PAREXEL INTERNATIONAL CORP, S-1/A, 1996-08-22

PAREXEL INTERNATIONAL CORP
S-1/A, 1996-08-22
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1996

REGISTRATION NO. 333-06953
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
MASSACHUSETTS 8731 04-2776269
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
</TABLE>

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195 WEST STREET
WALTHAM, MASSACHUSETTS 02154
(617) 487-9900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

JOSEF H. VON RICKENBACH
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
PAREXEL INTERNATIONAL CORPORATION
195 WEST STREET
WALTHAM, MASSACHUSETTS 02154
(617) 487-9900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

COPY TO:

WILLIAM J. SCHNOOR, JR.
HEATHER M. STONE
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

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<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.01 par value... $2,549,708 $880(2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(o).

(2) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 22, 1996

PROSPECTUS

56,818 SHARES

LOGO
COMMON STOCK

This Prospectus relates to resale of 56,818 shares of Common Stock, $.01
par value per share (the "Common Stock") of PAREXEL International Corporation
("PAREXEL" or the "Company") which may be offered hereby from time to time by
any or all of the selling stockholders named herein (collectively, the "Selling
Stockholders"). See "Selling Stockholders" and "Plan of Distribution." The
Company will not receive any of the proceeds from the resale of the shares by
the Selling Stockholders.

On May 26, 1996, the Company entered into a stock purchase agreement with
the stockholders of Sitebase Clinical Systems, Inc. ("Sitebase") pursuant to
which the Company purchased all outstanding shares of capital stock of Sitebase
with shares of Common Stock of the Company. The shares of Common Stock offered
hereby by the Selling Stockholders were acquired by such stockholders upon the
closing of the acquisition of Sitebase. In connection with the issuance of the
shares of Common Stock to the stockholders of Sitebase, each stockholder of
Sitebase agreed not to sell or otherwise transfer such shares until the
expiration of the pooling lockup period referred to herein, which is currently
expected to expire in August 1996. See "Selling Stockholders."

The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "PRXL." The last sale price for the Common Stock on August 20, 1996,
as reported on the Nasdaq National Market, was $50.25 per share. See "Price
Range of Common Stock and Dividend Policy."

SEE "RISK FACTORS" ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 1996
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ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-1 (including all amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the Common Stock offered hereby. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. For further information
with respect to the Company and the Common Stock offered hereby, reference is
hereby made to the Registration Statement and to the exhibits and schedules
filed therewith. Statements contained in this Prospectus regarding the contents
of any agreement or other document filed as an exhibit to the Registration
Statement are not necessarily complete, and in each instance reference is made
to the copy of such agreement filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. In
addition, the Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
The Registration Statement, including the exhibits and schedules thereto, as
well as the Company's periodic reports, proxy statements and other information,
may be inspected at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of all or any part thereof may be obtained upon payment of the prescribed
fees from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.

PAREXEL is a registered service mark of the Company.

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SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including Risk Factors and Consolidated Financial Statements and
Notes thereto, appearing elsewhere in this Prospectus. This Prospectus contains
certain "forward-looking" information, as that term is defined by (i) the
Private Securities Litigation Reform Act of 1995 (the "Act") and (ii) releases
made by the Securities and Exchange Commission. Such information involves risks
and uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading
contract research organization ("CRO"), providing clinical research and
development services to the worldwide pharmaceutical and biotechnology
industries. The Company believes it is the fourth largest CRO, based on
estimated annual net revenue, and one of only a few CROs capable of providing a
full range of clinical services on a global basis. The Company complements the
research and development departments of pharmaceutical and biotechnology
companies by offering high quality clinical research services to the client and
reducing drug development time and cost. In addition, the Company's integrated
services and extensive information technology capabilities, coupled with its
broad experience and expertise in global drug development, provide clients with
a variable cost alternative to the fixed costs associated with internal drug
development. The Company offers a full complement of clinical research and
development services, including designing, initiating and monitoring clinical
trials, managing and analyzing clinical data and consulting on regulatory
affairs.

PAREXEL's integrated information systems and worldwide network of offices
enable the Company to provide high-quality comprehensive services on a global
basis. The Company has provided clinical research and development services in
North America since 1985, in Europe since 1989, in Japan since May 1995 and in
Australia since December 1995.

The CRO industry derives substantially all of its revenue from the
pharmaceutical and biotechnology industries. The Company believes that the
following trends will cause the CRO industry to continue to grow: (i) many
pharmaceutical companies, in response to margin pressures, are seeking to reduce
the high fixed costs associated with peak-load staffing for drug development by
relying on a combination of internal resources and CROs; (ii) pharmaceutical and
biotechnology companies increasingly are attempting to maximize profits from a
given drug by pursuing regulatory approvals in multiple countries in parallel,
rather than sequentially, by outsourcing to CROs with global capabilities; (iii)
as consolidation in the pharmaceutical industry continues, many pharmaceutical
companies aggressively manage costs by reducing jobs and outsourcing to
variable-cost CROs in an effort to reduce the fixed costs associated with
internal drug development; (iv) as regulatory requirements in many jurisdictions
have become more complex, the pharmaceutical and biotechnology industries are
increasingly outsourcing to certain CROs to take advantage of their data
management expertise and global presence; (v) the worldwide research and
development expenditures for new drugs, including amounts spent on services of
the type provided by CROs, have experienced substantial growth in recent years
as a result of pressures to develop new drugs for an aging population and for
the treatment of life threatening diseases and chronic disorders; and (vi) the
growth of the biotechnology industry has increased the demand for expertise and
services provided by outside sources, including CROs. There can be no assurance,
however, that these trends will result in growth in the CRO industry.

PAREXEL's objective is to maintain and enhance its position as a leading
CRO by providing a full range of clinical services on a global basis. The
Company addresses all aspects of clinical research and development with a
flexible approach that allows its clients to use the Company's services on an
individual or bundled basis. The Company believes its expertise in conducting
scientifically demanding trials and its ability to coordinate complicated global
trials are significant competitive strengths. PAREXEL has recently devoted
significant resources to developing a state of the art information system
designed to allow the Company to more effectively manage its business operations
and deliver services to its clients. The Company will continue to

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invest in improvements in information technology and will consider acquisitions
of complementary businesses in order to enhance its competitive position and its
level of service.

Sitebase is a leading provider of remote data entry software and related
services to the pharmaceutical and biotechnology industries. Remote data entry
software facilitates the collection of clinical trials data on personal
computers at investigational sites and the ongoing transmission of such data to
trial sponsors for review and manufacturing.

The Company was incorporated in The Commonwealth of Massachusetts in 1983.
Unless the context otherwise requires, the terms "PAREXEL" and "the Company"
refer to PAREXEL International Corporation and its subsidiaries. The Company's
principal executive offices are located at 195 West Street, Waltham,
Massachusetts 02154, and its telephone number is (617) 487-9900.

RECENT ACQUISITIONS

In addition to the acquisition of Sitebase, the Company has recently closed
the following acquisitions. On June 28, 1996, the Company acquired all of the
outstanding capital stock of Caspard Consultants, a Paris-based biostatistical,
data management and consulting company, in exchange for 24,000 shares of Common
Stock. The transaction is expected to be treated as a pooling of interests for
financial accounting purposes. On August 16, 1996, the Company acquired all of
the outstanding capital stock of Lansal Clinical Pharmaceutics Limited, a
Tel-Aviv based CRO, in exchange for 24,000 shares of Common Stock. The
transaction is expected to be treated as a pooling of interests for financial
accounting purposes. On August 22, 1996, the Company acquired all of the
outstanding capital stock of State and Federal Associates, Inc., a Washington,
D.C. area health care economics and policy consulting firm, in exchange for
475,398 shares of Common Stock. The transaction is expected to be treated as a
pooling of interests for financial accounting purposes.

THE OFFERING

This Prospectus relates to the resale of 56,818 shares of Common Stock of
the Company received by the Selling Stockholders on the closing of the
acquisition of all outstanding shares of capital stock of Sitebase by the
Company. Such shares may be offered hereby from time to time by any or all of
the Selling Stockholders. The Company will not receive any of the proceeds from
the resale of the shares of Common Stock by the Selling Stockholders.

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<TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
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1991 1992 1993 1994 1995 1995 1996
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<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue................. $23,263 $45,407 $54,000 $58,002 $ 58,573 $42,281 $61,096
------- ------- ------- ------- -------- ------- -------
Costs and expenses:
Direct costs.............. 15,711 29,772 36,106 38,244 42,140 30,803 42,027
Selling, general and
administrative......... 5,015 10,164 11,831 13,631 13,294 9,762 13,079
Depreciation and
amortization........... 1,251 2,299 2,511 2,435 2,251 1,809 1,649
Facility and other
restructuring
charges................ 1,278(1) -- 3,254(2) -- -- -- --
Impairment of long-lived
assets................. -- -- -- -- 11,253(3) 11,253(3) --
------- ------- ------- ------- -------- ------- -------
Total costs and
expenses........ 23,255 42,235 53,702 54,310 68,938 53,627 56,755
------- ------- ------- ------- -------- ------- -------
Income (loss) from
operations................ 8 3,172 298 3,692 (10,365) (11,346) 4,341
Other income (expense),
net....................... 310 138 (520) (196) 55 -- 642
------- ------- ------- ------- -------- ------- -------
Income (loss) before
provision for income taxes
and cumulative effect of
accounting change......... 318 3,310 (222) 3,496 (10,310) (11,346) 4,983
======= ======= ======= ======= ======== ======= =======
Net income (loss)........... (664) 1,536 (2,157) 2,423 (10,630) (11,313) 2,995
======= ======= ======= ======= ======== ======= =======
Net income (loss) per
share..................... $ (0.97) $ 0.33 $ (2.97) $ 0.44 $ (12.61) $(13.44) $ 0.48
======= ======= ======= ======= ======== ======= =======
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
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<S> <C>
BALANCE SHEET DATA:
Working capital............................................................. $53,514
Total assets................................................................ 96,975
Long-term debt, less current maturities..................................... 682
Stockholders' equity........................................................ 58,475

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RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing the shares of Common Stock offered hereby.

LOSS OR DELAY OF LARGE CONTRACTS

Most of the Company's contracts are terminable upon 60 to 90 days' notice
by the client. Clients terminate or delay contracts for a variety of reasons,
including, among others, the failure of products being tested to satisfy safety
requirements, unexpected or undesired clinical results of the product, the
client's decision to forego a particular study, insufficient patient enrollment
or investigator recruitment or production problems resulting in shortages of the
drug. In addition, the Company believes that several factors, including the
potential adverse impact of health care reform, have caused pharmaceutical
companies to apply more stringent criteria to the decision to proceed with
clinical trials and therefore may result in a greater willingness of these
companies to cancel contracts with CROs. The loss or delay of a large contract
or the loss or delay of multiple contracts could have a material adverse effect
on the financial performance of the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

VARIABILITY OF QUARTERLY OPERATING RESULTS

The Company's quarterly operating results have been subject to variation,
and will continue to be subject to variation, depending upon factors such as the
initiation and progress of significant projects, exchange rate fluctuations, the
mix of services offered, the opening of new offices, the costs associated with
integrating acquisitions and the startup costs incurred in connection with the
introduction of new products and services. In addition, during the third quarter
of fiscal 1993 and 1995, the Company's results of operations were affected by a
non-cash restructuring charge and a non-cash write-down due to the impairment of
long-lived assets, respectively. See "Risks Associated with Acquisitions."
Because a high percentage of the Company's operating costs are relatively fixed,
variations in the initiation, completion, delay or loss of contracts, or in the
progress of clinical trials can cause material adverse variations in quarterly
operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quarterly Results."

DEPENDENCE ON CERTAIN INDUSTRIES AND CLIENTS

The Company's revenues are highly dependent on research and development
expenditures by the pharmaceutical and biotechnology industries. The Company's
operations could be materially and adversely affected by general economic
downturns in its clients' industries, the impact of the current trend toward
consolidation in these industries or any decrease in research and development
expenditures. Furthermore, the Company has benefited to date from the increasing
tendency of pharmaceutical and biotechnology companies to outsource large
clinical research projects. A reversal or slowing of this trend would have a
material adverse effect on the Company.

The Company believes that concentrations of business in the CRO industry
are not uncommon. The Company has experienced such concentration in the past and
may experience such concentration in fiscal 1996 and in future years. In the
year ended June 30, 1993 two clients accounted for approximately 12.9% and 11.3%
of the Company's consolidated net revenue, respectively. No client accounted for
10% or more of consolidated net revenue in fiscal 1994 or 1995 or in the nine
months ended March 31, 1996. In fiscal 1993, 1994 and 1995 and the nine months
ended March 31, 1996, the Company's top five clients accounted for 44.4%, 29.8%,
25.2% and 26.2%, respectively, of the Company's consolidated net revenue. The
loss of business from a significant client could have a material adverse effect
on the Company. See "Business -- Industry Trends" and "-- Clients and
Marketing."

DEPENDENCE ON GOVERNMENT REGULATION

The Company's business depends on the comprehensive government regulation
of the drug development process. In the United States, the general trend has
been in the direction of continued or increased regulation, although the FDA
recently announced regulatory changes intended to streamline the approval
process for

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biotechnology products by applying the same standards as are in effect for
conventional drugs. In Europe, the general trend has been toward coordination of
common standards for clinical testing of new drugs, leading to changes in the
various requirements currently imposed by each country. Changes in regulation,
including a relaxation in regulatory requirements or the introduction of
simplified drug approval procedures, as well as anticipated regulation, could
materially and adversely affect the demand for the services offered by the
Company. In addition, failure on the part of the Company to comply with
applicable regulations could result in the termination of ongoing research or
the disqualification of data, either of which could have a material adverse
effect on the Company. See "Business -- Industry Overview" and "-- Government
Regulation."

POTENTIAL ADVERSE IMPACT OF HEALTH CARE REFORM

Numerous governments have recently undertaken efforts to control growing
health care costs through legislation, regulation and voluntary agreements with
medical care providers and pharmaceutical companies. In the last several years,
several comprehensive health care reform proposals were introduced in the U.S.
Congress. The intent of the proposals was, generally, to expand health care
coverage for the uninsured and reduce the growth of total health care
expenditures. While none of the proposals was adopted, health care reform may
again be addressed by the U.S. Congress. Implementation of government health
care reform may adversely affect research and development expenditures by
pharmaceutical and biotechnology companies, resulting in a decrease of the
business opportunities available to the Company. Management is unable to predict
the likelihood of health care reform proposals being enacted into law or the
effect such law would have on the Company. See "Business -- Industry Overview."

Many European governments have also reviewed or undertaken health care
reform. For example, German health care reform legislation (the "Seehofer
Gesetz"), which was implemented on January 1, 1993, contributed to an estimated
15% decline in German pharmaceutical industry sales in calendar 1993 and led
several clients to cancel contracts with the Company. Subsequent to these
events, in the third quarter of fiscal 1993, the Company restructured its German
operations and incurred a restructuring charge of approximately $3.3 million. In
addition, in the third quarter of fiscal 1995, the Company's results of
operations were affected by a non-cash write-down due to the impairment of
long-lived assets of PAREXEL GmbH, the Company's German subsidiary, of
approximately $11.3 million. The Company cannot predict the impact that any
pending or future health care reform proposals may have on the Company's
business in Europe. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

COMPETITION; CRO INDUSTRY CONSOLIDATION

The Company primarily competes against in-house departments of
pharmaceutical companies, full service CROs and, to a lesser extent,
universities and teaching hospitals. Some of these competitors have
substantially greater capital, technical and other resources than the Company.
CROs generally compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, the quality of contract
research, the ability to organize and manage large-scale trials on a global
basis, the ability to manage large and complex medical databases, the ability to
provide statistical and regulatory services, the ability to recruit
investigators, the ability to integrate information technology with systems to
improve the efficiency of contract research, an international presence with
strategically located facilities, financial viability and price. There can be no
assurance that the Company will be able to compete favorably in these areas. See
"Business -- Competition."

The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to several large, full-service
CROs with global operations. The trend toward CRO industry consolidation has
resulted in heightened competition among the larger CROs for clients and
acquisition candidates. In addition, consolidation within the pharmaceutical
industry as well as a trend by pharmaceutical companies of outsourcing among
fewer CROs has led to heightened competition for CRO contracts.

RISKS ASSOCIATED WITH ACQUISITIONS

The Company has made a number of acquisitions and will continue to review
future acquisition opportunities. Revenue derived from acquired businesses has
contributed significantly to the Company's growth. No assurances can be given
that acquisition candidates will continue to be available on terms and

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conditions acceptable to the Company. Acquisitions involve numerous risks,
including, among other things, difficulties and expenses incurred in connection
with the acquisitions and the subsequent assimilation of the operations and
services or products of the acquired companies, the diversion of management's
attention from other business concerns and the potential loss of key employees
of the acquired company. Acquisitions of foreign companies also may involve the
additional risks of assimilating differences in foreign business practices and
overcoming language barriers. In the event that the operations of an acquired
business do not live up to expectations, the Company may be required to
restructure the acquired business or write-off the value of some or all of the
assets of the acquired business. In fiscal 1993 and 1995, the Company's results
of operations were materially and adversely affected by write-offs associated
with the Company's acquired German operations. There can be no assurance that
any acquisition will be successfully integrated into the Company's operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

MANAGEMENT OF BUSINESS EXPANSION; NEED FOR IMPROVED SYSTEMS; ASSIMILATION OF
FOREIGN OPERATIONS

The Company's business and operations have experienced substantial
expansion over the past 10 years. The Company believes that such expansion
places a strain on operational, human and financial resources. In order to
manage such expansion, the Company must continue to improve its operating,
administrative and information systems, accurately predict its future personnel
and resource needs to meet client contract commitments, track the progress of
ongoing client projects and attract and retain qualified management,
professional, scientific and technical operating personnel. Expansion of foreign
operations also may involve the additional risks of assimilating differences in
foreign business practices, hiring and retaining qualified personnel, and
overcoming language barriers. In the event that the operation of an acquired
business does not live up to expectations, the Company may be required to
restructure the acquired business or write-off the value of some or all of the
assets of the acquired business. In fiscal 1993 and 1995, the Company's results
of operations were materially and adversed affected by write-offs associated
with the Company's acquired German operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Global Operations."
Failure by the Company to meet the demands of and to manage expansion of its
business and operations could have a material adverse effect on the Company's
business.

DEPENDENCE ON PERSONNEL

The Company relies on a number of key executives, including Josef H. von
Rickenbach, its President, Chief Executive Officer and Chairman, upon whom the
Company maintains key man life insurance. Although the Company has entered into
agreements containing non-competition restrictions with its senior officers, the
Company does not have employment agreements with most of these persons and the
loss of the services of any of the Company's key executives could have a
material adverse effect on the Company. The Company's performance also depends
on its ability to attract and retain qualified professional, scientific and
technical operating staff. The level of competition among employers for skilled
personnel, particularly those with M.D., Ph.D. or equivalent degrees, is high.
There can be no assurance the Company will be able to continue to attract and
retain qualified staff. See "Business -- Employees."

POTENTIAL LIABILITY; POSSIBLE INSUFFICIENCY OF INSURANCE

Clinical research services involve the testing of new drugs on human
volunteers pursuant to a study protocol. Such testing involves a risk of
liability for personal injury or death to patients due to, among other reasons,
possible unforeseen adverse side effects or improper administration of the new
drug. Many of these patients are already seriously ill and are at risk of
further illness or death. The Company could be materially and adversely affected
if it were required to pay damages or incur defense costs in connection with a
claim that is outside the scope of an indemnity or insurance coverage, or if the
indemnity, although applicable, is not performed in accordance with its terms or
if the Company's liability exceeds the amount of applicable insurance. In
addition, there can be no assurance that such insurance will continue to be
available on terms acceptable to the Company. See "Business -- Potential
Liability and Insurance."

ADVERSE EFFECT OF EXCHANGE RATE FLUCTUATIONS

Approximately 38.8%, 36.0%, 40.2% and 38.7% of the Company's net revenue
for fiscal 1993, 1994 and 1995 and the nine months ended March 31, 1996,
respectively, were derived from the Company's operations outside of North
America. Since the revenue and expenses of the Company's foreign operations are
generally

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denominated in local currencies, exchange rate fluctuations between local
currencies and the United States dollar will subject the Company to currency
translation risk with respect to the results of its foreign operations. To the
extent the Company is unable to shift to its clients the effects of currency
fluctuations, these fluctuations could have a material adverse effect on the
Company's results of operations. The Company does not currently hedge against
the risk of exchange rate fluctuations.

POTENTIAL VOLATILITY OF STOCK PRICE

The market price of the Company's Common Stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
changes in earnings estimates by analysts, market conditions in the industry,
prospects of health care reform, changes in government regulation and general
economic conditions. In addition, the stock market has from time to time
experienced significant price and volume fluctuations that have been unrelated
to the operating performance of particular companies. These market fluctuations
may adversely affect the market price of the Company's Common Stock. Because the
Company's Common Stock currently trades at a relatively high price-earnings
multiple, due in part to analysts' expectations of continued earnings growth,
even a relatively small shortfall in earnings from, or a change in, analysts'
expectations may cause an immediate and substantial decline in the Company's
stock price. Investors in the Company's Common Stock must be willing to bear the
risk of such fluctuations in earnings and stock price.

ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCE OF PREFERRED STOCK

The Company's Restated Articles of Organization and Restated By-Laws
contain provisions that may make it more difficult for a third party to acquire,
or may discourage a third party from acquiring, the Company. These provisions
could limit the price that certain investors might be willing to pay in the
future for shares of the Company's Common Stock. In addition, shares of the
Company's Preferred Stock may be issued in the future without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of any holders of Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
adversely affect the market price of the Common Stock and could have the effect
of making it more difficult for a third party to acquire, or discouraging a
third party from acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue any shares of Preferred
Stock. See "Description of Capital Stock."

9
<PAGE> 11

USE OF PROCEEDS

The Company will not receive any proceeds from the resale of shares of
Common Stock by the Selling Stockholders hereunder. See "Selling Stockholders"
and "Plan of Distribution."

The principal purpose of this offering is to effect an orderly disposition
of the Selling Stockholders' shares.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "PRXL." Public trading of the Common Stock commenced on November 22,
1995. Prior to that time, there was no public market for the Company's Common
Stock. The following table sets forth the high and low sale prices for the
Common Stock as reported by Nasdaq for the periods indicated:

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1996:
Second quarter (from November 22).......................... $36 $18 3/4
Third quarter.............................................. 43 3/4 26
Fourth quarter............................................. 55 3/4 37 1/2
FISCAL YEAR ENDED JUNE 30, 1997:
First quarter (through August 20, 1996).................... $31 $50 3/4
</TABLE>

On August 20, 1996, the last reported sale price of the Common Stock on the
Nasdaq National Market was $50.25 per share. As of August 20, 1996, there were
approximately 75 stockholders of record of the Common Stock.

In November 1995, in connection with its initial public offering, the
Company paid a cash dividend of approximately $940,000 on certain series of its
Preferred Stock, which were subsequently converted into Common Stock. The
Company has never paid or declared any dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future. The Company
currently intends to retain future earnings to fund the development and growth
of its business.

