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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2007
 OR
 o
    
    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
  MASSACHUSETTS
(State or other jurisdiction of 
incorporation or organization)
    
    04-2776269
(I.R.S. Employer
Identification Number)
 200 WEST STREETWALTHAM, MASSACHUSETTS
    
    02451(Address of principal executive offices)
    
    (Zip Code)
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 Name of Each Class:
    
    Name of Each Exchange on Which Registered:Common Stock, $.01 par value per share
    
    Nasdaq Global Select Market
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
 þ o
 o þ
 þ o
 o
  þ o o
 o þ
    DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PAREXEL INTERNATIONAL CORPORATION
 FORM 10-K ANNUAL REPORT
 INDEX
 PAGEPART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    14Item 1B. Unresolved Staff Comments
    
    
    22Item 2. Properties
    
    
    22Item 3. Legal Proceedings
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23PART IIItem 5. Market for Registrants Common Equity,
Related Stockholder Matters, and Issuer
Purchases of Equity Securities
    
    
    23Item 6. Selected Financial Data
    
    
    25Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    40Item 8. Financial Statements and Supplementary Data
    
    
    41Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    72Item 9A. Controls and Procedures
    
    
    72Item 9B. Other Information
    
    
    72PART IIIItem 10. Directors, Executive Officers and Corporate Governance
of the Registrant
    
    
    72Item 11. Executive Compensation
    
    
    72Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
    
    
    73Item 13. Certain Relationships and Related Transactions,
and Director Independence
    
    
    73Item 14. Principal Accountant Fees and Services
    
    
    73PART IVItem 15. Exhibits and Financial Statement Schedule
    
    
    73SIGNATURES
    
    
    74EX-10.12.5 Fifth Amendment dated as of June 29, 2007 to Lease date June 14, 1991EX-10.15.2 First Amendment dated June 29, 2007 to Lease dated November 17, 1998EX-10.24 Tender Agreement, dated as of June 7, 2007EX-21.1 List of subsidiaries of the CompanyEX-23.1 Consent of Ernst & Young LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO




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PART I
  
 ITEM 1. BUSINESS
 GENERAL
   - 3 -




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rd
 DESCRIPTION OF BUSINESS
  
    
    CRS constitutes the Companys core business and includes clinical trials management and
biostatistics, data management and clinical pharmacology, as well as related medical
advisory and investigator site services.
    
    PCMS provides technical expertise and advice in such areas as drug development,
regulatory affairs, and bio/pharmaceutical process and management consulting. In addition,
PCMS provides a full spectrum of market development, product development, and targeted
communications services in support of product launch. PCMS consultants also identify
alternatives and propose solutions to address clients product development, registration,
and commercialization issues. In addition, PCMS provides health policy consulting and
strategic reimbursement services.
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
    
    Perceptive provides information technology solutions designed to improve clients product
development processes. Perceptive offers a portfolio of products and services that includes
medical imaging services, IVRS, CTMS, web-based portals, systems integration, and patient
diary applications.
 CLINICAL RESEARCH SERVICES
      
    
    CLINICAL PHARMACOLOGY (Phases I  IIa)
  
    
    PHASES II  IV
  Study Protocol Design
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CRF Design 
 Site and Investigator Recruitment 
 Patient Enrollment 
 Study Monitoring and Data Collection 
 Data Management 
  Biostatistics and Programming 
 Report Writing 
 - 6 -




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Medical Services
 Project Management 
 PAREXEL CONSULTING AND MEDICAL COMMUNICATIONS SERVICES
  Drug Development Consulting (DDC)
  Strategic Compliance and Operational Performance Excellence (SCOPE)
  Medical Communications Services (MedCom) 
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Health Policy & Strategic Reimbursement (HPSR) 
 Barnett Educational Services (Barnett) 
 PERCEPTIVE INFORMATICS, INC.
  Medical Imaging Services 
 IVRS 
 CTMS  ®
 Web-Based Portal 
 Integration Services Group 
 Patient Diary Applications 
  INFORMATION TECHNOLOGY
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SALES AND MARKETING
     CLIENTS
  BACKLOG
   - 9 -




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COMPETITION
   CRS
   
    
    previous experience with a client or in a specific therapeutic area;
    
    medical and scientific expertise in a specific therapeutic area;
    
    quality of services;
    
    breadth of services;
    
    the ability to organize and manage large-scale clinical 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 quickly recruit investigators and patients;
    
    the ability to integrate information technology with systems to improve the efficiency of clinical research;
    
    an international presence with strategically located facilities;
    
    financial strength and stability; and
    
    price.
  PCMS
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PERCEPTIVE
  INTELLECTUAL PROPERTY
  EMPLOYEES
   GOVERNMENT REGULATIONS
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REGULATION OF DRUGS AND BIOLOGICS
  Preclinical Research (approximately 1 to 3.5 years) 
 Clinical Trials (approximately 3.5 to 6 years)
 -
    
    Phase I consists of basic safety and pharmacology testing in approximately 20
to 80 human subjects, usually healthy or stable patient volunteers, and includes
studies to determine metabolic and pharmacologic action of the product in humans,
how the drug or biologic works, how it is affected by other drugs, how it is
tolerated and absorbed, where it goes in the body, how long it remains active,
and how it is broken down and eliminated from the body.
 -
    
    Phase II includes basic efficacy (effectiveness) and dose-range testing,
sometimes in 100 to 200 patients afflicted with a specific disease or condition
for which the product is intended for use, further safety testing, evaluation of
effectiveness, and determination of optimal dose levels, dose schedules, and
routes of administration. If Phase II studies yield satisfactory results and no
hold is placed on further studies by the FDA, Phase III studies can be commenced.
 -
    
    Phase III includes larger scale, multi-center, comparative clinical trials
conducted with patients afflicted by a target disease in order to provide enough
data for a valid statistical test of safety and effectiveness required by the FDA
and others and to provide a basis for product labeling. When results from Phase
II or Phase III show special promise in the treatment of a serious condition for
which existing therapeutic options are nonexistent, 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 Treatment Investigational New
Drug (TIND), which may span late Phase II, Phase III, and FDA review. Although
TINDs may enroll and collect a substantial amount of data from tens of thousands
of patients, they are not granted in all cases.
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NDA or Biologic License Application (BLA) Preparation and Submission 
 FDA Review of NDA or BLA 
 Post-Marketing Surveillance and Phase IV Studies 
 REGULATION OF MEDICAL DEVICES
    HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996
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POTENTIAL LIABILITY AND INSURANCE
     AVAILABLE INFORMATION
  
 ITEM 1A. RISK FACTORS
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THE LOSS, MODIFICATION, OR DELAY OF LARGE OR MULTIPLE CONTRACTS MAY NEGATIVELY IMPACT OUR FINANCIAL
PERFORMANCE
   
    
    merger or potential merger related activities involving the client;
    
    failure of products being tested to satisfy safety requirements;
    
    failure of products being tested to satisfy efficacy criteria;
    
    products having unexpected or undesired clinical results;
    
    client cost reductions as a result of budgetary limit or changing priorities;
    
    client decisions to forego a particular study, perhaps for economic reasons;
    
    insufficient patient enrollment in a study;
    
    insufficient investigator recruitment;
    
    clinical drug manufacturing problems resulting in shortages of the product;
    
    product withdrawal following market launch; and
    
    shut down of manufacturing facilities.
  WE FACE INTENSE COMPETITION IN MANY AREAS OF OUR BUSINESS; IF WE DO NOT COMPETE EFFECTIVELY, OUR
BUSINESS WILL BE HARMED
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THE FIXED RATE NATURE OF OUR CONTRACTS COULD HURT OUR OPERATING RESULTS
  IF GOVERNMENTAL REGULATION OF THE DRUG, MEDICAL DEVICE AND BIOTECHNOLOGY INDUSTRY CHANGES, THE NEED
FOR OUR SERVICES COULD DECREASE
     IF WE FAIL TO COMPLY WITH EXISTING REGULATIONS, OUR REPUTATION AND OPERATING RESULTS WOULD BE
HARMED
  WE MAY LOSE BUSINESS OPPORTUNITIES AS A RESULT OF HEALTH CARE REFORM AND THE EXPANSION OF
MANAGED-CARE ORGANIZATIONS
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BECAUSE WE DEPEND ON A SMALL NUMBER OF INDUSTRIES AND CLIENTS FOR ALL OF OUR BUSINESS, THE LOSS OF
BUSINESS FROM A SIGNIFICANT CLIENT COULD HARM OUR BUSINESS, REVENUE AND FINANCIAL CONDITION
  IF WE DO NOT KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES, OUR PRODUCTS AND SERVICES MAY BECOME LESS
COMPETITIVE OR OBSOLETE, ESPECIALLY IN OUR PERCEPTIVE BUSINESS
  IF OUR PERCEPTIVE BUSINESS IS UNABLE TO MAINTAIN CONTINUOUS, EFFECTIVE, RELIABLE AND SECURE
OPERATION OF ITS COMPUTER HARDWARE, SOFTWARE AND INTERNET APPLICATIONS AND RELATED TOOLS AND
FUNCTIONS, ITS BUSINESS WILL BE HARMED
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IF WE CANNOT RETAIN OUR HIGHLY QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL, OUR BUSINESS WOULD BE
HARMED
   WE MAY HAVE SUBSTANTIAL EXPOSURE TO PAYMENT OF PERSONAL INJURY CLAIMS AND MAY NOT HAVE ADEQUATE
INSURANCE TO COVER SUCH CLAIMS
   
    
    we had to pay damages or incur defense costs in connection with a claim that is outside
the scope of an indemnity; or
    
    a client failed to indemnify us in accordance with the terms of an indemnity agreement
because it did not have the financial ability to fulfill its indemnification obligation or
for any other reason.
   OUR BUSINESS IS SUBJECT TO INTERNATIONAL ECONOMIC, POLITICAL, AND OTHER RISKS THAT COULD NEGATIVELY
AFFECT OUR RESULTS OF OPERATIONS OR FINANCIAL POSITION
  
    
    changes in a specific countrys or regions political or economic conditions, including Western Europe, in particular;
    
    potential negative consequences from changes in tax laws affecting our ability to repatriate profits;
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
    
    difficulty in staffing and managing widespread operations;
    
    unfavorable labor regulations applicable to its European or other international operations;
    
    changes in foreign currency exchange rates; and
    
    longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions.
 OUR REVENUE AND EARNINGS ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS
  
    
    Foreign Currency Translation Risk. The revenue and expenses of our foreign operations
are generally denominated in local currencies, primarily the British pound and the Euro,
and then are translated into U.S. dollars for financial reporting purposes. For the fiscal
year ended June 30, 2007, 16.0% of total consolidated service revenue was denominated in
British pounds and approximately 36.4% of total consolidated service revenue was
denominated in Euros. For the fiscal year ended June 30, 2006, 17.0% of total consolidated
service revenue was denominated in British pounds and approximately 37.0% of total
consolidated service revenue was denominated in Euros. Accordingly, changes in exchange
rates between foreign currencies and the U.S. dollar will affect the translation of foreign
results into U.S. dollars for purposes of reporting our consolidated results.
    
