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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

              (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2004
                                       OR
            ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from _____ to _____
                         Commission file number 0-27058

                        PAREXEL INTERNATIONAL CORPORATION
             (Exact name of registrant as specified in its Charter)

              MASSACHUSETTS                                 04-2776269
    (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                  Identification Number)

                     195 WEST STREET
                 WALTHAM, MASSACHUSETTS                         02451
       (Address of principal executive offices)               (Zip Code)

        Registrant's telephone number, including area code (781) 487-9900

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     Common Stock, $.01 par value per share
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 75 days. YES (X) NO ( ).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). YES (X) NO ( ).

The aggregate market value of Common Stock held by nonaffiliates as of December
31, 2003 was approximately $283,814,414, based on the closing price of the
registrant's Common Stock as reported on the NASDAQ National Market on December
31, 2003, the last business day of the registrant's most recently completed
second fiscal quarter.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

As of August 31, 2004 there were 25,936,067 shares of Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Specified portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on December 16, 2004 are incorporated by reference into
Items 10, 11, 12, 13, and 14 of Part III of this report.

<PAGE>

                        PAREXEL INTERNATIONAL CORPORATION

                             FORM 10-K ANNUAL REPORT

                                      INDEX

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<S>           <C>                                                            <C>
PART I
              Item 1.  Business                                                3
              Item 2.  Properties                                             21
              Item 3.  Legal Proceedings                                      21
              Item 4.  Submission of Matters to a Vote of Security Holders    21
PART II
              Item 5.  Market for Registrant's Common Equity, Related
                         Stockholder Matters, and Issuer Purchases of
                         Equity Securities                                    22
              Item 6.  Selected Financial Data                                23
              Item 7.  Management's Discussion and Analysis of Financial
                         Condition and Results of Operations                  24
              Item 7A. Quantitative and Qualitative Disclosures About
                         Market Risk                                          34
              Item 8.  Financial Statements and Supplementary Data            36
              Item 9.  Changes in and Disagreements with Accountants on
                         Accounting and Financial Disclosure                  59
              Item 9A. Controls and Procedures                                59
              Item 9B. Other Information                                      59
PART III
              Item 10. Directors and Executive Officers of the Registrant     59
              Item 11. Executive Compensation                                 59
              Item 12. Security Ownership of Certain Beneficial Owners
                         and Management and Related Stockholder Matters       59
              Item 13. Certain Relationships and Related Transactions         60
PART IV
              Item 14. Principal Accountant Fees and Services                 60
              Item 15. Exhibits, Financial Statement Schedule, and
                         Reports on Form 8-K                                  60
SIGNATURES                                                                    61
</TABLE>

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                                     PART I

This annual report on Form 10-K includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. For this purpose, any
statements contained herein regarding the Company's strategy, future operations,
financial position, future revenue, projected costs, prospects, plans and
objectives of management, other than statements of historical facts, are
forward-looking statements. The words "anticipates", "believes", "estimates",
"expects", "intends", "may", "plans", "projects", "will", "would", and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. The Company
cannot guarantee that they actually will achieve the plans, intentions or
expectations expressed or implied in its forward-looking statements. There are a
number of important factors that could cause actual results, levels of activity,
performance or events to differ materially from those expressed or implied in
the forward-looking statements the Company makes. These important factors
include the Company's "critical accounting estimates" and the risk factors set
forth below. Although the Company may elect to update forward-looking statements
in the future, it specifically disclaims any obligation to do so, even if its
estimates change, and readers should not rely on those forward-looking
statements as representing the Company's views as of any date subsequent to the
date of this annual report.

ITEM 1. BUSINESS

GENERAL

PAREXEL International Corporation ("PAREXEL" or the "Company") is a leading
bio/pharmaceutical services company, providing a broad range of expertise in
clinical research, medical marketing, consulting and informatics and advanced
technology products and services to the worldwide pharmaceutical, biotechnology,
and medical device industries. The Company's primary objective is to provide
solutions for managing the bio/pharmaceutical product lifecycle with the goal of
reducing the time, risk and cost associated with the development and
commercialization of new therapies. Since its founding in 1983, PAREXEL has
developed significant expertise in processes and technologies supporting this
strategy. The Company's product and service offerings include: clinical trials
management, data management, biostatistical analysis, medical marketing,
clinical pharmacology, patient recruitment, regulatory and medical consulting,
health policy and reimbursement, performance improvement, industry training and
publishing, medical imaging services, interactive voice response systems
("IVRS"), clinical trial management systems ("CTMS"), web-based portals, systems
integration, patient diary applications, and other drug development consulting
services. The Company believes that its comprehensive services, depth of
therapeutic area expertise, global footprint and related access to patients, and
sophisticated information technology, along with its experience in global drug
development and product launch services, represent key competitive strengths.

The Company's services complement the research and development ("R&D") and
marketing functions of pharmaceutical, biotechnology, and medical device
companies. Through its clinical research and product launch services, PAREXEL
seeks to help clients maximize the return on their significant investments in
research and development by reducing the time, risk, and cost of clinical
development and launch of new products. Outsourcing these types of services to
PAREXEL provides clients with a variable cost alternative to the fixed costs
associated with internal drug development. Clients no longer need to staff to
peak periods and can benefit from PAREXEL's technical resource pool, broad
therapeutic area expertise, global infrastructure designed to expedite parallel,
multi-country clinical trials, and other advisory services focused on
accelerating time-to-market. The Company's vision is to integrate and build
critical mass in the complementary businesses of clinical research, medical
marketing, drug development and process optimization consulting, and information
technology products and integration services. The Company's goal is to provide
significant benefits to sponsor clients from this strategy, namely, a faster and
less expensive development and launch process, as well as a clinical development
strategy that optimally supports the marketing strategy for the new medical
products.

The Company is one of the largest bio/pharmaceutical services company in the
world, based upon annual service revenue. Headquartered near Boston,
Massachusetts, the Company manages 51 locations and has approximately 4,875
employees throughout 35 countries around the world. The Company has operations
in the major health care markets around the world, including the United States
("U.S."), Canada, Japan, Germany, the United Kingdom ("U.K."), France, Italy,
Spain, Sweden, Australia, South Africa, Argentina, Brazil, Chile, Israel,
Norway, Belgium, The Netherlands, Denmark, Finland and Central and Eastern
Europe including Russia, Poland, the Czech Republic, Lithuania, Hungary,
Romania, and the Ukraine. During fiscal year 2004, PAREXEL derived 54.8% of its
service revenue from its international operations.

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The Company was founded in 1983 as a regulatory affairs consulting firm and is a
Massachusetts corporation. Josef H. von Rickenbach, Chairman of the Board and
Chief Executive Officer of PAREXEL, was a co-founder. Since its inception, the
Company has executed a focused growth strategy embracing internal expansion as
well as strategic acquisitions to expand or enhance the Company's portfolio of
services, geographic presence, therapeutic area knowledge, information
technology capabilities, and client relationships. Acquisitions have been and
may continue to be an important component of PAREXEL's growth strategy. The
Company has completed nine acquisitions over the past five fiscal years.

DESCRIPTION OF BUSINESS

The Company provides a broad range of expertise in clinical research, medical
marketing, consulting and informatics and advanced technology services to the
worldwide pharmaceutical, biotechnology, and medical device industries. The
Company is managed through four business segments: Clinical Research Services
("CRS"), the PAREXEL Consulting Group ("PCG"), Medical Marketing Services
("MMS"), and Perceptive Informatics, Inc. ("Perceptive"), a majority owned
subsidiary of the Company. CRS constitutes the Company's core business and
includes clinical trials management and biostatistics and data management, as
well as related medical advisory and investigator site services. PCG provides
technical expertise in such disciplines as clinical pharmacology, regulatory
affairs, industry training, and management consulting. PCG consultants identify
alternatives and propose solutions to address clients' product development,
registration, and commercialization issues. MMS provides a full spectrum of
market development, product development, and targeted communications services in
support of product launch. MMS also provides health policy consulting and
strategic reimbursement services. Perceptive provides a variety of information
technology solutions designed to improve clients' product development processes.
Perceptive offers a portfolio of services that include medical imaging services,
IVRS, CTMS, web-based portals, systems integration, and patient diary
applications. As of June 30, 2004, the Company owned an approximate 97.9% of the
outstanding shares of common stock of Perceptive.

CLINICAL RESEARCH SERVICES

The Company's CRS business unit provides clinical trials management and
biostatistical and data management services. Revenue from these services
represented $309.3 million, or 56.5%, of the Company's consolidated service
revenue in fiscal year 2004, $312.8 million, or 59.9%, in fiscal year 2003, and
$261.7, or 58.0%, in fiscal year 2002.

The CRS business unit offers complete services for the design, initiation and
management of clinical trials programs, a critical element in obtaining
regulatory approval for bio/pharmaceutical products. The Company has performed
services in connection with trials in most therapeutic areas, including
Cardiology, Oncology, Infectious Diseases, Neurology, Allergy/Immunology,
Endocrinology/Metabolism, Gastroenterology, Obstetrics/Gynecology, Orthopedics,
Pediatrics, Psychiatry, and Transplantation. PAREXEL's multi-disciplinary
clinical trials group examines a product's existing preclinical and clinical
data to design clinical trials to provide evidence of the product's safety and
efficacy.

PAREXEL's CRS business unit can manage many aspects of clinical trials,
including study and protocol design, Case Report Forms ("CRFs") design, site and
investigator recruitment, patient enrollment, study monitoring and data
collection, data analysis, report writing and medical services. See "Government
Regulations" for additional information regarding processes involved in clinical
trials.

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

Clinical trials represent one of the most expensive and time-consuming parts of
the overall bio/pharmaceutical development process. The information generated
during these trials is critical for gaining marketing approval from the Food and
Drug Administration ("FDA") and other regulatory agencies and market acceptance
by clinicians and patients. CRS clinical trial management services involve many
phases of clinical trials, including Phases II, III, or IV clinical trials.

- PHASE II - IV

The CRS business unit assists clients with one or more of the following aspects
of clinical trials as shown below. CRS performs both full-service and
single-/multi-service trials. PAREXEL's involvement may range from being
involved in just one aspect of a clinical trial to all aspects of a clinical
trial.

                                       4
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      STUDY PROTOCOL DESIGN - The protocol defines the medical issues the study
      seeks to examine and the statistical tests that will be conducted.
      Accordingly, the protocol specifies the frequency and type of laboratory
      and clinical measures that are to be tracked and analyzed, the number of
      patients required to produce a statistically valid result, the period of
      time over which they must be tracked and the frequency and dosage of drug
      administration. The study's success depends on the protocol's ability to
      predict correctly the requirements of the regulatory authorities.

      CRF DESIGN - Once the study protocol has been finalized, the CRF must be
      developed. The CRF is the critical source document for collecting the
      necessary clinical data as dictated by the study protocol. The CRF may
      change at different stages of a trial. CRFs for one patient in a given
      study may consist of 100 or more pages.

      SITE AND INVESTIGATOR RECRUITMENT - The product under investigation is
      administered to patients by third-party physicians, serving as independent
      contractors, referred to as investigators, at hospitals, clinics, or other
      locations, referred to as sites. Medical devices are implemented or tested
      by investigators in similar settings. Potential investigators may be
      identified and solicited by the product sponsor. A significant portion of
      a trial's success depends on the successful identification and recruitment
      of experienced investigators with an adequate base of patients who satisfy
      the requirements of the study protocol. The Company has access to several
      thousand investigators who have conducted clinical trials for the Company.
      The Company provides additional services at the clinical investigator site
      to assist physicians and expedite the clinical research process.

      PATIENT ENROLLMENT - The investigators, usually with the assistance of a
      clinical research organization ("CRO"), find and enroll patients suitable
      for the study. The speed with which trials can be completed is
      significantly affected by the rate at which patients are enrolled.
      Prospective patients are required to review information about the drug and
      its possible side effects, and sign an informed consent form to record
      their knowledge and acceptance of potential side effects. Patients also
      undergo a medical examination to determine whether they meet the
      requirements of the study protocol. Patients then receive the product and
      are examined by the investigator as specified by the study protocol.
      Investigators are responsible for administering the products to patients,
      as well as examining patients and conducting necessary tests.

      STUDY MONITORING AND DATA COLLECTION - As patients are examined and tests
      are conducted in accordance with the study protocol, data are recorded on
      CRFs. CRFs are collected from study sites by specially trained persons
      known as monitors. Monitors visit sites regularly to ensure that the CRFs
      are completed correctly and to verify that the study has been conducted in
      compliance with the protocol and GCP. The monitors send completed CRFs to
      the study coordination site, where the CRFs are reviewed for consistency
      and accuracy before their data are entered into an electronic database.
      The Company offers several remote data entry ("RDE") technologies, which
      significantly enhance both the quality and timeliness of clinical data
      collection while achieving significant efficiency savings. The Company's
      study monitoring and data collection services are designed to comply with
      the FDA's adverse events reporting guidelines.

      DATA MANAGEMENT - PAREXEL's data management professionals provide a broad
      array of services to support the accurate collection, organization,
      validation and analysis of clinical data. For instance, they assist in the
      design of CRFs and investigator training manuals to ensure that data are
      collected in an organized and consistent format in compliance with the
      study protocol. Databases are designed according to the analytical
      specifications of the project and the particular needs of the client.
      Prior to data entry, PAREXEL personnel screen the data to detect errors,
      omissions and other deficiencies in completed CRFs. The use of scanning
      and imaging of the CRFs and the use of RDE technologies to gather and
      report clinical data expedites data exchange while minimizing data
      collection errors as a result of more timely verification of data
      integrity. After the data is entered, data management performs an array of
      data abstraction, data review, medical coding, serious adverse event
      reconciliation, loading of electronic data, such as laboratory data,
      database verification and editing and resolution of data problems. The
      data are then submitted to the sponsor in a customized format prescribed
      by the sponsor.

      The CRS business unit has extensive experience throughout the world in the
      creation of scientific databases for all phases of the drug development
      process, including the creation of customized databases to meet
      client-specific formats, integrated databases to support new drug
      application ("NDA") submissions and databases in strict accordance with
      FDA, European and Asian regulatory specifications.

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

      REPORT WRITING - A description of the study conduct, along with the
      statistical analysis findings for data collected during the trial together
      with other clinical data are presented and summarized in a final report
      generated for inclusion in a regulatory document.

      MEDICAL SERVICES - Throughout the course of a development program,
      PAREXEL's physicians provide a wide range of medical research and
      consulting services to improve the speed and quality of clinical research
      and to monitor patient safety, including medical supervision of clinical
      trials, medical monitoring of patient safety, review and reporting of
      adverse events, medical writing and strategy and product development.

      PROJECT MANAGEMENT - Throughout the entire spectrum of activities
      described above CRS provides project management services. These services
      entail providing overall leadership to the PAREXEL project team, acting as
      the main client liaison, project planning, managing progress against study
      goals and deliverables, budget management, progress and metrics reporting,
      and issue resolution. These project management services are offered on all
      types of trials - single-service, multi-service, or full-service.

PAREXEL CONSULTING GROUP

The PCG business unit offers a number of consulting and advisory services in
support of product development, regulatory and marketing processes. This group
brings together experts from relevant disciplines and focuses on designing
meaningful solutions and helping clients make the best business decisions with
respect to their product lifecycle strategies. This group also serves as a
valuable resource for the Company's internal operations. PCG includes four
business units, KMI/PAREXEL, Worldwide Regulatory Affairs ("WRA"), Clinical
Pharmacology, and Barnett International ("Barnett"). Service revenue from the
PCG business represented $113.1 million, or 20.7%, of consolidated service
revenue in fiscal year 2004, $100.8 million, or 19.3%, in fiscal year 2003, and
$94.5 million, or 20.9%, in fiscal year 2002.

- KMI/PAREXEL

KMI/PAREXEL offers manufacturing and information technology related services to
the pharmaceutical, bio/pharmaceutical and medical device industries in the U.S
and Europe. Employing an experienced team of former FDA investigators and
experienced engineers, the Company uses its established methodologies and
innovative information systems to assist clients in satisfying regulatory
standards for manufacturing and quality systems processes throughout a product's
lifecycle. KMI/PAREXEL has a staff of senior consultants with extensive
experience and recognized expertise in good manufacturing practices ("GMP") and
other FDA requirements. KMI/PAREXEL can evaluate clients' existing systems, help
prepare for FDA inspections, conduct NDA integrity audits, and develop
regulatory correctional action plans.

KMI/PAREXEL also has the resources and experience to test processes, laboratory
systems, automated unit operations, utilities, distributed control systems, and
IS/IT management systems for manufacturing, laboratory and clinical and research
applications for compliance with regulatory standards.

- WORLDWIDE REGULATORY AFFAIRS

Before a drug or medical device can be launched in a particular country, it must
be approved by the regulatory agency having jurisdiction in that country. WRA
provides comprehensive regulatory product registration services for
pharmaceutical and biotechnology products and medical devices in major
jurisdictions in North America, Europe, and Japan. These services include
regulatory strategy formulation, regulatory document preparation and review,
clinical quality assurance audits, regulatory training for client personnel, and
expert liaison with the FDA and other regulatory agencies.

WRA works closely with clients to devise regulatory strategies and comprehensive
registration programs. The Company's regulatory affairs experts review existing
published literature, evaluate the scientific background of a product, assess
the competitive and regulatory environment, identify deficiencies and define the
steps necessary to obtain regulatory authority approvals in the most expeditious
manner. Through these services, the Company helps its clients obtain regulatory
approval for particular products or product lines in certain specific markets
and participates fully in the product development process.

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- CLINICAL PHARMACOLOGY

Clinical pharmacology encompasses the early stages of clinical testing, when the
product is first evaluated to prove safety and efficacy. These tests vary from
"first in man" to "proof of concept studies" in Phases I and IIa of development.
See "Governmental Regulations" for additional information regarding the early
stages of clinical testing. PCG's Clinical Pharmacology group provides drug
development consulting, drug administration and monitoring, bioanalytical
services, and patient recruitment. PAREXEL's international network of clinical
pharmacology operations includes operations in Berlin (Germany), Baltimore,
Maryland (U.S.), Bloemfontein (South Africa) and Harrow (U.K.), and
bioanalytical laboratories in Bloemfontein and Poitiers (France). These
laboratories perform bioanalytical analyses according to Good Laboratory
Practices ("GLP") principles. With these locations, PCG's Clinical Pharmacology
group offers clinical pharmacology services (including bioanalytical services)
with a total of 343 dedicated beds (cooperating partners not included) on three
continents. The network also cooperates with a pharmageriatrics center in
Germany and a location, which specializes in renal and hepatic impairment, in
Poland, Hungary, and the Czech Republic.

- BARNETT INTERNATIONAL

PCG's Barnett group offers a wide range of specialized clinical consulting,
training, and publication services for the health care industry. Barnett
provides management consulting in the clinical research area, offering a wide
range of solutions that help pharmaceutical and biotechnology companies improve
their own in-house clinical performance. These services include clinical process
optimization, benchmarking and performance management, outsourcing management,
design and development of SOPs, human performance assessment and management,
technological analysis and implementation, and clinical training.

MEDICAL MARKETING SERVICES

Various pressures on the pharmaceutical industry have resulted in a greater
focus on decreasing the time to peak sales in order to maximize revenue and
profits over limited patent lives. MMS's strategy is to assist clients in
achieving optimal market penetration for their products by providing customized,
integrated and expert product pre-launch and launch services in the U.S.,
Europe, and internationally. Service revenue from the MMS business represented
$88.8 million, or 16.2%, of consolidated service revenue in fiscal year 2004,
$83.9 million, or 16.1%, in fiscal year 2003, and $75.2 million, or 16.7%, in
fiscal year 2002.

The Company's experience indicates that clients need assistance in creating
awareness and understanding of their products in the marketplace and in
addressing their products' rapid acceptance by opinion leaders, physicians,
managed care organizations and patient groups leading to accelerated product
acceptance and market penetration. MMS provides an integrated communication
plan, which includes market and opinion leader development, market preparation,
and targeted communications support to clients. An integrated communications
plan can detail external and internal strategies, including communications
objectives, target audiences, communications priorities and timing, key
messages, key meetings and events, and target publications and media. Other
services include meetings and exhibitions planning, continuing medical education
("CME") programs to help keep medical professionals apprised of current medical
developments, patient recruitment programs, strategies for medical manufacturers
regarding reimbursement from insurance companies and managed care providers,
telecommunications and call center support for patient assistance programs and
Phase IV studies.

PERCEPTIVE INFORMATICS, INC.

Perceptive, a majority-owned (97.9% of outstanding shares of common stock as of
June 30, 2004) subsidiary of PAREXEL, was formed by the Company in fiscal year
2000. Perceptive is a developing business that provides a variety of information
technology solutions designed to improve clients' product development processes.
Service revenue from the Perceptive business represented $36.0 million, or 6.6%,
of consolidated service revenue in fiscal year 2004, $24.8 million, or 4.7%, in
fiscal year 2003, and $20.0 million, or 4.4%, in fiscal year 2002. PAREXEL
currently offers through Perceptive a portfolio of technology-based services and
software products that include medical imaging services, IVRS, CTMS, web-based
portals, systems integration, and patient diary applications.

Perceptive's medical imaging services coordinate the use of a variety of medical
imaging modalities (e.g., radiographs, ultrasound, computed tomography and,
magnetic resonance imaging) to evaluate product safety and efficacy.

The business unit's IVRS service utilizes an Application Service Provider model
under which the company designs, develops, deploys, hosts, and supports an
application for each trial. Participating investigators call a toll free number
to enroll patients in a trial, and are able to interact with the system in their
native language. The system confirms enrollment and assigns a drug kit for the
patient. The system is also capable of monitoring drug inventory at investigator
sites and triggering drug shipments as needed.

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Perceptive's CTMS solutions are software packages that assist bio/pharmaceutical
companies in the complex process of planning and managing clinical trials and
they include IMPACT, INITIATOR, and INVESTIGATOR. IMPACT, the company's flagship
software product, is an enterprise-wide clinical trials management system used
to plan studies, track progress, support monitoring activities, track costs, and
track clinical supplies. The system is used by approximately 30
bio/pharmaceutical companies and by approximately 15,000 users worldwide. It is
primarily used for Phase II, III and IV studies. INITIATOR is a separate
software package offered by the Company to assist in the management and conduct
of Phase I trials. Perceptive also offers an investigator database tool,
INVESTIGATOR, to maintain up-to-date information concerning investigators and
their performance on prior trials. Sponsor companies use the tool to help select
the best investigators when initiating a new clinical trial.