10
<PAGE> 12

CAPITALIZATION

<TABLE>
The following table sets forth the capitalization of the Company as of
March 31, 1996. This table should be read in conjunction with the Company's
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Prospectus.
<CAPTION>

MARCH 31, 1996
--------------
(IN THOUSANDS)
<S> <C>
Long-term debt, excluding current maturities........................... $ 682
-------
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized,
no shares outstanding............................................. $ --
Common stock, $.01 par value, 25,000,000 shares authorized,
7,642,166 shares outstanding(1)................................... 77
Additional paid-in capital........................................... 64,961
Accumulated deficit.................................................. (6,771)
Cumulative translation adjustment.................................... 208
-------
Total stockholders' equity................................... 58,475
-------
Total capitalization......................................... $59,154
=======
<FN>

- ---------------

(1) Outstanding shares excludes (i) 56,818 shares issued to the Selling
Stockholders which are the subject of this Prospectus; (ii) 24,000 shares
of the Company's Common Stock issued on June 28, 1996 in connection with
the acquisition by the Company of all outstanding capital stock of Caspard
Consultants; and (iii) 655,953 shares of Common Stock issuable as of March
31, 1996 upon exercise of stock options at a weighted average exercise
price per share of $7.03. Since March 31, 1996, options to purchase 208,500
shares of Common Stock have been granted, including 39,000 shares to
executive officers of the Company named in the Summary Compensation Table,
and options to purchase 126,253 shares of Common Stock have been exercised
at a weighted average exercise price of $1.33 per share. See
"Management -- Options" and Note 12 of Notes to Consolidated Financial
Statements of the Company.

</TABLE>

11
<PAGE> 13
<TABLE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below at and for each of
the years in the five-year period ended June 30, 1995 are derived from financial
statements that have been audited by Price Waterhouse LLP, independent
accountants. The audited balance sheet at June 30, 1994 and 1995 and the related
statements of operations, of stockholders' equity, and of cash flows for each of
the three years in the period ended June 30, 1995 and related notes thereto
appear elsewhere in this Prospectus. The balance sheet data at March 31, 1996
and the statement of operations data for the nine months ended March 31, 1995
and 1996 are derived from unaudited financial statements. The unaudited
financial statements include all adjustments, consisting only of normal
recurring adjustments, that the Company considers necessary for a fair
presentation of the financial position and results of operations for these
periods. Operating results for the nine months ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the entire year
ending June 30, 1996. The data set forth below should be read in conjunction
with, and are qualified by reference to, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Company's financial
statements and related notes included elsewhere in this Prospectus.

<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, MARCH 31,
---------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................................... $25,652 $53,292 $ 65,294 $ 69,646 $ 79,928 $ 55,998 $ 84,797
Reimbursed costs.................................. (2,389) (7,885) (11,294) (11,644) (21,355) (13,717) (23,701)
------- ------- -------- -------- -------- -------- --------
Net revenue....................................... 23,263 45,407 54,000 58,002 58,573 42,281 61,096
------- ------- -------- -------- -------- -------- --------
Costs and expenses:
Direct costs.................................... 15,711 29,772 36,106 38,244 42,140 30,803 42,027
Selling, general and administrative............. 5,015 10,164 11,831 13,631 13,294 9,762 13,079
Depreciation and amortization................... 1,251 2,299 2,511 2,435 2,251 1,809 1,649
Facility and other restructuring charges........ 1,278(1) -- 3,254(2) -- -- -- --
Impairment of long-lived assets................. -- -- -- -- 11,253(3) 11,253(3) --
------- ------- -------- -------- -------- -------- --------
Total costs and expenses.................. 23,255 42,235 53,702 54,310 68,938 53,627 56,755
------- ------- -------- -------- -------- -------- --------
Income (loss) from operations..................... 8 3,172 298 3,692 (10,365) (11,346) 4,341
Other income (expense), net....................... 310 138 (520) (196) 55 -- 642
------- ------- -------- -------- -------- -------- --------
Income (loss) before provision for income taxes
and cumulative effect of accounting change...... 318 3,310 (222) 3,496 (10,310) (11,346) 4,983
Provision for income taxes........................ 982 1,774 1,935 1,573 320 (33) 1,988
------- ------- -------- -------- -------- -------- --------
Net income (loss) before cumulative effect of
accounting change............................... (664) 1,536 (2,157) 1,923 (10,630) (11,313) 2,995
Cumulative effect of change in method of
accounting for income taxes..................... -- -- -- 500 -- -- --
------- ------- -------- -------- -------- -------- --------
Net income (loss)................................. $ (664) $ 1,536 $ (2,157) $ 2,423 $(10,630) $(11,313) $ 2,995
======= ======= ======== ======== ======== ======== ========
Net income (loss) per share....................... $ (0.97) $ 0.33 $ (2.97) $ 0.44 $ (12.61) $ (13.44) $ 0.48
======= ======= ======== ======== ======== ======== ========
Weighted average common shares
outstanding..................................... 683(4) 5,236 727(4) 5,747 843(4) 842(4) 6,272
======= ======= ======== ======== ======== ======== ========
BALANCE SHEET DATA (AT PERIOD END):
Working capital................................... $(2,134) $ 5,884 $ 7,161 $ 10,885 $ 11,574 $ 53,514
Total assets...................................... 30,073 44,390 45,457 45,936 43,250 96,975
Long-term debt, less current maturities........... 518 790 222 391 633 682
Stockholders' equity.............................. 11,294 21,807 21,847 25,236 15,524 58,475

- ---------------
<FN>
(1) Represents a domestic facility restructuring charge related to the
abandonment of a lease in connection with the relocation of the Company's
headquarters.
(2) Represents a charge incurred in connection with a restructuring of
operations in Germany because of a decline in revenues from those
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note 4 of Notes to Consolidated Financial
Statements of the Company.
(3) Represents a non-cash charge primarily due to the write-down of intangible
assets of the Company's German operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 3 of
Notes to Consolidated Financial Statements of the Company.
(4) For the years ended June 30, 1991, 1993 and 1995 and the nine months ended
March 31, 1995 weighted average common shares outstanding exclude common
share equivalents (primarily convertible preferred stock), the inclusion of
which would have been anti-dilutive. See Note 2 of Notes to Consolidated
Financial Statements of the Company.
</TABLE>

12
<PAGE> 14

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

OVERVIEW

The Company provides a full spectrum of clinical research and development
services on a contract basis to the pharmaceutical and biotechnology industries.
These services are provided to clients on a global basis and include: (i)
designing, initiating and monitoring clinical trials; (ii) managing and
analyzing clinical data; and (iii) regulatory consulting.

The Company, founded in 1983 as a regulatory consulting firm, has built its
business both through internal expansion and acquisitions. In 1988, the Company
acquired Consulting Statisticians, Inc., a biostatistics and data management
provider specializing in the healthcare industry. In 1989, the Company initiated
its international expansion by acquiring the London-based McDonnell Douglas
Clinical Trials Analysis Division, a division of McDonnell Douglas Informations
Systems Ltd., which provided biostatistics and data management services in
Europe. In 1990, PAREXEL acquired Barnett Associates, Inc. to expand the
Company's Information Products Division, which offers a range of specialized
clinical consulting and training services and related products. In 1991, the
Company acquired AFB Arzneimittelforschung GmbH in Berlin, a European CRO based
in Berlin with offices in Frankfurt and Paris. The Company is headquartered in
Waltham, Massachusetts, and opened offices in San Diego in 1990, Raleigh-Durham
in 1994, Milan, Kobe, Japan and Sydney, Australia in 1995 and Madrid in 1996.

The Company's clinical research and development services contracts are
generally fixed price, with some variable components, and range in duration from
a few months to several years. A portion of the fee is typically required to be
paid at the time the contract is entered into and the balance in installments
over the contract's duration, in some cases on a milestone achievement basis.
Revenue from the contracts is generally recognized on a percentage of completion
basis as work is performed. Most of the Company's contracts are terminable upon
60 to 90 days' notice by the client. Clients terminate or delay contracts for a
variety of reasons, including, among others, the failure of products being
tested to satisfy safety requirements, unexpected or undesired clinical results
of the product, the client's decision to forego a particular study, insufficient
patient enrollment or investigator recruitment or production problems resulting
in shortages of the drug. Although the Company typically is entitled to receive
certain fees for winding down a study which is terminated or delayed and, in
some cases, a termination fee, the loss or delay of a large contract or the loss
or delay of multiple contracts could have a material adverse effect on the
Company. The Company believes that several factors, including the potential
adverse impact of health care reform, have caused pharmaceutical companies to
apply more stringent criteria to the decision to proceed with clinical trials
and therefore may have resulted in a greater willingness of these companies to
cancel contracts with CROs. As is customary in the industry, the Company
routinely subcontracts with third party investigators in connection with
clinical trials and with other third party service providers for laboratory
analysis and other specialized services. These and other reimbursable costs are
paid by the Company and reimbursed by clients and, in accordance with industry
practice, are included in revenue. Reimbursed costs vary from contract to
contract. Accordingly, the Company views net revenue, which consists of revenue
less reimbursed costs, as its primary measure of revenue growth.

Direct costs consist of compensation and related fringe benefits for
project-related employees, other project-related costs not reimbursed and
allocated facilities and information systems costs. Selling, general and
administrative expenses consist of compensation and related fringe benefits for
selling and administrative employees, professional services and advertising
costs, as well as allocated costs related to facilities and information systems.

Since the Company conducts operations on a global basis, the Company's
effective tax rate has depended and will depend on the geographic distribution
of its revenue among locations with varying tax rates. The Company's results of
operations will be affected by changes in the tax rates of the various
jurisdictions. In particular, as the geographic mix of the Company's results of
operations among various tax jurisdictions changes the Company's effective tax
rate may vary significantly from period to period.

13
<PAGE> 15

A key component of the Company's strategy is its investment in technology,
both client-oriented and internal management-oriented. These systems provide
increased standardization of operating processes and contract management
throughout the Company's worldwide operations. Integral to the system are: (i)
periodic monitoring and reviewing of contract progress; (ii) increased
visibility and periodic reviewing of hourly billing by employees and utilization
of project resources resulting in more efficient resource deployment; (iii)
integrated revenue recognition and billing subsystems; (iv) proposal and budget
generation; (v) management of clinical data; and (vi) forecasting of project
revenues and resource requirements.

GLOBAL OPERATIONS

<TABLE>
The following table sets forth, for the periods indicated, net revenue by
geographic region as well as the percentage of total net revenue represented by
such region.

<CAPTION>
FISCAL YEAR ENDED JUNE 30, NINE MONTHS ENDED MARCH 31,
------------------------------------------------------------------ -------------------------------------------
1993 % OF TOTAL 1994 % OF TOTAL 1995 % OF TOTAL 1995 % OF TOTAL 1996 % OF TOTAL
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue:
North
America.... $33,023 61.2% $37,111 64.0% $35,037 59.8% $25,165 59.5% $37,438 61.3%
Europe....... 20,977 38.8 20,891 36.0 23,443 40.0 17,116 40.5 23,048 37.7
Asia......... -- -- -- -- 93 0.2 -- -- 610 1.0
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total... $54,000 100.0% $58,002 100.0% $58,573 100.0% $42,281 100.0% $61,096 100.0%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</TABLE>

Within Europe, between fiscal 1993 and fiscal 1995, net revenue from German
operations decreased from $14.0 million, or 25.9% of consolidated net revenue,
to $12.3 million, or 20.9% of consolidated net revenue while net revenue from
other European operations increased from $7.0 million, or 13.0% of consolidated
net revenue, to $11.2 million, or 19.1% of consolidated net revenue. The
Company's foreign subsidiaries generally enter into contracts denominated in the
local currency of the foreign subsidiary. Because the foreign subsidiary's
expenses are generally paid in the local currency, such foreign subsidiaries'
local currency earnings are not materially affected by fluctuations in exchange
rates. However, changes in the exchange rates between these local currencies and
the U.S. dollar will affect the translation of such subsidiaries' financial
results into U.S. dollars for purposes of reporting the Company's consolidated
financial results. In cases where the Company contracts for a multi-country
clinical trial and a significant portion of the contract expenses are in a
currency other than the contract currency, the Company seeks to contractually
shift to its client the effect of fluctuations in the relative values of the
contract currency and the currency in which the expenses are incurred. To the
extent the Company is unable to shift to its clients the effects of currency
fluctuations, these fluctuations could have a material effect on the Company's
results of operations. The Company does not currently hedge against the risk of
exchange rate fluctuations.

Impact of German Operations

The Company's results of operations from fiscal 1993 through fiscal 1995
were adversely affected by its German operations. German healthcare reform
legislation, known as the Seehofer Gesetz, took effect on January 1, 1993, and
was designed to limit the rate of increase of the cost of prescription
medication in Germany and was largely responsible for an estimated 15% decline
in German pharmaceutical industry sales in calendar 1993. In the wake of the
uncertainties caused by the Seehofer Gesetz, the Company's German operation
experienced a sudden decline in demand for services as well as the cancellation
of several large contracts in Germany. These factors resulted in a 20.5% decline
in net revenue attributable to German operations from the quarter ended December
31, 1992 to the quarter ended March 31, 1993. In response to this revenue
decline, the Company consolidated certain facilities and reduced personnel costs
in Germany and, as a result, incurred a $3.3 million restructuring charge in the
quarter ended March 31, 1993, consisting of $2.4 million, $600,000 and $300,000
for facilities, wages and severance and other operating costs, respectively. As
a result of the restructuring, the Company reduced annual facility, personnel
and other operating costs by an estimated $1.0 million, $1.0 million and
$150,000, respectively.

While the fiscal 1993 restructuring served to temporarily improve operating
margins during fiscal 1994, net revenues came under pressure in the first two
quarters of fiscal 1995 and declined significantly in the third

14
<PAGE> 16

quarter. During the third quarter, drug development regulations in Germany and
Europe were modified, and further changes were being contemplated, all of which
were expected to have a detrimental impact on PAREXEL GmbH's operations. As a
result of this revenue decline, and in light of the past history of poor
operating performance, the Company reassessed in the third quarter of fiscal
1995 the recoverability of long-lived assets acquired in the 1991 acquisition of
PAREXEL GmbH. As a result of this reassessment, the Company determined that the
net book value of these long-lived assets was impaired and recorded an $11.3
million non-cash charge reflecting the excess of the book value of the PAREXEL
GmbH net assets over their fair value. Of the $11.3 million charge, $9.9 million
consisted of goodwill and other intangible assets. This charge was effected
under Statement of Financial Accounting Standards No. 121, which was issued in
March 1995. See Note 3 of Notes to Consolidated Financial Statements of the
Company.

RECENT DEVELOPMENTS

The following table shows certain preliminary, unaudited financial data for
the three months and the fiscal year ended June 30, 1996, released by the
Company on August 15, 1996. This information has been prepared by the Company on
the same basis as the audited financial statements appearing elsewhere in this
Prospectus and includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information when read in
conjunction with the Company's audited financial statements and related notes.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
THREE MONTHS ENDED JUNE 30,
JUNE 30, ---------------------------
--------------------------- 1995
1995 1996 -----------
----------- -----------
(UNAUDITED) (UNAUDITED)
1996
-----------
(UNAUDITED)(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net revenue................................ $26,910 $16,292 $88,006 $ 58,573
Costs and expenses:
Direct costs............................. 18,113 11,337 60,141 42,140
Selling, general and administrative...... 5,948 3,532 19,027 13,294
Depreciation and amortization............ 694 442 2,343 2,251
Impairment of long-lived assets.......... -- -- -- 11,253
------- ------- ------- --------
Income (loss) from operations.............. 2,155 981 6,495 (10,365)
Other income, net.......................... 514 55 1,157 55
------- ------- ------- --------
Income (loss) before income taxes.......... $ 2,669 $ 1,036 $ 7,652 $ (10,310)
======= ======= ======= ========
Net income (loss).......................... $ 1,604 $ 683 $ 4,599 $ (10,630)
======= ======= ======= ========
Net income (loss) per share................ $ 0.20 $ 0.13 $ 0.68 $ (12.61)
Weighted average common and common
equivalent shares outstanding............ 8,000 5,741 6,780 843
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1995
-------------
JUNE 30, 1996
-------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Working capital.................................................... $ 53,428 $ 11,574
Total assets....................................................... 102,401 43,250
Stockholders' equity............................................... 61,212 15,524
</TABLE>

Net revenue increased by $10.6 million, or 65%, from $16.3 million in the
three months ended June 30, 1995 to $26.9 million in the three months ended June
30, 1996. Income from operations increased by $1.2 million, or 120%, from
$981,000 in the three months ended June 30, 1995 to $2.2 million in the three
months ended June 30, 1996.

Net revenue increased by $29.4 million, or 50%, from $58.6 in fiscal 1995
to $88.0 million in fiscal 1996. Income from operations increased by $16.9
million, from a loss from operations of $10.4 million in fiscal 1995 to income
from operations of $6.5 million in fiscal 1996. Income from operations for
fiscal 1995 included an

15
<PAGE> 17

$11.3 million pre-tax charge for the impairment of long-lived assets related to
the Company's German operations. Income from operations for fiscal 1995,
excluding the impact of the impairment charge, was $303,000.

RESULTS OF OPERATIONS

<TABLE>
The following table sets forth for the periods indicated certain financial
data as a percentage of net revenue and the percentage change in these items
compared to the prior comparable period. The trends illustrated in the following
table may not be indicative of future results.

<CAPTION>
PERCENTAGE OF NET REVENUE
------------------------------------------ PERCENTAGE INCREASE (DECREASE)
NINE MONTHS -----------------------------------
FISCAL YEAR ENDED MARCH NINE
ENDED JUNE 30, 31, FISCAL FISCAL MONTHS
------------------------ -------------- 1993 TO 1994 TO 1995 TO
1993 1994 1995 1995 1996 1994 1995 1996
----- ----- ------ ----- ----- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 7.4% 1.0% 44.5%
Costs and expenses:
Direct costs....................... 66.9 65.9 71.9 72.8 68.8 5.9 10.2 36.4
Selling, general and
administrative................... 21.9 23.5 22.7 23.1 21.4 15.2 (2.5) 34.0
Depreciation and amortization...... 4.6 4.2 3.9 4.3 2.7 (3.0) (7.6) (8.8)
Restructuring and impairment....... 6.0 -- 19.2 26.6 -- * * *
----- ----- ------ ----- -----
Income (loss) from
operations......................... 0.6% 6.4% (17.7)% (26.8)% 7.1% * * *
===== ===== ====== ===== =====
<FN>

- ---------------

* not meaningful
</TABLE>

Nine Months Ended March 31, 1996 Compared to Nine Months Ended March 31, 1995

Net revenue increased by $18.8 million, or 44.5%, from $42.3 million for
the nine months ended March 31, 1995 to $61.1 million for the nine months ended
March 31, 1996. This net revenue growth was primarily attributable to an
increase in the number and average contract value of clinical research projects
serviced by the Company.

Direct costs increased by $11.2 million, or 36.4%, from $30.8 million for
the nine months ended March 31, 1995 to $42.0 million for the nine months ended
March 31, 1996. This increase in direct costs was due to the increase in the
number of project-related personnel and facilities costs necessary to support
the increased level of operations in North America and Europe. Direct costs as a
percentage of net revenue decreased from 72.8% for the nine months ended March
31, 1995 to 68.8% for the nine months ended March 31, 1996, primarily due to
improved workforce and facility utilization within North America and Europe.

Selling, general and administrative expenses increased by $3.3 million, or
34.0%, from $9.8 million for the nine months ended March 31, 1995 to $13.1
million for the nine months ended March 31, 1996. This increase was primarily
due to increased costs associated with additional administrative personnel,
increased hiring and selling costs, and increased facilities necessary to
support the Company's increased level of operations. Selling, general and
administrative expenses as a percentage of net revenue decreased from 23.1% for
the nine months ended March 31, 1995 to 21.4% for the nine months ended March
31, 1996 primarily due to efficiencies associated with higher revenue in North
America.

Depreciation and amortization expense decreased by $.2 million, or 8.8%,
from $1.8 million for the nine months ended March 31, 1995 to $1.6 million for
the nine months ended March 31, 1996. The change resulted from an increase in
depreciation associated with increased capital expenditures of $400,000, offset
by a reduction of $600,000 in depreciation and amortization resulting from the
write-down of impaired long-lived assets of the Company's German operations
during the three months ended March 31, 1995.

16
<PAGE> 18

Income from operations for the nine months ended March 31, 1996 was $4.3
million, compared to a loss from operations of $11.3 million for the nine months
ended March 31, 1995. Results for the nine months ended March 31, 1995 included
an $11.3 million non-cash charge related to the write-down due to the impairment
of long-lived assets of the Company's German operations. Loss from operations
for the nine months ended March 31, 1995, excluding the impact of the
write-down, was approximately $401,000.

Other income (expense), net increased by $642,000 to $642,000 for the nine
months ended March 31, 1996. This increase resulted from an increase in interest
income achieved from higher average balances of cash, cash equivalents and
short-term investments due primarily to proceeds from the Company's public
offerings in November 1995 and March 1996.

The Company's effective income tax rate was 39.9% for the nine months ended
March 31, 1996. The effective income tax rate varies with changes in the mix of
taxable income from the different jurisdictions in which the Company operates.

Fiscal Year Ended June 30, 1995 Compared to Fiscal Year Ended June 30, 1994

Net revenue increased by $571,000, or 1.0%, from $58.0 million for fiscal
1994 to $58.6 million for fiscal 1995. This increase was due to an increase of
$2.6 million in net revenue from European operations, offset by a decrease of
$2.1 million in net revenue from North American operations. The increase in
European net revenue was primarily due to the weakening of the dollar and, to a
lesser extent, to an increase in clinical research contract volume in all areas
in Europe other than Germany, which experienced a decline in net revenue. The
decline in net revenue from North America was primarily due to a decline in net
revenue from the Company's data management operation, which substantially
completed work on a number of large contracts during fiscal 1994 that were not
replaced in fiscal 1995.

Direct costs increased by $3.9 million, or 10.2%, from $38.2 million for
fiscal 1994 to $42.1 million for fiscal 1995. Substantially all of the increase
in direct costs was due to increased expenses associated with European
operations. The increase in direct costs in Europe was primarily due to the
hiring of additional project-related personnel and expansion of facilities in
the United Kingdom and France. The weakening of the dollar also contributed to
the increase of direct costs in Europe. Direct costs as a percentage of net
revenue increased from 65.9% in fiscal 1994 to 71.9% in fiscal 1995. This
increase was primarily due to the increased costs incurred in Europe, where
direct costs increased as a percentage of net revenue from 65.5% in fiscal 1994
to 75.4% in fiscal 1995 and to a decline in net revenue in North America, where
direct costs remained flat against lower net revenue, resulting in an increase
in direct costs as a percentage of net revenue from 66.2% in fiscal 1994 to
69.8% in fiscal 1995.

Selling, general and administrative expenses decreased by $337,000, or
2.5%, from $13.6 million in fiscal 1994 to $13.3 million in fiscal 1995. The
decrease in selling, general and administrative expenses was primarily due to
savings in Europe as a result of a more effective deployment of employee and
facility resources in the United Kingdom and Germany, partially offset by the
weakness of the dollar. Due to these factors, selling, general and
administrative expenses as a percentage of net revenue decreased from 23.5% for
fiscal 1994 to 22.7% in fiscal 1995.

Depreciation and amortization expenses decreased by $184,000, or 7.6%, from
$2.4 million in fiscal 1994 to $2.3 million in fiscal 1995. This decrease was
primarily due to a reduction in depreciation and amortization expense from fully
amortized intangible assets and the write-down of impaired long-lived assets,
offset in part by the weakness of the dollar. Fiscal 1995 includes only six
months of depreciation and amortization, or approximately $588,000, resulting
from the 1991 acquisition of PAREXEL GmbH. Due to the write-off of the
long-lived assets of PAREXEL GmbH in the quarter ended March 31, 1995, there
will be no depreciation or amortization attributable to these assets in future
periods. During fiscal 1995, the Company incurred an approximate $11.3 million
non-cash charge in connection with the write-down due to the impairment of long-
lived assets of the Company's German operations. See "Global
Operations -- Impact of German Operations" and Note 3 of Notes to Consolidated
Financial Statements of the Company.

