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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
OCTOBER 23, 1997
PAREXEL INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Massachusetts 0-27058 04-2776269
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
incorporation)
195 West Street, Waltham, Massachusetts 02154
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 487-9900
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report).
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ITEM 5. OTHER EVENTS.
On October 23, 1997, the Company issued a press release, a copy of which is
attached as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Exhibit
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99.1 Press release of the Company dated October 23, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAREXEL International Corporation
Dated: October 23, 1997 By: /s/ William T. Sobo, Jr.
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William T. Sobo, Jr., Senior
Vice President, Chief Financial
Officer, Treasurer and Clerk
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EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release of the Company dated October 23, 1997
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EXHIBIT 99.1
PAREXEL Reports First Quarter Results and Agrees to Acquire
Kemper-Masterson, Inc
BOSTON, Oct. 23 /PRNewswire/ -- PAREXEL International Corporation (Nasdaq: PRXL)
today reported the financial results of its first fiscal quarter ended September
30, 1997, and also announced the signing of a definitive agreement to acquire
Kemper-Masterson, Inc. (KMI), a leading management consulting firm on FDA and
other regulatory matters to the worldwide pharmaceutical, biotechnology and
medical device industries.
PAREXEL's net revenue was $51.2 million for the three months ended September 30,
1997, representing a 55% increase over net revenue of $33.0 million for the same
quarter of the prior year. Income from operations for the three months ended
September 30, 1997 increased 71% to $4.6 million, or 9.0% of net revenue,
compared to $2.7 million, or 8.2% of net revenue, in the prior year period. Net
income for the quarter was $3.6 million, or $0.18 per share, versus $1.9
million, or $0.11 per share, last year. This represents an 87% increase in net
income and a 57% increase in earnings per share between periods.
"PAREXEL has delivered another quarter of solid financial performance and
continues to lead the industry in internal revenue growth," said Josef H. von
Rickenbach, Chairman and Chief Executive Officer of PAREXEL. "These results
reflect the strong demand for pharmaceutical outsourcing services around the
world and PAREXEL's favorable competitive position for capturing market share."
The definitive agreement with KMI provides that PAREXEL will issue common stock
valued at $23 million in exchange for all of the outstanding common stock of
KMI. As one of the largest independent providers of FDA compliance and computer
systems validation services to the pharmaceutical, biotechnology and medical
device industries, KMI aids clients in formulating and executing regulatory
strategies in conformance with good manufacturing practices (GMP), and to a
lesser extent good clinical practices (GCP) and good laboratory practices (GLP),
throughout their manufacturing, research and development, and clinical
processes. Established in 1989 and based in the Boston area, KMI employs
approximately 100 individuals and generated net revenue of approximately $11
million during the trailing twelve-month period, with over 25% derived outside
of the United States.
Employing an impressive team of former FDA investigators and experienced
engineers, KMI integrates its established methodologies and innovative
information systems to assist clients in sustaining compliant and high-quality
regulatory environments throughout their existing and future operations.
Examples of services include: validation of computer systems and manufacturing
processes, GMP/GCP/GLP audits and training, FDA pre-approval inspection
assistance, compliance evaluations of new and existing manufacturing facilities,
quality assurance services, documentation and review of engineering
specifications and standard operating procedures, and new drug development
plans.
Clarence A. Kemper, Ph.D., Chairman of KMI, offered, "We share PAREXEL's vision
which incorporates a focus on outstanding client service and key ingredients for
success in our business,
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including investments in information technology, planning, execution, and
training." P. Michael Masterson, President of KMI, continued, "We look forward
to joining forces with PAREXEL, helping them expand their regulatory expertise
and value-added skill sets, and further leveraging our knowledge throughout the
development and manufacturing processes of new and existing clients."
The KMI acquisition will be accounted for as a pooling of interests for
financial reporting purposes. Completion of the transaction is subject to
certain conditions and is expected to occur by early December 1997. Upon
closing, the Company anticipates that it will record a one-time charge of
approximately $4.1 million in the December quarter, primarily related to a
non-cash accounting adjustment for stock options previously issued by KMI to
certain of its key employees.
Josef von Rickenbach remarked, "KMI fits nicely with PAREXEL's strategy to offer
a full spectrum of biopharmaceutical knowledge-based outsourcing services on a
worldwide basis. The dynamics of both businesses are quite similar, yet KMI adds
a new and important dimension to our portfolio of services taking us beyond the
clinic into the laboratory and manufacturing environments in a high end,
technical advisory capacity."
PAREXEL is a leading contract research and medical marketing organization
providing a broad range of knowledge-based outsourcing services to the worldwide
pharmaceutical, biotechnology and medical device industries. Over the past
fifteen years, PAREXEL has developed significant expertise in clinical trials
management, data management, biostatistical analysis, medical marketing,
clinical pharmacology, regulatory and medical consulting, industry training and
publishing, and other drug development consulting services. The Company's
integrated services, therapeutic area depth, and sophisticated information
technology, along with its experience in global drug development and product
launch services, represent key competitive strengths. Headquartered near Boston,
MA, PAREXEL has 20 offices in 10 countries.
This release may contain statements which may be "forward-looking" statements
under federal law. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to: risks associated with
the loss or delay of large contracts; the Company's dependence on certain
industries and clients; management of growth and the ability to attract and
retain employees; acquisitions; government regulation of certain industries and
clients; and competition or consolidation within the industry. These factors and
others are discussed more fully in the section entitled "Risk Factors" of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997.
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<TABLE>
PAREXEL International Corporation
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
<CAPTION>
Three months ended
September 30,
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1997 1996
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(Unaudited)
<S> <C> <C>
Net revenue $51,211 $33,030
Costs and expenses:
Direct costs 34,723 22,821
Selling, general
and administrative 9,884 6,617
Depreciation and amortization 1,978 883
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Income from operations 4,626 2,709
Other income, net 956 364
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Income before income taxes $ 5,582 $ 3,073
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Net income $ 3,628 $ 1,936
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Net income per share $ 0.18 $ 0.11
Weighted average common and
common equivalent shares
outstanding 20,591 17,256
</TABLE>
<TABLE>
<CAPTION>
Consolidated Balance Sheet Information
(In thousands)
Sept. 30, June 30,
1997 1997
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(Unaudited)
<S> <C> <C>
Working capital $111,185 $110,461
Total assets 199,607 201,001
Stockholders' equity 142,971 137,825
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