    Foreign Currency Transaction Risk. We may be subjected to foreign currency transaction
risk when our foreign subsidiaries enter into contracts or incur liabilities denominated in
a currency other than the foreign subsidiaries functional (local) currency. To the extent
we are unable to shift the effects of currency fluctuations to the clients, foreign
exchange fluctuations as a result of foreign currency exchange losses could have a material
adverse effect on our results of operations.
  OUR OPERATING RESULTS HAVE FLUCTUATED BETWEEN QUARTERS AND YEARS AND MAY CONTINUE TO FLUCTUATE IN
THE FUTURE, WHICH COULD AFFECT THE PRICE OF OUR COMMON STOCK
  
    
    the level of new business authorizations in a particular quarter or year;
    
    the timing of the initiation, progress, or cancellation of significant projects;
    
    exchange rate fluctuations between quarters or years;
    
    restructuring charges;
    
    seasonality;
    
    the mix of services offered in a particular quarter or year;
    
    the timing of the opening of new offices;
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
    
    timing, costs and the related financial impact of acquisitions;
    
    the timing of internal expansion;
    
    the timing and amount of costs associated with integrating acquisitions;
    
    the timing and amount of startup costs incurred in connection with the introduction of
new products, services or subsidiaries; and
    
    the dollar amount of changes in contract scope finalized during a particular period.
    OUR EFFECTIVE INCOME TAX RATE MAY FLUCTUATE FROM QUARTER-TO-QUARTER, WHICH MAY AFFECT EARNINGS AND
EARNINGS PER SHARE
  
    
    the requirement to exclude from our quarterly worldwide effective income tax
calculations losses in jurisdictions where no tax benefit can be recognized;
    
    actual and projected full year pretax income;
    
    changes in tax laws in various taxing jurisdictions;
    
    audits by taxing authorities; and
    
    the establishment of valuation allowances against deferred tax assets if it is
determined that it is more likely than not that future tax benefits will not be realized.
  OUR BUSINESS HAS EXPERIENCED SUBSTANTIAL EXPANSION IN THE PAST AND SUCH EXPANSION AND ANY FUTURE
EXPANSION COULD STRAIN OUR RESOURCES IF NOT PROPERLY MANAGED
  
    
    continue to improve operating, administrative, and information systems;
    
    accurately predict future personnel and resource needs to meet client contract commitments;
    
    track the progress of ongoing client projects; and
    
    attract and retain qualified management, sales, professional, scientific and technical operating personnel.
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
    
    assimilate differences in foreign business practices, exchange rates and regulatory requirements;
    
    operate amid political and economic instability;
    
    hire and retain qualified personnel; and
    
    overcome language, tariff and other barriers.
 WE MAY MAKE ACQUISITIONS IN THE FUTURE, WHICH MAY LEAD TO DISRUPTIONS TO OUR ONGOING BUSINESS
  
    
    assimilate the operations and services or products of the acquired company;
    
    integrate acquired personnel;
    
    retain and motivate key employees;
    
    retain customers;
    
    identify and manage risks facing the acquired company; and
    
    minimize the diversion of managements attention from other business concerns.
   OUR CORPORATE GOVERNANCE STRUCTURE, INCLUDING PROVISIONS OF OUR ARTICLES OF ORGANIZATION, BY-LAWS,
SHAREHOLDER RIGHTS PLAN, AS WELL AS MASSACHUSETTS LAW, MAY DELAY OR PREVENT A CHANGE IN CONTROL OR
MANAGEMENT THAT STOCKHOLDERS MAY CONSIDER DESIRABLE
  
    
    we have divided our board of directors into three classes that serve staggered
three-year terms;
    
    we are subject to Section 8.06 of the Massachusetts Business Corporation Law which
provides that directors may only be removed by stockholders for cause, vacancies in our
board of directors may only be filled by a vote of our board of directors and the number of
directors may be fixed only by our board of directors;
    
    we are subject to Chapter 110F of the Massachusetts General Laws which limits our
ability to engage in business combinations with certain interested stockholders;
    
    our stockholders are limited in their ability to call or introduce proposals at
stockholder meetings; and
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
    
    our shareholder rights plan would cause a proposed acquirer of 20% or more of our
outstanding shares of common stock to suffer significant dilution.
   OUR STOCK PRICE HAS BEEN AND MAY IN THE FUTURE BE VOLATILE, WHICH COULD LEAD TO LOSSES BY INVESTORS
   
    
    operating results;
    
    earnings estimates by analysts;
    
    market conditions in the industry;
    
    prospects of health care reform;
    
    changes in government regulations;
    
    general economic conditions, and
    
    our effective income tax rate.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
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Facility
    
    Sq. Ft.
    
    Use of Facility
    
    Lease ExpirationHeadquarters in Waltham, MA
    
    
    85,000
    
    
    CRS, Perceptive, and Corporate
    
    2009-2019Lowell, MA
    
    
    108,000
    
    
    PCMS, CRS, Perceptive, and General & Administrative (G&A)
    
    
    2011Uxbridge, UK
    
    
    75,000
    
    
    CRS, PCMS, and G&A
    
    
    2022Berlin, Germany
    
    
    250,000
    
    
    CRS, PCMS, Perceptive and G&A
    
    
    2016
  Total Sq. Ft.CRS
    
    
    711,000PCMS
    
    
    338,000Perceptive
    
    
    148,000General and Administrative
    
    
    243,000
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF
EQUITY SECURITIES
 MARKET INFORMATION AND HOLDERS
  2007
    
    2006High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    37.68
    
    
    $
    26.76
    
    
    $
    20.62
    
    
    $
    18.85Second Quarter
    
    $
    35.52
    
    
    $
    27.35
    
    
    $
    22.00
    
    
    $
    18.85Third Quarter
    
    $
    36.10
    
    
    $
    28.00
    
    
    $
    27.59
    
    
    $
    19.21Fourth Quarter
    
    $
    42.60
    
    
    $
    35.62
    
    
    $
    30.83
    
    
    $
    23.55
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DIVIDENDS
   COMPANY STOCK PERFORMANCE GRAPH
   
 Fiscal Years Ended June 30,Total Return Index For:
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007PAREXEL International Stock
    
    $
    100.00
    
    
    $
    100.29
    
    
    $
    142.34
    
    
    $
    142.49
    
    
    $
    207.41
    
    
    $
    302.37Nasdaq U.S. Stock Index
    
    $
    100.00
    
    
    $
    111.02
    
    
    $
    139.95
    
    
    $
    141.46
    
    
    $
    150.42
    
    
    $
    179.30Nasdaq Health Services Index
    
    $
    100.00
    
    
    $
    105.27
    
    
    $
    156.31
    
    
    $
    197.53
    
    
    $
    226.58
    
    
    $
    265.69
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ITEM 6. SELECTED FINANCIAL DATA
  For the years ended June 30,(in thousands, except per share data and number of employees)2007
    
    2006
    
    2005
    
    2004
    
    2003OPERATIONSService revenue
    
    $
    741,955
    
    
    $
    614,947
    
    
    $
    544,726
    
    
    $
    540,983
    
    
    $
    518,936Income (loss) from operations
    
    $
    57,566
    
    
    $
    39,855
    (1)
    
    $
    (276
    )(2)
    
    $
    18,373
    (3)
    
    $
    17,228
    (4)Net income (loss)
    
    $
    37,289
    
    
    $
    23,544
    
    
    $
    (35,177
    )
    
    $
    13,791
    
    
    $
    10,662Basic earnings (loss) per share
    
    $
    1.37
    
    
    $
    0.89
    
    
    $
    (1.35
    )
    
    $
    0.53
    
    
    $
    0.42Diluted earnings (loss) per share
    
    $
    1.33
    
    
    $
    0.87
    
    
    $
    (1.35
    )
    
    $
    0.51
    
    
    $
    0.42FINANCIAL POSITIONCash, cash equivalents, and marketable securities
    
    $
    96,677
    
    
    $
    92,749
    
    
    $
    88,622
    
    
    $
    95,607
    
    
    $
    82,724Working capital
    
    $
    118,746
    
    
    $
    131,552
    
    
    $
    120,301
    
    
    $
    145,408
    
    
    $
    134,346Total assets
    
    $
    680,013
    
    
    $
    538,633
    
    
    $
    475,736
    
    
    $
    502,996
    
    
    $
    464,237Borrowings under line of credit
    
    $
    30,463
    
    
    $
    498
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    $
    277
    
    
    $
    705
    
    
    $
    1,115
    
    
    $
    471
    
    
    $
    644Stockholders equity
    
    $
    316,616
    
    
    $
    248,763
    
    
    $
    205,571
    
    
    $
    246,760
    
    
    $
    227,100OTHER DATAPurchases of property and equipment
    
    $
    40,855
    
    
    $
    29,763
    
    
    $
    31,814
    
    
    $
    27,823
    
    
    $
    29,985Depreciation and amortization
    
    $
    30,855
    
    
    $
    26,035
    
    
    $
    29,618
    
    
    $
    25,762
    
    
    $
    20,656Number of employees
    
    
    6,485
    
    
    
    5,600
    
    
    
    5,140
    
    
    
    4,875
    
    
    
    5,095Weighted average shares used in
computing:Basic earnings (loss) per share
    
    
    27,316
    
    
    
    26,557
    
    
    
    26,065
    
    
    
    26,010
    
    
    
    25,371Diluted earnings (loss) per share
    
    
    28,108
    
    
    
    27,013
    
    
    
    26,065
    
    
    
    26,795
    
    
    
    25,683
 
 (1)
    