17
<PAGE> 19

Other income (expense), net, including interest expense, changed from an
expense of $196,000 in fiscal 1994 to income of $55,000 in fiscal 1995. The
change was primarily due to the incurrence in fiscal 1994 of approximately
$450,000 related to the Company's postponed fiscal 1994 initial public offering.

The effective tax rate in fiscal 1994 was 45.0%. Excluding the effect of
the $11.3 million non-cash, non-deductible write-down due to the impairment of
long-lived assets, the effective income tax rate would have been 33.9% for
fiscal 1995. In fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." The cumulative
effect of the change increased net income by $500,000 in fiscal 1994. See Notes
2 and 13 of Notes to Consolidated Financial Statements of the Company.

Fiscal Year Ended June 30, 1994 Compared to Fiscal Year Ended June 30, 1993

Net revenue increased by $4.0 million, or 7.4%, from $54.0 million in
fiscal 1993 to $58.0 million in fiscal 1994. This increase was primarily
attributable to an increase in the volume of clinical research projects in North
America. In Europe, an increase in the volume of clinical research projects in
all areas other than Germany was offset by the strength of the dollar and a
decline in net revenue from German operations. The Company believes the decline
in net revenue from German operations was primarily due to the continuing impact
of the German healthcare reform.

Direct costs increased by $2.1 million, or 5.9%, from $36.1 million in
fiscal 1993 to $38.2 million in fiscal 1994. The increase in direct costs was
the result of additional employee and facility-related expenses in all regions
other than Germany to accommodate increased levels of business, offset in part
by a reduction in reported European costs due to the strength of the dollar as
well as a decrease in personnel and facilities costs resulting from the
restructuring of German operations in the third quarter of fiscal 1993. Direct
costs as a percentage of net revenue decreased from 66.9% in fiscal 1993 to
65.9% in fiscal 1994. This decrease primarily reflected the improved workforce
and facility utilization resulting from the German restructuring, offset in part
by the increased number of project-related personnel and information systems
costs associated with increasing capacity in North America. See "Global
Operations -- Impact of German Operations."

Selling, general and administrative expenses increased by $1.8 million, or
15.2%, from $11.8 million in fiscal 1993 to $13.6 million in fiscal 1994. The
increase in selling, general and administrative expenses was primarily due to
expansion of the Company's global sales and marketing organization, increased
costs associated with an increase in North American administrative personnel,
investments in information services and, to a lesser extent, the hiring of a
President of European Operations. The increase was offset in part by a reduction
in reported European costs due to the strengthening of the dollar. Due to these
factors, selling, general and administrative expenses as a percentage of net
revenue increased from 21.9% in fiscal 1993 to 23.5% in fiscal 1994.

Depreciation and amortization expense decreased by $76,000, or 3.0%, from
$2.5 million in fiscal 1993 to $2.4 million in fiscal 1994, primarily due to the
strengthening of the dollar and reduced amortization expense, as certain
intangible assets were fully amortized in fiscal 1993.

During fiscal 1993, the Company recorded a $3.3 million charge in
connection with a restructuring of its German operations. This restructuring
primarily involved the physical consolidation of several operating groups into
two facilities and a reduction in headcount, and accordingly, the charge
reflects lease abandonment costs, write-offs of leasehold improvements,
severance payments and other directly related expenses. See "Global
Operations -- Impact of German Operations" and Note 4 of Notes to Consolidated
Financial Statements of the Company.

Other expense, net, including interest expense, decreased by $324,000, or
62.3%, from $520,000 in fiscal 1993 to $196,000 in fiscal 1994. This decrease
was primarily due to the incurrence in fiscal 1993 of $775,000 of expenses
associated with the fiscal 1993 postponed initial public offering, as compared
to the incurrence in fiscal 1994 of $450,000 of expenses associated with the
fiscal 1994 postponed initial public offering.

The effective tax rate in fiscal 1994 was 45.0%. Excluding the effects of
the $3.3 million German operations restructuring charge, which was not currently
deductible for income tax purposes, the Company's

18
<PAGE> 20

effective income tax rate in fiscal 1993 would have been 63.8%. See Note 13 of
Notes to Consolidated Financial Statements of the Company.

Quarterly Results

The Company's quarterly operating results have been subject to variation,
and will continue to be subject to variation, depending on factors such as the
initiation and progress of significant projects, exchange rate fluctuations, the
opening of new offices, the costs associated with integrating acquisitions and
the start-up costs incurred in connection with the introduction of new products
and services. In addition, during the third quarter of fiscal 1993 and 1995, the
Company's results of operations were affected by a restructuring charge and a
write-down due to the impairment of long-lived assets, respectively. Because a
high percentage of the Company's operating costs are relatively fixed in the
short term, variations in the initiation, completion, delay or loss of contracts
or progress of clinical trials can cause material adverse variations in
quarterly operating results.

<TABLE>
The following table presents unaudited quarterly operating results for the
Company for each of the eleven most recent fiscal quarters in the period ended
March 31, 1996. In the opinion of the Company, this information has been
prepared on the same basis as the consolidated financial statements appearing
elsewhere in this Prospectus and reflects all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of results for
operations for those periods. This quarterly financial data should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The operating results for any quarter
are not necessarily indicative of the results of any future period.

<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1993 1993 1994 1994 1994 1994 1995
--------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue...................... $12,880 $14,914 $15,036 $15,172 $13,176 $14,281 $ 14,824
------- ------- ------- ------- ------- ------- --------
Costs and expenses:
Direct costs................... 8,801 9,639 9,581 10,223 10,573 10,000 10,230
Selling, general and
administrative............... 3,112 3,383 3,286 3,850 3,384 3,099 3,279
Depreciation and
amortization................. 599 638 618 580 668 709 432
Impairment of long-lived
assets....................... -- -- -- -- -- -- 11,253
------- ------- ------- ------- ------- ------- --------
Total costs and
expenses............. 12,512 13,660 13,485 14,653 14,625 13,808 25,194
------- ------- ------- ------- ------- ------- --------
Income (loss) from operations.... $ 368 $ 1,254 $ 1,551 $ 519 $(1,449) $ 473 $(10,370)
======= ======= ======= ======= ======= ======= ========
Net income (loss)................ $ 726 $ 725 $ 877 $ 95 $ (971) $ 295 $(10,637)
======= ======= ======= ======= ======= ======= ========
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1995 1995 1995 1996
-------- --------- ------- --------

<S> <C> <C> <C> <C>
Net revenue...................... $16,292 $17,973 $20,616 $22,507
------- ------- ------- -------
Costs and expenses:
Direct costs................... 11,337 12,465 14,409 15,154
Selling, general and
administrative............... 3,532 3,834 4,244 5,001
Depreciation and
amortization................. 442 515 518 616
Impairment of long-lived
assets....................... -- -- -- --
-------- -------- -------- --------
Total costs and
expenses............. 15,311 16,814 19,171 20,771
-------- -------- -------- --------
Income (loss) from operations.... $ 981 $ 1,159 $ 1,445 $ 1,736
======= ======= ======= =======
Net income (loss)................ $ 683 $ 742 $ 956 $ 1,297
</TABLE>

Liquidity and Capital Resources

Since its inception, the Company has primarily financed its operations and
growth, including acquisitions, with cash flow from operations and the proceeds
from the sale of equity securities. Investing activities have included several
business acquisitions and capital expenditures have been primarily incurred for
information systems improvements and upgrades.

The Company's clinical research and development contracts are generally
fixed price with some variable components, and range in duration from a few
months to several years. The cash flows from contracts typically consists of a
down payment required to be paid at the time the contract is entered into and
the balance in installments over the contract's duration, in some cases on a
milestone achievement basis. Revenue from contracts is generally recognized on a
percentage completion basis as the work is performed. Accordingly, cash receipts
do not necessarily correspond to costs incurred and revenue recognized on
contracts. The Company's cash flow is influenced by the changes in levels of
billed and unbilled accounts receivable, net of amounts

19
<PAGE> 21

advance billed representing unearned revenue. As a result, the number of days
outstanding in accounts receivable, net of advance billing, and the related
dollar values of these accounts can vary due to the achievement of contractual
milestones and the timing and size of cash receipts. The number of days revenue
outstanding, net of advance billings, was 33 days at March 31, 1996, 44 days at
December 31, 1995, 51 days at September 30, 1995 and 41 days at June 30, 1995.
Accounts receivable, net of the allowance for doubtful accounts, increased from
$24.7 million at June 30, 1995 to $35.2 million at March 31, 1996. Advance
billings increased from $14.0 million at June 30, 1995 to $23.2 million at March
31, 1996 due to increased amounts billed to clients in advance of revenue
earned.

Unrestricted cash and cash equivalents decreased by $2.6 million during the
nine months ended March 31, 1996 as a result of $5.2 million and $37.5 million
in cash provided by operating and financing activities, respectively, offset by
$45.2 million in cash used for investing activities. Net cash provided by
operating activities resulted primarily from net income, excluding non-cash
expenses, of $4.6 million and increases in advance billings, accounts payable
and other current liabilities of $9.5 million, $900,000 and $2.9 million,
respectively. Cash used by operating activities included an increase in billed
and unbilled accounts receivable of $11.1 million. Financing activities
consisted primarily of net proceeds of approximately $21.2 million from the
Company's initial public offering of 1,600,000 shares of common stock in
November 1995, and net proceeds of approximately $15.7 million from the
Company's secondary public offering of 500,000 shares of common stock in March
1996. Investing activities consisted of net purchases of short-term investments
of $43.1 million and $2.2 million in capital expenditures. Capital expenditures
primarily relate to information system additions and upgrades.

Unrestricted cash and cash equivalents increased by $2.9 million during
fiscal 1995 as a result of $5.7 million provided by operating activities, offset
by approximately $2.3 million and $629,000 in cash used by investing and net
financing activities, respectively. The cash provided by the Company's operating
activities during fiscal 1995 was provided primarily from an increase in advance
contract billings. See Note 2 of Notes to Consolidated Financial Statements.
Investing activities in fiscal 1995 consisted primarily of capital expenditures
of $1.5 million and net purchases of short-term investments of $800,000.
Financing activities primarily involved the reduction of $684,000 in the
principal portion of long-term debt (capital leases).

Accounts receivable, net of the allowance for doubtful accounts, increased
from $23.3 million at June 30, 1994 to $24.7 million at June 30, 1995 primarily
due to a weaker dollar offset by an increase in the allowance for doubtful
accounts related to an increase in accounts for which collection was uncertain
at June 30, 1995. Advance billings increased from $9.4 million at June 30, 1994
to $14.0 million at June 30, 1995 due to an increase in amounts billed to
clients in advance of revenue being earned. The number of days revenue
outstanding in accounts receivable, net of advance billings, was 65 days at June
30, 1994 and 41 days at June 30, 1995. This decrease was primarily due to the
increase in advance billings.

The Company has domestic and foreign line of credit arrangements with banks
totalling approximately $6.4 million. The lines are collateralized by accounts
receivable, are payable on demand and bear interest at the local bank's base
rate or money market rate, plus 1% to 3% (for interest rates ranging from 5.8%
to 9.25% at March 31, 1996). There were no borrowings outstanding under these
lines of credit at either March 31, 1996 or June 30, 1995. The lines expire at
various dates through November 1996 and are renewable.

The Company has a $2.4 million capital lease line of credit with a U.S.
bank for the financing of property and equipment. Borrowings under this line are
payable over a three year term with interest fixed at the bank's five-year U.S.
Treasury note rate plus 2.5% (for a total interest rate of approximately 8.3% at
March 31, 1996) and are included in long-term debt. This line expires on
November 30, 1996 and is renewable annually thereafter. Approximately $800,000
was available under this line at March 31, 1996. The Company's primary cash
needs on both a short-term and long-term basis are for the payment of the
salaries and fringe benefits, capital expenditures, facility-related expenses
and travel expenditures.

The Company has invested approximately $2.2 million in the nine months
ended March 31, 1996 for capital expenditures related to facility expansion and
investments in information technology, and currently expects to invest
approximately $5.0 million to $7.0 million in the next twelve months. The
Company believes that its available cash and cash equivalents, together with
cash flows from operations, borrowings under its

20
<PAGE> 22

existing lines of credit and net proceeds from the offering, will be sufficient
to meet its foreseeable cash needs. In the future, the Company will consider
acquiring businesses offering services similar or complementary to those offered
by the Company. Any such acquisitions may require additional external
financings, and the Company may from time to time seek to obtain funds from
public or private issuances of equity or debt securities. There can be no
assurance that such financings will be available on terms acceptable to the
Company. The foregoing statements include forward-looking statements which
involve risks and uncertainties. The Company's actual experience may differ
materially from that discussed above. Factors that might cause such a difference
include, but are not limited to, those discussed in "Risk Factors" as well as
future events that have the effect of reducing the Company's available cash
balances, such as unexpected operating losses or capital expenditures or cash
expenditures related to possible future acquisitions.

21
<PAGE> 23

BUSINESS

PAREXEL is a leading contract research organization ("CRO"), providing
clinical research and development services to the worldwide pharmaceutical and
biotechnology industries. The Company believes it is the fourth largest CRO,
based on estimated annual net revenue, and one of only a few CROs capable of
providing a full range of clinical services on a global basis. The Company
complements the research and development departments of pharmaceutical and
biotechnology companies by offering high quality clinical research services to
the client and reducing drug development time and cost. In addition, the
Company's integrated services and extensive information technology capabilities
coupled with its broad experience and expertise in global drug development
provide clients with a variable cost alternative to the fixed costs associated
with internal drug development. The Company offers a full complement of clinical
research and development services, including designing, initiating and
monitoring clinical trials, managing and analyzing clinical data and consulting
on regulatory affairs.

The Company, founded in 1983 as a regulatory consulting firm, has built its
business both through internal expansion and acquisitions. In 1988, the Company
acquired Consulting Statisticians Inc., a leading biostatistics and data
management provider specializing in the healthcare industry. In 1989, the
Company initiated its international expansion by acquiring the London-based
McDonnell Douglas Clinical Trials Analysis Division, a division of McDonnell
Douglas Informations Systems Ltd., which provided biostatistics and data
management services in Europe. In 1990, the Company acquired Barnett Associates,
Inc. to expand its Information Products Division, through which the Company
offers a range of specialized clinical consulting and training services and
related products. In 1991, the Company acquired AFB Arzneimittelforschung GmbH
in Berlin, a European CRO based in Berlin, with offices in Frankfurt and Paris.
The Company is headquartered in Waltham, Massachusetts and opened offices in San
Diego in 1990, Raleigh-Durham in 1994, Milan, Kobe, Japan and Sydney, Australia
in 1995 and Madrid in 1996.

INDUSTRY OVERVIEW

The CRO industry provides independent product development services for the
pharmaceutical and biotechnology industries. Generally, CROs derive
substantially all of their revenue from the research and development
expenditures of pharmaceutical and biotechnology companies. The CRO industry has
evolved from providing limited clinical services in the 1970s to an industry
which currently offers a full range of services that encompass the clinical
research process, including pre-clinical evaluations, study design, clinical
trial management, data collection and biostatistical analysis and product
registration support. All of these services are provided in accordance with
regulations which govern clinical trials and the drug approval process.

The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to several large full-service
CROs with global operations. Although there are few barriers to entry for small,
limited-service providers, the Company believes there are significant barriers
to becoming a full-service CRO with global capabilities. Some of these barriers
include the development of broad therapeutic expertise and the infrastructure
and experience necessary to serve the global demands of clients, the ability to
simultaneously manage complex clinical trials in numerous countries, the
expertise to prepare regulatory submissions in multiple countries, and the
development and maintenance of the complex information technology systems
required to integrate these capabilities. In recent years, the CRO industry has
experienced consolidation due in part to the acquisition of smaller firms by
larger full-service CROs.

The CRO industry derives substantially all of its revenue from the
pharmaceutical and biotechnology industries. The Company believes that the
following trends will lead to further growth opportunities for full-service,
global CROs, although there can be no assurance that this growth will
materialize:

- Cost Containment Pressures. Recently, drug companies have been focusing
on more efficient ways of conducting business because of margin pressures
stemming from patent expirations, market acceptance of generic drugs and
impending regulatory pressures to reduce drug prices. The Company believes
that the pharmaceutical industry is responding by consolidating and
reducing jobs, centralizing the research and development process and
outsourcing to variable cost CROs, thereby reducing the fixed costs
associated with internal drug development. The CRO industry, by
specializing in clinical trials

22
<PAGE> 24

management, is often able to perform the needed services with a higher
level of expertise or specialization, more quickly and at a lower cost
than the client could perform the services internally. The Company
believes that some large pharmaceutical companies, rather than utilizing
multiple CRO service providers, are selecting one or two full-service,
global CROs to serve as their primary CROs.

- Globalization of Clinical Development and Regulatory
Strategy. Pharmaceutical and biotechnology companies increasingly are
attempting to maximize profits from a given drug by pursuing regulatory
approvals in multiple countries in parallel rather than sequentially, as
was the practice historically. The Company believes that the globalization
of clinical research and development activities has increased the demand
for CRO services. A pharmaceutical or biotechnology company seeking
approvals in a country in which it lacks experience or internal resources
will frequently turn to a CRO for assistance in interacting with
regulators or in organizing and conducting clinical trials. In addition, a
company may turn to a CRO in the belief that regulatory authorities who
are not familiar with the company may have more confidence in the results
from tests independently conducted by a CRO known to those authorities.

- Consolidation in the Pharmaceutical Industry. The pharmaceutical
industry is consolidating as pharmaceutical companies seek to obtain cost
reduction synergies through business combinations. Recent announced
consolidations include some of the largest multinational pharmaceutical
companies in the world, such as Glaxo-Wellcome, American Home
Products-American Cyanamid, Hoechst-Marion Merrill Dow, Upjohn-Pharmacia
and Roche-Syntex. Once consolidated, many pharmaceutical companies
aggressively manage costs by reducing headcount and outsourcing to
variable-cost CROs in an effort to reduce the fixed costs associated with
internal drug development. The Company believes that full-service global
CROs will benefit from this trend.

- Increasingly Complex and Stringent Regulation; Need for Technological
Capabilities. Increasingly complex and stringent regulatory requirements
throughout the world have increased the volume of data required for
regulatory filings and escalated the demands on data collection and
analysis during the drug development process. In recent years, the FDA and
corresponding regulatory agencies of Canada, Japan and Western Europe
commenced discussions to develop harmonized standards for preclinical and
clinical studies and the format and content of applications for new drug
approvals. Further, the FDA encourages the use of computer-assisted
filings in an effort to expedite the approval process. As regulatory
requirements have become more complex, the pharmaceutical and
biotechnology industries are increasingly outsourcing to CROs to take
advantage of their data management expertise, technological capabilities
and global presence.

- Drug Development Pressures. The Company believes that research and
development expenditures have increased as a result of the constant
pressure to develop a pipeline of products, and to respond to the demand
for products for an aging population and for the treatment of chronic
disorders and life-threatening conditions such as infectious diseases,
including AIDS. The development of therapies for chronic disorders, such
as Alzheimer's disease and arthritis, requires complex clinical trials to
demonstrate the therapy's effectiveness and determine whether the drug
causes any long-term side effects.

- Biotechnology Industry Growth. The U.S. biotechnology industry has grown
rapidly over the last ten years and is introducing significant numbers of
new drug candidates which will require regulatory approval. Many
biotechnology companies do not have the necessary experience or resources
to conduct clinical trials. Accordingly, many of these companies have
chosen to outsource to CROs rather than expend significant time and
resources to develop an internal clinical development capability. In
addition, as a result of recent product development setbacks encountered
by some biotechnology companies, the Company believes that such companies
are increasingly turning to CROs for sophisticated regulatory experience.
Moreover, the biotechnology industry is rapidly expanding into and within
Europe, providing significant growth opportunities for CROs with a global
presence.

23
<PAGE> 25

PAREXEL'S STRATEGY

PAREXEL's objective is to maintain and enhance its position as a leading
CRO by providing a full range of clinical services on a global basis. The
Company addresses all aspects of clinical research and development with a
flexible approach that allows its clients to use the Company's services on an
individual or bundled basis. The Company believes its expertise in conducting
scientifically demanding trials and its ability to coordinate complicated global
trials are significant competitive strengths. The Company has recently devoted
significant resources developing a state of the art information system designed
to allow the Company to more effectively manage its business operations and
deliver services to its clients. The Company will continue to invest in
improvements in information technology and will consider acquisitions of
complementary businesses in order to enhance its competitive position and its
level of service.

Serve the Global Model of New Drug Development

The Company believes that its ability to conduct clinical trials worldwide
enhances its ability to serve the increasingly global model of drug development.
The Company has provided clinical research and development services to major
North American, European and Japanese pharmaceutical companies. The Company has
expanded geographically primarily through internal growth, supplemented by
strategic acquisitions, with a goal of serving all major client markets
worldwide and positioning the Company to serve developing markets. Since January
1, 1994, the Company has opened offices in Kobe, Milan, Raleigh-Durham, Sydney,
Australia and Madrid. PAREXEL is conducting a number of multinational clinical
studies designed to pursue concurrent regulatory approvals in multiple
countries. The Company believes that the expertise developed by conducting
multi-jurisdictional clinical trials is a competitive advantage as
pharmaceutical companies increasingly pursue regulatory approvals in multiple
jurisdictions in parallel.

The Company believes that the efficient delivery of high-quality clinical
services requires adherence to standardized procedures on a worldwide basis. The
Company has devoted considerable resources to developing internal standard
operating procedures. These procedures, together with the Company's information
technology, enable the Company to reduce the time involved in preparing
regulatory submissions by concurrently compiling and analyzing large volumes of
data from multinational trials and preparing regulatory submissions for filings
on a global basis.

Address All Aspects of Clinical Research; Offer Flexible Menu of Services

The Company offers a full range of services that encompasses the clinical
research process. The Company believes that its knowledge and experience in all
stages of clinical research enhance its credibility with prospective clients.
The Company's full range of services and global experience complement the
research and development departments of pharmaceutical and biotechnology
companies. In order to meet the needs of specific clients, PAREXEL offers its
services on either an individual or a bundled basis. This approach allows the
Company to establish a relationship with a new client with the need for a
particular service which may in turn lead to larger, more comprehensive
projects. This flexibility allows PAREXEL to deliver its services by operating
autonomously or by working in close collaboration with its clients. In some
cases, the Company has taken advantage of the flexibility of its information
technology systems to gain direct access to client data on client systems. In
addition, the Company provides regulatory periodicals, training materials and
seminars and other complementary information products and services designed to
meet its clients' demands for increased productivity in clinical development.

Conduct Scientifically Demanding Trials

The Company provides its services in connection with scientifically and
clinically demanding trials in a wide range of therapeutic areas, such as trials
involving the testing of drugs developed by biotechnology companies and drugs
addressing complex diseases such as AIDS, cancer and Alzheimer's. The Company's
leadership in AIDS is evidenced by the selection of PAREXEL as the CRO for the
Intercompany Collaborative for AIDS Drug Development, a consortium including 18
global leaders in AIDS research. Other therapeutic categories in which the
Company has expertise include neurology, oncology, gastroenterology,

24
<PAGE> 26

endocrinology, cardiology, hematology, immunology, rheumatology and the study of
pulmonary, reproductive and infectious diseases. The Company believes that as
trials involve increasingly complex therapeutic areas, CROs with a broad range
of experience have a competitive advantage over other companies with more
limited capabilities.

