EX-99.1 2 y32040exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
 

Exhibit 99.1
(CAMBREX LOGO)
         
Date:
  March 14, 2007    
Contact:
  Gregory P. Sargen   Bob Thomson
 
  Vice President & CFO   Director, Investor Relations
Phone:
  201-804-3055   201-804-3047
Email:
  gregory.sargen@cambrex.com   bob.thomson@cambrex.com
Release:
  Immediate    
CAMBREX REPORTS FOURTH QUARTER AND FULL YEAR 2006 RESULTS
AND PROVIDES 2007 GUIDANCE
          East Rutherford, N.J., March 14 — Cambrex Corporation (NYSE: CBM) reports fourth quarter and full year 2006 results for the period ended December 31, 2006.
Highlights
  -   Sold Bio Businesses to Lonza for $460 million in first quarter 2007; Bio Businesses results included within Continuing Operations
 
  -   Sold Cork and Landen businesses to ICIG in fourth quarter 2006; Cork and Landen results included within Discontinued Operations
 
  -   Cambrex now consists of Human Health business (excluding Cork and Landen) and Corporate infrastructure
 
  -   Human Health (excluding Cork and Landen) sales increased 7.5% and operating profit increased 3.2% during fourth quarter 2006
 
  -   Annualized cost of reduced Corporate infrastructure to reach $17.5 million by the end of the year
Strategic Alternatives and Basis of Reporting
          Pursuant to its evaluation of strategic alternatives during 2006, Cambrex sold its two businesses in Cork, Ireland and Landen, Belgium during the fourth quarter of 2006, both previously reported within its Human Health segment. Cambrex also divested its Bioproducts and Biopharma business segments (the “Bio Businesses”) on February 6, 2007. The results from the Cork and Landen businesses are included within Discontinued Operations for all periods presented in this release and the results of the Bio Businesses are included within Continuing Operations for all periods presented, as required by GAAP. Cambrex will begin to report the Bio Businesses as Discontinued Operations during the first quarter of 2007.
          As previously announced, the Company expects to use the proceeds from the sale of the Bio Businesses along with funds borrowed under a new credit facility, assuming such facility can be arranged with favorable terms, to pay a special dividend of $13.50 to $14.50 per share.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
          Consistent with prior earnings releases, Adjusted (non-GAAP) results are used throughout this press release and the accompanying tables to better reflect the underlying results of operations for the periods presented. A reconciliation of GAAP results to Adjusted (non-GAAP) results can be found in the unaudited financial tables included in this press release.
Human Health and Corporate Segments
          The Human Health business, which now excludes Cork and Landen, provides products and services to accelerate the development and commercialization of branded and generic small molecule therapeutics, and is comprised of four world-class manufacturing and research facilities (Charles City, Iowa; Karlskoga, Sweden; Milan, Italy, and the Center of Technical Excellence in North Brunswick, New Jersey).
Fourth Quarter 2006
          Sales in the Human Health segment increased 7.5% in the fourth quarter 2006 to $66.0 million versus $61.4 million last year. After a favorable currency impact of 4.8%, the improvement was due primarily to increased demand for branded active pharmaceutical ingredients (APIs) partially offset by decreased sales of certain generic APIs.
          Fourth quarter 2006 Human Health Adjusted gross margin decreased to 33.4% from 35.3% in the fourth quarter 2005, primarily due to pricing pressures on certain APIs and increased production costs. Foreign currency unfavorably impacted Adjusted gross margin by 0.7 of a percentage point in the fourth quarter 2006. Fourth quarter 2006 Human Health operating profit increased to $12.9 million versus Adjusted operating profit of $12.6 million in the fourth quarter 2005 due to higher sales offset by a lower gross margin percentage versus the same period last year. Operating expenses were flat versus prior year. Foreign exchange had a negligible impact on Human Health Adjusted operating profit during the fourth quarter 2006.
          Corporate operating expenses during the fourth quarter 2006 were $12.8 million, compared to $9.2 million during the fourth quarter 2005. Adjusted operating expenses for Corporate for the fourth quarter 2006 were $8.3 million versus $5.5 million in the fourth quarter of 2005. The increase primarily reflects increased legal, bonus, and audit expenses.
Full Year 2006
          Sales in the Human Health segment increased 5.9% to $236.7 million during 2006 from $223.6 million in 2005 due to an increase in the number of custom development projects and greater demand for generic APIs partially offset by decreased sales of certain branded APIs. Foreign currency favorably
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
impacted sales growth by 0.5 of a percentage point during 2006. Human Health Adjusted gross margin during 2006 decreased to 35.4% compared to 38.6% in 2005, reflecting increased production costs and pricing pressures on certain products. Foreign currency unfavorably impacted Adjusted gross margin by 1.1 percentage points during 2006. Human Health operating profit for 2006 was $49.2 million, or 20.8% of sales, versus an Adjusted operating profit of $51.0 million, or 22.8% of sales, in 2005 due to lower gross margins described above offset by reductions in operating expenses. Foreign currency unfavorably impacted Adjusted Human Health operating margin as a percentage of sales by 1.1 percentage points in 2006.
          Corporate operating expenses for 2006 were $37.4 million, compared to $25.9 million during the 2005. Adjusted Corporate operating expenses during 2006 were $28.8 million, compared to $22.7 million during the previous year. The increase is primarily due to an increase in legal fees, bonus expense, and audit fees, as well as benefits related to stock appreciation rights in 2005 that did not recur in 2006.