    Income from operations for the year ended June 30, 2006 reflects $1.6 million of
compensation expense in conjunction with the acquisition of the Perceptive minority
interest as discussed in Note 3 to the consolidated financial statements included in Item 8
of this annual report. Additionally, the Company recorded a $2.6 million reduction to the
existing restructuring reserve as a result of execution of sub-lease agreements and changes
in assumptions of leased facilities, which was offset by $1.8 million in severance-related
restructuring expenses incurred during fiscal year 2006 in association with the fourth
quarter fiscal year 2005 restructuring plan. See Note 7 to the consolidated financial
statements included in Item 8 of this annual report for further detail.(2)
    
    Loss from operations for the year ended June 30, 2005 reflects $24.3 million in
restructuring charges recorded in the quarter ended June 30, 2005, consisting of $4.3
million for severance expense associated with the elimination of 123 managerial and staff
positions and $20.5 million related to eleven newly-abandoned leased facilities (or newly
abandoned sections of previously partially abandoned facilities), partially offset by $0.5
million related to changes in assumptions for leased facilities which were abandoned in
June 2001 and in March 2004. Additionally, the Company recorded in fiscal year 2005 $2.7
million of impairment charges associated with abandoned leased facilities and other fixed
assets, and $0.5 million related to other special charges. See Note 7 to the consolidated
financial statements included in Item 8 of this annual report for further detail. - 25 -




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(3)
    
    Income from operations for the year ended June 30, 2004 reflects $10.8 million in
restructuring charges recorded in the quarter ended March 31, 2004, consisting of $3.9
million for severance expense associated with the elimination of 157 managerial and staff
positions, $5.6 million related to seven newly-abandoned leased facilities, and $1.3
million related to changes in assumptions for leased facilities, which were abandoned in
June 2001. See Note 7 to the consolidated financial statements included in Item 8 of this
annual report for further detail.(4)
    
    Income from operations for the year ended June 30, 2003 reflects $9.4 million in
facilities-related restructuring charges related to changes in assumptions for leased
facilities, which were previously abandoned in June 2001. The changes in assumptions were
caused by the deterioration in the commercial real estate market. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
   
    
    CRS constitutes the Companys core business and includes clinical trials management and
biostatistics, data management and clinical pharmacology, as well as related medical
advisory and investigator site services.
    
    PCMS provides technical expertise and advice in such areas as drug development,
regulatory affairs, and bio/pharmaceutical process and management consulting; and provides
a full spectrum of market development, product development, and targeted communications
services in support of product launch. PCMS consultants identify alternatives and propose
solutions to address clients product development, registration, and commercialization
issues. PCMS also provides health policy consulting and strategic reimbursement services.
    
    Perceptive provides information technology solutions designed to improve clients
product development processes. Perceptive offers a portfolio of products and services that
includes medical imaging services, IVRS, CTMS, web-based portals, systems integration, and
patient diary applications.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   REVENUE RECOGNITION
  BILLED ACCOUNTS RECEIVABLE, UNBILLED ACCOUNTS RECEIVABLE AND DEFERRED REVENUE
  INCOME TAXES
   - 27 -




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GOODWILL
  RESULTS OF OPERATIONS
 QUARTERLY OPERATING RESULTS (UNAUDITED)
  For the year ended June 30, 2007(in thousands, except per share data)First
    
    Second
    
    Third
    
    Fourth
    
    TotalQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    YearService revenue
    
    $
    165,057
    
    
    $
    180,474
    
    
    $
    191,215
    
    
    $
    205,209
    
    
    $
    741,955Gross profit
    
    
    55,836
    
    
    
    60,398
    
    
    
    65,903
    
    
    
    72,618
    
    
    
    254,755Income from operations
    
    
    11,321
    
    
    
    13,867
    
    
    
    15,475
    
    
    
    16,903
    
    
    
    57,566Net income
    
    
    6,977
    
    
    
    9,080
    
    
    
    10,797
    
    
    
    10,435
    
    
    
    37,289Diluted earnings per share
    
    $
    0.25
    
    
    $
    0.32
    
    
    $
    0.38
    
    
    $
    0.37
    
    
    $
    1.33
 For the year ended June 30, 2006(in thousands, except per share data)First
    
    Second
    
    Third
    
    Fourth
    
    TotalQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    YearService revenue
    
    $
    138,380
    
    
    $
    149,762
    
    
    $
    157,320
    
    
    $
    169,485
    
    
    $
    614,947Gross profit
    
    
    44,757
    
    
    
    51,226
    
    
    
    53,969
    
    
    
    58,754
    
    
    
    208,706Income from operations
    
    
    5,015
    
    
    
    10,578
    
    
    
    11,192
    
    
    
    13,070
    
    
    
    39,855Net income
    
    
    3,318
    
    
    
    5,043
    
    
    
    6,754
    
    
    
    8,429
    
    
    
    23,544Diluted earnings per share
    
    $
    0.13
    
    
    $
    0.19
    
    
    $
    0.25
    
    
    $
    0.31
    
    
    $
    0.87
 ACQUISITIONS AND IMPACT OF RESTRUCTURING AND OTHER CHARGES
 ACQUISITIONS
 BMR/CCT
  - 28 -




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
   Purchase Price:Cash paid, net of cash acquired
    
    $
    66,480Transaction costs
    
    
    2,028$
    68,508Allocations:Current assets
    
    $
    11,884Property and equipment, net
    
    
    1,477Goodwill
    
    
    35,474Other intangible assets, net
    
    
    23,621Other assets
    
    
    79Total assets acquired
    
    
    72,535Current liabilities
    
    
    4,027Total liabilities assumed
    
    
    4,027Net assets acquired
    
    $
    68,508
   Weighted Average
    
    
    
    
    
    
    AccumulatedUseful Life
    
    
    Cost
    
    
    Amortization
    
    
    NetBacklog
    
    7.5 months
    
    $
    1,881
    
    
    $
    1,881
    
    
    $
    Non-competition and non-
solicitation agreements
    
    3 years
    
    
    126
    
    
    
    26
    
    
    
    100Customer relationships
    
    15 years
    
    
    21,614
    
    
    
    901
    
    
    
    20,713Total intangible assets
purchased
    
    
    
    
    
    $
    23,621
    
    
    $
    2,808
    
    
    $
    20,813
 - 29 -




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##### Table of Contents



Fiscal Year
    
    Amortization2007
    
    $
    2,8082008
    
    
    1,4832009
    
    
    1,4832010
    
    
    1,4572011
    
    
    1,4412012
    
    
    1,441
  For the fiscal year endedJune 30, 2007PRXL
    
    BMR/ CCT**
    
    TotalService revenue
    
    $
    741,955
    
    
    $
    20,484
    
    
    $
    762,439Net income*
    
    $
    37,289
    
    
    $
    505
    
    
    $
    37,794Basic EPS*
    
    $
    1.37
    
    
    $
    0.01
    
    
    $
    1.38Diluted EPS*
    
    $
    1.33
    
    
    $
    0.01
    
    
    $
    1.34
 For the fiscal year endedJune 30, 2006PRXL
    
    BMR/ CCT**
    
    TotalService revenue
    
    $
    614,947
    
    
    $
    31,261
    
    
    $
    646,208Net income (loss)*
    
    $
    23,544
    
    
    $
    (489
    )
    
    $
    23,055Basic EPS*
    
    $
    0.89
    
    
    $
    (0.02
    )
    
    $
    0.87Diluted EPS*
    
    $
    0.87
    
    
    $
    (0.01
    )
    
    $
    0.86
 
 *
    
    Inclusive of the interest expense that would have been
incurred related to the $50 million in borrowings at an annual
interest rate of 6.25% and amortization expense that would have
been incurred in connection with the customer relationship and
non-competition and non-solicitation agreements.**
    
    Represents four and a half months of financial results in
fiscal year 2007 and twelve months of financial results in
fiscal year 2006, prior to PAREXELs acquisition of BMR/CCT. Synchron
  - 30 -




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Perceptive
     Qdot
  IMC
  RESTRUCTURING CHARGES
   - 31 -




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ANALYSIS BY SEGMENT
  2007 vs. 2006
    
    
    
    
    
    
    2006 vs. 2005Increase
    
    
    %
    
    
    
    
    
    
    Increase
    
    
    %($ IN THOUSANDS)
    
    2007
    
    
    2006
    
    
    (Decrease)
    
    
    Change
    
    
    2005
    
    
    (Decrease)
    
    
    ChangeService revenue:CRS
    
    $
    548,838
    
    
    $
    442,512
    
    
    $
    106,326
    
    
    
    24.0
    %
    
    $
    379,292
    
    
    $
    63,220
    
    
    
    16.7
    %PCMS
    
    
    120,636
    
    
    
    117,129
    
    
    
    3,507
    
    
    
    3.0
    %
    
    
    122,587
    
    
    
    (5,458
    )
    
    
    -4.5
    %Perceptive
    
    
    72,481
    
    
    
    55,306
    
    
    
    17,175
    
    
    
    31.1
    %
    
    
    42,847
    
    
    
    12,459
    
    
    
    29.1
    %$
    741,955
    
    
    $
    614,947
    
    
    $
    127,008
    
    
    
    20.7
    %
    
    $
    544,726
    
    
    $
    70,221
    
    
    
    12.9
    %Direct costs:CRS
    
    $
    359,749
    
    
    $
    292,221
    
    
    $
    67,528
    
    
    
    23.1
    %
    
    $
    251,183
    
    
    $
    41,038
    
    
    
    16.3
    %PCMS
    
    
    86,612
    
    
    
    81,549
    
    
    
    5,063
    
    
    
    6.2
    %
    
    
    85,319
    
    
    
    (3,770
    )
    
    
    -4.4
    %Perceptive
    
    
    40,839
    
    
    
    32,471
    
    
    
    8,368
    
    
    
    25.8
    %
    
    
    23,542
    
    
    
    8,929
    
    
    
    37.9
    %$
    487,200
    
    
    $
    406,241
    
    
    $
    80,959
    
    
    
    19.9
    %
    
    $
    360,044
    
    
    $
    46,197
    
    
    
    12.8
    %Gross profit:CRS
    
    $
    189,089
    
    
    $
    150,291
    
    
    $
    38,798
    
    
    
    25.8
    %
    
    $
    128,109
    
    
    $
    22,182
    
    
    
    17.3
    %PCMS
    
    
    34,024
    
    
    
    35,580
    
    
    
    (1,556
    )
    
    
    -4.4
    %
    
    
    37,268
    
    
    
    (1,688
    )
    
    
    -4.5
    %Perceptive
    
    
    31,642
    
    
    
    22,835
    
    
    