Continue Investment in Information Technology

The Company believes that superior information technology is essential to
enable a CRO to provide project services concurrently in multiple countries,
expand its geographic operations to meet the global needs of the pharmaceutical
and biotechnology industries and provide innovative services designed to
expedite the clinical trials process. The Company has an extensive and effective
global information technology network and believes that its information
technology provides it with a significant competitive advantage. The Company's
information technology supports its global organizational structure by enabling
all offices to exchange information with each other so that several offices
worldwide can work simultaneously on a project. The global information
technology network also allows the Company to track the progress of ongoing
client projects and predict more accurately and quickly its future personnel
needs to meet client contract commitments. In addition, the Company's open and
flexible information technology system can be adapted to the multiple needs of
different clients and regulatory systems. For example, the system enables the
Company to reduce the time involved in preparing regulatory submissions by
concurrently compiling and analyzing large volumes of data from multinational
trials and preparing regulatory submissions for filings on a global basis. This
system also enables the Company to respond quickly to client inquires on the
progress of projects and, in some cases, to gain direct access to client data on
client systems.

SERVICES

The Company provides a full range of clinical research and development
services, including clinical trials management, clinical data management,
biostatistical analysis, study design and regulatory affairs services, including
product registrations with regulatory authorities for its clients. The Company
provides services individually or as an integrated package of two or more
services. The Company's full range of services and global experience complement
the research and development departments of the Company's clients. In addition,
the Company's Information Products Division ("IPD") offers specialized clinical
consulting and training services and related products.

Clinical Trials Management Services

PAREXEL offers complete services for the design, initiation and management
of clinical trial programs, a critical element in obtaining regulatory approval
for drugs. The Company has performed services in connection with trials in most
therapeutic areas, including neurology, oncology, gastroenterology,
endocrinology, cardiology, hematology, immunology, rheumatology and the study of
pulmonary, reproductive and infectious diseases. PAREXEL's multi-disciplinary
clinical trials group examines a product's existing preclinical and clinical
data to design clinical trials to provide evidence of the product's safety and
efficacy.

PAREXEL can manage every aspect of clinical trials, including design,
placement, initiation, monitoring, report preparation and strategy development.
See "Government Regulation -- New Drug Development-An Overview." Most of the
Company's clinical trials management projects involve Phase II or III clinical
trials, which are generally much larger and more complex than Phase I trials.

Clinical trials are monitored for and with strict adherence to good
clinical practices ("GCP"). The design of efficient Case Report Forms ("CRF"),
detailed operations manuals and site visits by PAREXEL's clinical research
associates ensure that clinical investigators and their staffs follow the
established protocols of the studies. The Company has adopted standard operating
procedures which are intended to satisfy regulatory requirements and serve as a
tool for controlling and enhancing the quality of PAREXEL's worldwide clinical
services.

Clinical trials represent one of the most expensive and time-consuming
parts of the overall drug development process. The information generated during
these trials is critical for gaining marketing approval

25
<PAGE> 27

from the FDA or other regulatory agencies. PAREXEL's clinical trials management
group assists clients with one or more of the following steps:

- Study Protocol Design. The protocol defines the medical issues the study
seeks to examine and the statistical tests that will be conducted.
Accordingly, the protocol defines the frequency and type of laboratory and
clinical measures that are to be tracked and analyzed. The protocol also
defines the number of patients required to produce a statistically valid
result, the period of time over which they must be tracked and the
frequency and dosage of drug administration. The study's success depends
on the protocol's ability to predict correctly the requirements of the
regulatory authority.

- Case Report Forms Design. Once the study protocol has been finalized,
CRFs must be developed. The CRF may change at different stages of a trial.
The CRFs for one patient in a given study may consist of 100 or more
pages.

- Site and Investigator Recruitment. The drug is administered to patients
by physicians, referred to as investigators, at hospitals, clinics or
other locations, referred to as sites. Potential investigators may be
identified by the drug sponsor or the CRO. The CRO generally solicits the
investigators' participation in the study. The trial's success depends on
the successful identification and recruitment of investigators with an
adequate base of patients who satisfy the requirements of the study
protocol. The Company has access to several thousand investigators who
have conducted clinical trials for the Company.

- Patient Enrollment. The investigators find and enroll patients suitable
for the study. The speed with which trials can be completed is
significantly affected by the rate at which patients are enrolled.
Prospective patients are required to review information about the drug and
its possible side effects, and sign an informed consent form to record
their knowledge and acceptance of potential side effects. Patients also
undergo a medical examination to determine whether they meet the
requirements of the study protocol. Patients then receive the drug and are
examined by the investigator as specified by the study protocol.

- Study Monitoring and Data Collection. As patients are examined and tests
are conducted in accordance with the study protocol, data are recorded on
CRFs and laboratory reports. The data are collected from study sites by
specially trained persons known as monitors. Monitors visit sites
regularly to ensure that the CRFs are completed correctly and that all
data specified in the protocol are collected. The monitors take completed
CRFs to the study coordinating site, where the CRFs are reviewed for
consistency and accuracy before their data is entered into an electronic
database. The Company's study monitoring and data collection services
comply with the FDA's adverse events reporting guidelines.

- Report Writing. The findings of statistical analysis of data collected
during the trial together with other clinical data are included in a final
report generated for inclusion in a regulatory document.

- Medical Services. Throughout the course of a clinical trial, PAREXEL's
physicians can provide a wide range of medical research and consulting
services, including medical monitoring of clinical trials.

Clinical Data Management and Biostatistical Services

PAREXEL's data management professionals assist in the design of CRFs, as
well as training manuals for investigators, to ensure that data are collected in
an organized and consistent format. Databases are designed according to the
analytical specifications of the project and the particular needs of the client.
Prior to data entry, PAREXEL personnel screen the data to detect errors,
omissions and other deficiencies in completed CRFs. The Company provides clients
with data abstraction, data review and coding, data entry, database verification
and editing and problem data resolution.

The Company has extensive experience in the United States and Europe in the
creation of scientific databases for all phases of the drug development process,
including the creation of customized databases to meet client-specific formats,
integrated databases to support New Drug Application submissions and

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databases in strict accordance with FDA and European specifications. For
example, the Company recently completed, in support of a New Drug Application
filing, an expanded access program with over 2,000 investigators enrolling over
11,000 patients at sites located in 26 countries, including 17 in Europe, five
in South America, two in Central America, the United States and Australia. Over
300,000 pages of CRF data were collected from these sites and merged into one
integrated database.

PAREXEL's biostatistics professionals assist clients with all phases of
drug development, including biostatistical consulting, database design, data
analysis and statistical reporting. These professionals develop and review
protocols, design appropriate analysis plans and design report formats to
address the objectives of the study protocol as well as the client's individual
objectives. Working with the programming staff, biostatisticians perform
appropriate analyses and produce tables, graphs, listings and other applicable
displays of results according to the analysis plan. Frequently, biostatisticians
represent clients during panel hearings at the FDA.

Regulatory Affairs Services

PAREXEL provides comprehensive regulatory product registration services for
pharmaceutical and biotechnology products in major jurisdictions in Europe and
North America, including regulatory strategy formulation, document preparation
and liaison with the FDA and other regulatory agencies. In addition, the Company
provides the services of qualified experts to assist with good manufacturing
practices ("GMP") compliance in existing manufacturing plants and to assure that
new facilities are built to conform to GMP. PAREXEL's staff provides on-site GMP
training sessions and conducts internal and external quality control and quality
assurance audits.

PAREXEL works closely with clients to devise regulatory strategies and
comprehensive product development programs. The Company's regulatory affairs
experts review existing published literature, assess the scientific background
of a product, assess the competitive and regulatory environment, identify
deficiencies and define the steps necessary to obtain registration in the most
expeditious manner. Through this service, the Company helps its clients
determine the feasibility of developing a particular product or product line.

Information Products Division

The Company's Information Products Division offers a range of specialized
clinical consulting and training services and related products through Barnett
International Corporation, a subsidiary of the Company, and through IPD's
publications group. Barnett International Corporation is a leader in providing
training, conferences, education and management consulting services to the
worldwide clinical research community, with extensive experience in organization
structure, curriculum design and human resource management in clinical research.
The publications group produces several publications covering regulatory issues,
including the monthly U.S. Regulatory Reporter (launched in 1984), books such as
New Drug Development: A Regulatory Overview and Biologics Development: A
Regulatory Overview, and reports such as CANDA: A Regulatory, Technology, and
Strategy Report and GCPs in the U.S., E.C., and Nordic Council: An International
Comparative Report.

INFORMATION SYSTEMS

The Company is committed to investing in information technology designed to
help the Company provide high quality services in a cost effective manner and to
manage its internal resources. The Company believes it is one of a few CROs that
has an extensive and effective global information technology network. The
Company has built on its network by developing a number of proprietary
information systems that address critical aspects of its business. These systems
track all aspects of the Company's projects utilizing:

- PROGEN(TM) -- A dynamic proposal and budget generation system first
developed and implemented globally in fiscal 1991. PROGEN generates
accurate and timely resource budgets in response to client requests for
proposals and also enables the Company to efficiently project staffing
requirements.

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<PAGE> 29

- TIMS(TM) -- An on-line time information management system, implemented in
North America in January 1994 and globally in January 1995. TIMS records
and tracks all hours spent by employees and enables managers to compare
such information with the PROGEN resource budget.

- FORE(TM) -- An on-line revenue and resource forecasting system
implemented in January 1995 in North America and in June 1995 in Europe.
FORE tracks actual resource utilization for and progress of client
projects and allows management to efficiently deploy future resources to
match the progress of each project.

- CIMS(TM) -- An on-line clinical information management system introduced
in fiscal 1993 in North America and in fiscal 1995 in Europe. CIMS allows
each clinical project manager to monitor and control the progress of an
entire clinical trial, including providing real-time access to information
on site recruitment, tracking of patient information, monitor information,
investigator payments and drug shipments, as well as participate in a
Company-wide integrated reporting system.

- DEMS(TM) -- A flexible, multi-user clinical trials data-entry and data
management system implemented in March 1995 in North America and August
1995 in Europe. DEMS encompasses data-entry, verification and validation
and provides for real-time CRF tracking and coding of clinical data and
promotes standardization of clinical data management processes at all of
the Company's worldwide locations.

Although the Company began to implement its information systems in 1990,
the Company's current information systems were not completely adopted until
fiscal 1995. The Company's information systems group has 45 employees
responsible for technology procurement, applications development and management
of the Company's worldwide computer network. The wide area network links ten
local area networks, interconnecting approximately 1,300 computers worldwide.
The Company's information systems are designed to work in support of and
reinforce the Company's standard operating procedures. The Company's information
technology system is open and flexible, allowing it to be adapted to the
multiple needs of different clients and regulatory systems. This system also
enables the Company to respond quickly to client inquiries on the progress of
projects and, in some cases, to gain direct access to client data on client
systems.

SALES AND MARKETING

PAREXEL's marketing strategy is to focus on prospective clients whose
clinical development projects are large and complex and to develop close
relationships with key decision-makers throughout its clients' drug development
organizations. The Company's client relations professionals, senior executives
and project team leaders all share responsibility for the maintenance of key
client relationships and business development activities. The Company believes
that its emphasis on developing close relationships with its clients leaves it
well positioned to benefit from the trend among pharmaceutical companies to
concentrate their outsourcing among fewer CROs. The Company's core marketing
activities are complemented by the industry conferences and publications offered
by the Company's IPD. Although the IPD activities are conducted as independent
business activities, the Company believes that the IPD offerings enhance the
Company's market position in the drug development community.

The Company's marketing activities are coordinated by PAREXEL's client
service executives in each of the Company's U.S. locations as well as the
Company's locations in France, Germany, Italy, Japan and the United Kingdom.
Most of the Company's business development personnel have technical or
scientific backgrounds and many are physicians, pharmacologists, statisticians
and regulatory affairs professionals. The Company coordinates its worldwide
marketing efforts through a computerized system that is integrated into each of
the Company's locations.

CLIENTS

PAREXEL has served most of the leading U.S., European and Japanese
pharmaceutical companies. PAREXEL's clients also include companies which develop
biotechnology and other emerging technologies.

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The Company has in the past derived, and may in the future derive, a
significant portion of its net revenue from a relatively limited number of major
projects or clients. Concentrations of business in the CRO industry are not
uncommon and the Company is likely to experience such concentration in fiscal
1996 and in future years. In fiscal 1993, two clients accounted for
approximately 12.9% and 11.3%, respectively, of the Company's consolidated net
revenue. In fiscal 1994 and 1995 and the nine months ended March 31, 1996, no
single customer accounted for more than 10% of consolidated net revenue. In
fiscal 1993, 1994 and 1995 and the nine months ended March 31, 1996, the
Company's top five customers accounted for 44.4%, 29.8%, 25.2% and 26.2%,
respectively, of the Company's consolidated net revenue. The loss of business
from a significant client could materially and adversely affect the Company's
net revenue.

COMPETITION

The Company primarily competes against in-house departments of
pharmaceutical companies, full service CROs, and, to a lesser extent,
universities and teaching hospitals. Some of these competitors have
substantially greater capital, technical and other resources than the Company.
CROs generally compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, the quality of contract
research, the ability to organize and manage large-scale trials on a global
basis, the ability to manage large and complex medical databases, the ability to
provide statistical and regulatory services, the ability to recruit
investigators, the ability to integrate information technology with systems to
improve the efficiency of contract research, an international presence with
strategically located facilities, financial viability and price. PAREXEL
believes that it competes favorably in these areas.

The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to several large, full-service
CROs with global operations. PAREXEL believes that it is the fourth largest
full-service CRO, based on estimated annual net revenue. The three largest CROs
are Corning Lab Services, Inc., a subsidiary of Corning, Inc., Applied
Bioscience International, Inc. and Quintiles Transnational Corporation. In
addition, the fifth largest CRO is ClinTrials Research, Inc. The trend toward
CRO industry consolidation has resulted in heightened competition among the
larger CROs for clients and acquisition candidates. In addition, consolidation
within the pharmaceutical industry as well as a trend toward the concentration
by pharmaceutical companies of outsourcing among fewer CROs has led to
heightened competition for CRO contracts.

GOVERNMENT REGULATION

New Drug Development -- An Overview

Before a new drug may be marketed in North America or Europe, the drug must
undergo extensive testing and regulatory review in order to determine that the
drug is safe and effective. The stages of this development process are as
follows:

- Preclinical Research (1 to 3.5 years). In vitro ("test tube") and animal
studies to establish the relative toxicity of the drug over a wide range
of doses and to detect any potential to cause birth defects or cancer. If
results warrant continuing development of the drug, the manufacturer will
file for an IND (Investigational New Drug Application), upon which the FDA
may grant permission to begin human trials.

- Clinical Trials (3.5 to 6 years)

- Phase I (6 months to 1 year). Basic safety and pharmacology testing
in 20 to 80 human subjects, usually healthy volunteers, includes
studies to determine how the drug works, how it is affected by other
drugs, where it goes in the body, how long it remains active, and how
it is broken down and eliminated from the body.

- Phase II (1 to 2 years). Basic efficacy (effectiveness) and
dose-range testing in 100 to 200 afflicted volunteers to help determine
the best effective dose, confirm that the drug works as expected, and
provide additional safety data.

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<PAGE> 31

- Phase III (2 to 3 years). Efficacy and safety studies in hundreds or
thousands of patients at many investigational sites (hospitals and
clinics) can be placebo-controlled trials, in which the new drug is
compared with a "sugar pill," or studies comparing the new drug with
one or more drugs with established safety and efficacy profiles in the
same therapeutic category.

- TIND (May span late Phase II, Phase III, and FDA review). When results
from Phase II or Phase III show special promise in the treatment of a
serious condition for which existing therapeutic options are limited or of
minimal value, the FDA may allow the manufacturer to make the new drug
available to a larger number of patients through the regulated mechanism
of a TIND (Treatment Investigational New Drug). Although less
scientifically rigorous than a controlled clinical trial, a TIND may
enroll and collect a substantial amount of data from tens of thousands of
patients.

- NDA Preparation and Submission. Upon completion of Phase III trials, the
manufacturer assembles the statistically analyzed data from all phases of
development into a single large document, the New Drug Application (NDA),
which today comprises, on average, roughly 100,000 pages.

- FDA Review & Approval (1 to 1.5 years). Careful scrutiny of data from
all phases of development (including a TIND) to confirm that the
manufacturer has complied with regulations and that the drug is safe and
effective from the specific use (or "indication") under study.

- Post-Marketing Surveillance and Phase IV Studies. Federal regulation
requires the manufacturer to collect and periodically report to FDA
additional safety and efficacy data on the drug for as long as the
manufacturer markets the drug (post-marketing surveillance). If the drug
is marketed outside the U.S., these reports must include data from all
countries in which the drug is sold. Additional studies (Phase IV) may be
undertaken after initial approval to find new uses for the drug, to test
new dosage formulations, or to confirm selected non-clinical benefits,
e.g., increased cost-effectiveness or improved quality of life.

The FDA's regulatory requirements have served as the model for much of the
regulation for new drug development worldwide. As a result, similar regulatory
requirements exist in the other countries in which the Company operates. The
Company's regulatory capabilities include knowledge of the specific regulatory
requirements in various countries, and the Company has managed simultaneous
regulatory submissions in more than one country for a number of drug sponsors.
Beginning in 1991, the FDA and corresponding regulatory agencies of Canada,
Japan and Western Europe commenced discussions to develop harmonized standards
for preclinical and clinical studies and the format and content of applications
for new drug approvals. Data from multinational studies adhering to GCP are now
generally acceptable to the FDA, Canadian and Western European regulators.

The clinical investigation of new drugs is highly regulated by government
agencies. The standard for the conduct of clinical research and development
studies comprises GCP, which stipulates procedures designed to ensure the
quality and integrity of data obtained from clinical testing and to protect the
rights and safety of clinical subjects. While GCP has not been formally adopted
by the FDA nor, with certain exceptions, by similar regulatory authorities in
other countries, some provisions of GCP have been included in regulations
adopted by the FDA. Furthermore, in practice, the FDA and many other regulatory
authorities require that study results submitted to such authorities be based on
studies conducted in accordance with GCP.

The services provided by PAREXEL are ultimately subject to FDA regulation
in the U.S. and comparable agencies in other countries. The Company is obligated
to comply with FDA requirements governing such activities as obtaining patient
informed consents, verifying qualifications of investigators, reporting
patients' adverse reactions to drugs and maintaining thorough and accurate
records. The Company must maintain source documents for each study for specified
periods, and such documents may be reviewed by the study sponsor and the FDA
during audits. Non-compliance with GCP can result in the disqualification of
data collected during a clinical trial.

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POTENTIAL LIABILITY AND INSURANCE

PAREXEL's clinical research services center on the testing of new drugs on
human volunteers pursuant to a study protocol. Clinical research involves a risk
of liability for personal injury or death to patients due, among other reasons,
to possible unforeseen adverse side effects or improper administration of the
new drug. Many of these patients are already seriously ill and are at risk of
further illness or death. The Company has not experienced any claims to date
arising out of any clinical trial managed or monitored by it.

The Company believes that the risk of liability to patients in clinical
trials is mitigated by various regulatory requirements, including the role of
institutional review boards ("IRBs") and the need to obtain each patient's
informed consent. The FDA requires each human clinical trial to be reviewed and
approved by the IRB at each study site. An IRB is an independent committee that
includes both medical and non-medical personnel and is obligated to protect the
interests of patients enrolled in the trial. After the trial begins, the IRB
monitors the protocol and measures designed to protect patients, such as the
requirement to obtain informed consent.

To reduce its potential liability, PAREXEL seeks to obtain indemnity
provisions in its contracts with clients and with investigators hired by the
Company on behalf of its clients. These indemnities generally do not, however,
protect PAREXEL against certain of its own actions such as those involving
negligence. Moreover, these indemnities are contractual arrangements that are
subject to negotiation with individual clients, and the terms and scope of such
indemnities can vary from client to client and from study to study. Finally, the
financial performance of these indemnities is not secured, so that the Company
bears the risk that an indemnifying party may not have the financial ability to
fulfill its indemnification obligations. PAREXEL could be materially and
adversely affected if it were required to pay damages or incur defense costs in
connection with a claim that is outside the scope of an indemnity or where the
indemnity, although applicable, is not performed in accordance with its terms.

The Company currently maintains an errors and omissions professional
liability insurance policy. There can be no assurance that this insurance
coverage will be adequate, or that insurance coverage will continue to be
available on terms acceptable to the Company.

INTELLECTUAL PROPERTY

The Company believes that factors such as its ability to attract and retain
highly-skilled professional and technical employees and its project management
skills and experience are significantly more important to its business than are
any intellectual property rights developed by it. PAREXEL has developed certain
computer software and related methodologies that the Company has sought to
protect through a combination of contracts, copyrights and trade secrets;
however, the Company does not consider the loss of exclusive rights to any of
this software or methodology to be material to the Company's business.

EMPLOYEES

As of March 31, 1996, the Company had approximately 1,150 employees, of
which over 100 hold Ph.D. or M.D. degrees and over 225 others hold masters
degrees. Approximately 62% of the full-time employees are located in North
America and 37% are located in Europe. The Company believes that its relations
with its employees are good.

The success of the Company's business depends on its ability to attract and
retain a qualified professional, scientific and technical staff. The level of
competition among employers for skilled personnel, particularly those with
Ph.D., M.D. or equivalent degrees, is high. The Company believes that its
multinational presence, which allows for international transfers, is an
advantage in attracting employees. In addition, the Company believes that the
wide range of clinical trials in which it participates allows the Company to
offer a broad experience to clinical researchers. While the Company has not
experienced any significant difficulties in attracting or retaining qualified
staff to date, there can be no assurance the Company will be able to avoid such
difficulties in the future.

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FACILITIES

PAREXEL leases all of its facilities. The Company's principal executive
offices are located in Waltham, Massachusetts, where it leases approximately
83,000 square feet under leases that expire in August 2001. The Company also
maintains North American offices in Philadelphia, Raleigh-Durham and San Diego.
The Company's European subsidiaries maintain offices in Berlin, Frankfurt,
London, Milan, Paris and Madrid. The Company's Japanese subsidiary is located in
Kobe. The Company's Australian subsidiary is located in Sydney.

LEGAL PROCEEDINGS

The Company is a defendant in a proceeding initiated by a former
shareholder of a business which was subsequently acquired by the Company
captioned Tallon v. Harwood, Barnett, Barnett Associates, Inc. and PAREXEL
International Corporation, 92-3496. The proceeding was filed on March 3, 1992 in
the Court of Common Pleas, Delaware County, Pennsylvania. The plaintiff, whose
shares were acquired by the other two shareholders of the acquired business
approximately three months prior to the acquisition of the business by PAREXEL,
is seeking unspecified monetary damages based on a claim that his shares were
purchased at an unfairly low price. The Company has filed an answer specifically
denying the material allegations raised in the plaintiff's complaint and raising
various affirmative defenses. The Company believes that resolution of this
matter will not have a material adverse effect on the financial position,
results of operations or business of the Company.

