8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 26, 2005

PAREXEL International Corporation

(Exact name of registrant as specified in charter)

Massachusetts	000-21244	04-2776269
(State or other juris- diction of incorporation	(Commission File Number)	(IRS Employer Identification No.)

195 West Street, Waltham, Massachusetts	02451
(Address of principal executive offices)	(Zip Code)

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

Not applicable.

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations for the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

     See Item 5.02, the contents of which are incorporated herein by reference.

     On May 26, 2005, the Compensation Committee of the Board of Directors of PAREXEL International Corporation (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 will be considered out-of-the-money if the option exercise price is 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. Outstanding unvested options that have an exercise price equal to or less than the closing price per share of the Company’s Common Stock on the NASDAQ National Market on June 30, 2005 will continue to vest on their normal schedule.

     The following table summarizes outstanding unvested out-of-the-money options held by executive officers and non-employee directors, based upon the closing price of $18.45 per share of Company common stock on the NASDAQ National Market on June 1, 2005, which could be subject to the acceleration and could become exercisable on June 30, 2005:

		Options Subject
Name	Position	to Acceleration
Josef H. von Rickenbach	Chairman & CEO		40,000
A. Dana Callow, Jr.	Director		13,000
A. Joseph Eagle, Jr.	Director		10,666
Patrick J. Fortune	Director		12,666
Richard L. Love	Director		11,000
Serge Okun	Director		11,000
William U. Parfet	Director		13,000
Carl A. Spalding	President & COO		42,000
Kurt A. Brykman	President, PAREXEL Consulting		50,000

     After the Company examined a number of alternatives, the decision to accelerate the vesting of out-of-the-money stock options was made primarily to avoid recognizing compensation expense associated with these stock options in future financial statements upon the adoption of Statement of Financial Accounting Standards (SFAS) No. 123(R), “Share-Based Payment”. Additionally, the Company believes out-of-the-money stock options may not be offering the affected employees sufficient incentive when compared to the potential future compensation expense that would have been attributable to these stock options. The Company estimates, based upon the closing price of $18.45 per share on the NASDAQ National Market on June 1, 2005, that the maximum future pre-tax compensation expense that will be avoided, based

on the Company’s implementation of SFAS 123(R) on July 1, 2005, is approximately $1.4 million, of which all are related to options held by executive officers and non-employee directors of the Company.

Item 2.05. Costs Associated with Exit or Disposal Activities.

     On May 26, 2005, the Board of Directors of the Company approved a plan to restructure its operations to reduce expenses, better align costs with current and future geographic sources of revenue, and improve operating efficiencies. These actions are expected to result in a pre-tax charge in the range of $30 to $35 million in the quarter ending June 30, 2005. The charge is primarily related to expenses to be incurred in connection with the consolidation or closure of certain offices, mostly in the United States, the associated relocation or elimination of approximately 150 positions, and certain other one-time costs. The Company anticipates completing restructuring activities by June 30, 2005. The restructuring initiatives primarily impact corporate overhead costs, but will also affect each of the Company’s three business segments. The charges will include approximately $24 to $27 million in costs related to the abandonment of certain property leases, approximately $4 to $5 million in employee separation benefits, and approximately $2 to $3 million in other one-time costs. The Company expects that approximately $25 to $30 million of these charges will result in future cash expenditures. The Company expects a small portion of the charge to be paid out in the fourth quarter, with the remainder to be paid out over several years. The Company expects the charge to result in annual pre-tax savings of approximately $8 to $10 million when completed.

     The Company issued a press release on June 1, 2005 announcing this restructuring. The full text of the press release issued in connection with the restructuring announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 5.02. Departure of Directors or Principal Officer; Election of Directors; Appointment of Principal Officers.