    8,807
    
    
    
    38.6
    %
    
    
    19,305
    
    
    
    3,530
    
    
    
    18.3
    %$
    254,755
    
    
    $
    208,706
    
    
    $
    46,049
    
    
    
    22.1
    %
    
    $
    184,682
    
    
    $
    24,024
    
    
    
    13.0
    %
 FISCAL YEAR ENDED JUNE 30, 2007 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30, 2006
  - 32 -




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FISCAL YEAR ENDED JUNE 30, 2006 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30, 2005
     - 34 -




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LIQUIDITY AND CAPITAL RESOURCES
    - 35 -




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DAYS SALES OUTSTANDING
  CASH FLOWS
     LINES OF CREDIT
  - 36 -




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FINANCING NEEDS
     rd
  - 37 -




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CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND GUARANTEES
  Less than 1
    
    
    1  3
    
    
    3  5
    
    
    More than($ IN THOUSANDS)
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    5 yearsOperating leases
    
    $
    237,535
    
    
    $
    42,013
    
    
    $
    58,980
    
    
    $
    39,054
    
    
    $
    97,488Obligations under capital leases
    
    
    258
    
    
    
    166
    
    
    
    92
    
    
    
    
    
    
    
    Purchase obligations
    
    
    16,568
    
    
    
    7,691
    
    
    
    4,076
    
    
    
    4,562
    
    
    
    239Total
    
    $
    254,361
    
    
    $
    49,870
    
    
    $
    63,148
    
    
    $
    43,616
    
    
    $
    97,727
      OFF-BALANCE SHEET ARRANGEMENTS
  INFLATION
  - 38 -




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RELATED PARTY TRANSACTIONS
     RECENTLY ISSUED ACCOUNTING STANDARDS
    - 39 -




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 MARKET RISK
  FOREIGN CURRENCY EXCHANGE RATES
    INTEREST RATES
   - 40 -




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 PAREXEL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the years ended June 30,2007
    
    
    2006
    
    
    2005Service revenue
    
    $
    741,955
    
    
    $
    614,947
    
    
    $
    544,726Reimbursement revenue
    
    
    176,149
    
    
    
    145,007
    
    
    
    126,811Total revenue
    
    
    918,104
    
    
    
    759,954
    
    
    
    671,537Costs and expenses:Direct costs
    
    
    487,200
    
    
    
    406,241
    
    
    
    360,044Reimbursable out-of-pocket expenses
    
    
    176,149
    
    
    
    145,007
    
    
    
    126,811Selling, general and administrative
    
    
    166,368
    
    
    
    143,652
    
    
    
    131,025Depreciation
    
    
    26,546
    
    
    
    24,473
    
    
    
    27,790Amortization
    
    
    4,309
    
    
    
    1,562
    
    
    
    1,828Restructuring (benefit) charges
    
    
    (34
    )
    
    
    (836
    )
    
    
    24,315Total costs and expenses
    
    
    860,538
    
    
    
    720,099
    
    
    
    671,813Income (loss) from operations
    
    
    57,566
    
    
    
    39,855
    
    
    
    (276
    )Interest income
    
    
    12,750
    
    
    
    9,354
    
    
    
    6,320Interest expense
    
    
    (11,764
    )
    
    
    (7,064
    )
    
    
    (4,508
    )Other income (loss), net
    
    
    982
    
    
    
    (371
    )
    
    
    (796
    )Total other income, net
    
    
    1,968
    
    
    
    1,919
    
    
    
    1,016Income before provision for income taxes
and minority interest (benefit) expense
    
    
    59,534
    
    
    
    41,774
    
    
    
    740Provision for income taxes
    
    
    22,277
    
    
    
    19,328
    
    
    
    35,566Minority interest (benefit) expense, net of tax
    
    
    (32
    )
    
    
    (1,098
    )
    
    
    351Net income (loss)
    
    $
    37,289
    
    
    $
    23,544
    
    
    $
    (35,177
    )Earnings (loss) per share:Basic
    
    $
    1.37
    
    
    $
    0.89
    
    
    $
    (1.35
    )Diluted
    
    $
    1.33
    
    
    $
    0.87
    
    
    $
    (1.35
    )Weighted average shares:Basic
    
    
    27,316
    
    
    
    26,557
    
    
    
    26,065Diluted
    
    
    28,108
    
    
    
    27,013
    
    
    
    26,065
  - 41 -




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PAREXEL INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
 As of June 30,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    96,677
    
    
    $
    82,749Marketable securities
    
    
    
    
    
    
    10,000Billed and unbilled accounts receivable, net
    
    
    325,021
    
    
    
    272,063Prepaid expenses
    
    
    15,484
    
    
    
    11,258Deferred tax assets
    
    
    4,984
    
    
    
    934Other current assets
    
    
    10,974
    
    
    
    8,074Total current assets
    
    
    453,140
    
    
    
    385,078Property and equipment, net
    
    
    97,233
    
    
    
    78,386Goodwill
    
    
    90,766
    
    
    
    50,112Other intangible assets, net
    
    
    27,361
    
    
    
    7,832Non-current deferred tax assets
    
    
    1,145
    
    
    
    10,495Other assets
    
    
    10,368
    
    
    
    6,730Total assets
    
    $
    680,013
    
    
    $
    538,633LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable and current portion of long-term debt
    
    $
    30,463
    
    
    $
    498Accounts payable
    
    
    12,942
    
    
    
    17,185Deferred revenue
    
    
    170,718
    
    
    
    139,836Accrued expenses
    
    
    20,431
    
    
    
    20,117Accrued restructuring charges, current portion
    
    
    4,337
    
    
    
    5,190Accrued employee benefits and withholdings
    
    
    55,296
    
    
    
    46,385Current deferred tax liabilities
    
    
    16,889
    
    
    
    12,645Income tax payable
    
    
    12,109
    
    
    
    7,498Other current liabilities
    
    
    11,209
    
    
    
    4,172Total current liabilities
    
    
    334,394
    
    
    
    253,526Long-term debt, net of current portion
    
    
    277
    
    
    
    705Non-current deferred tax liabilities
    
    
    12,183
    
    
    
    16,780Long-term accrued restructuring charges, less current portion
    
    
    5,970
    
    
    
    10,967Other liabilities
    
    
    8,247
    
    
    
    5,569Total liabilities
    
    
    361,071
    
    
    
    287,547Commitments and contingencies (Note 15)Minority interest in subsidiary
    
    
    2,326
    
    
    
    2,323Stockholders equity:Preferred stock$.01 par value; shares authorized: 5,000,000;
Series A junior participating preferred stock - 50,000
shares designated, none issued and outstanding

Common stock$.01 par value; shares authorized: 75,000,000
and 50,000,000 at June 30, 2007 and 2006, respectively
shares issued and outstanding: 27,565,633 and 26,920,119
at June 30, 2007 and 2006, respectively
    
    
    289
    
    
    
    283Additional paid-in capital
    
    
    191,835
    
    
    
    177,309Retained earnings
    
    
    102,564
    
    
    
    65,275Accumulated other comprehensive income
    
    
    21,928
    
    
    
    5,896Total stockholders equity
    
    
    316,616
    
    
    
    248,763Total liabilities and stockholders equity
    
    $
    680,013
    
    
    $
    538,633
  - 42 -




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PAREXEL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Accum.OtherCommon Stock
    
    
    
    
    
    
    
    
    
    
    Compre-
    
    
    Total
    
    
    Compre-Additional
    
    
    Treasury
    
    
    
    
    
    
    hensive
    
    
    Stock-
    
    
    hensiveNumber
    
    
    Par
    
    
    Paid-in
    
    
    Stock,
    
    
    Retained
    
    
    Income
    
    
    holders
    
    
    IncomeOf Shares
    
    
    Value
    
    
    Capital
    
    
    At Cost
    
    
    Earnings
    
    
    (Loss)
    
    
    Equity
    
    
    (Loss)Balance at June 30, 2004
    
    
    26,077,078
    
    
    $
    275
    
    
    $
    175,126
    
    
    $
    (8,056
    )
    
    $
    76,908
    
    
    $
    2,507
    
    
    $
    246,760
    
    
    $
    19,151Reclassification of treasury stock
    
    
    
    
    
    
    
    
    
    
    (8,056
    )
    
    
    8,056
    
    
    
    
    
    
    
    
    
    
    
    Shares repurchased in the open market
    
    
    (476,344
    )
    
    
    (5
    )
    
    
    (9,737
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,742
    )Shares issued under stock option/
employee stock purchase plans
    
    
    552,600
    
    
    
    5
    
    
    
    6,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,558Shares issued under subsidiary option plan
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Net unrealized loss on marketable securities
and derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (356
    )
    
    
    (356
    )
    
    
    (356
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,507
    )
    
    
    (2,507
    )
    
    
    (2,507
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,177
    )
    
    
    
    
    
    
    (35,177
    )
    
    
    (35,177
    )Balance at June 30, 2005
    
    
    26,153,334
    
    
    
    275
    
    
    
    163,921
    
    
    
    
    
    
    
    41,731
    
    
    
    (356
    )
    
    
    205,571
    
    
    
    (38,040
    )Shares repurchased in the open market
    
    
    (344,570
    )
    
    
    (3
    )
    
    
    (7,997
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,000
    )Shares issued under stock option/
employee stock purchase plans
    
    
    1,111,355
    
    
    
    11
    
    
    
    16,943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,954Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,442
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,442Net unrealized gain on marketable securities
and derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    712
    
    
    
    712
    
    
    
    712Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,540
    
    
    
    5,540
    
    
    
    5,540Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,544
    
    
    
    
    
    
    
    23,544
    
    
    
    23,544Balance at June 30, 2006
    
    
    26,920,119
    
    
    
    283
    
    
    
    177,309
    
    
    
    
    
    
    
    65,275
    
    
    
    5,896
    
    
    
    248,763
    
    
    
    29,796Shares issued under stock option/
employee stock purchase plans
    
    
    645,514
    
    
    
    6
    
    
    
    10,199
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,205Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,327Net unrealized gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    172
    
    
    
    172Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,860
    
    
    
    15,860
    
    
    
    15,860Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,289
    
    
    
    
    
    
    
    37,289
    
    
    
    37,289Balance at June 30, 2007
    
    
    27,565,633
    
    
    $
    289
    
    
    $
    191,835
    
    
    
    
    
