Acquisition, Goodwill and Intangibles

9 Months Ended

Mar. 31, 2013

Business Combinations, Goodwill and Intangibles [Abstract]

Business Combination Disclosure [Text Block]

NOTE 2 – ACQUISITIONS, GOODWILL, AND OTHER INTANGIBLE ASSETS

Acquisitions

Our condensed consolidated financial statements include the operating results of acquired entities from their respective dates of acquisition. Transaction costs of $0.4 million associated with the Liquent, Inc. (“Liquent”) acquisition for the nine months ended March 31, 2013 were expensed as incurred.

LIQUENT ACQUISITION

On December 21, 2012, we acquired all of the outstanding equity securities of Liquent, a leading global provider of Regulatory Information Management (RIM) solutions for total cash consideration of approximately $74.7 million. By combining Liquent with our Perceptive Informatics (“Perceptive”) segment, we intend to strengthen our regulatory capabilities by adding a regulatory information technology platform and provide our clients access to comprehensive regulatory agency submission planning, viewing, tracking, publishing, and registration management throughout the entire product lifecycle of a life sciences entity. We expect the acquisition also will benefit the PAREXEL Consulting and Medical Communications Services (“PCMS”) business, where we will be able to leverage Liquent’s significant expertise in regulatory information management outsourcing.

The acquisition was initially funded through a new $100.0 million unsecured term loan agreement (the 2012 Term Loan) with Bank of America, N.A. (defined as “Bank of America” in Note 9) (see Note 9).

We accounted for this acquisition as a business combination in accordance with FASB Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations.” We allocate the amounts that we pay for each acquisition to the assets we acquire and liabilities we assume based on their fair values at the dates of acquisition, including identifiable intangible assets. We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions determined by management and which consider management's best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows, discount rates, and estimated useful lives, could result in different purchase price allocations and amortization expense in current and future periods than those determined by the Company.

The components of the consideration transferred in conjunction with the Liquent acquisition and the preliminary allocation of that consideration is as follows (in thousands):

Total consideration transferred:
Cash paid, net of cash acquired	$	74,731
Preliminary allocation of consideration transferred:
Accounts receivable	$	8,687
Other current and non-current assets	547
Property and equipment	1,382
Definite-lived intangible assets	32,600
Goodwill	51,449
Total assets acquired	94,665
Current liabilities	5,403
Deferred revenue, current	2,830
Deferred tax liabilities	11,701
Total liabilities assumed	19,934
Net assets acquired:	$	74,731

The amounts above represent the preliminary fair value estimates as of March 31, 2013 and are subject to subsequent adjustment as we obtain additional information during the measurement period and finalize our fair value estimates, mainly as it relates to accounting for income taxes. We expect to complete our accounting for the Liquent acquisition in our fiscal quarter ending June 30, 2013.

The goodwill of $51.4 million arising from the Liquent acquisition largely reflects the potential synergies and expansion of our service offerings across products and markets complementary to our existing service offering and markets. The goodwill recorded is included in our Perceptive segment and is non-deductible for tax purposes.

The following are the preliminary identifiable intangible assets acquired and their respective estimated useful lives, as determined based on preliminary valuations (dollar amounts in thousands):

	Amount		Estimated Useful Life (Years)
Customer relationships	$	21,500	11
Technology	7,800		8
Trade name	2,800		8
Backlog	500		1
Total	$	32,600

HERON ACQUISITION

On April 30, 2013, we acquired all of the outstanding equity securities of the Heron Group LTD (“Heron”), a life sciences consultancy which provides evidence-based commercialization services to support biopharmaceutical companies throughout the lifecycle of their products. The purchase price was approximately $24.0 million, plus the potential for us to pay an additional $14.2 million over a twenty-six month period if specific financial targets for Heron are achieved. The acquisition was funded through use of existing cash. Heron's results of operations will be included in our PCMS segment.

The transaction will be accounted for using the acquisition method of accounting which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The acquisition related disclosures required by FASB ASC 805 cannot be made as the initial accounting for the business transaction is incomplete. Key financial data such as the determination of the fair value of the assets acquired and liabilities assumed is not yet available.

Goodwill and Other Intangible Assets

The goodwill balance of $305.4 million included in our accompanying consolidated balance sheet as of March 31, 2013 reflects the additions arising from the Liquent acquisition and a decrease of $1.5 million related to the impact of changes in foreign currency exchange rates used for translation for the nine month period ending March 31, 2013. The other intangible assets, net balance of $92.4 million reflects the additions arising from the Liquent acquisition, a decrease of $4.2 million related to the impact of changes in foreign currency exchange rates, and amortization expense of $6.0 million for the nine month period ended March 31, 2013.