Perceptive's web-based portal allows secure access to critical, real-time
information over the web. The portal supports clinical trials management,
communications, collaboration, and the viewing of metrics and clinical trial
data.

Through its Integration Services Group, Perceptive provides services in support
of its software packages including implementation, deployment, validation,
hosting, and integration.

Perceptive also offers solutions for the electronic collection of patient diary
information, often referred to by the industry as ePRO for electronic patient
reported outcomes. Perceptive offers clients solutions that include capturing
data from patients using handheld technology or over the telephone using the
company's IVRS technology.

Perceptive performs ongoing market surveillance to identify and support new
technologies that benefit clients as well as the Company's internal processes.

INFORMATION SYSTEMS

PAREXEL is committed to investing in information technology designed to help the
Company provide high quality services in a cost-effective manner and to better
manage its internal resources. The Company has built its information technology
network by developing a number of proprietary information systems that address
critical aspects of its business, such as project proposals/budget generation,
time information management, revenue and resource forecasting, clinical data
entry, data management, project management, and procurement/expense processing.

The Company maintains an internal Information Services group that is responsible
for technology planning and procurement, applications development, program
management, operations, and management of the Company's worldwide computer
network. The Company's information systems are designed to work in support of
and reinforce the Company's SOPs. The Company's information technology system is
open and flexible, allowing it to be adapted to the multiple needs of different
clients and regulatory systems. This system also enables the Company to respond
quickly to client inquiries regarding progress on projects and, in some cases,
to gain direct access to client data on client systems.

SALES AND MARKETING

PAREXEL has marketing personnel for the purpose of carrying out the Company's
global business development activities. In addition to significant selling
experience, most of these individuals have technical and/or scientific
backgrounds. The Company's senior executives and project team leaders also
participate in maintaining key client relationships and engaging in business
development activities.

Each of the Company's business segments has an independent business development
team that focuses on its particular market segment, and while all teams may work
with the same client companies, the individuals they work with within the
Company can vary. In many cases, however, the business segment selling teams
work together in order to provide clients with the most appropriate service
offering to meet their needs.

Each business development employee is generally responsible for a specific
client segment or group of clients and for developing a strategy to maintain and
strengthen an effective relationship with that client. Each individual is
responsible for developing his or her client base, responding to client requests
for information, developing and defending proposals and making presentations to
clients.

The business development group is supported by PAREXEL's global marketing
organization, which is primarily based at the Company's headquarters in Waltham,
Massachusetts. The Company's marketing activities consist primarily of brand
management, collateral development, participation in industry conferences,
advertising, public relations, e-marketing, publications, website development
and maintenance, market information development and analysis, and strategic
planning.

                                       8
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CLIENTS

The Company has in the past derived, and may in the future derive, a significant
portion of its service revenue from a core group of major projects or clients.
Concentrations of business in the bio/pharmaceutical services industry are not
uncommon and the Company expects to experience such concentration in future
years. In fiscal year 2004, the Company's five largest clients accounted for 30%
of its consolidated service revenue, although no client accounted for 10% or
more of consolidated service revenue. In fiscal year 2003, the Company's five
largest clients accounted for 32% of its consolidated service revenue and one
client, AstraZeneca PLC, accounted for 11% of consolidated service revenue. The
loss of business from a significant client could materially and adversely affect
the Company's service revenue and results of operations.

For fiscal year 2004, approximately 45.2% of the Company's service revenue was
attributed to operations in the U.S. and approximately 54.8% of the Company's
service revenue was attributed to operations outside the U.S. Financial data on
a geographic basis are included in Note 17 to the consolidated financial
statements in Item 8 of this annual report.

BACKLOG

Backlog represents anticipated service revenue from work not yet completed or
performed under signed contracts, letters of intent, and certain verbal
commitments. Once work commences, revenue is generally recognized over the life
of the contract as services are provided. Backlog at June 30, 2004 was $699.2
million, compared with $586.6 million at June 30, 2003. The Company anticipates
that approximately $312.8 million of the backlog as of June 30, 2004 will be
recognized as revenue after fiscal year 2005 concludes.

The Company believes that its backlog as of any date is not necessarily a
meaningful predictor of future results. Projects under contracts included in
backlog are subject to termination, revision, or delay. As detailed more fully
in the "Risk Factors" section of this annual report, clients terminate, delay,
or change the scope of projects for a variety of reasons including, among
others, the failure of products being tested to satisfy safety requirements,
unexpected or undesirable clinical results of the product, the clients' decision
to forego a particular study, insufficient patient enrollment or investigator
recruitment or production problems resulting in shortages of the drug.
Generally, the Company's contracts can be terminated upon thirty to sixty days'
notice by the client. The Company typically is entitled to receive certain fees
and, in some cases, a termination fee for winding down a delayed or terminated
project.

COMPETITION

The Company competes with other bio/pharmaceutical services companies and other
organizations that provide one or more of the services currently being offered
by the Company. Some of the larger bio/pharmaceutical services companies, such
as Quintiles Transnational Corporation, Covance Inc., and Pharmaceutical Product
Development Inc., offer services that compete directly with the Company's
services at many levels.

PAREXEL believes that the synergies arising from integrating the products and
services offered by its different business units, coupled with its global
infrastructure (and related access to patients), technological expertise, and
depth of experience differentiate it from its competitors. Although there are no
guarantees that the Company will continue to do so, the Company believes that it
competes favorably in all of its business areas. Increased competition could
adversely affect operating results.

CRS

The clinical outsourcing services industry is very fragmented, with several
hundred providers offering varying levels of service, skills and capabilities.
The Company's CRS group primarily competes against in-house departments of
pharmaceutical companies, other full service bio/pharmaceutical services
companies, small specialty CROs, and to a lesser extent, universities, teaching
hospitals, and other site organizations. The primary competitors for the CRS
business include Quintiles Transnational Corporation, Covance Inc.,
Pharmaceutical Product Development Inc., Inveresk Research Group Inc., Kendle
International Inc. and ICON PLC.

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CRS generally competes on the basis of:

-     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 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.

The Company believes CRS's key competitive strengths are its global footprint
and related access to patients, therapeutic knowledge, and its experience in
global drug development.

PCG

PCG competes with a large and diverse group of specialty service providers,
including major consulting firms with pharmaceutical industry practices, large
and small bio/pharmaceutical services companies, smaller companies with a
specific service focus, and individual consultants. The Company believes that no
other company in this area provides the particular combination of services that
PCG provides. Furthermore, there is limited overlap of competitors from one
service to the other because of the Company's varied service offerings. The
competition in this segment is generally based on expertise, experience,
reputation and price. The Company believes that PCG's key competitive strength
is its breadth and depth of expertise in regulatory strategy, submissions and
manufacturing compliance, and early stage drug development.

MMS

MMS competes with a large and fragmented group of companies including specialist
medical marketing companies, large international advertising companies that
offer medical education services, medical public relation firms, and small and
large bio/pharmaceutical services companies that offer medical marketing and
education services. The primary factors on which MMS competes include the
ability to understand the commercial, medical/scientific,
regulatory/reimbursement and communications issues involved in a successful
pharmaceutical product launch; the ability to develop global marketing and
communication strategies that accelerate product acceptance and market
penetration; and the ability to translate those strategies into actionable
activities and pricing. The Company believes that MMS's key competitive
strengths are the innovative marketing services that it provides and the breadth
of MMS's varied service offerings.

PERCEPTIVE

The Perceptive business competes primarily with bio/pharmaceutical services
companies, information technology companies and software companies. Companies in
this segment compete based on the strength and usability of their technology
offerings, their expertise and experience, and their understanding of the
clinical development process. Perceptive's key competitive strength is its
combination of technological expertise and knowledge of clinical development.
The Company believes that its strategy of collaborating with other technology
companies to implement certain tools, rather than developing its own, allows
Perceptive to adapt to new technologies more quickly than many of its
competitors. Perceptive's market position may be affected over time by
competitors' efforts to develop and market new information technology products
and services.

INTELLECTUAL PROPERTY

The Company's trademark "PAREXEL", is of material importance to the Company and
it has registered this and other trademarks in the U.S. and many foreign
countries. The duration of trademark registrations varies from country to
country. However, trademarks generally may be renewed indefinitely as long as
they are in use and/or their registrations are properly maintained, and as long
as they have not been found to become generic.

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EMPLOYEES

As of June 30, 2004, the Company had 4,875 employees. Approximately 38% of the
employees are located in North America and 62% are located throughout Europe,
Asia/Pacific and South America. The Company believes that its relations with its
employees are good.

The success of the Company's business depends on its ability to attract and
retain a qualified professional, scientific and technical staff. The level of
competition among employers for skilled personnel, particularly those with
Ph.D., M.D. or equivalent degrees, is high. The Company believes that its
multinational presence, which allows for international transfers, is an
advantage in attracting employees. In addition, the Company believes that the
wide range of clinical trials in which it participates allows the Company to
offer a broad experience to clinical researchers. There is no assurance that the
Company will be able to attract and retain qualified staff in the future.

GOVERNMENT REGULATIONS

PAREXEL provides clinical trial and diverse consulting services for
pharmaceutical, biotechnology and medical device industries. Lack of success in
obtaining approval for the conduct of clinical trials can adversely affect
PAREXEL. Lack of success in obtaining marketing approval or clearance for a
product for which PAREXEL has provided clinical trial or other services can also
adversely affect the Company. PAREXEL makes no guarantees to its clients with
regard to successful outcomes of the regulatory process, including the success
of clinical trial applications or marketing applications.

Clinical research services provided by PAREXEL in the U.S. are subject to
ongoing FDA regulation. The Company is obligated to comply with FDA requirements
governing activities such as obtaining patient informed consents, verifying
qualifications of investigators, reporting patients' adverse reactions to
products, and maintaining thorough and accurate records. The Company is also
required to ensure that the computer systems it uses to process human data from
clinical trials are validated in accordance with the electronic records
regulations that apply to the pharmaceutical and CRO industries (21 CFR Part
11). The Company must maintain source documents for each study for specified
periods, and such documents may be reviewed according to GCP standards by the
study sponsor and the FDA during audits and inspections. Non-compliance with GCP
can result in the disqualification of data collected during a clinical trial and
in non-approval of a product application submitted to the FDA.

The clinical investigation of new drugs, biologics and medical devices is highly
regulated by government agencies. The standard for the conduct of clinical
research and development studies comprises GCP, which stipulates procedures
designed to ensure the quality and integrity of data obtained from clinical
testing and to protect the rights and safety of clinical trial participants. The
FDA and many other regulatory authorities require that study results submitted
to such authorities be based on studies conducted in accordance with GCP. The
European Union ("EU") established as of May 1, 2004 the Clinical Trials
Directive (the "Directive") in an attempt to harmonize the regulatory
requirements of the member states for the EU for the conduct of clinical trials
in its territory. The Directive requires sponsors of clinical trials to submit
formal applications to national ethics committees and regulatory authorities
prior to the initiation of clinical trials in any of the 25 member states of the
EU. Whereas some member states, prior to the implementation of the Directive,
had minimal requirements for clinical trial initiation, all member states are
now subject to the same stringent requirements of the Directive. As in the U.S.,
clinical trials in the E.U., are expected to be carried out in compliance with
detailed requirements for GCP. The foreign regulatory approval process includes
all of the risks and potential delays associated with the FDA approval process.

Because the FDA's regulatory requirements have served as the model for much of
the regulation of new drug development worldwide, regulatory requirements
similar to those of the FDA exist in the other countries in which the Company
operates. The Company's regulatory capabilities include knowledge of the
specific regulatory requirements in numerous countries. The Company has managed
simultaneous regulatory submissions in more than one country for a number of
drug sponsors for at least the past eight years. Beginning in 1991, the FDA and
corresponding regulatory agencies of the EU and Japan commenced discussions to
develop harmonized standards for preclinical and clinical studies and the format
and content of applications for new drug approvals through a process known as
ICH. Data from multinational studies adhering to GCP are now generally
acceptable to the FDA, Canadian, the EU and Japanese regulators. The ICH process
has sanctioned a single common format for drug and biologic marketing
applications, known as the Common Technical Document ("CTD") in the U.S.,
Europe, Japan and Canada. On July 1, 2003 the CTD format became mandatory in
Europe and Japan and highly recommended by the FDA in the U.S. and by the
Canadian regulatory authorities. The Company has developed the expertise to
prepare CTDs for its clients in both paper and electronic form.

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REGULATION OF DRUGS AND BIOLOGICS

Before a new drug or biologic may be approved and marketed, the drug or biologic
must undergo extensive testing and regulatory review in order to determine that
the drug or biologic is safe and effective. It is not possible to estimate the
time in which preclinical, Phases I, II and III studies are completed with
respect to a given product, if at all, although the time period may last many
years. The stages of this development process are generally as follows:

      PRECLINICAL RESEARCH (APPROXIMATELY 1 TO 3.5 YEARS) - In vitro ("test
      tube") and animal studies in accordance with GLP to establish the relative
      toxicity of the drug or biologic over a wide range of doses and to detect
      any potential to cause a variety of adverse conditions and diseases,
      including birth defects or cancer. If results warrant continuing
      development of the drug or biologic, the results of the studies are
      submitted to the FDA by the manufacturer as part of an Investigational New
      Drug Application ("IND"), which must be reviewed by the FDA before
      proposed clinical testing can begin. An IND must include, among other
      things, preclinical data, chemistry, manufacturing and control
      information, and an investigational plan, and must be activated by the FDA
      before such trials may begin. There can be no assurance that submission of
      an IND will result in the ability to commence clinical trials.

      CLINICAL TRIALS (APPROXIMATELY 3.5 TO 6 YEARS)

            -     Phase I-Basic safety and pharmacology testing in approximately
                  20 to 80 human subjects, usually healthy volunteers, 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-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, to further test safety, begin evaluating
                  effectiveness, optimize dose level, determine dose schedules,
                  and determine 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-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.

      The FDA receives reports on the progress of each phase of clinical testing
      and may require the modification, suspension, or termination of clinical
      trials if, among other things, an unreasonable risk is presented to
      patients or if the design of the trial is insufficient to meet its stated
      objective.

      NDA OR BIOLOGIC LICENSE APPLICATION ("BLA") PREPARATION AND SUBMISSION -
      Upon completion of Phase III trials, the sponsor assembles the
      statistically analyzed data from all phases of development, along with the
      chemistry and manufacturing and pre-clinical data and the proposed
      labeling, among other things, into a single large document, the NDA or BLA
      (in CTD format as of July 1, 2003), which today comprises, on average,
      roughly 100,000 pages.

      FDA REVIEW OF NDA OR BLA - The FDA carefully scrutinizes data from all
      phases of development (including a TIND) to confirm that the manufacturer
      has complied with regulations and that the drug or biologic is safe and
      effective for the specific use (or "indication") under study. The FDA may
      refuse to accept the NDA or BLA for filing and substantive review if
      certain administrative and content criteria are not satisfied and even
      after accepting the submission for review, the FDA may also require
      additional testing or information before approval of an NDA or BLA. The
      FDA must deny approval of an NDA or BLA if applicable regulatory
      requirements are not ultimately satisfied.

                                       12
<PAGE>

      POST-MARKETING SURVEILLANCE AND PHASE IV STUDIES - Federal regulation
      requires the sponsor to collect and periodically report to the FDA
      additional safety and efficacy data on the drug or biologic for as long as
      the manufacturer markets the product (post-marketing surveillance). If the
      product is marketed outside the U.S., these reports must include data from
      all countries in which the product is sold. Additional studies (Phase IV)
      may be undertaken after initial approval to find new uses for the product,
      to test new dosage formulations, or to confirm selected non-clinical
      benefits, e.g., increased cost-effectiveness or improved quality of life.
      Product approval may be withdrawn if compliance with regulatory standards
      is not maintained or if problems occur following initial marketing.

REGULATION OF MEDICAL DEVICES

Unless a medical device is exempted from pre-market submission and clearance,
FDA approval or clearance of the device is required before the product may be
marketed in the U.S. In order to obtain clearance for marketing, a manufacturer
must demonstrate substantial equivalence to a similar legally marketed product
by submitting a premarket notification, 510(k), to the agency. The FDA may
require preclinical and clinical data to support a substantial equivalence
determination, and there can be no assurance the FDA will find a device
substantially equivalent. Clinical trials can take extended periods of time to
complete. In addition, if the FDA requires an approved Investigational Device
Exemption ("IDE") before clinical device trials may commence, there can be no
guarantee that the agency will approve the IDE. An IDE approval process could
also result in significant delay.

After submission of a premarket notification containing, among other things, any
data collected, the FDA may find the device substantially equivalent and the
device may be marketed. If the FDA finds that a device is not substantially
equivalent, the manufacturer may request that the FDA make a risk-based
classification to place the device in Class I or Class II. However, if a timely
request for risk-based classification is not made, or if the FDA determines that
a Class III designation is appropriate, an approved pre-market approval
application ("PMA") will be required before the device may be marketed.

The PMA approval process is lengthy, expensive, and typically requires, among
other things, extensive data from preclinical testing and a well-controlled
clinical trial or trials that demonstrate a reasonable assurance of safety and
effectiveness. There can be no assurance that review will result in timely or
any PMA approval. There may also be significant conditions on approval,
including limitations on labeling and advertising claims and the imposition of
post-market testing, tracking, or surveillance requirements.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

Laws protecting confidential medical information could impact the manner in
which the Company conducts certain components of its business. On August 14,
2002, the Department of Health and Human Services issued final modifications to
privacy regulations (the "Privacy Rule") under the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA"). These regulations impose restrictions
governing the disclosure of confidential medical information in the U.S.

The failure on the part of the Company, its clients and/or the physician
investigators from whom the Company receives confidential medical information to
comply with the Privacy Rule could result in the termination of ongoing research
or the disqualification of data for submission to regulatory authorities.
Additionally, the issuance of a notice of finding by a governmental authority
against either the Company or its clients, based upon a material violation by
the Company of any applicable regulation, could materially and adversely affect
its business.

POTENTIAL LIABILITY AND INSURANCE

PAREXEL's clinical research services focuses on the testing of experimental
drugs and devices on human volunteers pursuant to study protocols. Clinical
research involves a risk of liability for personal injury or death to patients
due, among other reasons, to possible unforeseen adverse side effects or
improper administration of the new drug or medical device. PAREXEL does not
provide healthcare services directly to patients. Rather, PAREXEL physicians or
physician investigators are responsible for administering drugs and evaluating
patients. Many of these patients are already seriously ill and are at risk of
further illness or death.

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

                                       13
<PAGE>

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

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

AVAILABLE INFORMATION

The Company's Internet website is http://www.parexel.com. The Company makes
available through its website the Company's annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed pursuant to Sections 13(a) and 15(d) of the Securities
Exchange Act of 1934, as amended. The Company makes these reports available free
of charge through its website as soon as reasonably practicable after they have
been electronically filed with, or furnished to, the Securities and Exchange
Commission.

RISK FACTORS

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

LOSS, MODIFICATION, OR DELAY OF LARGE OR MULTIPLE CONTRACTS MAY NEGATIVELY
IMPACT THE COMPANY'S FINANCIAL PERFORMANCE

The Company's clients generally can terminate their contracts with the Company
upon 30 to 60 days notice or can delay execution of services. The loss or delay
of a large contract or the loss or delay of multiple contracts could adversely
affect its operating results, possibly materially. The Company has in the past
experienced contract cancellations, which have adversely affected its operating
results.

Clients terminate or delay their contracts for a variety of reasons, including,
but not limited to:

      -     merger or potential merger related activities;

      -     failure of products being tested to satisfy safety requirements;

      -     failure of products being tested to prove effective;

      -     products having unexpected or undesired clinical results;

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

      -     insufficient patient enrollment in a study;

      -     insufficient investigator recruitment;

      -     production problems which cause shortages of the product;

      -     product withdrawal following market launch; and

      -     manufacturing facility shut down.

In addition, the Company believes that companies regulated by the FDA may
proceed with fewer clinical trials or conduct them without the assistance of
bio/pharmaceutical services companies if they are trying to reduce costs as a
result of budgetary limits or changing priorities. These factors may cause such
companies to cancel contracts with bio/pharmaceutical services companies such as
the Company.

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THE COMPANY FACES INTENSE COMPETITION IN MANY AREAS OF ITS BUSINESS; IF THE
COMPANY DOES NOT COMPETE EFFECTIVELY, ITS BUSINESS WILL BE HARMED

The bio/pharmaceutical services industry is highly competitive, and the Company
faces numerous competitors in many areas of its business. If the Company fails
to compete effectively, the Company may lose clients, which would cause its
business to suffer.

The Company primarily competes against in-house departments of pharmaceutical
companies, other full service CROs, small specialty CROs, and to a lesser
extent, universities, teaching hospitals, and other site organizations. Some of
the larger CROs against which the Company competes include Quintiles
Transnational Corporation, Covance, Inc. and Pharmaceutical Product Development
Inc. In addition, PAREXEL's PCG and MMS businesses also compete with a large and
fragmented group of specialty service providers, including
advertising/promotional companies, major consulting firms with pharmaceutical
industry groups and smaller companies with pharmaceutical industry focus.
Perceptive, a majority owned subsidiary of the Company, competes primarily with
CROs, information technology companies and other software companies. Some of
these competitors, including the in-house departments of pharmaceutical
companies, have greater capital, technical and other resources than the Company.
In addition, those of the Company's competitors that are smaller specialized
companies may compete effectively against the Company because of their
concentrated size and focus.

THE FIXED PRICE NATURE OF THE COMPANY'S CONTRACTS COULD HURT ITS OPERATING
RESULTS

Approximately 85.0% of the Company's contracts are at fixed prices. As a result,
the Company bears the risk of cost overruns. If the Company fails to adequately
price its contracts or if the Company experiences significant cost overruns, its
gross margins on the contract would be reduced and the Company could lose money
on contracts. In the past, the Company has had to commit unanticipated resources
to complete projects, resulting in lower gross margins on those projects. The
Company might experience similar situations in the future.

IF GOVERNMENTAL REGULATION OF THE DRUG, MEDICAL DEVICE AND BIOTECHNOLOGY
INDUSTRY CHANGES, THE NEED FOR THE COMPANY'S SERVICES COULD DECREASE

Governmental regulation of the drug, medical device and biotechnology product
development process is complicated, extensive, and demanding. A large part of
the Company's business involves assisting pharmaceutical and biotechnology
companies through the regulatory approval process. Changes in regulations, that,
for example, streamline procedures or relax approval standards, could eliminate
or reduce the need for the Company's services. If companies regulated by the FDA
or similar foreign regulatory authorities needed fewer of PAREXEL's services,
the Company would have fewer business opportunities and its revenues would
decrease, possibly materially.

