<PAGE>
                                  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, 2005

                                       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)

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

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<S>                                                             <C>
            200 WEST STREET
         WALTHAM, MASSACHUSETTS                                    02451
(Address of principal executive offices)                        (Zip Code)
</TABLE>

        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. [X]

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, 2004 was approximately $528,029,532, based on the closing price of the
registrant's Common Stock as reported on the NASDAQ National Market on December
31, 2004, 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 September 2, 2005 there were 26,560,138 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 15, 2005 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                                      22
         Item 4.  Submission of Matters to a Vote of Security Holders    22

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                 61
         Item 9A. Controls and Procedures                                61
         Item 9B. Other Information                                      61

PART III
         Item 10. Directors and Executive Officers of the Registrant     61
         Item 11. Executive Compensation                                 61
         Item 12. Security Ownership of Certain Beneficial Owners
                     and Management and Related Stockholder Matters      61
         Item 13. Certain Relationships and Related Transactions         62

PART IV
         Item 14. Principal Accountant Fees and Services                 62
         Item 15. Exhibits, Financial Statement Schedule, and
                     Reports on Form 8-K                                 62

SIGNATURES                                                               63
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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 PAREXEL International Corporation's
("PAREXEL" or the "Company") 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 it 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 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 to allow clients to better manage the
bio/pharmaceutical product lifecycle with the goal of reducing the time, risk
and cost associated with the development and commercialization of new therapies
and medical products. Since its founding in 1983, PAREXEL has developed
significant expertise in processes and technologies supporting these objectives.
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 new medical
products. The Company believes that outsourcing of these services has increased
in the past and should continue to increase in the future because of several
factors, which are placing increased pressure on clients. These factors include
the need to more tightly manage costs, capacity limitations, reductions in
exclusivity periods, the desire to speed up patient recruitment and reduce
development time, increased globalization and virtualization of clinical trials,
productivity issues, upcoming patent expirations, and more stringent government
regulations. With increased levels of investment continuing to be required and
with development times being extended, the Company believes these trends will
continue to create opportunities for companies like PAREXEL that are focused on
improving the efficiency of the drug development process.

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 5,140
employees throughout 37 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


                                        3
<PAGE>
2005, PAREXEL derived 62.7% of its service revenue from its international
operations. See Note 17 to the notes to the consolidated financial statements
included in Item 8 of this annual report for Geographic and Segment
information.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 three business segments, namely, Clinical Research
Services ("CRS"), PAREXEL Consulting and Medical Marketing ("PCMS"), and
Perceptive Informatics, Inc. ("Perceptive"). CRS constitutes the Company's core
business and includes clinical trials management and biostatistics, data
management and clinical pharmacology, as well as related medical advisory and
investigator site services. PCMS provides technical expertise in such
disciplines as regulatory affairs, industry training, publishing, product
development, management consulting, registration, commercialization issues,
market development, targeted communications services in support of product
launch, as well as health policy consulting and strategic reimbursement
services. Perceptive provides information technology solutions designed to
improve clients' product development processes. Perceptive offers a portfolio of
products and services that includes medical imaging services, interactive voice
response systems IVRS, clinical trials management systems CTMS, web-based
portals, systems integration, and patient diary applications. As of June 30,
2005, the Company owned approximately 97.8% of the outstanding shares of common
stock of Perceptive. On August 22, 2005, the Company acquired all of the equity
interests held by minority stockholders of Perceptive, and now owns 100% of
Perceptive. See Note 18 to the notes to the consolidated financial statements
included in Item 8 of this annual report.

Effective with the September 30, 2004 reporting period, certain components of
the Company's strategic business units were reorganized to better align services
offered to clients and to ensure a more integrated selling effort. Specifically,
the Company's clinical operations were consolidated by moving Phase I and some
small parts of the Regulatory business from the PAREXEL Consulting Group ("PCG")
to CRS, and Phase IV clinical operations from Medical Marketing Services ("MMS")
to CRS. The remaining businesses of PCG and MMS were then combined to form the
new PCMS business segment. These changes resulted in various reclassifications
to the historical segment information presented in Note 17 to the consolidated
financial statements included in Item 8 in this annual report, but had no impact
on the Company's total revenue, expenses, operating income, net income, or
balance sheet.

CLINICAL RESEARCH SERVICES

The Company's CRS business segment provides clinical trials management and
biostatistical and data management services. Revenue from these services
represented $375.3 million, or 68.9%, of the Company's consolidated service
revenue in fiscal year 2005, $375.2 million, or 69.4%, in fiscal year 2004, and
$364.2 million, or 70.2%, in fiscal year 2003.

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 are conducted in strict adherence with,
good clinical practice ("GCP"). The design of efficient CRFs, detailed
operations manuals, and site monitoring by the business unit'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.


                                        4
<PAGE>
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 I, II, III, and IV clinical trials.

-    CLINICAL PHARMACOLOGY (PHASE I - IIA)

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. The 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 Poitiers, France and Bloemfontein. These laboratories perform
bioanalytical analyses according to Good Laboratory Practices ("GLP")
principles. With these locations, the Clinical Pharmacology group offers
clinical pharmacology services (including bioanalytical services) with a total
of 347 dedicated beds (cooperating partners not included) on three continents.
Subsequent to the acquisition of Qdot PHARMA ("Qdot"), as disclosed in Note 18
to the consolidated financial statements in Item 8 of this annual report, the
number of dedicated beds has now increased to 395. 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.

-    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.

     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.


                                        5
<PAGE>
     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, the data management team performs an array of data
     abstraction, data review, medical coding, serious adverse event
     reconciliations, 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") and equivalent submissions and databases in strict
     accordance with FDA, European and Asian regulatory specifications.

     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 AND MARKETING SERVICES

The PCMS business segment 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. Service revenue from
the PCMS business represented $126.6 million, or 23.2%, of consolidated service
revenue in fiscal year 2005, $129.8 million, or 24.0%, in fiscal year 2004, and
$129.9 million, or 25.0%, in fiscal year 2003. PCMS offers drug development,
regulatory, manufacturing compliance, business process consulting, staffing
solutions, and marketing expertise consultation to the pharmaceutical,
bio/pharmaceutical and medical device industries in the U.S., Europe, and Asia.


                                        6
<PAGE>
     DRUG DEVELOPMENT CONSULTING ("DDC") - DDC provides comprehensive drug
     development and regulatory consulting services for pharmaceutical,
     biotechnology and medical device companies in major jurisdictions in North
     America, Europe, and Japan. These services include drug development and
     regulatory strategy design, scientific and technical evaluation, writing,
     and review services, regulatory application preparation and review,
     regulatory training for client personnel, and expert liaison with the FDA
     and other regulatory agencies.

     DDC works closely with clients to design drug development and regulatory
     strategies and comprehensive registration programs. The Company's drug
     development and regulatory affairs experts review existing published
     literature and regulatory precedents, evaluate the scientific and technical
     data 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.

     PROCESS & ORGANIZATIONAL EFFECTIVENESS ("POE") - The POE group offers a
     range of specialized clinical development and manufacturing consulting
     services for clients in the life sciences industry. POE's services are
     designed to help pharmaceutical, biotech and medical device companies
     achieve regulatory compliance, product quality and process excellence.
     These services include clinical and manufacturing strategy design, metrics
     assessment and development, risk management, GCP and GMP audits, processes
     optimization, organizational alignment, training and change management.

     POE offers its clients experienced regulatory and industry
     professionals--formerly from FDA, biotech, pharmaceutical and medical
     device companies--tested methodologies, thought leadership and focused
     expertise.

     STAFFING SOLUTIONS - The Staffing Solutions Group provides clinical support
     services to clients, including contracting of professional temporary staff
     out to clients. The skilled professionals that are employed by Staffing
     Solutions manage study sites, ensure compliance, develop strategies,
     perform training, and monitor studies in all phases and work in the
     following positions or areas:

          Clinical Research Associates,
          Project Managers,
          CRA Managers,
          Clinical Research Coordinators (on-site),
          Data Management,
          Medical Writing and
          Regulatory Affairs.

     These temporary contractors have knowledge in a wide range of therapeutic
     areas and extensive industry experience. The flexible and skilled staff
     within Staffing Solutions are available on short notice for assignments
     lasting from several days to several months or more and offer clients cost
     effective help to optimize their budgets and management resources by
     keeping projects on track and reducing the time clients would normally
     spend on training new employees.

     STRATEGIC MEDICAL MARKETING SERVICES ("SMMS") - The strategy of the SMMS
     group is to assist clients in achieving optimal market penetration for
     their products by providing customized, integrated and expert pre-launch
     and launch services in the U.S., Europe, and other areas of the world.
     SMMS's experience indicates that clients need assistance in creating
     awareness and understanding of their products in the marketplace and in
     addressing rapid acceptance of their products by opinion leaders,
     physicians, managed care organizations and patient groups leading to
     accelerated product acceptance and market penetration. SMMS designs and
     implements an integrated communication plan, which includes market and
     opinion leader development, market preparation, and targeted communications
     support for 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
     planning of meetings and exhibitions and providing continuing medical
     education ("CME") programs to help keep medical professionals apprised of
     current medical developments.

     HEALTH POLICY & STRATEGIC REIMBURSEMENT ("HPSR") - HPSR offers strategies
     for drug manufacturers regarding reimbursement from insurance companies and
     managed care providers and telecommunications and call center support for
     patient assistance programs.


                                        7
<PAGE>
PERCEPTIVE INFORMATICS, INC.

Perceptive 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 product development processes of clients. Service revenue
from the Perceptive business represented $42.8 million, or 7.9%, of consolidated
service revenue in fiscal year 2005, $36.0 million, or 6.6%, in fiscal year
2004, and $24.8 million, or 4.8%, in fiscal year 2003. Through Perceptive,
PAREXEL currently offers 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. As of June 30, 2005, the
Company owned approximately 97.8% of the outstanding shares of common stock of
Perceptive. On August 22, 2005, the Company acquired all of the equity interests
held by minority stockholders of Perceptive, and now owns 100% of Perceptive.
See Note 18 to the notes to the consolidated financial statements included in
Item 8 of this annual report.

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

     IVRS - Perceptive's IVRS service utilizes an Application Service Provider
     model under which Perceptive 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.

     CTMS - Perceptive's CTMS solutions are software packages that assist
     bio/pharmaceutical companies with the complex process of planning and
     managing clinical trials. These software packages include IMPACT,
     INITIATOR, and INVESTIGATOR. IMPACT, Perceptive's flagship software
     product, is an enterprise-wide clinical trials management system used to
     plan studies, track progress, support monitoring activities, monitor 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 Perceptive to assist in the management
     and conduct of Phase I trials. Perceptive also offers INVESTIGATOR, an
     investigator database tool used to maintain up-to-date information
     concerning investigators and their performance on prior trials. Sponsor
     companies use the tool to help select investigators when initiating a new
     clinical trial.

     WEB-BASED PORTAL - 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.

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

     PATIENT DIARY APPLICATIONS - 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 Perceptive'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.


                                        8
<PAGE>
SALES AND MARKETING

PAREXEL's sales and marketing personnel carry 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 three 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 individual clients 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 marketing personnel.
The Company's marketing activities consist primarily of brand management,
collateral development, participation in industry conferences, advertising,
e-marketing, publications, website development and maintenance, market
information development and analysis, and strategic planning.

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 2005, the Company's five largest clients accounted for 25%
of its consolidated service revenue. In fiscal year 2004, the Company's five
largest clients accounted for 30% of its consolidated service revenue. No single
client accounted for 10% or more of consolidated service revenues in fiscal
years 2005 and 2004. 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 2005, approximately 37.3% of the Company's service revenue was
attributed to operations in the U.S. and approximately 62.7% of the Company's
service revenue was attributed to operations outside of 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, 2005 was $732.2
million, compared with $699.2 million at June 30, 2004. The Company anticipates
that approximately $390.6 million of the backlog as of June 30, 2005 will be
recognized as revenue after fiscal year 2006 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.


                                        9
<PAGE>
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 rapid 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., PRA International., Kendle
International Inc. and ICON PLC.

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 quickly recruit investigators and patients;

     -    the ability to integrate information technology with systems to
          improve the efficiency of clinical research;

     -    an international presence with strategically located facilities;

     -    financial strength and stability; and

     -    price.

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

PCMS

PCMS 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, individual consultants,
specialist medical marketing companies, large international advertising
companies, medical public relation firms, and small and large bio/pharmaceutical
services companies.

The Company believes that it is different from its competitors in that no other
company provides the particular combination of services that PCMS offers. The
Company considers PCMS's key competitive strengths to include a combination of
deep expertise in early stage drug development, regulatory strategy and
submissions, manufacturing compliance, pricing, reimbursement and global
marketing and communications strategies.