    
    $
    102,564
    
    
    $
    21,928
    
    
    $
    316,616
    
    
    $
    53,321
  - 43 -




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##### Table of Contents



PAREXEL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended June 30,2007
    
    
    2006
    
    
    2005Cash flow from operating activities:Net income (loss)
    
    $
    37,289
    
    
    $
    23,544
    
    
    $
    (35,177
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Minority interest (benefit) expense, net of tax
    
    
    (32
    )
    
    
    (1,098
    )
    
    
    351Depreciation and amortization
    
    
    30,855
    
    
    
    26,035
    
    
    
    29,618Stock-based compensation
    
    
    4,327
    
    
    
    4,442
    
    
    
    Loss on disposal of assets
    
    
    72
    
    
    
    156
    
    
    
    85Deferred income taxes
    
    
    4,947
    
    
    
    4,164
    
    
    
    29,607Provision for losses on receivables, net
    
    
    247
    
    
    
    1,098
    
    
    
    (1,844
    )Changes in assets and liabilities, net of effects from acquisitions:Accounts receivable
    
    
    (33,927
    )
    
    
    (54,111
    )
    
    
    6,215Prepaid expenses and other current assets
    
    
    (6,743
    )
    
    
    (3,545
    )
    
    
    (2,870
    )Other assets
    
    
    (6,770
    )
    
    
    (2,545
    )
    
    
    3,409Accounts payable
    
    
    (6,436
    )
    
    
    2,608
    
    
    
    (1,556
    )Deferred revenue
    
    
    30,008
    
    
    
    7,595
    
    
    
    (13,168
    )Other current liabilities
    
    
    17,640
    
    
    
    25,948
    
    
    
    7,186Other liabilities
    
    
    (2,321
    )
    
    
    (6,047
    )
    
    
    9,131Net cash provided by operating activities
    
    
    69,156
    
    
    
    28,244
    
    
    
    30,987Cash flow from investing activities:Purchases of marketable securities
    
    
    (120,125
    )
    
    
    (79,075
    )
    
    
    (60,300
    )Proceeds from sale of marketable securities
    
    
    130,125
    
    
    
    73,075
    
    
    
    91,221Purchases of property and equipment
    
    
    (40,855
    )
    
    
    (29,763
    )
    
    
    (31,814
    )Acquisition of businesses
    
    
    (70,695
    )
    
    
    (7,425
    )
    
    
    (1,461
    )Proceeds from sale of assets
    
    
    300
    
    
    
    121
    
    
    
    392Net cash used in investing activities
    
    
    (101,250
    )
    
    
    (43,067
    )
    
    
    (1,962
    )Cash flow from financing activities:Proceeds from issuance of common stock
    
    
    10,205
    
    
    
    16,954
    
    
    
    6,558Payments to repurchase common stock
    
    
    
    
    
    
    (8,000
    )
    
    
    (9,742
    )Borrowings under lines of credit
    
    
    65,000
    
    
    
    (916
    )
    
    
    369Repayments under lines of credit
    
    
    (35,089
    )
    
    
    
    
    
    
    Repayments under long-term debt
    
    
    (428
    )
    
    
    
    
    
    
    Proceeds from issuance of subsidiarys common stock
    
    
    
    
    
    
    
    
    
    
    35Net cash provided by(used in) financing activities
    
    
    39,688
    
    
    
    8,038
    
    
    
    (2,780
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    6,334
    
    
    
    4,912
    
    
    
    (2,309
    )Net increase (decrease) in cash and cash equivalents
    
    
    13,928
    
    
    
    (1,873
    )
    
    
    23,936Cash and cash equivalents at beginning of year
    
    
    82,749
    
    
    
    84,622
    
    
    
    60,686Cash and cash equivalents at end of year
    
    $
    96,677
    
    
    $
    82,749
    
    
    $
    84,622
  - 44 -




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##### Table of Contents



PAREXEL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 For the years ended June 30,2007
    
    
    2006
    
    
    2005Supplemental disclosures of cash flow informationNet cash paid during the year for:Interest
    
    $
    9,554
    
    
    $
    7,064
    
    
    $
    4,508Income taxes, net of refunds
    
    $
    13,942
    
    
    $
    2,631
    
    
    $
    7,131Supplemental disclosures of investing activitiesFair value of assets acquired and goodwill
    
    $
    74,722
    
    
    $
    8,227
    
    
    $
    2,820Liabilities assumed
    
    
    (4,027
    )
    
    
    (802
    )
    
    
    (1,359
    )Cash paid for acquisitions
    
    $
    70,695
    
    
    $
    7,425
    
    
    $
    1,461
  - 45 -




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. DESCRIPTION OF BUSINESS
  NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation and Principles of Consolidation
  Reclassifications
  Use of Estimates
  Fair Values of Financial Instruments
  Revenue Recognition
   - 46 -




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##### Table of Contents



Cash, Cash Equivalents and Marketable Securities
  Concentration of Credit Risk
  Provision for Losses on Receivables
  Property and Equipment
  Development of Software for Internal Use
  - 47 -




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##### Table of Contents



Research and Development Costs
  Advertising Costs
  Goodwill
   Carrying amount as of June 30, 2004
    
    $
    41,002Add: IMC
    
    
    1,951Final purchase accounting adjustments
    
    
    (635
    )Effect of changes in rates used for translation and adjustments
    
    
    497Carrying amount as of June 30, 2005
    
    
    42,815Add: Qdot
    
    
    2,773Perceptive
    
    
    3,080Synchron
    
    
    (40
    )IMC
    
    
    647Effect of changes in rates used for translation and adjustments
    
    
    837Carrying amount as of June 30, 2006
    
    
    50,112Add: BMR/CCT
    
    
    35,474Perceptive
    
    
    48Qdot
    
    
    2,139Effect of changes in rates used for translation and adjustments
    
    
    2,993Carrying amount as of June 30, 2007
    
    $
    90,766
  ($ IN 000s)
    
    CRS
    
    PCMS
    
    PERCEPTIVE
    
    TOTALGoodwill
    
    $
    69,375
    
    
    $
    4,449
    
    
    $
    16,942
    
    
    $
    90,766
 - 48 -




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##### Table of Contents



Intangible Assets
   Weighted Average
    
    
    
    
    
    
    AccumulatedUseful Life
    
    
    Cost
    
    
    Amortization
    
    
    NetNon-competition and non-
solicitation agreements
    
    3 years
    
    $
    188
    
    
    $
    60
    
    
    $
    128Technology
    
    5 years
    
    
    2,379
    
    
    
    2,101
    
    
    
    278Customer relationships
    
    10 years
    
    
    33,332
    
    
    
    6,377
    
    
    
    26,955Total intangible assets
purchased
    
    
    
    
    
    $
    35,899
    
    
    $
    8,538
    
    
    $
    27,361
  Weighted Average
    
    
    
    
    
    
    AccumulatedUseful Life
    
    
    Cost
    
    
    Amortization
    
    
    NetNon-competition and non-
solicitation agreements
    
    3 years
    
    $
    62
    
    
    $
    22
    
    
    $
    40Technology and other
    
    5 years
    
    
    2,187
    
    
    
    1,486
    
    
    
    701Customer relationships
    
    10.7 years
    
    
    10,950
    
    
    
    3,859
    
    
    
    7,091Total intangible assets
purchased
    
    
    
    
    
    $
    13,199
    
    
    $
    5,367
    
    
    $
    7,832
  Carrying amount as of June 30, 2004
    
    $
    10,636Add: IMC
    
    
    585Less: Amortization
    
    
    (1,828
    )Effect of changes in rates used for translation and adjustments
    
    
    (165
    )Carrying amount as of June 30, 2005
    
    
    9,228Less: Amortization
    
    
    (1,562
    )Add: Effect of changes in rates used for translation and adjustments
    
    
    166Carrying amount as of June 30, 2006
    
    
    7,832Add: BMR/CCT
    
    
    23,621Effect of changes in rates used for translation and adjustments
    
    
    217Less: Amortization
    
    
    (4,309
    )Carrying amount as of June 30, 2007
    
    $
    27,361
  2008
    
    $
    3,2292009
    
    $
    2,7942010
    
    $
    2,1332011
    
    $
    2,1142012
    
    $
    2,114
 - 49 -




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Investments
  Income Taxes
  Foreign Currency
  Earnings Per Share
  Stock-Based Compensation
    - 50 -




---



##### Table of Contents



($ in thousands, except per share data)
    
    2005Net loss, as reported
    
    $
    (35,177
    )Deduct total stock-based compensation, net of tax
    
    
    (3,211
    )Pro forma net loss
    
    $
    (38,388
    )Basic loss per share  as reported
    
    $
    (1.35
    )Basic loss per share  pro forma
    
    $
    (1.47
    )
 Stock Options
   For the years ended June 30,2007
    
    2006
    
    2005Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    39.4
    %
    
    
    40.4
    %
    
    
    39.0
    %Risk-free interest rate
    
    
    4.88
    %
    
    
    4.01
    %
    
    
    3.52
    %Expected term (in years)
    
    
    4.33
    
    
    
    4.77
    
    
    
    5.0
  For the years ended June 30,($ in thousands, except per share data)

    
    2007
    
    2006
    
    2005Weighted-average fair value of
options granted per share
    
    $
    12.15
    
    
    $
    8.27
    
    
    $
    8.26Intrinsic value of options exercised
    
    $
    8,184
    
    
    $
    8,208
    
    
    $
    3,065Cash received from options exercised
    
    $
    9,034
    
    
    $
    15,618
    
    
    $
    3,853
 - 51 -




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##### Table of Contents



Weighted-AverageNumber of
    
    
    ExerciseOptions
    
    
    PriceFY 2007Outstanding at beginning of period
    
    
    2,432,745
    
    
    $
    16.71Granted
    
    
    337,500
    
    
    $
    31.16Exercised
    
    
    (524,369
    )
    
    $
    17.23Canceled
    
    
    (135,737
    )
    
    $
    23.12Outstanding at end of period
    
    
    2,110,139
    
    
    $
    18.48Exercisable at end of period
    
    
    1,194,713
    
    
    $
    14.07FY 2006Outstanding at beginning of period
    
    
    3,093,194
    
    
    $
    16.53Granted
    
    
    787,000
    
    
    $
    20.47Exercised
    
    
    (1,001,994
    )
    
    $
    15.59Canceled
    
    
    (445,455
    )
    
