EX-99.1 2 y17882exv99w1.txt PRESS RELEASE EXHIBIT 99.1 - Cambrex Corporation Press Release issued February 22, 2006 [CAMBREX LOGO] Date: February 22, 2006 Contact: Luke M. Beshar Anne-Marie Hess Executive Vice President & CFO Senior Director, Investor Relations Phone: 201-804-3010 201-804-3062 Email: luke.beshar@cambrex.com annemarie.hess@cambrex.com Release: Immediate CAMBREX REPORTS FOURTH QUARTER AND FULL YEAR 2005 RESULTS EAST RUTHERFORD, NJ - February 22, 2006 - Cambrex Corporation (NYSE: CBM) reports fourth quarter and full year 2005 results for the period ended December 31, 2005. FOURTH QUARTER 2005 CONSOLIDATED RESULTS For the fourth quarter 2005, the Company reported a net loss of $140.3 million, or $5.26 per diluted share, compared to net income of $4.9 million, or $0.18 per diluted share, in the fourth quarter 2004. Fourth quarter 2005 results include charges of $5.40 per diluted share from the following items: - An $87.2 million ($3.27 per diluted share) goodwill impairment and a $35.8 million ($1.34 per diluted share) charge to reduce the carrying value of long-lived assets recorded in Operating Expenses. The long-lived asset impairment includes a tax benefit of $2.3 million. The goodwill and asset impairments were recorded as the result of lower long-term profitability projections for the Biopharma segment and two small European reporting units in the Human Health segment. - A $16.9 million ($0.63 per diluted share) valuation allowance recorded within the Income Tax Provision to write down the carrying value of certain US tax assets that had previously been preserved by tax strategies. The valuation allowance results from the Company's recent history of domestic losses and its short-term projections for continued domestic losses. - A $4.2 million ($0.16 per diluted share) charge recorded within Administrative Expense primarily due to the severance agreement with the Company's former CEO. Excluding the charges noted above, fourth quarter 2005 net earnings were $3.8 million ($0.14 per diluted share). Please see the pro forma-to-GAAP reconciliation at the end of this press release. Management believes that pro forma results provide a more meaningful representation of the Company's operating results for the periods presented due to the magnitude and nature of the charges recorded in the fourth quarter 2005, full year 2005 and full year 2004. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 1 [CAMBREX LOGO] Sales increased 3.0% to $120.9 million in the fourth quarter 2005, including a 5.1% unfavorable impact from foreign currency, from $117.4 million in the fourth quarter 2004 resulting from improved sales performance in the Biopharma and Bioproducts segments. Fourth quarter 2005 gross margins decreased to 33.9% from 37.5% in the fourth quarter 2004 primarily due to lower Bioproducts margins resulting primarily from increased headcount to support current and future activity levels, lower Biopharma margins caused by higher fixed plant costs and adverse product mix and lower Human Health margins due to unfavorable absorption and lower pricing. Foreign currency favorably impacted consolidated gross margin by 0.4 percentage points in the fourth quarter 2005. FULL YEAR 2005 CONSOLIDATED RESULTS Full year 2005 sales increased 2.9% to $452.0 million, including a 0.4% unfavorable impact resulting from foreign currency, from $439.1 million in 2004 due to higher sales in the Bioproducts and Human Health segments partially offset by lower sales in the Biopharma segment. Full year 2005 gross margins decreased to 35.7% from 38.9% in 2004 due to lower Bioproducts margins resulting from increased headcount to support current and future activity levels, lower Biopharma margins caused by higher fixed plant costs and adverse product mix and lower Human Health margins due to unfavorable absorption and lower pricing. Foreign currency unfavorably impacted gross margin by 0.1 percentage point in 2005. For the full year 2005, the Company reported a net loss of $129.2 million, or $4.88 per diluted share, compared to a net loss of $26.9 million, or $1.03 per diluted share, in 2004. In addition to the charges recorded in the fourth quarter 2005 discussed above, earlier in 2005 the Company recorded a tax benefit of $3.3 million ($0.13 per diluted share) due to a favorable Swedish court decision and a charge of $1.3 million ($0.05 per diluted share) for the expected cost of environmental remediation of a former site. Excluding the charges noted above, 2005 net earnings were $12.9 million ($0.48 per diluted share). In 2004, a $48.7 million ($1.84 per diluted share) goodwill impairment was recorded in Biopharma Operating Expense, $2.9 million of income was recorded in Bioproducts Operating Expense due to the early termination of a customer contract and a $1.0 million charge was recorded in Human Health Operating Expense due to the reorganization and related workforce reductions at a European facility. Excluding the charges noted above, 2004 net earnings were $20.0 million ($0.76 per diluted share). Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 2 [CAMBREX LOGO] The total number of contract development and manufacturing projects processed by the Company's Biopharma, Cell Therapy (within the Bioproducts segment) and Human Health businesses increased 61% in full year 2005 compared to full year 2004. Compared to the third quarter 2005, two Human Health projects moved from pre-registration to approved status and two Biopharma projects ended due to unfavorable regulatory developments at two customers.