PCMS's combination of industry, medical/scientific, regulatory, manufacturing
and business process expertise, uniquely qualifies it to help its clients get
the right product to market in an efficient and effective manner.


                                       10
<PAGE>
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.
This and other trademarks have been registered 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 have become generic.

EMPLOYEES

As of June 30, 2005, the Company had approximately 5,140 employees.
Approximately 36% of the employees are located in North America and 64% are
located throughout Europe, Asia, Africa, 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 qualified professional, scientific and technical staff. The level of
competition among employers in the U.S. and oversees 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 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 to the
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 21 CFR Part 11 that apply to the pharmaceutical and CRO industries.
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 of 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 EU 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.


                                       11
<PAGE>
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 of numerous countries. The Company has managed
simultaneous regulatory submissions in more than one country for a number of
drug sponsors during each of the past nine 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
the International Conference on Harmonisation ("ICH") of Technical Requirements
for Registration of Pharmaceuticals for Human use. 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.

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 in the U.S. 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 consists of basic safety and pharmacology testing in
               approximately 20 to 80 human subjects, usually healthy
               volunteers, and includes studies to determine metabolic and
               pharmacologic action of the product in humans, how the drug or
               biologic works, how it is affected by other drugs, how it is
               tolerated and absorbed, where it goes in the body, how long it
               remains active, and how it is broken down and eliminated from the
               body.

          -    Phase II includes basic efficacy (effectiveness) and dose-range
               testing, sometimes in 100 to 200 patients afflicted with a
               specific disease or condition for which the product is intended
               for use, further safety testing, evaluation of effectiveness, and
               determination of optimal dose levels, dose schedules, and routes
               of administration. If Phase II studies yield satisfactory results
               and no hold is placed on further studies by the FDA, Phase III
               studies can be commenced.

          -    Phase III includes larger scale, multi-center, comparative
               clinical trials conducted with patients afflicted by a target
               disease in order to provide enough data for a valid statistical
               test of safety and effectiveness required by the FDA and others
               and to provide a basis for product labeling. When results from
               Phase II or Phase III show special promise in the treatment of a
               serious condition for which existing therapeutic options are
               nonexistent, limited, or of minimal value, the FDA may allow the
               sponsor to make the new drug available to a larger number of
               patients through the regulated mechanism of a Treatment
               Investigational New Drug ("TIND"), which may span late Phase II,
               Phase III, and FDA review. Although TINDs may enroll and collect
               a substantial amount of data from tens of thousands of patients,
               they are not granted in all cases.

     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.


                                       12
<PAGE>
     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.

     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 FDA. 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
the Company's business.


                                       13
<PAGE>
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.

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 this report, including 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 the execution of services. The loss or
delay of a large contract or the loss or delay of multiple contracts could
adversely affect the Company's operating results, possibly materially. The
Company has in the past experienced contract cancellations, which have adversely
affected its operating results, including a major Phase III cancellation during
the first quarter of this fiscal year.


                                       14
<PAGE>
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.

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 it may lose clients, which would cause its business to
suffer.

CRS 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 PCMS business also competes 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 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 RATE NATURE OF THE COMPANY'S CONTRACTS COULD HURT ITS OPERATING
RESULTS

Approximately 85.0% of the Company's contracts are fixed rate. 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.


                                       15
<PAGE>
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 European Union. 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 adopted GCP in 1998. The U.S., Europe and Japan have also collaborated
in the 15-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.

Parts of PAREXEL's PCMS 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 PCMS business in this area. As a result of lower level of FDA
enforcement activities over the last two years, PCMS experienced a decline in
the group's GMP consulting business, which adversely affected the business unit.

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 could 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, 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.


                                       16
<PAGE>
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.

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, 2005, the Company's five largest clients accounted for 25% of its
consolidated service revenue although no single client accounted for 10% or more
of consolidated service revenue, and in the fiscal year ended June 30, 2004, the
Company's five largest clients accounted for 30% of its consolidated service
revenue, although no single client accounted for 10% or more 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 were 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.


                                       17
<PAGE>
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.

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
and with investigators. 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 62.7% of
total consolidated service revenue for the fiscal year ended June 30, 2005 and
approximately 54.8% of total consolidated service revenue for the fiscal year
ended, June 30, 2004. In addition, the Company's service revenue from operations
in the United Kingdom represented approximately 19.7% of total consolidated
service revenue for the fiscal year ended June 30, 2005 and approximately 18.2%
of total consolidated service revenue for the fiscal year ended June 30, 2004.
The Company's service revenue from operations in Germany represented
approximately 18.6% of total consolidated service revenue for the fiscal year
ended June 30, 2005 and approximately 15.8% of total consolidated service
revenue for the fiscal year ended June 30, 2004. 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.


                                       18
<PAGE>
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 $5.3 million for the quarter
ended September 30, 2004, $13.5 million for the quarter ended December 31, 2004,
$17.3 million for the quarter ended March 31, 2005 and $(5.1) million for the
quarter ended June 30, 2005. 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
          projects;

     -    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

     -    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 65-70% 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 75-80% of the
Company's total operating costs in fiscal year 2005. 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 62.7% of the Company's total consolidated service revenue for the
fiscal year ended June 30, 2005 and approximately 54.8% of the Company's total
consolidated service revenue for the fiscal year ended June 30, 2004 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 and
have had a significant effect on the Company's 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 fiscal year ended June 30, 2005 approximately
               19.7% of total consolidated service revenue was denominated in
               British pounds and approximately 34.2% of total consolidated
               service revenue was denominated in Euros. For the fiscal year
               ended June 30, 2004, approximately 18.2% of total consolidated
               service revenue was denominated in British pounds and
               approximately 29.6% of total consolidated 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.


                                       19
<PAGE>
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.

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:


                                       20
<PAGE>
     -    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 September 2, 2005, the closing sale
price of the Company's common stock on the NASDAQ National Market was $19.83 per
share. During the period from July 1, 2003 to June 30, 2005, the price of the
Company's common stock ranged from a high of $25.04 per share to a low of $13.35
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.

The Company's stock price can be affected by quarter-to-quarter variations in a
number of factors including:

     -    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, 2005, the Company occupied approximately 1,200,000 square feet of
building space in 51 locations in 37 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
2005 and 2022.

The Company's U.S. facilities account for approximately 510,000 square feet. In
particular, the Company occupies approximately 241,000 square feet in various
locations in the Northeast, 111,000 square feet in various Mid-Atlantic
locations and 50,000 square feet in various Western locations.

The Company's non-U.S. facilities account for approximately 690,000 square feet.
In particular, the Company occupies approximately 169,000 square feet in various
locations in the United Kingdom, 240,000 square feet in various locations in
Germany and 71,000 square feet in various locations in France.


                                       21
<PAGE>
The Company's principal facilities are set forth below:

<TABLE>
<CAPTION>
Facility                      Space Ft.   Use of Facility                        Lease Expiration
---------------------------   ---------   ------------------------------------   ----------------
<S>                           <C>         <C>                                    <C>
Headquarters in Waltham, MA     80,000    CRS, Perceptive, and Corporate               2009
Lowell, MA                     108,000    PCMS, CRS, Perceptive, and General &         2011
                                          Administrative ("G&A")
Uxbridge, UK                    80,000    CRS, PCMS, and G&A                           2022
Berlin, Germany                190,000    CRS, PCMS, Perceptive and G&A                2012
</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..........................      516,000
PCMS.........................      360,000
Perceptive...................       84,000
General and Administrative...      240,000
</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 2005.

                                     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, 2005 and 2004,
respectively, on the NASDAQ National Market. The prices in the table below
reflect inter-dealer prices without retail mark-up, markdown or commission and
may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                       2005              2004
                 ---------------   ---------------
                  High      Low     High      Low
                 ------   ------   ------   ------
<S>              <C>      <C>      <C>      <C>
First Quarter    $20.43   $18.10   $17.70   $13.35
Second Quarter   $21.37   $17.71   $18.78   $15.28
Third Quarter    $25.04   $19.02   $18.57   $15.80
Fourth Quarter   $24.44   $17.12   $21.00   $17.23
</TABLE>

As of August 25, 2005, there were approximately 75 stockholders of record of the
Company's common stock. The number does not include stockholders 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.


                                       22
<PAGE>
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,
2005:

<TABLE>
<CAPTION>
                                                           Total Number of Shares        Maximum Number (or
                                                            (or Units) Purchased    Appropriate Dollar Value) of
                       Total Number of     Average Price     as Part of Publicly     Shares (or Units) that May
                      Shares (or Units)   Paid per Share     Announced Plans or      Yet Be Purchased Under the
       Period             Purchased          (or Unit)          Programs (1)              Plans or Programs
       ------         -----------------   --------------   ----------------------   ----------------------------
<S>                   <C>                 <C>              <C>                      <C>
04/01/05 - 04/30/05         88,148            $17.95                88,148                  $14.4 million
05/01/05 - 05/31/05         23,148            $18.04                23,148                  $14.0 million
06/01/05 - 06/30/05             --                --                    --                  $14.0 million
                           -------                                 -------
   Total                   111,296            $17.97               111,296
                           =======                                 =======
</TABLE>

     (1)  On September 9, 2004, 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.

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data of the Company for the five
years ended June 30, 2005 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)
                                                   -------------------------------------------------------------
                                                      2005          2004         2003         2002       2001
                                                    --------      --------     --------     --------   --------
<S>                                                 <C>           <C>          <C>          <C>        <C>
OPERATIONS

Service revenue                                     $544,726      $540,983     $518,936     $451,461   $387,560
Income (loss) from operations                       $   (276)(1)  $ 18,373(2)  $ 17,228(3)  $ 20,493   $ (6,860)(4)
Net income (loss)                                   $(35,177)     $ 13,791     $ 10,662     $ 13,235   $   (825)
Basic earnings (loss) per share                     $  (1.35)     $   0.53     $   0.42     $   0.53   $  (0.03)
Diluted earnings (loss) per share                   $  (1.35)     $   0.51     $   0.42     $   0.52   $  (0.03)

FINANCIAL POSITION
Cash, cash equivalents and marketable securities    $ 88,622      $ 95,607     $ 82,724     $ 66,109   $ 60,949
Working capital                                     $120,301      $145,408     $134,346     $138,020   $123,488
Total assets                                        $475,736      $502,996     $464,237     $407,161   $361,534
Long-term debt                                      $  1,115      $    471     $    644     $    432   $     12
Stockholders' equity                                $205,571      $246,760     $227,100     $200,077   $177,822

OTHER DATA
Purchases of property and equipment                 $ 31,813      $ 27,824     $ 29,985     $ 23,808   $ 18,145
Depreciation and amortization                       $ 29,618      $ 25,762     $ 20,656     $ 17,893   $ 21,453
Number of employees                                    5,140         4,875        5,095        4,930      4,640
Weighted average shares used in computing:
   Basic earnings (loss) per share                    26,065        26,010       25,371       24,928     24,637
   Diluted earnings (loss) per share                  26,065        26,795       25,683       25,582     24,637
</TABLE>


                                       23
<PAGE>
     (1)  Loss from operations for the year ended June 30, 2005 reflects $24.3
          million in restructuring charges recorded in the quarter ended June
          30, 2005, consisting of $4.3 million for severance expense associated
          with the elimination of 123 managerial and staff positions and $20.5
          million related to eleven newly-abandoned leased facilities (or new
          sections of previously partially abandoned facilities), partially
          offset by $(0.5) million related to changes in assumptions for leased
          facilities, which were abandoned in June 2001 and in March 2004.
          Additionally, the Company recorded $2.7 million of impairment charges
          associated with abandoned leased facilities and other fixed assets,
          and $0.5 million related to other special charges. See Note 7 to the
          consolidated financial statements included in Item 8 of this annual
          report for further detail.

     (2)  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.

     (3)  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.

     (4)  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.

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 three business segments, namely, CRS, PCMS 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.

PCMS provides technical expertise in such disciplines as clinical pharmacology,
regulatory affairs, industry training, and management consulting; and provides a
full spectrum of market development, product development, and targeted
communications services in support of product launch. PCMS consultants identify
alternatives and propose solutions to address clients' product development,
registration, and commercialization issues. PCMS also provides health policy
consulting and strategic reimbursement services.


                                       24
<PAGE>
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. As of June 30, 2005, the
Company owned approximately 97.8% of the outstanding shares of common stock of
Perceptive. On August 22, 2005, the Company acquired all of the equity interests
held by minority stockholders of Perceptive, and now owns 100% of Perceptive.
See Note 18 to the notes to the consolidated financial statements included in
Item 8 of this annual report.