          James A. Mack, Chairman, President, and CEO of Cambrex commented: “We achieved growth in our Human Health segment during 2006 despite the demands of the strategic alternatives process. We are confident that prevailing market forces will lead to more outsourcing of custom development and commercial manufacturing for branded APIs as well as greater demand for generic APIs. In 2007 we will focus on continued cost reductions, the implementation of strategic capital investments to increase capacity at each of our manufacturing facilities, strengthening and building upon our proprietary taste masking and other technologies, and restructuring the corporate cost center.”
Bioproducts and Biopharma Segments
          As previously announced, Cambrex completed the sale of the Bio Businesses to Lonza AG during February 2007. As a result, Cambrex will begin to report the Bio Businesses as Discontinued Operations during the first quarter of 2007.
Bioproducts
          The Bioproducts segment includes products and services for research and therapeutic applications. Bioproducts sales in the fourth quarter 2006 increased 15.4% to $41.4 million, including a 3.7% favorable impact from foreign currency, reflecting growth in most product categories. Fourth quarter 2006 gross margin was nearly flat at 50.4% versus Adjusted gross margin of 50.6% in the fourth quarter 2005. Foreign currency favorably impacted Bioproducts gross margin by 0.7 of a percentage point in the fourth quarter 2006. Bioproducts Adjusted operating profit margin during the fourth quarter of 2006 was 14.6% of sales versus 15.4% during the fourth quarter of 2005 due to increased operating expenses. Foreign currency favorably impacted Bioproducts operating profit margin by 0.6 of a percentage point in the fourth quarter 2006.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
          Full year 2006 Bioproducts sales increased 9.1% to $163.1 million, including a 0.4% favorable impact from foreign currency, versus $149.5 million in 2005. Gross margin for 2006 decreased to 51.7% versus an Adjusted gross margin of 52.6% in the full year 2005 due to higher production costs. Foreign currency favorably impacted Bioproducts gross margin by 0.8 of a percentage point in 2006. Bioproducts Adjusted operating profit margin during 2006 was nearly flat at 17.8% versus 17.9% in 2005. Foreign currency favorably impacted Bioproducts operating profit margin by 0.7 of a percentage point in 2006.
Biopharma
          The Biopharma segment consists of the Company’s contract biopharmaceutical process development and manufacturing business. Sales in the fourth quarter 2006 increased 22.2% to $17.0 million versus $14.0 million in the fourth quarter 2005. Fourth quarter 2006 Biopharma gross margin improved to 23.6% versus an Adjusted gross margin of 8.2% in the fourth quarter 2005. Fourth quarter 2006 Biopharma operating profit was $1.7 million versus an Adjusted operating loss of $2.1 million in the fourth quarter 2005. The improved gross margin and operating profit results were a result of higher suite and process development fees. Foreign currency had no impact on Biopharma sales, gross margin or operating profit margin.
          Full year 2006 Biopharma sales were $52.5 million versus $41.7 million in 2005, a 25.9% increase. Biopharma gross margin during 2006 improved to 6.2% compared to an Adjusted gross margin of -7.6% in the previous year. Biopharma operating loss during 2006 was $6.1 million versus an Adjusted operating loss of $14.1 million in 2005.
Consolidated Results
Fourth Quarter 2006
          On a GAAP basis, Cambrex reported income from continuing operations of $0.6 million, or $0.02 per diluted share, compared to a loss of $97.6 million, or $3.66 per diluted share, in the fourth quarter 2005. Excluding certain items included in the attached GAAP to Adjusted (non-GAAP) reconciliation tables, Adjusted fourth quarter 2006 net income was $6.7 million, or $0.25 per diluted share. On a comparable basis, Adjusted fourth quarter 2005 net income was $5.4 million, or $0.20 per diluted share.
          Sales increased 11.9% to $124.4 million in the fourth quarter 2006, including a 3.9% favorable impact from foreign currency, from $111.2 million in the fourth quarter 2005, reflecting improved sales performance across all business segments. Gross margins for the fourth quarter 2006 increased to 37.7% from 36.5% in the fourth quarter 2005 primarily due to improved sales in the Biopharma segment partially offset by higher production costs within Bioproducts and declines in Human Health gross margins
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
described earlier in this release. Foreign currency unfavorably impacted consolidated gross margin by 0.1 percentage point in the fourth quarter 2006.
          During the fourth quarter 2006, Adjusted operating profit was $12.4 million versus $10.4 million during the same period in 2005. This is due to increased profitability within all operating segments of the business offset by an increase in corporate expenses explained earlier in this release.
Full Year 2006 Consolidated Results
          On a GAAP basis, the Company reported a loss from continuing operations of $1.2 million, or $0.05 loss per diluted share, compared to a loss of $83.2 million, or $3.15 per diluted share, in 2005. Excluding certain items included in the attached GAAP to Adjusted (non-GAAP) reconciliation tables, 2006 net income was $17.6 million, or $0.65 per diluted share. Excluding certain items included in the attached GAAP to Adjusted (non-GAAP) reconciliation tables, net income was $17.7 million, or $0.67 per diluted share in 2005.
          Sales increased 9.0% to $452.3 million in 2006, including a 0.4% favorable impact from foreign currency, from $414.8 million in 2005, reflecting improved sales performance across all business segments. Gross margins during 2006 decreased to 37.9% from an Adjusted gross margin of 39.0% in the previous year primarily due to improved sales in the Biopharma segment partially offset by higher production costs within Bioproducts and reductions in Human Health gross margins described earlier in this release. Foreign currency unfavorably impacted consolidated gross margin by 0.3 of a percentage point in 2006.