Number of projects ------------------------ Full year Full year Project type 2004 2005 %Change ------------- --------- --------- ------- Biopharma 15 23 53% Cell Therapy 8 17 113% Human Health* 39 60 54%
*Note: The Human Health line does not include projects for approved therapeutics. BIOPRODUCTS The Bioproducts segment includes products and services for research and therapeutic applications. Bioproducts sales in the fourth quarter 2005 increased 5.7% to $35.9 million, including a 3.7% unfavorable impact from foreign currency, from $33.9 million in the fourth quarter 2004 primarily due to higher sales volumes of research products, cell therapy and related services and therapeutic media. Fourth quarter 2005 Bioproducts gross margin decreased to 50.1% from 56.8% in the fourth quarter 2004 primarily due to increased headcount to support current and future activity levels, higher utilities and foreign currency effects partially offset by favorable absorption from higher sales volumes. Foreign currency unfavorably impacted Bioproducts gross margin by 1.1 percentage point in the fourth quarter 2005. Fourth quarter 2005 Bioproducts operating profit margin increased to 14.7% from 13.3% in the fourth quarter 2004 primarily due to lower commissions and bonus accruals. Foreign currency unfavorably impacted Bioproducts operating profit margin by 1.0 percentage point in the fourth quarter 2005. BIOPHARMA The Biopharma segment consists of the Company's contract biopharmaceutical process development and manufacturing business. Sales in the fourth quarter 2005 increased 21.0% to $14.0 million from $11.5 million in the fourth quarter 2004 due to higher suite revenues resulting from the timing Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 3 [CAMBREX LOGO] of client projects and higher material reimbursement revenue partially offset by lower process development revenues. Fourth quarter 2005 Biopharma gross margin decreased to 7.1% versus 13.7% in the fourth quarter 2004 driven by higher material reimbursements which contribute virtually no gross profit, higher utility costs, costs associated with pre-approval inspections (PAIs) and the depreciation of the 2800 liter bioreactor that was commissioned earlier in 2005. The fourth quarter 2005 Biopharma operating loss was $90.5 million versus an operating loss of $0.7 million in the fourth quarter 2004. The fourth quarter 2005 operating loss resulted principally from a $76.8 million goodwill impairment and an $11.4 million charge to reduce the carrying value of long-lived assets. Excluding the charges noted above, Biopharma had an operating loss of $2.3 million in the fourth quarter 2005 versus $0.7 million in the fourth quarter 2004 due to lower gross profit and a $0.7 million charge related to an investment made for a large pharmaceutical client whose project was cancelled due to an unfavorable regulatory development. Foreign currency had no impact on Biopharma sales, gross margin or operating profit margin. HUMAN HEALTH The Human Health segment consists of small molecule active pharmaceutical ingredients (APIs), advanced intermediates and other products derived from organic chemistry. Human Health sales in the fourth quarter 2005 decreased 1.2% to $71.0 million, including a 6.6% unfavorable impact due to foreign currency, from $71.9 million in the fourth quarter 2004. Higher net sales volumes were more than offset by the unfavorable impact of foreign currency. Fourth quarter 2005 Human Health gross margin decreased to 31.0% from 32.3% in the fourth quarter 2004 primarily due to higher inventory reserves, lower pricing and higher production costs partially offset by favorable product mix and higher sales volumes. Foreign currency favorably impacted gross margin by 1.2 percentage points in the fourth quarter 2005. The fourth quarter 2005 Human Health operating loss was $26.0 million versus operating profit of $13.1 million in the fourth quarter 2004. The fourth quarter 2005 operating loss resulted from a $26.7 million charge to reduce the carrying value of long-lived assets and a $10.4 million goodwill impairment. Excluding the charges noted above, Human Health operating margins were 15.7% in the fourth quarter 2005 compared to 18.3% in the fourth quarter 2004 due to lower gross