In the U.S., the FDA and the Congress have attempted to streamline the
regulatory process by providing for industry user fees that fund additional
reviewer hires and better management of the regulatory review process. In
Europe, governmental authorities have approved common standards for clinical
testing of new drugs throughout the E.U. by adopting standards for GCP and by
making the clinical trial application and approval process more uniform across
member states starting in May 2004. . The FDA has had GCP in place as a
regulatory standard and requirement for new drug approval for many years and
Japan had adopted GCP since April 1998. The U.S., Europe and Japan have also
collaborated in the 14-year-long ICH, the purpose of which is to eliminate
duplicative or conflicting regulations in the three regions. The ICH partners
have agreed upon a common format (the Common Technical Document) for marketing
applications that eliminates the need to tailor the format to each region. Such
efforts and similar efforts in the future that streamline the regulatory process
may reduce the demand for the Company's services.

For example, parts of PAREXEL's PCG business advises clients on how to satisfy
regulatory standards for manufacturing processes and on other matters related to
the enforcement of government regulations by the FDA and other regulatory
bodies. Any reduction in levels of review of manufacturing processes or levels
of regulatory enforcement, generally, would result in fewer business
opportunities for the PCG business in this area. As a result of lower level of
FDA enforcement activities over the last two years, PCG has experienced a
decline in the group's GMP consulting business, which has adversely affected the
business unit.

                                       15
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IF THE COMPANY FAILS TO COMPLY WITH EXISTING REGULATIONS, ITS REPUTATION AND
OPERATING RESULTS WOULD BE HARMED

The Company's business is subject to numerous governmental regulations,
primarily relating to pharmaceutical product development and the conduct of
clinical trials. If the Company fails to comply with these governmental
regulations, it could result in the termination of the Company's ongoing
research, development or sales and marketing projects, or the disqualification
of data for submission to regulatory authorities. The Company also could be
barred from providing clinical trial services in the future or be subjected to
fines. Any of these consequences would harm the Company's reputation, its
prospects for future work and its operating results. In addition, the Company
may have to repeat research or redo trials. The Company may be contractually
required to take such action at no further cost to the customer, but at
substantial cost to the Company.

THE COMPANY MAY LOSE BUSINESS OPPORTUNITIES AS A RESULT OF HEALTH CARE REFORM
AND THE EXPANSION OF MANAGED CARE ORGANIZATIONS

Numerous governments, including the U.S. government and governments outside of
the U.S., have undertaken efforts to control growing health care costs through
legislation, regulation and voluntary agreements with medical care providers and
drug companies. If these efforts are successful, pharmaceutical, medical device
and biotechnology companies may react by spending less on research and
development. If this were to occur, the Company would have fewer business
opportunities and its revenues could decrease, possibly materially.

For instance, in the past, the U.S. Congress has entertained several
comprehensive health care reform proposals. The proposals were generally
intended to expand health care coverage for the uninsured and reduce the growth
of total health care expenditures. While the U.S. Congress has not yet adopted
any comprehensive reform proposals, members of Congress may raise similar
proposals in the future. The Company is unable to predict the likelihood that
health care reform proposals will be enacted into law. In addition to health
care reform proposals, the expansion of managed care organizations in the
healthcare market may result in reduced spending on research and development.
Managed care organizations' efforts to cut costs by limiting expenditures on
pharmaceuticals and medical devices could result in pharmaceutical,
biotechnology and medical device companies spending less on research and
development. If this were to occur, the Company would have fewer business
opportunities and its revenues could decrease, possibly materially.

NEW AND PROPOSED LAWS AND REGULATIONS REGARDING CONFIDENTIALITY OF PATIENT
INFORMATION COULD RESULT IN INCREASED RISKS OF LIABILITY OR INCREASED COSTS TO
THE COMPANY, OR COULD LIMIT THE COMPANY'S SERVICE OFFERINGS

The confidentiality and release of patient-specific information are subject to
government regulation. Under the Health Insurance Portability and Accountability
Act of 1996, or HIPAA, the U.S. Department of Health and Human Services has
issued regulations mandating heightened privacy and confidentiality protections.
The federal government and state governments have proposed or adopted additional
legislation governing the possession, use and dissemination of medical record
information and other personal health information. Proposals being considered by
state governments may contain privacy and security provisions that are more
burdensome than the federal regulations. In order to comply with these
regulations, the Company may need to implement new security measures, which may
require the Company to make substantial expenditures or cause the Company to
limit the products and services it offers. In addition, if the Company violates
applicable laws, regulations or duties relating to the use, privacy or security
of health information, it could be subject to civil or criminal liability.

IF THE COMPANY DOES NOT KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES, ITS PRODUCTS
AND SERVICES MAY BECOME LESS COMPETITIVE OR OBSOLETE, ESPECIALLY IN THE
COMPANY'S PERCEPTIVE INFORMATICS BUSINESS

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

                                       16
<PAGE>

BECAUSE THE COMPANY DEPENDS ON A SMALL NUMBER OF INDUSTRIES AND CLIENTS FOR ALL
OF ITS BUSINESS, THE LOSS OF BUSINESS FROM A SIGNIFICANT CLIENT COULD HARM ITS
BUSINESS, REVENUE, AND FINANCIAL CONDITION

The loss of, or a material reduction in the business of, a significant client
could cause a substantial decrease in the Company's revenue and adversely affect
its business and financial condition, possibly materially. In the fiscal year
ended June 30, 2004, the Company's five largest clients accounted for 30% of its
consolidated service revenue, although no client accounted for 10% or more of
consolidated service revenue. In the fiscal year ended June 30, 2003, the
Company's five largest clients accounted for 32% of its consolidated service
revenue, and one client, AstraZeneca, accounted for 11% of consolidated service
revenue. The Company expects that a small number of clients will continue to
represent a significant part of its revenue. The Company's contracts with these
clients generally can be terminated on short notice. The Company has in the past
experienced contract cancellations with significant clients.

IF THE COMPANY'S PERCEPTIVE INFORMATICS 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

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

Although Perceptive's computer and communications hardware is protected through
physical and software safeguards, it is still vulnerable to fire, storm, flood,
power loss, earthquakes, telecommunications failures, physical or software
break-ins, and similar events. In addition, Perceptive's software products are
complex and sophisticated, and could contain data, design or software errors
that could be difficult to detect and correct. If Perceptive fails to maintain
and further develop the necessary computer capacity and data to support its
customers' needs, it could result in loss of or delay in revenue and market
acceptance.

IF THE COMPANY IS UNABLE TO ATTRACT SUITABLE WILLING VOLUNTEERS FOR THE CLINICAL
TRIALS OF ITS CLIENTS, ITS CLINICAL RESEARCH SERVICES BUSINESS MAY SUFFER

One of the factors on which the Company's CRS business competes is the ability
to recruit patients for the clinical studies the Company is managing. These
clinical trials rely upon the ready accessibility and willing participation of
volunteer subjects. These subjects generally include volunteers from the
communities in which the studies are conducted. Although to date these
communities have provided a substantial pool of potential subjects for research
studies, there may not be enough patients available with the traits necessary to
conduct the studies. For example, if the Company manages a study for a treatment
of a particular type of cancer, its ability to conduct the study may be limited
by the number of patients that it can recruit that have that form of cancer. If
multiple organizations are conducting similar studies and competing for
patients, it could also make the Company's recruitment efforts more difficult.
If the Company is unable to attract suitable and willing volunteers on a
consistent basis, it would have an adverse effect on the trials being managed by
its CRS business, which could have a material adverse effect on its CRS
business.

IF THE COMPANY'S HIGHLY QUALIFIED MANAGEMENT AND TECHNICAL PERSONNEL LEFT, ITS
BUSINESS WOULD BE HARMED

The Company relies on the expertise of its Chairman and Chief Executive Officer,
Josef H. von Rickenbach. If Mr. von Rickenbach left, it would be difficult and
expensive to find a qualified replacement with the level of specialized
knowledge of the Company's products and services and the bio/pharmaceutical
services industry. The Company is a party to an employment agreement with Mr.
von Rickenbach, which may be terminated by the Company or Mr. von Rickenbach
upon notice to the other party.

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

                                       17
<PAGE>

THE COMPANY MAY HAVE SUBSTANTIAL EXPOSURE TO PAYMENT OF PERSONAL INJURY CLAIMS
AND MAY NOT HAVE ADEQUATE INSURANCE TO COVER SUCH CLAIMS

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

In order to mitigate the risk of liability, the Company seeks to include
indemnity provisions in its Clinical Research Services contracts with clients.
However, the Company is not able to include indemnity provisions in all of its
contracts. The indemnity provisions the Company includes in these contracts
would not cover its exposure if:

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

      -     a client failed to indemnify the Company 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.

The Company also carries insurance to cover its risk of liability. However, the
Company's insurance is subject to deductibles and coverage limits and may not be
adequate to cover claims. In addition, liability coverage is expensive. In the
future, the Company may not be able to maintain or obtain liability insurance on
reasonable terms, at a reasonable cost or in sufficient amounts to protect it
against losses due to claims.

THE COMPANY'S BUSINESS IS SUBJECT TO INTERNATIONAL ECONOMIC, POLITICAL AND OTHER
RISKS THAT COULD NEGATIVELY AFFECT ITS RESULTS OF OPERATIONS OR FINANCIAL
POSITION

The Company provides most of its services on a worldwide basis. The Company's
service revenue from non-U.S. operations represented approximately 54.8% of
total service revenue for the year ended June 30, 2004 and approximately 49.2%
of total service revenue for the year ended June 30, 2003. In addition, the
Company's service revenue from operations in the United Kingdom represented
approximately 18.3% of total service revenue for the year ended June 30, 2004
and approximately 18.4% of total service revenue for the year ended June 30,
2003. The Company anticipates that service revenue from international operations
may grow in the future. Accordingly, the Company's business is subject to risks
associated with doing business internationally, including:

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

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

      -     difficulty in staffing and managing widespread operations;

      -     unfavorable labor regulations applicable to its European operations;

      -     changes in foreign currency exchange rates; and

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

THE COMPANY'S OPERATING RESULTS HAVE FLUCTUATED BETWEEN QUARTERS AND YEARS AND
MAY CONTINUE TO FLUCTUATE IN THE FUTURE, WHICH COULD AFFECT THE PRICE OF ITS
COMMON STOCK

The Company's quarterly and annual operating results have varied and will
continue to vary in the future as a result of a variety of factors. For example,
the Company's income (loss) from operations was $7.8 million for the quarter
ended September 30, 2003, $8.2 million for the quarter ended December 31, 2003,
$(1.7) million for the quarter ended March 31, 2004, and $10.3 million for the
quarter ended June 30, 2004. Factors that cause these variations include:

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

      -     the timing of the initiation, progress, or cancellation of
            significant project;

      -     exchange rate fluctuations between quarters or years;

      -     restructuring charges;

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

      -     the timing of the opening of new offices;

      -     costs and the related financial impact of acquisitions;

      -     the timing of internal expansion;

      -     the timing and amount of costs associated with integrating
            acquisitions; and

                                       18
<PAGE>

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

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

Approximately 80-85% of the Company's operating costs are fixed in the short
term. In particular, a significant portion of the Company's operating costs
relate to personnel, which are estimated to have accounted for 65-70% of the
Company's total operating costs in fiscal year 2004. As a result, the effect on
the Company's revenues of the timing of the completion, delay or loss of
contracts, or the progress of client projects, could cause its operating results
to vary substantially between reporting periods.

If the Company's operating results do not match the expectations of securities
analysts and investors as a result of these factors, the trading price of its
common stock will likely decrease.

THE COMPANY'S REVENUE AND EARNINGS ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS

Approximately 54.8% of the Company's service revenue for the year ended June 30,
2004 and approximately 49.2% of the Company's service revenue for the year ended
June 30, 2003 were from non-U.S. operations. The Company's financial statements
are denominated in U.S. dollars. As a result, changes in foreign currency
exchange rate, could have a significant effect on its operating results.
Exchange rate fluctuations between local currencies and the U.S. dollar create
risk in several ways, including:

      -     Foreign Currency Translation Risk. The revenue and expenses of the
            Company's 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 year ended June 30, 2004, approximately 18.3% of total service
            revenue was denominated in British pounds and approximately 32.2% of
            total service revenue was denominated in Euros. For the year ended
            June 30, 2003, approximately 18.4% of total service revenue was
            denominated in British pounds and approximately 26.7% of total
            service revenue was denominated in Euros.

      -     Foreign Currency Transaction Risk. The Company's service contracts
            may be denominated in a currency other than the functional currency
            in which it performs the service related to such contracts.

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

THE COMPANY'S BUSINESS HAS EXPERIENCED SUBSTANTIAL EXPANSION IN THE PAST AND
SUCH EXPANSION AND ANY FUTURE EXPANSION COULD STRAIN ITS RESOURCES IF NOT
PROPERLY MANAGED

The Company has expanded its business substantially in the past. Future rapid
expansion could strain the Company's operational, human and financial resources.
In order to manage expansion, the Company must:

      -     continue to improve operating, administrative and information
            systems;

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

      -     track the progress of ongoing client projects; and

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

If the Company does not take these actions and is not able to manage the
expanded business, the expanded business may be less successful than
anticipated, and the Company may be required to allocate additional resources to
the expanded business, which it would have otherwise allocated to another part
of its business.

The Company may face additional risks in expanding its foreign operations.
Specifically, the Company may find it difficult to:

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

      -     operate amid political and economic instability;

      -     hire and retain qualified personnel; and

      -     overcome language, tariff and other barriers.

                                       19
<PAGE>

THE COMPANY MAY MAKE ACQUISITIONS IN THE FUTURE, WHICH MAY LEAD TO DISRUPTIONS
TO ITS ONGOING BUSINESS

The Company has made a number of acquisitions and will continue to review new
acquisition opportunities. If the Company is unable to successfully integrate an
acquired company, the acquisition could lead to disruptions to the business. The
success of an acquisition will depend upon, among other things, the Company's
ability to:

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

      -     integrate acquired personnel;

      -     retain and motivate key employees;

      -     retain customers; and

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

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

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

THE COMPANY'S CORPORATE GOVERNANCE STRUCTURE, INCLUDING PROVISIONS OF ITS
ARTICLES OF ORGANIZATION AND BY-LAWS AND ITS SHAREHOLDER RIGHTS PLAN, AND
MASSACHUSETTS LAW MAY DELAY OR PREVENT A CHANGE IN CONTROL OR MANAGEMENT THAT
STOCKHOLDERS MAY CONSIDER DESIRABLE

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

      -     the Company has divided its board of directors into three classes
            that serve staggered three-year terms;

      -     the Company is 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 the Company's board of
            directors may only be filled by a vote of the Company's board of
            directors and the number of directors may be fixed only by the
            Company's board of directors;

      -     the Company is subject to Chapter 110F of the Massachusetts General
            Laws which limits its ability to engage in business combinations
            with certain interested stockholders;

      -     the Company's stockholders are limited in their ability to call or
            introduce proposals at stockholder meetings; and

      -     the Company's shareholder rights plan would cause a proposed
            acquirer of 20% or more of the Company's outstanding shares of
            common stock to suffer significant dilution.

These provisions could have the effect of delaying, deferring, or preventing a
change in control of the Company or a change in the Company's management that
stockholders may consider favorable or beneficial. These provisions could also
discourage proxy contests and make it more difficult for stockholders to elect
directors and take other corporate actions. These provisions could also limit
the price that investors might be willing to pay in the future for shares of the
Company's stock. In addition, the Company's Board of Directors may issue
preferred stock in the future without stockholder approval. If the Company's
Board of Directors issues preferred stock, the holders of common stock would be
subordinate to the rights of the holders of preferred stock. The Company's Board
of Directors' ability to issue the preferred stock could make it more difficult
for a third party to acquire, or discourage a third party from acquiring, a
majority of the Company's stock.

THE COMPANY'S STOCK PRICE HAS BEEN AND MAY IN THE FUTURE BE VOLATILE, WHICH
COULD LEAD TO LOSSES BY INVESTORS

The market price of the Company's common stock has fluctuated widely in the past
and may continue to do so in the future. On August 30, 2004 the closing sale
price of the Company's common stock on the NASDAQ National Market was $20.23 per
share. During the period from July 1, 2002 to June 30, 2004, the closing sale
price of the Company's common stock ranged from a high of $20.96 per share to a
low of $8.05 per share. Investors in the Company's common stock must be willing
to bear the risk of such fluctuations in stock price and the risk that the value
of an investment in the Company's stock could decline.

                                       20
<PAGE>

The Company's stock price can be affected by quarter-to-quarter variations in:

      -     operating results;

      -     earnings estimates by analysts;

      -     market conditions in the industry;

      -     prospects of health care reform;

      -     changes in government regulations; and

      -     general economic conditions.

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

ITEM 2. PROPERTIES

As of June 30, 2004, the Company occupied approximately 1,400,000 square feet of
building space in 51 locations in 35 countries around the world. Except for
26,600 square feet of building space in Poitiers, France, the Company does not
own any properties, but leases space under various leases that expire between
2004 and 2022.

The Company's non-U.S. facilities account for approximately 750,000 square feet.
In particular, the Company occupies approximately 191,000 square feet in various
locations in the United Kingdom, 234,000 square feet in various locations in
Germany and 83,000 square feet in various locations in France.

The Company's principal facilities are set forth below:

<TABLE>
<CAPTION>
Facility                         Space                    Use of Facility               Lease Expiration
--------                         -----                    ---------------               ----------------
<S>                             <C>            <C>                                      <C>
Headquarters in Waltham,  MA    212,000        CRS, PCG, Perceptive and General &
                                               Administrative ("G&A")                         2009
Uxbridge, UK                     87,000        CRS, PCG, MMS, and G&A                         2022
Berlin, Germany                 120,000        CRS, PCG, Perceptive and G&A                   2013
</TABLE>

The following table indicates the approximate square footage of property
attributable to each of the Company's operating segments:

<TABLE>
<CAPTION>
                                      Total Sq. Ft.
                                      -------------
<S>                                   <C>
CRS.................................     624,500
PCG.................................     243,750
MMS.................................     162,650
Perceptive..........................      82,000
General and Administrative..........     289,500
</TABLE>

See Note 15 to the consolidated financial statements included in Item 8 of this
annual report for further information regarding the Company's lease obligations.

ITEM 3. LEGAL PROCEEDINGS

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

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

No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2004.

                                       21
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION AND HOLDERS

The Company's common stock is traded on the NASDAQ National Market under the
symbol "PRXL". The table below shows the high and low bid prices of the common
stock for each quarter of the fiscal years ended June 30, 2004 and 2003,
respectively, on the NASDAQ National Market. The prices in the table below
reflect inter-dealer prices without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                 2004                       2003
                            High      Low              High      Low
                           ------    ------           ------    ------
<S>                        <C>       <C>              <C>       <C>
First Quarter              $17.70    $13.35           $14.45    $ 8.47
Second Quarter             $18.78    $15.28           $13.53    $ 8.05
Third Quarter              $18.57    $15.80           $14.87    $10.17
Fourth Quarter             $21.00    $17.23           $14.75    $11.80
</TABLE>

As of August 30, 2004, there were approximately 71 stockholders of record of the
Company's common stock. The number does not include shareholders for which
shares were held in a "nominee" or "street" name.

DIVIDENDS

The Company has never declared or paid any cash dividends on its capital stock
and does not anticipate paying any cash dividend in the foreseeable future. The
Company intends to retain future earnings for the development and expansion of
its business.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table provides information about purchases of equity securities by
the Company and its affiliated purchasers during the quarter ended June 30,
2004:

<TABLE>
<CAPTION>
                                                                     Total Number of
                                                                    Shares (or Units)          Maximum Number (or
                         Total Number                             Purchased as Part of     Appropriate Dollar Value) of
                         of Shares (or             Average         Publicly Announced       Shares (or Units) that May
                        Units) Purchased        Price Paid per      Plans or Programs        Yet Be Purchased Under the
       Period                 (1)               Share (or Unit)            (2)                   Plans or Programs
<S>                     <C>                     <C>                <C>                      <C>
04/01/04 - 04/30/04         137,900                 $19.05               137,900                   $4.8 million
06/01/04 - 06/30/04          48,600                 $20.27                48,600                   $3.8 million
                            -------                                      -------
  Total                     186,500                 $19.36               186,500
                            =======                                      =======
</TABLE>

      (1)   The Company purchased an aggregate of 186,500 shares of its common
            stock pursuant to the repurchase plan that it publicly announced on
            September 27, 1999 (the "Plan").

      (2)   The Company's Board of Directors approved the repurchase by the
            Company of shares of its common stock having a value of up to $20.0
            million in the aggregate pursuant to the Plan. Unless terminated
            earlier by resolution of the Company's Board of Directors, the Plan
            will expire when all shares authorized for repurchase have been
            repurchased by the Company.

There were no repurchases made during the period of July 1, 2003 to December 31,
2003. Repurchases made during the quarter ended March 31, 2004 can be found
under Part II, Item 2 of the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004.

In September 1999, the Board of Directors approved a stock repurchase program
authorizing the purchase of up to $20 million of the Company's common stock.
Repurchases are made in the open market subject to market conditions. As of June
30, 2004, the Company had acquired 1,306,100 shares at a total cost of $16.2
million. Subsequent to June 30, 2004, the Company used the remaining $3.8
million authorized under the plan to repurchase 200,500 shares of common stock.
In total, the Company acquired 1,506,600 shares at a total cost of $20.0
million.

                                       22
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data of the Company for the five
years ended June 30, 2004 are derived from the consolidated financial statements
of the Company. The information set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included as Item 7 and the consolidated financial statements and
related footnotes included as Item 8 in this Form 10-K.