          During 2006, Adjusted operating profit was $43.2 million, versus $40.9 million in 2005 reflecting increased profits in Bioproducts and an improvement in Biopharma, offset by a decrease in Human Health operating profit and higher corporate expenses, both described earlier in this release.
Fourth Quarter and Full Year 2006 Consolidated Interest and Tax Expenses
          Net interest expense in the fourth quarter 2006 was $2.3 million, which was flat compared to the same period last year. For the full year 2006, Adjusted net interest expense decreased to $8.6 million from $9.8 million during 2005 reflecting lower average debt offset by higher interest rates.
          The Adjusted tax rate in the fourth quarter 2006 was 34.6% compared to 33.3% in the fourth quarter of 2005. The Adjusted full year tax rate in 2006 was 49.2% compared to 42.9% in 2005. The difference in the Adjusted tax rate is due to geographic shifts in income between the periods. Since the Company is currently not recording any tax benefit for U.S. and certain European losses, the consolidated effective tax rate has been and is expected to be highly volatile.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
Fourth Quarter and Full Year 2006 Capital Expenditures, Depreciation, and Amortization
          For the combined Human Health and Corporate cost centers, capital expenditures and depreciation were $13.3 million and $4.4 million, respectively, during the fourth quarter 2006 compared to $5.4 million of capital expenditures and $4.6 million of depreciation in the fourth quarter of 2005. Full year 2006 combined Human Health and Corporate cost center capital expenditures and depreciation were $29.0 million and $19.0 million, respectively, compared to $19.3 million of capital expenditures and $19.9 million of depreciation during 2005. The combined Human Health and Corporate cost centers had negligible amortization expenses during the past two years.
          For the entire Company, consolidated capital expenditures, depreciation, and amortization for the fourth quarter 2006 were $17.0 million, $7.0 million, and $0.5 million compared to $11.6 million, $7.6 million, and $0.5 million in the fourth quarter 2005, respectively. For the full year 2006, capital expenditures, depreciation, and amortization were $42.6 million, $29.3 million, and $2.2 million, respectively, compared to $37.2 million, $30.8 million, and $2.2 million in 2005.
Guidance
          Sales growth during 2007 within the Human Health segment is expected to be within the range of 5% to 10% and operating profit is expected to be in the range of $50 to $55 million. The Company expects to restructure the corporate office during 2007 and achieve an annualized run rate of $17.5 million in operating expenses by the end of 2007. Significant charges will be incurred during 2007 related to change in control, retention, and severance arrangements pursuant to the strategic alternatives process that resulted in the sale of the Bio Businesses and our Cork, Ireland and Landen, Belgium businesses. The Company expects to provide an update on its corporate restructuring later in the year.
          For 2007, capital expenditures and depreciation for continuing operations are currently expected to be approximately $30 to $33 million and $21 to $23 million, respectively.
          Full year and quarterly effective tax rates will continue to be highly sensitive to the geographic mix of income or losses.
          The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the 2006 Form 10-K is filed with the US Securities and Exchange Commission.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
Conference Call and Webcast
          The Conference Call to discuss fourth quarter and full year 2006 earnings will begin at 8:30 a.m. Eastern Time on Thursday, March 15, 2007 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 pass code 9914932 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 http://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 22, 2007 by calling 1-800-642-1687 for Domestic, and 1-706-645-9291 for International. Please use pass code 9914932 to access the replay.
Forward Looking Statements
          This news release may contain “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, as amended, 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/or operating performance. Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed in the Company’s periodic reports filed with the SEC. Any 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, lack of suitable raw materials or packaging materials, the Company’s ability to receive regulatory approvals for its products, the outcome of the evaluation of strategic alternatives, the availability of financing on favorable terms in order to fund the portion of the special dividend that is not being funded from proceeds of the sale and whether the Company’s estimates set forth in the definitive proxy statement filed January 4, 2007 with respect to its earnings and profits utilized to calculate taxes on the Bio Businesses divestiture in 2007 will be correct. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
otherwise. New factors emerge from time to time and it is not possible for us to predict which new factors will arise. In addition, we cannot assess the impact of each factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
          For further details and a discussion of these and other risks and uncertainties, investors and security holders are cautioned to review the definitive proxy statement, the Cambrex 2005 Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the SEC, including the Current Reports on Form 8-K.
About Cambrex
          Cambrex provides products and services to accelerate the development and commercialization of branded and generic small molecule therapeutics. The Company currently employs approximately 850 worldwide. For more information, please visit www.cambrex.com.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
Adjusted Statement of Profit and Loss — Non-GAAP*
For the Quarters Ended December 31, 2006 and 2005
(in thousands)
                                 