Effective with the September 30, 2004 reporting period, certain components of
the Company's strategic business units were reorganized to better align services
offered to clients and to ensure a more integrated selling effort. Specifically,
the Company's clinical operations were consolidated by moving Phase I and some
small parts of the Regulatory business from PCG to CRS, and Phase IV clinical
operations from MMS to CRS. The remaining businesses of PCG and MMS were then
combined to form the new PCMS business segment. These changes resulted in
various reclassifications to the historical segment information presented in
Note 17 to the consolidated financial statements included in Item 8 in this
annual report, but had no impact on the Company's total revenue, expenses,
operating income, net income, or balance sheet.

Additionally, an accounting reclassification in the amount of $7.0 million, $6.2
million, and $3.4 million for the fiscal years 2005, 2004, and 2003,
respectively has been made from Service Revenue to Other Income/(Loss) to
reflect a change in the accounting treatment with respect to the impact of
foreign exchange rates on certain CRS contracts denominated in a currency other
than the prime contract holder's functional currency. The change had no impact
to expenses, net income, or earnings per share, but did impact gross margin and
operating income.

The Company conducts a significant portion of its operations in foreign
countries. Approximately 62.7% and 54.8% of the Company's service revenue for
the fiscal years ended June 30, 2005 and 2004, 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, 2005,
approximately 19.7% of total service revenue was denominated in British Pounds
and approximately 34.2% of total service revenue was denominated in Euros. For
the fiscal year ended June 30, 2004, approximately 18.2% of total service
revenue was denominated in British Pounds and approximately 29.6% 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 2005, the Company's
revenues and the Company's costs increased in 2005 from the comparable 2004
period.

Approximately 85.0% of the Company's contracts are fixed rate, 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.

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 AND ESTIMATES

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:


                                       25
<PAGE>
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
historical 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.

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 2005 and 2004. 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, 2005 and 2004. 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, 2005 and 2004:

<TABLE>
<CAPTION>
                                              For the year ended June 30, 2005
                                            (in thousands, except per share data)
                                    ----------------------------------------------------
                                      First     Second      Third     Fourth      Total
                                     Quarter    Quarter    Quarter    Quarter     Year
                                    --------   --------   --------   --------   --------
<S>                                 <C>        <C>        <C>        <C>        <C>
Service revenue                     $130,422   $135,759   $134,905   $143,640   $544,726
Income (loss) from operations          8,481      7,511      7,473    (23,741)      (276)
Net income (loss)                      5,656      6,066      4,619    (51,518)   (35,177)
Diluted earnings (loss) per share   $   0.21   $   0.23   $   0.17   $  (1.98)  $  (1.35)
</TABLE>


                                       26
<PAGE>
<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                     $131,433   $132,596   $137,665   $139,289   $540,983
Income (loss) from operations          7,130      6,732     (3,918)     8,429     18,373
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>

ACQUISITIONS AND IMPACT OF RESTRUCTURING AND OTHER CHARGES

ACQUISITIONS

Effective October 1, 2004, the Company acquired 100% of the outstanding stock of
Integrated Marketing Concepts ("IMC"), a provider of specialty professional
marketing and communication services in Whitehall, Pennsylvania for
approximately $1.5 million in cash. Under the agreement, the Company agreed to
make additional payments of up to $2.9 million in contingent purchase price if
IMC achieves certain established financial targets through September 30, 2007.

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.

RESTRUCTURING CHARGES

During the year ended June 30, 2005, the Company recorded restructuring charges
totaling $24.3 million, consisting of $4.3 million for severance expense
associated with the elimination of 123 managerial and staff positions and $20.5
million related to eleven abandoned leased facilities partially, offset by $0.5
million related to changes in assumptions for leased facilities, which were
abandoned in June 2001 and March 2004. In addition, the Company recorded $2.7
million of impairment charges associated with abandoned leased facilities and
other fixed assets.

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 relating of changes in assumptions
for leased facilities, which were abandoned in June 2001.

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 2005, 2004,
and 2003 were as follows:


                                       27
<PAGE>
<TABLE>
<CAPTION>
                                            2005 vs. 2004                    2004 vs. 2003
                                         -------------------              -------------------
                                          Increase       %                 Increase       %
                     2005       2004     (Decrease)   Change     2003     (Decrease)   Change
                   --------   --------   ----------   ------   --------   ----------   ------
($IN THOUSANDS)
<S>                <C>        <C>        <C>          <C>      <C>        <C>          <C>
Service revenue:
   CRS             $375,327   $375,219    $   108       0.0%   $364,200    $11,019       3.0%
   PCMS             126,552    129,791     (3,239)     -2.5%    129,936       (145)     -0.1%
   Perceptive        42,847     35,973      6,874      19.1%     24,800     11,173      45.1%
                   --------   --------    -------              --------    -------
                   $544,726   $540,983    $ 3,743       0.7%   $518,936    $22,047       4.2%
                   ========   ========    =======              ========    =======
Direct costs:
   CRS             $247,527   $242,255    $ 5,272       2.2%   $238,998    $ 3,257       1.4%
   PCMS              88,975     95,702     (6,727)     -7.0%     93,627      2,075       2.2%
   Perceptive        23,542     18,106      5,436      30.0%     14,551      3,555      24.4%
                   --------   --------    -------              --------    -------
                   $360,044   $356,063    $ 3,981       1.1%   $347,176    $ 8,887       2.6%
                   ========   ========    =======              ========    =======
Gross profit:
   CRS             $127,800   $132,964    $(5,164)     -3.9%   $125,202    $ 7,762       6.2%
   PCMS              37,577     34,089      3,488      10.2%     36,309     (2,220)     -6.1%
   Perceptive        19,305     17,867      1,438       8.0%     10,249      7,618      74.3%
                   --------   --------    -------              --------    -------
                   $184,682   $184,920    $  (238)     -0.1%   $171,760    $13,160       7.7%
                   ========   ========    =======              ========    =======
</TABLE>

Certain fiscal year 2003 and 2004 amounts have been reclassified to conform to
the fiscal year 2005 presentation. 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, 2005 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30,
2004

Service revenue increased by $3.7 million, or 0.7%, to $544.7 million for the
fiscal year ended June 30, 2005 from $541.0 million for the fiscal year ended
June 30, 2004. On a geographic basis, service revenue for the fiscal year ended
June 30, 2005 was distributed as follows: The United States $202.9 million
(37.3%), Europe $313.1 million (57.4%), and Asia & Other $28.7 million (5.3%).
Service revenue for the fiscal year ended June 30, 2004 was distributed as
follows: The United States $244.7 million (45.2%), Europe $272.5 million
(50.4%), and Asia & Other $23.8 million (4.4%). The year-over-year shift of
revenue from the United States to Europe was primarily attributed to a growing
trend toward winning new business awards in the U.S. for projects to be
completed outside of the U.S. and recent softness in the PCMS business segment.

On a segment basis, CRS service revenue remained flat at $375.3 million for the
fiscal year ended June 30, 2005 compared with $375.2 million in fiscal year
2004, as the favorable $17.4 million impact of foreign exchange fluctuation was
essentially offset by the impact of several factors including: cancellations
caused by drug safety and efficacy issues, client driven project
start-up-delays, and the impact of European Clinical Trials Directive on the
Phase I unit in Germany, which delayed the start up of certain Phase I projects.
PCMS service revenue decreased by $3.2 million, or 2.5%, to $126.6 million in
fiscal year 2005 from $129.8 million in fiscal year 2004 due primarily to lower
levels of demand for medical marketing services from a key pharmaceutical client
and staffing shortages in the consulting business. Perceptive service revenue
increased by $6.9 million, or 19.1%, to $42.8 million in fiscal year 2005, as
compared with $36.0 million in fiscal year 2004. Of the total 19.1% increase,
approximately 16.2% resulted from increased demand for the group's medical
imaging and IVRS services, with the remaining 2.9% attributed 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.


                                       28
<PAGE>
Direct costs increased by $4.0 million, or 1.1%, to $360.0 million in fiscal
year 2005 from $356.0 million in fiscal year 2004. On a segment basis, CRS
direct costs increased by $5.3 million, or 2.2%, to $247.5 million in fiscal
year 2005 from $242.2 million in fiscal year 2004. The relatively small
year-over-year increase in CRS direct costs was due primarily to flat revenue,
tighter cost controls, and productivity and quality improvements, which were
partially offset by an increase of $11.5 million due to foreign currency
fluctuations. As a percentage of service revenue, CRS direct costs for fiscal
year 2005 increased by 1.4 points to 66.0% in fiscal year 2005 from 64.6% in
fiscal year 2004 due primarily to higher hiring and relocation costs. PCMS
direct costs decreased $6.7 million, or 7.0%, to $89.0 million in fiscal year
2005 from $95.7 million in fiscal year 2004. The year-over-year decrease in PCMS
direct costs was a result of lower labor costs directly tied to lower revenue
levels and tighter cost controls, which were partially offset by a 2.9% increase
from foreign currency fluctuations. As a percentage of service revenue, PCMS
direct costs for the year ended June 30, 2005 decreased by 3.4 points to 70.3%
in fiscal year 2005 from 73.7% in the same period one year ago as a result of
the factors previously mentioned. Perceptive direct costs increased by $5.4
million, or 30.0%, to $23.5 million in fiscal 2005 from $18.1 million in the
same period in the last fiscal year. Of the total 30.0% increase, approximately
3.1% was attributed to foreign currency fluctuations with the remaining 26.9%
primarily due to higher labor costs associated with increased staffing needs to
support business growth. As a percentage of service revenue, Perceptive's direct
costs for the year ended June 30, 2005 increased by 4.6 points to 54.9% in
fiscal 2005 from 50.3% in the same period one year ago as a result of a less
favorable revenue mix.

Selling, general and administrative ("SG&A") expenses increased by $1.0 million,
or 0.8%, to $131.0 million in fiscal year 2005 from $130.0 million in fiscal
year 2004. The year-over-year increase was attributed primarily to a 3.5%
increase resulting from foreign currency fluctuations and incremental expense
incurred to comply with Sarbanes-Oxley 404, offset by a 2.7% decrease resulting
from a reduction in bonus accrual and other cost cutting measures in fiscal year
2005. As a percentage of service revenue, SG&A was flat at 24.1% in fiscal year
2005 and 24.0% in fiscal year 2004.

Depreciation and amortization ("D&A") expense increased by $3.8 million, or
15.0%, to $29.6 million in fiscal year 2005 from $25.8 million in fiscal year
2004. Of the total 15.0% increase, approximately 10.5% was attributed to
impairment charges associated with abandoned leased facilities and other fixed
assets, and the remaining 4.5% was due primarily to foreign currency
fluctuations and increased capital spending. As a percentage of service revenue,
D&A increased by 0.6 points to 5.4% in fiscal year 2005 versus 4.8% in fiscal
year 2004.

The Company took a $24.3 million restructuring charge in fiscal year 2005
consisting of $4.3 million for severance expense associated with the elimination
of 123 managerial and staff positions and $20.0 million related to abandoned
leased facilities. In fiscal year 2004, the Company took a restructuring charge
of $10.8 million comprised of $3.9 million for severance expense associated with
the elimination of 157 managerial and staff positions, $5.6 million related to
seven abandoned leased facilities, and $1.3 million related to changes in
assumptions for previously abandoned leased facilities.

Income from operations decreased by $18.7 million, to a loss of $0.3 million in
fiscal 2005 from $18.4 million in fiscal year 2004 due primarily to
restructuring charges and the reasons noted in the preceding paragraphs.

Total other income decreased by $4.1 million, or 80.0% to $1.0 million in fiscal
year 2005 from $5.1 million in fiscal year 2004. The decrease was due primarily
to $2.0 million in foreign currency exchange losses, a $1.2 million write-off of
long-term investments deemed permanently impaired, and $0.9 million loss
associated with the unwinding of a foreign exchange contract.

In fiscal year 2005, the Company's effective tax rate was extremely high
primarily as a result of $37.4 million in tax valuation reserves recorded during
the quarter ended June 30, 2005 in conjunction with (1) net operating loss of
certain subsidiaries and (2) the write down of a portion of the Company's
deferred tax assets resulting from the loss position of certain PAREXEL
subsidiaries (mainly in the United States). In fiscal 2004, the Company had an
effective income tax rate of 39.7%. The Company's tax rate is a function of the
relative levels of profitability in the various taxing jurisdictions in which
the Company does business. 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 and its consolidated results of
operations and financial position. The Company is aggressively working to turn
around the performance of its underperforming entities and hopes to be in a
position to begin reversing these valuation allowances as early as fiscal year
2007.