<TABLE>
<CAPTION>
                                                                          For the years ended June 30,
                                                          (in thousands, except per share data and number of employees)
                                                      2004            2003             2002         2001             2000
                                                   ----------      ----------       ----------   ----------       ----------
<S>                                                <C>             <C>              <C>          <C>              <C>
                    OPERATIONS

Service revenue                                    $  547,216      $  522,313       $  451,461   $  387,560       $  378,150
Income (loss) from operations                      $   24,606(1)   $   20,605 (2)   $   20,493   $   (6,860)(3)   $    2,983(4)
Net income (loss)                                  $   13,791      $   10,662       $   13,235   $     (825)      $    4,388
Basic earnings (loss) per share                    $     0.53      $     0.42       $     0.53   $    (0.03)      $     0.18
Diluted earnings (loss) per share                  $     0.51      $     0.42       $     0.52   $    (0.03)      $     0.17

                FINANCIAL POSITION

Cash, cash equivalents and marketable securities   $   95,607      $   82,724       $   66,109   $   60,949       $   90,530
Working capital                                    $  145,408      $  134,346       $  138,020   $  123,488       $  123,680
Total assets                                       $  502,996      $  464,237       $  407,161   $  361,534       $  351,940
Long-term debt                                     $      471      $      644       $      432   $       12       $      104
Stockholders' equity                               $  246,760      $  227,100       $  200,077   $  177,822       $  186,133

                    OTHER DATA

Purchase of property and equipment                 $   27,824      $   29,985       $   23,808   $   18,145       $   19,089
Depreciation and amortization                      $   25,762      $   20,656       $   17,893   $   21,453       $   21,934
Number of employees                                     4,875           5,095            4,930        4,640            4,200
Weighted average shares used in computing:
  Basic earnings (loss) per share                      26,010          25,371           24,928       24,637           24,981
  Diluted earnings (loss) per share                    26,795          25,683           25,582       24,637           25,140
</TABLE>

      (1)   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.

      (2)   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. See Note 7
            to the consolidated financial statements included in Item 8 of this
            annual report for further detail.

      (3)   Loss from operations for the year ended June 30, 2001, includes a
            restructuring benefit of $0.7 million. This consisted of a $1.5
            million reduction in previously accrued restructuring charges due to
            changes in estimates related to the third quarter 2000
            restructuring, offset by $0.8 million for exiting a business
            location in the U.S. Also in the year ended June 30, 2001, the
            Company recorded restructuring charges of $7.2 million. These
            charges included $3.1 million of employee severance and related
            costs for eliminating approximately 125 managerial and staff
            positions worldwide (44% in the U.S. and 56% in Europe), $3.9
            million related to consolidation and abandonment of certain
            facilities (40% in the U.S. and 60% in Europe), and approximately
            $0.2 million primarily related to miscellaneous costs associated
            with the Company's fourth quarter restructuring plan. Additionally,
            the Company recorded $1.0 million in accelerated depreciation
            expense due to changes in the estimated useful lives of leasehold
            improvements in abandoned leased facilities, $0.9 million of
            one-time asset write-offs, as well as $0.6 million in expenses
            associated with discontinued services.

                                       23
<PAGE>

      (4)   Income from operations for the year ended June 30, 2000 reflects
            $13.1 million related to restructuring and other charges recorded in
            the quarter ended March 31, 2000, consisting primarily of severance
            and lease termination costs and $1.0 million related to accelerated
            depreciation expense due to changes in the estimated useful lives of
            leasehold improvements on abandoned leased facilities.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

The Company is a leading bio/pharmaceutical services company, providing a broad
range of expertise in clinical research, medical marketing, consulting and
informatics and advanced technology products and services to the worldwide
pharmaceutical, biotechnology, and medical device industries. The Company's
primary objective is to provide solutions for managing the bio/pharmaceutical
product lifecycle with the goal of reducing the time, risk and cost associated
with the development and commercialization of new therapies. Since its founding
in 1983, PAREXEL has developed significant expertise in processes and
technologies supporting this strategy. The Company's product and service
offerings include: clinical trials management, data management, biostatistical
analysis, medical marketing, clinical pharmacology, patient recruitment,
regulatory and medical consulting, health policy and reimbursement, performance
improvement, industry training and publishing, medical imaging services, IVRS,
CTMS, web-based portals, systems integration, patient diary application, and
other drug development consulting services. The Company believes that its
comprehensive services, depth of therapeutic area expertise, global footprint
and related access to patients, and sophisticated information technology, along
with its experience in global drug development and product launch services,
represent key competitive strengths.

The Company is managed through four business segments, namely, CRS, PCG, MMS and
Perceptive.

CRS constitutes the Company's core business and includes clinical trials
management and biostatistics and data management, as well as related medical
advisory and investigator site services.

PCG provides technical expertise in such disciplines as clinical pharmacology,
regulatory affairs, industry training, and management consulting. PCG
consultants identify alternatives and propose solutions to address clients'
product development, registration, and commercialization issues.

MMS provides a full spectrum of market development, product development, and
targeted communications services in support of product launch. MMS 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
services that include medical imaging services, IVRS, CTMS, web-based portals,
systems integration, and patient diary applications. Perceptive is a
majority-owned subsidiary of the Company. As of June 30, 2004, the Company owned
approximately 97.9% of the outstanding shares of common stock of Perceptive.

Effective July 1, 2004, the Company moved the Clinical Pharmacology unit of PCG
into the CRS business segment. As a result of this move, ongoing and historical
revenue and direct costs associated with this unit will be moved from PCG to
CRS. The Company is currently contemplating other changes directed at improving
the operational effectiveness of the Company.

The Company conducts a significant portion of its operations in foreign
countries. Approximately 54.8% and 49.2% of the Company's service revenue for
the fiscal years ended June 30, 2004 and 2003, respectively, were from non-U.S.
operations. Because the Company's financial statements are denominated in U.S.
dollars, changes in foreign currency exchange rates can have a significant
effect on its operating results. For the fiscal year ended June 30, 2004,
approximately 18.3% of total service revenue was denominated in British Pounds
and approximately 32.2% of total service revenue was denominated in Euros. For
the fiscal year ended June 30, 2003, approximately 18.4% of total service
revenue was denominated in British Pounds and approximately 26.7% of total
service revenue was denominated in Euros. As a result of the weakened U.S.
dollar against the British Pound and the Euro in fiscal year 2004, the Company's
revenues and the Company's costs increased in 2004 from the comparable 2003
period.

Approximately 85.0% of the Company's contracts are fixed price, with some
variable components, and range in duration from a few months to several years.
Cash flow from these contracts typically consists of a down payment required to
be paid at the time of contract execution with the balance due in installments
over the contract's duration, usually on a milestone achievement basis. Revenue
from these contracts is generally recognized as work is performed. As a result,
cash receipts do not necessarily correspond to costs incurred and revenue
recognized on contracts.

                                       24
<PAGE>

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

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company's financial condition and results of
operations are based on the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the U.S. The preparation of these financial statements requires the Company
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, revenues and expenses, and other financial information. On an
ongoing basis, the Company evaluates its estimates and judgments. The Company
bases its estimates on historical experience and on various other factors that
it believes to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions.

The Company regards an accounting estimate underlying its financial statements
as a "critical accounting estimate" if the nature of the estimate or assumption
is material due to level of subjectivity and judgment involved or the
susceptibility of such matter to change and if the impact of the estimate or
assumption on financial condition or operating performance is material. The
Company believes that the following accounting policies are most critical to
aid in fully understanding and evaluating its reported financial results:

REVENUE RECOGNITION

Service revenue on fixed-price contracts is recognized as services are
performed. The Company measures progress for fixed-price contracts using the
concept of proportional performance based upon a unit based output method. This
method requires the Company to estimate total expected units, as well as, the
costs and revenue per unit. Generally, the assigned financial manager or
financial analyst reviews contract estimates on a monthly basis. Adjustments to
contract estimates are made in the periods in which the facts that require the
revisions become known. Historically, there have not been any significant
variations between contract estimates and the actual cost incurred, which were
not recovered from clients. In the event that future estimates are materially
incorrect, they could materially impact the Company's consolidated results of
operations and financial position.

BILLED ACCOUNTS RECEIVABLE, UNBILLED ACCOUNTS RECEIVABLE AND DEFERRED REVENUE

Billed accounts receivable represent amounts for which invoices have been sent
to clients. Unbilled accounts receivable represent amounts recognized as revenue
for which invoices have not yet been sent to clients. Deferred revenue
represents amounts billed or payments received for which revenue has not yet
been earned. The Company maintains an allowance for doubtful accounts based on
historic collectability and specific identification of potential problem
accounts. In the event the Company is unable to collect portions of its
outstanding billed or unbilled receivables, there may be a material impact to
the Company's consolidated results of operations and financial position.

INCOME TAXES

The Company's global provision for corporate income taxes is calculated using
the tax accounting rules established by SFAS No. 109. Income tax expense is
based on the distribution of profit before tax amongst the various taxing
jurisdictions in which the Company operates, adjusted as required by the tax
laws of each taxing jurisdiction. Changes in the distribution of profits and
losses between taxing jurisdictions may have a significant impact on the
Company's effective tax rate. The provision is a combination of current-year tax
liability and future tax liability/benefit that results from differences between
book and taxable income that will reverse in future periods. Deferred tax assets
and liabilities for these future tax effects are established on the Company's
balance sheet. A valuation allowance is established if it is more likely than
not that future tax benefits will not be realized. Monthly interim tax provision
calculations are prepared during the year. Differences between these interim
estimates and the final results for the year could materially impact the
Company's effective tax rate and its consolidated results of operations and
financial position.

                                       25
<PAGE>

GOODWILL

Goodwill represents the excess of the cost of an acquired business over the fair
value of the related net assets at the date of acquisition. Under SFAS No. 142,
"Goodwill and Other Intangible Assets", goodwill is subject to annual impairment
testing or more frequent testing if an event occurs or circumstances change that
would more likely than not reduce the carrying value of the reporting unit below
its fair value. The Company has assessed the impairment of goodwill under SFAS
No. 142 in fiscal years 2004 and 2003. The impairment testing involves
determining the fair market value of each of the reporting units with which the
goodwill was associated and comparing the value with the reporting unit's
carrying value. Based on this assessment, there was no impairment identified at
June 30, 2004 and 2003. Any future impairment of goodwill could have a material
impact to the Company's financial position or its results of operations.

RESULTS OF OPERATIONS

QUARTERLY OPERATING RESULTS (UNAUDITED)

The following is a summary of unaudited quarterly results of operations for the
years ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>
                                                          For the year ended June 30, 2004
                                                       (in thousands, except per share data)
                                        First         Second         Third            Fourth        Total
                                       Quarter        Quarter       Quarter          Quarter         Year
                                    ------------   ------------   ------------    ------------   ------------
<S>                                 <C>            <C>            <C>             <C>            <C>
Service revenue                     $    132,123   $    134,088   $    139,899    $    141,106   $    547,216
Income (loss) from operations              7,820          8,224         (1,684)         10,246         24,606
Net income (loss)                          4,732          5,042         (2,484)          6,501         13,791
Diluted earnings (loss) per share   $       0.18   $       0.19   $      (0.10)   $       0.24   $       0.51
</TABLE>

<TABLE>
<CAPTION>
                                                          For the year ended June 30, 2003
                                                       (in thousands, except per share data)
                                        First         Second          Third         Fourth         Total
                                       Quarter        Quarter        Quarter        Quarter         Year
                                    ------------   ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>            <C>
Service revenue                     $    121,417   $    124,942   $    135,005   $    140,949   $    522,313
Income from operations                     7,003          1,733          8,281          3,588         20,605
Net income                                 3,263            142          4,375          2,882         10,662
Diluted earnings per share          $       0.13   $       0.01   $       0.17   $       0.11   $       0.42
</TABLE>

ACQUISITIONS AND IMPACT OF RESTRUCTURING AND OTHER CHARGES

ACQUISITIONS

On March 1, 2004, the Company acquired the remaining outstanding shares of
3Clinical Research AG ("3C"), a clinical research organization with expertise in
Phase I and Phase IIa Proof-Of-Concept studies in Berlin, Germany, for $11.7
million in cash. Prior to March 1, 2004, PAREXEL was a minority shareholder of
3C. In connection with this transaction, the Company recorded as goodwill
approximately $8.1 million of excess cost over the fair value of the interest in
the net assets acquired.

During the first quarter of fiscal year 2004, the Company acquired an additional
10% investment interest in FARMOVS for approximately $1.0 million. FARMOVS is a
Clinical Pharmacology unit in South Africa. PAREXEL now has a 70% investment
interest in FARMOVS.

                                       26
<PAGE>

On January 31, 2003, the Company acquired 100% of the outstanding stock of FWPS
Group Limited (FW Pharma), a provider of software for clinical trial management
systems in Birmingham, United Kingdom, for approximately $11.9 million in the
form of a combination of cash and shares of the Company's common stock. The
Company originally issued an aggregate of 238,095 shares (valued at
approximately $3.0 million) of its common stock to stockholders of FWPS Group
Limited in connection with the acquisition. Of these shares, 32,854 shares were
surrendered back to the Company by FW Pharma stockholders pursuant to the
purchase price adjustment provisions of the purchase agreement between the
parties. Under the agreement, the Company agreed to make additional payments of
up to a maximum of $4.3 million in contingent purchase price if FW Pharma
achieved certain established financial and non-financial targets through January
31, 2005. As of June 30, 2004, the Company had made an additional $0.7 million
contingent purchase price payment in the form of cash and promissory notes. The
remaining maximum contingent obligation is $2.4 million. The promissory notes
were all paid in full by the Company as of August 18, 2004. In connection with
this transaction, the Company recorded approximately $10.1 million of excess
cost over the fair value of the interest in the net assets acquired as goodwill.

On October 28, 2002, the Company acquired the assets of Pracon & HealthIQ, a
provider of specialized sales and marketing services based in Reston, Virginia
and Orange, California, for approximately $1.7 million in cash. Pracon &
HealthIQ was a division of Excerpta Medica, Inc. In connection with this
transaction, the Company recorded approximately $1.6 million of excess cost over
the fair value of the interest in the net assets acquired as goodwill.

RESTRUCTURING CHARGES

During the year ended June 30, 2004, the Company recorded restructuring charges
totaling $10.8 million, 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 abandoned in June 2001.
These amounts were recorded in the quarter ended March 31, 2004.

During the year ended June 30, 2003, the Company recorded facilities-related
restructuring charges totaling $9.4 million, as a result of changes in
assumptions for leased facilities, which were previously abandoned in June 2001.
The changes in prior assumptions were caused by a further deterioration in
challenging real estate market conditions, which made it difficult to sub-lease
the abandoned facilities at previously estimated rental rates. In June 2001, the
Company made certain reasonable assumptions based upon market conditions, which
indicated that sub-lease payments for these abandoned facilities were probable.
The June 2001 restructuring charge involved fourteen properties. The Company has
been successful in exiting or subleasing eleven of those properties. After
significant effort in trying to sub-lease the remaining properties in a time of
a declining commercial real estate market, it became apparent to the Company
during fiscal year 2003 that the original assumptions for the remaining three
properties were no longer valid under current market conditions.

                                       27
<PAGE>

ANALYSIS BY SEGMENT

The Company evaluates its segment performance and allocates resources based on
service revenue and gross profit (service revenue less direct costs), while
other operating costs are evaluated on a geographical basis. Accordingly, the
Company does not include selling, general, and administrative expenses,
depreciation and amortization expense, interest income (expense), other income
(expense), and income taxes expense in segment profitability. Service revenue,
direct costs and gross profit on service revenue for fiscal years 2004, 2003,
and 2002 were as follows:

<TABLE>
<CAPTION>
                                                    2004 vs. 2003                      2003 vs. 2002
                                                 -------------------                -------------------
                                                  Increase       %                   Increase      %
($ IN THOUSANDS)          2004         2003      (Decrease)   Change      2002      (Decrease)   Change
                       ----------   ----------   ----------   ------   ----------   ----------   ------
                                     Restated                           Restated
<S>                    <C>          <C>          <C>          <C>      <C>          <C>          <C>
Service revenue:
  CRS                  $  309,341   $  312,847   $   (3,506)   -1.1%   $  261,727   $   51,120    19.5%
  PCG                     113,117      100,813       12,304    12.2%       94,534        6,279     6.6%
  MMS                      88,785       83,853        4,932     5.9%       75,213        8,640    11.5%
  Perceptive               35,973       24,800       11,173    45.1%       19,987        4,813    24.1%
                       ----------   ----------   ----------            ----------   ----------

                       $  547,216   $  522,313   $   24,903     4.8%   $  451,461   $   70,852    15.7%
                       ==========   ==========   ==========            ==========   ==========

Direct costs:
  CRS                  $  186,708   $  195,968   $   (9,260)   -4.7%   $  170,762   $   25,206    14.8%
  PCG                      85,472       80,311        5,161     6.4%       73,141        7,170     9.8%
  MMS                      64,913       55,741        9,172    16.5%       48,933        6,808    13.9%
  Perceptive               18,970       15,156        3,814    25.2%       15,873         (717)   -4.5%
                       ----------   ----------   ----------            ----------   ----------

                       $  356,063   $  347,176   $    8,887     2.6%   $  308,709   $   38,467    12.5%
                       ==========   ==========   ==========            ==========   ==========

Gross profit:
  CRS                  $  122,633   $  116,879   $    5,754     4.9%   $   90,965   $   25,914    28.5%
  PCG                      27,645       20,502        7,143    34.8%       21,393         (891)   -4.2%
  MMS                      23,872       28,112       (4,240)  -15.1%       26,280        1,832     7.0%
  Perceptive               17,003        9,644        7,359    76.3%        4,114        5,530   134.4%
                       ----------   ----------   ----------            ----------   ----------

                       $  191,153   $  175,137   $   16,016     9.1%   $  142,752   $   32,385    22.7%
                       ==========   ==========   ==========            ==========   ==========
</TABLE>

Certain fiscal year 2002 and 2003 amounts have been reclassified to conform to
the fiscal year 2004 presentation. Specifically, effective July 1, 2003, the
Company merged the Conferences and Publishing business of PCG with and into the
Meetings and Events business of MMS in order to eliminate duplication and
improve synergies. As a result, revenue and direct costs associated with these
businesses were moved from PCG to MMS. In addition, the Company combined certain
CRS and Corporate Information Technology groups into one organization led by the
Company's Corporate Information Systems group in order to capitalize on various
synergies in those areas. As a result, ongoing and historical expenses related
to CRS activities were shifted from CRS direct costs to selling, general and
administrative expenses. Additionally, these financials reflect
reclassifications of certain reimbursable expenses of PCG from "Reimbursement
Revenue" into "Service Revenue", and from "Reimbursable Out-of-Pocket Expenses"
into "Direct Costs." These reclassifications had no impact on the Company's
total revenue, expenses, operating income, net income, or balance sheet.

For additional financial information on a segment and geographic basis, see Note
17 to the consolidated financial statements included in Item 8 of this annual
report.

FISCAL YEAR ENDED JUNE 30, 2004 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30,
2003

Service revenue increased by $24.9 million, or 4.8%, to $547.2 million for the
fiscal year ended June 30, 2004 from $522.3 million for the fiscal year ended
June 30, 2003. On a geographic basis, service revenue for the fiscal year ended
June 30, 2004 was distributed as follows: The United States $247.3 million
(45.2%), Europe $276.1 million (50.5%), and Asia & Other $23.8 million (4.3%).
Service revenue for the fiscal year ended June 30, 2003 was distributed as
follows: The United States $265.6 million (50.8%), Europe $235.6 million
(45.1%), and Asia & Other $21.1 million (4.1%).

                                       28
<PAGE>

On a segment basis, CRS service revenue decreased by $3.5 million, or 1.1%, to
$309.3 million for the fiscal year ended June 30, 2004 from $312.8 million in
fiscal year 2003, as the result of a favorable $19.2 million effect of foreign
exchange fluctuations was more than offset by the impact of a relatively low
level of new business wins in the first half of calendar year 2003 and signing
of fewer favorable changes-in-scope in the quarter ended June 30, 2004 quarter.
PCG service revenue increased by $12.3 million, or 12.2%, to $113.1 million in
fiscal year 2004 from $100.8 million in fiscal year 2003. Approximately 10.5% of
the total 12.2% increase was attributed to the positive impact of foreign
currency fluctuations, with the remaining 1.7% due primarily to incremental
revenue from the 3C acquisition that was completed during the third quarter of
fiscal year 2004, partly offset by the impact of lower levels of FDA enforcement
activity on the group's GMP consulting business. MMS service revenue increased
by $4.9 million, or 5.9%, to $88.8 million in fiscal year 2004 from $83.9
million in the same period one year ago. The increase was due primarily to a
strong rebound in demand for the group's services during the second half of
fiscal year 2004, as well as the effect of the Pracon and HealthIQ acquisition
completed in the second quarter of fiscal year 2003. Perceptive service revenue
increased by $11.2 million, or 45.1%, to $36.0 million in fiscal year 2004, as
compared with $24.8 million in fiscal year 2003. Of the total 45.1% increase,
approximately 23.7% was attributed to incremental revenue associated with the FW
Pharma acquisition completed during the third quarter of fiscal year 2003, 16.2%
resulted from increased demand for the group's medical diagnostic imaging
services, and 5.2% was caused by the positive impact of foreign currency
fluctuations.

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

Direct costs increased by $8.9 million, or 2.6%, to $356.1 million in fiscal
year 2004 from $347.2 million in fiscal year 2003. On a segment basis, CRS
direct costs decreased by $9.3 million, or 4.7%, to $186.7 million in fiscal
year 2004 from $196.0 million in fiscal year 2003. The year-over-year decrease
in CRS direct costs was due primarily to a reduction in labor costs associated
with lower levels of revenue, tighter cost controls, and improved quality and
productivity, offset by a 5.9% increase due to the impact of foreign currency
fluctuations. As a percentage of service revenue, CRS direct costs for fiscal
year 2004 decreased by 2.2 percentage points to 60.4% in fiscal year 2004 from
62.6% in fiscal year 2003 due primarily to tighter cost controls and continued
improvements in quality and productivity. PCG direct costs increased $5.2
million, or 6.4%, to $85.5 million in fiscal year 2004 from $80.3 million in
fiscal year 2003. The total 6.4% increase was driven by foreign currency
fluctuations of approximately 10.0%, partially offset by a 3.6% decrease
resulting from tighter cost controls. As a percentage of service revenue, PCG
direct costs for the year ended June 30, 2004 decreased by 4.1 points to 75.6%
in fiscal year 2004 from 79.7% in the same period one year ago. MMS direct costs
increased $9.2 million, or 16.5%, to $64.9 million in fiscal year 2004 from
$55.7 million in fiscal year 2003. Of the total 16.5% increase, approximately
4.1% was attributed to increased costs as a result of foreign currency
fluctuations, with the remaining 12.4% due primarily to increased labor costs
associated with increased staffing needs to support an increased number of
projects serviced by the group. As a percentage of service revenue, MMS direct
costs increased by 6.6 points to 73.1% in fiscal year 2004 from 66.5% in the
same period one year ago primarily reflecting the increased costs described
above, coupled with a less favorable revenue mix and the impact of hiring in
anticipation of increased business. Perceptive direct costs increased by $3.8
million, or 25.2%, to $19.0 million in fiscal 2004 from $15.2 million in the
same period in the last fiscal year. Of the total 25.2% increase, approximately
4.4% was attributed to foreign currency fluctuations, 8.6% was caused by
incremental costs associated with the FW Pharma acquisition completed in January
2003, and 12.2% was due primarily to increased labor costs to support business
growth. As a percentage of service revenue, Perceptive's direct costs for the
year ended June 30, 2004 decreased by 8.4 points to 52.7% in fiscal 2004 from
61.1% in the same period one year ago due primarily to higher revenue and
continued productivity improvements.