    2006     2005  
            % of             % of  
    Amount     Sales     Amount     Sales  
Gross Sales
   $ 124,435       100.0 %   $ 111,193       100.0 %
Commissions and Allowances
     694       0.6 %     (467 )     -0.4 %
 
                            
Net Sales
     123,741       99.4 %     111,660       100.4 %
 
                                
Other Revenues
     1,740       1.4 %     685       0.6 %
 
                            
 
                                
Net Revenue
     125,481       100.8 %     112,345       101.0 %
 
                                
Cost of Sales
     78,548       63.1 %     71,362       64.1 %
 
                            
 
                                
Gross Profit
     46,933       37.7 %     40,983       36.9 %
 
                                
Operating Expenses
                                
Sales and Marketing Expense
     8,943       7.2 %     8,627       7.8 %
Research and Development Expense
     5,158       4.1 %     5,485       4.9 %
Administrative Expense
     19,922       16.0 %     15,944       14.3 %
Amortization
     504       0.4 %     519       0.5 %
 
                            
Total Operating Expenses
     34,527       27.7 %     30,575       27.5 %
 
                            
 
                                
Operating Profit
     12,406       10.0 %     10,408       9.4 %
 
                                
Other Expenses
                                
Interest — Other
     2,330       1.9 %     2,270       2.0 %
Other Income, net
     (134 )     -0.1 %     (31 )     0.0 %
 
                            
Total Other Expenses
     2,196       1.8 %     2,239       2.0 %
 
                            
 
                                
Income Before Taxes
     10,210       8.2 %     8,169       7.4 %
 
                                
Income Tax Provision
     3,531       2.8 %     2,720       2.5 %
 
                            
 
                                
Net Income
   $ 6,679       5.4 %   $ 5,449       4.9 %
 
                            
 
                                
Basic Earnings per Share
                                
Net Income
   $ 0.25             $ 0.20          
 
                                
Diluted Earnings per Share
                                
Net Income
   $ 0.25             $ 0.20          
 
                                
Weighted Average Shares Outstanding
                                
Basic
     27,108               26,654          
Diluted
     27,252               26,683          
 
*   Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
Statement of Profit and Loss — GAAP
For the Quarters Ended December 31, 2006 and 2005
(in thousands)
                                 
    2006     2005  
            % of             % of  
    Amount     Sales     Amount     Sales  
Gross Sales
   $ 124,435       100.0 %   $ 111,193       100.0 %
Commissions and Allowances
     694       0.6 %     (467 )     -0.4 %
 
                            
Net Sales
     123,741       99.4 %     111,660       100.4 %
 
                                
Other Revenues
     1,740       1.4 %     685       0.6 %
 
                            
 
                                
Net Revenue
     125,481       100.8 %     112,345       101.0 %
 
                                
Cost of Sales
     78,548       63.1 %     71,790       64.5 %
 
                            
 
                                
Gross Profit
     46,933       37.7 %     40,555       36.5 %
 
                                
Operating Expenses
                                
Sales and Marketing Expense
     8,943       7.2 %     8,634       7.8 %
Research and Development Expense
     5,285       4.2 %     5,501       4.9 %
Administrative Expense
     24,438       19.7 %     19,716       17.7 %
Asset Impairments
     —       0.0 %     82,383       74.1 %
Amortization
     504       0.4 %     519       0.5 %
 
                            
Total Operating Expenses
     39,170       31.5 %     116,753       105.0 %
 
                            
 
                                
Operating Profit/(Loss)
     7,763       6.2 %     (76,198 )     -68.5 %
 
                                
Other Expenses
                                
Interest — Other
     2,330       1.9 %     2,270       2.0 %
Other Expense/(Income), net
     1,341       1.0 %     (31 )     0.0 %
 
                            
Total Other Expenses
     3,671       2.9 %     2,239       2.0 %
 
                            
 
                                
Income/(Loss) Before Taxes
     4,092       3.3 %     (78,437 )     -70.5 %
 
                                
Income Tax Provision
     3,531       2.8 %     19,122       17.2 %
 
                            
 
                                
Income/(Loss) from Continuing Operations
   $ 561       0.5 %   $ (97,559 )     -87.7 %
 
                                
Loss from Discontinued Operations, Net of Tax
     (25,928 )     -20.9 %     (24,021 )     -21.6 %
 
                            
 
                                
Net Loss
   $ (25,367 )     -20.4 %   $ (121,580 )     -109.3 %
 
                            
 
                                
Basic Loss per Share
                                
Income/(Loss) from Continuing Operations
   $ 0.02             $ (3.66 )        
Loss from Discontinued Operations, Net of Tax
   $ (0.96 )           $ (0.90 )        
 
                            
Net Loss
   $ (0.94 )           $ (4.56 )        
 
                                
Diluted Loss per Share
                                
Income/(Loss) from Continuing Operations
   $ 0.02             $ (3.66 )        
Loss from Discontinued Operations, Net of Tax
   $ (0.95 )           $ (0.90 )        
 
