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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-27058
PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
MASSACHUSETTS 04-2776269
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
195 WEST STREET
WALTHAM, MASSACHUSETTS 02451
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 487-9900
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value per share
(Title of class)
(Continued)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO __.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant:
The aggregate market value of Common Stock held by nonaffiliates was
$203,929,372 as of September 21, 2000.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
As of September 21, 2000, there were 24,694,642 shares of the
registrant's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the Registrant's 2000 Annual Report to Stockholders for
the fiscal year ended June 30, 2000 are incorporated by reference into Part II
of this report.
Specified portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on November 16, 2000 are incorporated by reference into
Part III of this report.
(End of cover page)
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PAREXEL INTERNATIONAL CORPORATION
FORM 10-K ANNUAL REPORT
INDEX
PAGE
----
PART I.
Item 1. Business 4
Risk Factors 13
Item 2. Properties 16
Item 3. Legal Proceedings 16
Item 4. Submission of Matters to a Vote 16
of Security Holders
PART II
Item 5. Market for Registrant's Common Equity 17
and Related Stockholder Matters
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis of Financial 17
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures 17
About Market Risk
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements with Accountants on 17
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 17
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners 17
and Management
Item 13. Certain Relationships and Related Transactions 17
PART IV
Item 14. Exhibits, Financial Statement Schedule, and 18
Reports on Form 8-K
SIGNATURES 21
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PART I
ITEM 1. BUSINESS
GENERAL
PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading
contract research, medical marketing and consulting services organization
providing a broad spectrum of services from first-in-human clinical studies
through product launch to the pharmaceutical, biotechnology, and medical device
industries around the world. The Company's primary objective is to help clients
rapidly obtain the necessary regulatory approvals of their products and quickly
reach peak sales. Over the past seventeen years, PAREXEL has developed
significant expertise in disciplines and technologies supporting this strategy.
The Company's service offerings include: clinical trials management, data
management, biostatistical analysis, medical marketing, clinical pharmacology,
regulatory and medical consulting, performance improvement, industry training
and publishing, and other drug development consulting services. The Company
believes that its integrated services, depth of therapeutic area expertise, and
sophisticated information technology, along with its experience in global drug
development and product launch services, represent key competitive strengths.
The Company complements the research and development ("R&D") and marketing
functions of pharmaceutical, biotechnology, and medical device companies.
Through its clinical research and product launch services, PAREXEL helps clients
maximize the return on their significant investments in research and development
by reducing the time and cost of clinical development and launch of new
products. Outsourcing these types of services to PAREXEL provides clients with a
variable cost alternative to the fixed costs associated with internal drug
development. Clients no longer need to staff to peak periods and can benefit
from PAREXEL's technical resource pool, broad therapeutic area expertise, global
infrastructure designed to expedite parallel, multi-country clinical trials, and
other advisory services focused on accelerating time-to-market. The Company's
vision is to integrate and build critical mass in the complementary businesses
of clinical research, medical marketing and drug development consulting
services. The Company sees significant benefits accruing to sponsor clients from
this strategy, namely, a faster and less expensive development and launch
process, as well as a clinical development strategy that optimally supports the
marketing strategy for the new pharmaceutical product.
The Company believes it is the third largest contract research organization
("CRO") in the world (based upon annual net revenue). Headquartered near Boston,
Massachusetts, the Company manages 41 locations and has approximately 4,200
employees throughout 29 countries around the world. The Company has established
footholds in the major health care markets around the world, including the
United States, Japan, Germany, the United Kingdom ("U.K."), France, Italy,
Spain, Sweden, Australia, Latin America, Israel, Norway, Holland, and Eastern
Europe, including Russia, Poland, Czech Republic, Lithuania and Hungary. The
Company believes it is the second largest clinical CRO in both Europe and Japan,
based upon annual net revenue). During fiscal 2000, PAREXEL derived 40% of its
revenue from its international operations, distinguishing the Company from many
of its competitors.
The Company was founded in 1983 as a regulatory consulting firm and is a
Massachusetts corporation. Josef H. von Rickenbach, Chairman of the Board,
President, and Chief Executive Officer of PAREXEL, was a co-founder. Since its
inception, the Company has executed a focused growth strategy embracing internal
expansion, as well as strategic acquisitions to expand or enhance the Company's
portfolio of services, geographic presence, therapeutic area knowledge,
information technology, and client relationships. Acquisitions have been and
will continue to be an important component of PAREXEL's growth strategy.
In September 1999, the Company acquired CEMAF S.A., a leading Phase I clinical
research and bioanalytical laboratory located in Poitiers, France in a purchase
business combination.
INDUSTRY OVERVIEW
The CRO industry provides independent product development and related services
on an outsourced basis to the pharmaceutical, biotechnology, and medical device
industries. The CRO industry has evolved from providing limited clinical
services in the 1970s to an industry which currently offers a full range of
services that encompass the research, development and commercialization
processes, including discovery, pre-clinical evaluations, study design, clinical
trial management, data collection and management, biostatistical analysis,
clinical formulation, packaging, manufacturing, laboratory testing, product
registrations, medical marketing, contract sales, and other services. CROs are
required to conduct services in accordance with strict regulations which govern
clinical trials and the drug approval process.
The CRO industry is fragmented, with participants ranging from several hundred
small, limited-service providers to several large full-service CROs with global
operations. The Company believes there are significant barriers to becoming a
full-service CRO with global capabilities. Some of these barriers include the
development of broad therapeutic area knowledge and expertise in other technical
areas, the infrastructure and experience necessary to serve the global demands
of clients, the ability to simultaneously manage complex clinical trials in
numerous countries, the expertise to prepare regulatory submissions in multiple
countries, the development and maintenance of complex information technology
systems required to integrate these capabilities, the establishment of solid
working relationships with repeat clients, a strong history of financial
performance, and capital funding to finance growth. In recent years, the CRO
industry has experienced consolidation reflected in the acquisitions of smaller
firms by larger, public CROs.
The CRO industry derives substantially all of its revenue from the
pharmaceutical and biotechnology industries. It is estimated that the global
pharmaceutical and biotechnology industries spent approximately $53 billion in
1999 on research and development, with an equal or greater amount spent on
marketing and selling activities. More than $5 billion is estimated to have been
outsourced to CROs, and the pharmaceutical outsourcing industry is projected to
be growing 10-15% annually. The CRO industry's reliance on the pharmaceutical
sector makes it sensitive to changes in that industry. Over the past year,
consolidation in the pharmaceutical industry has been a primary driver of
increased project cancellations and delays,
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affecting all of the major CROs. We believe that the cancellations will return
to past levels as the newly merged pharmaceutical companies complete their
integration and restructuring.
Long term, the Company believes that there are a number of positive trends in
the pharmaceutical industry driving the CRO industry's growth, including the
following:
- CONTINUING PRESSURE FOR NEW PRODUCTS. The Company believes that
research and development expenditures have increased as a result of
the constant pressure to develop product pipelines, and to respond
to the demand for products for an aging population and for the
treatment of chronic disorders and life-threatening conditions in
such therapeutic categories as infectious disease, central nervous
system, cardiology and oncology. The development of therapies for
chronic disorders, requires complex clinical trials to demonstrate
the therapy's safety and effectiveness, and to determine if the
drug causes any long-term side effects.
- GLOBALIZATION OF CLINICAL DEVELOPMENT AND REGULATORY STRATEGY.
Pharmaceutical and biotechnology companies increasingly are
attempting to maximize profits from a given drug by pursuing
regulatory approvals in multiple countries simultaneously rather
than sequentially, as was the practice historically. The Company
believes that the globalization of clinical research and
development activities has increased the demand for CRO services. A
pharmaceutical or biotechnology company seeking approvals in a
country in which it lacks experience or internal resources will
frequently turn to a CRO for assistance in interacting with
regulators or in organizing and conducting clinical trials. In
addition, a company may turn to a CRO in the belief that regulatory
authorities who are not familiar with the company may have more
confidence in the results from tests independently conducted by a
CRO known to those authorities.
- CONSOLIDATION IN THE PHARMACEUTICAL INDUSTRY. Consolidation in the
pharmaceutical industry has accelerated during the past year as
companies seek to boost pipelines and reduce costs through business
combinations. While the near term focus on merger integration has,
in some cases, disrupted a client's R&D and outsourcing programs,
once the merger integration is completed, we expect that many
companies will manage costs by reducing headcount and outsourcing
to variable-cost CROs in an effort to reduce the fixed costs
associated with internal drug development.