The Company is not a party to, and is not aware of, any proceeding
involving any material claims arising out of any clinical trial that it managed
or monitored.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITIONS
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Josef H. von Rickenbach................ 41 President, Chief Executive Officer,
Chairman of the Board and Director
William T. Sobo, Jr. .................. 39 Senior Vice President, Chief Financial
Officer, Treasurer and Clerk
Barry R. Philpott...................... 47 President, European Operations
Veronica G.H. Jordan, Ph.D. ........... 46 Senior Vice President
John G. Lee, Ph.D. .................... 62 Senior Vice President
R. Adrian Otte, M.D. .................. 40 Senior Vice President
Taylor J. Crouch....................... 36 Senior Vice President
Paule Dapres, M.D. .................... 51 Senior Vice President
A. Dana Callow, Jr.(1)(2)(3)........... 44 Director
Patrick J. Fortune(1).................. 49 Director
Prof. Dr. med. Werner M. Herrmann...... 55 Director and Chief Scientific Officer
Peter Barton Hutt...................... 61 Director
James A. Saalfield(2)(3)............... 49 Director
</TABLE>

- ---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
(3) Member of Stock Option Committee.

JOSEF H. VON RICKENBACH co-founded PAREXEL in 1983 and has served as a
director since then. Prior to his involvement with PAREXEL, he was European Area
Manager with ERCO (now ENSECO), Inc., a diversified testing and technical
consulting company. Mr. von Rickenbach has worked for Schering-Plough, Inc., and
3M (East), a division of Minnesota Mining and Manufacturing, Inc. Mr. von
Rickenbach received an M.B.A. from the Harvard University Graduate School of
Business Administration and has an undergraduate degree from the Lucerne College
of Economics and Administration.

WILLIAM T. SOBO, JR. is responsible for all financial and administrative
activities of the Company. Prior to joining PAREXEL in 1987, Mr. Sobo was a
supervisor at Coopers & Lybrand in the emerging business/ middle market group
and also served as the controller for a regional financial consulting firm. Mr.
Sobo is a Certified Public Accountant and received an M.B.A. from Boston
University and a B.S. from the Wharton School at the University of Pennsylvania.

BARRY R. PHILPOTT is responsible for the general management of PAREXEL's
European operations, based in London, England. Prior to joining PAREXEL in 1993,
Mr. Philpott served in several senior management positions with EG&G Inc., a
diversified technology company based in Massachusetts, most recently as General
Manager of its Worldwide Optical & Analytical Division. Previous to this
position he was the President and Managing Director of EG&G Applied Research
Corp.

VERONICA G.H. JORDAN, PH.D., is responsible for client relations and
marketing activities at PAREXEL. Before joining PAREXEL in 1987, Dr. Jordan was
Director of Marketing and Business Development at Biogen, Inc. Previously, Dr.
Jordan worked at Clinical Assays, a division of Baxter Travenol. Dr. Jordan has
a Ph.D. from Oxford University and a B.S. from Cambridge University.

JOHN G. LEE, PH.D., is the head of worldwide statistical activities of the
Company. Prior to joining PAREXEL in 1988, Dr. Lee worked at The Upjohn Company
for over 20 years in positions of increasing responsibility in the
biostatistical area and most recently as Director of Statistics for the Medical
Affairs Division for eight years. Dr. Lee received a Ph.D. and an M.S. from the
University of Minnesota.

R. ADRIAN OTTE, M.D., is responsible for the Company's medical monitoring
and medical writing services for ongoing clinical trials. Prior to joining
PAREXEL's operation in Germany as Vice President, Clinical

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Research Europe and General Manager of PAREXEL's Central European Region, Dr.
Otte served in several senior management positions, most recently as Head of
Clinical Research, at Duphar BV, Holland. Dr. Otte received his medical degree
at the Welsh National School of Medicine and is a Fellow of the Faculty of
Pharmaceutical Medicine.

TAYLOR J. CROUCH is responsible for the Company's client relations
activities, including proposal preparation, contract negotiations and account
management, and is responsible for the Company's worldwide marketing activities.
Prior to joining PAREXEL's operation in Germany as Vice President, Client
Relations and Marketing in 1991, Mr. Crouch served in several senior management
positions, most recently as Marketing Operations Manager, at Schering-Plough,
Inc. in Germany. Mr. Crouch received an M.B.A. from the University of Chicago.

PAULE DAPRES, M.D. is responsible for the Company's European clinical
operations. Prior to joining PAREXEL in 1992, Dr. Dapres served in several
senior management positions at Schering Plough, Inc. Dr. Dapres received her
M.D. degree from the University of Paris.

A. DANA CALLOW, JR. was elected a director of the Company in June 1986.
Since December 1982, Mr. Callow has been a general partner of the general
partner of several of Boston Capital Ventures' limited partnerships including
Boston Capital Ventures International Limited Partnership, Boston Capital
Ventures Limited Partnership, Boston Capital Ventures II Limited Partnership and
Boston Capital Ventures III, Limited Partnership. Mr. Callow is a director of a
number of privately held companies, including Tektagen Incorporated and ILEX
Oncology, Inc.

PATRICK J. FORTUNE, PH.D. was elected a director of the Company in June
1996. Mr. Fortune is Vice President, Information Technology and Chief
Information Officer of Monsanto Company. From 1994 to October 1995, Mr. Fortune
was President and Chief Operating Officer, Chief Information Officer and a
member of the Board of Directors of Coram Healthcare Corporation. From 1991 to
1994, Mr. Fortune was Corporate Vice President, Information Management at
Bristol-Myers Squibb. Prior to that, Mr. Fortune was Senior Vice President and
General Manager of Packaging Corporation of America, a subsidiary of Tenneco and
held several management positions with Baxter International Inc., including
Corporate Vice President, Vice President, Research and Development and Vice
President, Information Services. Mr. Fortune has been named as a party in four
class action or derivative lawsuits, generally alleging violations of certain
anti-fraud provisions of federal securities law, filed in late 1995 against
Coram Healthcare Corporation and its other officers and directors. These actions
are currently pending and no determination can be made regarding their outcome.

PROF. DR. MED. WERNER M. HERRMANN is Chief Scientific Officer for PAREXEL
and was elected a director of the Company in April 1991. Dr. Herrmann founded a
Berlin-based provider of clinical and biostatistical and clinical data
management services in 1982, which was acquired by PAREXEL and renamed PAREXEL
GmbH Independent Pharmaceutical Research Organization ("PAREXEL GmbH"). Prior to
1982, Dr. Herrmann was head of the Psychiatry and Neurology Branch, Department
of Experimental and Clinical Pharmacology, Institute for Drugs, Federal Health
Office, Berlin, Germany, from 1979 to 1982. Dr. Herrmann is a Full Professor at
the Department of Psychiatry, Free University of Berlin.

PETER BARTON HUTT was elected a director of the Company in March 1989. Mr.
Hutt is a partner in the Washington, D.C. law firm of Covington & Burling,
specializing in food and drug law and in government regulation of health and
safety. He is a director of several pharmaceutical and drug development
companies, including IDEC Pharmaceuticals, Inc., Emisphere Technologies, Inc.,
Interneuron Pharmaceuticals, Inc., Vivus, Inc., Sparta, Inc. and Cell Genesys,
Inc. From 1971 to 1975, Mr. Hutt was Chief Counsel for the FDA.

JAMES A. SAALFIELD was elected a director of the Company in January 1993.
Mr. Saalfield is a retired general partner of Fleet Venture Partners I, II, III
and IV and managing general partner of Dean's Hill L.P. and The Still River Fund
and President of The Still River Management Company. Mr. Saalfield served as the
senior vice president of Fleet Venture Resources, Inc. and senior vice president
of Fleet Growth Resources, Inc. from 1985 to 1993. Mr. Saalfield is a director
of a number of companies, including KVH Industries and Bioshelters.

Each director holds office until that director's successor has been duly
elected and qualified. Upon the closing of the Company's initial public
offering, the Company's Board of Directors was divided into three

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<PAGE> 36

classes, with staggered three-year terms. Messrs. Herrmann and Fortune serve in
the class whose term expires in 1996; Messrs. Saalfield and Hutt serve in the
class whose term expires in 1997; and Messrs. von Rickenbach and Callow serve in
the class whose term expires in 1998. Upon the expiration of the term of each
class of directors, persons comprising such class of persons will be elected for
a three-year term at the next succeeding annual meeting of stockholders.

Mr. Callow, a director, was granted a non-qualified option to purchase
100,000 shares of Common Stock in March 1989 at an exercise price of $0.75 per
share. This option was exercised in full in March 1994 and the shares
transferred to Boston Capital Ventures International Limited Partnership and
Boston Capital Ventures Limited Partnership. Mr. Hutt, a director, was granted a
non-qualified option to purchase 17,500 shares of Common Stock in March 1989 at
an exercise price of $0.75 per share and a non-qualified option to purchase
10,000 shares of Common Stock in March 1994 at an exercise price of $12.50 per
share. Messrs. Callow and Saalfield, current non-employee directors of the
Company, were each granted a non-qualified option to purchase 10,000 shares of
Common Stock in May 1994 at an exercise price of $12.50 per share. Mr. Hutt's
March 1994 option was initially exercisable as to 3,333 shares, with the
remaining shares vesting in two installments in March 1995 and March 1996,
subject to specified meeting attendance requirements. The May 1994 options
granted to Messrs. Callow and Saalfield become exercisable in three equal annual
installments, beginning on the first anniversary of the date of grant, subject
to specified meeting attendance requirements.

The Company's 1995 Non-Employee Director Stock Option Plan (the "Director
Plan") provides for the grant of options to purchase a maximum of 300,000 shares
of Common Stock of the Company to non-employee directors of the Company. Under
the Director Plan, each non-employee director who was a member of the Board of
Directors on the effective date of the Company's initial public offering
received options under the Director Plan. In addition, each non-employee
director first elected to the Board of Directors after the effective date of the
Company's initial public offering will receive an option for 10,000 shares on
the date of his or her election. The Director Plan further provides for an
automatic grant of an option for 10,000 shares on the first business day of July
of each year, beginning in July 1996, to each non-employee director who has
continuously served for the lesser of (i) the previous full year or (ii) since
the last annual meeting of stockholders at which directors were elected. The
exercise price per share for all options granted under the Director Plan will be
equal to the market price of the Common Stock as of the date of grant. The
options will become exercisable in three equal annual installments beginning on
the first anniversary of the date of grant, subject to specified meeting
attendance requirements. Options to purchase an aggregate of 126,500 shares of
Common Stock have been granted to date under the Director Plan. The only cash
compensation payable to non-employee directors is $1,500 per day of Board or
committee meetings (with not more than one $1,500 payment being made for any one
day). Outside directors are reimbursed for their reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors and Board
committees.

Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve until their successors have been duly elected and
qualified. There are no family relationships among any of the executive officers
or directors of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. von Rickenbach, the President, Chief Executive Officer, and Chairman of
the Company, served as a member of the Compensation Committee of the Board of
Directors until July 1, 1996.

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid or accrued by the
Company for services rendered for fiscal 1995 to each of the Company's executive
officers or former executive officers whose total salary and bonus exceeded
$100,000 during fiscal 1995. The Company did not grant any restricted stock
awards or stock appreciation rights or make any long-term incentive plan payouts
during that fiscal year. The Company does not have a defined benefit or
actuarial plan.

35
<PAGE> 37

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION COMPENSATION(2)
- --------------------------- ------ --------- ----- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Josef H. von Rickenbach............. 1995 $183,545 $ 0 $26,973(3) $ 3,450
President, Chief Executive Officer
and Chairman
Steven D. Reich, M.D.(4)............ 1995 164,822 16,666 -- 912
Senior Vice President
Barry R. Philpott................... 1995 146,300 0 -- 11,704
President, European Operations
John G. Lee, Ph. D.................. 1995 139,135 0 -- 2,964
Senior Vice President
Veronica G.H. Jordan, Ph.D.......... 1995 116,833 25,063 -- 3,446
Senior Vice President
<FN>

- ---------------

(1) Includes commissions.
(2) Contributions to defined contribution plans.
(3) Includes $11,084 automobile allowance and $15,889 related to interest on
stock subscriptions receivable.
(4) In a letter dated September 27, 1995, Dr. Reich resigned as an employee of
the Company effective December 1, 1995.
</TABLE>

OPTIONS

No options or stock appreciation rights were granted during the year ended
June 30, 1995 to the executives named in the Summary Compensation Table above.
Since June 30, 1995, options to purchase 84,000 shares have been granted to the
executives named in the Summary Compensation Table above, including options to
purchase 50,000, 15,000 and 10,000 shares to Messrs. von Rickenbach, Philpott
and Lee, respectively, and 9,000 shares to Ms. Jordan.

The following table sets forth information concerning the value of
unexercised options as of June 30, 1995 held by the executives named in the
Summary Compensation Table above. No options were exercised during the year
ended June 30, 1995 by such executives.

<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT JUNE 30, 1995 OPTIONS AT JUNE 30, 1995(1)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Josef H. von
Rickenbach............. -- -- 60,000 0 $864,000 $ 0
Steven D. Reich,
M.D.(2)................ -- -- 30,000 0 437,000 0
Barry R. Philpott........ -- -- 2,000 8,000 5,000 20,000
John G. Lee, Ph.D........ -- -- 60,000 0 864,000 0
Veronica G.H. Jordan,
Ph.D................... -- -- 10,000 0 146,500 0
<FN>

- ---------------

(1) Value based on the Company's initial public offering price per share of
$15.00.
(2) In a letter dated September 27, 1995, Dr. Reich resigned as an employee of
the Company effective December 1, 1995.
</TABLE>

In September 1995, the Company adopted its 1995 Stock Plan which provides
for the issuance of a maximum of 500,000 shares of Common Stock pursuant to the
grant of incentive stock options to officers and other employees and the grant
of non-qualified stock options or stock awards to employees, consultants,
directors and officers of the Company. Options to purchase 322,500 shares have
been granted under the 1995 Stock Plan at a weighted average exercise price of
$30.35.

In September 1995, the Company adopted its 1995 Employee Stock Purchase
Plan (the "1995 Purchase Plan") which provides for the issuance of a maximum of
300,000 shares of Common Stock pursuant to the

36
<PAGE> 38

exercise of nontransferable options granted to participating employees. All
employees of the Company, except employees who by participating would own five
percent or more of the Company's Common Stock, whose customary employment is
more than 20 hours per week and more than five months in any calendar year are
eligible to participate in the 1995 Purchase Plan. To participate in the 1995
Purchase Plan, an employee must authorize the Company to deduct an amount (not
less than one percent nor more than ten percent of a participant's total
compensation) from his or her pay during six-month periods commencing on
September 1 and March 1 of each year (each a "Plan Period"), but in no case
shall an employee be entitled to purchase more than 500 shares in any Plan
Period. The exercise price for the option for each Plan Period is 85% of the
lesser of the average market price of the Common Stock on the first or last
business day of the Plan Period. If an employee is not a participant on the last
business day of the Plan Period, such employee is not entitled to exercise his
or her option, and the amount of his or her accumulated payroll deductions will
be refunded without interest. An employee's rights under the 1995 Purchase Plan
terminate upon his or her voluntary withdrawal from the plan at any time or upon
termination of employment. As of August 14, 1996, 336 employees were enrolled in
the 1995 Purchase Plan.

EMPLOYMENT AGREEMENTS

The Company is party to an employment agreement dated July 2, 1987 with Dr.
Veronica G.H. Jordan. Currently, Dr. Jordan is paid an annual base salary of
$80,000. The employment agreement with Dr. Jordan may be terminated for cause
upon the unanimous action of the Company's Board of Directors.

The Company and Barry R. Philpott are parties to a letter agreement of
employment dated July 6, 1993. Mr. Philpott's current annual base salary is
L95,000 (approximately $150,000). The Company may terminate Mr. Philpott's
employment upon two months' notice and upon payment of severance benefits equal
to one month's base salary per full year of service, with a maximum payment
equal to six months' base salary.

The executive officers of the Company are bound by the terms of a Key
Employee Confidentiality and Invention Agreement, pursuant to which confidential
information proprietary to the Company obtained during the term of employment by
the Company may not be disclosed by the employee during or subsequent to such
term of employment, and pursuant to which the employee agrees not to compete
with the business of the Company during and for one year subsequent to the term
of employment.

In connection with the acquisition by the Company of PAREXEL GmbH, Dr.
Herrmann entered into an employment agreement with PAREXEL GmbH, dated March 11,
1991. The employment agreement was amended as of June 30, 1993. Dr. Herrmann
also entered into an employment agreement with the Company on June 30, 1993. The
employment agreements provide for a monthly base salary of approximately DM
11,400 (approximately $6,900). The employment agreements with Dr. Herrmann
expire on June 30, 1997.

37
<PAGE> 39

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN STOCK TRANSACTIONS

In February and March 1991, the Company issued pursuant to venture capital
financings 468,332 shares and warrants to purchase an additional 92,887 shares
of its Series F Convertible Preferred Stock (the "Series F Warrants"). The
Company also sold at that time 141,300 shares and a warrant to purchase 90,000
additional shares of its Series G Non-Voting Convertible Preferred Stock. The
purchase price per share and exercise price per share was in each case $10.00.
Each share of Series F Convertible Preferred Stock and Series G Non-Voting
Convertible Preferred Stock automatically converted into one share of Common
Stock upon the closing of the Company's initial public offering in November
1995. Series F Convertible Preferred Stock was purchased by the following
executive officers: Veronica G.H. Jordan (2,500 shares), John G. Lee (2,500
shares) and William T. Sobo, Jr. (500 shares). The following executive officers
were purchasers of Series F Warrants: Veronica G.H. Jordan (750 shares), John G.
Lee (750 shares) and William T. Sobo, Jr. (150 shares).

In April 1992, the Company sold an aggregate of 508,334 shares of Series I
Convertible Preferred Stock and warrants to purchase 151,516 shares of Series J
Convertible Preferred Stock (the "Series J Warrants"). The shares of Series I
Convertible Preferred Stock were sold at a price of $15.00 per share and the
Series J Warrants were issued with an exercise price of $16.50 per share. Josef
H. von Rickenbach purchased 2,000 shares of Series I Convertible Preferred
Stock. All of the Series J Warrants were exercised in December 1992. All shares
of Series I and Series J Convertible Preferred Stock automatically converted
into Common Stock on the closing of the Company's initial public offering in
November 1995.

In August 1993, all Series D Convertible Preferred Stock Warrants were
exercised by their respective holders. Upon the closing of the Company's initial
public offering in November 1995, 226,700 shares of Common Stock were issued
upon the automatic conversion of such shares of Series D Convertible Preferred
Stock.

The purchasers of the Series A Convertible Preferred Stock, the Series B
Convertible Preferred Stock, the Series C Convertible Preferred Stock, the
Series D Convertible Preferred Stock, the Series F Convertible Preferred Stock,
the Series F Warrants, the Series G Non-Voting Convertible Preferred Stock, the
Series G Warrants, the Series I Convertible Preferred Stock and the Series J
Convertible Preferred Stock (collectively, the "Rightsholders") are entitled to
require the Company to register under the Act up to a total of approximately
3,067,525 shares of outstanding Common Stock and Common Stock issuable upon
exercise of certain outstanding options (the "Registrable Shares") under the
terms of certain agreements among the Company and the Rightsholders (the
"Registration Agreements"). The Registration Agreements provide that in the
event the Company proposes to register any of its securities under the Act at
any time or times, the Rightsholders, subject to certain exceptions, shall be
entitled to include Registrable Shares in such registration. However, the
managing underwriter of any such offering may exclude for marketing reasons some
or all of such Registrable Shares from such registration. Substantially all of
the Rightsholders have, subject to certain conditions and limitations,
additional rights to require the Company to prepare and file a registration
statement under the Act with respect to their Registrable Shares if
Rightsholders holding at least 40% of the Registrable Shares held by all such
Rightsholders so request. The Company is generally required to bear the expenses
of all such registrations, except underwriting discounts and commissions.

ACQUISITION OF PAREXEL GMBH

In March 1991, the Company entered into a sales contract with Dr. Werner M.
Herrmann to acquire Dr. Herrmann's majority stockholder interest in AFB
Arzneimittelforschung GmbH in Berlin, a German corporation, for a purchase price
of DM 3,000,000 (approximately $1.8 million) and 128,493 shares of the Company's
Series H Preferred Stock. A Stock Purchase, Restriction and Registration Rights
Agreement dated March 11, 1991 between the Company and Dr. Herrmann governs the
rights and preferences of the Series H Convertible Preferred Stock, including
certain registration rights. Each share of Series H Convertible Preferred Stock
owned by Dr. Herrmann automatically converted into one share of Common Stock
upon the closing of the Company's initial public offering. See Note 3 of Notes
to Consolidated Financial Statements of the Company.

38
<PAGE> 40

In connection with the acquisition, Dr. Herrmann entered into an employment
agreement with PAREXEL GmbH, dated March 11, 1991. The employment agreement was
amended as of June 30, 1993. Dr. Herrmann also entered into an employment
agreement with the Company on June 30, 1993. The employment agreements provide
for a monthly base salary of approximately DM 11,400 (approximately $6,900). See
"Management -- Employment Agreements."

On January 1, 1992, PAREXEL GmbH entered into a promissory note in favor of
Dr. Herrmann in the principal amount of DM 2,000,000 (approximately $1.2
million), representing amounts Dr. Herrmann loaned PAREXEL GmbH during the first
six months of fiscal year 1991. Repayment was made in twelve equal monthly
installments of DM 166,667, plus accrued interest, beginning September 1, 1992.
The note was fully repaid in September 1993.

OTHER TRANSACTIONS

On June 9, 1989, the Company loaned $33,500 to Josef H. von Rickenbach for
the purchase of 8,375 shares of the Company's Series C Convertible Preferred
Stock and a warrant for 6,700 shares of the Company's Series D Convertible
Preferred Stock. The principal amount of the loan, plus interest accruing at a
rate of 9.34% from the date thereof, was paid in full upon the closing of the
Company's initial public offering in November 1995. On August 27, 1990, the
Company loaned $33,500 to Mr. von Rickenbach for the purchase of 6,700 shares of
the Company's Series D Convertible Preferred Stock. The principal amount of the
loan, plus interest accruing at a rate of 8.66% from the date thereof, was paid
in full upon the closing of the Company's initial public offering in November
1995. On April 8, 1992, the Company loaned Mr. von Rickenbach an additional
$30,000 to purchase 2,000 shares of the Company's Series I Convertible Preferred
Stock. The principal amount of the loan, plus interest accruing at a rate of
6.69% from the date thereof, was paid in full upon the closing of the Company's
initial public offering in November 1995. On September 1, 1993, the Company
loaned $33,500 to Mr. von Rickenbach for the purchase of 6,700 shares of the
Company's Series D Convertible Preferred Stock. The principal amount of the
loan, plus interest accruing at a rate of 5.32% from the date thereof, was paid
in full upon the closing of the Company's initial public offering in November
1995.

The Company has adopted a policy whereby all future transactions between
the Company and its officers, directors and affiliates will be on terms no less
favorable to the Company than could be obtained from unrelated third parties and
will be approved by a majority of the disinterested members of the Company's
Board of Directors.

39
<PAGE> 41

PRINCIPAL STOCKHOLDERS

<TABLE>
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of August 20, 1996 (i) by each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) by each director and each executive officer or
former executive officer of the Company named in the Summary Compensation Table
and (iii) by all directors and executive officers of the Company as a group.
Unless otherwise indicated below, to the knowledge of the Company, all persons
listed below have sole voting and investment power with respect to their shares
of Common Stock, except to the extent authority is shared by spouses under
applicable law.