    $
    24.63Outstanding at end of period
    
    
    2,432,745
    
    
    $
    16.71Exercisable at end of period
    
    
    1,509,132
    
    
    $
    14.78FY 2005Outstanding at beginning of period
    
    
    3,245,425
    
    
    $
    15.70Granted
    
    
    343,000
    
    
    $
    20.28Exercised
    
    
    (343,348
    )
    
    $
    11.22Canceled
    
    
    (151,883
    )
    
    $
    18.65Outstanding at end of period
    
    
    3,093,194
    
    
    $
    16.53Exercisable at end of period
    
    
    2,552,441
    
    
    $
    16.66
  Weighted-Weighted-
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicNumber of
    
    Exercise
    
    Contractual
    
    ValueOptions
    
    Price
    
    Life In Years
    
    (In Thousands)Outstanding at end of period
    
    
    2,110,139
    
    
    $
    18.48
    
    
    
    4.47
    
    
    $
    38,998Exercisable at end of period
    
    
    1,194,713
    
    
    $
    14.07
    
    
    
    2.79
    
    
    $
    16,815
 Restricted Stock
  - 52 -




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##### Table of Contents



Weighted-AverageGrant-DateShares
    
    
    Fair ValueOutstanding at beginning of period
    
    
    365,333
    
    
    $
    14.25Granted
    
    
    25,043
    
    
    $
    19.32Vested
    
    
    (83,333
    )
    
    $
    12.62Outstanding at end of period, non-vested
    
    
    307,043
    
    
    $
    15.11
  Weighted-AverageGrant-DateShares
    
    
    Fair ValueOutstanding at beginning of period
    
    
    
    
    
    
    -Granted
    
    
    509,000
    
    
    $
    13.79Vested
    
    
    (50,000
    )
    
    $
    12.62Forfeited
    
    
    (93,667
    )
    
    $
    12.62Outstanding at end of period, non-vested
    
    
    365,333
    
    
    $
    14.25
  Derivative Financial Instruments
   - 53 -




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##### Table of Contents



Recently Issued Accounting Standards
    NOTE 3. ACQUISITIONS
 Fiscal Year 2007
 BMR/CCT
   
 - 54 -




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##### Table of Contents



Purchase Price:Cash paid, net of cash acquired
    
    $
    66,480Transaction costs
    
    
    2,028$
    68,508Allocations:Current assets
    
    $
    11,884Property and equipment, net
    
    
    1,477Goodwill
    
    
    35,474Other intangible assets, net
    
    
    23,621Other assets
    
    
    79Total assets acquired
    
    
    72,535Current liabilities
    
    
    4,027Total liabilities assumed
    
    
    4,027Net assets acquired
    
    $
    68,508
   Weighted Average
    
    
    
    
    
    
    AccumulatedUseful Life
    
    
    Cost
    
    
    Amortization
    
    
    NetBacklog
    
    7.5 months
    
    $
    1,881
    
    
    $
    1,881
    
    
    $
    Non-competition and non-
solicitation agreements
    
    3 years
    
    
    126
    
    
    
    26
    
    
    
    100Customer relationships
    
    15 years
    
    
    21,614
    
    
    
    901
    
    
    
    20,713Total intangible assets
purchased
    
    
    
    
    
    $
    23,621
    
    
    $
    2,808
    
    
    $
    20,813
  Fiscal Year
    
    
    Amortization2007
    
    
    $
    2,8082008
    
    
    
    1,4832009
    
    
    
    1,4832010
    
    
    
    1,4572011
    
    
    
    1,4412012
    
    
    
    1,441
 - 55 -




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##### Table of Contents



For the fiscal year endedJune 30, 2007PRXL
    
    BMR/ CCT**
    
    TotalService revenue
    
    $
    741,955
    
    
    $
    20,484
    
    
    $
    762,439Net income*
    
    $
    37,289
    
    
    $
    505
    
    
    $
    37,794Basic EPS*
    
    $
    1.37
    
    
    $
    0.01
    
    
    $
    1.38Diluted EPS*
    
    $
    1.33
    
    
    $
    0.01
    
    
    $
    1.34
 For the fiscal year endedJune 30, 2006PRXL
    
    BMR/ CCT**
    
    TotalService revenue
    
    $
    614,947
    
    
    $
    31,261
    
    
    $
    646,208Net income (loss)*
    
    $
    23,544
    
    
    $
    (489
    )
    
    $
    23,055Basic EPS*
    
    $
    0.89
    
    
    $
    (0.02
    )
    
    $
    0.87Diluted EPS*
    
    $
    0.87
    
    
    $
    (0.01
    )
    
    $
    0.86
 
 *
    
    Inclusive of the interest expense we would have incurred
related to the $50 million in borrowings at an annual interest
rate of 6.25% and amortization expense we would have incurred
in connection with the customer relationship and
non-competition and non-solicitation agreements.**
    
    Represents four and a half months of financial results in
fiscal year 2007 and twelve months of financial results in
fiscal year 2006, prior to PAREXELs acquisition of BMR/CCT. Fiscal Year 2006
 Synchron
  Perceptive
   - 56 -




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##### Table of Contents



Qdot
  Fiscal Year 2005
 IMC
  NOTE 4. MARKETABLE SECURITIES
   NOTE 5. BILLED AND UNBILLED ACCOUNTS RECEIVABLE
  ($ IN THOUSANDS)
    
    2007
    
    
    2006Billed
    
    $
    192,143
    
    
    $
    154,270Unbilled
    
    
    136,594
    
    
    
    121,262Provision for losses on receivables
    
    
    (3,716
    )
    
    
    (3,469
    )$
    325,021
    
    
    $
    272,063
 - 57 -




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##### Table of Contents



NOTE 6. PROPERTY AND EQUIPMENT
  ($ IN THOUSANDS)
    
    2007
    
    
    2006Owned assets:Computer software
    
    $
    73,183
    
    
    $
    73,001Computer and office equipment
    
    
    62,205
    
    
    
    78,423Leasehold improvements
    
    
    31,734
    
    
    
    26,045Medical equipment
    
    
    18,674
    
    
    
    15,476Furniture and fixtures
    
    
    16,385
    
    
    
    17,612Buildings
    
    
    4,952
    
    
    
    4,649Other
    
    
    3,528
    
    
    
    2,695210,661
    
    
    
    217,901Less: accumulated depreciation
    
    
    (114,229
    )
    
    
    (140,523
    )96,432
    
    
    
    77,378Assets held under capital lease:Computer software
    
    
    1,603
    
    
    
    1,999Less: accumulated amortization
    
    
    (802
    )
    
    
    (991
    )801
    
    
    
    1,008$
    97,233
    
    
    $
    78,386
   NOTE 7. RESTRUCTURING CHARGES
    - 58 -




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##### Table of Contents



Payments/Balance at
    
    
    Provisions/
    
    
    Foreign Currency
    
    
    Balance at($ IN THOUSANDS)
    
    June 30, 2006
    
    
    Adjustments
    
    
    Exchange
    
    
    June 30, 2007Employee severance costs
    
    $
    734
    
    
    $
    (93
    )
    
    $
    (418
    )
    
    $
    223Facilities-related charges
    
    
    15,423
    
    
    
    59
    
    
    
    (5,398
    )
    
    $
    10,084$
    16,157
    
    
    $
    (34
    )
    
    $
    (5,816
    )
    
    $
    10,307
 Payments/Balance at
    
    
    Provisions/
    
    
    Foreign Currency
    
    
    Balance atJune 30, 2005
    
    
    Adjustments
    
    
    Exchange
    
    
    June 30, 2006Employee severance costs
    
    $
    3,694
    
    
    $
    1,765
    
    
    $
    (4,725
    )
    
    $
    734Facilities-related charges
    
    
    27,310
    
    
    
    (2,601
    )
    
    
    (9,286
    )
    
    
    15,423$
    31,004
    
    
    $
    (836
    )
    
    $
    (14,011
    )
    
    $
    16,157
 Payments/Balance at
    
    
    Provisions/
    
    
    Foreign Currency
    
    
    Balance atJune 30, 2004
    
    
    Adjustments
    
    
    Exchange
    
    
    June 30, 2005Employee severance costs
    
    $
    1,503
    
    
    $
    4,300
    
    
    $
    (2,109
    )
    
    $
    3,694Facilities-related charges
    
    
    11,923
    
    
    
    20,015
    
    
    
    (4,628
    )
    
    
    27,310$
    13,426
    
    
    $
    24,315
    
    
    $
    (6,737
    )
    
    $
    31,004
 NOTE 8. CREDIT ARRANGEMENTS
     - 59 -




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##### Table of Contents



NOTE 9. STOCKHOLDERS EQUITY
   2003 Preferred Stock Rights
  NOTE 10. EARNINGS PER SHARE
  - 60 -




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##### Table of Contents



Years ended June 30,($ IN THOUSANDS, EXCEPT PER SHARE DATA)
    
    2007
    
    
    2006
    
    
    2005Net income (loss) attributable to common shares
    
    $
    37,289
    
    
    $
    23,544
    
    
    $
    (35,177
    )Weighted average number of shares outstanding,
used
in computing basic earnings per share
    
    
    27,316
    
    
    
    26,557
    
    
    
    26,065Dilutive common stock equivalents
    
    
    792
    
    
    
    456
    
    
    
    Weighted average shares used in computing
diluted earnings per share
    
    
    28,108
    
    
    
    27,013
    
    
    
    26,065Basic earnings (loss) per share
    
    $
    1.37
    
    
    $
    0.89
    
    
    $
    (1.35
    )Diluted earnings (loss) per share
    
    $
    1.33
    
    
    $
    0.87
    
    
    $
    (1.35
    )
 NOTE 11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  Unrealized gain(loss) on availablefor sale securitiesForeign currency
    
    
    and derivative($ IN THOUSANDS)
    
    translation
    
    
    instruments
    
    
    TotalBalance as of June 30, 2004
    
    $
    2,605
    
    
    $
    (98
    )
    
    $
    2,507Changes during the year
    
    
    (2,507
    )
    
    
    (356
    )
    
    
    (2,863
    )Balance as of June 30, 2005
    
    
    98
    
    
    
    (454
    )
    
    
    (356
    )Changes during the year
    
    
    5,540
    
    
    
    712
    
    
    
    6,252Balance as of June 30, 2006
    
    
    5,638
    
    
    
    258
    
    
    
    5,896Changes during the year
    
    
    15,860
    
    
    
    172
    
    
    
    16,032Balance as of June 30, 2007
    
    $
    21,498
    
    
    $
    430
    
    
    $
    21,928
 NOTE 12. STOCK AND EMPLOYEE BENEFIT PLANS
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##### Table of Contents