Selling, general and administrative ("SG&A") expenses increased by $5.5 million,
or 4.4%, to $130.0 million in fiscal year 2004 from $124.5 million in fiscal
year 2003 due primarily to foreign currency fluctuations. As a percentage of
service revenue, SG&A was flat at 23.8% in both fiscal years 2004 and 2003.

Depreciation and amortization ("D&A") expense increased by $5.1 million, or
24.7%, to $25.8 million in fiscal year 2004 from $20.7 million in fiscal year
2003. Of the total 24.7% increase, 6.8% was attributed to incremental
amortization expense associated with intangible assets acquired through
acquisitions, 3.6% was attributed to impairment charges associated with
abandoned leased facilities and other fixed assets, and the remaining 14.3% was
due primarily to foreign currency fluctuations and increased capital spending.
As a percentage of service revenue, D&A was 4.7% in fiscal year 2004 and 4.0% in
fiscal year 2003.

The Company had 4,875 employees at the end of fiscal year 2004 and 5,095
employees at the end of fiscal year 2003. The decrease was due primarily to the
elimination of staff positions in an effort to reduce costs and improve
efficiency.

Income from operations increased by $4.0 million, or 19.4%, to $24.6 million in
fiscal 2004 from $20.6 million in fiscal year 2003 due primarily to an increased
level of restructuring charges and the reasons noted in the preceding
paragraphs. Income from operations improved by 0.6 points as a percentage of
service revenue to 4.5% in fiscal year 2004 from 3.9% in fiscal year 2003.

                                       29
<PAGE>

Total other income (loss) decreased by $0.9 million, or 45.1%, to $(1.2) million
in fiscal year 2004 from $(2.1) million in fiscal year 2003. The decrease was
due primarily to lower foreign currency exchange losses.

The Company had an effective income tax rate of 39.7% in fiscal year 2004 and
39.2% in fiscal year 2003. Tax rates are a function of profitability in the
various taxing jurisdictions in which the Company does business. During fiscal
year 2004, the Company released $1.3 million of tax accruals in conjunction with
the resolution of certain outstanding tax issues and the favorable results of
various tax audits. Without the release of these reserves, the Company's
effective income tax rate would have been higher. As of June 30, 2004, the
Company has tax loss carryforwards, tax effected, of $11.7 million that are
available to offset future tax liabilities based upon future profitability in
the different taxing jurisdictions in which PAREXEL operates.

FISCAL YEAR ENDED JUNE 30, 2003 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30,
2002

Service revenue increased by $70.9 million, or 15.7%, to $522.3 million for the
fiscal year ended June 30, 2003 from $451.5 million in fiscal year 2002. On a
geographic basis, service revenue for the fiscal year ended June 30, 2003 was
distributed as follows: The United States $265.6 million (50.8%), Europe $235.6
million (45.1%), and Asia & Other $21.1 million (4.1%). For the fiscal year
ended June 30, 2002, service revenue was distributed as follows: The United
States $252.6 million (55.9%), Europe $178.3 million (39.5%), and Asia & Other
$20.6 million (4.6%).

On a segment basis, CRS service revenue increased by $51.1 million, or 19.5%, to
$312.8 million for the fiscal year ended June 30, 2003 from $261.7 million in
fiscal year 2002. Of the total 19.5% increase, approximately 6.7% was attributed
to the positive impact of foreign currency fluctuations, with the remaining
12.8% due primarily to higher business volume in Phases IIIb and IV of the
clinical trials business, increases in activity with the biotech client sector
and the impact of changes in scope. PCG service revenue increased by $6.3
million, or 6.6%, to $100.8 million in the fiscal year ended June 30, 2003 from
$94.5 million in fiscal year 2002 due primarily to the positive impact of
foreign currency fluctuations. MMS service revenue increased by $8.6 million, or
11.5%, to $83.9 million in fiscal year 2003 from $75.2 million in the same
period one year ago. Of the total 11.5% increase, approximately 6.6% was
attributed to incremental revenue from the Pracon and HealthIQ acquisition
completed during the second quarter of fiscal year 2003, while the remaining
4.9% was caused by an increase in the number of projects serviced by the group.
Perceptive service revenue increased by $4.8 million, or 24.1%, to $24.8 million
in fiscal year 2003 as compared with $20.0 million in fiscal year 2002. Of the
total 24.1% increase, approximately 18.8% was attributed to incremental revenue
associated with the FW Pharma acquisition completed during the third quarter of
fiscal year 2004, 3.5% was attributed to the positive impact of foreign currency
fluctuations, and the remaining 1.8% was principally attributed to new business
growth in web, voice, and data product offerings.

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

Direct costs increased by $38.5 million, or 12.5%, to $347.2 million in fiscal
year 2003 from $308.7 million in fiscal year 2002. On a segment basis, CRS
direct costs increased by $25.2 million, or 14.8%, to $196.0 million for fiscal
year 2003 from $170.8 million in fiscal year 2002. Of the total 14.8% increase,
approximately 6.4% was attributed to increased costs as a result of foreign
currency fluctuations, and the remaining 8.4% was due primarily to higher labor
costs associated with business growth. As a percentage of service revenue, CRS
direct costs for fiscal year 2003 decreased by 2.6 percentage points to 62.6% in
fiscal year 2003 from 65.2% in fiscal year 2002 due primarily to improved
operational labor efficiencies, and leveraging of strong business growth. PCG
direct costs increased $7.2 million, or 9.8%, to $80.3 million in fiscal year
2003 from $73.1 in fiscal year 2002. Of the total 9.8% increase, approximately
1.6% was attributed to severance costs and the remaining 8.2% was due primarily
to increased costs as a result of foreign currency fluctuations. As a percentage
of service revenue, PCG direct costs for fiscal year 2003 increased by 2.4
percentage points to 79.7% in fiscal year 2003 from 77.3% in fiscal year 2002
due primarily to unfavorable business mix. MMS direct costs increased $6.8
million, or 13.9%, to $55.7 million in fiscal year 2003 from $48.9 million in
fiscal year 2002. Of the total 13.9% increase, approximately 5.5% was attributed
to the negative impact of foreign currency fluctuations, 4.6% was attributed to
incremental labor costs associated with the Pracon and HealthIQ acquisition, and
the remaining 3.8% was due primarily to increased labor costs associated with an
increased number of projects serviced by the group. As a percentage of service
revenue, MMS direct costs increased by 1.4 points to 66.5% in fiscal year 2003
from 65.1% in fiscal year 2002. Perceptive direct costs decreased by $0.7
million, or 4.5%, to $15.2 million in fiscal year 2003 from $15.9 million in
fiscal year. An incremental increase in direct costs associated with the FW
Pharma acquisition of approximately 4.9% was offset by a decrease in physician
reader costs and lower labor costs. As a percentage of service revenue,
Perceptive's direct costs for fiscal year 2003 decreased by 18.3 percentage
points to 61.1% in fiscal year 2003 from 79.4% in the same period one year ago,
due primarily to a more favorable business mix, lower physician reader costs,
and better labor cost leveraging.

                                       30
<PAGE>

SG&A expenses increased by $20.1 million, or 19.3%, to $124.5 million in fiscal
year 2003 from $104.4 million in fiscal year 2002. Of the total 19.3% increase,
approximately 8.7% was caused by foreign currency fluctuations, and
approximately 2.6% was attributed to incremental expenses associated with the
Pracon & HealthIQ and FW Pharma acquisitions, while the remaining 8.0% increase
was driven primarily by increased selling and marketing expenses, higher
research and development costs and the impact of recording $2.4 million in
severance costs. As a percentage of service revenue, SG&A expenses increased by
0.7 percentage points to 23.8% in the fiscal year ended June 30, 2003 as
compared with 23.1% in the fiscal year ended June 30, 2002.

The Company had 5,095 employees at the end of fiscal year 2003 and 4,930
employees at the end of fiscal year 2002. The increase was due primarily to the
acquisitions of Pracon & HealthIQ and FW Pharma, as well as hiring of additional
employees to support revenue growth.

D&A expense increased by $2.8 million, or 15.4 %, to $20.7 million in fiscal
year 2003 from $17.9 million in fiscal year 2002 due primarily to higher
expenses as a result of foreign currency fluctuations and an increase in capital
spending of $6.2 million over fiscal year 2002. As a percentage of service
revenue, D&A was 4.0% for fiscal years 2003 and 2002.

Income from operations increased marginally to $20.6 million in fiscal year 2003
from $20.5 million one year ago. Income from operations decreased as a
percentage of service revenue to 3.9% in fiscal year 2003 from 4.5% in the
fiscal year 2002 due to the reasons noted in the preceding paragraphs.
Facilities-related restructuring charges of $9.4 million recorded during the
fiscal year 2003 had an adverse impact on operating margin of 1.8 points.

Total other income/(loss) was $(2.1) million in fiscal year 2003 and $2.4
million in fiscal year 2002. The decrease was due primarily to a year-over-year
increase in foreign exchange losses of $4.5 million, as a result of a weakening
of the U.S. dollar versus both the British Pound and the Euro.

The Company had an effective income tax rate of 39.2% in fiscal year 2003
compared with 39.3% in fiscal year 2002. Any future changes in the mix of
taxable income in the different jurisdictions in which the Company operates
could materially impact the Company's effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations and growth,
including acquisition costs, with cash flow from operations and proceeds from
the sale of equity securities. Investing activities primarily reflect
acquisition costs and capital expenditures for information systems enhancements.

Approximately 85.0% of the Company's contracts are fixed price, with some
variable components, and range in duration from a few months to several years.
Cash flow from these contracts typically consists of a down payment required to
be paid at the time of contract execution with the balance due in installments
over the contract's duration, usually on a milestone achievement basis. Revenue
from these contracts is generally recognized as work is performed. As a result,
cash receipts do not necessarily correspond to costs incurred and revenue
recognized on contracts.

DAYS SALES OUTSTANDING

The Company's operating cash flow is heavily influenced by changes in billed and
unbilled receivables and deferred revenue. These account balances as well as
days sales outstanding in accounts receivable, net of deferred revenue, can vary
based on contractual milestones and the timing and size of cash receipts. Days
sales outstanding ("DSO") in accounts receivable, net of deferred revenue, was
36 days at June 30, 2004 compared with 45 days at June 30, 2003. The decrease in
DSO as of June 30, 2004 as compared with June 30, 2003 was due primarily to
improved billing practices and increased collection activities, as well as a
higher level of deferred revenue. Accounts receivable, net of the allowance for
doubtful accounts, was $222.0 million ($127.5 million in billed accounts
receivable and $94.5 million in unbilled accounts receivable) at June 30, 2004
and $222.7 million ($144.0 million in billed accounts receivable and $78.7
million in unbilled accounts receivable) at June 30, 2003. Deferred revenue was
$145.4 million at June 30, 2004 and $130.7 million at June 30, 2003. Days sales
outstanding is calculated by adding the end-of-period balances for billed and
unbilled account receivables, net of deferred revenue and allowances for
doubtful accounts, then dividing the resulting amount by gross revenue (service
revenue, reimbursement revenue, and investigator fees) for the most recent
quarter, and multiplying the resulting fraction by the number of days in the
quarter.

                                       31
<PAGE>

CASH FLOWS

Net cash provided by operating activities for the fiscal year 2004 totaled $50.2
million and was generated from $13.8 million of net income, $25.8 million
related to non-cash charges for depreciation and amortization expense, $15.8
million associated with a decrease in accounts receivable (net of allowance for
doubtful accounts and deferred revenue), and a $7.5 million decrease in deferred
tax assets and other sources, offset by a $10.1 million decrease in accounts
payable, other current liabilities and other liabilities, and a $2.6 million
increase in prepaid expenses and other assets. Net cash provided by operating
activities for the fiscal year 2003 totaled $47.8 million and was generated from
$10.7 million of net income, $20.7 million related to depreciation and
amortization expense, a $15.4 million decrease in accounts receivable (net of
allowance of doubtful accounts and deferred revenue), a $9.4 million increase in
various current and non-current liabilities, and $0.6 million in minority
interest in net income of a consolidated subsidiary, offset by a $4.1 million
increase in other assets, a $3.4 million increase in deferred tax assets, and a
$1.5 million increase in prepaid and other current assets.

Net cash used by investing activities for fiscal year 2004 totaled $63.0
million, and consisted primarily of $27.8 million of equipment purchases
(primarily for software and hardware), $21.9 million of net purchases of
marketable securities (net of proceeds from sale of securities), and $13.4
million used for the acquisition of 3C. Net cash used by investing activities
for fiscal year 2003 totaled $10.0 million and consisted principally of $30.0
million used for capital expenditures (mainly computer software/hardware and
leasehold improvements) and $11.1 million used for the acquisitions of Pracon &
HealthIQ and FW Pharma, partly offset by $30.6 million of net proceeds from the
sale of marketable securities (net of security purchases).

Net cash used in financing activities for fiscal year 2004 totaled $0.1 million
as $7.4 million generated from the issuance of common stock in connection with
the Company's stock option and employee stock purchase plans and $0.5 million
from borrowings under lines-of-credit were essentially offset by $8.1 million
used to repurchase the Company's common stock pursuant to its stock repurchase
program. Net cash provided by financing activities for the fiscal year 2003
totaled $3.7 million and was primarily generated by proceeds from the issuance
of common stock in conjunction with the Company's stock option and employee
stock purchase plans.

LINES OF CREDIT

The Company has a line of credit with ABN AMRO Bank, NV in the amount of Euro
12.0 million. This line-of-credit is not collateralized, is payable on demand,
and bears interest at a rate ranging between 3% to 5%. The line-of-credit may be
revoked or cancelled by the Bank at any time at their discretion The Company
primarily entered into this line-of-credit to facilitate business transactions
with the bank. At June 30, 2004, the Company had approximately Euro 12.0 million
available under this line of credit.

The Company has other foreign lines-of-credit with banks totaling approximately
$1.8 million. These lines are used as overdraft protection and bear interest at
rates ranging from 4% to 6%. The lines of credit are payable on demand and are
supported by PAREXEL International Corporation. At June 30, 2004, the Company
had approximately $1.8 million available under these credit arrangements.

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

FINANCING NEEDS

The Company's primary cash needs are for the payment of salaries and fringe
benefits, hiring and recruiting expenses, business development costs,
acquisition-related costs, capital expenditures, and facilities-related
expenses. The Company's principal source of cash is from contracts with clients.
If the Company is unable to generate new contracts with existing and new clients
and/or if the level of contract cancellations increases, revenue and cash flow
will be adversely affected (see "Risk Factors" for further detail). Absent a
material adverse change in the level of the Company's new business bookings or
contract cancellations, PAREXEL believes that its existing capital resources
together with cash flow from operations and borrowing capacity under existing
lines of credit will be sufficient to meet its foreseeable cash needs over the
next 12 months and on a longer term basis.

                                       32
<PAGE>

In the future, the Company expects to consider acquiring businesses to enhance
its service offerings, expand its therapeutic expertise, and/or increase its
global presence. Any such acquisitions may require additional external
financing, and the Company may from time to time seek to obtain funds from
public or private issuance of equity or debt securities. The Company may be
unable to secure such financing on terms acceptable to the Company.

The Company expects capital expenditures to total approximately $25.0 million in
fiscal year 2005.

On September 9, 2004, the Board of Directors approved a new stock repurchase
program authorizing the purchase of up to $20 million of the Company's common
stock to be repurchased in the open market subject to market conditions.

CONTINGENT LIABILITIES AND GUARANTEES

The Company's contractual obligations and commitments for fiscal years
subsequent to June 30, 2004 are as follows:

<TABLE>
<CAPTION>
($IN THOUSANDS)           2005         2006         2007         2008         2009      Thereafter      Total
                       ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Operating leases       $   30,250   $   26,330   $   23,006   $   21,058   $   16,873   $   53,985   $  171,502
Obligations under
  capital leases              105          114           92            -            -            -          311
                       ----------   ----------   ----------   ----------   ----------   ----------   ----------
Total                  $   30,355   $   26,444   $   23,098   $   21,058   $   16,873   $   53,985   $  171,813
                       ==========   ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>

In association with the FW Pharma acquisition as discussed in Note 3 to the
consolidated financial statements included in Item 8 of this annual report, as
of June 30, 2004, the Company is obligated to make a maximum additional payments
of $2.4 million in contingent purchase price if FW Pharma achieves certain
established financial targets through January 31, 2005.

The Company has letter-of-credit agreements with banks totaling approximately
$1.0 million guaranteeing performance under various operating leases and vendor
agreements.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the Company's financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to the
Company.

FOREIGN CURRENCY EXCHANGE RATES

The Company derived approximately 55.0% of its service revenue for fiscal year
2004, 49.0% of its service revenue for fiscal year 2003 and 43.0% of its service
revenue for fiscal year 2002, from operations outside of the U.S. The Company
does not have significant operations in countries in which the economy is
considered to be highly inflationary. The Company's financial statements are
denominated in U.S. dollars. Accordingly, changes in exchange rates between
foreign currencies and the U.S. dollar will affect the translation of financial
results into U.S. dollars for purposes of reporting the Company's consolidated
financial results.

The Company may be subjected to foreign currency transaction risk when the
Company's foreign subsidiaries enter into contracts denominated in a currency
other than the foreign subsidiary's functional (local) currency. To the extent
the Company is unable to shift the effects of currency fluctuations to its
clients, foreign exchange fluctuations as a result of currency exchange losses
could have a material effect on the Company's results of operations. The Company
has implemented a derivative hedging policy during the fourth quarter of fiscal
year 2004 to hedge certain foreign denominated accounts receivable and
intercompany payables. Derivatives are accounted for in accordance with FAS No.
133 "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133").

The Company occasionally enters into other currency exchange contracts to offset
the impact of currency fluctuations. These currency exchange contracts are
entered into as economic hedges, but are not designated as hedges for accounting
purposes as defined under FAS 133. The Company does not expect gains or losses
on these contracts to have a material impact on its financial results. During
fiscal years 2004 and 2003, the Company recorded foreign-exchange losses of $1.8
million and $1.9 million, respectively.

                                       33
<PAGE>

INFLATION

The Company believes the effects of inflation generally do not have a material
adverse impact on its operations or financial condition.

RELATED PARTY TRANSACTIONS

During the third quarter of fiscal year 2004, the Company disposed of a small
business by closing an asset sale arrangement with a former non-officer
employee. In association with the transaction, the buyer issued a four-year
promissory note to the Company. Payments on the promissory note are due on a
quarterly basis, commencing on June 30, 2004. All gains and losses from this
transaction have been deferred until the promissory note is paid in full.

During the first quarter of fiscal year 2004, an officer of the Company
exercised a stock option for 60,000 shares of the Company's common stock and
surrendered to the Company 25,714 shares of the Company's common stock as
payment of the exercise price. The shares surrendered were owned by the officer
for more than six months and their value was set by the closing price per share
of the Company's common stock as quoted on the NASDAQ National Market for the
last trading day immediately preceding the date of exercise. The officer elected
to defer receipt of 34,286 of the option shares exercised pursuant to the
Company's Non-Qualified Deferred Compensation Plan. There was no compensation
expense recorded in association with this transaction and all of the shares of
common stock are issued and outstanding.

The Company contributed the shares of stock of FWPS Group Limited, a company
organized under the laws of the United Kingdom, which it acquired in January
2003, to its majority owned subsidiary, Perceptive Informatics, Inc., in July
2003. Perceptive issued shares of common stock to PAREXEL International Trust, a
wholly owned subsidiary of the Company, as consideration for this contribution.
As a result of the transaction, the Company's ownership in Perceptive increased
from 97.4% to 98.2% in July 2003. Certain executive officers and directors of
the Company own 0.87% of the issued and outstanding common stock of Perceptive.
The terms of this transaction were approved by an independent committee of the
Board of Directors of the Company, the members of which neither serve as
Director of, nor own any shares of stock of, Perceptive and using a valuation
prepared by an independent third party.

During the years ended June 30, 2004 and 2003, certain members of the Company's
Board of Directors were affiliated with companies in which PAREXEL is a minority
shareholder. The total sum of all of these investments by PAREXEL was $0.9
million.

RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2003, the Emerging Issues Task Force ("EITF") issued EITF No. 03-1.
The Meaning of Other-Than-Temporary Impairment and its Application to Certain
Investments. EITF No. 03-1 requires new tabular and narrative disclosure items
effective for fiscal years ending after December 15, 2003. Companies are
required to provide expanded information about their debt and marketable
securities with market values below carrying values. The narrative information
must include positive and negative information management considered in
concluding the unrealized loss was not other-than-temporary and therefore was
not recognized in earnings. The Company's adoption of ETIF No. 03-1 is not
expected to require additional disclosure.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

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

FOREIGN CURRENCY EXCHANGE RATES

The Company may be subjected to foreign currency transaction risk when the
Company's foreign subsidiaries enter into contracts or incur liabilities
denominated in a currency other than the foreign subsidiary's functional
currency. For the year ended June 30, 2004, approximately 18.3% of total service
revenue was denominated in British pounds and approximately 32.2% of total
service revenue was denominated in Euros. The Company has implemented a
derivative policy during the fourth quarter of fiscal year 2004 to hedge certain
foreign denominated accounts receivable and intercompany payables. Derivatives
are accounted for in accordance with FAS 133.

                                       34
<PAGE>

Occasionally, the Company enters into other foreign currency exchange contracts
to offset the impact of currency fluctuations. These currency exchange contracts
are entered into as economic hedges, but are not designated as hedges for
accounting purposes as defined under FAS 133. The notional contract amount of
these outstanding currency exchange contracts was approximately $10.4 million at
June 30, 2004. The potential gain or loss in the fair value of these currency
exchange contracts that would result from a hypothetical change of 10% in
exchange rates would be approximately $1.1 million.