- INCREASINGLY COMPLEX AND STRINGENT REGULATION, NEED FOR
TECHNOLOGICAL CAPABILITIES. Increasingly complex and stringent
regulatory requirements throughout the world have increased the
volume of data required for regulatory filings and escalated the
demands on data collection and analysis during the drug development
process. In recent years, the FDA and corresponding regulatory
agencies of Canada, Japan and Western Europe have made progress in
attempting to harmonize standards for preclinical and clinical
studies and the format and content of applications for new drug
approvals. Further, the FDA encourages the use of computer-assisted
filings in an effort to expedite the approval process. As
regulatory requirements have become more complex, the
pharmaceutical and biotechnology industries are increasingly
outsourcing to CROs to take advantage of their data management
expertise, technological capabilities and global presence.
- COMPETITIVE PRESSURES. Drug companies have been focusing on gaining
market share and more efficient ways of conducting business because
of pressures stemming from patent expirations, market acceptance of
generic drugs, and efforts of regulatory bodies and managed care
initiatives to control drug prices. The Company believes that the
pharmaceutical industry is responding by centralizing their
research and development processes and outsourcing to variable cost
CROs, thereby reducing the fixed costs associated with internal
drug development. The CRO industry, by specializing in clinical
trials management, is often able to perform the needed services
with a higher level of expertise or specialization, on a more
timely basis, and at a lower cost than the client could perform the
services internally. The Company believes that some large
pharmaceutical companies, rather than utilizing many CRO service
providers, are selecting a limited number of full-service, global
CROs to serve as their primary CROs.
- GROWTH OF THE BIOTECHNOLOGY AND SMALL PHARMACEUTICAL SECTORS. The
U.S. biotechnology industry has grown rapidly over the last ten
years, and in recent years the genomics industry has emerged with
strong growth potential. More so than in the past, biotechnology
and small pharmaceutical companies are developing products
themselves, rather than licensing compounds to larger
pharmaceutical companies. In many cases, the smaller companies do
not have the necessary experience or resources to conduct clinical
trials, registrations, and product launches, which has resulted in
increased demand for CRO services from this sector.
- ADVANCES IN DRUG DEVELOPMENT TECHNOLOGIES. A host of new
technologies for drug development, including genomics, high
throughput screening, and bioinformatics, have significantly
increased the number of drug targets available for evaluation and
development into new products. This has increased the overall level
of drug development activity and has fueled strong growth in new
compounds now in the early development stages.
PAREXEL'S STRATEGY
PAREXEL seeks to become the leading provider of outsourced clinical development
services, with a focus on reducing the time, risk, and cost associated with
developing and launching new products. Our strategy for achieving this vision is
to provide a full spectrum of expertise-driven clinical development services,
including clinical research services, drug development consulting, and
clinically oriented medical marketing services. With an ongoing commitment to
providing excellent client service and advancing safe and effective drug
therapies, the Company draws on its specialized knowledge and expertise to aid
clients in the expedition of drug development time, regulatory approval, and the
market introduction of new products. In so doing, PAREXEL helps clients achieve
an important objective, which is maximizing product revenues and profits over
limited patent lives.
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The Company's service philosophy involves a flexible approach which allows its
clients to use the Company's services on an individual or bundled basis. The
Company believes its expertise in conducting scientifically demanding trials and
its ability to coordinate complicated global trials are substantial competitive
strengths. The Company continues to devote significant resources to developing
innovative methodologies and sophisticated information systems designed to allow
the Company to more effectively manage its business operations and deliver
services to its clients. The Company has executed a focused growth strategy
embracing internal expansion and strategic acquisitions to expand or enhance the
Company's portfolio of services, geographic presence, therapeutic area
knowledge, information technology, and client relationships.
PAREXEL's business focus is on clinical development services, integrated with
medical marketing and consulting services that optimize the clinical development
phase for our clients. Management believes that PAREXEL provides substantial
benefits to client organizations by helping them achieve better integration
between their R&D and marketing functions. Designing clinical trials to meet
marketing, as well as regulatory requirements, can provide clients with a higher
return on their substantial clinical trial investment and provide marketing data
sooner. PAREXEL Clinical Research and Medical Marketing Services can work
together to assist clients in realizing these key benefits.
INVESTMENT IN INFORMATION TECHNOLOGY SERVICES
The Company believes that superior information technology is critical to
efficient drug development and launch processes, on both the client and CRO
sides. Using technology to reduce the overall cost, time, and risk of developing
and launching a new product is a key element of the Company's strategy. PAREXEL
has a subsidiary, Advanced Technology and Informatics, Inc. ("ATI"), which is
dedicated to implementing this critical strategy component. Through a
combination of internally developed technology and partnerships with other
technology leaders, ATI is able to tailor solutions to meet each client's
particular needs, from developing overall technology strategies to implementing
new systems, to effectively accommodating legacy systems. This year, the Company
introduced a series of Intranet/Extranet-based tools, including ParXnet(tm),
ParXtrial(tm), ParXlaunch(tm) and ParXware(tm). The Company is evolving these
tools on an ongoing basis, as well as developing new tools. The Company believes
that it has a leadership position in this area and expects this
technology-related business to be a key growth driver in the future. In fiscal
2001, ATI became a separate business unit to maximize its ability to create new
technology-based services.
PROVIDE A TRULY GLOBAL SERVICE
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 provides clinical research and development services to major North
American, European and Japanese pharmaceutical companies. The Company has
expanded geographically primarily through internal growth, supplemented by
strategic acquisitions, with a goal of serving all major client markets
worldwide and positioning the Company to serve developing markets. The Company
has established a presence in North America, the United Kingdom, Denmark,
Finland, France, Italy, Spain, Germany, Sweden, Norway, Lithuania, South Africa,
Japan, Australia, Israel, Poland, Hungary, the Czech Republic, and Russia.
PAREXEL also maintains a Phase I alliance with TOHO, one of the largest Japanese
pharmaceutical wholesalers and owner of the Tokyo Research Center of Clinical
Pharmacology. PAREXEL prides itself on its ability to work globally with
consistent operating processes, quality, communications, and performance metrics
across all regions.
PAREXEL is conducting a number of multinational clinical studies designed to
pursue concurrent regulatory approvals in multiple countries. The Company
believes that the expertise developed by conducting multi-jurisdictional
clinical trials is a competitive advantage as pharmaceutical companies
increasingly pursue regulatory approvals simultaneously in multiple
jurisdictions.
The Company believes that the efficient delivery of high-quality clinical
services requires adherence to standardized procedures on a worldwide basis. The
Company has devoted considerable resources to developing internal standard
operating procedures, including many internal checks and balances. These
procedures, together with the Company's information technology, enable the
Company to reduce the time involved in preparing regulatory submissions by
concurrently compiling and analyzing large volumes of data from multinational
trials and preparing regulatory submissions for filings on a global basis.
ADDRESS ALL ASPECTS OF CLINICAL RESEARCH AND PRODUCT LAUNCH AND PROVIDE
BUNDLED AND UNBUNDLED SERVICES
The Company offers a broad range of services that encompass the clinical
research process through to commercial launch. The Company believes that its
knowledge and experience in all stages of clinical research, as well as peri-
and post-approval services surrounding product launch, enhance its marketability
and credibility with clients. The Company's broad range of services and global
experience complement the R&D and marketing and sales functions of
pharmaceutical and biotechnology companies. In order to meet the needs of
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
who requires one particular service, which may in turn lead to larger, more
comprehensive projects. The Company also 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 has a depth of expertise in designing and conducting scientifically
and clinically demanding trials in a wide range of therapeutic areas, including
cardiovascular, central nervous system, oncology, gastroenterology,
endocrinology, hematology, immunology, pediatrics, rheumatology and the study of
pulmonary, reproductive and infectious diseases. PAREXEL has expertise dealing
in complex disease indications such as HIV, cancer, Alzheimers, and
transplantation. Additionally, it has successfully designed and completed
numerous trials which are complex because of their size and scope, such as with
cardiovascular drugs, intended for a very large population. The Company believes
that as trials become increasingly complex, CROs with a broad range of
experience have a competitive advantage over other companies with more limited
capabilities.
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SERVICES
The Company believes that there are outsourcing opportunities throughout the
drug development process, and the Company will continue to actively seek ways to
leverage its drug development expertise throughout the product lifecycle to
assist clients in achieving their development and commercial goals. Today, the
Company provides a full continuum of outsourced services to the pharmaceutical
and biotechnology industries ranging from first-in-human clinical studies
through a product's launch into the commercial marketplace.
Over the past seventeen years, PAREXEL has developed significant expertise in
disciplines which support clients' efforts to accelerate the development and
market introduction of their products. Specifically, PAREXEL offers such
services as: clinical trials management, data management, biostatistical
analysis, medical marketing, clinical pharmacology, regulatory and medical
consulting, industry training and publishing, and other drug development
consulting services. The Company's integrated services, therapeutic area depth,
and sophisticated information technology, along with its experience in global
drug development and product launch services, represent key competitive
strengths.
PAREXEL has internally organized its operations into three interactive business
units, namely: Clinical Research Services, Medical Marketing Services and
Consulting Services. Financial data on a business unit and geographic basis are
included in footnote 16 to the consolidated financial statements attached as
exhibit 13.1 to this annual report.