<CAPTION>
SHARES
BENEFICIALLY
OWNED PRIOR TO
THIS OFFERING(1)
-----------------
DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS NUMBER PERCENT
- ------------------------------------------------- ------- -------
<S> <C> <C>
Josef H. von Rickenbach(2).................................................. 432,390 5.5

A. Dana Callow(3)........................................................... 83,348 1.1
c/o Boston Capital Ventures Limited Partnership
45 School Street
Boston, MA 02108

Patrick J. Fortune.......................................................... 0 *

Werner M. Herrmann.......................................................... 88,493 1.1

Peter Barton Hutt(4)........................................................ 39,500 *

James A. Saalfield(5)....................................................... 18,666 *

Veronica G.H. Jordan(6)..................................................... 63,250 *

John G. Lee(7).............................................................. 53,250 *

Barry R. Philpott(8)........................................................ 7,000 *

Steven D. Reich(9).......................................................... 27,850 *

All executive officers and directors as a group (13 persons)(10)............ 850,497 10.5

- ---------------
<FN>

* Less than 1% of the outstanding Common Stock.

(1) The number of shares of Common Stock deemed outstanding includes: (i)
7,849,237 shares of Common Stock outstanding as of August 20, 1996; and
(ii) shares issuable pursuant to options held by the respective person or
group which may be exercised within 60 days after August 20, 1996
("presently exercisable" stock options), as set forth below.

(2) Includes 321,183 shares of Common Stock owned by The Josef H. von
Rickenbach GRAT dated November 17, 1995. Includes 30,000 shares of Common
Stock issuable pursuant to presently exercisable stock options.

(3) Includes 44,166 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(4) Includes 39,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(5) Includes 16,666 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(6) Includes 10,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(7) Includes 50,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(8) Includes 6,000 shares of Common Stock issuable pursuant to presently
exercisable stock options.

(9) In a letter dated September 27, 1995, Dr. Reich resigned as an employee of
the Company effective December 1, 1995.

(10) Includes 257,132 shares of Common Stock issuable pursuant to presently
exercisable stock options.

</TABLE>
40
<PAGE> 42

SELLING STOCKHOLDERS

<TABLE>
<CAPTION>
SHARES OWNED PRIOR
TO THIS OFFERING SHARES TO BE
------------------ OFFERED PURSUANT
SELLING STOCKHOLDERS NUMBER PERCENT TO THIS PROSPECTUS
- --------------------------------------------------------- ------ ------- -------------------
<S> <C> <C> <C>
Raymond A. Konisky....................................... 28,409 * 28,409
3 Rosemarie Lane
Georgetown, MA 01833
Karen A. Konisky......................................... 28,409 * 28,409
3 Rosemarie Lane
Georgetown, MA 01833
</TABLE>

- ---------------

* Less than 1% of the outstanding Common Stock.

Raymond A. Konisky and Karen A. Konisky acquired their shares in connection
with the sale of all the outstanding stock of Sitebase Clinical Systems, Inc.
("Sitebase") to the Company pursuant to a Stock Purchase Agreement (the
"Purchase Agreement") dated May 24, 1996. Approximately 5,682 of the shares of
Common Stock issued pursuant to the Purchase Agreement have been placed in
escrow until the earlier of (i) September 30, 1996 or (ii) the issuance of the
audit report relating to the Company's financial statements for the fiscal year
ended June 30, 1996. The shares that have been placed in escrow will be used to
satisfy any indemnification claims brought by PAREXEL based on a breach of any
of the representations or warranties of Sitebase or the Selling Stockholders set
forth in the Purchase Agreement. Mr. Konisky and Ms. Konisky were each officers
and directors of Sitebase until they resigned such positions on the closing of
the acquisition. Mr. Konisky is currently an employee of the Company. In the
Purchase Agreement, the Company agreed to bear all expenses in connection with
the registration and sale of the Mr. Konisky's and Ms. Konisky's shares (other
than underwriting discounts and selling commissions). See "Plan of
Distribution."

Each of Mr. Konisky and Ms. Konisky represented in the Purchase Agreement,
and Registration Rights Agreement referenced therein, that he or she was
purchasing the shares from the Company without any present intention of
effecting a distribution of those shares. The acquisition is to be accounted for
as a pooling of interests. Mr. and Ms. Konisky each agreed not to sell or
otherwise transfer such shares until the expiration of the pooling lockup
period, which is currently expected to expire in August 1996. In recognition of
the fact, however, that investors may want to be able to sell their shares when
they consider appropriate, the Company has filed with the Commission a
registration statement on Form S-1 (of which this Prospectus is a part) with
respect to the resale of the shares by the Selling Stockholders from time to
time on the Nasdaq National Market. The Company will prepare and file such
amendments and supplements to the registration statement as may be necessary to
keep it effective until the earlier of the sale of all shares pursuant to the
registration statement or 90 days after the registration statement is declared
effective (the "Distribution Period"). The Distribution Period will be extended,
in accordance with the terms of the Registration Rights Agreement, by one day
for each day during which resales under the registration statement are suspended
by the Company pursuant to the Company's suspension rights as set forth in the
Registration Rights Agreement.

The Registration Rights Agreement entered into by the Company and the
Selling Stockholders provides that the Company will indemnify the Selling
Stockholders for any losses incurred by them in connection with actions arising
from any untrue statement of a material fact in the Registration Statement or
any omission of a material fact required to be stated therein, unless such
statement or omission was made in reliance upon written information furnished to
the Company by the Selling Stockholders. Similarly, the Registration Rights
Agreement provides that each Selling Stockholder will indemnify the Company and
its officers and directors for any losses incurred by them in connection with
any action arising from any untrue statement of material fact in the
Registration Statement or any omission of a material fact required to be stated
therein, if such statement or omission was made in reliance on written
information furnished to the Company by such Selling Stockholders.

41
<PAGE> 43

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company is 25,000,000 shares of Common
Stock, par value $.01 per share, and 5,000,000 shares of Preferred Stock, par
value $.01 per share.

COMMON STOCK

As of August 20, 1996, there were 7,849,237 shares of Common Stock
outstanding and held of record by 75 stockholders.

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders. Holders of Common Stock do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors out
of funds legally available therefor, subject to any preferential dividend rights
of any outstanding Preferred Stock. Upon the liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive ratably
the net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of the Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in this offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future. There are no shares of Preferred Stock
outstanding.

PREFERRED STOCK

The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 5,000,000 shares of Preferred Stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company. The Company has no present plans to issue any
shares of Preferred Stock.

MASSACHUSETTS LAW AND CERTAIN PROVISIONS OF THE COMPANY'S RESTATED
ARTICLES OF ORGANIZATION AND BY-LAWS

The Company believes that it has more than 200 stockholders, thus making it
subject to Chapter 110F of the Massachusetts General Laws, an anti-takeover law.
In general, this statute prohibits a publicly held Massachusetts corporation
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (i) the interested stockholder obtains
the approval of the board of directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder, or (iii) the
business combination is approved by both the board of directors and the holders
of two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). An "interested stockholder" is a
person who, together with its affiliates and associates, owns (or at any time
within the prior three years did own) 5% or more of the outstanding voting stock
of the corporation. A "business combination" includes a merger, a stock or asset
sale, and certain other transactions resulting in a financial benefit to the
interested stockholder. The Company may at any time elect not to be governed by
Chapter 110F by vote of a majority of its stockholders, but such an amendment
would not be effective for twelve months and would not apply to a business
combination with any person who became an interested stockholder prior to the
adoption of the amendment.

42
<PAGE> 44

The Massachusetts Business Corporation Law generally requires that
publicly-held Massachusetts corporations have a classified board of directors
consisting of three classes as nearly equal in size as possible, unless those
corporations elect to opt out of the statute's coverage. By vote of the Board of
Directors, the Company has elected to opt out of the classified board provisions
of this statute and has adopted separate classified Board provisions in its
Restated Articles of Organization. See "Management -- Executive Officers and
Directors."

The Company's By-Laws include a provision that excludes the Company from
the applicability of Massachusetts General Laws Chapter 110D, entitled
"Regulation of Control Share Acquisitions." In general, this statute provides
that any stockholder of a corporation subject to this statute who acquires 20%
or more of the outstanding voting stock of a corporation may not vote such stock
unless the stockholders of the corporation so authorize. The Board of Directors
may amend the Company's By-Laws at any time to subject the Company to this
statute prospectively.

The Company's By-Laws require that nominations for the Board of Directors
made by a stockholder comply with certain notice procedures. A notice by a
stockholder of a planned nomination must be given not less than 60 and not more
than 90 days prior to a scheduled meeting, provided that if less than 70 days'
notice is given of the date of the meeting, a stockholder will have ten days
within which to give such notice. The stockholder's notice of nomination must
include particular information about the stockholder, the nominee and any
beneficial owner on whose behalf the nomination is made. The Company may require
any proposed nominee to provide such additional information as is reasonably
required to determine the eligibility of the proposed nominee.

The By-Laws also require that a stockholder seeking to have any business
conducted at a meeting of stockholders give notice to the Company not less than
60 and not more than 90 days prior to the scheduled meeting, provided that if
less than 70 days' notice is given of the date of the meeting, a stockholder
will have ten days within which to give such notice. The notice from the
stockholder must describe the proposed business to be brought before the meeting
and include information about the stockholder making the proposal, any
beneficial owner on whose behalf the proposal is made, and any other stockholder
known to be supporting the proposal. The By-Laws require the Company to call a
special stockholders' meeting at the request of stockholders holding at least
33 1/3% of the voting power of the Company.

The Company's Restated Articles of Organization include provisions
eliminating the personal liability of the Company's directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by the Massachusetts Business Corporation Law. Additionally, the Company's
Restated Articles of Organization provide that the Company shall indemnify each
person who is or was a director or officer of the Company, and each person who
is or was serving or has agreed to serve at the request of the Company as a
director or officer of, or in a similar capacity with, another organization or
in any capacity with respect to any employee benefit plan of the Company,
against all liabilities, costs and expenses reasonably incurred by any such
persons in connection with the defense or disposition of or otherwise in
connection with or resulting from any action, suit or other proceeding in which
they may be involved by reason of being or having been such a director or
officer, or by reason of any action taken or not taken in such capacity, except
with respect to any matter as to which such person shall have been finally
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that his or her action was in the best interests of the
Company or, to the extent such matter relates to service with respect to an
employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan.

The Restated Articles of Organization provide that certain transactions,
such as the sale, lease or exchange of all or substantially all of the Company's
property and assets and the merger or consolidation of the Company into or with
any other corporation, may be authorized by the approval of the holders of a
majority of the shares of each class of stock entitled to vote thereon, rather
than by two-thirds as otherwise provided by statute, provided that the
transactions have been authorized by a majority of the members of the Board of
Directors and the requirements of any other applicable provisions of the
Restated Articles of Organization have been met.

43
<PAGE> 45

Certain of the provisions of the Restated Articles of Organization and
By-Laws discussed above would discourage or make more difficult a proxy contest
or the assumption of control by a holder of a substantial block of the Company's
stock. Such provisions could also have the effect of discouraging a third party
from making a tender offer or otherwise attempting to obtain control of the
Company, even though such an attempt might be beneficial to the Company and its
stockholders. In addition, since the Restated Articles of Organization and
By-Laws are designed to discourage accumulations of large blocks of the
Company's stock by purchasers whose objective is to have stock repurchased by
the Company at a premium, such provisions could tend to reduce the temporary
fluctuations in the market price of the Company's stock which are caused by such
accumulations. Accordingly, stockholders could be deprived of certain
opportunities to sell their stock at a temporarily higher market price.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Boston EquiServe
LP.

PLAN OF DISTRIBUTION

The shares offered hereby may be resold from time to time by the Selling
Stockholders for their own accounts. The Company will receive none of the
proceeds from this offering. The Selling Stockholders will pay or assume
brokerage commissions or other charges and expenses incurred in the resale of
the shares.

Resales of the shares by the Selling Stockholders is not subject to any
underwriting agreement. The shares covered by this Prospectus may be resold by
the Selling Stockholders or by pledgees, donees, transferees or other successors
in interest. The shares offered by each Selling Stockholder may be resold from
time to time at market prices prevailing at the time of sale, at prices relating
to such prevailing market prices or at negotiated prices. In addition, the
Selling Stockholders may resell their shares covered by this Prospectus through
customary brokerage channels, either through broker-dealers acting as agents or
brokers, or through broker-dealers acting as principals, who may then resell the
shares, or at private sales or otherwise, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions, commissions, or
fees from the Selling Stockholders and/or purchasers of the shares for whom such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Any broker-dealers that participate with the Selling
Stockholders in the distribution of the shares may be deemed to be underwriters
and any commissions received by them and any profit on the resale of the shares
positioned by them might be deemed to be underwriting discounts and commissions,
within the meaning of the Securities Act, in connection with such sales.

The Company will inform the Selling Stockholders that the antimanipulation
rules under the Securities Exchange Act of 1934 (Rule 10b-5 and 10b-6) may apply
to sales in the market and will furnish the Selling Stockholders upon request
with a copy of these Rules. The Company will also inform the Selling
Stockholders of the need for delivery of copies of this Prospectus.

Any shares covered by the Prospectus that qualify for resale pursuant to
Rule 144 under the Securities Act may be resold under Rule 144 rather than
pursuant to this Prospectus.

The Common Stock is quoted on the Nasdaq National Market under the symbol
"PRXL."

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Selling Stockholders by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts.

EXPERTS

The consolidated financial statements as of June 30, 1994 and 1995 and for
each of the three years in the period ended June 30, 1995 included in this
Prospectus and the financial statement schedule included in the Registration
Statement have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

44
<PAGE> 46

PAREXEL INTERNATIONAL CORPORATION
<TABLE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated statement of operations for the three years ended June 30, 1995 and
unaudited for the nine months ended March 31, 1995 and 1996......................... F-3
Consolidated balance sheet at June 30, 1994 and 1995 and unaudited at March 31,
1996................................................................................ F-4
Consolidated statement of stockholders' equity for the three years ended June 30, 1995
and unaudited for the nine months ended March 31, 1995 and 1996..................... F-5
Consolidated statement of cash flows for the three years ended June 30, 1995 and
unaudited for the nine months ended March 31, 1995 and 1996......................... F-6
Notes to consolidated financial statements............................................ F-7
</TABLE>

F-1
<PAGE> 47

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
PAREXEL International Corporation

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of PAREXEL
International Corporation and its subsidiaries at June 30, 1994 and 1995, and
the results of their operations and their cash flows for each of the three years
in the period ended June 30, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

As discussed in Note 2 of the consolidated financial statements, the Company
changed its method of accounting for income taxes in fiscal 1994.

PRICE WATERHOUSE LLP

Boston, Massachusetts
September 25, 1995

F-2
<PAGE> 48

PAREXEL INTERNATIONAL CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

<CAPTION>
NINE MONTHS ENDED
FOR THE YEAR ENDED JUNE 30, MARCH 31,
---------------------------------- ---------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue............................. $ 65,294 $ 69,646 $ 79,928 $ 55,998 $ 84,797
Reimbursed costs.................... (11,294) (11,644) (21,355) (13,717) (23,701)
-------- -------- -------- -------- --------
Net revenue......................... 54,000 58,002 58,573 42,281 61,096
-------- -------- -------- -------- --------
Costs and expenses:
Direct costs................... 36,106 38,244 42,140 30,803 42,027
Selling, general and
administrative............... 11,831 13,631 13,294 9,762 13,079
Depreciation and
amortization................. 2,511 2,435 2,251 1,809 1,649
Restructuring charge........... 3,254 -- -- -- --
Impairment of long-lived
assets....................... -- -- 11,253 11,253 --
-------- -------- -------- -------- --------
53,702 54,310 68,938 53,627 56,755
-------- -------- -------- -------- --------
Income (loss) from operations....... 298 3,692 (10,365) (11,346) 4,341
Interest income (expense)........... (181) (71) (172) (16) 623
Other income (expense), net......... (339) (125) 227 16 19
-------- -------- -------- -------- --------
Income (loss) before provision
(benefit) for income taxes and
cumulative effect of accounting
change............................ (222) 3,496 (10,310) (11,346) 4,983
Provision (benefit) for income
taxes............................. 1,935 1,573 320 (33) 1,988
-------- -------- -------- -------- --------
Net income (loss) before cumulative
effect of accounting change....... (2,157) 1,923 (10,630) (11,313) 2,995
Cumulative effect of change in
method of accounting for income
taxes............................. -- 500 -- -- --
-------- -------- -------- -------- --------
Net income (loss)................... $ (2,157) $ 2,423 $(10,630) $(11,313) $ 2,995
======== ======== ======== ======== ========
Net income (loss) per share:
Before cumulative effect of
accounting change............ $ (2.97) $ 0.35 $ (12.61) $ (13.44) $ 0.48
Cumulative effect of change in
method of accounting for
income taxes................. -- 0.09 -- -- --
-------- -------- -------- -------- --------
Net income (loss) per share......... $ (2.97) $ 0.44 $ (12.61) $ (13.44) $ 0.48
======== ======== ======== ======== ========
Weighted average common shares
outstanding....................... 727 5,747 843 842 6,272
======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE> 49

PAREXEL INTERNATIONAL CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)

<CAPTION>
JUNE 30
------------------- MARCH 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents:
Unrestricted.......................................... $ 2,366 $ 5,315 $ 2,666
Restricted............................................ 431 1,360 902
Short-term investments................................... 700 1,500 44,581
Accounts receivable, net................................. 23,322 24,675 35,201
Other current assets..................................... 2,576 4,003 6,237
------- ------- -------
Total current assets............................. 29,395 36,853 89,587

Property and equipment, net................................ 4,902 4,671 5,958
Intangible assets, net..................................... 10,559 605 439
Other assets............................................... 1,080 1,121 991
------- ------- -------
$45,936 $43,250 $96,975
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt..................... $ 364 $ 692 $ 665
Accounts payable......................................... 2,020 2,466 3,333
Advance billings......................................... 9,440 14,032 23,175
Other current liabilities................................ 6,686 8,089 8,900
------- ------- -------
Total current liabilities........................ 18,510 25,279 36,073

Long-term debt............................................. 391 633 682
Other liabilities.......................................... 1,799 1,814 1,745
------- ------- -------
Total liabilities................................ 20,700 27,726 38,500
------- ------- -------
Commitments and contingencies (Note 16)

Stockholders' equity:
Convertible preferred stock.............................. 23,683 23,683 --
Common stock -- $.01 par value; shares authorized:
6,684,077 at June 30, 1994 and 1995 and 25,000,000 at
March 31, 1996; shares issued: 836,378 at June 30,
1994, 858,364 at June 30, 1995 and 7,656,872 at March
31, 1996; shares outstanding: 823,045 at June 30,
1994, 843,658 at June 30, 1995 and 7,642,166 at March
31, 1996;............................................. 8 9 77
Additional paid-in capital............................... 358 406 64,961
Retained earnings (accumulated deficit).................. 1,804 (8,826) (6,771)
Stock subscriptions receivable........................... (163) (157) --
Cumulative translation adjustment........................ (454) 409 208
------- ------- -------
Total stockholders' equity....................... 25,236 15,524 58,475
------- ------- -------
$45,936 $43,250 $96,975
======= ======= =======
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE> 50

PAREXEL INTERNATIONAL CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except number of shares)

<CAPTION>
CONVERTIBLE COMMON STOCK
PREFERRED STOCK ------------------------------ RETAINED
----------------------- ADDITIONAL EARNINGS STOCK
NUMBER ISSUANCE NUMBER PAR PAID-IN (ACCUMULATED SUBSCRIPTIONS
OF SHARES PRICE, NET OF SHARES VALUE CAPITAL DEFICIT) RECEIVABLE
---------- ---------- --------- ----- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1992......... 1,946,195 $ 19,950 723,878 $ 7 $ 314 $ 1,538 $(148)
Issuance of common stock upon
exercise of stock options...... 10,500 23
Issuance of Series B convertible
preferred stock upon exercise
of warrants.................... 3,333 100
Issuance of Series J convertible
preferred stock upon exercise
of warrants.................... 151,516 2,500
Forfeiture and repurchase of
restricted shares.............. (13,333) (134)
Foreign currency translation.....
Net loss......................... (2,157)
---------- ---------- --------- --- -------- --------- -----
BALANCE AT JUNE 30, 1993......... 2,101,044 22,550 721,045 7 203 (619) (148)
Issuance of Series D convertible
preferred stock upon exercise
of warrants.................... 226,700 1,133 (33)
Issuance of common stock upon
exercise of stock options...... 102,000 1 75
Income tax benefit from exercise
of stock options............... 80
Proceeds from stock subscriptions
receivable..................... 18
Foreign currency translation.....
Net income....................... 2,423
---------- ---------- --------- --- -------- --------- -----
BALANCE AT JUNE 30, 1994......... 2,327,744 23,683 823,045 8 358 1,804 (163)
Issuance of common stock upon
exercise of stock options...... 21,986 1 65
Repurchase of common shares...... (1,373) (17)
Proceeds from stock subscriptions
receivable..................... 6
Foreign currency translation.....
Net loss......................... (10,630)
---------- ---------- --------- --- -------- --------- -----
BALANCE AT JUNE 30, 1995......... 2,327,744 23,683 843,658 9 406 (8,826) (157)
Issuance of Series F and G
preferred stock upon exercise
of warrants (unaudited)........ 176,887 1,769
Proceeds from stock subscriptions
receivable (unaudited)......... 157
Conversion of preferred stock
into common upon initial
public offering (unaudited).... (2,504,631) (25,452) 4,478,008 45 25,408
Payment of accrued preferred
stock dividends (unaudited).... (940)
Net proceeds from initial public
offering of common stock
(unaudited).................... 1,600,000 16 21,204
Net proceeds from follow-on
public offering (unaudited).... 500,000 5 15,645
Issuance of common stock upon
exercise of stock options
(unaudited).................... 220,500 2 306
Income tax benefit from exercise
of stock options (unaudited)... 1,992
Foreign currency translation
(unaudited)....................
Net income (unaudited)........... 2,995
--------- --------- --------- --- -------- ---------- -----
BALANCE AT MARCH 31, 1996
(UNAUDITED).................... -- -- 7,642,166 $77 $ 64,961 $ (6,771) $ --
========= ========= ========= === ======== ========== =====

CUMULATIVE TOTAL
DEFERRED TRANSLATION STOCKHOLDERS'
COMPENSATION ADJUSTMENT EQUITY
------------ ----------- ------------
<S> <C> <C> <C>
BALANCE AT JUNE 30, 1992......... $ (128) $ 274 $ 21,807
Issuance of common stock upon
exercise of stock options...... 23
Issuance of Series B convertible
preferred stock upon exercise
of warrants.................... 100
Issuance of Series J convertible
preferred stock upon exercise
of warrants.................... 2,500
Forfeiture and repurchase of
restricted shares.............. 128 (6)
Foreign currency translation..... (420) (420)
Net loss......................... (2,157)
------ ---- ------------
BALANCE AT JUNE 30, 1993......... -- (146) 21,847
Issuance of Series D convertible
preferred stock upon exercise
of warrants.................... 1,100
Issuance of common stock upon
exercise of stock options...... 76
Income tax benefit from exercise
of stock options............... 80
Proceeds from stock subscriptions
receivable..................... 18
Foreign currency translation..... (308) (308)
Net income....................... 2,423
------ ----- -------
BALANCE AT JUNE 30, 1994......... -- (454) 25,236
Issuance of common stock upon
exercise of stock options...... 66
Repurchase of common shares...... (17)
Proceeds from stock subscriptions
receivable..................... 6
Foreign currency translation..... 863 863
Net loss......................... (10,630)
------ ---- --------
BALANCE AT JUNE 30, 1995......... -- 409 15,524
Issuance of Series F and G
preferred stock upon exercise
of warrants (unaudited)........ 1,769
Proceeds from stock subscriptions
receivable (unaudited)......... 157
Conversion of preferred stock
into common upon initial
public offering (unaudited).... --
Payment of accrued preferred
stock dividends (unaudited).... (940)
Net proceeds from initial public
offering of common stock
(unaudited).................... 21,220
Net proceeds from follow-on
public offering (unaudited).... 15,650
Issuance of common stock upon
exercise of stock options
(unaudited).................... 309
Income tax benefit from exercise
of stock options (unaudited)... 1,992
Foreign currency translation
(unaudited).................... (201) (201)
Net income (unaudited)........... 2,995
------ ----- --------
BALANCE AT MARCH 31, 1996
(UNAUDITED).................... $ -- $ 208 $ 58,475
====== ===== ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE> 51