                            
Net Loss
   $ (0.93 )           $ (4.56 )        
 
                                
Weighted Average Shares Outstanding
                                
Basic
     27,108               26,654          
Diluted
     27,252               26,654          
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
Adjusted Statement of Profit and Loss – Non-GAAP*
For the Years Ended December 31, 2006 and 2005
(in thousands)
                                 
    2006     2005  
            % of             % of  
    Amount     Sales     Amount     Sales  
Gross Sales
   $ 452,255       100.0 %   $ 414,761       100.0 %
Commissions and Allowances
     1,955       0.4 %     2,649       0.6 %
 
                            
Net Sales
     450,300       99.6 %     412,112       99.4 %
 
                                
Other Revenues
     5,174       1.1 %     6,358       1.5 %
 
                            
 
                                
Net Revenue
     455,474       100.7 %     418,470       100.9 %
 
                                
Cost of Sales
     284,125       62.8 %     256,640       61.9 %
 
                            
 
                                
Gross Profit
     171,349       37.9 %     161,830       39.0 %
 
                                
Operating Expenses
                                
Sales and Marketing Expense
     33,435       7.4 %     33,310       8.0 %
Research and Development Expense
     19,399       4.3 %     21,407       5.2 %
Administrative Expense
     73,111       16.1 %     63,955       15.4 %
Amortization
     2,159       0.5 %     2,237       0.5 %
 
                            
 
                                
Total Operating Expenses
     128,104       28.3 %     120,909       29.1 %
 
                            
Operating Profit
     43,245       9.6 %     40,921       9.9 %
 
                                
Other Expenses
                                
Interest — Other
     8,645       1.9 %     9,786       2.4 %
Other (Income)/Expense, net
     (21 )     0.0 %     47       0.0 %
 
                            
Total Other Expenses
     8,624       1.9 %     9,833       2.4 %
 
                            
 
                                
Income Before Taxes
     34,621       7.7 %     31,088       7.5 %
 
                                
Income Tax Provision
     17,025       3.8 %     13,340       3.2 %
 
                            
 
                                
Net Income
   $ 17,596       3.9 %   $ 17,748       4.3 %
 
                            
 
                                
Basic Earnings per Share
                                
Net Income
   $ 0.66             $ 0.67          
 
                                
Diluted Earnings per Share
                                
Net Income
   $ 0.65             $ 0.67          
 
                                
Weighted Average Shares Outstanding
                                
Basic
     26,816               26,456          
Diluted
     26,932               26,581          
 
*   Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
Statement of Profit and Loss — GAAP
For the Years Ended December 31, 2006 and 2005
(in thousands)
                                 
    2006     2005  
            % of             % of  
    Amount     Sales     Amount     Sales  
Gross Sales
   $ 452,255       100.0 %   $ 414,761       100.0 %
Commissions and Allowances
     1,955       0.4 %     2,649       0.6 %
 
                            
Net Sales
     450,300       99.6 %     412,112       99.4 %
 
                                
Other Revenues
     5,174       1.1 %     6,358       1.5 %
 
                            
 
                                
Net Revenue
     455,474       100.7 %     418,470       100.9 %
 
                                
Cost of Sales
     284,125       62.8 %     258,345       62.3 %
 
                            
 
                                
Gross Profit
     171,349       37.9 %     160,125       38.6 %
 
                                
Operating Expenses
                                
Sales and Marketing Expense
     33,435       7.4 %     33,340       8.0 %
Research and Development Expense
     21,190       4.7 %     21,469       5.2 %
Administrative Expense
     81,718       18.0 %     67,681       16.3 %
Asset Impairments
     —       0.0 %     82,383       19.9 %
Amortization
     2,159       0.5 %     2,237       0.5 %
 
                            
Total Operating Expenses
     138,502       30.6 %     207,110       49.9 %
 
                            
 
                                
Operating Profit/(Loss)
     32,847       7.3 %     (46,985 )     -11.3 %
 
                                
Other Expenses
                                
Interest — Other
     13,917       3.1 %     9,786       2.4 %
Other Expense, Net
     1,454       0.3 %     47       0.0 %
 
                            
Total Other Expenses
     15,371       3.4 %     9,833       2.4 %
 
                            
 
                                
Income/(Loss) Before Taxes
     17,476       3.9 %     (56,818 )     -13.7 %
 
                                
Income Tax Provision
     18,721       4.2 %     26,413       6.4 %
 
                            
 
                                
Loss from Continuing Operations
   $ (1,245 )     -0.3 %   $ (83,231 )     -20.1 %
 
                                
Loss from Discontinued Operations, Net of Tax
     (28,627 )     -6.3 %     (27,227 )     -6.5 %
 
                            
 
                                
Loss before Cumulative Effect of a Change in Accounting Principle
     (29,872 )     -6.6 %     (110,458 )     -26.6 %
 
                                
Cumulative Effect of a Change in Accounting Principle
     (228 )     -0.1 %     —       0.0 %
 
                            
 
                                
Net Loss
   $ (30,100 )     -6.7 %   $ (110,458 )     -26.6 %
 
                            
 