                                       29
<PAGE>
FISCAL YEAR ENDED JUNE 30, 2004 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30,
2003

Service revenue increased by $22.1 million, or 4.2%, to $541.0 million for the
fiscal year ended June 30, 2004 from $518.9 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 $244.7 million
(45.2%), Europe $272.5 million (50.4%), and Asia & Other $23.8 million (4.4%).
Service revenue for the fiscal year ended June 30, 2003 was distributed as
follows: The United States $264.1 million (50.9%), Europe $233.7 million
(45.0%), and Asia & Other $21.1 million (4.1%).

On a segment basis, CRS service revenue increased by $11.0 million, or 3.0%, to
$375.2 million for the fiscal year ended June 30, 2004 from $364.2 million in
fiscal year 2003, as the result of a favorable $27.4 million effect of foreign
exchange fluctuations that were partially 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.
PCMS service revenue remained flat at $129.8 million in fiscal year 2004 and
$129.9 million in 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 increased by $3.3 million, or 1.4%, to $242.3 million in fiscal
year 2004 from $239.0 million in fiscal year 2003. Of the total 1.4% increase,
4.1% was attributed to the impact of foreign currency fluctuations, which was
offset by a decrease of 2.7% resulting from tighter cost controls. As a
percentage of service revenue, CRS direct costs decreased by 1.0 point to 64.6%
in fiscal year 2004 from 65.6% in the same period one year ago. PCMS direct
costs increased by $2.1 million, or 2.2%, to $95.7 million in fiscal year 2004
from $93.6 million in fiscal year 2003. Of the total 2.2% increase,
approximately 1.5% was attributed to foreign currency fluctuations, with the
remaining 0.7% due primarily to increased labor costs. As a percentage of
service revenue, PCMS direct costs increased by 1.6 points to 73.7% in fiscal
year 2004 from 72.1% in the same period one year ago primarily due to a less
favorable revenue mix and the impact of hiring in anticipation of increased
business. Perceptive direct costs increased by $3.6 million, or 24.4%, to $18.1
million in fiscal 2004 from $14.6 million in the same period in the last fiscal
year. Of the total 24.4% increase, approximately 3.0% was attributed to foreign
currency fluctuations, 8.6% was caused by incremental costs associated with the
FW Pharma acquisition completed in January 2003, and 12.8% 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 50.3% in fiscal 2004 from 58.7% in the same period one year ago
due primarily to higher revenue and continued productivity improvements.

Selling, general and administrative 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 24.0% in both fiscal years 2004 and 2003.

Depreciation and amortization 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 4.8% 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 $1.1 million, or 6.6%, to $18.4 million in
fiscal 2004 from $17.2 million in fiscal year 2003 due to the reasons noted in
the preceding paragraphs. Income from operations remained flat at 3.4% in fiscal
year 2004 and 3.3% in fiscal year 2003.

Total other income (loss) increased by $3.8 million, or 302.7%, to $5.1 million
in fiscal year 2004 from $1.3 million in fiscal year 2003. The increase was due
primarily to foreign currency exchange gains.


                                       30
<PAGE>
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 had tax loss carryforwards, tax effected, of $11.7 million that were
available to offset future tax liabilities based upon future profitability in
the different taxing jurisdictions in which PAREXEL operates.

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 rate, 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
39 days at June 30, 2005 and 36 days at June 30, 2004. The increase in DSO as of
June 30 2005 as compared with June 30, 2004 was due primarily to slow
collections and heavy levels of billing in June 2005. Accounts receivable, net
of the allowance for doubtful accounts, was $217.9 million ($123.8 million in
billed accounts receivable and $94.1 million in unbilled accounts receivable) at
June 30, 2005 and $222.0 million ($127.5 million in billed accounts receivable
and $94.5 million in unbilled accounts receivable) at June 30, 2004. Deferred
revenue was $132.2 million at June 30, 2005 and $145.4 million at June 30, 2004.
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.

CASH FLOWS

Net cash provided by operating activities for fiscal year 2005 totaled $31.0
million and was generated from $29.6 million related to non-cash charges for
depreciation and amortization expense, a $16.3 million increase in liabilities
(primarily related to restructuring reserves), a $29.6 million change in
deferred taxes (related to recording of valuation reserves), and a $0.5 million
decrease in current and other assets, offset by a net loss of $35.2 million, an
$8.8 million decrease in accounts receivable (net of allowance for doubtful
accounts and deferred revenue), and a $1.0 million decrease in accounts payable
and other sources. 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 used by investing activities for fiscal year 2005 totaled $2.0 million,
and consisted of $31.8 million of equipment purchases (primarily for software
and hardware) and $1.5 million used for the acquisition of IMC, offset by $31.3
million of net proceeds from the sales of marketable securities and other
assets. Net cash used by investing activities for fiscal year 2004 totaled $63.0
million and consisted principally 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 the sale of securities), and $13.4
million for the acquisition of 3C.


                                       31
<PAGE>
Net cash used in financing activities for fiscal year 2005 totaled $2.8, and
consisted of $9.7 million used to repurchase the Company's common stock pursuant
to its stock repurchase program, offset by $6.6 million in proceeds from the
issuance of common stock in connection with the Company's stock option and
employee stock purchase plans and $0.3 million from borrowings under
lines-of-credit. Net cash used by financing activities for the fiscal year 2004
totaled $0.1 million as $7.5 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.

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, 2005, 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, 2005, 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.

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 $31 million in
fiscal year 2006, primarily for computer software and hardware.

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. As of
June 30, 2005, the Company had acquired 275,844 shares at a total cost of $6.0
million under this program.


                                       32
<PAGE>
CONTINGENT LIABILITIES AND GUARANTEES

     -    The Company's contractual lease obligations for fiscal years
          subsequent to June 30, 2005 are as follows:

<TABLE>
<CAPTION>
                      2006      2007      2008      2009      2010    Thereafter     Total
                    -------   -------   -------   -------   -------   ----------   --------
($IN THOUSANDS)
<S>                 <C>       <C>       <C>       <C>       <C>       <C>          <C>
Operating leases    $39,355   $36,070   $29,881   $23,769   $13,758     $74,191    $217,024
Obligations under
   capital leases       738       468       332       272       126          --       1,936
                    -------   -------   -------   -------   -------     -------    --------
Total               $40,093   $36,538   $30,213   $24,041   $13,884     $74,191    $218,960
                    =======   =======   =======   =======   =======     =======    ========
</TABLE>

     -    In association with the IMC acquisition as discussed in Note 3 to the
          consolidated financial statements included in Item 8 of this annual
          report, as of June 30, 2005, the Company is obligated to make maximum
          additional payments of $2.9 million in contingent purchase price if
          IMC achieves certain established financial targets through September
          30, 2007.

     -    In association with the Qdot acquisition as discussed in Note 18 to
          the Consolidated Financial Statements included in Item 8 of this
          annual report, the Company is obligated to make maximum additional
          payments of approximately $3.0 million in contingent purchase price if
          Qdot achieves certain established financial targets through September
          28, 2008.

     -    The Company has letter-of-credit agreements with banks totaling
          approximately $4.3 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.

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

As discussed in Note 18 to the consolidated financial statements included in
Item 8 of this annual report, on August 22, 2005, the Company acquired all of
the equity interests held by minority stockholders of Perceptive Informatics,
Inc., and now owns all of the outstanding common stock of Perceptive. This
acquisition was effected through a "short-form" merger of PIC Acquisition, Inc.,
an indirect subsidiary of PAREXEL and, prior to the merger, the owner of 97.8%
of the outstanding common stock of Perceptive. Under the terms of the merger,
Perceptive was valued at approximately $66.3 million, and PAREXEL agreed to pay
an aggregate of approximately $3.2 million in cash to the minority stockholders
for their shares of common stock. Certain executive officers and directors of
PAREXEL held shares of Perceptive common stock prior to the merger.

In addition, under the terms of the merger, PAREXEL assumed all outstanding
stock options under Perceptive's stock incentive plan. As a result, the holders
of Perceptive stock options are entitled to receive upon exercise of such
options $1.65 in cash, without interest, for each share of Perceptive common
stock that was subject to such options immediately prior to the merger. None of
the other terms and conditions of the Perceptive stock options have changed. The
stock options will continue to be exercisable only upon payment of the exercise
price of such options and to be subject to the vesting schedule to which such
stock options were subject immediately prior to the merger. Certain executive
officers and directors of PAREXEL held stock options to purchase Perceptive
common stock prior to the merger.

Additionally as part of the merger, PAREXEL has also agreed to make payments
totaling $1.6 million to certain employees of Perceptive on the first
anniversary of the effective date of the merger, including $500,000 to an
executive officer. These payments are not conditioned on these employees
remaining as employees of Perceptive on the first anniversary of the effective
date of the merger.


                                       33
<PAGE>
The terms and conditions of the merger were established and approved by a
special committee of the Board of Directors of PAREXEL consisting of two
independent directors of PAREXEL having no interests in Perceptive, with
consultation from an investment banking firm and legal counsel.

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. The total pro rata amount of gain
realized to-date through June 30, 2005 was $89,000. All payments have been
received in a timely manner.

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 Perceptive., 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 owned 0.87% of the
issued and outstanding common stock of Perceptive as of July 2003. 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 year ended June 30, 2004, certain members of the Company's Board of
Directors were affiliated with a company in which PAREXEL is a minority
shareholder. The total amount of investment by PAREXEL was $0.5 million.

RECENTLY ISSUED ACCOUNTING STANDARDS

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS Statement No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123(R)"),
which is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
Compensation". Statement 123(R) supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and amends SFAS Statement No. 95, Statement of Cash
Flows. Generally, the approach in Statement 123(R) is similar to the approach
described in Statement 123. However, Statement 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The Company adopted SFAS 123(R) on July
1, 2005 using the prospective method as described in SFAS No. 148 and is
currently in the process of evaluating an acceptable option valuation model.
Because Statement 123(R) must be applied not only to new awards but to
previously granted awards that are not fully vested on the effective date, and
because the Company adopted Statement 123 using the prospective transition
method (which applied only to awards granted, modified or settled after the
adoption date), compensation costs for some previously granted awards that were
not recognized under Statement 123 will be recognized under Statement 123(R).
However, had the Company adopted Statement 123(R) in prior periods, the impact
of that standard would have approximated the impact of Statement 123 as
described in the disclosure of pro forma net income and earnings per share in
Note 2 to the consolidated financial statements. Statement 123(R) also requires
the benefits of tax deductions in excess of recognized compensation costs to be
reported as a financing cash flow, rather than as an operating cash flow as
required under current literature. This requirement will reduce net operating
cash flows and increase net financing cash flows in periods after adoption. The
Company expects pre-tax stock-based compensation in fiscal year 2006 to be
approximately $1.7 million (unaudited).

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", which changes the requirements for the accounting and reporting of
a change in accounting principle. SFAS No. 154 applies to all voluntary changes
in accounting principle as well as to changes required by an accounting
pronouncement that does not include specific transition provisions. SFAS No. 154
requires that changes in accounting principle be retrospectively applied. SFAS
No. 154 is effective for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005. The Company does not believe
adoption of this statement will have a material impact on the Company's
financial statements.

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.


                                       34
<PAGE>
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, 2005, approximately 19.7% of total service
revenue was denominated in British pounds and approximately 34.2% of total
service revenue was denominated in Euros. The Company 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 SFAS 133.

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 SFAS 133. The notional contract amount of
these outstanding currency exchange contracts was approximately $10.3 million at
June 30, 2005. 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 $0.6 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 $1.1
million as of June 30, 2005 and $0.5 million as of June 30, 2004.