2005 Stock Incentive Plan
   2001 Stock Incentive Plan
  1998 Stock Plan
  1995 Stock Plan
  Employee Stock Purchase Plan
   Perceptive Stock Incentive Plan
  - 62 -




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##### Table of Contents



401(k)
  NOTE 13. FINANCIAL INSTRUMENTS
    NOTE 14. INCOME TAXES
  ($ IN THOUSANDS)
    
    2007
    
    
    2006
    
    
    2005Domestic
    
    $
    (1,199
    )
    
    $
    (9,201
    )
    
    $
    (30,366
    )Foreign
    
    
    60,733
    
    
    
    50,975
    
    
    
    31,106$
    59,534
    
    
    $
    41,774
    
    
    $
    740
 - 63 -




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##### Table of Contents



($ IN THOUSANDS)
    
    2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    100
    
    
    $
    1,345
    
    
    $
    (692
    )State
    
    
    714
    
    
    
    732
    
    
    
    152Foreign
    
    
    17,335
    
    
    
    13,280
    
    
    
    10,34218,149
    
    
    
    15,357
    
    
    
    9,802Deferred:Federal
    
    
    (249
    )
    
    
    
    
    
    
    16,439State
    
    
    (31
    )
    
    
    
    
    
    
    3,570Foreign
    
    
    4,408
    
    
    
    3,971
    
    
    
    5,7554,128
    
    
    
    3,971
    
    
    
    25,764$
    22,277
    
    
    $
    19,328
    
    
    $
    35,566
  ($ IN THOUSANDS)
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    2005
    
    
    %Income tax expense computed at the federal
statutory rate
    
    $
    20,837
    
    
    
    35.0
    %
    
    $
    14,621
    
    
    
    35.0
    %
    
    $
    259
    
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    360
    
    
    
    0.6
    %
    
    
    215
    
    
    
    0.5
    %
    
    
    99
    
    
    
    13.3
    %Foreign rate differential
    
    
    (2,958
    )
    
    
    -4.9
    %
    
    
    (1,700
    )
    
    
    -4.0
    %
    
    
    (955
    )
    
    
    -129.4
    %Change in valuation allowances
    
    
    347
    
    
    
    0.5
    %
    
    
    3,052
    
    
    
    7.3
    %
    
    
    36,555
    
    
    
    4,940.1
    %Additions to reserves
    
    
    710
    
    
    
    1.2
    %
    
    
    2,233
    
    
    
    5.3
    %
    
    
    185
    
    
    
    25.0
    %Research and development
    
    
    (1,175
    )
    
    
    -2.0
    %
    
    
    (1,082
    )
    
    
    -2.6
    %
    
    
    (955
    )
    
    
    -128.9
    %Other non-deductible expenses
    
    
    3,194
    
    
    
    5.4
    %
    
    
    790
    
    
    
    1.9
    %
    
    
    235
    
    
    
    31.8
    %Other
    
    
    962
    
    
    
    1.6
    %
    
    
    1,199
    
    
    
    2.9
    %
    
    
    143
    
    
    
    19.3
    %$
    22,277
    
    
    
    37.4
    %
    
    $
    19,328
    
    
    
    46.3
    %
    
    $
    35,566
    
    
    
    4,806.2
    %
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##### Table of Contents



($ IN THOUSANDS)
    
    2007
    
    
    2006Deferred tax assets:U.S. loss carryforwards
    
    $
    15,859
    
    
    $
    5,301Foreign loss carryforwards
    
    
    12,563
    
    
    
    13,028Accrued expenses
    
    
    14,307
    
    
    
    10,953Tax credit carryforwards
    
    
    7,501
    
    
    
    4,558Provision for losses on receivables
    
    
    588
    
    
    
    613Deferred compensation
    
    
    1,985
    
    
    
    1,736Deferred revenue
    
    
    
    
    
    
    9,392Other
    
    
    4,015
    
    
    
    4,249Gross deferred tax assets
    
    
    56,818
    
    
    
    49,830Deferred tax asset valuation allowance
    
    
    (47,588
    )
    
    
    (42,586
    )Total deferred tax assets
    
    
    9,230
    
    
    
    7,244Deferred tax liabilities:Property and equipment
    
    
    (6,002
    )
    
    
    (5,820
    )Deferred revenue
    
    
    (9,525
    )
    
    
    Intangible assets
    
    
    (5,539
    )
    
    
    (1,445
    )Foreign risk reserve
    
    
    (1,100
    )
    
    
    (1,839
    )Foreign work-in-process valuation
    
    
    (5,578
    )
    
    
    (11,274
    )Other
    
    
    (4,429
    )
    
    
    (4,862
    )Total deferred tax liabilities
    
    
    (32,173
    )
    
    
    (25,240
    )$
    (22,943
    )
    
    $
    (17,996
    )
  ($ IN THOUSANDS)
    
    2007
    
    
    2006Current deferred tax assets
    
    $
    4,984
    
    
    $
    934Non-current deferred tax assets
    
    
    1,145
    
    
    
    10,495Current deferred tax liabilities
    
    
    (16,889
    )
    
    
    (12,645
    )Non-current deferred tax liabilities
    
    
    (12,183
    )
    
    
    (16,780
    )$
    (22,943
    )
    
    $
    (17,996
    )
 - 65 -




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NOTE 15. COMMITMENTS, CONTINGENCIES AND GUARANTEES
 :
 ($ IN THOUSANDS)
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalOperating and capital leases
    
    $
    42,179
    
    
    $
    34,549
    
    
    $
    24,523
    
    
    $
    21,011
    
    
    $
    18,043
    
    
    $
    97,488
    
    
    $
    237,793Less: sublease income
    
    
    (3,896
    )
    
    
    (5,596
    )
    
    
    (464
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,956
    )Purchase Commitments
    
    
    7,691
    
    
    
    3,182
    
    
    
    894
    
    
    
    4,301
    
    
    
    261
    
    
    
    239
    
    
    
    16,568Total
    
    $
    45,974
    
    
    $
    32,135
    
    
    $
    24,953
    
    
    $
    25,312
    
    
    $
    18,304
    
    
    $
    97,727
    
    
    $
    244,405
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NOTE 16. RELATED PARTY TRANSACTIONS
     NOTE 17. GEOGRAPHIC AND SEGMENT INFORMATION
  ($ IN THOUSANDS)
    
    2007
    
    
    2006
    
    
    2005Service revenue:United States
    
    $
    266,835
    
    
    $
    217,778
    
    
    $
    202,924Europe
    
    
    418,590
    
    
    
    358,108
    
    
    
    313,114Asia and Other
    
    
    56,530
    
    
    
    39,061
    
    
    
    28,688$
    741,955
    
    
    $
    614,947
    
    
    $
    544,726Income (loss) from operations:United States
    
    $
    (970
    )
    
    $
    (5,801
    )
    
    $
    (33,357
    )Europe
    
    
    47,686
    
    
    
    45,613
    
    
    
    32,474Asia and Other
    
    
    10,850
    
    
    
    43
    
    
    
    607$
    57,566
    
    
    $
    39,855
    
    
    $
    (276
    )Tangible long-lived assets:United States
    
    $
    40,719
    
    
    $
    32,825
    
    
    $
    30,981Europe
    
    
    61,156
    
    
    
    49,755
    
    
    
    43,522Asia and Other
    
    
    4,640
    
    
    
    2,536
    
    
    
    2,462$
    106,515
    
    
    $
    85,116
    
    
    $
    76,965
 - 67 -




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##### Table of Contents



($ IN THOUSANDS)
    
    CRS
    
    PCMS
    
    PERCEPTIVE
    
    TOTALService revenue:2007
    
    $
    548,838
    
    
    $
    120,636
    
    
    $
    72,481
    
    
    $
    741,9552006
    
    $
    442,512
    
    
    $
    117,129
    
    
    $
    55,306
    
    
    $
    614,9472005
    
    $
    379,292
    
    
    $
    122,587
    
    
    $
    42,847
    
    
    $
    544,726Gross profit on
service revenue:2007
    
    $
    189,089
    
    
    $
    34,024
    
    
    $
    31,642
    
    
    $
    254,7552006
    
    $
    150,291
    
    
    $
    35,580
    
    
    $
    22,835
    
    
    $
    208,7062005
    
    $
    128,109
    
    
    $
    37,268
    
    
    $
    19,305
    
    
    $
    184,682
 NOTE 18. OTHER EVENT
   rd
 - 68 -




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect
on the financial statements.
     /s/ Josef H. von Rickenbach

Josef H. von Rickenbach
    
    
    
    /s/ James F. Winschel, Jr.

James F. Winschel, Jr.Chairman of the Board and Chief Executive Officer
    
    
    
    Senior Vice President and Chief Financial Officer(principal executive officer)
    
    
    
    (principal financial officer)
 - 69 -




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Report of Independent Registered Public Accounting Firm
       
 - 70 -




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
      .
   
 - 71 -




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
  Changes in Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT
  CODE OF ETHICS
  
 ITEM 11. EXECUTIVE COMPENSATION
  - 72 -




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  (1) FINANCIAL STATEMENTS
  FINANCIAL STATEMENTS
    
    FORM 10-K PAGESReports of Independent Registered Public Accounting
Firm for the years ended June 30, 2007, 2006 and 2005
    
    
    70-71Consolidated Statements of Operations for each of the
three years ended June 30, 2007, 2006 and 2005
    
    
    41Consolidated Balance Sheets at June 30, 2007 and 2006
    
    
    42Consolidated Statements of Stockholders Equity for
each of the three years ended June 30, 2007, 2006 and 2005
    
    
    43Consolidated Statements of Cash Flows for each of the
three years ended June 30, 2007, 2006 and 2005
    
    
    44-45Notes to Consolidated Financial Statements
    
    
    46-68(2) FINANCIAL STATEMENT SCHEDULESFor the three years ended June 30, 2007:Schedule II  Valuation and Qualifying Accounts and Reserves
    
    
    78
  (3) EXHIBITS
  - 73 -




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##### Table of Contents



SIGNATURES
   By: /s/ Josef H. von Rickenbach
    
    
    
    Dated: August 27, 2007Josef H. von RickenbachChairman of the Board and Chief Executive Officer
  Signatures
    
    Title(s)
    
    Date/s/ Josef H. von RickenbachJosef H. von Rickenbach
    
    Chairman
of the Board and Chief
Executive Officer (principal executive
officer)
    
    August 27, 2007/s/ James F. Winschel, Jr.James F. Winschel, Jr.
    