INTEREST RATES

The Company's exposure to interest rate changes is minimal as the level of
long-term debt the Company has is minimal. Long-term debt was approximately $0.5
million as of June 30, 2004 and $0.6 million as of June 30, 2003.

                                       35
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                        PAREXEL INTERNATIONAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                FOR THE YEARS ENDED JUNE 30,
                                              2004          2003          2002
                                           ----------    ----------    ----------
                                                          Restated      Restated
<S>                                        <C>           <C>           <C>
Service revenue                            $  547,216    $  522,313    $  451,461
Reimbursement revenue                         111,387        96,902       113,463
                                           ----------    ----------    ----------

TOTAL REVENUE                                 658,603       619,215       564,924

Costs and expenses:
Direct costs                                  356,063       347,176       308,709
Reimbursable out-of-pocket expenses           111,387        96,902       113,463
Selling, general and administrative           129,989       124,502       104,366
Depreciation and amortization                  25,762        20,656        17,893
Restructuring charges                          10,796         9,374             -
                                           ----------    ----------    ----------

TOTAL COSTS                                   633,997       598,610       544,431
                                           ----------    ----------    ----------

INCOME FROM OPERATIONS                         24,606        20,605        20,493

Interest income                                 5,550         4,403         2,693
Interest expense                               (4,686)       (3,240)       (1,452)
Other income (loss), net                       (2,027)       (3,281)        1,200
                                           ----------    ----------    ----------

TOTAL OTHER INCOME (LOSS)                      (1,163)       (2,118)        2,441

Income before provision for income taxes
  and minority interest                        23,443        18,487        22,934
Provision for income taxes                      9,313         7,250         9,013
Minority interest                                 339           575           686
                                           ----------    ----------    ----------

NET INCOME                                 $   13,791    $   10,662    $   13,235
                                           ==========    ==========    ==========

Earnings per share:
Basic                                      $     0.53    $     0.42    $     0.53
Diluted                                    $     0.51    $     0.42    $     0.52

Weighted average shares
Basic                                          26,010        25,371        24,928
Diluted                                        26,795        25,683        25,582
</TABLE>

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

                                       36
<PAGE>

                        PAREXEL INTERNATIONAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                            AS OF JUNE 30,
                                                                         2004            2003
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
                                  ASSETS

Current assets:
 Cash and cash equivalents                                           $     60,686    $     69,734
 Marketable securities (Note 4)                                            34,921          12,990
 Billed and unbilled accounts receivable, net (Note 5)                    221,956         222,726
 Prepaid expenses                                                          11,681          12,087
 Current deferred tax assets                                               29,710          27,604
 Income tax receivable                                                      1,834               -
 Other current assets                                                       4,694           4,936
                                                                     ------------    ------------
       Total current assets                                               365,482         350,077

Property and equipment, net (Note 6)                                       68,983          61,924
Goodwill (Note 2)                                                          41,002          29,803
Other intangible assets, net (Note 2)                                      10,636           5,763
Non-current deferred tax assets                                            10,160          10,043
Other assets                                                                6,733           6,627
                                                                     ------------    ------------
       Total assets                                                  $    502,996    $    464,237
                                                                     ============    ============
                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Notes payable and current portion of long-term debt                 $        768    $        118
 Accounts payable                                                          15,917          14,462
 Deferred revenue                                                         145,409         130,650
 Accrued expenses                                                          14,805          13,766
 Accrued restructuring charges (Note 7)                                     5,481           8,750
 Accrued employee benefits and withholdings                                28,577          37,849
 Current deferred tax liabilities                                           4,424           2,557
 Income taxes payable                                                           -           1,801
 Other current liabilities                                                  4,693           5,778
                                                                     ------------    ------------
       Total current liabilities                                          220,074         215,731
Long-term debt                                                                471             644
Non-current deferred tax liabilities                                       18,100          10,674
Long-term accrued restructuring charges (Note 7)                            7,944               -
Other liabilities                                                           5,886           6,092
                                                                     ------------    ------------
       Total liabilities                                                  252,475         233,141
                                                                     ------------    ------------
Commitments and contingencies (Note 15)
Minority interest in subsidiary                                             3,761           3,996
Stockholders' equity:

    Preferred stock--$.01 par value; shares authorized:
      5,000,000 at June 30, 2004 and June 30, 2003; Series A
      Junior Participating Preferred Stock - 50,000 shares
      designated, none issued and outstanding

    Common stock--$.01 par value; shares authorized:
      50,000,000 at June 30, 2004 and 2003; shares issued:
      26,522,178 and 26,683,055 at June 30, 2004 and 2003,
      respectively; shares outstanding: 26,077,078 and 25,822,055
      at June 30, 2004 and 2003, respectively                                 275             267
 Additional paid-in capital                                               175,126         174,734
 Treasury stock, shares at cost; 445,100 and 861,000 shares
   at June 30, 2004 and 2003, respectively                                 (8,056)         (8,165)
 Retained earnings                                                         76,908          63,117
 Accumulated other comprehensive income (loss)                              2,507          (2,853)
                                                                     ------------    ------------
     Total stockholders' equity                                           246,760         227,100
                                                                     ------------    ------------
         Total liabilities and stockholders' equity                  $    502,996    $    464,237
                                                                     ============    ============
</TABLE>

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

                                       37
<PAGE>

                       PAREXEL INTERNATIONAL CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                                       Accum.
                                                        Common Stock                                    Other
                                              --------------------------------             Retained    Compre-     Total    Compre-
                                                                    Additional  Treasury   Earnings    hensive    Stock-    hensive
                                                 Number      Par     Paid-in     Stock,     (Accum.     Income    holders'  Income/
                                               Of Shares    Value    Capital     At Cost    Deficit)    (Loss)     Equity   (Loss)
                                              ----------    -----   ----------  --------   ---------  ---------   --------  -------
<S>                                           <C>           <C>     <C>         <C>        <C>        <C>         <C>       <C>
Balance at June 30, 2001                      24,775,220    $ 257   $  164,141  $ (8,165)  $  39,220  $ (17,631)  $177,822  $(8,529)
                                                                                                                            =======

Shares issued under stock option/purchase
  plans                                          397,588        4        3,263                                       3,267
Income tax benefit from exercise
  of stock options                                                         425                                         425
Foreign currency translation adjustment                                                                   5,328      5,328    5,328
Net income                                                                                    13,235                13,235   13,235
                                              ----------    -----   ----------  --------   ---------  ---------   --------  -------

Balance at June 30, 2002                      25,172,808    $ 261   $  167,829  $ (8,165)  $  52,455  $ (12,303)  $200,077  $18,563
                                                                                                                            =======

Shares issued under stock option/purchase
  plans                                          411,152        4        3,797                                       3,801
Shares issued for acquisitions                   238,095        2        2,887                                       2,889
Income tax benefit from exercise
  of stock options                                                         221                                         221
Foreign currency translation adjustment                                                                   9,450      9,450    9,450
Net income                                                                                    10,662                10,662   10,662
                                              ----------    -----   ----------  --------   ---------  ---------   --------  -------

Balance at June 30, 2003                      25,822,055    $ 267   $  174,734  $ (8,165)  $  63,117  $  (2,853)  $227,100  $20,112
                                                                                                                            =======
Shares issued under stock option/purchase
  plans                                          769,952        8        7,414                                       7,422
Shares issued under subsidiary option plan                                  64                                          64
Shares surrendered for the exercise of stock
  options                                        (25,714)                  450      (450)                                -
Share surrendered for the settlement of an
  outstanding non-trade receivable               (11,261)                           (177)                             (177)
Shares repurchased in the open market           (445,100)                         (8,056)                           (8,056)
Adjustment to shares issued for acquisition      (32,854)
Re-designated shares to authorized but not
  issued shares                                                         (8,792)    8,792
Income tax benefit from exercise of stock
  options                                                                1,256                                       1,256
Net unrealized loss on marketable securities                                                                (98)       (98)     (98)
Foreign currency translation adjustment                                                                   5,458      5,458    5,458
Net income                                                                                    13,791                13,791   13,791
                                              ----------    -----   ----------  --------   ---------  ---------   --------  -------
Balance at June 30, 2004                      26,077,078    $ 275   $  175,126  $ (8,056)  $  76,908  $   2,507   $246,760  $19,151
                                              ==========    =====   ==========  ========   =========  =========   ========  =======
</TABLE>

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

                                       38
<PAGE>

                        PAREXEL INTERNATIONAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                           FOR THE YEARS ENDED JUNE 30,
                                                                         2004          2003          2002
                                                                      ----------    ----------    ----------
<S>                                                                   <C>           <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income                                                            $   13,791    $   10,662    $   13,235
Adjustments to reconcile net income to net cash provided (used)
  by operating activities:
    Minority interest in net income of consolidated subsidiary               339           575           686
    Depreciation and amortization                                         25,762        20,656        17,893
    (Gain) loss on disposal of assets                                        157           122          (963)
    Deferred income taxes                                                  7,070        (3,379)       (6,206)
    Allowance for doubtful accounts                                       (1,798)        1,391            47

Change in assets and liabilities, net of effects from acquisitions:
  Accounts receivable                                                      3,844         3,114       (16,911)
  Prepaid expenses and other current assets                                1,626        (1,469)       (1,962)
  Other assets                                                            (4,256)       (4,144)         (737)
  Accounts payable                                                         1,259         2,935       (14,727)
  Deferred revenue                                                        13,772        10,904        20,614
  Other current liabilities                                              (18,954)        5,445        10,205
  Other liabilities                                                        7,561         1,005         1,140
                                                                      ----------    ----------    ----------
Net cash provided by operating activities                                 50,173        47,817        22,314
                                                                      ----------    ----------    ----------

CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of marketable securities                                      (159,706)     (204,589)     (364,594)
Proceeds from sale of marketable securities                              137,775       235,229       324,323
Purchases of property and equipment                                      (27,823)      (29,985)      (23,808)
Acquisition of business, net of cash acquired                            (13,422)      (11,131)       (1,793)
Proceeds from sale of assets                                                 143           488         1,945
                                                                      ----------    ----------    ----------
Net cash used in investing activities                                    (63,033)       (9,988)      (63,927)
                                                                      ----------    ----------    ----------

CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock                                     7,422         3,801         3,267
Payments to repurchase common stock                                       (8,056)            -             -
Borrowings (repayments) under lines of credit and long-term debt             477           (92)           45
Proceeds from issuance of subsidiary's common stock                           64             -             -
                                                                      ----------    ----------    ----------
Net cash provided (used) by financing activities                             (93)        3,709         3,312
                                                                      ----------    ----------    ----------

Effect of exchange rate changes on cash and cash equivalents               3,905         5,717         3,190
                                                                      ----------    ----------    ----------

Net increase (decrease) in cash and cash equivalents                      (9,048)       47,255       (35,111)
Cash and cash equivalents at beginning of year                            69,734        22,479        57,590
                                                                      ----------    ----------    ----------

Cash and cash equivalents at end of year                              $   60,686    $   69,734    $   22,479
                                                                      ==========    ==========    ==========
</TABLE>

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

                                       39
<PAGE>

                        PAREXEL INTERNATIONAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                            FOR THE YEARS ENDED JUNE 30,
                                                          2004          2003          2002
                                                       ----------    ----------    ----------
<S>                                                    <C>           <C>           <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for:
  Interest                                             $    4,585    $    3,236    $    1,448
                                                       ==========    ==========    ==========

  Income taxes                                         $    2,838    $   16,343    $    9,975
                                                       ==========    ==========    ==========

SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING ACTIVITIES:

Asset purchased under capital lease                             -             -    $      525
                                                       ==========    ==========    ==========

Fair value of assets acquired and goodwill             $   17,501    $   21,294    $    2,928
Liabilities and minority interest assumed                  (4,079)       (7,213)       (1,135)
                                                       ----------    ----------    ----------
  Cash paid and common stock issued for acquisitions   $   13,422    $   14,081    $    1,793
                                                       ==========    ==========    ==========

SUPPLEMENTAL DISCLOSURES OF NON-CASH
FINANCING ACTIVITIES:

Income tax benefit from exercise of stock options      $    1,256    $      221    $      425
                                                       ==========    ==========    ==========
</TABLE>

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

                                       40
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS

The Company is a leading bio/pharmaceutical services company, providing a broad
range of expertise in clinical research, medical marketing, consulting and
informatics and advanced technology products and services to the worldwide
pharmaceutical, biotechnology, and medical device industries. The Company's
primary objective is to provide solutions for managing the bio/pharmaceutical
product lifecycle with the goal of reducing the time, risk and cost associated
with the development and commercialization of new therapies. Since its founding
in 1983, PAREXEL has developed significant expertise in processes and
technologies supporting this strategy. The Company's product and service
offerings include: clinical trials management, data management, biostatistical
analysis, medical marketing, clinical pharmacology, patient recruitment,
regulatory and medical consulting, health policy and reimbursement, performance
improvement, industry training and publishing, medical imaging services, IVRS,
CTMS, web-based portals, systems integration, patient diary applications, and
other drug development consulting services. The Company believes that its
comprehensive services, depth of therapeutic area expertise, global footprint
and related access to patients, and sophisticated information technology, along
with its experience in global drug development and product launch services,
represent key competitive strengths.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of PAREXEL
International Corporation, its wholly owned and majority-owned subsidiaries. All
significant inter-company accounts and transactions have been eliminated.

RECLASSIFICATIONS

Certain fiscal year 2003 amounts have been reclassified to conform to the fiscal
year 2004 presentation. Specifically, effective July 1, 2003, the Company merged
the Conferences and Publishing business of PCG with and into the Meetings and
Events business of MMS in order to eliminate duplication and improve synergies.
As a result, revenue and direct costs associated with these businesses were
moved from PCG to MMS. In addition, the Company combined certain CRS and
Corporate Information Technology groups into one organization led by the
Company's Corporate Information Systems group in order to capitalize on various
synergies in those areas. As a result, ongoing and historical expenses related
to CRS activities were shifted from CRS direct costs to selling, general and
administrative expenses. Additionally, these financials reflect
reclassifications of certain reimbursable expense of PCG from "Reimbursement
Revenue" into "Service Revenue", and from "Reimbursable Out-of-Pocket Expenses"
into "Direct Costs." The reclassification had no impact to the Company's total
revenue, expenses, operating income, net income, or balance sheet.

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses, and
disclosures of contingent assets and liabilities. Actual results may differ from
those estimates.

REVENUE RECOGNITION

In the Company's CRS, PCG and MMS business units, fixed-price contract revenue
is recognized as services are performed. The Company measures progress for fixed
price contracts using the concept of proportional performance based upon a unit
based output method. Under the unit based output method, output units are
predefined in the contract and revenue is recognized based upon completion of
such output units.

In the Company's Perceptive business unit, software revenue is recognized based
on percentage of completion in accordance with Statement of Position ("SOP")
97-2 "Software Revenue Recognition" and the relevant guidance provided by SOP
81-1 "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts", due to the significant nature of customization of
each project.

                                       41
<PAGE>

Revenue related to contract modifications is recognized when realization is
assured and the amounts are reasonably determinable. Adjustments to contact cost
estimates are made in the periods in which the facts that require the revisions
become known. When the revised estimates indicate a loss, such loss is provided
in the current period in its entirety. Unbilled accounts receivable represent
revenue recognized in excess of amounts billed. Deferred service revenue
represents amounts billed in excess of revenue recognized.

Reimbursable out-of-pocket expenses are reflected in the Company's Consolidated
Statements of Operations under "Reimbursement Revenue" and "Reimbursable
Out-of-Pocket Expenses".

As is customary in the industry, the Company routinely subcontracts on behalf of
its clients with independent physician investigators in connection with clinical
trials. These investigator fees are not reflected in PAREXEL's Service Revenue,
Reimbursement Revenue, Reimbursable Out-of-Pocket Expenses, and/or Direct Costs,
since such fees are reimbursed by clients on a "pass through basis", without
risk or reward to the Company. The amounts of these investigator fees were $92.5
million, $78.6 million and $74.6 million for the fiscal years ended June 30,
2004, 2003 and 2002, respectively.

CASH, CASH EQUIVALENTS, MARKETABLE SECURITIES, AND FINANCIAL INSTRUMENTS

The Company considers all highly liquid investments purchased with original
maturities of 30 days or less to be cash equivalents. Marketable securities
include securities purchased with original maturities of greater than 30 days.
Marketable securities are classified as "available for sale" and are carried at
fair market value, which approximates amortized cost.

CONCENTRATION OF CREDIT RISK

Financial instruments, which may potentially expose the Company to
concentrations of credit risk, include trade accounts receivable. However, the
Company maintains reserves for potential credit losses and such losses, in the
aggregate, have not exceeded management expectations. In fiscal year 2004, the
Company's largest client accounted for 8% of consolidated service revenue. In
fiscal years 2003 and 2002, one client, AstraZeneca PLC, accounted for 11% of
consolidated service revenue. The accounts receivable balance for AstraZeneca
PLC was $28.2 at June 30, 2003 and $23.4 million at June 30, 2002.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

PAREXEL establish a specific allowance for customers when the Company becomes
aware that they will not meet their financial obligation. Customer accounts are
reviewed individually on a regular basis and appropriate reserves are
established as deemed appropriate.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. Depreciation is provided on the
straight-line method based on estimated useful lives of 40 years for buildings,
3 to 8 years for computer hardware and software, and 5 years for office
furniture, fixtures and equipment. Leasehold improvements are amortized over the
lesser of the estimated useful lives of the improvements or the remaining lease
term. Repair and maintenance costs are expensed as incurred.

DEVELOPMENT OF SOFTWARE FOR INTERNAL USE

The Company accounts for the costs of computer software developed or obtained
for internal use in accordance with Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" (SOP 98-1). The Company capitalizes costs of materials,
consultants and payroll and payroll related costs for employees incurred in
developing internal-use software. These costs are included in computer software
in Note 6 below and the amount was $33.7 million at June 30, 2004 and $26.7
million at June 30, 2003. Costs incurred during the preliminary project and
post-implementation stages are charged to expense.

                                       42
<PAGE>

RESEARCH AND DEVELOPMENT COSTS

The Company incurs ongoing research and development costs related to core
technologies used internally as well as software and technology sold externally.
Unless eligible for capitalization, these costs are expensed as incurred.
Research and development expense was $4.0 million and $2.2 million in fiscal
year 2004 and 2003, respectively, and is included in Selling, General and
Administrative expenses in the consolidated statements of operations.

ADVERTISING COSTS

All advertising costs are expensed as incurred. Advertising expense was $2.6
million and $2.2 million in fiscal years 2004 and 2003, respectively.

GOODWILL

Effective July 1, 2002, the Company adopted the provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets". Under this statement, goodwill as well
as certain other intangible assets, determined to have an indefinite life, are
no longer amortized. Instead, these assets are reviewed for impairment at least
annually or more frequently if an event occurs or circumstances change that
would more likely than not reduce the carrying value of the reporting unit below
its fair value. The Company has performed its annual impairment test, with no
evidence of impairment to the Company's goodwill for fiscal years 2004 and 2003.

The changes in the carrying amount of goodwill for fiscal years 2004 and 2003
were as follows (in thousands):

<TABLE>
<S>                                                                       <C>
Carrying amount as of June 30, 2002                                       $ 12,257
Add: Pracon & HealthIQ                                                       1,632
         FW Pharma                                                           9,445
         Effect of change in rates used for translation and adjustments      6,469
                                                                          --------

Carrying amount as of June 30, 2003                                       $ 29,803

Add: FW Pharma                                                                 703
         3 Clinical Research                                                 8,056
         Effect of change in rates used for translation and adjustments      2,440
                                                                          --------

Carrying amount as of June 30, 2004                                       $ 41,002
                                                                          ========
</TABLE>

INTANGIBLE ASSETS

Intangible assets consist primarily of technology and customer lists acquired
through acquisitions completed by the Company in fiscal years 2004 and 2003.
(see Note 3 of these notes to the consolidated financial statements below). The
estimated useful lives for all intangible assets are between 3 to 10 years.

                                       43
<PAGE>

The changes in the carrying amount of intangible assets for fiscal years 2004
and 2003 were as follows (in thousands):

<TABLE>
<S>                                                                       <C>
Carrying amount as of June 30, 2002                                       $  2,506
Add: Pracon & HealthIQ                                                         408
         FW Pharma                                                           5,588
         Amortization                                                         (487)
         Effect of change in rates used for translation and adjustments     (2,252)
                                                                          --------

Carrying amount as of June 30, 2003                                       $  5,763

Add: 3 Clinical Research                                                     5,805
         Amortization                                                       (1,412)
         Effect of change in rates used for translation and adjustments        480
                                                                          --------

Carrying amount as of June 30, 2004                                       $ 10,636
                                                                          ========
</TABLE>

Amortization expense was $1.4 million, $0.5 million and $0.06 million for the
fiscal years ended June 30, 2004, 2003, and 2002, respectively. Estimated
amortization expense for the next five years is as follows:

<TABLE>
<S>      <C>
2004     $2,213
2005     $2,204
2006     $2,162
2007     $2,162
2008     $1,683
</TABLE>

INCOME TAXES

Deferred income tax assets and liabilities are recognized for the expected
future tax consequences (utilizing current tax rates) of temporary differences
between the carrying amounts and the tax bases of assets and liabilities.
Deferred tax assets are recognized for the estimated future tax benefits of
deductible temporary differences and tax operating loss and credit carryforwards
and are net of valuation allowances established in jurisdictions where the
realization of those benefits is questionable. Deferred income tax expense
represents the change in the net deferred tax asset and liability balances.

FOREIGN CURRENCY

Assets and liabilities of the Company's international operations are translated
into U.S. dollars at exchange rates that are in effect on the balance sheet date
and equity accounts are translated at historical exchange rates. Income and
expense items are translated at average exchange rates, which are in effect
during the year. Translation adjustments are accumulated in other comprehensive
income/(loss) as a separate component of stockholders' equity in the
consolidated balance sheet. Transaction gains and losses are included in other
income in the consolidated statements of operations. Transaction gains/(losses),
net of foreign currency exchange contract gains and losses were $(1.8) million,
$(1.9) million and $0.2 million in fiscal years 2004, 2003, 2002, respectively.

EARNINGS PER SHARE

Earnings per share has been calculated in accordance with SFAS No. 128,
"Earnings per Share." Basic earnings per share is computed by dividing net
income for the period by the weighted average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing net income by the weighted average number of common shares plus the
dilutive effect of outstanding stock options and shares issuable under the
employee stock purchase plan.