CLINICAL RESEARCH SERVICES ("CRS")
Revenues from the Clinical Trials Management, Biostatistical and Data
Management, and Advanced Technology initiatives, services that the Company's
Clinical Research Services business unit provides, represent approximately $263
million (69%) of the Company's consolidated net revenue for fiscal 2000. As
noted above, in fiscal 2001, ATI became a separate business unit.
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 cardiovascular, central nervous system, infectious
disease, AIDS/HIV, neurology, oncology, gastroenterology, endocrinology,
hematology, immunology, rheumatology, pulmonary, and reproductive diseases.
PAREXEL's multi-disciplinary clinical trials group examines a product's existing
preclinical and clinical data to design clinical trials to provide evidence of
the product's safety and efficacy.
PAREXEL can manage every aspect of clinical trials, including study and protocol
design, placement, initiation, monitoring, report preparation and strategy
development. See "Government Regulation" for additional information. Most of the
Company's clinical trials management projects involve Phase II or III clinical
trials, which are generally larger, longer and more complex than Phase I trials.
Clinical trials are monitored for and with strict adherence to good clinical
practices ("GCP"). The design of efficient Case Report Forms ("CRFs"), detailed
operations manuals and site visits by PAREXEL's clinical research associates
seek to ensure that clinical investigators and their staff follow the
established protocols of the studies. The Company has adopted standard operating
procedures which are intended to satisfy regulatory requirements and serve as a
tool for controlling and enhancing the quality of PAREXEL's worldwide clinical
services.
Clinical trials represent one of the most expensive and time-consuming parts of
the overall drug development process. The information generated during these
trials is critical for gaining marketing approval from the FDA or other
regulatory agencies. PAREXEL's clinical trials management group assists clients
with one or more of the following steps:
- STUDY PROTOCOL DESIGN. The protocol defines the medical issues the
study seeks to examine and the statistical tests that will be
conducted. Accordingly, the protocol also defines the frequency and
type of laboratory and clinical measures that are to be tracked and
analyzed. The protocol also defines the number of patients required
to produce a statistically valid result, the period of time over
which they must be tracked and the frequency and dosage of drug
administration. The study's success depends on the protocol's
ability to predict correctly the requirements of the regulatory
authorities.
- CASE REPORT FORM DESIGN. Once the study protocol has been
finalized, case report forms must be developed. The CRF is the
critical source document for collecting the necessary clinical data
as dictated by the study protocol. The CRF may change at different
stages of a trial. The CRFs for one patient in a given study may
consist of 100 or more pages.
- SITE AND INVESTIGATOR RECRUITMENT. The drug is administered to
patients by physicians, referred to as investigators, at hospitals,
clinics, or other locations, referred to as sites. Potential
investigators may be identified and solicited by the drug sponsor
or the CRO. A significant portion of the trial's success depends on
the successful identification and recruitment of experienced
investigators with an adequate base of patients who satisfy the
requirements of the study protocol. The Company has access to
several thousand investigators who have conducted clinical trials
for the Company. The Company will also provide additional services
at the clinical investigator site to assist physicians and expedite
the clinical research process.
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- PATIENT ENROLLMENT. The investigators, usually with the assistance
of CROs, find and enroll patients suitable for the study. The speed
with which trials can be completed is significantly affected by the
rate at which patients are enrolled. Prospective patients are
required to review information about the drug and its possible side
effects, and sign an informed consent form to record their
knowledge and acceptance of potential side effects. Patients also
undergo a medical examination to determine whether they meet the
requirements of the study protocol. Patients then receive the drug
and are examined by the investigator as specified by the study
protocol. Investigators are responsible for administering drugs to
patients, as well as examining patients and conducting necessary
tests.
- STUDY MONITORING AND DATA COLLECTION. As patients are examined and
tests are conducted in accordance with the study protocol, data are
recorded on CRFs. CRFs 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 offers several remote data
entry ("RDE") technologies which significantly enhance both the
quality and timeliness of clinical data collection while achieving
significant efficiency savings. (See "Advanced Technology and
Informatics" below.) The Company's study monitoring and data
collection services comply with the FDA's adverse events reporting
guidelines.
- REPORT WRITING. The statistical analysis findings for data
collected during the trial together with other clinical data are
included in a final report generated for inclusion in a regulatory
document.
- MEDICAL SERVICES. Throughout the course of a development program,
PAREXEL's physicians provide a wide range of medical research and
consulting services to improve the speed and quality of clinical
research, including medical supervision of clinical trials,
compliance with medical standards and safety regulations, medical
writing, medical imaging, strategy development, and portfolio
management.
Biostatistical and Data Management Services
PAREXEL's data management professionals assist in the design of CRFs, as well as
training manuals for investigators, to ensure that data are collected in an
organized and consistent format in compliance with the study protocol. Databases
are designed according to the analytical specifications of the project and the
particular needs of the client. Prior to data entry, PAREXEL personnel screen
the data to detect errors, omissions and other deficiencies in completed CRFs.
The use of RDE technologies, to gather and report clinical data, expedites data
exchange while minimizing data collection errors as a result of more timely data
integrity verification. The Company provides clients with data abstraction, data
review and coding, data entry, database verification and editing and problem
data resolution.
The Company has extensive experience throughout the world in the creation of
scientific databases for all phases of the drug development process, including
the creation of customized databases to meet client-specific formats, integrated
databases to support New Drug Application submissions and databases in strict
accordance with FDA and European specifications.
PAREXEL's biostatistics professionals assist clients with all phases of drug
development, including biostatistical consulting, database design, data analysis
and statistical reporting. These professionals develop and review protocols,
design appropriate analysis plans and design report formats to address the
objectives of the study protocol as well as the client's individual objectives.
Working with the programming staff, biostatisticians perform appropriate
analyses and produce tables, graphs, listings and other applicable displays of
results according to the analysis plan. Frequently, PAREXEL's biostatisticians
represent clients during panel hearings at the FDA.
ADVANCED TECHNOLOGY AND INFORMATICS
Information technology is integral to the clinical research process. PAREXEL has
technical experts which consult externally with clients, as well as internally
with Drug Development professionals, on ways to best utilize technology to
expedite the development process. The Company currently offers a portfolio of
information technology tools including the ParXnettm suite of
Intranet/Extranet-based tools, Electronic Data Capture, Medical Imaging,
Integrated Voice Response System ("IVRS"), Medical Imaging Services, ECG
Services, computer-based training programs, and other similar products that can
be customized to our clients' needs. ATI continues to identify and support new
technologies to benefit clients as well as PAREXEL's internal process
businesses.
MEDICAL MARKETING SERVICES ("MMS")
Various pressures on the pharmaceutical industry have resulted in a greater
focus on quickly moving more compounds from clinical development into the
marketplace in order to maximize revenues and profits over limited patent lives.
MMS's strategy is to assist clients in achieving optimal market penetration for
their products by providing customized, integrated and expertise-based product
development and product launch services around the world. The MMS business
represents approximately $49 million, (13%) of consolidated net revenue in
fiscal 2000.
The Company's experience indicates that clients need assistance in creating
awareness of products in the marketplace and in addressing the technical aspects
of launching their products, especially managing the simultaneous launch of
numerous products. MMS provides comprehensive, value-added pre-and post-launch
services, including market development, product management, and targeted
communications support to leading pharmaceutical and biotechnology companies
throughout the U.S. and Europe. It specializes in gathering, analyzing, and
interpreting scientific data for delivery of customized messages to targeted
audiences. Detailed services include market planning and analysis, strategic
consulting, product profiling and positioning, branding, pricing and
reimbursement consulting, patient studies, health economics, scientific
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writing and publishing of medical texts and journals, management of
international physician symposia, accredited continuing medical education
("CME") and training programs, promotional material production, and multimedia
communications including Intranet and Internet development.
PAREXEL'S CONSULTING SERVICES ("PCG")
The Company offers a number of consulting and advisory services in support of
the product development and product marketing processes. This group brings
together experts from relevant disciplines focused on designing meaningful
solutions and helping clients make the best business decisions with respect to
their product development and marketing strategies. This group also serves as a
valuable resource for the Company's internal operations. PAREXEL's Consulting
Group includes Regulatory Affairs, Clinical Pharmacology and the Information
Products Group. The PCG business represents approximately $67 million (18%) of
consolidated net revenue for fiscal 2000.
Regulatory Affairs
PAREXEL provides comprehensive regulatory product registration services for
pharmaceutical and biotechnology products in major jurisdictions in North
America, Europe, and Japan. These services include regulatory strategy
formulation, document preparation and review, quality assurance, and liaison
with the FDA and other regulatory agencies. In addition, the Company provides
the services of qualified experts to assist with good manufacturing practices
("GMP") compliance in existing and new manufacturing plants, including system
validation services. PAREXEL's staff provides on-site GCP and GMP training
sessions and conducts internal and external quality control and quality
assurance audits.