margins and higher bonus Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 4 [CAMBREX LOGO] accruals. Foreign currency favorably impacted Human Health operating margin by 1.4 percentage points in the fourth quarter 2005. FOURTH QUARTER AND FULL YEAR 2005 CONSOLIDATED OPERATING, INTEREST AND TAX EXPENSES Sales and marketing expense in the fourth quarter 2005 decreased to $8.8 million, or 7.3% of sales, from $9.2 million, or 7.8% of sales in the fourth quarter 2004, principally due to the impact of foreign currency. Sales and marketing expense for the full year 2005 increased to $34.0 million, or 7.5% of sales, from $32.6 million, or 7.4%, in 2004 primarily due to the cost of additional headcount in Europe to support the Bioproducts business. Fourth quarter 2005 Research and Development Expense was flat with prior year at $5.7 million. Research and Development Expense for the full year 2005 increased to $22.3 million, or 4.9% of sales, from $19.7 million, or 4.5% of sales, in 2004 due to increased spending for rapid microbial detection and FlashGel(TM) product development and due to growth in the Human Health custom development area. Fourth quarter 2005 Administrative Expense increased to $20.6 million, or 17.0% of sales, from $17.4 million, or 14.7% of sales, in the fourth quarter 2004 due to a $4.2 million charge comprised primarily of the cost of the severance agreement with the Company's former CEO. Excluding the $4.2 million charge, Administrative Expense in the fourth quarter 2005 declined $1.0 million compared to the fourth quarter 2004 primarily due to lower corporate expenses and the impact of foreign currency. Excluding the charges recorded in 2005, full year 2005 Administrative Expense decreased to $65.8 million, or 14.6% of sales, from $70.1 million, or 16.0% of sales, principally due to lower SARS expense and legal and professional fees partially offset by increased headcount and higher environmental expenses. The Company completed its annual analysis of the carrying value of goodwill and long-lived assets and has recorded a $125.3 million charge in the fourth quarter 2005 comprised of an $87.2 million goodwill impairment and a $38.1 million pre-tax impairment of long-lived assets resulting from lower projections of long-term profitability for the Biopharma segment and two small European reporting units within the Human Health segment. The impairment writes down all the remaining goodwill and a portion of the long-lived assets at the respective sites. The impairment within the Biopharma segment partly resulted from unfavorable regulatory developments at a large client in the fourth quarter 2005. Net Interest Expense in the fourth quarter and full year 2005 is essentially flat with prior year at $2.5 million and $10.5 million, respectively. The average interest rate in the fourth quarter 2005 and 2004 is 5.6% and 5.4% respectively, and for the full year 2005 and 2004 is 5.5%. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 5 [CAMBREX LOGO] The tax rate in the fourth quarter 2005 was - 14.5% compared to 43.6% in the fourth quarter of 2004. The fourth quarter 2005 tax rate includes the impact of the goodwill and long-lived asset impairments discussed above and a $16.9 million valuation allowance to write down the carrying value of certain US tax assets that had been previously preserved by tax strategies. These charges increased fourth quarter 2005 Tax Expense by $14.6 million. Excluding the charges recorded in the fourth quarter 2005, the effective tax rate is 45.8% in the fourth quarter 2005 versus 43.6% in the fourth quarter 2004 due to the geographic distribution of income or losses. Since the Company is currently not recording any tax benefit for US and certain European losses, the consolidated effective tax rate is expected to be highly volatile. The full year tax rate in 2005 was - 23.3% compared to - 126.5% in 2004. The 2005 results include the impact of the items affecting the fourth quarter 2005, as discussed above, and a $3.3 million positive impact on tax expenses related to the previously discussed Swedish tax court decision. Excluding the charges recorded in 2005 and 2004, the 2005 consolidated effective tax rate increased to 50.5% from 40.8% in 2004. Capital expenditures and