                                       44
<PAGE>

STOCK-BASED COMPENSATION

The Company accounts for employee stock awards using the intrinsic value based
method as prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", as described by Financial Accounting Standards
Board ("FASB") Interpretation No. 44. Accordingly, no compensation expense is
recognized if the exercise price of the Company's stock options was equal to the
market price of the underlying stock on the date of grant. The Company has
adopted the provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", as amended by SFAS No. 148 for disclosure purposes only.

The fair value for options granted was estimated at the time of the grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions for the three years ended June 30, 2004, 2003 and 2002: Risk free
interest rates of 3.12% in fiscal year 2004, 3.32% in fiscal year 2003 and 4.08%
in fiscal year 2002, dividend yield of 0.0% for each year; weighted-average
volatility factor of the expected market price of the Company's common stock of
55% for fiscal year 2004, 57% for fiscal year 2003 and 64% for fiscal year 2002;
and an average holding period of 5 years for fiscal years 2004 and 2003, and 6
years for fiscal year 2002. During fiscal years 2004, 2003 and 2002, the
weighted-average grant-date fair value of the stock options granted were $7.51,
$5.51 and $8.30 per share, respectively.

If the compensation cost for the Company's stock options and the employee stock
purchase plan had been determined based on the fair value at the date of grant,
as prescribed in SFAS No. 123, the Company's net income and net income per share
would have been as follows:

<TABLE>
<CAPTION>
($ in thousands, except per share data)                2004          2003          2002
                                                    ----------    ----------    ----------
<S>                                                 <C>           <C>           <C>
Net income, as reported                             $   13,791    $   10,662    $   13,235
Deduct total stock-based compensation, net of tax       (3,487)       (2,154)       (5,858)
                                                    ----------    ----------    ----------

Pro forma net income                                $   10,304    $    8,508    $    7,377
                                                    ==========    ==========    ==========

Pro forma net income per share:

  Basic                                             $     0.40    $     0.34    $     0.30
  Diluted                                           $     0.38    $     0.33    $     0.29
</TABLE>

As stock options vest over several years and additional stock option grants are
expected to be made each year, the above pro forma disclosures are not
necessarily representative of pro forma effects on results of operations for
future periods.

DERIVATIVES/FINANCIAL INSTRUMENTS

The Company utilizes derivative financial instruments to reduce currency
exposures related to certain foreign denominated accounts receivable and
intercompany payables. Derivatives are accounted for in accordance with FAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". The Company
recognizes derivative instruments as either assets or liabilities in the balance
sheet and measures them at fair value. If the derivative instruments are
designated as cash flow hedges, the corresponding changes in fair value are
recorded in stockholders equity as a component of comprehensive income or
expense.

From time to time, the Company enters into currency exchange contracts to hedge
foreign currency exposures. These currency exchange contracts are entered into
as economic hedges, but are not designated as hedges for accounting purposes as
defined under FAS 133.

Realized gains or losses on currency exchange contracts, acquired for the
purpose of reducing exposure to currency fluctuations associated with expected
cash flows denominated in currencies other than functional currencies, are
reflected in other income, in the consolidated statements of operations.
Currency exchange contracts are marked to market with the unrealized gain or
loss reflected in other income, in the consolidated statements of operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2003, the EITF issued EITF No. 03-1. The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments. EITF
No. 03-1 requires new tabular and narrative disclosure items effective for
fiscal years ending after December 15, 2003. Companies are required to provide
expanded information about their debt and marketable securities with market
values below carrying values. The narrative information must include positive
and negative information management considered in concluding the unrealized loss
was not other-than-temporary and therefore was not recognized in earnings. The
Company's adoption of ETIF No. 03-1 is not expected to require additional
disclosure.

                                       45
<PAGE>

NOTE 3. ACQUISITIONS

FISCAL YEAR 2004

On March 1, 2004, the Company acquired the remaining outstanding shares of
3Clinical Research AG ("3C"), a clinical research organization with expertise in
Phase I and Phase IIa Proof-Of-Concept studies in Berlin, Germany, for $11.7
million in cash. Prior to March 1, 2004, PAREXEL was a minority shareholder of
3C. In association with this transaction, the Company recorded as goodwill
approximately $8.1 million of excess cost over the fair value of the interest in
the net assets acquired. Pro forma results of 3C's operations have not been
presented because the effect of this acquisition is not material.

During the first quarter of fiscal year 2004, the Company acquired an additional
interest in FARMOVS for approximately $1.0 million. FARMOVS is a Clinical
Pharmacology unit in South Africa. PAREXEL now has a 70% investment interest in
FARMOVS.

FISCAL YEAR 2003

On January 31, 2003, the Company acquired 100% of the outstanding stock of FWPS
Group Limited (FW Pharma), a provider of software for clinical trial management
systems in Birmingham, United Kingdom, for approximately $11.9 million in the
form of a combination of cash and shares of the Company's common stock. The
Company originally issued an aggregate of 238,095 shares (valued at
approximately $3.0 million) of its common stock to stockholders of FWPS Group
Limited in connection with the acquisition. Of these shares, 32,854 shares were
surrendered back to the Company by FW Pharma stockholders pursuant to the
purchase price adjustment provisions in the purchase agreement between the
parties. Under the agreement, the Company agreed to make additional payments of
up to a maximum of $4.3 million in contingent purchase price if FW Pharma
achieved certain established financial and non-financial targets through January
31, 2005. As of June 30, 2004, the Company had made an additional $0.7 million
contingent purchase price payment in the form of cash and promissory notes. The
remaining maximum contingent obligation is $2.4 million. The promissory notes
were all paid in full by the Company as of August 18, 2004. In connection with
this transaction, the Company recorded approximately $10.1 million of excess
cost over the fair value of the interest in the net assets acquired as goodwill.

On October 28, 2002, the Company acquired the assets of Pracon & HealthIQ, a
provider of specialized sales and marketing services based in Reston, Virginia
and Orange, California, for approximately $1.7 million in cash. Pracon &
HealthIQ was a division of Excerpta Medica, Inc. In connection with this
transaction, the Company recorded approximately $1.6 million of excess cost over
the fair value of the interest in the net assets acquired as goodwill.

FISCAL YEAR 2002

On July 1, 2001, the Company acquired EDYABE, a clinical research organization
in Latin America, with offices in Argentina and Brazil, for approximately $1.6
million in cash. In connection with this transaction, the Company recorded
approximately $1.4 million of excess cost over the fair value of the interest in
the net assets acquired as goodwill.

NOTE 4. MARKETABLE SECURITIES

Available-for-sale securities included in marketable securities at June 30, 2004
and 2003, consisted entirely of municipal debt, agency securities and money
market securities. At June 30, 2004, all available-for-sale securities were
scheduled to mature on varying dates within two years.

The Company's investments are reflected at fair market value, which approximates
amortized cost. During fiscal year 2004, gross realized gains were $2.6 million
and gross realized losses were $3.7 million. During fiscal year 2003, gross
realized gains were minimal and there were no gross realized losses. During
fiscal year 2002, gross realized gains totaled $0.2 million and gross realized
losses totaled $0.2 million.

                                       46
<PAGE>

NOTE 5. BILLED AND UNBILLED ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2004 and 2003, consisted of the following:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                     2004          2003
                                  ----------    ----------
<S>                               <C>           <C>
Billed                            $  129,942    $  147,411
Unbilled                              96,229        81,328
Allowance for doubtful accounts       (4,215)       (6,013)
                                  ----------    ----------

                                  $  221,956    $  222,726
                                  ==========    ==========
</TABLE>

NOTE 6.  PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2004 and 2003, consisted of the following:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                      2004          2003
                                   ----------    ----------
<S>                                <C>           <C>
Owned assets:
  Computer and office equipment    $   75,148    $   67,374
  Computer software                    55,501        44,447
  Leasehold improvements               23,435        20,147
  Furniture and fixtures               17,825        20,084
  Medical equipment                    10,423         4,287
  Buildings                             4,453         4,202
  Other                                 1,248           834
                                   ----------    ----------
                                      188,033       161,375
Less: accumulated depreciation       (119,330)      (99,836)
                                   ----------    ----------
                                   $   68,703    $   61,539
                                   ----------    ----------

Assets held under capital lease:
  Computer software                       525           525
Less: accumulated amortization           (245)         (140)
                                   ----------    ----------
                                          280           385
                                   ----------    ----------

                                   $   68,983    $   61,924
                                   ==========    ==========
</TABLE>

Depreciation and amortization expense relating to property and equipment was
$24.4 million, $20.7 million, and $17.9 million, for the years ended June 30,
2004, 2003, and 2002, respectively. Depreciation expense for the year ended June
30, 2004 includes $0.7 million of accelerated depreciation due to changes in the
estimated useful lives of leasehold improvements on abandoned leased facilities.

NOTE 7. RESTRUCTURING CHARGES

During the year ended June 30, 2004, the Company recorded restructuring charges
totaling $10.8 million, 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. These amounts were recorded in March 2004.

                                       47
<PAGE>

During the year ended June 30, 2003, the Company recorded facilities-related
restructuring charges totaling $9.4 million, as a result of changes in
assumptions for leased facilities abandoned in June 2001. The changes in prior
assumptions were caused by a further deterioration in challenging real estate
market conditions, which made it difficult to sub-lease the abandoned facilities
at previously estimated rental rates. In June 2001, the Company made certain
reasonable assumptions based upon market conditions, which indicated that
sub-lease payments for these abandoned facilities were probable. The June 2001
restructuring charge involved fourteen properties. The Company has been
successful in exiting or subleasing eleven of those properties. After
significant effort in trying to sub-lease the remaining properties in a time of
a declining commercial real estate market, it became apparent to the Company
during fiscal year 2003 that the original assumptions for the remaining three
properties were no longer valid under current market conditions.

The Company did not record any restructuring charges in fiscal year 2002.

Fiscal years 2004, 2003, and 2002 activities against the restructuring accrual
were as follows:

<TABLE>
<CAPTION>
                             Balance at       Gross         Payments/       Balance at
($ IN THOUSANDS)           June 30, 2003    Provisions     Adjustments    June 30, 2004
                           -------------   ------------    ------------   -------------
<S>                        <C>             <C>             <C>            <C>
Employee severance costs    $        244   $      3,875    $     (2,616)   $      1,503
Facilities related charge          8,506          6,921          (3,504)         11,923
                            ------------   ------------    ------------    ------------

                            $      8,750   $     10,796    $     (6,120)   $     13,426
                            ============   ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                             Balance at       Gross         Payments/       Balance at
                           June 30, 2002    Provisions     Adjustments    June 30, 2003
                           -------------   ------------    ------------   -------------
<S>                        <C>             <C>             <C>            <C>
Employee severance costs    $      1,176              -    $       (932)   $        244
Facilities related charge          2,125          9,374          (2,993)          8,506
                            ------------   ------------    ------------    ------------

                            $      3,301   $      9,374    $     (3,925)   $      8,750
                            ============   ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                             Balance at       Gross         Payments/       Balance at
                           June 30, 2001    Provisions     Adjustments    June 30, 2002
                           -------------   ------------    ------------   -------------
<S>                        <C>             <C>             <C>            <C>
Employee severance costs    $      2,785              -    $     (1,609)   $      1,176
Facilities related charge          5,709              -          (3,584)          2,125
Other charges                        242              -            (242)              -
                            ------------   ------------    ------------    ------------

                            $      8,736              -    $     (5,435)   $      3,301
                            ============   ============    ============    ============
</TABLE>

NOTE 8. CREDIT ARRANGEMENTS

The Company has a line of credit with ABN AMRO Bank, NV in the amount of Euro
12.0 million. This line-of-credit is not collateralized, is payable on demand,
and bears interest at a rate ranging between 3% to 5%. The line of credit may be
revoked or cancelled by the Bank at any time at its discretion. The Company
primarily entered into this line-of-credit to facilitate business transactions
with the Bank. At June 30, 2004, the Company had approximately Euro 12.0 million
available under this line-of-credit.

The Company has other foreign lines-of-credit with banks totaling approximately
$1.8 million. These lines are used as overdraft protection and bear interest at
rates ranging from 4% to 6%. The lines of credit are payable on demand and are
supported by PAREXEL International Corporation. At June 30, 2004, the Company
had approximately $1.8 million available credit under these arrangements.

                                       48
<PAGE>

The Company has letter-of-credit agreements with banks totaling approximately
$1.0 million guaranteeing performance under various operating leases and vendor
agreements.

NOTE 9. STOCKHOLDERS' EQUITY

As of June 30, 2004 and 2003, there were 5,000,000 shares of preferred stock,
$0.01 par value, authorized. Of the total shares authorized, 50,000 shares have
been designated as Series A Junior Participating Preferred Stock, but none were
issued or outstanding. Preferred stock may be issued at the discretion of the
Board of Directors (without stockholder approval) with such designations, rights
and preferences as the Board of Directors may determine.

In September 1999, the Board of Directors approved a stock repurchase program
authorizing the purchase of up to $20 million of the Company's common stock.
Repurchases are made in the open market subject to market conditions. As of June
30, 2004, the Company had acquired 1,306,100 shares at a total cost of $16.2
million. Subsequent to June 30, 2004, the Company used the remaining $3.8
million authorized under the plan to repurchased 200,500 shares of common stock.
In total, the Company acquired 1,506,600 shares at a total cost of $20.0
million.

In December 2003, the Board of Directors of the Company approved the restoration
of shares of common stock held as treasury shares to the status of authorized
and unissued shares.

On September 9, 2004, the Board of Directors approved a new stock repurchase
program authorizing the purchase of up to $20 million of the Company's common
stock to be repurchased in the open market subject to market conditions.

2003 PREFERRED STOCK RIGHTS

On March 27, 2003, the Company adopted a Shareholder Rights Plan. Under this
Plan, one Right for each outstanding share was distributed to stockholders of
record as of April 7, 2003. The Rights trade with the underlying common stock
and initially are not exercisable. Subject to limited exceptions, the Rights
will become exercisable if a person or a group acquires 20 percent or more of
the Company's common stock or commences a tender offer for 20 percent or more of
the Company's outstanding stock. If the Rights become exercisable, the type and
amount of securities receivable upon exercise of each Right will depend on the
circumstances at the time of exercise. Each Right will initially entitle each
stockholder to purchase one one-thousandth of a share of newly created Series A
Junior Participating Preferred Stock at an exercise price of $98.00. The
adoption of this Plan did not impact the Company's financial position or results
of its operations.

NOTE 10.  EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income by the weighted
average number of common shares plus the dilutive effect of outstanding stock
options and shares issuable under the employee stock purchase plan.
Approximately 0.7 million, 1.9 million and 1.2 million shares issuable upon
exercise of outstanding stock options were excluded from the calculation of
diluted earnings per share for the fiscal years ended June 30, 2004, 2003 and
2002, respectively, because they were anti-dilutive.

The following table is a summary of shares used in calculating basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                            Years ended June 30,
($ IN THOUSANDS)                                        2004       2003       2002
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Net income                                            $ 13,791   $ 10,662   $ 13,235

Weighted average number of shares outstanding, used
   in computing basic earnings per share                26,010     25,371     24,928
Dilutive common stock options                              785        312        654
                                                      --------   --------   --------
Weighted average shares used in computing
  diluted earnings per share                            26,795     25,683     25,582
                                                      ========   ========   ========

Basic earnings per share                              $   0.53   $   0.42   $   0.53
Diluted earnings per share                            $   0.51   $   0.42   $   0.52
</TABLE>

                                       49
<PAGE>

NOTE 11. COMPREHENSIVE INCOME

Comprehensive income (loss) has been calculated by the Company in accordance
with FASB No. 130 "Reporting Comprehensive Income". The reconciliation of the
components of accumulated other comprehensive income (loss) was as follows:

<TABLE>
<CAPTION>
                                               Unrealized
                                                 gain on
                                Foreign         available
                                currency        for sale
($ IN THOUSANDS)              translation      investments       Total
                              ------------    ------------    ------------
<S>                           <C>             <C>             <C>
Balance as of June 30, 2001   $    (17,631)              -    $    (17,631)
Changes during the year              5,328               -           5,328
                              ------------    ------------    ------------

Balance as of June 30, 2002   $    (12,303)              -    $    (12,303)
Changes during the year              9,450               -           9,450
                              ------------    ------------    ------------

Balance as of June 30, 2003   $     (2,853)              -    $     (2,853)
Changes during the year              5,458             (98)          5,360-
                              ------------    ------------    ------------

Balance as of June 30, 2004   $      2,605    $        (98)   $      2,507
                              ============    ============    ============
</TABLE>

NOTE 12. STOCK AND EMPLOYEE BENEFIT PLANS

The Stock Option Committee of the Board of Directors is responsible for
administration of the Company's stock option plans and determines the term of
each option, the option exercise price, the number of option shares granted, and
the rate at which options become exercisable.

2001 STOCK INCENTIVE PLAN

In September 2001, the Company adopted the 2001 Stock Incentive Plan, ("2001
Plan") which provides for the grant of incentive and non-qualified stock options
for the purchase of up to an aggregate of 1,000,000 shares of common stock to
employees, officers, directors, consultants, and advisors (and any individuals
who have accepted an offer for employment) of the Company. Options under the
2001 Plan expire ten years from the date of grant and the vesting period may
vary at the Board of Directors' discretion.

1998 STOCK PLAN

In February 1998, the Company adopted the 1998 Non-qualified, Non-officer Stock
Option Plan (the "1998 Plan") which provides for the grant of non-qualified
options to purchase up to an aggregate of 500,000 shares of common stock to any
employee or consultant of the Company who is not an executive officer or
director of the Company. In January 1999, the Company's Board of Directors
approved an increase in the number of shares issuable under the 1998 Plan to
1,500,000 shares. Options under the 1998 Plan expire eight years from the date
of grant and vest at dates ranging from the issuance date to five years.

1995 STOCK PLAN

The 1995 Stock Plan ("1995 Plan") provides for the grant of incentive and
non-qualified stock options for the purchase of up to an aggregate of
3,028,674 shares of common stock to directors, officers, employees, and
consultants to the Company. Options under the 1995 Plan expire eight years
from the date of grant and vest over ninety days to five years.

EMPLOYEE STOCK PURCHASE PLANS

In September 1995, the Company adopted the 1995 Employee Stock Purchase Plan
(the "Purchase Plan"). Under the Purchase Plan, employees had the opportunity to
purchase common stock at 85% of the average market value on the first or last
day of the plan period (as defined by the Purchase Plan), whichever was lower,
up to specified limits. An aggregate of 600,000 shares could have been issued
under the Purchase Plan. The Purchase Plan terminated in fiscal year 2000.

                                       50
<PAGE>

In March 2000, the Board of Directors of the Company adopted the 2000 Employee
Stock Purchase Plan (the "2000 Purchase Plan"). Under the 2000 Purchase Plan,
employees have the opportunity to purchase common stock at 85% of the average
market value on the first day of each opening period or last day of each
purchase period (as defined by the Purchase Plan), whichever is lower, up to
specified limits. An aggregate of approximately 800,000 shares may be issued
under the 2000 Purchase Plan.

During fiscal year 2004, there were 267,418 shares purchased at a range of
$10.59 to $15.72 per share and during fiscal year 2003, there were 273,091
shares purchased at a range of $7.17 to $10.59 per share.

STOCK OPTIONS OF SUBSIDIARY

In August 2000, Perceptive Informatics, Inc. ("Perceptive"), a majority owned
subsidiary of the Company, adopted the 2000 Stock Incentive Plan ("the
Perceptive Plan"), which was amended in March 2003 to grant rights to purchase
up to an aggregate of 7,030,000 shares of Perceptive common stock. Under the
Perceptive Plan, Perceptive may grant to its employees, officers, directors,
consultants and advisors, options, restricted stock awards, or other stock-based
awards. As of June 30, 2004 and 2003, Perceptive was not publicly traded and
options to purchase 3,085,802 shares and 3,200,427 shares, respectively were
outstanding under this plan and the options to purchase 101,375 shares had been
exercised.

SUMMARY DATA FOR PAREXEL STOCK OPTION PLANS

Aggregate stock option activities for all plans, excluding the Perceptive Plan,
for the three years ended June 30, 2004 were as follows:

<TABLE>
<CAPTION>
                                                              Weighted
                                                               Average
                                                              Exercise
                                                 Options        Price
                                                 ---------    --------
<S>                                              <C>          <C>
Outstanding at June 30, 2001                     3,594,523    $ 15.76
Granted                                            876,000    $ 13.19
Exercised                                         (130,324)   $  8.41
Canceled                                          (325,629)   $ 17.79
                                                 ---------

Outstanding at June 30, 2002                     4,014,570    $ 15.20
Granted                                            129,000    $ 11.19
Exercised                                         (138,061)   $  9.23
Canceled                                          (346,148)   $ 17.81
                                                 ---------

Outstanding at June 30, 2003                     3,659,361    $ 15.05
Granted                                            485,420    $ 17.13
Exercised                                         (502,534)   $  9.86
Canceled                                          (396,822)   $ 18.80
                                                 ---------

Outstanding at June 30, 2004                     3,245,425    $ 15.70
                                                 =========

Exercisable at June 30, 2002                     1,830,609

Exercisable at June 30, 2003                     2,251,228

Exercisable at June 30, 2004                     2,156,845

Available for future grant at June 30, 2004      1,310,671
</TABLE>

                                       51
<PAGE>

Summary information related to options outstanding and exercisable as of June
30, 2004 was as follows:

<TABLE>
<CAPTION>
                        OUTSTANDING                           OPTIONS EXERCISABLE
----------------------------------------------------------  -----------------------
                                       Weighted
                                       Average    Weighted                 Weighted
       Range of       Outstanding     Remaining    Average   Exercisable   Average
       Exercise          as of       Contractual  Exercise      as of      Exercise
        Prices       June 30, 2004   Life (Years)   Price   June 30, 2004   Price
<S>                  <C>             <C>          <C>       <C>            <C>
$ 7.5621 - $11.3430      725,727         3.9       $ 9.51      604,690      $ 9.51
$11.3431 - $15.1240    1,295,322         5.0       $12.72      795,667      $12.63
$15.1241 - $18.9050      519,515         6.8       $17.07       68,627      $17.02
$18.9051 - $22.6860      231,441         2.9       $21.21      214,441      $21.29
$22.6861 - $26.4670       87,770         1.7       $24.42       87,770      $24.42
$26.4671 - $30.2480      172,450         1.9       $27.09      172,450      $27.09
$30.2481 - $34.0290      164,400         1.1       $31.80      164,400      $31.80
$34.0291 - $37.8100       48,800         1.8       $36.21       48,800      $36.21
                       ---------                             ---------
                       3,245,425                             2,156,845
                       =========                             =========
</TABLE>

401(k) PLAN

The Company sponsors an employee savings plan ("the Plan") as defined by Section
401(k) of the Internal Revenue Code of 1986, as amended. The Plan covers
substantially all employees in the U.S. who elect to participate. Participants
have the opportunity to invest on a pre-tax basis in a variety of mutual fund
options and PAREXEL stock. The Company matches 100% of each participant's
voluntary contributions up to 3% of gross salary per payroll period subject to
an annual cap of $3,000. Company contributions vest to the participants in 20%
increments for each year of employment and become fully vested after five years
of continuous employment. Company contributions to the Plan were $2.7 million,
$2.8 million and $2.6 million, for the years ended June 30, 2004, 2003, and
2002, respectively.