PAREXEL works closely with clients to devise regulatory strategies and
comprehensive product development programs. The Company's regulatory affairs
experts review existing published literature, assess the scientific background
of a product, assess the competitive and regulatory environment, identify
deficiencies and define the steps necessary to obtain registration in the most
expeditious manner. Through this service, the Company helps its clients
determine the feasibility of developing a particular product or product line.
Clinical Pharmacology
PAREXEL's clinical pharmacology services primarily include Phase I and IIa
investigations and trial facilities, both for volunteers and patients. The
Company's Clinical Pharmacology Unit in Berlin is one of the world's leading
units for combined kinetic and dynamic studies. It provides state-of-the-art in-
and outpatient facilities, and is staffed with a team of clinical pharmacology
experts with extensive experience in both pharmacokinetics and pharmacodynamics.
PAREXEL also maintains a clinical pharmacology research collaboration with
Georgetown University Medical Center, referred to as the Georgetown/PAREXEL
Clinical Pharmacology Research Unit ("CPRU"). This relationship provides PAREXEL
exclusive access to the CPRU for purposes of conducting clinical pharmacology
research employing a more flexible, variable-cost business model. A third unit
is located in Poitiers, France and includes both a Phase I clinic and a
bioanalytical laboratory specializing in mass spectrometry in combination with
chromatography.
Information Products Group
The Company's Information Products Group ("IPG") offers a wide range of
specialized clinical consulting, training, and publication services to the
health care industry. IPG is a leader in providing conferences, educational
materials, and management consulting services to the clinical research
community, with expertise in organizational structure, curriculum design, and
human resource management. The publications group produces several publications
recognized throughout the industry covering regulatory and drug development
matters.
IPG is also a leader in management consulting in the clinical research area,
offering a wide range of solutions that help pharmaceutical and biotechnology
companies improve their own in-house clinical performance. These services
include performance benchmarking, process improvement, clinical research
capacity analysis, and operational support services.
INFORMATION SYSTEMS
The Company is committed to investing in information technology designed to help
the Company provide high quality services in a cost effective manner and to
manage its internal resources. The Company has built on its information
technology network by developing a number of proprietary information systems
that address critical aspects of its business, such as project proposals/budget
generation, time information management, revenue and resource forecasting,
clinical data entry and management and project management.
The Company's Information Services group is responsible for technology planning
and procurement, applications development, program management, operations, and
management of the Company's worldwide computer network. 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.
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FISCAL 2000 CANCELLATION AND RESTRUCTURING AND OTHER CHARGES
During the three months ended March 31, 2000, the Company announced that
Novartis, a key client, reduced the amount of work outsourced to the CRS
business segment, due to Novartis' reprioritization of its research pipeline. As
a result, the Company estimated that total revenues for fiscal 2000 and 2001
would be reduced by $50 million to $55 million in the aggregate.
Consequently, during the year ended June 30, 2000, the Company recorded
restructuring and other charges of $13.1 million. These charges included $7.2
million for employee severance costs related to the Company's decision to
eliminate approximately 475 managerial and staff positions in order to reduce
personnel costs as a result of a material dollar volume of contract
cancellations. The charges also included $4.3 million for lease termination
costs related to continued efforts to consolidate certain facilities and reduce
excess space in certain locations in addition to changes in the Company's
original estimate of when certain facilities would be sublet. The remaining
charges, totaling $1.6 million, primarily related to the write-off of certain
intangible assets and other investments, which are not expected to produce
future value. The Company is planning to further consolidate facilities to gain
further cost savings. In this regard, the Company plans to take an additional
facilities-related charge of between $5 and $10 million in the first quarter of
fiscal 2001. Overall, the Company anticipates these restructuring and other
charges will result in aggregate cost savings of $15 to $20 million once
implemented.
SALES AND MARKETING
PAREXEL's business development strategy is based on maintaining excellent
service-oriented relationships with its large client base. 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. In addition to significant selling experience, most of
the Company's business development personnel have technical or scientific
backgrounds in the pharmaceutical industry. The Company believes that its
emphasis on developing close relationships with its clients leaves it well
positioned to benefit from the trend among pharmaceutical companies to
concentrate their outsourcing among fewer CROs.
The Company's marketing activities are coordinated by PAREXEL's global marketing
organization, with offices at its headquarters and in the U.K. The Company's
promotional activities consist primarily of participation in industry
conferences, advertising, and public relations.
CLIENTS
During fiscal 2000, the Company provided services to most of the top 20
pharmaceutical and top 10 biotechnology companies. The Company has in the past
derived, and may in the future derive, a significant portion of its net revenue
from a core group of major projects or clients. Concentrations of business in
the CRO industry are not uncommon and the Company is likely to continue to
experience such concentration in future years. In fiscal 2000, the Company's
five largest clients accounted for 45% of its consolidated net revenue. In
fiscal 1999, the Company's five largest clients accounted for 44% of its
consolidated net revenue, while in fiscal 1998, the Company's five largest
clients accounted for 34% of its consolidated net revenue. In fiscal 2000 and
1999, one client, Novartis, accounted for 21% and 20% of consolidated net
revenue, respectively. In fiscal 1998, a different client, Smithkline Beecham,
accounted for 12% of consolidated net revenue. The loss of business from a
significant client could materially and adversely affect the Company's net
revenue and results of operations.
BACKLOG
Backlog represents anticipated net revenue from work not yet completed or
performed under signed contracts, letter agreements, and certain verbal
commitments. Once work commences, revenue is generally recognized over the life
of the contract. Backlog at June 30, 2000 was approximately $385.1 million.
The Company believes that its backlog as of any date is not necessarily a
meaningful predictor of future results. Clinical studies under contracts
included in backlog are subject to termination, revision, or delay. Clients
terminate or delay contracts for a variety of reasons including, among others,
the failure of products being tested to satisfy safety requirements, unexpected
or undesirable clinical results of the product, the clients' decision to forego
a particular study, insufficient patient enrollment or investigator recruitment
or production problems resulting in shortages of the drug. Generally, the
Company's contracts are terminable upon sixty days' notice by the client. The
Company typically is entitled to receive certain fees for winding down a study
which is terminated or delayed and, in some cases, a termination fee.
COMPETITION
The Company primarily competes against in-house departments of pharmaceutical
companies, other full service CROs, and, occasionally, small specialty CROs. In
addition, PAREXEL's Consulting and Medical Marketing Services businesses have a
large and fragmented group of specialty service providers with which they
compete. Some of the major CRO's against which the Company competes have greater
capital, technical and other resources than the Company. CROs generally compete
on the basis of previous experience, medical and scientific expertise in
specific therapeutic areas, the quality of services, the ability to organize and
manage large-scale trials on a global basis, the effectiveness in managing large
and complex medical databases, the capability to provide statistical and
regulatory services, the ability to recruit investigators and patients, the
ability to integrate information technology with systems to improve the
efficiency of contract research, an international presence with strategically
located facilities, financial viability and price. PAREXEL believes that it
competes effectively in these areas.
The CRO industry is fragmented, with participants ranging from several hundred
small, limited-service providers to several large, full-service CROs with global
operations. PAREXEL believes that it is the third largest full-service CRO in
the world, based on annual net revenue. Other large CROs include Quintiles
Transnational Corporation, Covance Inc., and Pharmaceutical Product Development,
Inc. The trend toward CRO industry consolidation, as well as pharmaceutical
companies outsourcing to a fewer number of preferred CRO's, has resulted in
heightened competition
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among the larger CROs for clients and acquisition candidates.
INTELLECTUAL PROPERTY
PAREXEL has developed certain computer software and related methodologies that
the Company has sought to protect through a combination of contracts, copyrights
and trade secrets; however, the Company does not consider the loss of exclusive
rights to any of this software or methodology to be material to the Company's
business.
EMPLOYEES
As of June 30, 2000, the Company had approximately 4,200 employees.
Approximately 49% of the employees are located in North America and 51% are
located throughout Europe and the Asia/Pacific region. The Company believes that
its relations with its employees are good.
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The success of the Company's business depends on its ability to attract and
retain a qualified professional, scientific and technical staff. The level of
competition among employers for skilled personnel, particularly those with
Ph.D., M.D. or equivalent degrees, is high. The Company believes that its
multinational presence, which allows for international transfers, is an
advantage in attracting employees. In addition, the Company believes that the
wide range of clinical trials in which it participates allows the Company to
offer a broad experience to clinical researchers. While the Company has not
experienced any significant difficulties in attracting or retaining qualified
staff to date, there can be no assurance the Company will be able to avoid such
difficulties in the future.