                                
Basic Loss per Share
                                
Loss from Continuing Operations
   $ (0.05 )           $ (3.15 )        
Loss from Discontinued Operations, Net of Tax
   $ (1.06 )           $ (1.03 )        
Cumulative Effect of a Change in Accounting Principle
   $ (0.01 )           $ —          
 
                            
Net Loss
   $ (1.12 )           $ (4.18 )        
 
                                
Diluted Loss per Share
                                
Loss from Continuing Operations
   $ (0.05 )           $ (3.15 )        
Loss from Discontinued Operations, Net of Tax
   $ (1.06 )           $ (1.03 )        
Cumulative Effect of a Change in Accounting Principle
   $ (0.01 )           $ —          
 
                            
Net Loss
   $ (1.12 )           $ (4.18 )        
 
                                
Weighted Average Shares Outstanding
                                
Basic
     26,816               26,456          
Diluted
     26,816               26,456          
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ 07073
Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBEX)
CAMBREX CORPORATION
Gross Sales, Gross Profit & Operating Profit by Segment
For the Quarters Ended December 31, 2006 and 2005
(in thousands)
                                                                         
    Fourth Quarter 2006  
    Gross     Gross             Adjusted Gross     Adjusted GP%-     Operating     OP%     Adjusted Operating     Adjusted OP%-  
    Sales     Profit - GAAP     GP%     Profit - Non-GAAP*     Non-GAAP*     Profit/(loss) - GAAP     GAAP     Profit/(loss) - Non-GAAP*     Non-GAAP*  
Bioproducts
   $ 41,378     $ 20,859       50.4 %   $ 20,859       50.4 %   $ 5,919       14.3 %   $ 6,046       14.6 %
Biopharma
     17,048       4,019       23.6 %     4,019       23.6 %     1,720       10.1 %     1,720       10.1 %
Human Health
     66,009       22,055       33.4 %     22,055       33.4 %     12,899       19.5 %     12,899       19.5 %
Corporate
     —       —               —               (12,775 )             (8,259 )        
 
                                                            
Total
   $ 124,435     $ 46,933       37.7 %   $ 46,933       37.7 %   $ 7,763       6.2 %   $ 12,406       10.0 %
 
                                                            
                                                                         
    Fourth Quarter 2005  
    Gross     Gross             Adjusted Gross     Adjusted GP%-     Operating     OP%     Adjusted Operating     Adjusted OP%-  
    Sales     Profit - GAAP     GP%     Profit - Non-GAAP*     Non-GAAP*     Profit/(loss) - GAAP     GAAP     Profit/(loss) - Non-GAAP*     Non-GAAP*  
Bioproducts
   $ 35,860     $ 17,956       50.1 %   $ 18,135       50.6 %   $ 5,235       14.6 %   $ 5,520       15.4 %
Biopharma
     13,951       989       7.1 %     1,150       8.2 %     (84,700 )     -607.1 %     (2,140 )     -15.3 %
Human Health
     61,382       21,610       35.2 %     21,698       35.3 %     12,427       20.2 %     12,554       20.5 %
Corporate
     —       —               —               (9,160 )             (5,526 )        
 
                                                            
Total
   $ 111,193     $ 40,555       36.5 %   $ 40,983       36.9 %   $ (76,198 )     -68.5 %   $ 10,408       9.4 %
 
                                                            
                                 
    Gross Sales Comparison  
    4Q06     4Q05              
    Gross     Gross     Change     Change  
    Sales     Sales     $     %  
     
Bioproducts
   $ 41,378     $ 35,860     $ 5,518       15.4 %
Biopharma
     17,048       13,951       3,097       22.2 %
Human Health
     66,009       61,382       4,627       7.5 %
 
                          
Total
   $ 124,435     $ 111,193     $ 13,242       11.9 %
 
                          
 
*   Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBERX LOGO)
CAMBREX CORPORATION
Gross Sales, Gross Profit & Operating Profit by Segment
For the Years Ended December 31, 2006 and 2005
(in thousands)
                                                                         
    Twelve Months 2006  
    Gross     Gross             Adjusted Gross     Adjusted GP%-     Operating     OP%     Adjusted Operating     Adjusted OP%-  
    Sales     Profit - GAAP     GP%     Profit - Non-GAAP*     Non-GAAP*     Profit/(loss) - GAAP     GAAP     Profit/(loss) - Non-GAAP*     Non-GAAP*  
Bioproducts
   $ 163,119     $ 84,350       51.7 %   $ 84,350       51.7 %   $ 27,196       16.7 %   $ 28,987       17.8 %
Biopharma
     52,477       3,236       6.2 %     3,236       6.2 %     (6,062 )     -11.6 %     (6,062 )     -11.6 %
Human Health
     236,659       83,763       35.4 %     83,763       35.4 %     49,157       20.8 %     49,157       20.8 %
Corporate
     —       —               —               (37,444 )             (28,837 )        
 
                                                              
Total
   $ 452,255     $ 171,349       37.9 %   $ 171,349       37.9 %   $ 32,847       7.3 %   $ 43,245       9.6 %
 
                                                              
                                                                         