depreciation for the fourth quarter 2005 were $12.3 million and $9.0 million compared to $11.7 million and $9.5 million in the fourth quarter 2004, respectively. Capital expenditures and depreciation for 2005 are $40.3 million and $36.6 million compared to $39.5 million and $38.9 million in 2004, respectively. GUIDANCE The Company is providing full year 2006 guidance for sales growth to be within the range of 4% to 8% and net earnings to be in the range of $0.75 to $0.95 per fully diluted share. For the year 2006, guidance for capital expenditures, depreciation and amortization for continuing operations is currently expected to be approximately $40 - $45 million, $36 million, and $2.0 million, respectively. The Company expects the full year 2006 effective tax rate to be approximately 40 - 45%. The full year and quarterly effective tax rates will continue to be highly sensitive to the geographic mix of income or losses. The above guidance excludes any costs associated with the previously announced agreement to purchase Cutanogen (estimated to be $0.15 per diluted share depending on the timing of milestone payments), the previously announced early extinguishment of a portion of the Company's long-term debt ($0.20 per diluted share) and the previously announced evaluation of strategic alternatives to enhance shareholder value. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 6 [CAMBREX LOGO] The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the 2005 Form 10-K is filed with the US Securities and Exchange Commission. CONFERENCE CALL AND WEBCAST The Conference Call to discuss fourth quarter and full year 2005 earnings will begin at 8:30 a.m. Eastern Time on Thursday, February 23, 2006 and last approximately 45 minutes. Those wishing to participate should call 1-888-634-4003 for Domestic, and +1-706-634-6653 for International. Please use the conference ID 4188520 and call approximately 10 minutes before the start time. The Conference Call will also be webcast in the Investor Relations section of the Cambrex website located at www.cambrex.com. The webcast will be available for approximately thirty (30) days following the call. A replay of the Conference Call will be available approximately two hours after the completion of the call through the end of business day, Thursday, March 2, 2006 by calling 1-800-642-1687 for Domestic, and +1-706-645-9291 for International. Please use the conference ID 4188520 too access the replay. FORWARD LOOKING STATEMENTS This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under The Securities Exchange Act of 1934, including, without limitation, statements regarding expected performance, especially expectations with respect to sales, research and development expenditures, earnings per share, capital expenditures, acquisitions, divestitures, collaborations, or other expansion opportunities. These statements may be identified by the fact that words such as "expects", "anticipates", "intends", "estimates", "believes" or similar expressions are used in connection with any discussion of future financial and operating performance. The forward-looking statements contained herein are based on current plans and expectations and involve risks and uncertainties that could cause actual outcomes and results to differ materially from current expectations including but not limited to, global economic trends, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and/or regulations (particularly environmental issues), tax rate, interest rate, technology, manufacturing and legal issues, changes in foreign exchange rates, performance of minority investments, uncollectible receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, and lack of suitable raw materials or packaging materials, the possibility that the value of the acquisition of PermaDerm(TM) cultured skin may not be realized or that our plans to obtain a Humanitarian Device Exemption, completion of clinical trials and commercialization of PermaDerm cultured skin in the United States may not be successful and the Company may not receive regulatory approval for its products. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 7 [CAMBREX LOGO] For further details and a discussion of these and other risks and uncertainties, investors are cautioned to review the Cambrex Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. ABOUT CAMBREX Cambrex is a global, diversified life sciences company dedicated to providing products and services to accelerate and improve the discovery and commercialization of human therapeutics. The Company employs approximately 2,000 worldwide. For more information, please visit http://www.cambrex.com. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 8 [CAMBREX LOGO] CAMBREX CORPORATION Statement of Profit and Loss - Pro forma* For the Quarters Ended December 31, 2005 and 2004 (in thousands)