PAREXEL INTERNATIONAL CORPORATION
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Increase (Decrease) in Cash and Cash Equivalents

<CAPTION>
NINE MONTHS
ENDED
FOR THE YEAR ENDED JUNE 30, MARCH 31,
------------------------------ --------------------
1993 1994 1995 1995 1996
------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $(2,157) $ 2,423 $(10,630) $(11,313) $ 2,995
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization................... 2,511 2,435 2,251 1,809 1,649
Restructuring transactions...................... 3,273 (1,959) (683) (527) (110)
Impairment of long-lived assets................. -- -- 11,253 11,253 --
Change in assets and liabilities:
Restricted cash............................... 429 (282) (929) (787) 458
Accounts receivable, net...................... (4,436) (6,309) (281) (2,246) (11,052)
Other current assets.......................... (624) (366) (1,395) 11 (2,319)
Other assets.................................. 299 (531) (79) (70) 254
Accounts payable.............................. 479 (1,573) 256 227 928
Advance billings.............................. 18 350 3,953 7,730 9,465
Other current liabilities..................... (886) 1,867 1,932 148 2,857
Other liabilities............................. 83 (239) 56 41 36
------- ------- -------- -------- --------
Net cash provided (used) by operating activities.... (1,011) (4,184) 5,704 6,276 5,161
------- ------- -------- -------- --------
Cash flows from investing activities:
Purchases of short-term investments............... (8,015) (2,787) (3,510) (2,500) (146,600)
Proceeds from sale of short-term investments...... 9,807 4,303 2,710 700 103,519
Purchase of property and equipment................ (1,699) (1,979) (1,460) (1,106) (2,161)
Payments for business acquisition................. (100) (100) -- -- --
------- ------- -------- -------- --------
Net cash used by investing activities............... (7) (563) (2,260) (2,906) (45,242)
------- ------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of preferred stock......... 2,600 1,100 -- -- 1,769
Proceeds from issuance of common stock............ 23 76 66 66 37,179
Cash received from stock subscriptions............ -- 18 6 6 157
Payments to acquire treasury stock................ -- -- (17) (17) --
Repayments of long-term debt...................... (1,821) (510) (684) (476) (665)
Dividends on preferred stock...................... -- -- -- -- (940)
Repayments under lines of credit, net............. -- -- -- -- --
------- ------- -------- -------- --------
Net cash provided (used) by financing activities.... 802 684 (629) (421) 37,500
------- ------- -------- -------- --------
Effect of exchange rate changes on unrestricted cash
and cash equivalents.............................. (454) (24) 134 178 (68)
------- ------- -------- -------- --------
Net increase (decrease) in unrestricted cash and
cash equivalents.................................. (670) (4,087) 2,949 3,127 (2,649)
Unrestricted cash and cash equivalents at beginning
of period......................................... 7,123 6,453 2,366 2,366 5,315
------- ------- -------- -------- --------
Unrestricted cash and cash equivalents at end of
period............................................ $ 6,453 $ 2,366 $ 5,315 $ 5,493 $ 2,666
======= ======= ======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest........................................ $ 172 $ 83 $ 179 $ 150 $ 105
Income taxes.................................... $ 2,621 $ 1,237 $ 565 $ 377 $ 1,225
Supplemental disclosure of noncash financing
activities:
Property and equipment acquired under capital
lease obligations............................... $ 166 $ 666 $ 1,265 $ 1,143 $ 686
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE> 52

PAREXEL INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF THE BUSINESS

PAREXEL International Corporation (the "Company"), is a leading contract
research organization ("CRO"), providing clinical research and development
services to the worldwide pharmaceutical and biotechnology industries. The
Company designs, initiates and monitors clinical trials, manages and analyzes
clinical data, assists with regulatory affairs and offers other related services
and products.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of PAREXEL
International Corporation and its wholly-owned domestic and foreign
subsidiaries. The Company's German and French subsidiaries operate on a fiscal
year which ends May 31. All significant intercompany accounts and transactions
have been eliminated.

Revenue

Fixed price contract revenue is recognized using the percentage of
completion method based on the ratio that costs incurred to date bear to
estimated total costs at completion. Revenue from other contracts is recognized
as services are provided. Revenue related to contract modifications is
recognized when realization is assured and the amounts are reasonably
determinable. Adjustments to contract cost estimates are made in the periods in
which the facts which require the revisions become known. When the revised
estimate indicates a loss, such loss is provided for currently in its entirety.
"Unbilled accounts receivable" represents revenue recognized in excess of
amounts billed. "Advance billings" represents amounts billed in excess of
revenue recognized.

Investigator Fees

Investigator fees are accrued based on investigator services rendered.
Investigator fee payments are made based on predetermined contractual
arrangements, which may differ from the accrual of the expense. Payments to
investigators in excess of the accrued expense are classified as prepaid
expenses and accrued expense in excess of amounts paid is classified as other
current liabilities.

Cash, Cash Equivalents, Short-Term Investments and Financial Instruments

The Company invests excess cash in overnight repurchase agreements and debt
securities of government municipalities. These investments are subject to
minimal credit and market risk. For the purpose of the statement of cash flows,
the Company considers all highly liquid debt instruments purchased with original
maturities of three months or less to be cash equivalents. Short-term
investments include securities purchased with original maturities of greater
than three months. Restricted cash consists of advances and deposits from
customers subject to certain restrictions.

Effective July 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115") on a prospective basis. Under this standard, the
Company is required to classify its marketable securities into one or more of
the following categories: held-to-maturity, trading or available-for-sale. At
June 30, 1995, all of the Company's short-term investments are classified as
available-for-sale. In accordance with FAS 115, securities available-for-sale
are recorded at fair market value and any unrealized gains or losses are
recorded as part of stockholders' equity. At June 30, 1995 the fair market value
of available-for-sale securities approximated cost.

The debt securities held by the Company had average maturities of 16 years.
These securities include seven day put options which allow the Company to sell
the underlying securities in seven days at par value. As such, there were no
realized gains or losses associated with the disposition of these securities.
The Company

F-7
<PAGE> 53

PAREXEL INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

uses these derivative financial instruments on a limited basis to shorten
contractual maturity dates, thereby managing interest rate risk. Premiums paid
for purchased options are amortized to interest income in the consolidated
statement of operations. Costs of securities sold is determined on a specific
identification method.

Concentration of Credit Risk

Financial instruments which potentially expose the Company to
concentrations of credit risk include trade accounts receivable. However, this
risk is limited due to the large number of clients and the international
dispersion of the Company's client base. Collateral is not required on these
transactions. In addition, the Company maintains reserves for potential credit
losses and such losses, in the aggregate, have not exceeded management
expectations.

Property and Equipment

Property and equipment is stated at cost. Depreciation is provided on the
straight-line method over the estimated useful lives of the assets ranging from
three to five years. Leasehold improvements are amortized over the lesser of the
estimated useful lives of the improvements or the remaining lease term. Repair
and maintenance costs are charged to expense as incurred.

Intangible Assets

Intangible assets comprise principally goodwill, customer lists, covenants
not to compete, the value of an assembled workforce, and other intangible assets
attributable to businesses acquired. Goodwill represents the excess of the cost
of businesses acquired over the fair value of the related net assets at the date
of acquisition, and is amortized using the straight-line method over five to
twenty-five years. Other intangible assets are amortized using the straight-line
method over five to ten years.

Impairment of Long-Lived Assets

The Company periodically assesses the recoverability of the carrying amount
of long-lived assets, including intangible assets. A loss is recognized when
expected future cash flows (undiscounted and without interest) are less than the
carrying amount of the asset. The amount of the impairment loss is determined as
the difference by which the carrying amount of the asset exceeds the fair value
of the asset.

Income Taxes

Prior to July 1, 1993, deferred income taxes were recorded by the Company
using the liability method as established by Statement of Financial Accounting
Standards No. 96, "Accounting for Income Taxes" ("FAS 96"). This method gave
consideration to future tax consequences associated with differences between
financial accounting and tax bases of assets and liabilities subject to
significant restrictions on the recognition of deferred tax assets.

Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109")
prospectively. FAS 109 requires the recognition of deferred tax assets
(representing future tax benefits) attributable to deductible temporary
differences between financial statement and income tax bases of assets and
liabilities and to operating loss carryforwards to the extent that realization
of these benefits is more likely than not. The cumulative effect of the adoption
of FAS 109 increased net income by $500,000 for the year ended June 30, 1994 and
primarily related to the future tax benefit of currently not deductible
temporary differences within the North American operations.

F-8
<PAGE> 54

PAREXEL INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency

Assets and liabilities of the Company's international operations are
translated into U.S. dollars at exchange rates in effect at the balance sheet
date. Income and expense items are translated at average exchange rates for the
period. Accumulated net translation adjustments are included in stockholders'
equity. Realized gains and losses recorded in the statement of operations were
not material.

Net Income (Loss) Per Share

Net income (loss) per share is determined by dividing net income (loss)
applicable to common stock by the weighted average number of common shares and
common share equivalents outstanding during the year. Common share equivalents
consist of convertible preferred stock (Note 11) and common stock which may be
issuable upon exercise of outstanding common stock options and warrants to
purchase convertible preferred stock, when dilutive. Net income (loss)
applicable to common stock consists of net income (loss) adjusted by a
combination of the elimination of interest expense and additional interest
income, net of income taxes, assuming the Company used the proceeds from the
exercise of common stock options and convertible preferred stock warrants
granted more than one year prior to the offering date to (1) repurchase 20% of
the outstanding common stock at market value, (2) eliminate all outstanding
long-term debt and (3) invest in government securities.

Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock options granted by the Company during the twelve months
preceding the offering date have been included in the calculation of common and
common share equivalents outstanding as if they were outstanding for all periods
presented using the treasury stock method and an assumed public offering price
of $14 per share.

Interim Financial Data (Unaudited)

The interim financial data at March 31, 1996 and for the nine months ended
March 31, 1995 and 1996 included in the accompanying consolidated financial
statements is unaudited; however, in the opinion of the Company, the interim
financial data include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods. The interim financial data are not necessarily indicative of the
results of operations for a full fiscal year.

NOTE 3 -- IMPAIRMENT OF LONG-LIVED ASSETS

In fiscal 1991, PAREXEL acquired AFB Arzneimittelforschung GmbH, in Berlin
(which was subsequently renamed PAREXEL GmbH), a contract research organization
headquartered in Germany in exchange for $3.9 million of cash, Series H
Convertible Preferred Stock then valued at $1.3 million and the assumption of
$16.1 million of liabilities. Since it was acquired, PAREXEL GmbH's financial
performance has fallen below management's expectations and has experienced a
continued declining revenue base.

In response, management implemented a restructuring effort in fiscal 1993
(Note 4) and continued to budget positive operating results that supported the
realization of the related net assets. However, in the third quarter of fiscal
1995, PAREXEL GmbH's operations suffered a further decline in net revenue
resulting in a net loss for the period. Also during the third quarter, drug
development regulations in Germany and Europe were modified, and further changes
were being contemplated, all of which were expected to have a detrimental impact
on PAREXEL GmbH's operations.

Considering the cumulative impact of the above-described factors,
management updated its assessment of the realizability of the long-lived assets
of PAREXEL GmbH as of the third quarter of fiscal 1995.

In accordance with its accounting policy for impaired long-lived assets,
management prepared a forecast of PAREXEL GmbH's expected future cash flows on
an undiscounted basis and without interest charges. This forecast was based on
assumptions developed by management using PAREXEL GmbH's historical

F-9
<PAGE> 55

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

experience as well as the best estimate of future trends and events. In the
short-term, management has forecasted declining revenue in certain of PAREXEL
GmbH's operations in recognition of the current business environment within
Germany. In the longer-term, management's assumptions reflect a stabilization of
the revenue base, followed by a period of moderate revenue and expense growth
(approximately 4% annually). The sum of the forecasted cash flows from
management's model was less than the carrying amount of PAREXEL's investment in
PAREXEL GmbH.

To assess the fair value of PAREXEL GmbH, the company retained a valuation
expert. A discounted cash flow valuation technique was utilized with a discount
rate of approximately 19.5% based upon PAREXEL GmbH's calculated cost of
capital. The results of this calculation indicated a de minimus valuation and
accordingly, in the third quarter of fiscal 1995, the Company recorded an
impairment loss on long-lived assets of $11.3 million; comprising $8.7 million
in goodwill, $1.4 million in fixed assets and $1.2 million in identifiable
intangible assets.

NOTE 4 -- RESTRUCTURING CHARGE

In fiscal 1993, the Company recorded a charge aggregating $3,254,000 with
respect to a plan to restructure its German operations. The plan primarily
involved the physical consolidation of several operating groups within two
facilities and a reduction in employee headcount. The charge included lease
abandonment costs, write-offs of leasehold improvements, severance payments and
other expenses directly associated with the restructuring plan.

The remaining liability associated with this restructuring was $596,000 at
June 30, 1994 and primarily related to remaining lease payments on duplicative
facilities. Charges against this reserve during fiscal 1995 were $443,000. The
remaining liability at June 30, 1995 of $153,000 is expected to be utilized by
the end of fiscal 1997. There were no material changes in estimates included in
this restructuring liability during fiscal 1995.

NOTE 5 -- ACCOUNTS RECEIVABLE
<TABLE>

Accounts receivable at June 30, 1994 and 1995 consisted of the following
(in thousands):

<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Billed........................................................... $10,896 $14,081
Unbilled......................................................... 13,006 11,868
Allowance for doubtful accounts.................................. (580) (1,274)
------- -------
$23,322 $24,675
======= =======
</TABLE>

NOTE 6 -- PROPERTY AND EQUIPMENT
<TABLE>

Property and equipment at June 30, 1994 and 1995 consisted of the following
(in thousands):

<CAPTION>
1994 1995
------ -------
<S> <C> <C>
Computer and office equipment..................................... $6,065 $ 6,807
Computer software................................................. 1,030 1,061
Furniture and fixtures............................................ 1,896 2,117
Motor vehicles.................................................... 57 23
Leasehold improvements............................................ 681 371
------ -------
9,729 10,379
Less accumulated depreciation and amortization.................... 4,827 5,708
------ -------
$4,902 $ 4,671
====== =======
</TABLE>

F-10
<PAGE> 56

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in the above amounts is property and equipment acquired under
capital lease obligations of approximately $1,777,000 and $3,036,000 at June 30,
1994 and 1995, respectively. Accumulated depreciation on property and equipment
under capital leases totalled approximately $858,000 and $1,285,000 at June 30,
1994 and 1995, respectively.

Depreciation and amortization expense relating to property and equipment
was approximately $1,398,000, $1,463,000 and $1,689,000 for the years ended June
30, 1993, 1994 and 1995, respectively, of which $247,000, $286,000 and $427,000
related to amortization of property and equipment under capital leases.

NOTE 7 -- INTANGIBLE ASSETS

<TABLE>
Intangible assets at June 30, 1994 and 1995 consisted of the following (in
thousands):

<CAPTION>
1994 1995
------- ------
<S> <C> <C>
Goodwill..................................................... $11,353 $1,588
Other........................................................ 3,020 831
------- ------
14,373 2,419
Less accumulated amortization:
Goodwill..................................................... 2,186 1,057
Other........................................................ 1,628 757
------- ------
$10,559 $ 605
======= ======
</TABLE>

NOTE 8 -- OTHER CURRENT LIABILITIES

Other current liabilities at June 30, 1994 and 1995 consisted of the
following (in thousands):

<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
Accrued compensation and withholdings.............................. $1,999 $2,068
Accrued investigator fees.......................................... 266 1,608
Estimated contract completion costs in excess of revenue........... 163 210
Accrued restructuring charges...................................... 596 153
Income taxes payable............................................... 601 720
Other.............................................................. 3,061 3,330
------ ------
$6,686 $8,089
====== ======
</TABLE>

NOTE 9 -- LINES OF CREDIT

The Company has domestic and foreign line of credit arrangements with banks
totalling approximately $6.4 million. The lines are collateralized by accounts
receivable, are payable on demand and bear interest at the local bank base or
money market rate, plus 1% to 3% (resulting in interest rates ranging from 9.4%
to 10.0% at June 30, 1995). There were no borrowings outstanding under these
lines of credit at either June 30, 1994 or June 30, 1995. The lines expire at
various dates through November 1996 and are renewable.

The Company has a $2,350,000 capital lease line of credit with a U.S. bank
for the financing of property and equipment. This line is collateralized by
property and equipment. Borrowings under this line are payable over a three year
term with interest fixed at the five year U.S. Treasury note rate plus 2.5% (for
a total interest rate of 8.3% at June 30, 1995) and are included in long-term
debt (see Note 10). This line of credit expires on November 30, 1996 and is
renewable annually. Approximately $470,000 was available under this line at June
30, 1995.

F-11
<PAGE> 57

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 -- LONG-TERM DEBT

Long-Term Debt

<TABLE>
Long-term debt at June 30, 1994 and 1995 consisted of the following (in
thousands):

<CAPTION>
1994 1995
---- ------
<S> <C> <C>
Obligations under capital leases..................................... $755 $1,325
Less current maturities.............................................. 364 692
---- ------
$391 $ 633
==== ======
</TABLE>

The Company leases certain property and equipment under its capital lease
line of credit (see Note 9) and other capital lease agreements. Aggregate lease
obligations bear a weighted average interest rate of approximately 11% at June
30, 1995.

Long-term debt matures as follows: $691,892 in fiscal 1996, $536,268 in
fiscal 1997 and $97,077 in fiscal 1998.

NOTE 11 -- STOCKHOLDERS' EQUITY

Public Offerings (Unaudited)

On November 22, 1995, 1,600,000 shares of the Company's common stock were
sold by the Company to the public in the Company's initial public offering at a
price of $15 per share. Proceeds to the Company, net of offering expenses,
amounted to $21.2 million. Upon closing of the initial public offering, the
Company received $157,000 in repayment of stock subscriptions receivable, $1.8
million of proceeds from the exercise of preferred stock warrants and all of the
preferred stock automatically converted into a total of 4,478,008 shares of
common stock. In addition, the Company paid cumulative dividends to Series A and
B preferred stockholders of approximately $940,000.

On March 1, 1996, an additional 500,000 shares of the Company's common
stock were sold to the public at a price per share of $33.75. Proceeds to the
Company, net of offering expenses, amounted to approximately $15.7 million.

Convertible Preferred Stock

<TABLE>
Convertible preferred stock at June 30, 1994 and 1995 consisted of the
following (in order of liquidation preference) (dollars in thousands, except par
value):

<CAPTION>
<S> <C>
Series A, $0.01 par value; 40,000 shares authorized, 35,495 shares issued
and outstanding......................................................... $ 558
Series B, $0.01 par value, 95,000 shares authorized, 65,000 shares issued
and outstanding......................................................... 1,904
Series C, $0.01 par value, 295,874 shares authorized, issued and
outstanding............................................................. 1,151
Series D, $0.01 par value, 473,400 shares authorized, issued and
outstanding............................................................. 2,363
Series F, $0.01 par value, 819,000 shares authorized, 468,332 shares
issued and outstanding.................................................. 4,635
Series G, $0.01 par value, 819,000 shares authorized, 141,300 shares
issued and outstanding.................................................. 1,398
Series I, $0.01 par value, 508,334 shares authorized, issued and
outstanding............................................................. 7,389
Series J, $0.01 par value, 151,516 shares authorized, issued and
outstanding............................................................. 2,500
Series E, $0.01 par value, 60,000 shares authorized, issued and
outstanding............................................................. 500
Series H, $0.01 par value, 145,000 shares authorized, 128,493 shares
issued and outstanding.................................................. 1,285
-------
$23,683
=======
</TABLE>

F-12
<PAGE> 58

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All preferred stock is convertible at any time into shares of common stock
at the option of the holder according to specified conversion rates
(twenty-for-one for Series A and B, and one-for-one for all other preferred
stock). In addition, Series G preferred stock is convertible into Series F
preferred stock at any time. Series F preferred stock is also convertible into
Series G preferred stock at any time. Each series of preferred stock includes
antidilution and conversion price adjustment provisions that may increase the
conversion ratio for these shares in the event of a sale by the Company of
additional shares of common stock at a price below the conversion price for such
series. Automatic conversion all preferred stock occurs upon the closings of an
initial public offering provided certain defined minimum proceeds and per share
requirements are met. The conversion of preferred stock into a total of
4,301,121 shares of common stock is reflected in the unaudited consolidated
balance sheet at December 31, 1995 at the initial public offering price of
$15.00 per share.

All preferred stockholders are entitled to dividend and voting rights
afforded common stockholders, except Series G which is non-voting, in proportion
to the number of common shares into which their preferred shares are
convertible. In addition, the holders of preferred stock have certain
antidilutive rights, rights to representation on the Company's Board of
Directors and certain required registration privileges. Series A and B preferred
stock accrue dividends cumulatively at a rate of $1.35 and $2.40 per share per
annum, respectively. Such dividends may only be paid at the discretion of the
Board of Directors and are payable upon conversion of the related shares into
common stock upon the closing of an initial public offering, out of legally
available funds.

Preferred Stock Warrants

At June 30, 1995, the Company had outstanding warrants to purchase 92,887
and 90,000 shares of Series F and Series G convertible preferred stock,
respectively, at an exercise price of $10.00 per share. These warrants were
issued in conjunction with the issuance of the same respective series of
convertible preferred stock and expire on December 31, 1996. The warrants are
subject to early expiration in the event of an initial public offering where
certain defined minimum proceeds and per share requirements are met, and are
automatically converted into proportional equivalent common stock warrants upon
the redemption, cancellation or conversion of all outstanding shares of the
related series of preferred stock.

Reserved Shares

At June 30, 1995, the Company had reserved 705,874 shares of common stock
for the exercise of common stock options and 4,237,149 and 182,887 shares of
common stock for the conversion of outstanding shares of preferred stock and
shares of preferred stock issuable upon the exercise of outstanding warrants,
respectively. In addition, shares of the various series of preferred stock are
reserved for the exercise of preferred stock warrants and preferred stock
conversions.

Treasury Stock

At June 30, 1994, the Company held 13,333 shares of common stock in
treasury, at a cost per share of $0.01. During the year ended June 30, 1995,
1,373 common shares were repurchased at a cost per share of $12.50. There were
14,706 shares of common stock held in treasury at June 30, 1995.

NOTE 12 -- STOCK AND EMPLOYEE BENEFIT PLANS

Common Stock Options

The Company's 1986 Incentive Stock Option Plan, 1987 Stock Plan and 1989
Stock Plan (collectively, the "Plans") provide for the granting of incentive and
non-qualified stock options for the purchase of shares of common stock, and
awards and sales of common stock, to directors, officers, employees and
consultants,

F-13
<PAGE> 59

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

depending upon the provisions of the plan. An aggregate of 638,000 shares of
common stock was originally reserved for issuance under the Plans.