GOVERNMENT REGULATIONS
Before a new drug may be approved and marketed, the drug must undergo extensive
testing and regulatory review in order to determine that the drug is safe and
effective. The stages of this development process are as follows:
1. Preclinical Research (1 to 3.5 years). In vitro ("test tube") and
animal studies to establish the relative toxicity of the drug over
a wide range of doses and to detect any potential to cause birth
defects or cancer. If results warrant continuing development of the
drug, the manufacturer will file an Investigational New Drug
Application ("IND"), upon which the FDA may grant permission to
begin human trials.
2. Clinical Trials (3.5 to 6 years)
3. Phase I (6 months to 1 year). Basic safety and pharmacology testing
usually 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.
4. Phase II (1 to 2 years). Basic efficacy (effectiveness) and
dose-range testing usually 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.
5. Phase III (2 to 3 years). Efficacy and safety studies in hundreds
or thousands of patients at many investigational sites (hospitals
and clinics) can be placebo-controlled trials, in which the new
drug is compared with a "sugar pill," or studies comparing the new
drug with one or more drugs with established safety and efficacy
profiles in the same therapeutic category. Treatment
Investigational New Drug ("TIND") may span late Phase II, Phase
III, and FDA review. When results from Phase II or Phase III show
special promise in the treatment of a serious condition for which
existing therapeutic options are limited or of minimal value, the
FDA may allow the sponsor to make the new drug available to a
larger number of patients through the regulated mechanism of a
TIND. Although less scientifically rigorous than a controlled
clinical trial, a TIND may enroll and collect a substantial amount
of data from tens of thousands of patients.
6. New Drug Application ("NDA") Preparation and Submission. Upon
completion of Phase III trials, the sponsor assembles the
statistically analyzed data from all phases of development into a
single large document, the NDA, which today comprises, on average,
roughly 100,000 pages.
7. FDA Review & Approval (1 to 1.5 years). Careful scrutiny of data
from all phases of development (including a TIND) to confirm that
the manufacturer has complied with regulations and that the drug is
safe and effective for the specific use (or "indication") under
study.
8. Post-Marketing Surveillance and Phase IV Studies. Federal
regulation requires the sponsor to collect and periodically
report to FDA additional safety and efficacy data on the drug for
as long as the manufacturer markets the drug (post-marketing
surveillance). If the drug is marketed outside the U.S., these
reports must include data from all countries in which the drug is
sold. Additional studies (Phase IV) may be undertaken after initial
approval to find new uses for the drug, to test new dosage
formulations, or to confirm selected non-clinical benefits, e.g.,
increased cost-effectiveness or improved quality of life.
The clinical investigation of new drugs is highly regulated by government
agencies. The standard for the conduct of clinical research and development
studies comprises GCP, which stipulates procedures designed to ensure the
quality and integrity of data obtained from clinical testing and to protect the
rights and safety of clinical subjects. While GCP has not been formally adopted
by the FDA nor, with certain exceptions, by similar regulatory authorities in
other countries, some provisions of GCP have been included in regulations
adopted by the FDA. Furthermore, in practice, the FDA and many other regulatory
authorities require that study results submitted to such authorities be based on
studies conducted in accordance with GCP.
The FDA's regulatory requirements have served as the model for much of the
regulation for new drug development worldwide. As a result, similar regulatory
requirements exist in the other countries in which the Company operates. The
Company's regulatory capabilities include knowledge of the specific regulatory
requirements in various countries. The Company has managed simultaneous
regulatory submissions in more than one country for a number of drug sponsors.
Beginning in 1991, the FDA and corresponding regulatory agencies of Canada,
Japan and Western Europe commenced discussions to develop harmonized standards
for preclinical and clinical studies and the format and content of applications
for new drug approvals. Data from multinational studies adhering to GCP are now
generally acceptable to the FDA, Canadian and Western European regulators.
Effective April 1, 1997, Japan officially adopted GCP and legitimized the use of
CROs in conducting clinical research.
The services provided by PAREXEL are ultimately subject to FDA regulation in the
U.S. and comparable agencies in other countries. The Company is obligated to
comply with FDA requirements governing such activities as obtaining patient
informed consents, verifying qualifications of
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investigators, reporting patients' adverse reactions to drugs and maintaining
thorough and accurate records. The Company must maintain source documents
for each study for specified periods, and such documents may be reviewed by the
study sponsor and the FDA during audits. Non-compliance with GCP can result in
the disqualification of data collected during a clinical trial.
POTENTIAL LIABILITY AND INSURANCE
PAREXEL's clinical research services focus on the testing of experimental drugs
on human volunteers pursuant to a study protocol. Clinical research involves a
risk of liability for personal injury or death to patients due, among other
reasons, to possible unforeseen adverse side effects or improper administration
of the new drug. PAREXEL does not provide healthcare services directly to
patients. Rather, physician investigators are responsible for administrating
drugs and evaluating patients. Many of these patients are already seriously ill
and are at risk of further illness or death.
The Company believes that the risk of liability to patients in clinical trials
is mitigated by various regulatory requirements, including the role of
institutional review boards ("IRBs") and the need to obtain each patient's
informed consent. The FDA requires each human clinical trial to be reviewed and
approved by the IRB at each study site. An IRB is an independent committee that
includes both medical and non-medical personnel and is obligated to protect the
interests of patients enrolled in the trial. The IRB monitors the protocol and
measures designed to protect patients, such as the requirement to obtain
informed consent.
To reduce its potential liability, PAREXEL is generally successful in
incorporating indemnity provisions into its contracts with clients and with
investigators hired by the Company on behalf of its clients. These indemnities
generally do not, however, protect PAREXEL against certain of its own actions,
such as those involving negligence. Moreover, these indemnities are contractual
arrangements that are subject to negotiation with individual clients, and the
terms and scope of such indemnities can vary from client to client and from
study to study. Finally, the financial performance of these indemnities is not
secured, so that the Company bears the risk that an indemnifying party may not
have the financial ability to fulfill its indemnification obligations. PAREXEL
could be materially and adversely affected if it were required to pay damages or
incur defense costs in connection with an uninsured claim that is outside the
scope of an indemnity or where the indemnity, although applicable, is not
performed in accordance with its terms.
The Company currently maintains an errors and omissions professional liability
insurance policy. There can be no assurance that this insurance coverage will be
adequate, or that insurance coverage will continue to be available on terms
acceptable to the Company.
RISK FACTORS
The statements included in this annual report, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
incorporated by reference to exhibit 13.1 hereto, may contain "forward-looking"
statements, within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, regarding future results and
events that involve a number of risks and uncertainties including the adequacy
of the Company's existing capital resources and future cash flows from
operations, statements regarding expected financial results, future growth and
customer demand. For this purpose, any statements that are not statements of
historical fact may be deemed forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends"
and similar expressions are intended to identify forward-looking statements. The
Company's actual future results may differ significantly from the results
discussed in the forward-looking statements. Important factors that might cause
such a difference include, but are not limited to, risks associated with: the
cancellation, revision, or delay of contracts, including those contracts in
backlog; the Company's dependence on certain industries and clients; the
Company's ability to manage growth and its ability to attract and retain
employees; the Company's ability to complete additional acquisitions and to
integrate newly acquired businesses or enter into new lines of business;
government regulation of certain industries and clients; competition and
consolidation within the pharmaceutical industry; the potential for significant
liability to clients and third parties; the potential adverse impact of health
care reform; and the effects of exchange rate fluctuations. These factors and
others are discussed below in greater detail.
THE LOSS, MODIFICATION, OR DELAY OF LARGE CONTRACTS MAY NEGATIVELY IMPACT THE
COMPANY'S FINANCIAL PERFORMANCE
Generally, the Company's clients can terminate their contracts with the Company
upon sixty days' notice. Clients terminate or delay their contracts for a
variety of reasons, including, but not limited to:
- products being tested fail to satisfy safety requirements;
- products have unexpected or undesired clinical results;
- the client decides to forego a particular study, perhaps for economic
reasons;
- not enough patients enroll in the study;
- not enough investigators are recruited; or
- production problems cause shortages of the drug.
In addition, the Company believes that pharmaceutical companies may proceed with
fewer clinical trials if they are trying to reduce costs. These factors may
cause pharmaceutical companies to cancel contracts with contract research
organizations at a higher rate than in the past. 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's financial performance. Refer to "Fiscal 2000
Cancellation and Restructuring and Other Charges" above.
THE COMPANY'S OPERATING RESULTS HAVE FLUCTUATED BETWEEN QUARTERS AND YEARS
AND MAY CONTINUE TO FLUCTUATE IN THE FUTURE
The Company's quarterly and annual operating results have varied, and will
continue to vary. Factors that could cause these variations include:
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- the level of new business authorizations in a particular quarter or
year;
- the timing of the initiation, progress, or cancellation of
significant projects;
- exchange rate fluctuations between quarters or years;
- the mix of services offered in a particular quarter or year;
- the timing of the opening of new offices;
- the timing of other internal expansion costs;
- the timing and amount of costs associated with integrating
acquisitions; and
- the timing and amount of startup costs incurred in connection with the
introduction of new products and services.