NOTE 13. FINANCIAL INSTRUMENTS

As of June 30, 2004 and 2003, the Company had entered into currency exchange
contracts to exchange Euro and British Pounds for U.S. dollars. The notional
contract amount of outstanding currency exchange contracts was approximately
$10.4 million and $28.3 million at June 30, 2004 and 2003, respectively.

While it is not the Company's intention to terminate the above derivative
financial instruments, fair values were estimated based on market rates, which
represented the amounts that the Company would receive or pay if the instruments
were terminated at the balance sheet date. The fair values of currency exchange
contracts were approximately $2 thousand at June 30, 2004 and $150 thousand at
June 30, 2003.

At June 30, 2004, maturities of the Company's currency exchange contracts ranged
from one to four months.

NOTE 14. INCOME TAXES

Domestic and foreign income (loss) before income taxes for the three years ended
June 30, were as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)     2004          2003         2002
                  ----------    ----------   ----------
<S>               <C>           <C>          <C>
Domestic          $   (1,120)   $    1,743   $   23,413
Foreign               24,563        16,744         (479)
                  ----------    ----------   ----------

                  $   23,443    $   18,487   $   22,934
                  ==========    ==========   ==========
</TABLE>

                                       52
<PAGE>

Provisions for income taxes for the three years ended June 30, were as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)          2004          2003          2002
                       ----------    ----------    ----------
<S>                    <C>           <C>           <C>
Current:
  Federal              $     (585)   $    5,209    $    8,512
  State                       531         1,027         3,060
  Foreign                   4,303         4,393         2,849
                       ----------    ----------    ----------

                            4,249        10,629        14,421
                       ----------    ----------    ----------

Deferred:
  Federal                    (493)       (2,714)       (4,351)
  State                       (43)         (409)          (89)
  Foreign                   5,601          (256)         (968)
                       ----------    ----------    ----------

                            5,064        (3,379)       (5,408)
                       ----------    ----------    ----------

                       $    9,313    $    7,250    $    9,013
                       ==========    ==========    ==========
</TABLE>

The Company's consolidated effective income tax rate differed from the U.S.
federal statutory income tax rate as set forth below:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                               2004         %       2003         %       2002        %
                                             --------     ----    --------     ----    --------    -----
<S>                                          <C>          <C>     <C>          <C>     <C>         <C>
Income tax expense computed at the federal
  statutory rate                             $  8,206     35.0%   $  6,470     35.0%   $  8,027     35.0%
State income taxes, net of federal benefit        359      1.5%        408      2.2%      1,989      8.7%
Foreign rate differential                         594      2.5%       (956)    -5.2%       (344)    -1.5%
Foreign permanent tax adjustments              (1,417)    -6.0%       (780)    -4.2%       (109)    -0.5%
U.S. permanent tax adjustments                    (56)    -0.2%         21      0.1%     (2,928)   -12.8%
Change in valuation allowances                  2,816     12.0%      1,911     10.3%      2,625     11.4%
Tax accrual reduction                          (1,317)    -5.6%          -        -           -        -
Other                                             128      0.5%        176      1.0%       (247)    -1.1%
                                             --------     ----    --------     ----    --------    -----

                                             $  9,313     39.7%   $  7,250     39.2%   $  9,013     39.3%
                                             ========     ====    ========     ====    ========    =====
</TABLE>

During fiscal year 2004, the Company released $1.3 million of tax accruals in
conjunction with the resolution of certain outstanding tax issues and the
favorable results of various tax audits. Without the release of these reserves,
the Company's effective income tax rate would have been higher.

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

                                       53
<PAGE>

Significant components of the Company's net deferred tax assets as of June 30,
2004 and 2003 were as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                              2004          2003
                                           ----------    ----------
<S>                                        <C>           <C>
Deferred tax assets:
  Foreign loss carryforwards               $   11,675    $    8,749
  Accrued expenses                             26,218        25,361
  Allowance for doubtful accounts                 721           484
  Unbilled accounts receivable                 16,907        14,840
  Other                                            83            81
                                           ----------    ----------

Gross deferred tax assets                      55,604        49,515
Deferred tax asset valuation allowance        (15,734)      (11,868)
                                           ----------    ----------

Total deferred tax assets                      39,870        37,647
                                           ----------    ----------

Deferred tax liabilities:
Property and equipment                        (14,543)       (9,031)
Deferred contract profit                       (3,849)       (2,687)
Other                                          (4,132)       (1,513)
                                           ----------    ----------

Total deferred tax liabilities                (22,524)      (13,231)
                                           ----------    ----------

                                           $   17,346    $   24,416
                                           ==========    ==========
</TABLE>

The net deferred tax assets and liabilities included in the consolidated balance
sheets as of June 30, 2004 and 2003 were as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                              2004          2003
                                           ----------    ----------
<S>                                        <C>           <C>
Current deferred tax assets                $   29,710    $   27,604
Non-current deferred tax assets                10,160        10,043
Current deferred tax liabilities               (4,424)       (2,557)
Non-current deferred tax liabilities          (18,100)      (10,674)
                                           ----------    ----------

                                           $   17,346    $   24,416
                                           ==========    ==========
</TABLE>

The Company has foreign tax loss carryforwards, tax effected, of approximately
$11.7 million that are available to offset future liabilities for foreign income
taxes. Substantially all of the foreign tax losses are carried forward
indefinitely, subject to certain limitations. A valuation allowance has been
established for certain future foreign income tax benefits related to income tax
loss carryforwards and temporary tax adjustments based on an assessment that it
is more likely than not that these benefits will not be realized. In fiscal year
2004, the valuation allowance increased by $3.9 million. As of June 30, 2004,
$15.7 million of future tax rate benefit remains. The ultimate realization of
this benefit is dependent upon the generation of sufficient taxable income in
respective jurisdictions.

                                       54
<PAGE>

NOTE 15. COMMITMENTS, CONTINGENCIES AND GUARANTEES

The Company leases its facilities under operating leases that include renewal
and escalation clauses. Total rent expense, net of sublease income was $34.0
million, $30.2 million, and $25.4 million for fiscal years 2004, 2003 and 2002,
respectively. Future minimum lease payments due under non-cancelable leases are
as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)           2005          2006          2007          2008          2009       Thereafter       Total
<S>                     <C>           <C>           <C>           <C>           <C>           <C>           <C>
Operating leases        $   30,250    $   26,330    $   23,006    $   21,058    $   16,873    $   53,985    $  171,502
Less: sublease income         (724)         (397)         (308)         (308)         (280)         (969)       (2,986)
                        ----------    ----------    ----------    ----------    ----------    ----------    ----------

Total                   $   29,526    $   25,933    $   22,698    $   20,750    $   16,593    $   53,016    $  168,516
                        ==========    ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

In association with the FW Pharma acquisition as discussed in Note 3, the
Company is obligated to make a maximum additional payments of $2.4 million in
contingent purchase price if FW Pharma achieves certain established financial
targets through January 31, 2005.

The Company has letter-of-credit agreements with banks totaling approximately
$1.0 million guaranteeing performance under various operating leases and vendor
agreements.

NOTE 16. RELATED PARTY TRANSACTIONS

During the third quarter of fiscal year 2004, the Company disposed of a small
business by closing an asset sale arrangement with a former non-officer
employee. In association with the transaction, the buyer issued a four-year
promissory note to the Company. Payments on the promissory note are due on a
quarterly basis, commencing on June 30, 2004. All gains and losses from this
transaction have been deferred until the promissory note is paid in full.

During the first quarter of fiscal year 2004, an officer of the Company
exercised a stock option for 60,000 shares of the Company's common stock and
surrendered to the Company 25,714 shares of the Company's common stock as
payment of the exercise price. The shares surrendered were owned by the officer
for more than six months and their value was set by the closing price per share
of the Company's common stock as quoted on the NASDAQ National Market for the
last trading day immediately preceding the date of exercise. The officer elected
to defer receipt of 34,286 of the option shares exercised pursuant to the
Company's Non-Qualified Deferred Compensation Plan. There was no compensation
expense recorded in association with this transaction and all of the shares of
common stock are issued and outstanding.

The Company contributed the shares of stock of FWPS Group Limited, a company
organized under the laws of the United Kingdom, which it acquired in January
2003, to its majority owned subsidiary, Perceptive Informatics, Inc., in July
2003. Perceptive issued shares of common stock to PAREXEL International Trust, a
wholly owned subsidiary of the Company, as consideration for this contribution.
As a result of the transaction, the Company's ownership in Perceptive increased
from 97.4% to 98.2% in July 2003. Certain executive officers and directors of
the Company own 0.87% of the issued and outstanding common stock of Perceptive.
The terms of this transaction were approved by an independent committee of the
Board of Directors of the Company, the members of which neither serve as
Director of, nor own any shares of stock of Perceptive and using a valuation
prepared by an independent third party.

During the years ended June 30, 2004 and 2003, certain members of the Company's
Board of Directors were affiliated with certain companies in which PAREXEL is a
minority shareholder. The total sum of all of these investments by PAREXEL was
$0.9 million.

                                       55
<PAGE>

NOTE 17. GEOGRAPHIC AND SEGMENT INFORMATION

Financial information by geographic area for the three years ended June 30,
2004, 2003 and 2002 were as follows:

<TABLE>
<CAPTION>
($ IN THOUSANDS)                    2004          2003          2002
                                 ----------    ----------    ----------
<S>                              <C>           <C>           <C>
Service revenue:
  United States                  $  247,345    $  265,564    $  252,552
  Europe                            276,089       235,612       178,357
  Asia and Other                     23,782        21,137        20,552
                                 ----------    ----------    ----------
                                 $  547,216    $  522,313    $  451,461
                                 ==========    ==========    ==========
Income (loss) from operations:
  United States                  $   (1,774)   $    8,397    $   18,690
  Europe                             25,344        16,916         3,831
  Asia and Other                      1,036        (4,708)       (2,028)
                                 ----------    ----------    ----------

                                 $   24,606    $   20,605    $   20,493
                                 ==========    ==========    ==========

Tangible Long-lived assets:
  United States                  $    3,064    $    2,187    $    2,206
  Europe                              2,521         3,375         2,484
  Asia and Other                      1,148         1,065           940
                                 ----------    ----------    ----------

                                 $    6,733    $    6,627    $    6,033
                                 ==========    ==========    ==========
</TABLE>

The Company is managed through four business segments, namely, CRS, PCG, MMS and
Perceptive. CRS constitutes the Company's core business and includes clinical
trials management and biostatistics and data management, as well as related
medical advisory and investigator site services. PCG provides technical
expertise in such disciplines as clinical pharmacology, regulatory affairs,
industry training, publishing, and management consulting. PCG consultants
identify alternatives and propose solutions to address clients' product
development, registration, and commercialization issues. MMS provides a full
spectrum of market development, product development, and targeted communications
services in support of product launch. MMS 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 services that include the medical imaging
services, IVRS, CTMS, web-based portals, systems integration, and patient diary
applications.

The Company evaluates its segment performance and allocates resources based on
service revenue and gross profit (service revenue less direct costs), while
other operating costs are evaluated on a geographical basis. Accordingly, the
Company does not include selling, general, and administrative expenses,
depreciation and amortization expense, interest income (expense), other income
(expense), and income tax expense in segment profitability. The accounting
policies of the segments are the same as those described in Note 2. Furthermore,
the Company attributes revenue to individual countries based upon the number of
hours of services performed in the respective countries and inter-segment
transactions are not included in service revenue.

                                       56
<PAGE>

The Company evaluates its assets (including long-lived assets) on a geographic
basis because it has a global infrastructure supporting all four business
segments.

<TABLE>
<CAPTION>
($ IN THOUSANDS)                       CRS          PCG          MMS      PERCEPTIVE      TOTAL
                                   ----------   ----------   ----------   ----------   ----------
<S>                                <C>          <C>          <C>          <C>          <C>
Service revenue:
  2004                             $  309,341   $  113,117   $   88,785   $   35,973   $  547,216
  2003                             $  312,847   $  100,813   $   83,853   $   24,800   $  522,313
  2002                             $  261,727   $   94,534   $   75,213   $   19,987   $  451,461

Gross profit on service revenue:
  2004                             $  122,633   $   27,645   $   23,872   $   17,003   $  191,153
  2003                             $  116,879   $   20,502   $   28,112   $    9,644   $  175,137
  2002                             $   90,965   $   21,393   $   26,280   $    4,114   $  142,752
</TABLE>

                                       57
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of PAREXEL International Corporation:

We have audited the accompanying consolidated balance sheets of PAREXEL
International Corporation and its subsidiaries as of June 30, 2004 and June 30,
2003 and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended June 30,
2004. Our audits also included the financial statement schedule listed in the
Index at Item 15(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of PAREXEL
International Corporation and its subsidiaries at June 30, 2004 and June 30,
2003, and the consolidated results of their operations, and cash flows for each
of the three years in the period ended June 30, 2004 in conformity with United
States generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole presents fairly in all material respects
the information set forth therein.

                                                       Ernst & Young LLP

Boston, Massachusetts
August 30, 2004

                                       58
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable

ITEM 9A. CONTROLS AND PROCEDURES.

The Company's management, with the participation of the Company's chief
executive officer and chief financial officer, evaluated the effectiveness of
the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) as of June 30, 2004. Based on this
evaluation, the Company's chief executive officer and chief financial officer
concluded that, as of June 30, 2004, the Company's disclosure controls and
procedures were (1) designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company's
chief executive officer and chief financial officer by others within those
entities, particularly during the period in which this report was being
prepared, and (2) effective, in that they provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission.

No change in the Company's internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the
fiscal quarter ended June 30, 2004 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

ITEM 9B. OTHER INFORMATION.

Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to this item may be found under the captions "Elections
of Directors," "Corporate Governance", "Executive Officers" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Proxy Statement for the
Company's 2004 Annual Meeting of Stockholders. Such information is incorporated
herein by reference. The Company has adopted a code of ethics, the PAREXEL
International Corporation Code of Business Conduct and Ethics, which applies to
the conduct of the Company's officers, directors and employees.

CODE OF ETHICS

The Company has adopted a code of business conduct and ethics applicable to all
of its employees, including its principal executive officers and principal
financial officer. The code of business conduct and ethics is available on the
Company's website (www.parexel.com) under the category "Investor
Relations-Corporate Governance".

ITEM 11. EXECUTIVE COMPENSATION

Information with respect to this item may be found under the captions
"Directors' Compensation," "Compensation Committee Interlocks and Insider
Participation," "Executive Compensation," "Employment Agreements," "Stock
Performance Graph" and "Compensation Committee and Committee Report on Executive
Compensation" in the Proxy Statement for the Company's 2004 Annual Meeting of
Stockholders. Such information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information with respect to this item may be found under the caption "Security
Ownership of Certain Beneficial Owners and Management" and "Equity Compensation
Plan Information" in the Proxy Statement for the Company's 2004 Annual Meeting
of Stockholders. Such information is incorporated herein by reference.

                                       59
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this item may be found under the captions "Certain
Relationships and Related Transactions" in the Proxy Statement for the Company's
2004 Annual Meeting of Stockholders. Such information is incorporated herein by
reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item may be found under the caption "Fees Paid
to Independent Auditors" in the Proxy Statement for the Company's 2004 Annual
Meeting of Stockholders. Such information is incorporated herein by reference.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)   The following documents are filed as part of this report:

      (1) FINANCIAL STATEMENTS

          The following financial statements and supplementary data are included
          in Item 8 of this annual report:

<TABLE>
<CAPTION>
         FINANCIAL STATEMENTS                                 FORM 10-K PAGES
         --------------------                                 ---------------
<S>                                                           <C>
Report of Independent Registered Public Accounting
  Firm for the years ended  June 30, 2004, 2003 and 2002               58
Consolidated Statements of Operations for each of the
  three years ended June 30, 2004, 2003, and 2002                      36
Consolidated Balance Sheets at June 30, 2004 and 2003                  37
Consolidated Statements of Stockholders' Equity for
  each of the three years ended June 30, 2004, 2003, and 2002          38
Consolidated Statements of Cash Flows for each of the
  three years ended June 30, 2004, 2003, and 2002                   39-40
Notes to Consolidated Financial Statements                          41-57
</TABLE>

      (2) FINANCIAL STATEMENT SCHEDULES

          For the three years ended June 30, 2004:

            Schedule II - Valuation and Qualifying Accounts

            All other schedules are omitted because they are not applicable or
            the required information is shown in the Consolidated Financial
            Statements or Notes thereto.

      (3) EXHIBITS

          The list of Exhibits filed as a part of this Annual Report on Form
          10-K are set forth on the Exhibit Index immediately preceding such
          Exhibits, and is incorporated herein by this reference.

(B) Reports on Form 8-K:

      1.    The Company furnished an Amendment No. 1 to Current Report on Form
            8-K/A on May 5, 2004 under Item 12, which amended the Form 8-K filed
            by the Company on April 22, 2004.

      2.    The Company furnished a Current Report on Form 8-K on April 22, 2004
            under Item 12, which included the Company's Press Release dated
            April 22, 2004 containing financial results for the quarter ended
            March 31, 2004.

                                       60
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

PAREXEL INTERNATIONAL CORPORATION

By: /s/ Josef H. von Rickenbach                        Dated: September 10, 2004
-------------------------------
    Josef H. von Rickenbach
    Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          Signatures                             Title(s)                           Date
<S>                            <C>                                          <C>
/s/ Josef H. von Rickenbach
---------------------------
Josef H. von Rickenbach        Chairman of the Board and Chief              September 10, 2004
                               Executive Officer (principal executive
                               officer)

/s/ James F. Winschel, Jr.
---------------------------
James F. Winschel, Jr.         Senior Vice President and Chief              September 10, 2004
                               Financial Officer (principal financial and
                               accounting officer)

/s/ A. Dana Callow, Jr.
---------------------------
A. Dana Callow, Jr.            Director                                     September 10, 2004


---------------------------
A. Joseph Eagle                Director

/s/ Patrick J. Fortune
---------------------------
Patrick J. Fortune             Director                                     September 10, 2004

/s/ Richard L. Love
---------------------------
Richard L. Love                Director                                     September 10, 2004

/s/ Serge Okun
---------------------------
Serge Okun                     Director                                     September 10, 2004

/s/ William U. Parfet
---------------------------
William U. Parfet              Director                                     September 10, 2004
</TABLE>

                                       61
<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.   DESCRIPTION

    3.1       Amended and Restated Articles of Organization of the Company, as
              amended (filed as Exhibit 4.1 to the Company's Registration
              Statement on Form S-8 (File No. 333-104968) 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.

    10.4*     Form of Stock Option Agreement under the Company's 2001 Stock
              Incentive Plan.

    10.5*     1989 Stock Plan of the Company (filed as Exhibit 10.12 to the
              Company's Registration Statement on Form S-1 (File No. 33-97406)
              and incorporated herein by this reference).

    10.6*     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).

    10.7*     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).

    10.8*     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).

                                       62
<PAGE>

    10.9      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).

    10.10     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).

    10.11*    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).

    10.12*    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).

    10.13     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).

    10.14     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     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).

    10.16.1*  Employment Agreement dated August 30, 1996 between Ulf Schneider
              and PAREXEL GmbH (filed as Exhibit 10.20 to the Company's Annual
              Report on Form 10-K for the year ended June 30, 2000 and
              incorporated herein by this reference).

    10.16.2*  Amendment to Employment Agreement, dated November 22, 1999,
              between Ulf Schneider and PAREXEL GmbH (filed as Exhibit 10.19.2
              to the Company's Annual Report on Form 10-K for the year ended
              ended June 30, 2001 and incorporated herein by this reference).

    10.16.3*  Amendment to Employment Agreement, dated June 21, 2000 between Ulf
              Schneider and PAREXEL GmbH (filed as Exhibit 10.19.3 to the
              Company's Annual Report on Form 10-K for the year ended ended June
              30, 2001 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).

                                       63
<PAGE>

    10.18*    Change of Control/Severance Agreement, dated as of April 9, 2001,
              by and between the Company and Carl A. Spalding (filed as Exhibit
              10.22 to the Company's Annual Report on Form 10-K for the year
              ended June 30, 2001 and incorporated herein by this reference).

    10.19*    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).

    10.20*    1998 Non-Qualified, Non-Officer Stock Option Plan (filed as
              Exhibit 4.4 to the Company's Registration Statement on Form S-8
              (File No. 333-47033) and incorporated herein by this reference).

    10.21*    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).

    10.22     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 ).

    10.23     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).

    10.24*    Change of Control/Severance Agreement, dated as of December 23,
              2003, by and between the Company and Susan H. Alexander (filed as
              Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
              the quarter ended December 31, 2003 and incorporated herein by
              this reference).

    21.1      List of subsidiaries of the Company

    23.1      Consent of Ernst & Young LLP

    31.1      CEO certification pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002

    31.2      CFO certification pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002

    32.1      CEO certification pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002

    32.2      CFO certification pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002

* denotes management contract or any compensatory plan, contract or arrangement

                                       64
<PAGE>

                                   SCHEDULE II

                        PAREXEL INTERNATIONAL CORPORATION

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                ($ in thousands)

<TABLE>
<CAPTION>
                            Balance at     Charged to                     Balance at
                            beginning       costs and     Deductions        end of
                             of year        expenses    and write-offs       year
                           ------------   ------------  --------------   ------------
<S>                        <C>            <C>           <C>              <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:

Year ended June 30, 2002   $      4,575   $        961   $       (914)   $      4,622
Year ended June 30, 2003   $      4,622   $      2,408   $     (1,017)   $      6,013
Year ended June 30, 2004   $      6,013   $      2,089   $     (3,887)   $      4,215
</TABLE>

                                       65