8-K 1 y92080e8vk.txt CAMBREX CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20459 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): November 10, 2003 CAMBREX CORPORATION -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 1-10638 22-2476135 -------------------------- --------------------------------- (Commission File Number) (IRS Employer Identification No.) One Meadowlands Plaza, East Rutherford, New Jersey 07073 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 201-804-3000 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) CAMBREX CORPORATION FORM 8-K CURRENT REPORT NOVEMBER 10, 2003 Item 2. Acquisition or Disposition of Assets On November 10, 2003, Cambrex Corporation ("Cambrex", the "Company" or "Registrant") completed the sale of the Rutherford Chemicals business to a subsidiary of Arsenal Capital Partners. The sale agreement specifies proceeds of $55.0 million in cash received at closing, a $2.0 million subordinated 12% interest bearing note receivable due in full in 5-1/2 years, and an $8.0 million performance based cash earn-out if future operating profit targets are achieved in each of the next three years. These proceeds are before fees and expenses associated with the transaction and a working capital adjustment. Net proceeds from the cash received at closing will be used to repay outstanding debt on the Company's bank facility. Item 7. Financial Statements and Exhibits. (b) Pro forma financial information. Unaudited Pro Forma Condensed Consolidated Income Statements for the nine months ended September 30, 2003 and 2002. Unaudited Pro Forma Condensed Consolidated Income Statements for the years ended December 31, 2002, 2001, and 2000. Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2003. Notes to Unaudited Pro Forma Consolidated Financial Statements. (c) Exhibits. 10. Amended and Restated Asset Sale Agreement dated October 17, 2003, between the Registrant and Rutherford Acquisition Corp, a subsidiary of Arsenal Capital Partners. Basis of Presentation The following unaudited pro forma consolidated financial statements reflect the divestiture of the Rutherford Chemicals business after giving effect to pro forma adjustments described in the accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements. These unaudited pro forma consolidated financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of Cambrex Corporation, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and Quarterly Report on Form 10-Q as of September 30, 2003 and for the nine months ended September 30, 2003 and 2002, respectively. The unaudited pro forma consolidated income statements give effect to the divestiture as if it had occurred on January 1, 2000. The unaudited pro forma balance sheet gives effect to the divestiture as if it had occurred on September 30, 2003. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the divestiture been consummated at the dates indicated, nor is it necessarily indicative of future operating results or financial position of the Company. CAMBREX CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL(1) CHEMICALS(2) ADJUSTMENTS PRO FORMA ------------- ------------ ----------- --------- Gross sales 303,526 303,526 Commissions & allowances 2,891 2,891 ------- ------- -------- ------- Net sales 300,635 - - 300,635 Other revenue 6,899 6,899 ------- ------- -------- ------- NET REVENUES 307,534 - - 307,534 Cost of goods sold 183,170 183,170 ------- ------- -------- ------- GROSS PROFIT 124,364 - - 124,364 Operating expenses: Selling, general & administrative 72,936 72,936 Legal settlement 11,342 11,342 Research and development 12,576 12,576 ------- ------- -------- ------- Total operating expenses 96,854 - - 96,854 OPERATING PROFIT 27,510 - - 27,510 Other expenses/(income): Interest expense, net 8,301 (1,791)(3) 6,510 Other (income), net (207) - (207) ------- ------- -------- ------- INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 19,416 - 1,791 21,207 Income taxes 18,274 - (4) 18,274 ------- ------- -------- ------- INCOME FROM CONTINUING OPERATIONS 1,142 - 1,791 2,933 ======= ======= ======== ======= Basic and diluted earnings from continuing operations per share: Per share - basic 0.04 0.11 Weighted average shares outstanding - basic 25,769 25,769 Per share - diluted 0.04 0.11 Weighted average shares outstanding-diluted 26,032 26,032