2005 2004 -------------------- -------------------- % of % of Amount Sales Amount Sales ------------ ------ ---------- ------ Gross Sales $ 120,853 100.0% $ 117,365 100.0% Commissions and Allowances (259) -0.2% (20) 0.0% ----------- ---------- Net Sales 121,112 100.2% 117,385 100.0% Other Revenues 721 0.6% 255 0.2% ----------- ---------- Net Revenue 121,833 100.8% 117,640 100.2% Cost of Sales 80,850 66.9% 73,571 62.7% ----------- ---------- Gross Profit 40,983 33.9% 44,069 37.5% Operating Expenses Sales and Marketing Expense 8,805 7.3% 9,171 7.8% Research and Development Expense 5,730 4.7% 5,723 4.9% Administrative Expense 16,378 13.5% 17,390 14.7% Amortization 564 0.5% 541 0.5% ----------- ---------- Total Operating Expenses 31,477 26.0% 32,825 27.9% ----------- ---------- Operating Profit 9,506 7.9% 11,244 9.6% Other Expenses Interest - Other 2,533 2.1% 2,479 2.1% Other (Income)/Expense, net (32) 0.0% 134 0.1% ----------- ---------- Total Other Expenses 2,501 2.1% 2,613 2.2% ----------- ---------- Income Before Taxes 7,005 5.8% 8,631 7.4% Income Tax Provision 3,208 2.7% 3,760 3.2% ----------- ---------- Net Income $ 3,797 3.1% $ 4,871 4.2% =========== ========== Basic Earnings per Share Net Income $ 0.14 $ 0.19 Diluted Earnings per Share Net Income $ 0.14 $ 0.18 Weighted Average Shares Outstanding Basic 26,654 26,154 Diluted 26,683 26,540
* Refer to the GAAP to Pro forma Reconciliation. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 9 [CAMBREX LOGO] CAMBREX CORPORATION Statement of Profit and Loss - GAAP For the Quarters Ended December 31, 2005 and 2004 (in thousands)
2005 2004 ---------------------- ------------------ % of % of Amount Sales Amount Sales ------------ ------ ---------- ----- Gross Sales $ 120,853 100.0% $ 117,365 100.0% Commissions and Allowances (259) -0.2% (20) 0.0% ------------ ---------- Net Sales 121,112 100.2% 117,385 100.0% Other Revenues 721 0.6% 255 0.2% ------------ ---------- Net Revenue 121,833 100.8% 117,640 100.2% Cost of Sales 80,850 66.9% 73,571 62.7% ------------ ---------- Gross Profit 40,983 33.9% 44,069 37.5% Operating Expenses Sales and Marketing Expense 8,805 7.3% 9,171 7.8% Research and Development Expense 5,730 4.7% 5,723 4.9% Administrative Expense 20,601 17.0% 17,390 14.7% Impairment Charges 125,331 103.7% - 0.0% Amortization 564 0.5% 541 0.5% ------------ ---------- Total Operating Expenses 161,031 133.2% 32,825 27.9% ------------ ---------- Operating (Loss)/Profit (120,048) -99.3% 11,244 9.6% Other Expenses Interest - Other 2,533 2.1% 2,479 2.1% Other (Income)/Expense, net (32) 0.0% 134 0.1% ------------ ---------- Total Other Expenses 2,501 2.1% 2,613 2.2% ------------ ---------- (Loss)/Income Before Taxes (122,549) -101.4% 8,631 7.4% Income Tax Provision 17,784 14.7% 3,760 3.2% ------------ ---------- Net (Loss)/Income $ (140,333) -116.1% $ 4,871 4.2% ============ ========== Basic Earnings per Share Net (Loss)/Income $ (5.26) $ 0.19 Diluted Earnings per Share Net (Loss)/Income $ (5.26) $ 0.18 Weighted Average Shares Outstanding Basic 26,654 26,154 Diluted 26,654 26,540
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 10 [CAMBREX LOGO] CAMBREX CORPORATION Gross Sales, Gross Profit & Operating Profit/(Loss) by Segment For the Quarters Ended December 31, 2005 and 2004 (in thousands)
Fourth Quarter 2005 ------------------------------------------------------------------------------------------------------ Operating Gross Gross Profit/(Loss)- OP%- Operating OP%- Sales Profit GP% GAAP GAAP Profit/(Loss)-Pro forma* Pro forma* ----------- -------- ------ ---------------- ------ ------------------------ ---------- Bioproducts $ 35,860 $ 17,956 50.1% $ 5,254 14.7% $ 5,254 14.7% Biopharma 13,951 989 7.1% (90,517) -648.8% (2,316) -16.6% Human Health 71,042 22,038 31.0% (25,996) -36.6% 11,134 15.7% Corporate - - (8,789) (4,566) ----------- -------- ---------------- ------------------------ Total $ 120,853 $ 40,983 33.9% $ (120,048) -99.3% $ 9,506 7.9% =========== ======== ================ ========================
