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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): August 4, 1998
APPLIED ANALYTICAL INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation or Organization)
0-21185 04-2687849
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(Commission File Number) (I.R.S. Employer Identification Number)
5051 New Centre Drive
Wilmington, North Carolina 28403
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(Address of Principal Executive Offices) (Zip Code)
(910) 392-1606
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(Registrant's Telephone Number, Including Area Code)
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APPLIED ANALYTICAL INDUSTRIES, INC.
FORM 8-K
(Any item which is not applicable or to which the answer is negative
has been omitted.)
Item 5. Other Events.
On August 4, 1998, Applied Analytical Industries, Inc. (the "Company") issued a
press release reporting the Company's unaudited consolidated financial results
for the period ended June 30, 1998. The press release is filed as Exhibit 99.1
hereto and is incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
Exhibits:
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Exhibit No. Description
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<S> <C>
99.1 Press release dated August 4, 1998
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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.
APPLIED ANALYTICAL INDUSTRIES, INC.
Date: August 4, 1998 By: /s/ Frederick D. Sancilio
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Frederick D. Sancilio, Ph.D.
President and Chief Executive Officer
Date: August 4, 1998 By: /s/ Eugene T. Haley
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Eugene T. Haley
Executive Vice President and
Chief Financial Officer
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APPLIED ANALYTICAL INDUSTRIES, INC.
EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release dated August 4, 1998
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PRESS RELEASE EXHIBIT 99.1
FOR: Applied Analytical Industries, Inc.
CONTACT: Pamela S. Dietze
Investor Relations Coordinator
Applied Analytical Industries, Inc.
(910) 392-1606
APPLIED ANALYTICAL INDUSTRIES, INC. (AAI) ANNOUNCES
RECORD FINANCIAL RESULTS FOR SECOND QUARTER 1998
Wilmington, North Carolina, August 4, 1998 -- Applied Analytical
Industries, Inc. (Nasdaq: AAII) today announced financial results for
the second quarter ended June 30, 1998.
Net sales for the second quarter of 1998 rose 23% to $19.4 million from
net sales of $15.8 million reported in the second quarter of 1997. The
Company reported net income for the second quarter of 1998 of $1.3
million, or $0.08 per share, versus a net income of $0.6 million or
$0.04 per share, for the same period a year ago. Quarterly net sales of
the Company's core Fee-for-Service business increased by 13% to $17.2
million in 1998 from $15.2 million for the same period of 1997.
Internal Product Development revenues for the second quarter were $2.2
million, compared to $0.6 million for the same period in 1997.
For the six months ending June 30, 1998, net sales were $36.5 million,
an increase of 18% from the net sales of $31.0 million reported for the
same period of 1997. Net income was $2.4 million, or $0.15 per share,
versus net income of $1.5 million, or $0.09 per share in 1997. Net
sales of the Company's core Fee-for-Service business increased by 13%
to $32.8 million in 1998 from $29.0 million in 1997. Internal Product
Development revenues in 1998 increased by 86% to $3.8 million versus
Internal Product Development revenues of $2.0 million in 1997.
The gross margin from Fee-for-Service work was 48% for the second
quarter of 1998 compared to 50% for the same period of 1997. Research
and development ("R&D") expenses were 10% of net sales in the second
quarter of 1998, compared to 11% in the second quarter of 1997.
Dr. Frederick Sancilio, AAI's Chief Executive Officer and Chairman
commented on the second quarter by saying, "Demand for our
Fee-for-Service business in the United States continues to be strong.
To meet this demand, we have acquired an additional 75,000 square feet
of laboratory space in New Jersey that will be operational in the
fourth quarter of this year. This new space will be phased into
operations over the next three years."
Discussing Internal Product Development, Dr. Sancilio stated, "Our net
sales from licensing and royalties of $2.2 million continues to
demonstrate the successful growth of
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this program. During the second quarter, in the U.S., we signed one new
licensing contract and filed two products with the FDA."
AAI is a leading contract research and development organization (CRO)
providing pharmaceutical product development and support services to
the worldwide pharmaceutical and biotechnology industries. The Company
offers seamless outsourcing as well as an integrated broad spectrum of
pharmaceutical services, both clinical and non-clinical. Additionally,
AAI leverages its drug development expertise to generate licensing and
royalty revenues by licensing internally developed drugs and drug
technologies to pharmaceutical client companies worldwide.
Information in the 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 acquire and maintain large
client contracts, the ability to hire and retain qualified employees
and other items that may cause the actual results to differ materially,
which may be discussed in the Company's recent Form 10-K filings, its
registration statement, as amended, and other filings with the
Securities and Exchange Commission.
(Table to follow)
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APPLIED ANALYTICAL INDUSTRIES, INC.
Condensed Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)
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Three months ended Six months ended
June 30, June 30,
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1998 1997 1998 1997
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Net sales:
Fee for service $ 17,199 $ 15,223 $ 32,776 $ 28,969
Internal product development 2,227 591 3,763 2,020
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19,426 15,814 36,539 30,989
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Operating costs and expenses:
Cost of sales 8,965 7,566 17,462 15,057
Selling 2,017 1,829 4,183 3,664
General and administrative 4,400 3,855 8,062 7,034
Research and development 1,965 1,753 3,368 3,371
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17,347 15,003 33,075 29,126
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Income from operations 2,079 811 3,464 1,863
Other income (expense):
Interest income, net of expense 116 247 248 574
Other, net (43) 93 (32) 217
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73 340 216 791
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Income before income taxes 2,152 1,151 3,680 2,654
Provision for income taxes 846 568 1,301 1,161
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Net income $ 1,306 $ 583 $ 2,379 $ 1,493
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Basic earnings per share $ 0.08 $ 0.04 $ 0.15 $ 0.09
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Weighted average shares outstanding 16,303 16,288 16,300 16,288
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Diluted earnings per share $ 0.08 $ 0.04 $ 0.15 $ 0.09
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Weighted average shares outstanding 16,357 16,417 16,405 16,429
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