Sometimes mistakes don’t turn out all bad.
That was the case for Parexel International Corp. during its fiscal 2010 first quarter, when an accounting mistake it made after an acquisition last year helped it post a revenue gain that otherwise would have been a decline.
The Waltham, Mass.-based contract research organization posted service revenues of $259.8 million during the three months ended Sept. 30, down 1.3 percent compared with 263.1 million during the same period last year. But thanks to an accounting slip associated with its 2008 buyout of ClinPhone, which improperly attributed $5.7 million in service revenues to the 2008 first quarter, service revenues actually rose about 1 percent. The picture improves even more once a $16.2 million hit from the weak dollar and a $6.2 million gain from acquisitions are factored in, translating into a 4.8 percent increase in year-on-year service revenues.
But that’s where the good news ends. Parexel reported net income of $12.4 million on sales of $307.5 million during the three months ended Sept. 30, compared with net income of $13.6 million on sales of $319.6 million during the same period last year — declines of 3.8 percent and 8.7 percent, respectively.
Chairman and CEO Josef von Rickenbach said the company is planning a major restructuring effort, aimed at better leveraging its global resources. Parexel said it expects to take a $30 million charge related to the move during its second quarter, to cover the cost of layoffs and “facility restructuring.”
The Q1 results missed the company’s previous guidance for service revenues of between $263 million and $268 million, prompting it to reduce its forecast for the full year from service revenues of between $1.12 billion to $1.15 billion. The new guidance forecasts service revenues of between $1.11 billion and $1.13 billion for fiscal 2010.