Fourth Quarter 2004 ------------------------------------------------------------------------------------------------------ Operating Gross Gross Profit/(Loss)- OP%- Operating OP%- Sales Profit GP% GAAP GAAP Profit/(Loss)-Pro forma* Pro forma* ----------- -------- ------ ---------------- ------ ------------------------ ---------- Bioproducts $ 33,918 $ 19,254 56.8% $ 4,514 13.3% 4,514 13.3% Biopharma 11,531 1,577 13.7% (748) -6.5% (748) -6.5% Human Health 71,916 23,238 32.3% 13,149 18.3% 13,149 18.3% Corporate - - (5,671) (5,671) ----------- -------- ---------------- ------------------------ Total $ 117,365 $ 44,069 37.5% $ 11,244 9.6% 11,244 9.6% =========== ======== ================ ========================
Gross Sales Comparison ----------------------------------------------- 4Q05 4Q04 Gross Gross Change Change Sales Sales $ % ----------- -------- ---------- ------ Bioproducts $ 35,860 $ 33,918 $ 1,942 5.7% Biopharma 13,951 11,531 2,420 21.0% Human Health 71,042 71,916 (874) -1.2% ----------- -------- ---------- Total $ 120,853 $117,365 $ 3,488 3.0% =========== ======== ==========
---------- * Refer to the GAAP to Pro forma Reconciliation. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 11 [CAMBREX LOGO] CAMBREX CORPORATION Statement of Profit and Loss - Pro forma* For the Years Ended December 31, 2005 and 2004 (in thousands)
2005 2004 ---------------------- ---------------------- % of % of Amount Sales Amount Sales ----------- ----- ------------ ----- Gross Sales $ 451,986 100.0% $ 439,115 100.0% Commissions and Allowances 3,437 0.8% 2,258 0.5% ----------- ------------ Net Sales 448,549 99.2% 436,857 99.5% Other Revenues 6,548 1.5% 6,800 1.5% ----------- ------------ Net Revenue 455,097 100.7% 443,657 101.0% Cost of Sales 293,760 65.0% 272,917 62.1% ----------- ------------ Gross Profit 161,337 35.7% 170,740 38.9% Operating Expenses Sales and Marketing Expense 34,038 7.5% 32,584 7.4% Research and Development Expense 22,331 4.9% 19,659 4.5% Administrative Expense 65,767 14.6% 70,127 16.0% Amortization 2,282 0.5% 1,921 0.4% ----------- ------------ Total Operating Expenses 124,418 27.5% 124,291 28.3% ----------- ------------ Operating Income 36,919 8.2% 46,449 10.6% Other Expenses Interest - Other 10,815 2.4% 10,950 2.5% Other Expenses 40 0.0% 73 0.0% ----------- ------------ Total Other Expenses 10,855 2.4% 11,023 2.5% ----------- ------------ Income Before Taxes 26,064 5.8% 35,426 8.1% Provision for Income Taxes 13,174 2.9% 14,461 3.3% ----------- ------------ Income From Continuing Operations $ 12,890 2.9% $ 20,965 4.8% Discontinued Operations Loss From Discontinued Operations - (978) ----------- ------------ Net Income $ 12,890 $ 19,987 =========== ============ Basic Earnings per Share Income From Continuing Operations $ 0.49 $ 0.80 Loss From Discontinued Operations $ - $ (0.03) ----------- ------------ Net Income $ 0.49 $ 0.77 Diluted Earnings per Share Income From Continuing Operations $ 0.48 $ 0.79 Loss From Discontinued Operations $ - $ (0.03) ----------- ------------ Net Income $ 0.48 $ 0.76 Weighted Average Shares Outstanding Basic 26,456 26,094 Diluted 26,581 26,462
------------------------- * Refer to the GAAP to Pro forma Reconciliation. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201,804,3000 | Fax 201,804,9852 | www.cambrex.com 12 [CAMBREX LOGO] CAMBREX CORPORATION Statement of Profit and Loss - GAAP For the Years Ended December 31, 2005 and 2004 (in thousands)