     On May 26, 2005, Carl A. Spalding, President and Chief Operating Officer of the Company, submitted his retirement notice to the Company, effective June 30, 2005. The Company and Mr. Spalding entered into a Consulting Agreement in connection with Mr. Spalding’s retirement, pursuant to which he will provide management consulting services to the Company from July 1, 2005 to October 31, 2005 at a rate mutually agreeable to the parties. The Consulting Agreement includes confidentiality, non-compete, non-solicitation and inventions assignment provisions. A copy of the Consulting Agreement is attached hereto as Exhibit 10.1.

     Josef von Rickenbach, the current Chairman and Chief Executive Officer of the Company, was appointed to serve as President, effective July 1, 2005 following Mr. Spalding’s retirement. Mr. von Rickenbach, 50, founded the Company in 1983 and has served as a Director, Chairman of the Board and Chief Executive Officer since 1983 and served as President from 1983 until April 2001.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.		Description
	10.1	Consulting Agreement, dated May 26, 2005, by and between PAREXEL International Corporation and Carl A. Spalding
	99.1	Press release dated June 1, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 2, 2005	PAREXEL International Corporation
	By:	/s/ James F. Winschel, Jr.
		James F. Winschel, Jr.
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
	10.1	Consulting Agreement, dated May 26, 2005, by and between PAREXEL International Corporation and Carl A. Spalding
	99.1	Press release dated June 1, 2005.

EX-10.1

Exhibit 10.1

May 26, 2005

Carl A. Spalding
3126 Dahlia Way
Naples, Florida 34105

Dear Carl:

PAREXEL International Corporation, a Massachusetts corporation having its principal office in Waltham, Massachusetts, U.S.A., (“PAREXEL”) desires to retain Carl A. Spalding (the “Consultant”) as a consultant. PAREXEL hereby retains Consultant to provide management consulting services. Consultant hereby accepts said retainer and, subject to terms and conditions hereinafter set forth, agrees to provide the services as indicated above.

NOW, THEREFORE, in consideration of such retainer and the mutual covenants and promises herein contained, and for other good and valuable consideration, the Company and the Consultant agree as follows:

1.	As compensation for his services, PAREXEL shall pay Consultant a consultancy fee at a rate mutually agreeable to both parties. Consultant shall invoice PAREXEL for such services and PAREXEL shall pay such invoices within thirty (30) days after the invoice is received by PAREXEL. PAREXEL shall reimburse Consultant for travel and other reasonable out-of-pocket expenses incurred by Consultant at the request of PAREXEL, unless Consultant expressly agrees in advance to waive such reimbursement. Consultant hereby agrees to be available for a minimum of 8 hours per month.
2.	The term of this Agreement shall commence as of July 1, 2005, and shall continue until October 31, 2005.
3.	Consultant understands that Consultant’s relationship with PAREXEL and its clients, officers and employees is one of confidence and that during the period of Consultant’s engagement, Consultant may acquire or may have already acquired knowledge of, or access to, information which relates to the business, operations, or plans of PAREXEL or its clients and which is not known to the general public (hereinafter “Confidential Information”). Such Confidential Information may include, but is not limited to client relationships, budgets, costs, prices, vendor lists, information about products, designs, processes, marketing plans, customers, and technology. Except as may be necessary in the ordinary course of performing any duties as a consultant to PAREXEL, Consultant will not at any time, either during Consultant’s engagement or thereafter, (a) disclose any Confidential Information to any other person or entity or (b) use any Confidential Information for Consultant’s own benefit or the benefit of any other person or entity.
	The foregoing obligation shall not apply to information:

a)	which was known to Consultant prior to receipt from PAREXEL;
b)	which is or lawfully becomes generally available to the public;

c)	which is lawfully acquired from third parties who have a right to disclose such information;
d)	which by mutual written agreement is released from a confidential status; and
e)	which Consultant is required by law to release.