A high percentage of the Company's operating costs are fixed. Therefore, the
timing of the completion, delay or loss of contracts, or in the progress of
client projects, can cause the Company's operating results to vary substantially
between reporting periods.
THE COMPANY DEPENDS ON A SMALL NUMBER OF INDUSTRIES AND CLIENTS FOR ALL OF ITS
BUSINESS
The Company depends on research and development expenditures by pharmaceutical
and biotechnology companies to sustain a large part of its business. The
Company's operations could be materially and adversely affected if:
- its clients' businesses experience financial problems or are affected
by a general economic downturn;
- consolidation in the pharmaceutical or biotechnology industries leads
to a smaller client base for the Company; or
- its clients reduce their research and development expenditures.
Furthermore, the Company has benefited to date from the increasing tendency of
pharmaceutical companies to out-source large clinical research projects. If this
trend slows or reverses, the Company's operations would be materially and
adversely affected. In fiscal 2000, the Company's five largest clients accounted
for 45% of its consolidated net revenue, and one client accounted for 21% of
consolidated revenue. In fiscal 1999, the Company's five largest clients
accounted for 44% of its consolidated net revenue, and one client accounted for
20% of consolidated net revenue. The Company could suffer a material adverse
effect if it lost the business of a significant client.
THE COMPANY'S BUSINESS HAS EXPERIENCED SUBSTANTIAL EXPANSION IN THE PAST AND THE
COMPANY MUST PROPERLY MANAGE THAT EXPANSION
The Company's business has expanded substantially in the past. Rapid expansion
could strain the Company's operational, human and financial resources. In order
to manage 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, sales, professional,
scientific and technical operating personnel.
The Company will face additional risks in expanding its foreign operations.
Specifically, the Company may find it difficult to:
- assimilate differences in foreign business practices;
- hire and retain qualified personnel; and
- overcome language barriers.
If an acquired business does not meet the Company's performance expectations,
the Company may have to restructure the acquired business or write-off the value
of some or all of the assets of the acquired business. If the Company fails to
properly manage its expansion, the Company could experience a material adverse
effect.
THE COMPANY MAY NOT BE ABLE TO MAKE STRATEGIC ACQUISITIONS IN THE FUTURE
The Company relies on it ability to make strategic acquisitions as a component
of its growth. The Company has made a number of acquisitions and will continue
to review future acquisition opportunities. The Company may not be able to
acquire companies on terms and conditions acceptable to the Company.
Additionally, the Company faces several obstacles in connection with the
acquisitions it consummates, including:
- The Company may encounter difficulties and will encounter expenses in
connection with acquisitions and the subsequent assimilation of the
operations and services or products of the acquired companies;
- The Company's management will necessarily divert attention from other
business concerns; and
- The Company could lose some or all of the key employees of the acquired
company.
In the event that the operations of an acquired business do not meet the
Company's performance expectations, the Company may have to restructure the
acquired business or write-off the value of some or all of the assets of the
acquired business. The Company may experience difficulty integrating acquired
companies into its operations.
THE COMPANY RELIES ON HIGHLY QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL WHO
MAY NOT REMAIN WITH THE COMPANY
The Company relies on a number of key executives, including Josef H. von
Rickenbach, its Chairman, President and Chief Executive Officer. The Company
maintains key man life insurance on Mr. von Rickenbach. The Company does not
have employment agreements with most of its senior
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officers and if any of these key executives leave the company, it could have a
material adverse effect on the Company. In addition, in order to compete
effectively, the Company must attract and maintain qualified sales,
professional, scientific and technical operating personnel. Competition for
these skilled personnel, particularly those with a medical degree, a Ph.D. or
equivalent degrees is intense. The Company may not be successful in attracting
or retaining key personnel.
THE COMPANY MAY NOT HAVE ADEQUATE INSURANCE AND MAY HAVE SUBSTANTIAL EXPOSURE TO
PAYMENT OF PERSONAL INJURY CLAIMS
Clinical research services primarily involve the testing of experimental drugs
on consenting human volunteers pursuant to a study protocol. Such services
involve a risk of liability for personal injury or death to patients who
participate in the study or who use a drug approved by regulatory authorities
after the clinical research has concluded, due to, among other reasons, possible
unforeseen adverse side effects or improper administration of the new drug by
physicians. In certain cases, these patients are already seriously ill and are
at risk of further illness or death. The Company's financial stability could be
materially and adversely affected if the Company had to pay damages or incur
defense costs in connection with a claim that is outside the scope of an
indemnity or insurance coverage. The Company's financial stability could also be
materially and adversely affected in cases where the indemnity, although
applicable, is not performed in accordance with its terms. Additionally, the
Company could be adversely and materially affected if its liability exceeds the
amount of its insurance. The Company may not be able to continue to secure
insurance on acceptable terms.
THE COMPANY'S STOCK PRICE IS VOLATILE AND COULD DECLINE
The market price of the Company's common stock has fluctuated widely in the past
and may continue to do so in the future in response to quarter-to-quarter
variations in:
- operating results;
- earnings estimates by analysts;
- market conditions in the industry;
- prospects of health care reform;
- changes in government regulations; and
- general economic conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that are not related to the operating performance
of particular companies. These market fluctuations may adversely affect the
market price of the Company's common stock. Since the Company's common stock has
traded in the past at a relatively high price-earnings multiple, due in part to
analysts' expectations of earnings growth, the price of the stock could quickly
and substantially decline as a result of even a relatively small shortfall in
earnings from, or a change in, analysts' expectations. Investors in the
Company's common stock must be willing to bear the risk of such fluctuations in
earnings and stock price.
THE COMPANY'S BUSINESS DEPENDS ON CONTINUED COMPREHENSIVE GOVERNMENTAL
REGULATION OF THE DRUG DEVELOPMENT PROCESS
In the United States, governmental regulation of the drug development process
has become more complicated and more extensive. However, the FDA recently
announced regulatory changes intended to streamline the approval process for
biotechnology products by applying the same standards for approval of
biotechnology products as are in effect for conventional drugs. In Europe,
governmental authorities are coordinating common standards for clinical testing
of new drugs, leading to changes in the various requirements currently imposed
by each country. In April 1997, Japan legislated good clinical practices and
legitimatized the use of contract research organizations. The Company's business
could be materially and adversely affected if governments relaxed their
regulatory requirements or simplified their drug approval procedures, since such
actions would eliminate much of the demand for the Company's services. In
addition, if the Company was unable to comply with any applicable regulation,
the relevant governmental agencies could terminate the Company's ongoing
research or disqualify research data.
THE COMPANY FACES INTENSE COMPETITION
The Company primarily competes against in-house departments of drug companies,
full service contract research organizations, and to a lesser extent,
universities, teaching hospitals and other site organizations. Some of these
competitors have greater capital, technical and other resources than the
Company. Contract research organizations generally compete on the basis of:
- previous experience;
- medical and scientific expertise in specific therapeutic areas;
- the quality of services;
- the ability to organize and manage large-scale trials on a global
basis;
- the ability to manage large and complex medical databases;
- the ability to provide statistical and regulatory services;
- the ability to recruit investigators and patients;
- the ability to integrate information technology with systems to improve
the efficiency of contract research;
- an international presence with strategically located facilities;
- financial strength and stability; and
- price.
The contract research organization industry is fragmented, with several hundred
small, limited-service providers and several large, full-service contract
research organizations with global operations. The Company competes against
large contract research organizations, including Quintiles
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Transnational Corporation, Covance Inc., and Pharmaceutical Product Development,
Inc., for both clients and acquisition candidates. In addition, the Company
competes for research contracts arising out of the consolidation within the drug
industry and the growing tendency of drug companies to outsource to a small
number of preferred contract research organizations.
THE COMPANY MAY LOSE BUSINESS OPPORTUNITIES AS A RESULT OF HEALTH CARE REFORM
Numerous governments have undertaken efforts to control growing health care
costs through legislation, regulation and voluntary agreements with medical care
providers and drug companies. In the last few years, the U.S. Congress has
entertained several comprehensive health care reform proposals. The proposals
were generally intended to expand health care coverage for the uninsured and
reduce the growth of total health care expenditures. While the U.S. Congress did
not adopt any of the proposals, members of Congress may raise similar proposals
in the future. If any of these proposals are approved by the U.S. Congress,
pharmaceutical and biotechnology companies may react by spending less on
research and development. If this were to occur, the Company would have fewer
business opportunities. The Company is unable to predict the likelihood that
health care reform proposals will be enacted into law or the effect such laws
would have on the Company's business.
Many governments outside the U.S. have also reviewed or undertaken health care
reform. The Company cannot predict the impact that any pending or future foreign
health care reform proposals may have on its business in other countries.