                                       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,
                                           ------------------------------
                                             2005       2004       2003
                                           --------   --------   --------
<S>                                        <C>        <C>        <C>
Service revenue                            $544,726   $540,983   $518,936
Reimbursement revenue                       126,811    111,387     96,902
                                           --------   --------   --------
      Total revenue                         671,537    652,370    615,838

Costs and expenses:
   Direct costs                             360,044    356,063    347,176
   Reimbursable out-of-pocket expenses      126,811    111,387     96,902
   Selling, general and administrative      131,025    129,989    124,502
   Depreciation and amortization             29,618     25,762     20,656
   Restructuring charges                     24,315     10,796      9,374
                                           --------   --------   --------
      Total costs                           671,813    633,997    598,610
                                           --------   --------   --------
Income (loss) from operations                  (276)    18,373     17,228
Interest income                               6,320      5,550      4,403
Interest expense                             (4,508)    (4,686)    (3,240)
Other income (loss), net                       (796)     4,206         96
                                           --------   --------   --------
      Total other income                      1,016      5,070      1,259

Income before provision for income taxes
   and minority interest                        740     23,443     18,487
Provision for income taxes                   35,566      9,313      7,250
Minority interest                               351        339        575
                                           --------   --------   --------
      Net income/(loss)                    $(35,177)  $ 13,791   $ 10,662
                                           ========   ========   ========
Earnings/(loss) per share:
   Basic                                   $  (1.35)  $   0.53   $   0.42
   Diluted                                 $  (1.35)  $   0.51   $   0.42

Weighted average shares:
   Basic                                     26,065     26,010     25,371
   Diluted                                   26,065     26,795     25,683
</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,
                                                                             -------------------
                                                                               2005       2004
                                                                             --------   --------
<S>                                                                          <C>        <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                 $ 84,622   $ 60,686
   Marketable securities (Note 4)                                               4,000     34,921
   Billed and unbilled accounts receivable, net (Note 5)                      217,887    221,956
   Prepaid expenses                                                            12,086     11,681
   Current deferred tax assets                                                 18,811     29,710
   Income tax receivable                                                        3,605      1,834
   Other current assets                                                         3,580      4,694
                                                                             --------   --------
      Total current assets                                                    344,591    365,482

Property and equipment, net (Note 6)                                           71,865     68,983
Goodwill (Note 2)                                                              42,815     41,002
Other intangible assets, net (Note 2)                                           9,228     10,636
Non-current deferred tax assets                                                 2,137     10,160
Other assets                                                                    5,100      6,733
                                                                             --------   --------
      Total assets                                                           $475,736   $502,996
                                                                             ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable and current portion of long-term debt                       $    507   $    768
   Accounts payable                                                            14,424     15,917
   Deferred revenue                                                           132,241    145,409
   Accrued expenses                                                            13,858     14,805
   Accrued restructuring charges (Note 7)                                      13,231      5,481
   Accrued employee benefits and withholdings                                  28,747     28,577
   Current deferred tax liabilities                                            16,928      4,424
   Other current liabilities                                                    4,354      4,693
                                                                             --------   --------
      Total current liabilities                                               224,290    220,074
Long-term debt                                                                  1,115        471
Non-current deferred tax liabilities                                           17,853     18,100
Long-term accrued restructuring charges (Note 7)                               17,773      7,944
Other liabilities                                                               5,188      5,886
                                                                             --------   --------
      Total liabilities                                                       266,219    252,475
                                                                             --------   --------
Commitments and contingencies (Note 15)
Minority interest in subsidiary                                                 3,946      3,761
Stockholders' equity:
   Preferred stock--$.01 par value; 5,000,000 shares authorized; Series A
      Junior Participating Preferred Stock - 50,000 shares designated,
      none issued and outstanding
   Common stock--$.01 par value; 50,000,000 shares authorized; shares
      issued: 26,153,334 and 26,522,178 at June 30, 2005 and 2004,
      respectively; shares outstanding: 26,153,334 and 26,077,078 at June
      30, 2005 and 2004, respectively                                             275        275
   Additional paid-in capital                                                 163,921    175,126
   Treasury stock, shares at cost: 0 and 445,100 shares
      at June 30, 2005 and 2004, respectively                                      --     (8,056)
   Retained earnings                                                           41,731     76,908
   Accumulated other comprehensive income (loss)                                 (356)     2,507
                                                                             --------   --------
      Total stockholders' equity                                              205,571    246,760
                                                                             --------   --------
      Total liabilities and stockholders' equity                             $475,736   $502,996
                                                                             ========   ========
</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, 2002                   25,172,808  $261    $167,829   $(8,165)  $ 52,455  $(12,303) $200,077  $ 18,563
                                                                                                                     ========
Shares issued under stock option/
   employee stock 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/
   employee stock 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)                            --
Shares 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
                                                                                                                     ========
Reclassification of treasury stock                                  (8,056)    8,056                             --
Shares repurchased in the open market           (476,344)   (5)     (9,737)                                  (9,742)
Shares issued under stock option/
   employee stock purchase plans                 552,600     5       6,553                                    6,558
Shares issued under subsidiary option plan                              35                                       35
Net unrealized loss on marketable securities
   and derivative instruments                                                                        (356)     (356)     (356)
Foreign currency translation adjustment                                                            (2,507)   (2,507)   (2,507)
Net loss                                                                                (35,177)            (35,177)  (35,177)
                                              ----------  ----    --------   -------   --------  --------  --------  --------
   Balance at June 30, 2005                   26,153,334  $275    $163,921        --   $ 41,731  $   (356) $205,571  $(38,040)
                                              ==========  ====    ========   =======   ========  ========  ========  ========
</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,
                                                                          --------------------------------
                                                                            2005        2004        2003
                                                                          --------   ---------   ---------
<S>                                                                       <C>        <C>         <C>
Cash flow from operating activities:
   Net income/(loss)                                                      $(35,177)  $  13,791   $  10,662
   Adjustments to reconcile net income/(loss) to net cash provided
      (used) by operating activities:
      Minority interest in net income of consolidated subsidiaries             351         339         575
      Depreciation and amortization                                         29,618      25,762      20,656
      Loss on disposal of assets                                                85         157         122
      Deferred income taxes                                                 29,607       7,070      (3,379)
      Allowance for doubtful accounts                                       (1,844)     (1,798)      1,391

   Changes in assets and liabilities, net of effects from acquisitions:
         Accounts receivable                                                 6,215       3,844       3,114
         Prepaid expenses and other current assets                          (2,870)      1,626      (1,469)
         Other assets                                                        3,409      (4,256)     (4,144)
         Accounts payable                                                   (1,556)      1,259       2,935
         Deferred revenue                                                  (13,168)     13,772      10,904
         Other current liabilities                                           7,186     (18,954)      5,445
         Other liabilities                                                   9,131       7,561       1,005
                                                                          --------   ---------   ---------
            Net cash provided by operating activities                       30,987      50,173      47,817
                                                                          --------   ---------   ---------
Cash flow from investing activities:
   Purchases of marketable securities                                      (60,300)   (159,706)   (204,589)
   Proceeds from sale of marketable securities                              91,221     137,775     235,229
   Purchases of property and equipment                                     (31,814)    (27,823)    (29,985)
   Acquisition of business, net of cash acquired                            (1,461)    (13,422)    (11,131)
   Proceeds from sale of assets                                                392         143         488
                                                                          --------   ---------   ---------
            Net cash used in investing activities                           (1,962)    (63,033)     (9,988)
                                                                          --------   ---------   ---------
Cash flow from financing activities:
   Proceeds from issuance of common stock                                    6,558       7,422       3,801
   Payments to repurchase common stock                                      (9,742)     (8,056)         --
   Borrowings (repayments) under lines of credit and long-term debt            369         477         (92)
   Proceeds from issuance of subsidiary's common stock                          35          64          --
                                                                          --------   ---------   ---------
            Net cash provided (used) by financing activities                (2,780)        (93)      3,709
                                                                          --------   ---------   ---------
Effect of exchange rate changes on cash and cash equivalents                (2,309)      3,905       5,717
                                                                          --------   ---------   ---------
Net increase (decrease) in cash and cash equivalents                        23,936      (9,048)     47,255
Cash and cash equivalents at beginning of year                              60,686      69,734      22,479
                                                                          --------   ---------   ---------
Cash and cash equivalents at end of year                                  $ 84,622   $  60,686   $  69,734
                                                                          ========   =========   =========
</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,
                                                        ----------------------------
                                                          2005      2004      2003
                                                        -------   -------   -------
<S>                                                     <C>       <C>       <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the year for:
   Interest                                             $ 4,508   $ 4,585   $ 3,236
                                                        =======   =======   =======
   Income taxes                                         $ 7,131   $ 2,838   $16,343
                                                        =======   =======   =======

SUPPLEMENTAL DISCLOSURES OF INVESTING ACTIVITIES

Fair value of assets acquired and goodwill              $ 2,820   $17,501   $21,294
Liabilities and minority interest assumed                (1,359)   (4,079)   (7,213)
                                                        -------   -------   -------
   Cash paid and common stock issued for acquisitions   $ 1,461   $13,422   $14,081
                                                        =======   =======   =======

SUPPLEMENTAL DISCLOSURES OF NON-CASH
   FINANCING ACTIVITIES

Income tax benefit from exercise of stock options       $    --   $ 1,256   $   221
                                                        =======   =======   =======
</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 and 2004 amounts have been reclassified to conform to
the fiscal year 2005 presentation. Effective with the September 30, 2004
reporting period, certain components of the Company's strategic business units
were reorganized to better align services offered to clients and to ensure a
more integrated selling effort. Specifically, the Company's clinical operations
were consolidated by moving Phase I and some small parts of the Regulatory
business from PCG to CRS, and Phase IV clinical operations from MMS to CRS. The
remaining businesses of PCG and MMS were then combined to form the new PCMS
business segment. These changes resulted in various reclassifications to the
historical segment information, but had no impact on the Company's total
revenue, expenses, operating income, net income, or balance sheet.

Additionally, an accounting reclassification in the amount of $7.0 million, $6.2
million, and $3.4 million for the fiscal years 2005, 2004, and 2003,
respectively has been made from Service Revenue to Other Income/(Loss) to
reflect a change in the accounting treatment with respect to the impact of
foreign exchange rates on certain contracts denominated in a currency other than
the prime contract holder's functional currency. The change had no impact to
expenses, net income, or earnings per share, but did impact gross margin and
operating income.

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 and PCMS 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 a proportional performance basis 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 contract
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
recognized 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 $64.1
million, $92.5 million and $78.6 million for the fiscal years ended June 30,
2005, 2004 and 2003, respectively.

CASH, CASH EQUIVALENTS, MARKETABLE SECURITIES, AND FINANCIAL INSTRUMENTS

The Company considers all highly liquid investments purchased with original
maturities of 90 days or less to be cash equivalents. Marketable securities
include securities purchased with original maturities of greater than 90 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 2005 and
2004, the Company's largest client accounted for 8% of consolidated service
revenue.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

PAREXEL establishes a specific allowance for doubtful accounts when the Company
becomes aware that a customer may not meet its financial obligation. Customer
accounts are reviewed individually on a regular basis and appropriate reserves
are established as deemed necessary.

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. The amounts related to internal use software totaled $38.8
million at June 30, 2005 and $33.7 million at June 30, 2004. Costs incurred
during the preliminary project and post-implementation stages are charged to
expense.

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 $4.6 million, $4.0 million, and $2.2
million in fiscal years 2005, 2004 and 2003, respectively, and is included in
Selling, General and Administrative expenses in the consolidated statements of
operations.


                                       42
<PAGE>
ADVERTISING COSTS

All advertising costs are expensed as incurred. Advertising expense was $2.3
million, $2.6 million and $2.2 million in fiscal years 2005, 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 of the Company's goodwill balance for fiscal years 2005
and 2004.

The changes in the carrying amount of goodwill balances for fiscal years 2005
and 2004 were as follows (in thousands):

<TABLE>
<S>                                                                    <C>
Carrying amount as of June 30, 2003                                    $29,803
Add: FW Pharma                                                             703
     3 Clinical Research                                                 8,056
     Effect of changes in rates used for translation and adjustments     2,440
                                                                       -------
Carrying amount as of June 30, 2004                                    $41,002
Add: IMC                                                                 1,951
     Final purchase accounting adjustments                                (635)
     Effect of changes in rates used for translation and adjustments       497
                                                                       -------
Carrying amount as of June 30, 2005                                    $42,815
                                                                       =======
</TABLE>

INTANGIBLE ASSETS

Intangible assets consist primarily of technology and customer lists acquired
through acquisitions completed by the Company in fiscal years 2005 and 2004 (see
Note 3 of these notes to the consolidated financial statements below). The
estimated useful lives for all intangible assets are between 3 and 10 years.

The changes in the carrying amount of intangible assets for fiscal years 2005
and 2004 were as follows (in thousands):

<TABLE>
<S>                                                                    <C>
Carrying amount as of June 30, 2003                                    $ 5,763
Add: 3 Clinical Research                                                 5,805
     Amortization                                                       (1,412)
     Effect of changes in rates used for translation and adjustments    (2,252)
                                                                       -------
Carrying amount as of June 30, 2004                                    $10,636
Add: IMC                                                                   585
     Amortization                                                       (1,828)
     Effect of changes in rates used for translation and adjustments      (165)
                                                                       -------
Carrying amount as of June 30, 2005                                    $ 9,228
                                                                       =======
</TABLE>

Amortization expense was $1.8 million, $1.4 million and $0.5 million for the
fiscal years ended June 30, 2005, 2004, and 2003, respectively. Estimated
amortization expense for the next five years is as follows:

<TABLE>
<S>    <C>
2006   $2,085
2007   $2,076
2008   $2,076
2009   $1,567
2010   $1,017
</TABLE>


                                       43
<PAGE>
INVESTMENTS

The Company has investments in privately held entities in the form of equity
instruments that are not publicly traded and for which fair values are not
readily determinable. The Company records the majority of its investments in
private entities under the cost method of accounting and assesses the net
realizable value of these entities on a quarterly basis to determine if there
has been a decline (other than temporary) in the fair value of these entities.
The quarterly assessment includes an evaluation of the market condition of the
overall industry, historical and projected financial performance, expected cash
needs and recent funding events. During the quarter ended June 30, 2005, the
Company wrote off $1.2 million in investments, which were deemed to be
permanently impaired. The amount of the write-off is included in the Other
Income (Loss), net line of the consolidated statements of operations. The
balance of the investments recorded under the cost method was $1.2 million as of
June 30, 2005 and $2.4 million as of June 30, 2004.