See accompanying notes to the unaudited pro forma consolidated financial statements. CAMBREX CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL(1) CHEMICALS(2) ADJUSTMENTS PRO FORMA ------------- ------------ ----------- --------- Gross sales 294,655 294,655 Commissions & allowances 2,926 2,926 ------- ------- -------- ------- Net sales 291,729 - - 291,729 Other revenue 5,097 5,097 ------- ------- -------- ------- NET REVENUES 296,826 - - 296,826 Cost of goods sold 161,393 161,393 ------- ------- -------- ------- GROSS PROFIT 135,433 - - 135,433 Operating expenses: Selling, general & administrative 64,594 64,594 Restructuring and other charges 2,538 2,538 Research and development 11,672 11,672 ------- ------- -------- ------- Total operating expenses 78,804 - - 78,804 OPERATING PROFIT 56,629 - - 56,629 Other expenses/(income): Interest expense, net 8,673 (1,711)(3) 6,962 Other expense, net 3,453 3,453 ------- ------- -------- ------- INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 44,503 - 1,711 46,214 Income taxes 11,170 599 (4) 11,769 ------- ------- -------- ------- INCOME FROM CONTINUING OPERATIONS 33,333 - 1,112 34,445 ======= ======= ======== ======= Basic and diluted earnings from continuing operations per share: Per share - basic 1.28 1.33 Weighted average shares outstanding-basic 25,967 25,967 Per share - diluted 1.25 1.29 Weighted average shares outstanding-diluted 26,665 26,665
See accompanying notes to the unaudited pro forma consolidated financial statements. CAMBREX CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2002 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA ------------- ------------ ----------- --------- Gross sales 522,176 127,746 394,430 Commissions & allowances 5,392 805 4,587 ------- ------- -------- ------- Net sales 516,784 126,941 - 389,843 Other revenue 10,159 936 9,223 ------- ------- -------- ------- NET REVENUES 526,943 127,877 - 399,066 Cost of goods sold 326,767 108,235 218,532 ------- ------- -------- ------- GROSS PROFIT (LOSS) 200,176 19,642 - 180,534 Operating expenses: Selling, general & administrative 98,563 9,987 88,576 Restructuring and other charges 14,501 10,263 4,238 Vitamin B-3 provision 10,000 10,000 - Research and development 17,629 1,835 15,794 ------- ------- -------- ------- Total operating expenses 140,693 32,085 - 108,608 OPERATING PROFIT (LOSS) 59,483 (12,443) - 71,926 Other expenses/(income): Interest expense/(income), net 11,237 (27) (2,281)(3) 8,983 Other expense/(income), net 64 (3,481) 3,545 ------- ------- -------- ------- INCOME/(LOSS) BEFORE TAXES 48,182 (8,935) 2,281 59,398 Income taxes 11,949 (2,387) 798 (4) 15,134 ------- ------- -------- ------- NET INCOME/(LOSS) 36,233 (6,548) 1,483 44,264 ======= ======= ======== ======= Basic and diluted earnings per share: Per share - basic 1.40 1.71 Weighted average shares outstanding-basic 25,954 25,954 Per share - diluted 1.37 1.67 Weighted average shares outstanding-diluted 26,520 26,520
See accompanying notes to the unaudited pro forma consolidated financial statements. CAMBREX CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2001 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA ------------- ------------ ----------- --------- Gross Sales 499,194 141,452 357,742 Commissions & allowances 4,259 606 3,653 ------- ------- -------- ------- Net sales 494,935 140,846 - 354,089 Other revenue 3,920 (8) 3,928 ------- ------- -------- ------- NET REVENUES 498,855 140,838 - 358,017 Cost of goods sold 319,520 120,662 198,858 ------- ------- -------- ------- GROSS PROFIT 179,335 20,176 - 159,159 Operating expenses: Selling, general & administrative 91,651 10,259 81,392 Restructuring and other charges 18,649 16,627 2,022 Vitamin B-3 Provision 4,400 4,400 - Research and development 19,619 2,240 17,379 ------- ------- -------- ------- Total operating expenses 134,319 33,526 - 100,793 OPERATING PROFIT/(LOSS) 45,016 (13,350) - 58,366 Other expenses/(income): Interest expense, net 10,567 (35) (2,759)(3) 7,843 Other (income)/expense, net (277) 46 (323) ------- ------- -------- ------- INCOME/(LOSS) BEFORE TAXES 34,726 (13,361) 2,759 50,846 Income taxes 9,414 (3,762) 966 (4) 14,142 ------- ------- -------- ------- NET INCOME/(LOSS) 25,312 (9,599) 1,793 36,704 ======= ======= ======== ======= Basic and diluted earnings per share: Per share - basic 0.99 1.43 Weighted average shares outstanding - basic 25,648 25,648 Per share - diluted 0.96 1.39 Weighted average shares outstanding - diluted 26,495 26,495
See accompanying notes to the unaudited pro forma consolidated financial statements. CAMBREX CORPORATION CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2000 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA ------------- ------------ ----------- --------- Gross sales 492,544 166,039 326,505 Commissions & allowances 4,976 4,132 844 ------- ------- -------- ------- Net sales 487,568 161,907 - 325,661 Other revenue 4,527 (176) 4,703 ------- ------- -------- ------- NET REVENUES 492,095 161,731 - 330,364 Cost of goods sold 314,600 129,199 185,401 ------- ------- -------- ------- GROSS PROFIT 177,495 32,532 - 144,963 Operating expenses: Selling, general & administrative 85,714 10,071 75,643 Restructuring - - - Vitamin B-3 Provision - - - Research and development 14,267 2,465 11,802 ------- ------- -------- ------- Total operating expenses 99,981 12,536 - 87,445 OPERATING PROFIT 77,514 19,996 - 57,518 Other expenses/(income): Interest expense/(income), net 11,487 (78) (3,555)(3) 8,010 Other (income), net (329) (116) (213) ------- ------- -------- ------- INCOME BEFORE TAXES 66,356 20,190 3,555 49,721 Income taxes 19,649 6,478 1,244 (4) 14,415 ------- ------- -------- ------- NET INCOME 46,707 13,712 2,311 35,306 ======= ======= ======== ======= Basic and diluted earnings per share Per share - basic 1.87 1.41 Weighted average shares outstanding - basic 25,015 25,015 Per share - diluted 1.79 1.35 Weighted average shares outstanding-diluted 26,157 26,157