THE COMPANY IS SUBJECT TO CURRENCY TRANSLATION RISKS
The Company derived approximately 40% of its net revenue for fiscal 2000 from
operations outside of North America. In fiscal 1999, 43% of the Company's net
revenue was derived from operations outside of North America. The Company's
revenues and expenses from foreign operations are usually denominated in local
currencies. The Company is therefore subject to exchange rate fluctuations
between local currencies and the United States dollar. To the extent that the
Company cannot shift this currency translation risk to other parties, the
Company's operating results could be materially and adversely affected. The
Company does not currently hedge against the risk of exchange rate fluctuations.
In fiscal 2000, the Company recorded realized foreign exchange gains of
approximately $1.6 million.
ITEM 2. PROPERTIES
PAREXEL maintains 41 locations throughout 29 countries around the world. The
Company leases all but one of its facilities. The principle executive and
administrative offices are located in Waltham, Massachusetts. The Waltham
facilities encompass approximately 192,000 square feet and, in addition to the
executive and administrative offices, serve the CRS unit in all aspects of its
business and the PCG unit in regulatory affairs. Also in North America, the
Company leases facilities for its CRS business unit in Chicago, Raleigh-Durham
and San Diego. CRS shares leased space in Philadelphia with the Information
Products Group of PCG and in Washington D.C. with the MMS business unit's
headquarters.
In Europe, the Company maintains offices in Berlin, London and Paris, having
approximately 145,000, 75,000 and 43,000 square feet respectively. CRS shares
this leased space in Berlin, London and Paris with PCG, and otherwise occupies
offices in Frankfurt, Sheffield, Guildford, and Amsterdam. MMS' principal
European offices are located in Worthing, with other facilities in Paris.
The Company is planning to consolidate certain facilities to achieve cost
savings. In this regard, the Company plans to take a facilities-related charge
in fiscal 2001. Please see "Fiscal 2000 Cancellation and Restructuring and Other
Charges." Otherwise, the Company considers all of its properties to be suitable
and adequate for its present needs.
ITEM 3. LEGAL PROCEEDINGS
The Company has been named as one of many defendants in approximately seventeen
(17) lawsuits currently pending before the state trial courts in New Jersey and
Pennsylvania. This litigation relates to a drug for which the Company provided
clinical research services. These actions were brought by individual plaintiffs
and not as class actions. Generally, the claims against the Company in these
actions include negligence, breach of express and implied warranty, strict
liability, fraud, civil conspiracy, and negligent and intentional infliction of
emotional distress. The Company has provided notice of these matters to its
insurance carriers. Indemnification has been secured as to four (4) of the
pending lawsuits from one of the companies for which the Company provided
clinical research services. The Company has submitted requests for
indemnification as to the remaining pending lawsuits pursuant to the Company's
contracts with other companies for which the Company provided clinical research
services for the subject drug.
The Company and four of its directors have been named in a lawsuit filed on or
about June 8, 2000 by two arbitrageurs, Elliott Associates, L.P. and Westgate
International L.P. The complaint, filed in the United States District Court for
the Southern District of New York, alleges violations of Section 10(b) of the
Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5, Section
20(a) of the Exchange Act and state law claims for fraud and negligent
misrepresentation. The arbitrageurs allege that they executed both purchases and
short sales of securities in reliance on statements made by the Company
regarding a proposed merger with Covance, Inc. announced in April 1999. The
arbitrageurs further allege that they were damaged by the termination of the
merger agreement which was announced in June 1999. The Plaintiffs have provided
notice to the Company's counsel that they intend to withdraw their negligent
misrepresentation claim. The Company and the Directors have filed a motion with
the court to dismiss the complaint. The Company has provided notice of this
matter to its insurance carrier.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2000.
16
<PAGE> 17
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
This information is incorporated by reference from page 29 "Quarterly Operating
Results and Common Stock Information (Unaudited)" of the Company's 2000 Annual
Report to Stockholders included as Exhibit 13.1 to this annual report.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference from page 29 "Selected Financial
Data," of the Company's 2000 Annual Report to Stockholders included as Exhibit
13.1 to this annual report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This information is incorporated by reference from pages 11-15, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," of
the Company's 2000 Annual Report to Stockholders included as Exhibit 13.1 to
this annual report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is incorporated by reference from page 15, "Market Risk," of
the Company's 2000 Annual Report to Stockholders included as Exhibit 13.1 to
this annual report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information are
incorporated by reference from pages 16-28 of the Company's 2000 Annual Report
to Stockholders included as Exhibit 13.1 to this annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item may be found under the captions "Elections
of Directors," "Executive Officers" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Proxy Statement for the Company's 2000 Annual
Meeting of Stockholders. Such information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found under the captions
"Directors' Compensation," "Compensation Committee Interlocks and Insider
Participation," "Executive Compensation," "Employment Agreements," "Stock
Performance Graph" and "Compensation Committee and Stock Option Committee Report
on Executive Compensation" in the Proxy Statement for the Company's 2000 Annual
Meeting of Stockholders. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item may be found under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement
for the Company's 2000 Annual Meeting of Stockholders. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item may be found under the caption "Certain
Relationships and Related Transactions" in the Proxy Statement for the Company's
2000 Annual Meeting of Stockholders. Such information is incorporated herein by
reference.
17
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this report:
(1) FINANCIAL STATEMENTS. The following financial statements and
supplementary data included in the 2000 Annual Report to
Stockholders, filed as Exhibit 13.1 to this report, are incorporated
by reference into Item 8 of this report.
<TABLE>
<CAPTION>
ANNUAL REPORT TO
FINANCIAL STATEMENTS FORM 10-K PAGE STOCKHOLDERS PAGE
-------------------- -------------- -----------------
<S> <C> <C>
Report of Independent Accountants F16 28
Consolidated Statements of Operations for each of the
three years ended June 30, 2000 F1 16
Consolidated Balance Sheets at June 30, 2000 and 1999 F2 17
Consolidated Statements of Stockholders' Equity for
each of the three years ended June 30, 2000 F3 18
Consolidated Statements of Cash Flows for each of the
three years ended June 30, 2000 F4 19
Notes to Consolidated Financial Statements F5-F15 20-28
</TABLE>
(2) FINANCIAL STATEMENT SCHEDULES:
For the three years ended June 30, 2000:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable
or the required information is shown in the Consolidated
Financial Statements or Notes thereto.
(3) EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Amended and Restated Articles of Organization of the
Company, as amended (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended December 31, 1996 and incorporated herein by this
reference).
3.2 Amended and Restated By-laws of the Company (filed as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1
(File No. 333-1188) and incorporated herein by this reference).
3.3 Amendment to Article 1, Section 1 of the Corporation's Amended
and Restated By-laws.
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 Registration Rights Agreement dated as of February 27, 1998 by
and among the Company and the former stockholders of PPS
Europe Ltd. (filed as Exhibit 4.4 to the Company's Current
Report on Form 8-K/A dated March 1, 1998 and incorporated
herein by reference).
4.3 Registration Rights Agreement dated as of February 27, 1998 by
and among the Company and the former stockholders of Creative
Communications Solutions Limited (filed as exhibit 4.8 to the
Registrant's Registration Statement on Form S-3 (File No.
333-53941) and incorporated herein by reference).
4.4 Share Acquisition Agreement with respect to Groupe
PharMedicom S.A., dated March 31, 1999 among Herve
Laurent, Philippe Conquet and Others, as Sellers, and
PAREXEL International Corporation, as Buyer (filed as
Exhibit 2.2 to Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 and incorporated
herein by this reference).
18
<PAGE> 19
4.5 Registration Rights Agreement dated as of March 31, 1999
among PAREXEL International Corporation and certain former
stockholders of Groupe PharMedicom S.A. (filed as Exhibit
4.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999 and incorporated herein
by this reference).
10.1* Agreement dated June 30, 1993 between Prof. Dr. med. Werner M.
Herrmann and PAREXEL GmbH Independent Pharmaceutical Research
Organization, as amended, as of April 1, 1998 (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1998 and incorporated herein
by this reference).
10.2* Letter Agreement effective as of July 1, 1997 between Prof.
Dr. med. Werner M. Herrmann and the Company, as amended as of
April 1, 1998(filed as Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31,
1998 and incorporated herein by this reference).
10.3* 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 reference.
10.4* 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).
10.5* 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).
10.6* 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).
10.7* Second Amended and Restated 1995 Stock Plan of the Company
(filed as Exhibit 10.9 to the Registrant's Annual Report
on Form 10-K for the Fiscal Year Ended June 30, 1998 and
incorporated herein by this reference).
10.8* 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).
10.9* 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).
10.10 Loan and Security Agreement dated as of July 31, 1992
between the Company, Barnett International Corporation and
The First National Bank of Boston, as amended (filed as
Exhibit 10.12 to the Registrant's Annual Report on Form
10-K for the year ended June 30, 1999 and incorporated
herein by this reference.
10.11 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).
10.12 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
19
<PAGE> 20
incorporated herein by this reference).