2005 2004 ---------------------- ---------------------- % of % of Amount Sales Amount Sales ------------- ----- ------------ ----- Gross Sales $ 451,986 100.0% $ 439,115 100.0% Commissions and Allowances 3,437 0.8% 2,258 0.5% ------------- ------------ Net Sales 448,549 99.2% 436,857 99.5% Other Revenues 6,548 1.5% 6,800 1.5% ------------- ------------ Net Revenue 455,097 100.7% 443,657 101.0% Cost of Sales 293,760 65.0% 272,917 62.1% ------------- ------------ Gross Profit 161,337 35.7% 170,740 38.9% Operating Expenses Sales and Marketing Expense 34,038 7.5% 32,584 7.4% Research and Development Expense 22,331 4.9% 19,659 4.5% Administrative Expense 71,290 15.9% 70,127 16.0% Impairment Charges 125,331 27.7% 48,720 11.1% Other, net - 0.0% (1,863) -0.4% Amortization 2,282 0.5% 1,921 0.4% ------------- ------------ Total Operating Expenses 255,272 56.5% 171,148 39.0% ------------- ------------ Operating Loss (93,935) -20.8% (408) -0.1% Other Expenses Interest - Other 10,815 2.4% 10,950 2.5% Other Expenses 40 0.0% 73 0.0% ------------- ------------ Total Other Expenses 10,855 2.4% 11,023 2.5% ------------- ------------ Loss Before Taxes (104,790) -23.2% (11,431) -2.6% Provision for Income Taxes 24,421 5.4% 14,461 3.3% ------------- ------------ Loss From Continuing Operations $ (129,211) -28.6% $ (25,892) -5.9% Discontinued Operations Loss From Discontinued Operations - (978) ------------- ------------ Net Loss $ (129,211) $ (26,870) ============= ============ Basic Earnings per Share Loss From Continuing Operations $ (4.88) $ (0.99) Loss From Discontinued Operations $ - $ (0.04) ------------- ------------ Net Loss $ (4.88) $ (1.03) Diluted Earnings per Share Loss From Continuing Operations $ (4.88) $ (0.99) Loss From Discontinued Operations $ - $ (0.04) ------------- ------------ Net Loss $ (4.88) $ (1.03) Weighted Average Shares Outstanding Basic 26,456 26,094 Diluted 26,456 26,094
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 13 [CAMBREX LOGO] CAMBREX CORPORATION Gross Sales, Gross Profit & Operating Profit/(Loss) by Segment For the Years Ended December 31, 2005 and 2004 (in thousands)
Full Year 2005 ------------------------------------------------------------------------------------------------------ Operating Gross Gross Profit/(Loss)- OP%- Operating OP%- Sales Profit GP% GAAP GAAP Profit/(Loss)-Pro forma* Pro forma* ----------- -------- ------ ---------------- ------ ------------------------ ---------- Bioproducts $ 149,498 $ 77,908 52.1% $ 25,753 17.2% 25,753 17.2% Biopharma 41,698 (3,811) -9.1% (103,062) -247.2% (14,861) -35.6% Human Health 260,790 87,240 33.5% 8,377 3.2% 45,507 17.4% Corporate - - (25,003) (19,480) ----------- -------- ---------------- -------------- Total $ 451,986 $161,337 35.7% $ (93,935) -20.8% 36,919 8.2% =========== ======== ================ ==============
Full Year 2004 ------------------------------------------------------------------------------------------------------ Operating Gross Gross Profit/(Loss)- OP%- Operating OP%- Sales Profit GP% GAAP GAAP Profit/(Loss)-Pro forma* Pro forma* ----------- -------- ------ ---------------- ------ ------------------------ ---------- Bioproducts $ 136,108 $ 74,930 55.1% $ 26,386 19.4% 23,523 17.3% Biopharma 43,270 4,880 11.3% (53,813) -124.4% (5,093) -11.8% Human Health 259,737 90,930 35.0% 50,651 19.5% 51,651 19.9% Corporate - - (23,632) (23,632) ----------- -------- ---------------- -------------- Total $ 439,115 $170,740 38.9% (408) -0.1% 46,449 10.6% =========== ======== ================ ==============
Gross Sales Comparison ---------------------------------------------------------- 2005 2004 Gross Gross Change Change Sales Sales $ % -------- ---------- --------- ------ Bioproducts $149,498 $ 136,108 $ 13,390 9.8% Biopharma 41,698 43,270 (1,572) -3.6% Human Health 260,790 259,737 1,053 0.4% -------- ---------- --------- Total $451,986 $ 439,115 $ 12,871 2.9% ======== ========== =========
* Refer to the GAAP to Pro forma Reconciliation. Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 14 [CAMBREX LOGO] CAMBREX CORPORATION GAAP to Pro forma Reconciliation - Net (Loss)/Income For the Quarters and Years ended December 31, 2005 and 2004
Fourth Quarter 2005 Fourth Quarter 2004 ---------------------- ---------------------------- Net (Loss)/ Diluted Income EPS Net Income Diluted EPS ----------- -------- ---------- ----------- Net (Loss)/Income - As Reported $(140,333) $ (5.26) $ 4,871 $ 0.18 Impairment - Goodwill and Long Lived Assets (net of tax) 122,981 4.61 - - Executive Severance 4,223 0.16 - - Domestic Tax Valuation Allowance 16,926 0.63 - - --------- -------- ---------- ----------- Net Income - Pro forma $ 3,797 $ 0.14 $ 4,871 $ 0.18 ========= ======== ========== ===========
