PAREXEL REPORTS FOURTH QUARTER AND FISCAL 2005 FINANCIAL RESULTS
BOSTON, MA, August 1, 2005 — PAREXEL International Corporation (Nasdaq: PRXL) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2005.
For the three months ended June 30, 2005, PAREXEL’s consolidated service revenue increased 3.1% to $143.6 million compared with $139.3 million in the prior year period. The Company reported an operating loss of $23.7 million, versus operating income of $8.4 million in the comparable quarter of the prior year and a net loss for the quarter of $51.5 million, or $1.98 per diluted share, compared with net income of $6.5 million, or $0.24 per diluted share, for the quarter ended June 30, 2004. The Company recorded $29.8 million in restructuring and special charges during the quarter. As previously announced, these charges were related to the abandonment of certain property leases, employee separation benefits, and other special costs. The Company also incurred a $25.5 million one-time non-cash tax charge to record tax valuation reserves on a portion of the Company’s net deferred tax assets resulting from the loss position of certain PAREXEL subsidiaries, mainly in the United States.
On a proforma basis, excluding the effect of $29.8 million of restructuring and special charges, and the $25.5 million non-cash tax charge discussed above, operating income for the fourth quarter of Fiscal 2005 was $3.8 million, net income was $2.3 million, and earnings per diluted share were $0.09 (within the earnings per share guidance range issued on June 30, 2005).
The current period and the corresponding historical financial results contained within this press release include a reclassification between Service Revenue and Other Income related to a change in the accounting treatment with respect to the impact of foreign exchange rates on certain contracts. The reclassification had no impact on the Company’s expenses, net income, or earnings per share, but did impact gross margin and operating income. Please refer to footnote (a) in the attached financial charts for additional detail.
On a segment basis, consolidated service revenue for the fourth quarter of Fiscal 2005 was $99.3 million in Clinical Research Services, $32.9 million in PAREXEL Consulting and Marketing Services, and $11.4 million in Perceptive Informatics, Inc.
For the fiscal year ended June 30, 2005, consolidated service revenue was $544.7 million versus $541.0 million in the prior year period. For Fiscal 2005 there was an operating loss of $276,000 compared with operating income of $18.4 million, or 3.4% of consolidated service revenue in the prior year period. The net loss for Fiscal 2005 was $35.2 million or $1.35 per diluted share, compared with net income of $13.8 million, or $0.51 per diluted share in the prior year period. On a proforma basis, excluding the effect of $29.8 million of restructuring and special charges and a $25.5 million non-cash tax charge recorded in the fourth quarter, operating income for the fiscal year was $27.2 million, net income was $18.6 million, and earnings per diluted share were $0.70.
On a segment basis, consolidated service revenue for Fiscal 2005 was $375.3 million in Clinical Research Services, $126.6 million in PAREXEL Consulting and Marketing Services, and $42.8 million in Perceptive Informatics, Inc.
As of March 31, 2005, PAREXEL’s backlog totaled $747 million. Adding the June quarter’s gross new business wins of $207.8 million to that amount, then subtracting $143.6 million in current quarter service revenue, $42 million in cancellations, and approximately $37 million for the negative impact of foreign exchange left the Company with a backlog of $732.2 million as of June 30, 2005. Excluding the foreign exchange impact of approximately $37 million, backlog would have been $769.2 million, a sequential increase of 3% from the March 31, 2005 backlog.
Mr. Josef H. von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “Obviously, we have been disappointed with our recent financial performance. However, we believe that the future annual savings from the recent restructuring and special charges, and the quarter’s solid gross new business wins, will go a long way toward helping us achieve our long-term profitability goals. Going forward, we plan to intensely focus on driving revenue growth while continuing to tightly control costs and improve operational performance.”
The Company issued forward-looking guidance for the first quarter of Fiscal 2006 (ending September 30, 2005), and for Fiscal 2006. For the first quarter, the Company anticipates reporting consolidated service revenue in the range of $135 to $140 million and earnings per diluted share in the range of $0.14 to $0.18. For Fiscal 2006, consolidated service revenue is expected to be in the range of $590 to $615 million (using current exchange rates) and earnings per diluted share are projected to be in the range of $0.78 and $0.92 (versus previously issued revenue guidance of $595 to $620 million, and earnings per diluted share of $0.78 to $0.94). The changes to previous revenue guidance are due to the strengthening of the dollar, the reclassification of revenue previously mentioned in this press release, and the impact of the QdotPharma acquisition. The earnings per share estimates include the impact of recording stock-based compensation expense under new accounting standards for currently unvested options, which is estimated to be $0.04 per share for Fiscal 2006.