INCOME TAXES

Deferred income tax assets and liabilities are recorded 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 $(0.2) million,
$4.4 million and $1.4 million in fiscal years 2005, 2004, 2003, 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.

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, 2005, 2004 and 2003: Risk free
interest rates of 3.52% in fiscal year 2005, 3.12% in fiscal year 2004 and 3.32%
in fiscal year 2003, dividend yield of 0.0% for each year; weighted-average
volatility factor of the expected market price of the Company's common stock of
39% for fiscal year 2005, 55% for fiscal year 2004 and 57% for fiscal year 2003;
and an average holding period of 5 years for each year. During fiscal years
2005, 2004 and 2003, the weighted-average grant-date fair value of the stock
options granted were $8.26, $7.51 and $5.51 per share, respectively.


                                       44
<PAGE>
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>
                                                      2005       2004      2003
                                                    --------   -------   -------
($ in thousands, except per share data)
<S>                                                 <C>        <C>       <C>
Net income (loss), as reported                      $(35,177)  $13,791   $10,662
Deduct total stock-based compensation, net of tax    (3,211)   (3,487)   (2,154)
                                                    --------   -------   -------

Pro forma net income (loss)                         $(38,388)  $10,304   $ 8,508
                                                    ========   =======   =======
Basic net income (loss) per share - as reported     $  (1.35)  $  0.53   $  0.42
Basic net income (loss) per share - pro forma       $  (1.47)  $  0.40   $  0.34
Diluted net income (loss) per share - as reported   $  (1.35)  $  0.51   $  0.42
Diluted net income (loss) per share - pro forma     $  (1.47)  $  0.38   $  0.33
</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 SFAS 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 effective portion of the
changes in fair value are recorded in stockholders equity as a component of
other comprehensive income ("OCI"). These amounts are reclassified from OCI and
recognized in earnings when either the forecasted transaction occurs or it
becomes probable that the forecasted transaction will not occur. The amount
recorded in OCI at June 30, 2005 will be reclassified to earnings within twelve
months. Changes in the ineffective portion of a derivative instrument are
recognized in earnings in the periods in which it is identified. There was no
ineffectiveness recorded in fiscal year 2005.

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 SFAS 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

On December 16, 2004, the FASB issued SFAS Statement No. 123 (revised 2004),
"Share-Based Payment", which is a revision of SFAS Statement No. 123,
"Accounting for Stock-Based Compensation". Statement 123(R) supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS
Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement
123(R) is similar to the approach described in Statement 123. However, Statement
123(R) requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the income statement based on their
fair values. Pro forma disclosure is no longer an alternative. The Company
adopted SFAS 123(R) on July 1, 2005 using the prospective method as described in
SFAS No. 148 and is currently in the process of evaluating an acceptable option
valuation model. Because Statement 123(R) must be applied not only to new awards
but to previously granted awards that are not fully vested on the effective
date, and because the Company adopted Statement 123 using the prospective
transition method (which applied only to awards granted, modified or settled
after the adoption date), compensation costs for some previously granted awards
that were not recognized under Statement 123 will be recognized under Statement
123(R). However, had the Company adopted Statement 123(R) in prior periods, the
impact of that standard would have approximated the impact of Statement 123 as
described in the disclosure of pro forma net income and earnings per share in
Note 2 to the consolidated financial statements. Statement 123(R) also requires
the benefits of tax deductions in excess of recognized compensation costs to be
reported as a financing cash flow, rather than as an operating cash flow as
required under current literature. This requirement will reduce net operating
cash flows and increase net financing cash flows in periods after adoption. The
Company expects pre-tax stock-based compensation in fiscal year 2006 to be
approximately $1.7 million (unaudited).


                                       45
<PAGE>
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", which changes the requirements for the accounting and reporting of
a change in accounting principle. SFAS No. 154 applies to all voluntary changes
in accounting principle as well as to changes required by an accounting
pronouncement that does not include specific transition provisions. SFAS No. 154
requires that changes in accounting principle be retrospectively applied. SFAS
No. 154 is effective for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005. The Company does not believe
adoption of this statement will have a material impact on the Company's
financial statements.

NOTE 3. ACQUISITIONS

FISCAL YEAR 2005

Effective October 1, 2004, the Company acquired 100% of the outstanding stock of
IMC, a provider of specialty professional marketing and communication services
in Whitehall, Pennsylvania for approximately $1.5 million in cash. Under the
agreement, the Company agreed to make additional payments of up to $2.9 million
in contingent purchase price if IMC achieves certain established financial
targets through September 30, 2007. Pro forma results of IMC's operations have
not been presented because the effect of this acquisition is not material.

FISCAL YEAR 2004

On March 1, 2004, the Company acquired the remaining outstanding shares of 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 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 Pharma 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. In connection with
this transaction, the Company recorded approximately $11.7 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.

NOTE 4. MARKETABLE SECURITIES

Available-for-sale securities included in marketable securities at June 30, 2005
and 2004, consisted entirely of municipal debt and agency securities. At June
30, 2005, all available-for-sale securities were scheduled to mature on varying
dates within two years.

The Company's marketable securities are reflected at fair market value, which
approximates amortized cost. During fiscal year 2005, gross realized gains were
$2.9 million and gross realized losses were $2.1 million. 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.


                                       46
<PAGE>
NOTE 5. BILLED AND UNBILLED ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2005 and 2004, consisted of the following:

<TABLE>
<CAPTION>
                                    2005       2004
                                  --------   --------
($IN THOUSANDS)
<S>                               <C>        <C>
Billed                            $124,885   $129,942
Unbilled                            95,373     96,229
Allowance for doubtful accounts     (2,371)    (4,215)
                                  --------   --------
                                  $217,887   $221,956
                                  ========   ========
</TABLE>

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2005 and 2004, consisted of the following:

<TABLE>
<CAPTION>
                                     2005        2004
                                  ---------   ---------
($IN THOUSANDS)
<S>                               <C>         <C>
Owned assets:
   Computer and office equipment  $  75,458   $  75,148
   Computer software                 61,253      55,501
   Leasehold improvements            24,408      23,435
   Furniture and fixtures            17,023      17,825
   Medical equipment                 11,647      10,423
   Buildings                          4,418       4,453
   Other                              1,943       1,248
                                  ---------   ---------
                                    196,150     188,033
Less: accumulated depreciation     (125,993)   (119,330)
                                  ---------   ---------
                                  $  70,157   $  68,703
                                  ---------   ---------

Assets held under capital lease:
   Computer software                  2,128         525
Less: accumulated amortization         (420)       (245)
                                  ---------   ---------
                                      1,708         280
                                  ---------   ---------
                                  $  71,865   $  68,983
                                  =========   =========
</TABLE>

Depreciation and amortization expense relating to property and equipment was
$27.8 million, $24.4 million, and $20.7 million, for the years ended June 30,
2005, 2004, and 2003, respectively. Depreciation expense for the year ended June
30, 2005 includes $2.7 million in accelerated depreciation for certain impaired
assets including amounts related to unamortized leasehold improvements on
abandoned leased facilities.

NOTE 7. RESTRUCTURING CHARGES

During the year ended June 30, 2005, the Company recorded restructuring charges
totaling $24.3 million consisting of $4.3 million for severance expense
associated with the elimination of 123 managerial and staff positions and $20.5
million related to eleven newly-abandoned leased facilities, partially offset by
$0.5 million related to changes in assumptions for leased facilities, which
were previously abandoned. In addition, the Company recorded $2.7 million of
impairment charges associated with abandoned leased facilities and other fixed
assets.

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.

Fiscal years 2005, 2004, and 2003 activities against the restructuring accrual
were as follows:

<TABLE>
<CAPTION>
                               Balance at       Gross      Payments/      Balance at
                             June 30, 2004   Provisions   Adjustments   June 30, 2005
                             -------------   ----------   -----------   -------------
($IN THOUSANDS)
<S>                          <C>             <C>          <C>           <C>
Employee severance costs        $ 1,503        $ 4,300      $(2,109)       $ 3,694
Facilities-related charges       11,923         20,015       (4,628)        27,310
                                -------        -------      -------        -------
                                $13,426        $24,315      $(6,737)       $31,004
                                =======        =======      =======        =======
</TABLE>

<TABLE>
<CAPTION>
                               Balance at       Gross      Payments/      Balance at
                             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 charges        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 charges        2,125         9,374        (2,993)         8,506
                                 ------        ------       -------         ------
                                 $3,301        $9,374       $(3,925)        $8,750
                                 ======        ======       =======         ======
</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% and 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, 2005, 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, 2005, the Company
had approximately $1.8 million available credit under these arrangements.

The Company has letter-of-credit agreements with banks totaling approximately
$4.3 million guaranteeing performance under various operating leases and vendor
agreements.

NOTE 9. STOCKHOLDERS' EQUITY

As of June 30, 2005 and 2004, 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.


                                       48
<PAGE>
In September 1999, the Board of Directors approved a stock repurchase program
authorizing the purchase of up to $20.0 million of the Company's common stock.
Repurchases are made in the open market subject to market conditions. As of June
30, 2005, the Company had acquired 1,506,600 shares at a total cost of $20.0
million under this program.

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 $20.0 million of the Company's common
stock to be repurchased in the open market subject to market conditions. As of
June 30, 2005, the Company had acquired 275,844 shares at a total cost of $6.0
million under this program.

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. There were
no anti-dilutive shares outstanding for the fiscal year ended June 30, 2005 as a
result of the net loss for the year. Approximately 0.7 million and 1.9 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 and 2003, 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,
                                                      ----------------------------
                                                        2005       2004      2003
                                                      --------   -------   -------
($IN THOUSANDS)
<S>                                                   <C>        <C>       <C>
Net income/(loss)                                     $(35,177)  $13,791   $10,662
Weighted average number of shares outstanding, used
   in computing basic earnings per share                26,065    26,010    25,371
Dilutive common stock options                               --       785       312
                                                      --------   -------   -------
Weighted average shares used in computing
   diluted earnings per share                           26,065    26,795    25,683
                                                      ========   =======   =======
Basic earnings/(loss) per share                       $  (1.35)  $  0.53   $  0.42
Diluted earnings/(loss) per share                     $  (1.35)  $  0.51   $  0.42
</TABLE>


                                       49
<PAGE>
NOTE 11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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 loss on
                                                 available for sale
                                                   investments and
                              Foreign currency       derivative
                                 translation         instruments        Total
                              ----------------   ------------------   --------
($IN THOUSANDS)
<S>                           <C>                <C>                  <C>
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
Changes during the year             (2,507)             (356)           (2,863)
                                  --------             -----          --------
Balance as of June 30, 2005       $     98             $(454)         $   (356)
                                  ========             =====          ========
</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.

On May 26, 2005, the Compensation Committee of the Board of Directors of the
Company approved the acceleration of vesting of certain unvested
out-of-the-money stock options previously awarded to current employees,
including executive officers, and non-employee directors, effective as of the
close of business on June 30, 2005. A stock option was considered
out-of-the-money if the option exercise price was greater than the closing price
per share of Common Stock of the Company on the NASDAQ National Market on June
30, 2005. Such actions were taken in accordance with the provisions of the
Company's Second Amended and Restated 1995 Stock Option Plan, 1998
Non-qualified, Non-Officer Stock Option Plan and the 2001 Stock Incentive Plan.
There were 281,000 stock options that vested as a result of the acceleration on
June 30, 2005. The closing price on June 30, 2005 was $19.82 per share. No
compensation expense was recorded as a result of this acceleration.

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 no more than ten years from the date of grant and the
expiration date and 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.


                                       50
<PAGE>
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. The 1995 Plan will expire on September
13, 2005, except for options outstanding on that date.