    Senior
Vice President and Chief
Financial Officer (principal financial and
accounting officer)
    
    August 27, 2007/s/ A. Dana Callow, Jr.A. Dana Callow, Jr.
    
    Director
    
    August 27, 2007/s/ Patrick J. FortunePatrick J. Fortune
    
    Director
    
    August 27, 2007/s/ Richard L. LoveRichard L. Love
    
    Director
    
    August 27, 2007/s/ Ellen M. ZaneEllen M. Zane
    
    Director
    
    August 27, 2007/s/ Christopher J. LindopChristopher J. Lindop
    
    Director
    
    August 27, 2007
 - 74 -




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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT NO.
    
    DESCRIPTION3.1
    
    Amended and Restated Articles of Organization of the Company, as amended. (filed as Exhibit
3.1 to the Companys Quarterly Report on Form 10-Q for the quarterly period ended December 31,
2006 and incorporated herein by this reference).3.2
    
    Amended and Restated By-laws of the Company (filed as Exhibit 4.2 to the Companys
Registration Statement on Form S-8 (File No. 333-104968) and incorporated herein by this
reference).4.1
    
    Specimen certificate representing the Common Stock of the Company (filed as Exhibit 4.1 to
the Companys Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein
by this reference).4.2
    
    Rights Agreement dated March 27, 2003 between the Corporation and Equiserve Trust
Company, N.A., as Rights Agent, which includes as Exhibit A the Form of Certificate of Vote of
Series A Junior Participating Preferred Stock, as Exhibit B the Form of Rights Certificate and
as Exhibit C the Summary of Rights to Purchase Common Stock (filed as Exhibit 4.1 to the
Companys Current Report on Form 8-K/A dated March 31, 2003 and incorporated herein by this
reference).10.1*
    
    Form of Stock Option Agreement of the Company (filed as Exhibit 10.9 to the Companys
Registration Statement on Form S-1 (File No. 333-1188) and incorporated herein by reference).10.2*
    
    Form of Stock Option Agreement under the Companys Second Amended and Restated 1995 Stock
Plan (filed as Exhibit 99.1 to the Companys current Report on Form 8-K dated September 2,
2004 and incorporated herein by this reference).10.3*
    
    Form of Stock Option Agreement for Executive Officers under the Companys Second Amended and
Restated 1995 Stock Plan (filed as Exhibit 10.3 to the Companys Annual Report on Form 10-K
for the year ended June 30, 2004 and incorporated herein by this reference).10.4*
    
    Form of Stock Option Agreement under the Companys 2001 Stock Incentive Plan (filed as
Exhibit 10.4 to the Companys Annual Report on Form 10-K for the year ended June 30, 2004 and
incorporated herein by this reference).10.5*
    
    Second Amended and Restated 1995 Stock Plan of the Company (filed as Exhibit 10.9 to the
Companys Annual Report on Form 10-K for the year ended June 30, 1998 and incorporated herein
by this reference).10.6*
    
    1995 Non-Employee Director Stock Option Plan of the Company (filed as Exhibit 10.14 to the
Companys Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by
this reference).10.7.1*
    
    2001 Stock Incentive Plan of the Company (filed as Exhibit 10.7.1 to the Companys Annual
Report on Form 10-K for the year ended June 30, 2006 and incorporated herein by this
reference).10.7.2*
    
    Amendment No. 1 to 2001 Stock Incentive Plan of the Company (filed as Exhibit 10.7.2 to the
Companys Annual Report on Form 10-K for the year ended June 30, 2006 and incorporated herein
by this reference).10.8*
    
    2005 Stock Incentive Plan of the Company (filed as Exhibit 10.8 to the Companys Annual
Report on Form 10-K for the year ended June 30, 2006 and incorporated herein by this
reference).10.9*
    
    Form of Restricted Stock Agreement for non-employee directors under the Companys 2005 Stock
Incentive Plan (filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the
quarter ended December 31, 2005 and incorporated herein by this reference).
 - 75 -




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##### Table of Contents



EXHIBIT NO.
    
    DESCRIPTION10.10*
    
    Form of Restricted Stock Agreement for executive officers under the Companys 2005 Stock
Incentive Plan (filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended December 31, 2005 and incorporated herein by this reference).10.11*
    
    Corporate Plan for Retirement of the Company (filed as Exhibit 10.16 to the Companys
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).10.12.1
    
    Lease dated June 14, 1991 between 200 West Street Limited Partnership and the Company
(filed as Exhibit 10.19 to the Companys Annual Report on Form 10-K for the year ended June
30, 2000 and incorporated herein by this reference).10.12.2
    
    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 Companys
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).10.12.3
    
    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 Companys
Registration Statement on Form S-1 (File No. 33-97406) and incorporated herein by this
reference).10.12.4
    
    Third Amendment to Lease dated November 17, 1998 between Boston Properties Limited
Partnership and the Company (filed as Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended December 31, 1998 and incorporated herein by this reference).10.12.5
    
    Fifth Amendement dated as of June 29, 2007 to the lease dated June 14, 1991 by and between
Boston Properties Limited Partnership and PAREXEL International, LLC
(filed
herewith).10.13*
    
    1998 Non-Qualified, Non-Officer Stock Option Plan, as amended (filed as Exhibit 10.16 to the
Companys Annual Report on Form 10-K for the year ended June 30, 1999 and incorporated herein
by this reference).10.14*
    
    Amended and Restated Employment Agreement dated December 6, 1999 between Josef H. von
Rickenbach and the Company (filed as Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q for the quarter ended December 31, 1999 and incorporated herein by this reference).10.15.1
    
    Lease dated November 17, 1998 between Boston Properties Limited Partnership and the Company
(filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended
December 31, 1998 and incorporated herein by this reference).10.15.2
    
    First Amendment dated as of June 29, 2007 to the lease dated November 17, 1998 by and
between Boston Properties Limited Partnership and PAREXEL
International LLC (filed
herewith).10.16*
    
    Employment Agreement, dated February 21, 2005, between Ulf Schneider and PAREXEL GmbH (filed
as Exhibit 10.1 to the Companys Current Report on Form 8-K dated February 21, 2005
and incorporated herein by this reference).10.17
    
    Fourth Amendment dated August 28, 2000 to the lease dated November 17, 1998 between Boston
Properties Limited Partnership and the Company (filed as Exhibit 10.22 to the Companys Annual
Report on Form 10-K for the year ended June 30, 2000 and incorporated herein by this
reference).10.18.1*
    
    Change of Control/Severance Agreement, dated as of April 3, 2001, by and between the
Company and James F. Winschel, Jr. (filed as Exhibit 10.23 to the Companys Annual Report on
Form 10-K for the year ended June 30, 2001 and incorporated herein by this reference).10.18.2*
    
    Amendment No. 1 to Change of Control/Severance Agreement, dated as of February 7, 2006, by
and between the Company and James F. Winschel, Jr. (filed as Exhibit 10.5 to the Companys
Quarterly Report on Form 10-Q for the quarter ended December 31, 2005 and incorporated herein
by this reference).10.19.1*
    
    Change of Control/Severance Agreement, dated as of December 16, 2005, by and between the
Company and Mark A. Goldberg (filed as Exhibit 10.4 to the Companys Quarterly Report on Form
10-Q for the quarter ended December 31, 2005 and incorporated herein by this reference).
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##### Table of Contents



EXHIBIT NO.
    
    DESCRIPTION10.19.2*
    
    Amendment No. 1 to Change of Control /Severance Agreement, dated as of February 7, 2006,
by and between the Company and Mark A. Goldberg (filed as Exhibit 10.6 to the Companys
Quarterly Report on Form 10-Q for the quarter ended December 31, 2005 and incorporated herein
by reference).10.20
    
    PAREXEL International Nonqualified Deferred Compensation Plan (filed as Exhibit 10.21 to the
Companys Annual Report on Form 10-K for the year ended June 30, 2002 and incorporated herein
by this reference).10.21
    
    ABN  AMRO Cash Pooling Agreement, dated as of September 14, 2001 (filed as Exhibit 10.21 to
the Companys Annual Report on Form 10-K for the year ended June 30, 2003 and incorporated
herein by this reference ).10.22
    
    Lease dated April 10, 2002 between API (No. 23) Limited, Arlington Property Investments
Limited, PAREXEL International Limited and the Company (filed as Exhibit 10.22 to the
Companys Annual Report on Form 10-K for the year ended June 30, 2003 and incorporated herein
by this reference).10.23*
    
    Change of Control/Severance Agreement, dated as of July 6, 2006, by and between the Company
and Douglas A. Batt (filed as Exhibit 10.26 to the Companys Annual Report on Form 10-K for
the year ended June 30, 2006 and incorporated herein by this reference).10.24
    
    Tender Agreement, dated as of June 7, 2007, by and between PAREXEL (Taiwan), Inc. and Albert
Liou (filed herewith).10.25
    
    Credit Agreement, dated as of January 12, 2007, between and among the Company, JP Morgan
ChaseBank, N.A., as Administrative Agent, J.P. Morgan Securities Inc., as Sole Bookrunner and
Sole Lead Arranger, ABN Amro Bank N.V., as Syndication Agent, Wachoria Bank, N.A., as
Documentation Agent and a Syndicate of banks (filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K dated January 12, 2007 and incorporated herein by this reference).21.1
    
    List of subsidiaries of the Company23.1
    
    Consent of Ernst & Young LLP31.1
    
    CEO certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    CFO certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    CEO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    CFO certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    denotes management contract or any compensatory plan, contract or arrangement - 77 -




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##### Table of Contents



SCHEDULE II
 PAREXEL INTERNATIONAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 Balance at
    
    Charged to
    
    Recovery
    
    Balance atbeginning
    
    costs and
    
    (Deductions)
    
    end of($ IN THOUSANDS)
    
    of year
    
    expenses
    
    and (write-offs)
    
    yearProvision for losses on receivables:Year ended June 30, 2005
    
    $
    4,215
    
    
    $
    926
    
    
    $
    (2,770
    )
    
    $
    2,371Year ended June 30, 2006
    
    $
    2,371
    
    
    $
    1,293
    
    
    $
    (195
    )
    
    $
    3,469Year ended June 30, 2007
    
    $
    3,469
    
    
    $
    4
    
    
    $
    243
    
    
    $
    3,716
 - 78 -