	The terms of this item 3, and Consultant’s obligations hereunder, shall survive termination or expiration of this Agreement and the completion of Consultant’s services hereunder.
4.	During the period of engagement, Consultant will not provide similar services to organizations, businesses or other entities competing with PAREXEL.
5.	Upon the termination of Consultant’s engagement with PAREXEL for any reason, Consultant shall deliver to PAREXEL all documents or other materials relating to Consultant’s work with PAREXEL or its clients. Upon written request, all notebooks, memoranda, notes, computer programs, records, diagrams, charts, flow charts, drawings, files, or other documents, together with all copies and derivations therefrom, shall be delivered to PAREXEL.
	Consultant hereby assigns to PAREXEL the entire right, title and interest in any invention, data (whether in written, schematic or any other form) or idea, patentable or not, and all copyrights therein, including without limitation, any software and software documentation, made or conceived or reduced to practice or learned by Consultant either alone or jointly with others during the period of engagement:

a)

while working for, or arising out of Consultant’s work with, PAREXEL in any capacity; or

b)

which relates in any manner to, or is useful in, the actual or anticipated business or products of PAREXEL or relates in any manner to, or is useful in, PAREXEL’s actual or anticipated research and development, or is suggested by or results from any task assigned to Consultant or others by PAREXEL or work performed by Consultant or others for or on behalf of PAREXEL or which is discovered or developed using any of PAREXEL’s facilities or on PAREXEL time.

6.   Consultant agrees that in connection with any invention, data or ideas covered by item 5 above:

a)	Consultant will disclose it promptly to PAREXEL;
b)	Consultant will, at PAREXEL’s request, promptly execute a specific assignment of title to PAREXEL and do anything else reasonably necessary to enable PAREXEL to secure a patent for or acquire or enforce any rights, including, without limitation,

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any copyrights, in the invention, data or idea in the United States or in foreign countries provided that PAREXEL shall reimburse Consultant for any expenses in connection therewith.

If for any reason, including incapacity, PAREXEL is unable, after reasonable effort, to secure Consultant’s signature on any document or documents needed to apply for, perfect or otherwise acquire a patent or any other rights in the invention, data or idea, or to enforce such rights, Consultant hereby irrevocably designates PAREXEL as Consultant’s agent and attorney-in-fact, to act for and in Consultant’s behalf to execute and file such documents with the same legal force and effect as if executed by Consultant.

The terms of items 5 and 6 above, and Consultant’s obligations hereunder, shall survive termination or expiration of this Agreement and the completion of Consultant’s services hereunder.

7.	Consultant will not, in connection with Consultant’s engagement by PAREXEL, either directly or indirectly use or disclose any trade secret, confidential or proprietary information of any previous employer or other party which, by virtue of applicable law or the terms of any agreement to which Consultant is party, Consultant is bound not to so use or disclose.
8.	Consultant shall not at any time during the twelve month period following the expiration or termination of Consultant’s engagement with PAREXEL hire any employee of PAREXEL or solicit or encourage any employee of PAREXEL to terminate his employment with PAREXEL.
9.	Consultant understands that the primary client relationship is held by PAREXEL and that such a relationship is valuable and critical to the survival of PAREXEL’s business. Consultant agrees to perform services as a subcontractor to PAREXEL and shall not at any time during the twelve month period following the expiration or termination of Consultant’s engagement with PAREXEL solicit or accept consultant status with client(s) of PAREXEL.
10.	Consultant shall perform services under this Agreement only as an independent contractor, and nothing contained herein shall be construed to be inconsistent with that relationship or status. Accordingly, Consultant shall have sole responsibility for the payment of all federal, state and local income taxes and for all employment and disability insurance, Social Security and other similar taxes. This Agreement shall not constitute, create, or in any way be interpreted as, a joint venture, partnership, or formal business organization of any kind.
11.	Consultant agrees that this Agreement, while it relates to certain terms and conditions of Consultant’s engagement by PAREXEL, is not an employment contract and that, as an independent contractor, Consultant is not eligible for any employee benefits from PAREXEL.
12.	This Agreement and the Key Employee Agreement, dated April 9, 2001 , by and between PAREXEL and the Consultant, constitute the entire agreement between Consultant and PAREXEL and supersede all prior contracts, agreements, and understandings relating to the