In September 1995 the Company adopted the 1995 Stock Plan (the "1995
Plan"). The 1995 Plan provides for the issuance of up to 500,000 stock options
to key employees, officers, consultants and advisors of the Company. The Company
granted options to purchase 89,500 shares of conversion stock under the 1995
Plan contingent upon the effectiveness of the Company's initial public offering.
These options have an exercise price equal to the initial public offering price.

The Company's Board of Directors determines the type of grant, option
exercise price per share, the vesting period (generally four to five years), and
the expiration date at the date of grant.

In September 1995 the Company adopted the 1995 Non-Employee Director Stock
Option Plan ("Director Plan"). The Director Plan provides for the grant of
options to purchase up to 300,000 shares of common stock of the Company. Options
totalling 86,500 will be automatically granted upon the effective date of the
initial public offering by the Company at an exercise price equal to the initial
public offering price and will become exercisable on the first succeeding June
30th after the effective date. All other options become exercisable in three
equal annual installments beginning on the first anniversary of the date of
grant, subject to specified meeting attendance requirements. No options have
been granted to date under the Director Plan.

In addition to plan options granted, the Company granted options to
purchase an aggregate of 86,300 shares of common stock not pursuant to any plan
at various dates prior to 1989, which options remain outstanding at June 30,
1995. These options are exercisable at any time at prices ranging from $0.35 to
$0.75 per share. During the year ended June 30, 1994, the Company granted
additional options to purchase 40,000 shares of common stock not pursuant to any
plan. These options vest over a three year period and have an exercise price of
$12.50 per share.

<TABLE>
Aggregate stock option activity during fiscal 1993, 1994 and 1995 was as
follows:

<CAPTION>
SHARES EXERCISE PRICE
-------- ---------------
<S> <C> <C>

Outstanding at June 30, 1992..................................... 761,206 $ 0.25 -- $10.00
Granted..................................................... 19,000 10.00 -- 12.50
Canceled.................................................... (28,684) 0.60 -- 12.50
Exercised................................................... (10,500) 0.60 -- 6.00
--------

Outstanding at June 30, 1993..................................... 741,022 0.25 -- 12.50
Granted..................................................... 95,300 12.50
Canceled.................................................... (11,500) 0.60 -- 12.50
Exercised................................................... (102,000) 0.60 -- 0.75
--------

Outstanding at June 30, 1994..................................... 722,822 0.25 -- 12.50
Granted..................................................... 12,000 12.50
Canceled.................................................... (75,383) 3.00 -- 12.50
Exercised................................................... (21,986) 3.00
--------

Outstanding at June 30, 1995..................................... 637,453 0.25 -- 12.50
========
Exercisable at June 30, 1995..................................... 556,644 0.25 -- 12.50
========
Available for future grant at June 30, 1995...................... 68,421
========
</TABLE>

All of the foregoing options were granted with an exercise price equal to
fair market value at the time of grant, as determined by the Board of Directors.

F-14
<PAGE> 60

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Stock Purchase Plan

In September 1995 the Company adopted the 1995 Employee Stock Purchase Plan
(the "Purchase Plan"). Under the Purchase Plan, employees may be granted the
opportunity to purchase common stock at 85% of the average market value on the
first or last day of the plan period (as defined by the Purchase Plan),
whichever is lower. An aggregate of 300,000 shares may be issued under the
Purchase Plan.

401(k) Plan

The Company sponsors an employee savings plan (the "Plan") as defined by
Section 401(k) of the Internal Revenue Code of 1986, as amended. The Plan covers
substantially all employees in the U.S. who elect to participate. Participants
have the opportunity to invest on a pre-tax basis in a variety of mutual fund
options. Effective July 1, 1992, the Company matches 100% of each participants'
voluntary contributions up to 3% of gross salary per payroll period. Company
contributions vest to the participants in 20% increments for each year of
employment and become fully vested after five years of continued employment.
Company contributions to the Plan were $376,000 and $327,000 for the years ended
June 30, 1994 and 1995, respectively.

NOTE 13 -- INCOME TAXES

<TABLE>
Domestic and foreign income (loss) before income taxes for the years ended
June 30, 1993, 1994 and 1995 are as follows (in thousands):

<CAPTION>
1993 1994 1995
------- ------ --------
<S> <C> <C> <C>
Domestic................................................. $ 3,588 $2,702 $ 350
Foreign.................................................. (3,810) 794 (10,660)
------- ------ --------
$ (222) $3,496 $(10,310)
======= ====== ========
</TABLE>
<TABLE>

The following table summarizes the provision for income taxes for the year
ended June 30, 1993 under FAS 96 and for the years ended June 30, 1994 and 1995
under FAS 109 (in thousands):

<CAPTION>
1993 1994 1995
------ ------ -----
<S> <C> <C> <C>
Current:
Federal............................................ $1,209 $ 881 $ 274
State.............................................. 494 421 192
Foreign............................................ 80 361 78
------ ------ -----
1,783 1,663 544
------ ------ -----
Deferred:
Federal............................................ 138 (55) (164)
State.............................................. (6) (18) (55)
Foreign............................................ -- (17) (5)
------ ------ -----
132 (90) (224)
------ ------ -----
Benefit of acquired loss carryforwards to reduce
goodwill.............................................. 20 -- --
------ ------ -----
$1,935 $1,573 $ 320
====== ====== =====
</TABLE>

F-15
<PAGE> 61

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
Income taxes are greater than the amount of income tax determined by
applying the applicable U.S. federal statutory income tax rate to income before
income taxes as a result of the following differences (in thousands):

<CAPTION>
1993 1994 1995
------ ------ -------
<S> <C> <C> <C>
Income tax expense (benefit) at the 34% federal
statutory rate....................................... $ (76) $1,189 $(3,505)
State income taxes, net of federal benefit............. 322 282 92
Foreign rate differential.............................. (3) 105 (108)
Non-deductible amortization of intangible assets....... 349 305 169
Non-deductible impairment of assets.................... -- -- 3,348
Foreign operating losses without current benefit....... 23 -- 334
Temporary items without current benefit (reversals).... 1,302 (341) --
Other.................................................. 18 33 (10)
------ ------ -------
$1,935 $1,573 $ 320
====== ====== =======
</TABLE>

Temporary items without current benefit relate primarily to book and tax
differences between the deductibility of restructuring charges (see Note 4).

Provision has not been made for U.S. or additional foreign taxes on
undistributed earnings of foreign subsidiaries as those earnings have been
permanently reinvested. Such taxes, if any, are not expected to be significant.

<TABLE>
Significant components of the Company's net deferred tax asset as of June
30, 1994 and 1995 are as follows (in thousands):

<CAPTION>
1994 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Foreign loss carryforwards.................................. $ 6,440 $ 6,891
Facility and other restructuring costs...................... 857 763
Accrued expenses............................................ 364 445
Property and equipment...................................... -- 703
Allowance for doubtful accounts............................. 162 417
Other....................................................... -- 118
------- -------
Gross deferred tax assets................................... 7,823 9,337
Deferred tax asset valuation allowance...................... (6,071) (7,491)
------- -------
Total deferred tax assets.............................. 1,752 1,846
------- -------
Deferred tax liabilities:
Deferred foreign contract profit............................ (754) (463)
Other....................................................... (148) (289)
------- -------
Total deferred tax liabilities......................... (902) (752)
------- -------
$ 850 $ 1,094
======= =======
</TABLE>

The net deferred tax asset includes the tax effect of approximately
$13,900,000 of pre-acquisition and post-acquisition foreign tax loss
carryforwards available to offset future liabilities for foreign income tax.
Substantially all of the foreign tax losses are carried forward indefinitely,
subject to certain limitations. A valuation allowance has been established for
the future foreign income tax benefits primarily related to income tax loss
carryforwards and temporary differences. The ultimate realization of these loss
carryforwards is primarily dependent upon the generation of sufficient taxable
income in respective foreign jurisdictions, primarily Germany.

F-16
<PAGE> 62

PAREXEL INTERNATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
The sources of the components comprising the deferred income tax expense
(benefit) are as follows for the year ended June 30, 1993 as recorded under FAS
96 (in thousands):

<CAPTION>
1993
----
<S> <C>
Depreciation...................................................... 37
Accounts receivable............................................... (16)
Compensation costs................................................ (44)
Facility restructuring............................................ 156
Other............................................................. (1)
----
$132
====
</TABLE>

NOTE 14 -- OTHER INCOME (EXPENSE), NET

Other income (expense), net includes interest income of $370,000, $250,000
and $213,000 for the years ended June 30, 1993, 1994, and 1995, respectively. In
addition, expenses from postponed initial public offerings of $775,000 and
$450,000 are included for the years ended June 30, 1993 and 1994, respectively.

NOTE 15 -- GEOGRAPHIC INFORMATION

<TABLE>
The Company's operations involve a single industry segment providing
clinical research and development services. The principal financial information
by geographic area is as follows (in thousands):

<CAPTION>
FOR THE YEAR ENDED JUNE 30,
--------------------------------
1993 1994 1995
------- ------- --------
<S> <C> <C> <C>
Net revenue
North America........................................... $33,023 $37,111 $ 35,037
Europe.................................................. 20,977 20,891 23,443
Asia.................................................... -- -- 93
------- ------- --------
$54,000 $58,002 $ 58,573
======= ======= ========
Income (loss) from operations
North America........................................... $ 4,127 $ 3,096 $ 376
Europe.................................................. (3,829) 596 (10,741)
Asia.................................................... -- -- 0
------- ------- --------
$ 298 $ 3,692 $(10,365)
======= ======= ========
Identifiable assets
North America........................................... $20,199 $21,349 $ 25,288
Europe.................................................. 25,258 24,587 17,927
Asia.................................................... -- -- 35
------- ------- --------
$45,457 $45,936 $ 43,250
======= ======= ========
</TABLE>

Significant Customers

For the year ended June 30, 1993, two customers accounted for 12.9% and
11.3% of the Company's consolidated net revenue. No single customer accounted
for more than 10% of the Company's consolidated net revenue for the year ended
June 30, 1994 or 1995.

F-17
<PAGE> 63

PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 -- COMMITMENTS

<TABLE>
The Company leases its facilities under operating leases which include
renewal and escalation clauses. Total rent expense was approximately $3,323,000,
$3,722,000 and $4,258,000 for years ended June 30, 1993, 1994 and 1995,
respectively. Future minimum lease commitments due under non-cancelable
operating leases and capital lease obligations at each fiscal year end are as
follows (in thousands):

<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1996.......................................................... $ 774 $ 3,999
1997.......................................................... 567 3,592
1998.......................................................... 99 3,041
1999.......................................................... -- 2,557
2000.......................................................... -- 2,275
Thereafter.................................................... -- 3,551
------ -------
Total obligations............................................. 1,440 $19,015
=======
Less amount representing interest............................. 115
------
$1,325
======
</TABLE>

NOTE 17 -- RELATED PARTY TRANSACTIONS

Certain of the Company's Directors are affiliated with certain of the
Company's customers. Net revenue recognized from these customers was $26,000,
$1,029,000 and $937,000 in fiscal 1993, 1994 and 1995, respectively. Amounts
included in accounts receivable at June 30, 1994 and 1995 were $464,000 and
$161,000, respectively. Related party amounts included in accounts receivable
are on standard terms and manner of settlement.

F-18
<PAGE> 64

================================================================================

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OF THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.

---------------------

<TABLE>
TABLE OF CONTENTS

<CAPTION>
PAGE
----
<S> <C>
Additional Information................ 2
Summary............................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 10
Price Range of Common Stock and
Dividend Policy..................... 10
Capitalization........................ 11
Selected Consolidated Financial
Data................................ 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 21
Management............................ 32
Certain Relationships and Related
Transactions........................ 37
Principal Stockholders................ 39
Selling Stockholders.................. 40
Description of Capital Stock.......... 41
Plan of Distribution.................. 43
Legal Matters......................... 43
Experts............................... 44
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

================================================================================

56,818 SHARES

[PAREXEL LOGO]

COMMON STOCK

------------------------------
PROSPECTUS
, 1996
------------------------------

================================================================================
<PAGE> 65

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:

<S> <C>
Registration fee........................................................... $ 880
Nasdaq Additional Listing fee.............................................. 1,616
Printing and engraving expenses............................................ 15,000
Legal fees and expenses.................................................... 10,000
Accounting fees and expenses............................................... 10,000
Blue Sky fees and expenses (including legal fees).......................... 1,500
Miscellaneous.............................................................. 11,004
-------
Total............................................................ $50,000
=======

The Company will bear all expenses shown above.
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article 6 of the Company's Restated Articles of Organization provides that
the Company shall indemnify each person who is or was a director or officer of
the Company, and each person who is or was serving or has agreed to serve at the
request of the Company as a director or officer of, or in a similar capacity
with, another organization against all liabilities, costs and expenses
reasonably incurred by any such persons in connection with the defense or
disposition of or otherwise in connection with or resulting from any action,
suit or other proceeding in which they may be involved by reason of being or
having been such a director or officer or by reason of any action taken or not
taken in such capacity, except with respect to any matter as to which such
person shall have been finally adjudicated by a court of competent jurisdiction
not to have acted in good faith in the reasonable belief that his or her action
was in the best interests of the Company. Section 67 of Chapter 156B of the
Massachusetts Business Corporation Law authorizes a corporation to indemnify its
directors, officers, employees and other agents unless such person shall have
been adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that such action was in the best interests of the corporation.

Reference is hereby made to Section 9 of the Registration Rights Agreement
among the Company and the Selling Stockholders, filed as Exhibit 10.24 of this
Registration Statement, for a description of indemnification arrangements
between the Company and the Selling Stockholders, pursuant to which the Selling
Stockholders are obligated, under certain circumstances, to indemnify directors,
officers and controlling persons of the Company against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the "Act").

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Act:

Since July 1, 1992 and through the date prior to the effective date, the
Company has issued options to purchase an aggregate of 582,800 shares of Common
Stock exercisable at a weighted average price of $25.80. Since July 1, 1992,
options to purchase an aggregate of 379,239 shares of Common Stock have been
exercised.

II-1
<PAGE> 66

No underwriter was engaged in connection with the foregoing sales of
securities. Sales of Common Stock to directors, officers and employees were made
in reliance upon Section 4(2) of the Act as transactions not involving any
public offering or in reliance upon Rule 701 under the Act or Regulation S under
the Act. Sales of the shares of Convertible Preferred Stock and Warrants were
made in reliance upon Section 4(2) of the Act as a transaction not involving any
public offering, Rule 506 of Regulation D under the Act, or Regulation S under
the Act. The Company has reason to believe that all of the foregoing purchasers
were familiar with or had access to information concerning the operations and
financial condition of the Company, and all of those individuals acquired the
shares for investment and not with a view to the distribution thereof. At the
time of issuance, all of the foregoing securities were deemed to be restricted
securities for the purposes of the Act and the certificates representing such
securities bore legends to that effect.

<TABLE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.

(a) Exhibits.

<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
3.1* -- Amended and Restated Articles of Organization of the Company (filed as exhibit
3.1 to the Registrant's Registration Statement on Form S-1 (File No. 333-1188)
and incorporated herein by this reference).

3.2* -- Amended and Restated By-laws of the Company (filed as exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 (File No. 333-1188) and
incorporated herein by this reference).

4.1* -- Specimen certificate representing the Common Stock of the Company (filed as
exhibit 4.1 to the Registrant's Registration Statement on Form S-1 (File No.
33-97406) and incorporated herein by this reference).

4.2* -- Stock Purchase Agreement dated as of May 24, 1996 between the Company, Sitebase
Clinical Systems, Inc., Raymond A. Konisky and Karen A. Konisky.

4.3* -- Registration Rights Agreement dated as of June 28, 1996 between the Company,
Raymond A. Konisky and Karen A. Konisky.

5.1* -- Opinion of Testa, Hurwitz & Thibeault, LLP.

10.1* -- Stock Restriction and Registration Rights Agreement dated as of June 15, 1990
among the Company and Samuel T. Barnett and Frederic Harwood (filed as exhibit
10.1 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).

10.2* -- Stock Purchase, Restriction and Registration Rights Agreement dated as of March
11, 1991 between the Company and Prof. Dr. Werner M. Herrmann (filed as exhibit
10.2 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).

10.3* -- Investment Agreement dated as of December 26, 1990 among the Company and the
stockholders named therein (filed as exhibit 10.3 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).

10.4* -- Investment Agreement dated as of March 31, 1992 among the Company and the
stockholders named therein (filed as exhibit 10.4 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).

10.5* -- Sales Contract dated March 11, 1991 among Prof. Dr. Werner M. Herrmann, Josef H.
von Rickenbach and William T. Sobo with respect to the sale by Prof. Dr. Herrmann
of a majority interest in AFB Arzneimittelforschung GmbH (filed as exhibit 10.5
to the Registrant's Registration Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).
</TABLE>

II-2
<PAGE> 67

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.6* -- Employment Agreement dated June 30, 1993 between AFB-PAREXEL GmbH Independent
Pharmaceutical Research Organization and Prof. Dr. med. Werner M. Herrmann (filed
as exhibit 10.6 to the Registrant's Registration Statement on Form S-1 (File No.
33-97406) and incorporated herein by this reference).

10.7* -- Letter Agreement dated June 30, 1993 between the Company and Prof. Dr. Werner M.
Herrmann (filed as exhibit 10.7 to the Registrant's Registration Statement on
Form S-1 (File No. 33-97406) and incorporated herein by this reference).

10.8* -- Employment Agreement dated July 2, 1987 between Dr. Veronica G.H. Jordan and the
Company (filed as exhibit 10.8 to the Registrant's Registration Statement on Form
S-1 (File No. 33-97406) and incorporated herein by this reference).

10.9* -- Form of Stock Option Agreement of the Company (filed as exhibit 10.9 to the
Registrant's Registration Statement on Form S-1 (File No. 333-1188) and
incorporated herein by this reference).

10.10* -- 1986 Incentive Stock Option Plan of the Company (filed as exhibit 10.10 to the
Registrant's Registration Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).

10.11* -- 1987 Stock Plan of the Company (filed as exhibit 10.11 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).

10.12* -- 1989 Stock Plan of the Company (filed as exhibit 10.12 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).

10.13* -- 1995 Stock Plan of the Company (filed as exhibit 10.13 to the Registrant's
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).

10.14* -- 1995 Non-Employee Director Stock Option Plan of the Company (filed as exhibit
10.14 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).

10.15* -- 1995 Employee Stock Purchase Plan of the Company (filed as exhibit 10.15 to the
Registrant's Registration Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).

10.16* -- Corporate Plan for Retirement of the Company (filed as exhibit 10.16 to the
Registrant's Registration Statement on Form S-1 (File No. 33-97406) and
incorporated herein by this reference).

10.17* -- Loan and Security Agreement dated as of July 31, 1992 between the Company,
Barnett International Corporation and The First National Bank of Boston, as
amended.

10.18* -- Line of Credit Agreement between PAREXEL GmbH and Deutsche Bank Berlin, dated
January 23, 1995 (filed as exhibit 10.24 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).

10.19* -- First Amendment dated as of January 3, 1992 to the Lease dated June 14, 1991
between 200 West Street Limited Partnership and the Company (filed as exhibit
10.25 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).

10.20* -- Second Amendment dated as of June 28, 1993 to the lease dated June 14, 1991
between 200 West Street Limited Partnership and the Company (filed as exhibit
10.28 to the Registrant's Registration Statement on Form S-1 (File No. 33-97406)
and incorporated herein by this reference).

10.21* -- Letter of employment dated July 6, 1993 between Barry R. Philpott and the Company
(filed as exhibit 10.29 to the Registrant's Registration Statement on Form S-1
(File No. 33-97406) and incorporated herein by this reference).
</TABLE>

II-3
<PAGE> 68

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S> <C>
10.22* -- Credit Agreement dated December 30, 1994 between PAREXEL GmbH and The First
National Bank of Boston (filed as exhibit 10.30 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).

10.23* -- Collateral Agreement dated December 30, 1994 between PAREXEL GmbH and The First
National Bank of Boston (filed as exhibit 10.31 to the Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).

11.1* -- Statement re computation of per share earnings.

21.1* -- List of subsidiaries of the Company.

23.1+ -- Consent of Price Waterhouse LLP.

23.2 -- Consent of Testa, Hurwitz & Thibeault, LLP (contained in Exhibit 5.1).

24.1 -- Powers of Attorney (see page II-7).
<FN>

- ---------------

* previously filed.
+ filed herewith.
</TABLE>
<TABLE>

(b) Financial Statement Schedule for the three years ended June 30, 1995:

<CAPTION>
PAGE
NUMBER
------
<S> <C> <C> <C>
Schedule II -- Valuation and Qualifying Accounts and Reserves................. S-1
</TABLE>

All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or the
notes thereto.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to provisions described in Item 14 above, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes (1) to file, during any period
in which offers or sales are being made, a post-effective amendment to this
registration statement to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement or to include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement; (2)
that, for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering; and (4) that for purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of a registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

II-4
<PAGE> 69

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Waltham, Massachusetts, on the 20th
day of August, 1996.

PAREXEL INTERNATIONAL CORPORATION

By: /s/ WILLIAM T. SOBO, JR.
------------------------------
William T. Sobo, Jr.
Senior Vice President and
Treasurer

SIGNATURES
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<CAPTION>
SIGNATURES TITLE(S) DATE
---------- -------- ----
<S> <C> <C>
* President, Chief Executive August 20, 1996
- ------------------------------------------ Officer and Chairman (principal
Josef H. von Rickenbach executive officer)

/S/ WILLIAM T. SOBO, JR. Senior Vice President and August 20, 1996
- ------------------------------------------ Treasurer (principal financial
William T. Sobo, Jr. and accounting officer)

* Director August 20, 1996
- ------------------------------------------
A. Dana Callow

* Director August 20, 1996
- ------------------------------------------
Patrick J. Fortune

* Director August 20, 1996
- ------------------------------------------
Werner M. Herrmann

* Director August 20, 1996
- ------------------------------------------
Peter Barton Hutt

* Director August 20, 1996
- ------------------------------------------
James A. Saalfield

*By: /s/ WILLIAM T. SOBO, JR.
- ------------------------------------------
William T. Sobo, Jr.
Attorney-in-fact
</TABLE>

II-5
<PAGE> 70

SCHEDULE II

PAREXEL INTERNATIONAL CORPORATION

<TABLE>
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>

BALANCE AT CHARGED TO CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING OF COSTS AND OTHER AND END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS WRITE-OFFS PERIOD
----------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Year ended June 30, 1993..... $ 321,000 $ 143,000 -- $(222,000) $ 242,000
Year ended June 30, 1994..... 242,000 349,000 -- (11,000) 580,000
Year ended June 30, 1995..... 580,000 1,021,000 -- (327,000) 1,274,000
Deferred tax asset valuation
allowance
Year ended June 30, 1994..... -- -- $6,659,000(1) (588,000) 6,071,000
Year ended June 30, 1995..... 6,071,000 -- 1,620,000 (200,000) 7,491,000
<FN>

- ---------------

(1) Recorded in connection with the adoption of Statement of Financial
Accounting Standards No. 109 on July 1, 1993.
</TABLE>

S-1

<PAGE> 1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form S-1 of our report dated September 25, 1995
relating to the financial statements of PAREXEL International Corporation, which
appears in such Prospectus. We also consent to the application of such report to
the Financial Statement Schedule for the three years ended June 30, 1995 listed
under Item 16(b) of this Registration Statement when such schedule is read in
conjunction with the financial statements referred to in our report. The audits
referred to in such report also included this schedule. We also consent to the
references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data."

PRICE WATERHOUSE LLP

Boston, Massachusetts

August 20, 1996