EMPLOYEE STOCK PURCHASE PLANS

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 had 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 was lower, up to
specified limits. The 2000 Purchase Plan was amended in May 2005 for offering
periods commencing on or after June 1, 2005 to purchase common stock at 95% of
the fair market value of the stock on the last day of each purchase period (as
defined by the Purchase Plan). An aggregate of approximately 1,800,000 shares
may be issued under the 2000 Purchase Plan.

During fiscal year 2005, there were 209,252 shares purchased at a range of
$10.59 to $16.82 per share and during fiscal year 2004, there were 267,418
shares purchased at a range of $10.59 to $15.72 per share.

STOCK OPTIONS OF SUBSIDIARY

In August 2000, Perceptive Informatics, Inc., 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 was able to grant to its employees,
officers, directors, consultants and advisors, options, restricted stock awards,
or other stock-based awards. As of June 30, 2005 and 2004, Perceptive was not
publicly traded and options to purchase 4,206,535 shares and 3,085,802 shares,
respectively were outstanding under this plan and the options to purchase
137,250 shares had been exercised as of June 30, 2005.

As discussed in Note 18 below, on August 22, 2005, PAREXEL acquired all of the
equity interests held by minority stockholders of Perceptive. Under the terms of
the agreement, PAREXEL assumed all outstanding stock options under the
Perceptive Plan. As a result, the holders of Perceptive stock options are
entitled to receive upon exercise of such options $1.65 in cash, without
interest, for each share of Perceptive common stock that was subject to such
options immediately prior to the merger. None of the other terms and conditions
of the Perceptive stock options have changed. The stock options will continue to
be exercisable only upon payment of the exercise price of such options and to be
subject to the vesting schedule to which such stock option were subject
immediately prior to the merger.

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, 2005 were as follows:

<TABLE>
<CAPTION>
                                           Weighted Average
                                Options     Exercise Price
                               ---------   ----------------
<S>                            <C>         <C>
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
   Granted                       343,000        $20.28
   Exercised                    (343,348)       $11.22
   Canceled                     (151,883)       $18.65
</TABLE>


                                       51
<PAGE>
<TABLE>
<S>                            <C>         <C>
Outstanding at June 30, 2005   3,093,194        $16.53
                               =========
Exercisable at June 30, 2003   2,251,228
Exercisable at June 30, 2004   2,156,845
Exercisable at June 30, 2005   2,552,441
Available for future grant     1,079,554
   at June 30, 2005
</TABLE>

Summary information related to options outstanding and exercisable as of June
30, 2005 was as follows:

<TABLE>
<CAPTION>
                                   OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                      ---------------------------------------------   ------------------------------
                                        Weighted
                                         Average
                       Outstanding      Remaining       Weighted       Exercisable       Weighted
      Range of            as of        Contractual       Average          as of           Average
  Exercise Prices     June 30, 2005   Life (Years)   Exercise Price   June 30, 2005   Exercise Price
  ---------------     -------------   ------------   --------------   -------------   --------------
<S>                   <C>             <C>            <C>              <C>             <C>
                                 ,
$ 7.5621 - $11.3430       486,236          3.0           $ 9.45           461,907         $ 9.49
$11.3431 - $15.1240     1,176,240          3.9           $12.66         1,023,622         $12.59
$15.1241 - $18.9050       465,390          5.8           $17.08           171,584         $17.06
$18.9051 - $22.6860       537,333          5.4           $20.63           467,333         $20.81
$22.6861 - $26.4670        61,770          1.4           $24.51            61,770         $24.51
$26.4671 - $30.2480       162,300          0.9           $27.09           162,300         $27.09
$30.2481 - $34.0290       157,025          0.1           $31.80           157,025         $31.80
$34.0291 - $37.8100        46,900          0.8           $36.23            46,900         $36.23
                        ---------                                       ---------
                        3,093,194          3.9           $16.53         2,552,441         $16.66
                        =========                                       =========
</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 $2.3 million,
$2.7 million and $2.8 million, for the years ended June 30, 2005, 2004, and
2003, respectively.

NOTE 13. FINANCIAL INSTRUMENTS

As of June 30, 2005 and 2004, the Company had entered into currency exchange
contracts to exchange Euro, British Pounds and South African Rand for U.S.
dollars. The notional contract amount of outstanding currency exchange contracts
was approximately $11.9 million and $10.4 million at June 30, 2005 and 2004,
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 $11.7 million at June 30, 2005 and $10.4 million at
June 30, 2004.

At June 30, 2005, maturities of the Company's currency exchange contracts ranged
from one to four months.


                                       52
<PAGE>
NOTE 14. INCOME TAXES

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

<TABLE>
<CAPTION>
                    2005       2004      2003
                  --------   -------   -------
($IN THOUSANDS)
<S>               <C>        <C>       <C>
Domestic          $(30,366)  $(1,120)  $ 1,743
Foreign             31,106    24,563    16,744
                  --------   -------   -------
                  $    740   $23,443   $18,487
                  ========   =======   =======
</TABLE>

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

<TABLE>
<CAPTION>
                    2005     2004      2003
                  -------   ------   -------
($IN THOUSANDS)
<S>               <C>       <C>      <C>
Current:
   Federal        $  (692)  $ (585)  $ 5,209
   State              152      531     1,027
   Foreign         10,342    4,303     4,393
                  -------   ------   -------
                    9,802    4,249    10,629
                  -------   ------   -------
Deferred:
   Federal         16,439     (493)   (2,714)
   State            3,570      (43)     (409)
   Foreign          5,755    5,601      (256)
                  -------   ------   -------
                   25,764    5,065    (3,379)
                  -------   ------   -------
                  $35,566   $9,314   $ 7,250
                  =======   ======   =======
</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>
                                               2005       %       2004      %     2003      %
                                             -------   ------   -------   ----   ------   ----
($IN THOUSANDS)
<S>                                          <C>       <C>      <C>       <C>    <C>      <C>
Income tax expense computed at the federal
   statutory rate                            $   259     35.0%  $ 8,206   35.0%  $6,470   35.0%
State income taxes, net of federal benefit        99     13.3%      359    1.5%     408    2.2%
Foreign rate differential                     (2,298)  -310.5%      594    2.5%    (956)  -5.2%
Foreign permanent tax adjustments               (533)   -72.0%   (1,417)  -6.0%    (780)  -4.2%
U.S. permanent tax adjustments                   188     25.4%      (56)  -0.2%      21    0.1%
Change in valuation allowances                37,439   5059.3%    2,816   12.0%   1,911   10.3%
Other                                            412     55.7%   (1,188)  -5.1%     176    1.0%
                                             -------   ------   -------   ----   ------   ----
                                             $35,566   4806.2%  $ 9,314   39.7%  $7,250   39.2%
                                             =======   ======   =======   ====   ======   ====
</TABLE>

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,
2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                           2005       2004
                                         --------   --------
($IN THOUSANDS)
<S>                                      <C>        <C>
Deferred tax assets:
   US loss carryforwards                 $  8,637   $     --
   Foreign loss carryforwards              12,471     11,675
   Accrued expenses                        36,571     26,218
   Allowance for doubtful accounts            238        721
   Unbilled accounts receivable            11,992     16,907
   Other                                      167         83
                                         --------   --------
Gross deferred tax assets                  70,076     55,604
Deferred tax asset valuation allowance    (49,128)   (15,734)
                                         --------   --------
Total deferred tax assets                  20,948     39,870
                                         --------   --------
Deferred tax liabilities:
   Property and equipment                 (10,709)   (14,543)
   Deferred contract profit                (8,127)    (3,849)
   Foreign intangible assets               (1,109)        --
   Foreign risk reserve                    (1,818)    (1,470)
   Foreign work-in-process valuation       (2,772)        --
   UK group relief                         (2,946)        --
   Other                                   (7,300)    (2,662)
                                         --------   --------
Total deferred tax liabilities            (34,781)   (22,524)
                                         --------   --------
                                         $(13,833)  $ 17,346
                                         ========   ========
</TABLE>

The net deferred tax assets and liabilities included in the consolidated balance
sheets as of June 30, 2005 and 2004 were as follows:

<TABLE>
<CAPTION>
                                         2005       2004
                                       --------   --------
($IN THOUSANDS)
<S>                                    <C>        <C>
Current deferred tax assets            $ 18,811   $ 29,710
Non-current deferred tax assets           2,137     10,160
Current deferred tax liabilities        (16,928)    (4,424)
Non-current deferred tax liabilities    (17,853)   (18,100)
                                       --------   --------
                                       $(13,833)  $ 17,346
                                       ========   ========
</TABLE>

The Company has tax loss carryforwards, tax effected, of approximately $21.1
million that are available to offset future liabilities for income taxes. Some
of the tax loss carryforwards will expire if not used within the next 5 years,
but most can be carried forward indefinitely. A valuation allowance has been
established for certain future 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 2005,
the valuation allowance increased by $33.4 million with significant reserves
added in the U.S. and the Netherlands. As of June 30, 2005, $49.1 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 $35.6
million, $34.0 million, and $30.2 million for fiscal years 2005, 2004 and 2003,
respectively. Additionally, the Company has assets under capital leases. Future
minimum lease payments due under non-cancelable leases are as follows:

<TABLE>
<CAPTION>
                                 2006      2007      2008      2009      2010    Thereafter     Total
                               -------   -------   -------   -------   -------   ----------   --------
($IN THOUSANDS)
<S>                            <C>       <C>       <C>       <C>       <C>       <C>          <C>
Operating and capital leases   $40,093   $36,538   $30,213   $24,041   $13,884    $74,191     $218,960
Less: sublease income           (1,887)   (1,530)   (1,037)     (798)     (145)      (424)      (5,821)
                               -------   -------   -------   -------   -------    -------     --------
Total                          $38,206   $35,008   $29,176   $23,243   $13,739    $73,767     $213,139
                               =======   =======   =======   =======   =======    =======     ========
</TABLE>

In association with the IMC acquisition as discussed in Note 3 above, as of June
30, 2005, the Company is obligated to make maximum additional payments of $2.9
million in contingent purchase price if IMC achieves certain established
financial targets through September 30, 2007.

In association with the Qdot acquisition as discussed in Note 18 below, the
Company is obligated to make maximum additional payments of approximately $3.0
million in contingent purchase price if Qdot achieves certain established
financial targets through September 28, 2008.

The Company has letter-of-credit agreements with banks totaling approximately
$4.3 million guaranteeing performance under various operating leases and vendor
agreements.

NOTE 16. RELATED PARTY TRANSACTIONS

As discussed in Note 18 below, on August 22, 2005, the Company acquired all of
the equity interests held by minority stockholders of Perceptive Informatics,
Inc., and now owns all of the outstanding common stock of Perceptive. This
acquisition was effected through a "short-form" merger of PIC Acquisition, Inc.,
an indirect subsidiary of PAREXEL and, prior to the merger, the owner of 97.8%
of the outstanding common stock of Perceptive. Under the terms of the merger,
Perceptive was valued at approximately $66.3 million, and PAREXEL agreed to pay
an aggregate of approximately $3.2 million in cash to the minority stockholders
for their shares of common stock. Certain executive officers and directors of
PAREXEL held shares of Perceptive common stock prior to the merger.

In addition, under the terms of the merger, PAREXEL assumed all outstanding
stock options under Perceptive's stock incentive plan. As a result, the holders
of Perceptive stock options are entitled to receive upon exercise of such
options $1.65 in cash, without interest, for each share of Perceptive common
stock that was subject to such options immediately prior to the merger. None of
the other terms and conditions of the Perceptive stock options have changed. The
stock options will continue to be exercisable only upon payment of the exercise
price of such options and to be subject to the vesting schedule to which such
stock options were subject immediately prior to the merger. Certain executive
officers and directors of PAREXEL held stock options to purchase Perceptive
common stock prior to the merger.

Additionally as part of the merger, PAREXEL has also agreed to make payments
totaling $1.6 million to certain employees of Perceptive on the first
anniversary of the effective date of the merger, including $500,000 to an
executive officer. These payments are not conditioned on these employees
remaining as employees of Perceptive on the first anniversary of the effective
date of the merger.

The terms and conditions of the merger were established and approved by a
special committee of the Board of Directors of PAREXEL consisting of two
independent directors of PAREXEL having no interests in Perceptive, with
consultation from an investment banking firm and legal counsel.

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. The total amount of pro rata gain
realized to-date through June 30, 2005 was $89,000. All payments have been
received in a timely manner.

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 Perceptive, in July 2003. Perceptive issued shares of common stock to


                                       55
<PAGE>
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 owned 0.87% of the
issued and outstanding common stock of Perceptive as of July 2003. 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 year ended June 30, 2004, certain members of the Company's Board of
Directors were affiliated with a company in which PAREXEL is a minority
shareholder. The total amount of investment by PAREXEL was $0.5 million.