See accompanying notes to the unaudited pro forma consolidated financial statements. CAMBREX CORPORATION BALANCE SHEET AS OF SEPTEMBER 30, 2003 (UNAUDITED)
CAMBREX CONSOLIDATED RUTHERFORD PRO FORMA HISTORICAL CHEMICALS(7) ADJUSTMENTS PRO FORMA ------------ ------------ ----------- --------- CURRENT ASSETS Cash and cash equivalents 41,835 41,835 Trade receivables, net 54,681 54,681 Inventories, net 76,348 76,348 Deferred tax asset 21,433 21,433 Assets held for sale 65,558 65,558 - Other current assets 25,790 25,790 ------- ------ --------- ------- TOTAL CURRENT ASSETS 285,645 65,558 - 220,087 Property, plant and equipment, net 256,221 256,221 Goodwill and other tangibles 268,859 268,859 Other assets 12,915 12,915 ------- ------ --------- ------- OTHER ASSETS 823,640 65,558 - 758,082 ======= ====== ========= ======= CURRENT LIABILITIES Accounts payable and accrued liabilities 71,711 71,711 Liabilities held for sale 9,905 9,905 - Short-term debt and current portion of long-term debt 2,299 2,299 ------- ------ --------- ------- TOTAL CURRENT LIABILITIES 83,915 9,905 - 74,010 Long-term debt 253,686 (53,055)(8) 200,631 Deferred tax liabilities 52,984 52,984 Other liabilities 52,599 (1,150)(9) 51,449 ------- ------ --------- ------- TOTAL LIABILITIES 443,184 9,905 (54,205) 379,074 STOCKHOLDERS' EQUITY 380,456 55,653 54,205 379,008 ------- ------ --------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 823,640 65,558 - 758,082 ======= ====== ========= =======
See accompanying notes to the unaudited pro forma consolidated financial statements. Cambrex Corporation Notes to Pro forma Consolidated Financial Statements (Unaudited) (1) Reflects results of continuing operations of the Company as filed in the Company's Form 10-Q filed on November 12, 2003 for the third quarter 2003, which excludes the Rutherford Chemicals business which was reported as a discontinued operation for the respective period. (2) For the nine month periods ended September 30, 2003 and 2002, the Rutherford Chemicals business has already been reflected as a discontinued operation in the historical financial statements filed on Form 10-Q on November 12, 2003 for the third quarter 2003. (3) Reflects the reduction of interest expense attributable to the application of cash proceeds from the sale of the Rutherford Chemicals business to the Company's long-term debt balance. The interest expense reduction was calculated using the average interest rate for each period presented which was 4.5%, 4.3%, 4.3%, 5.2% and 6.7% for the nine month periods ended September 30, 2003 and 2002 and for the years ended December 31, 2002, 2001 and 2000, respectively. An increase in the variable interest rate of 1/8% would have resulted in higher annual interest expense reduction of approximately $66 for each period. (4) Eliminates the income tax benefit of the reduction in interest expense at a U.S. federal statutory rate of 35%. For the nine month period ended September 30, 2003, there was no income tax benefit assumed due to the Company's recording of a valuation allowance for all net domestic deferred tax assets as of September 30, 2003. (See the Company's third quarter 2003 Form 10-Q, note (6), filed on November 12, 2003 for further discussion). (5) Reflects the results of operations of the Company including the Rutherford Chemicals business which was not reported as a discontinued operation until September 30, 2003. (6) Eliminates the results of operations of the Rutherford Chemicals business for the respective periods as if the divestiture had been completed on January 1, 2000. (7) Eliminates the net assets and liabilities of the Rutherford Chemicals business as if the divestiture had been completed on September 30, 2003. (8) Reflects the application of the estimated cash proceeds from the sale of the Rutherford Chemicals business, net of fees and expenses and working capital adjustment, to the outstanding long-term debt balance. These cash proceeds exclude the earn-out arrangement and any potential collection of the $2.0 million note receivable. (9) Reflects the write-off of net pension and post-retirement plan liabilities that resulted from the curtailment accounting associated with the sale of the Rutherford Chemicals business. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized. CAMBREX CORPORATION By: /s/ Luke M. Beshar ------------------------------ Luke M. Beshar Senior Vice President and Chief Financial Officer Date: November 25, 2003