Full Year 2005 Full Year 2004 ---------------------- ---------------------------- Net (Loss)/ Diluted Net (Loss)/ Income EPS Income Diluted EPS ----------- -------- ----------- ----------- Net Loss - As Reported $ (129,211) $ (4.88) $ (26,870) $ (1.03) Impairment - Goodwill and Long Lived Assets (net of tax) 122,981 4.63 48,720 1.84 Executive Severance 4,223 0.16 - - Domestic Tax Valuation Allowance 16,926 0.64 - - Tax Benefit (Swedish Tax Item) (3,329) (0.13) - - Environmental Reserve 1,300 0.05 - - Early Termination of Bioproducts Customer Contract - - (2,863) (0.11) Restructuring at European Site - - 1,000 0.04 ---------- -------- ----------- ----------- Net Income - Pro forma $ 12,890 $ 0.48 $ 19,987 $ 0.76 ========== ======== =========== ===========
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 15 [CAMBREX LOGO] CAMBREX CORPORATION GAAP to Pro forma Reconciliation - Operating Profit/(Loss) by Segment For the Quarters and Years ended December 31, 2005 and 2004
Fourth Quarter 2005 --------------------------------------------------------------------------- Bioproducts Biopharma Human Health Corporate Total ----------- --------- ------------ --------- --------- Operating Profit/(Loss) - As Reported $ 5,254 $ (90,517) $ (25,996) $ (8,789) $(120,048) Impairment Charge - 88,201 37,130 - 125,331 Executive Severance - - - 4,223 4,223 --------- --------- --------- --------- --------- Operating Profit/(Loss) - Pro forma $ 5,254 $ (2,316) $ 11,134 $ (4,566) $ 9,506 ========= ========= ========= ========= =========
Fourth Quarter 2004 --------------------------------------------------------------------------- Bioproducts Biopharma Human Health Corporate Total ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - As Reported $ 4,514 $ (748) $ 13,149 $ (5,671) $ 11,244 ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - Proforma $ 4,514 $ (748) $ 13,149 $ (5,671) $ 11,244 =========== ========= ============ ========= ==========
Full Year 2005 --------------------------------------------------------------------------- Bioproducts Biopharma Human Health Corporate Total ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - As Reported $ 25,753 $(103,062) $ 8,377 $ (25,003) $ (93,935) Impairment Charge - 88,201 37,130 - 125,331 Executive Severance - - - 4,223 4,223 Environmental Reserve - - - 1,300 1,300 ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - Proforma $ 25,753 $ (14,861) $ 45,507 $ (19,480) $ 36,919 =========== ========= ============ ========= ==========
Full Year 2004 --------------------------------------------------------------------------- Bioproducts Biopharma Human Health Corporate Total ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - As Reported $ 26,386 $ (53,813) $ 50,651 $ (23,632) $ (408) Impairment Charge - 48,720 - - 48,720 Early Termination of Bioproducts Customer Contract (2,863) - - - (2,863) Restructuring - - 1,000 - 1,000 ----------- --------- ------------ --------- ---------- Operating Profit/(Loss) - Pro forma $ 23,523 $ (5,093) $ 51,651 $ (23,632) $ 46,449 =========== ========= ============ ========= ==========
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 16 [CAMBREX LOGO] CAMBREX CORPORATION Consolidated Balance Sheet As of December 31, 2005 and 2004 (in thousands)
2005 2004 -------- -------- Assets Cash and Cash Equivalents $ 45,932 $ 91,532 Trade Receivables, net 74,425 68,370 Inventories, net 93,617 91,039 Deferred Tax Asset 1,162 2,605 Other Current Assets 17,652 20,825 -------- -------- Total Current Assets 232,788 274,371 Property, Plant and Equipment, Net 222,130 280,790 Goodwill and Other Intangibles 135,897 230,656 Other Non-Current Assets 5,985 6,168 -------- -------- Total Assets $596,800 $791,985 ======== ======== Liabilities and Stockholders' Equity Trade Accounts Payable $ 38,813 $ 38,552 Accrued Liabilities 51,819 52,181 Short-term Debt and Current Portion of Long-term Debt 1,514 1,400 -------- -------- Total Current Liabilities 92,146 92,133 Long-term Debt 186,819 226,187 Deferred Tax Liabilities 31,135 21,686 Other Non-Current Liabilities 61,314 60,663 -------- -------- Total Liabilities $371,414 $400,669 Stockholders' Equity $225,386 $391,316 -------- -------- Total Liabilities and Stockholders' Equity $596,800 $791,985 ======== ========
### Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com 17