NOTE 17. GEOGRAPHIC AND SEGMENT INFORMATION

Financial information by geographic area for the three years ended June 30,
2005, 2004 and 2003 were as follows:

<TABLE>
<CAPTION>
                                   2005       2004       2003
                                 --------   --------   --------
($IN THOUSANDS)
<S>                              <C>        <C>        <C>
Service revenue:
   United States                 $202,924   $244,713   $264,090
   Europe                         313,114    272,490    233,709
   Asia and Other                  28,688     23,780     21,137
                                 --------   --------   --------
                                 $544,726   $540,983   $518,936
                                 ========   ========   ========
Income (loss) from operations:
   United States                 $(32,039)  $ (4,408)  $  6,923
   Europe                          30,470     21,745     15,013
   Asia and Other                   1,293      1,036     (4,708)
                                 --------   --------   --------
                                 $   (276)  $ 18,373   $ 17,228
                                 ========   ========   ========

Tangible Long-lived assets:
   United States                 $  2,116   $  3,064   $  2,187
   Europe                           1,940      2,521      3,375
   Asia and Other                   1,044      1,148      1,065
                                 --------   --------   --------
                                 $  5,100   $  6,733   $  6,627
                                 ========   ========   ========
</TABLE>

The Company is managed through three business segments, namely, CRS, PCMS 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. PCMS provides technical
expertise in such disciplines as clinical pharmacology, regulatory affairs,
industry training, publishing, and management consulting. PCMS consultants
identify alternatives and propose solutions to address clients' product
development, registration, and commercialization issues. PCMS provides a full
spectrum of market development, product development, and targeted communications
services in support of product launch. PCMS also provides health policy
consulting and strategic reimbursement services. Perceptive provides information
technology solutions designed to improve clients' product development processes.
Perceptive offers a portfolio of 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 geographic 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.

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


                                       56
<PAGE>
<TABLE>
<CAPTION>
                                      CRS       PCMS     PERCEPTIVE     TOTAL
                                   --------   --------   ----------   --------
($IN THOUSANDS)
<S>                                <C>        <C>        <C>          <C>
Service revenue:
   2005                            $375,327   $126,552     $42,847    $544,726
   2004                            $375,219   $129,791     $35,973    $540,983
   2003                            $364,200   $129,936     $24,800    $518,936

Gross profit on service revenue:
   2005                            $127,800   $ 37,577     $19,305    $184,682
   2004                            $132,964   $ 34,089     $17,867    $184,920
   2003                            $125,202   $ 36,309     $10,249    $171,760
</TABLE>

NOTE 18. SUBSEQUENT EVENTS

Effective July 1, 2005, the Company acquired the assets of Qdot PHARMA, a
leading Phase I and IIa Proof of Concept clinical pharmacology business located
in George, South Africa for approximately $3.0 million. Under the agreement, the
Company agreed to make additional payments of up to approximately $3.0 million
in contingent purchase price if Qdot achieves certain established financial
targets through September 28, 2008. In association with this transaction, the
Company recorded approximately $1.8 million of excess cost over the fair value
of the interest in the net assets acquired as goodwill. Pro forma results of
Qdot operations have not been presented because the effect of this acquisition
is not material.

On August 22, 2005, the Company acquired all of the equity interests held by
minority stockholders of Perceptive Informatics, Inc., and now owns all of the
outstanding common stock of Perceptive. This acquisition was effected through a
"short-form" merger of PIC Acquisition, Inc., an indirect subsidiary of PAREXEL
and, prior to the merger, the owner of 97.8% of the outstanding common stock of
Perceptive. Under the terms of the merger, Perceptive was valued at
approximately $66.3 million, and PAREXEL agreed to pay an aggregate of
approximately $3.2 million in cash to the minority stockholders for their shares
of common stock. Certain executive officers and directors of PAREXEL held shares
of Perceptive common stock prior to the merger.

In addition, under the terms of the merger, PAREXEL assumed all outstanding
stock options under Perceptive's stock incentive plan. As a result, the holders
of Perceptive stock options are entitled to receive upon exercise of such
options $1.65 in cash, without interest, for each share of Perceptive common
stock that was subject to such options immediately prior to the merger. None of
the other terms and conditions of the Perceptive stock options have changed. The
stock options will continue to be exercisable only upon payment of the exercise
price of such options and to be subject to the vesting schedule to which such
stock options were subject immediately prior to the merger. Certain executive
officers and directors of PAREXEL held stock options to purchase Perceptive
common stock prior to the merger.

Additionally as part of the merger, PAREXEL has also agreed to make payments
totaling $1.6 million to certain employees of Perceptive on the first
anniversary of the effective date of the merger, including $500,000 to an
executive officer. These payments are not conditioned on these employees
remaining as employees of Perceptive on the first anniversary of the effective
date of the merger.

The terms and conditions of the merger were established and approved by a
special committee of the Board of Directors of PAREXEL consisting of two
independent directors of PAREXEL having no interests in Perceptive, with
consultation from an investment banking firm and legal counsel.


                                       57
<PAGE>
        MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of PAREXEL International Corporation is responsible for
establishing and maintaining adequate internal control over financial reporting
for the Company. Internal control over financial reporting is defined in Rule
13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as
a process designed by, or under the supervision of, the Company's principal
executive and principal financial officers and effected by the Company's board
of directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:

     -    Pertain to the maintenance of records that in reasonable detail
          accurately and fairly reflect the transactions and dispositions of the
          assets of the Company;

     -    Provide reasonable assurance that transactions are recorded as
          necessary to permit preparation of financial statements in accordance
          with generally accepted accounting principles, and that receipts and
          expenditures of the Company are being made only in accordance with
          authorizations of management and directors of the Company; and

     -    Provide reasonable assurance regarding prevention or timely detection
          of unauthorized acquisition, use or disposition of the Company's
          assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal
control over financial reporting as of June 30, 2005. In making this assessment,
the Company's management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.

Based on the assessment, management concluded that, as of June 30, 2005, the
Company's internal control over financial reporting is effective based on those
criteria.

The Company's independent registered public accounting firm, Ernst & Young LLP
has issued an audit report on management's assessment of the Company's internal
control over financial reporting. This report appears on page 60.


/s/ Josef H. von Rickenbach             /s/ James F. Winschel, Jr.
-------------------------------------   ----------------------------------------
Josef H. von Rickenbach                 James F. Winschel, Jr.
Chairman of the Board and               Senior Vice President and
Chief Executive Officer                 Chief Financial Officer
                                        (principal financial officer)


                                       58
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of PAREXEL
International Corporation and subsidiaries as of June 30, 2005 and 2004, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended June 30, 2005. Our audits
also include the financial statement schedule listed in the Index at Item 15.
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 subsidiaries at June 30, 2005 and 2004, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended June 30, 2005, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements as a whole, presents fairly in all material respects the information
set forth therein.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of PAREXEL
International Corporation's internal control over financial reporting as of June
30, 2005, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated August 26, 2005 expressed an unqualified opinion thereon.

                                        Ernst & Young LLP

Boston, Massachusetts
August 26, 2005


                                       59
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that PAREXEL
International Corporation maintained effective internal control over financial
reporting as of June 30, 2005, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). PAREXEL
International Corporation's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the company's internal control over financial reporting based
on our audit.

We conducted our audit 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 effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that PAREXEL International Corporation
maintained effective internal control over financial reporting as of June 30,
2005, is fairly stated, in all material respects, based on the COSO criteria.
Also, in our opinion, PAREXEL International Corporation maintained, in all
material respects, effective internal control over financial reporting as of
June 30, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the 2005 consolidated financial
statements of PAREXEL International Corporation and our report dated August 26,
2005 expressed an unqualified opinion thereon.

                                        Ernst & Young LLP

Boston, Massachusetts
August 26, 2005


                                       60
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

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 of June 30, 2005. The term
"disclosure controls and procedures," as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act, means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by
a 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 SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Based on the
evaluation of the Company's disclosure controls and procedures as of as of June
30, 2005, the Company's chief executive officer and chief financial officer
concluded that, as of such date, the Company's disclosure controls and
procedures were effective at the reasonable assurance level.

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 2005 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 2005 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 2005 Annual Meeting
of Stockholders. Such information is incorporated herein by reference.


                                       61
<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
2005 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 2005 Annual
Meeting of Stockholders. Such information is incorporated herein by reference.

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(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, 2005, 2004 and 2003              59-60
Consolidated Statements of Operations for each of the
   three years ended June 30, 2005, 2004 and 2003                        36
Consolidated Balance Sheets at June 30, 2005 and 2004                    37
Consolidated Statements of Stockholders' Equity for
   each of the three years ended June 30, 2005, 2004 and 2003            38
Consolidated Statements of Cash Flows for each of the
   three years ended June 30, 2005, 2004 and 2003                     39-40
Notes to Consolidated Financial Statements                            41-57
</TABLE>

     (2) FINANCIAL STATEMENT SCHEDULES

          For the three years ended June 30, 2005:

               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.


                                       62
<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 8, 2005
    ---------------------------------
    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       September 8, 2005
                              Chief Executive Officer
                              (principal executive officer)


/s/ James F. Winschel, Jr.
---------------------------
James F. Winschel, Jr.        Senior Vice President and       September 8, 2005
                              Chief Financial Officer
                              (principal financial and
                              accounting officer)


/s/ A. Dana Callow, Jr.
---------------------------
A. Dana Callow, Jr.           Director                        September 8, 2005


/s/ A. Joseph Eagle
---------------------------
A. Joseph Eagle               Director                        September 8, 2005


/s/ Patrick J. Fortune
---------------------------
Patrick J. Fortune            Director                        September 8, 2005


/s/ Richard L. Love
---------------------------
Richard L. Love               Director                        September 8, 2005


/s/ Serge Okun
---------------------------
Serge Okun                    Director                        September 8, 2005


/s/ William U. Parfet
---------------------------
William U. Parfet             Director                        September 8, 2005
</TABLE>


                                       63
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.   DESCRIPTION
-----------   -----------
<S>           <C>
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. (filed as
              Exhibit 10.3 to the Company's Annual Report on Form 10-K for the
              year ended June 30, 2004 and incorporated herein by this
              reference)

10.4*         Form of Stock Option Agreement under the Company's 2001 Stock
              Incentive Plan. (filed as Exhibit 10.4 to the Company's Annual
              Report on Form 10-K for the year ended June 30, 2004 and
              incorporated herein by reference.)

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).

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).
</TABLE>


                                       64
<PAGE>
<TABLE>
<S>           <C>
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
              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 June 30,
              2001 and incorporated herein by this reference).

10.16.4*      Amendment to Employment Agreement, dated February 21, 2005,
              between Ulf Schneider and PAREXEL GmbH (filed as Exhibit 10.1 to
              the Company's Current Report on Form 8-K dated February 21, 2005
              and incorporated herein by this reference).

10.17         Fourth Amendment dated August 28, 2000 to the lease dated November
              17, 1998 between Boston Properties Limited Partnership and the
              Company (filed as Exhibit 10.22 to the Company's Annual Report on
              Form 10-K for the year ended June 30, 2000 and incorporated herein
              by this reference).

10.18*        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*        PAREXEL International Nonqualified Deferred Compensation Plan
              (filed as Exhibit 10.21 to the Company's Annual Report on Form
              10-K for the year ended June 30, 2002 and incorporated herein by
              this reference).

10.21         ABN - AMRO Cash Pooling Agreement, dated as of September 14, 2001
              (filed as Exhibit 10.21 to the Company's Annual Report on Form
              10-K for the year ended June 30, 2003 and incorporated herein by
              this reference ).

10.22         Lease dated April 10, 2002 between API (No. 23) Limited, Arlington
              Property Investments Limited, PAREXEL International Limited and
              the Company (filed as Exhibit 10.22 to the Company's Annual Report
              on Form 10-K for the year ended June 30, 2003 and incorporated
              herein by this reference).

10.23*        Change of Control/Severance Agreement, dated as of 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
</TABLE>


                                       65
<PAGE>
<TABLE>
<S>           <C>
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
</TABLE>

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


                                       66
<PAGE>
                                   SCHEDULE II

                        PAREXEL INTERNATIONAL CORPORATION
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                                   Balance at   Charged to                    Balance at
                                    beginning    costs and     Deductions       end of
                                     of year     expenses    and write-offs      year
                                   ----------   ----------   --------------   ----------
($IN THOUSANDS)
<S>                                <C>          <C>          <C>              <C>
Allowance for doubtful accounts:
   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
   Year ended June 30, 2005          $4,215       $  926        $(2,770)        $2,371
</TABLE>


                                       67