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	same subject matter between the parties, including, but not limited to, the Change of Control/Severance Agreement, dated April 9, 2001, by and between PAREXEL and Consultant. The parties intend this Agreement to be a complete statement of the terms of their agreement, and no change or modification of any of the provisions of this Agreement shall be effective unless it is in writing and signed by a duly authorized officer of PAREXEL and Consultant.
13.	Consultant agrees that Consultant’s obligations to PAREXEL under this Agreement will also extend to any other organization which succeeds or becomes affiliated to the business of PAREXEL by reason of any sale, merger, or similar transaction.
14.	Any dispute as to the meaning, effect or validity of this Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, U.S.A. If any part of this Agreement is unenforceable for any reason, the Agreement shall remain effective and enforceable to the fullest extent permitted by law.
15.	Consultant agrees, individually and as trustee of the Carl A. Spalding, Sr. Revocable Living Trust dated 12/21/1990, that he will exercise all options granted to him pursuant to the Company’s Second Amended and Restated 1995 Stock Plan no later than 239 days after the termination of this Consulting Agreement, notwithstanding any terms or conditions in any stock option agreement between him and the Company to the contrary.

If the foregoing terms and conditions are acceptable, please sign and date both copies of this Agreement, and return one to PAREXEL.

Sincerely,	Agreed to and accepted by:
	Consultant
/s/ Josef H. von Rickenbach	/s/ Carl A. Spalding
Josef H. von Rickenbach	Carl A. Spalding
Chairman and Chief Executive Officer
Date: May 26, 2005	Date: May 26, 2005
	Please indicate your Tax ID Number/Social Security Number:

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EX-99.1

Exhibit 99.1

CONTACTS:	James Winschel, Senior Vice-President and Chief Financial Officer
	Jill Baker, Vice President of Investor Relations
	(781) 434-4118

PAREXEL ANNOUNCES FOURTH QUARTER RESTRUCTURING CHARGE

Boston, MA, June 1, 2005 – PAREXEL International Corporation (Nasdaq: PRXL) today announced that it will record a charge in the fourth quarter of Fiscal 2005 (ending June 30, 2005) in connection with restructuring activities it is undertaking.

The Company has approved a plan to reduce expenses, better align costs with current and future geographic sources of revenue, and improve operating efficiencies. These actions are expected to result in a pre-tax charge in the range of $30 to $35 million. The charge is primarily related to expenses to be incurred in connection with the consolidation or closure of certain offices, mostly in the United States, the associated relocation or elimination of approximately 150 positions, and certain other one-time costs. The restructuring initiatives primarily impact corporate overhead costs, but will also affect each of the Company’s three business segments. The charges will include approximately $24 to $27 million in costs related to the abandonment of certain property leases, approximately $4 to $5 million in employee separation benefits, and approximately $2 to $3 million in other one-time costs. PAREXEL expects a small portion of the charge to be paid out in the fourth quarter, with the remainder to be paid out over several years. The Company expects the charge to result in annual pre-tax savings of approximately $8 to $10 million when completed.

The Company anticipates that these fourth quarter restructuring activities may have a dampening effect on short-term financial performance, and will reduce results from the Company’s previous expectations. PAREXEL plans to issue a press release to quantify revenue and earnings per share expectations for the fourth quarter as well as for future periods prior to the end of June.

Mr. Josef von Rickenbach, PAREXEL’s Chairman and Chief Executive Officer stated, “As we announced last quarter, the geographic mix of our business has changed dramatically, leaving us with excess facilities capacity, especially in the United States. We have therefore taken steps to better align our space requirements with client demand. I would like to note, however, that we are also continuing to hire in many locations to meet the demands of the business, and expect a net increase to our headcount at the end of this quarter as compared to the March quarter.”

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 currently operates in 53 locations throughout 37 countries around the world, and has 5,070 employees.

This release contains “forward-looking” statements regarding future results and events, including, without limitation, statements regarding the restructuring activities, the expected charge for the restructuring activities, and other effects of the restructuring activities. 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 restructurings, including the restructuring activities 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.