10.13* Letter of employment dated July 6, 1993 between Barry R.
Philpott and the Company (filed as Exhibit 10.29 to the
Registrant's Registration Statement on Form S-1 (File No.
33-97406) and incorporated herein by this reference).
10.14* 1998 Non-Qualified, Non-Officer Stock Option Plan, as
amended (filed as Exhibit 10.16 to the registrant's Annual
Report on form 10-K for the year ended June 30, 1999 and
incorporated herein by this reference).
10.15* Amended and Restated Employment Agreement dated December 6,
1999 between Josef H. von Rickenbach and the Company (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the Quarter Ended December 31, 1999 and
incorporated herein by this reference).
10.16* Change in Control Agreement dated October 20, 1998 between
Barry R. Philpott and the Company (filed as Exhibit 10.4
to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1998 and incorporated herein by
this reference).
10.17 Third Amendment to Lease dated November 17, 1998 between
Boston Properties Limited Partnership and the Company
(filed as Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended December 31,
1998 and incorporated herein by this reference).
10.18 Lease dated November 17, 1998 between Boston Properties
Limited Partnership and the Company (filed as Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended December 31, 1998 and incorporated herein by
this reference).
10.19 Lease dated June 14, 1991 between 200 West Street Limited
Partnership and the Company.
10.20* Employment Agreement dated August 30, 1996 between Ulf Schneider
and the Company.
10.21* Employment Agreement dated December 15, 1997 between Paule
Dapres and the Company.
10.22 Fourth Amendment dated August 28, 2000 to the lease dated
November 17, 1998 between Boston Properties Limited Partnership
and the Company.
13.1 Specified portions of the Registrant's 2000 Annual Report to
Stockholders.
21.1 List of subsidiaries of the Company.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Report of Independent Accountants on Financial Statement
Schedule.
27.1 Financial Data Schedule.
(B) Reports on Form 8-K:
No reports on Form 8-K for the quarter ended June 30, 2000.
* denotes management contract or any compensatory plan, contract or arrangement.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the city of Waltham,
Massachusetts, on the 25th day of September, 2000.
PAREXEL INTERNATIONAL CORPORATION
By: /s/ Josef H. Von Rickenbach
---------------------------------
Josef H. von Rickenbach
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
to be signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE(S) DATE
---------- -------- ----
<S> <C> <C>
/s/ Josef H. Von Rickenbach
----------------------------------------
Josef H. von Rickenbach Chairman, President and Chief September 25, 2000
Executive Officer (principal
executive officer)
/s/ James F. Winschel, Jr.
----------------------------------------
James F. Winschel, Jr. Senior Vice President and Chief September 25, 2000
Financial Officer (principal
financial and accounting officer)
/s/ A. Dana Callow, Jr.
----------------------------------------
A. Dana Callow, Jr. Director September 25, 2000
/s/ A. Joseph Eagle
----------------------------------------
A. Joseph Eagle Director September 25, 2000
/s/ Patrick J. Fortune
----------------------------------------
Patrick J. Fortune Director September 25, 2000
/s/ Werner M. Herrmann
----------------------------------------
Werner M. Herrmann Director September 25, 2000
/s/ Serge Okun
----------------------------------------
Serge Okun Director September 25, 2000
/s/ William T. Sobo, Jr.
----------------------------------------
William T. Sobo, Jr. Director September 25, 2000
</TABLE>
21
<PAGE> 22
Schedule II
PAREXEL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($ in thousands)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
beginning costs and Charged to Deductions end of
Description of year expenses other accounts and write-offs year
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
Year ended June 30, 1998 $3,384 $1,924 $ -- $ (246) $5,062
Year ended June 30, 1999 5,062 533 -- (468) 5,127
Year ended June 30, 2000 5,127 607 -- (2,034) 3,700
DEFERRED TAX ASSET
VALUATION ALLOWANCE:
Year ended June 30, 1998 $3,504 $ -- $ -- $ (891) $2,613
Year ended June 30, 1999 2,613 950 -- -- 3,563
Year ended June 30, 2000 3,563 -- -- (95) 3,468
</TABLE>
22
<PAGE> 23
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Amended and Restated Articles of Organization of the
Company, as amended (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
Ended December 31, 1996 and incorporated herein by this
reference).
3.2 Amended and Restated By-laws of the Company (filed as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1
(File No. 333-1188) and incorporated herein by this reference).
3.3 Amendment to Article 1, Section 1 of the Corporation's
Amended and Restated By-laws.
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 Registration Rights Agreement dated as of February 27, 1998 by
and among the Company and the former stockholders of PPS
Europe Ltd. (filed as Exhibit 4.4 to the Company's Current
Report on Form 8-K/A dated March 1, 1998 and incorporated
herein by reference).
4.3 Registration Rights Agreement dated as of February 27, 1998 by
and among the Company and the former stockholders of Creative
Communications Solutions Limited (filed as exhibit 4.8 to the
Registrant's Registration Statement on Form S-3 (File No.
333-53941) and incorporated herein by reference).
4.4 Share Acquisition Agreement with respect to Groupe
PharMedicom S.A., dated March 31, 1999 among Herve
Laurent, Philippe Conquet and Others, as Sellers, and
PAREXEL International Corporation, as Buyer (filed as
Exhibit 2.2 to Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 and incorporated
herein by this reference).
<PAGE> 24
4.5 Registration Rights Agreement dated as of March 31, 1999
among PAREXEL International Corporation and certain former
stockholders of Groupe PharMedicom S.A. (filed as Exhibit
4.1 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999 and incorporated herein
by this reference).
10.1* Agreement dated June 30, 1993 between Prof. Dr. med. Werner M.
Herrmann and PAREXEL GmbH Independent Pharmaceutical Research
Organization, as amended, as of April 1, 1998 (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 1998 and incorporated herein
by this reference).
10.2* Letter Agreement effective as of July 1, 1997 between Prof.
Dr. med. Werner M. Herrmann and the Company, as amended as of
April 1, 1998(filed as Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the Quarter Ended March 31,
1998 and incorporated herein by this reference).
10.3* 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 reference.
10.4* 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).
10.5* 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).
10.6* 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).
10.7* Second Amended and Restated 1995 Stock Plan of the Company
(filed as Exhibit 10.9 to the Registrant's Annual Report
on Form 10-K for the Fiscal Year Ended June 30, 1998 and
incorporated herein by this reference).
10.8* 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).
10.9* 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).
10.10 Loan and Security Agreement dated as of July 31, 1992
between the Company, Barnett International Corporation and
The First National Bank of Boston, as amended (filed as
Exhibit 10.12 to the Registrant's Annual Report on Form
10-K for the year ended June 30, 1999 and incorporated
herein by this reference.
10.11 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).
10.12 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
<PAGE> 25
incorporated herein by this reference).
10.13* Letter of employment dated July 6, 1993 between Barry R.
Philpott and the Company (filed as Exhibit 10.29 to the
Registrant's Registration Statement on Form S-1 (File No.
33-97406) and incorporated herein by this reference).
10.14* 1998 Non-Qualified, Non-Officer Stock Option Plan, as
amended (filed as Exhibit 10.16 to the registrant's Annual
Report on form 10-K for the year ended June 30, 1999 and
incorporated herein by this reference).
10.15* Amended and Restated Employment Agreement dated December 6,
1999 between Josef H. von Rickenbach and the Company (filed as
Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the Quarter Ended December 31, 1999 and
incorporated herein by this reference).
10.16* Change in Control Agreement dated October 20, 1998 between
Barry R. Philpott and the Company (filed as Exhibit 10.4
to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended September 30, 1998 and incorporated herein by
this reference).
10.17 Third Amendment to Lease dated November 17, 1998 between
Boston Properties Limited Partnership and the Company
(filed as Exhibit 10.1 to the Registrant's Quarterly
Report on Form 10-Q for the Quarter Ended December 31,
1998 and incorporated herein by this reference).
10.18 Lease dated November 17, 1998 between Boston Properties
Limited Partnership and the Company (filed as Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the
Quarter Ended December 31, 1998 and incorporated herein by
this reference).
10.19 Lease dated June 14, 1991 between 200 West Street Limited
Partnership and the Company.
10.20* Employment Agreement dated August 30, 1996 between Ulf Schneider
and the Company.
10.21* Employment Agreement dated December 15, 1997 between Paule
Dapres and the Company.
10.22 Fourth Amendment dated August 28, 2000 to the lease dated
November 17, 1998 between Boston Properties Limited Partnership
and the Company.
13.1 Specified portions of the Registrant's 2000 Annual Report to
Stockholders.
21.1 List of subsidiaries of the Company.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Report of Independent Accountants on Financial Statement
Schedule.
27.1 Financial Data Schedule.
(B) Reports on Form 8-K:
No reports on Form 8-K for the quarter ended June 30, 2000.
* denotes management contract or any compensatory plan, contract or arrangement.
