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Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-05535
Prospectus Supplement No. 1, dated April 29, 1997
(To Prospectus dated April 1, 1997)
[AAI LOGO]
APPLIED ANALYTICAL INDUSTRIES, INC.
COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
On April 29, 1997, the Company issued a press release reporting certain
financial information for the quarter ended March 31, 1997. A copy of such press
release is attached.
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[AAI Logo] 1206 North 23rd Street
Wilmington, NC 28105
910.251.6700
800.575.4AAI
Fax: 910.251.6755
FOR IMMEDIATE RELEASE FOR: Applied Analytical Industries, Inc.
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CONTACTS: Mark P. Colonnese
Vice President and
Chief Financial Officer
Kay Thompson
Investor Relations Manager
Applied Analytical Industries, Inc.
910/392-1606
Christine Flaherty
Account Supervisor, IR
Makovsky & Company, Inc.
212/508-9600
APPLIED ANALYTICAL INDUSTRIES, INC. (AAI) ANNOUNCES FIRST
QUARTER 1997 FINANCIAL RESULTS
Wilmington, North Carolina, April 29, 1997 -- Applied Analytical
Industries, Inc. (Nasdaq: AAII) today announced financial results for the first
quarter ended March 31, 1997.
Net sales for the first quarter of 1997 rose 53% to $15.2 million
versus net sales of $9.9 million in the first quarter of 1996. Net income for
the first quarter of 1997 was $910,000, up 39% from $655,000 in the same period
a year ago. Net sales and income for 1997 included results of L.A.B.
Gesellschaft fur pharmakologische Untersuchungen mbH & Co., a European contract
research organization, acquired by AAI on December 31, 1996. Earnings per share
for the first quarter were $0.06 in both current and prior years. The 1997 per
share figure includes both the dilutive effect of the acquisition and a 38%
increase in outstanding shares to 16.4 million from 11.9 million pro forma
shares outstanding in the prior year period. This increase in shares reflects
the impact of the Company's initial public offering in September 1996.
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Quarterly net sales of the Company's core fee-for-service business
increased 47% to $13.6 million in 1997 from $9.3 million for the same period in
1996. Licensing revenues for the quarter more than doubled to $1.5 million from
$0.7 million reported in first quarter of 1996.
Commenting on these results, Dr. Frederick Sancilio, Chairman and Chief
Executive Officer, stated, "Our operating performance for the quarter in the
fee-for-service and internal drug development businesses again demonstrates the
synergistic opportunity presented to us in providing both services to our
clients. In our fee-for-service business, demand for contract research and
development services continues to be strong both domestically and
internationally as companies increasingly turn to outsourcing to keep fixed
costs down in their own operations. Licensing revenues in the first quarter from
our internal drug development business exceeded those earned for the entire year
of 1996. Our licensing agreement with Teva Pharmaceuticals, also announced
today, contributed to our successful first quarter." Regarding the recent
acquisition of L.A.B., Dr. Sancilio concluded, "the integration of AAI and
L.A.B. is progressing as expected and we continue to believe that L.A.B. will
have a positive impact on earnings in the second half of 1997."
AAI is a leading contract research and development organization
providing pharmaceutical product development and support services to the
worldwide pharmaceutical and biotechnology industries. The Company offers a
broad range of integrated, value-added services spanning the entire drug life
cycle. Additionally, through its internal development program, AAI leverages its
expertise to generate revenue by licensing internally developed drugs and drug
technologies to pharmaceutical companies.
Information in this press release contains certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements involve risks and
uncertainties that could cause actual results to differ materially, including
without limitation, the ability of acquired businesses to be integrated with
AAI's operations, actual operational performance, the ability to maintain large
client contracts or to enter into new contracts, and other items that may cause
the actual results to differ materially which are discussed in the Company's
recent Form 10-K for the year ended December 31, 1996, its registration
statement on Form S-1, as amended, and other filings with the Securities and
Exchange Commission.
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APPLIED ANALYTICAL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)
QUARTER ENDED MARCH 31
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<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Net Sales $ 15,222 $ 9,925
Costs & Expenses:
Cost of Sales 7,491 4,118
Selling 1,835 1,544
General & Administrative 3,407 2,273
Research & Development 1,618 852
Other Expense/(Income), net (632) 29
13,719 8,816
Income before Income Taxes 1,503 1,109
Income Taxes 593 454
Net Income $ 910 $ 655
Earnings per Share (1) $ 0.06 $ 0.06
Weighted Average Shares (1) 16,409 11,918
</TABLE>
(1) Weighted average common shares outstanding for 1997 reflects the impact
of the issuance of 3,105,000 shares of common stock in the Company's
initial public offering, completed on September 19, 1996. The weighted
average shares for 1996 are presented on a pro forma basis.
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