The Company believes that presenting the proforma information contained in the financial tables and in this press release assists investors and others in gaining a better understanding of its core operating results and future prospects, especially when comparing such results to previous periods or forecasted guidance. Management uses this proforma information, in addition to the GAAP information, as the basis for measuring the Company’s core operating performance and comparing such performance to that of prior periods and to the performance of its competitors. Such measures are also used by management in its financial and operating decision-making. Proforma information is not meant to be considered superior to or a substitute for the Company’s results of operations prepared in accordance with GAAP. A reconciliation of Generally Accepted Accounting Principles (GAAP) results with proforma results may be found in the attached financial tables.
A conference call to discuss PAREXEL’s fourth quarter and year-end earnings, business, and financial outlook will begin at 10 a.m. ET Tuesday, August 2nd and will be broadcast live over the internet via webcast. The webcast may be accessed in the “Webcasts” portion of the Investor Relations section of the Company’s website at http://www.parexel.com. Users should follow the instructions provided to assure that the necessary audio applications are downloaded and installed. A replay of this webcast will be archived on the website approximately two hours after the call and will continue to be accessible for approximately one year following the live event. To participate via telephone, dial 612-332-0932 and ask to join the PAREXEL quarterly conference call.
PAREXEL is one of the largest biopharmaceutical outsourcing organizations in the world, providing a broad range of knowledge-based contract research, medical marketing and consulting services to the worldwide pharmaceutical, biotechnology and medical device industries. With a commitment to providing solutions that expedite time-to-market and peak market penetration, PAREXEL has developed significant expertise in clinical trials management, data management, biostatistical analysis, medical marketing, clinical pharmacology, regulatory and medical consulting, industry training and publishing and other drug development consulting services. Its information technology subsidiary, Perceptive Informatics, Inc., develops and offers a portfolio of innovative technology-based products and services that facilitate clinical drug development and are designed to decrease time to peak sales. The technology portfolio includes web-based portal solutions and tracking tools, Interactive Voice Response Systems (IVRS), Clinical Trial Management Systems (CTMS), electronic diary and investigator database solutions. Perceptive also offers advanced medical diagnostics services to assess rapidly and objectively the safety and efficacy of new drugs, biologics, and medical devices in clinical trials. PAREXEL’s integrated services, therapeutic area depth and sophisticated information technology, along with its experience in global drug development and product launch services, represent key competitive strengths. Headquartered near Boston, MA, PAREXEL operates in 51 locations throughout 37 countries around the world, and has 5,140 employees.
This release contains "forward-looking" statements regarding future results and events, including, without limitation, statements regarding expected financial results, future growth and customer demand, such as the guidance provided by the Company with respect to the first quarter and Fiscal Year 2006. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "expects", "intends", "appears", “estimates”, “projects”, “targets” and similar expressions are also intended to identify forward-looking statements. The forward-looking statements in this release involve a number of risks and uncertainties. The Company's actual future results may differ significantly from the results discussed in the forward-looking statements contained in this release. Important factors that might cause such a difference include, but are not limited to, risks associated with: actual operating performance; actual expense savings and other operating improvements resulting from recent restructurings, including the fourth quarter fiscal 2005 restructuring referenced in this release; the loss, modification, or delay of contracts which would, among other things, adversely impact the Company’s recognition of revenue included in backlog; the Company's dependence on certain industries and clients; the Company's ability to win new business, manage growth and costs, and attract and retain employees; the Company's ability to complete additional acquisitions and to integrate newly acquired businesses or enter into new lines of business; government regulation of the drug, medical device and biotechnology industry; consolidation within the pharmaceutical industry; competition within the biopharmaceutical services industry; the potential for significant liability to clients and third parties; the potential adverse impact of health care reform; and the effects of exchange rate fluctuations and other international economic, political, and other risks. Such factors and others are discussed more fully in the section entitled "Risk Factors" of the Company’s Quarterly Report on Form 10-Q for the Quarter ended March 31, 2005 as filed with the SEC on May 9, 2005, which “Risk Factors” discussion is incorporated by reference in this press release. The forward-looking statements included in this press release represent the Company’s estimates as of the date of this release. The Company specifically disclaims any obligation to update these forward-looking statements in the future. These forward-looking statements should not be relied upon as representing the Company’s estimates or views as of any date subsequent to the date of this press release.
PAREXEL is a registered trademark of PAREXEL International Corporation, and Perceptive Informatics is a trademark of Perceptive Informatics, Inc. All other names or marks may be registered trademarks or trademarks of their respective business and are hereby acknowledged.