    Twelve Months 2005  
    Gross     Gross             Adjusted Gross     Adjusted GP%-     Operating     OP%     Adjusted Operating     Adjusted OP%-  
    Sales     Profit - GAAP     GP%     Profit - Non-GAAP*     Non-GAAP*     Profit/(loss) - GAAP     GAAP     Profit/(loss) - Non-GAAP*     Non-GAAP*  
Bioproducts
   $ 149,498     $ 77,908       52.1 %   $ 78,619       52.6 %   $ 25,670       17.2 %   $ 26,800       17.9 %
Biopharma
     41,698       (3,811 )     -9.1 %     (3,160 )     -7.6 %     (97,245 )     -233.2 %     (14,148 )     -33.9 %
Human Health
     223,565       86,028       38.5 %     86,371       38.6 %     50,512       22.6 %     51,010       22.8 %
Corporate
     —       —               —               (25,922 )             (22,741 )        
 
                                                              
Total
   $ 414,761     $ 160,125       38.6 %   $ 161,830       39.0 %   $ (46,985 )     -11.3 %   $ 40,921       9.9 %
 
                                                              
                                 
    Gross Sales Comparison  
    2006     2005              
    Gross     Gross     Change     Change  
    Sales     Sales     $     %  
     
Bioproducts
   $ 163,119     $ 149,498     $ 13,621       9.1 %
Biopharma
     52,477       41,698       10,779       25.9 %
Human Health
     236,659       223,565       13,094       5.9 %
 
                          
Total
   $ 452,255     $ 414,761     $ 37,494       9.0 %
 
                          
 
*   Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation — Net Income
For the Quarters and Twelve Months Ended December 31, 2006 and 2005
                                 
    Fourth Quarter 2006     Fourth Quarter 2005  
    Net Income     Diluted EPS     Net Income     Diluted EPS  
Income/(loss) from continuing operations
   $ 561     $ 0.02     $ (97,559 )   $ (3.66 )
Evaluation of strategic alternatives (recorded in Admin. Expense)
     4,516       0.17       —       —  
Cutanogen related costs (R&D Expense)
     127       0.00       —       —  
Write-down of investment in equity securities (Other Expense)
     1,475       0.05                  
Executive severance (Admin. Expense)
     —       —       4,223       0.16  
Increase in tax valuation allowance and related items (Tax Provision)
     —       —       16,402       0.61  
Asset impairments
     —       —       82,383     $ 3.09  
 
                        
Adjusted Net Income — Non-GAAP
   $ 6,679     $ 0.25     $ 5,449     $ 0.20  
 
                        
                                 
    Twelve Months 2006     Twelve Months 2005  
    Net Income     Diluted EPS     Net Income     Diluted EPS  
Loss from continuing operations
   $ (1,245 )   $ (0.05 )   $ (83,231 )   $ (3.15 )
Evaluation of strategic alternatives (Admin. Expense)
     8,607       0.32       —       —  
Cutanogen milestone and related costs (R&D Expense)
     1,791       0.07       —       —  
Senior note prepayment expenses (Interest Expense)
     5,272       0.20       —       —  
Write-down of investment in equity securities (Other Expense)
     1,475       0.05                  
Increase in tax valuation allowance and related items (Tax Provision)
     1,696       0.06       16,402       0.62  
Executive severance (Admin. Expense)
     —       —       4,223       0.16  
Asset impairments
     —       —       82,383       3.10  
Increase in environmental reserve (Admin. Expense)
     —       —       1,300       0.05  
Benefit from Swedish tax item (Tax Provision)
     —       —       (3,329 )     (0.13 )
 
                        
Adjusted Net Income — Non-GAAP
   $ 17,596     $ 0.65     $ 17,748     $ 0.67  
 
                        
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation — Operating Profit by Segment
For the Quarters and Twelve Months Ended December 31, 2006 and 2005
                                         
    Fourth Quarter 2006  
    Bioproducts     Biopharma     Human Health     Corporate     Total  
     
Operating Profit — As Reported
   $ 5,919     $ 1,720     $ 12,899     $ (12,775 )   $ 7,763  
Evaluation of strategic alternatives
     —       —       —       4,516       4,516  
Cutanogen related costs
     127       —       —       —       127  
 
                              
Adjusted Operating Profit — Non-GAAP
   $ 6,046     $ 1,720     $ 12,899     $ (8,259 )   $ 12,406  
 
                              
                                         
    Fourth Quarter 2005  
    Bioproducts     Biopharma     Human Health     Corporate     Total  
     
Operating Profit — As Reported
   $ 5,235     $ (84,700 )   $ 12,427     $ (9,160 )   $ (76,198 )
Asset impairments
     —       82,383       —       —       82,383  
Executive severance
     —       —       —       4,223       4,223  
Change in allocation methodology
     285       177       127       (589 )     —  
 
                              
Adjusted Operating Profit — Non-GAAP
   $ 5,520     $ (2,140 )   $ 12,554     $ (5,526 )   $ 10,408  
 
                              
                                         
    Twelve Months 2006  
    Bioproducts     Biopharma     Human Health     Corporate     Total  
     
Operating Profit — As Reported
   $ 27,196     $ (6,062 )   $ 49,157     $ (37,444 )   $ 32,847  
Evaluation of strategic alternatives
     —       —       —       8,607       8,607  
Cutanogen milestone and related costs
     1,791       —       —       —       1,791  
 
                              
Adjusted Operating Profit — Non-GAAP
   $ 28,987     $ (6,062 )   $ 49,157     $ (28,837 )   $ 43,245  
 
                              
                                         
    Twelve Months 2005  
    Bioproducts     Biopharma     Human Health     Corporate     Total  
     
Operating Profit — As Reported
   $ 25,670     $ (97,245 )   $ 50,512     $ (25,922 )   $ (46,985 )
Asset impairments
     —       82,383       —       —       82,383  
Executive severance
     —       —       —       4,223       4,223  
Increase in environmental reserve
     —       —       —       1,300       1,300  
Change in allocation methodology
     1,130       714       498       (2,342 )     —  
 
                              
Adjusted Operating Profit — Non-GAAP
   $ 26,800     $ (14,148 )   $ 51,010     $ (22,741 )   $ 40,921  
 
                              
Note: The change in allocation methodology reflects certain medical benefit expenses in the fourth quarter and twelve months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation — Operating Expenses
For the Quarters and Twelve Months Ended December 31, 2006 and 2005
                 
    Fourth Quarter  
    2006     2005  
Operating Expenses — GAAP
   $ 39,170     $ 116,753  
Evaluation of strategic alternatives
     (4,516 )     —  
Cutanogen related costs
     (127 )     —  
Asset impairments
     —       (82,383 )
Executive severance
     —       (4,223 )
Change in allocation methodology
     —       428  
 
            
Adjusted Operating Expenses — Non-GAAP
   $ 34,527     $ 30,575  
 
            
                 
    Twelve Months  
    2006     2005  
Operating Expenses — GAAP
   $ 138,502     $ 207,110  
Evaluation of strategic alternatives
     (8,607 )     —  
Cutanogen milestone and related costs
     (1,791 )     —  
Asset impairments
     —       (82,383 )
Executive severance
     —       (4,223 )
Increase in environmental reserve
     —       (1,300 )
Change in allocation methodology
     —       1,705  
 
            
Adjusted Operating Expenses — Non-GAAP
   $ 128,104     $ 120,909  
 
            
Note: The change in allocation methodology reflects certain medical benefit expenses in fourth quarter and twelve months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
GAAP to Adjusted (Non-GAAP) Reconciliation — Administrative Expense
For the Quarters and Twelve Months Ended December 31, 2006 and 2005
                 
    Fourth Quarter  
    2006     2005  
Administrative Expense — GAAP
   $ 24,438     $ 19,716  
Evaluation of strategic alternatives
     (4,516 )     —  
Executive severance
     —       (4,223 )
Change in allocation methodology
     —       451  
 
            
Adjusted Administrative Expense — Non-GAAP
   $ 19,922     $ 15,944  
 
            
                 
    Twelve Months  
    2006     2005  
Administrative Expense — GAAP
   $ 81,718     $ 67,681  
Evaluation of strategic alternatives
     (8,607 )     —  
Executive severance
     —       (4,223 )
Increase in environmental reserve
     —       (1,300 )
Change in allocation methodology
     —       1,797  
 
            
Adjusted Administrative Expense — Non-GAAP
   $ 73,111     $ 63,955  
 
            
Note: The change in allocation methodology reflects certain medical benefit expenses in fourth quarter and twelve months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments.
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com

 

 

(CAMBREX LOGO)
CAMBREX CORPORATION
Consolidated Balance Sheet
As of December 31, 2006 and 2005
(in thousands)
                 
    December 31,     December 31,  
    2006     2005  
Assets
                
 
                
Cash and Cash Equivalents
   $ 33,746     $ 45,342  
Trade Receivables, net
     74,012       69,283  
Inventories, net
     94,601       81,080  
Assets of Discontinued Operations — Short Term
     —       18,913  
Other Current Assets
     22,391       14,908  
 
            
Total Current Assets
     224,750       229,526  
 
                
Property, Plant and Equipment, Net
     227,024       201,784  
Goodwill and Other Intangibles
     148,209       145,603  
Assets of Discontinued Operations — Long Term
     —       29,574  
Other Non-Current Assets
     6,393       5,985  
 
            
 
                
Total Assets
   $ 606,376     $ 612,472  
 
            
 
                
Liabilities and Stockholders’ Equity
                
 
                
Trade Accounts Payable
   $ 42,246     $ 33,720  
Accrued Expenses and Other Current Liabilities
     64,888       50,368  
Liabilities of Discontinued Operations — Short Term
     —       6,231  
 
            
Total Current Liabilities
     107,134       90,319  
 
                
Long-term Debt
     162,371       186,819  
Deferred Tax Liabilities
     30,219       26,976  
Liabilities of Discontinued Operations — Long Term
     —       7,921  
Other Non-Current Liabilities
     60,006       57,186  
 
            
 
                
Total Liabilities
   $ 359,730     $ 369,221  
 
                
Stockholders’ Equity
   $ 246,646     $ 243,251  
 
            
 
                
Total Liabilities and Stockholders’ Equity
   $ 606,376     $ 612,472  
 
            
Cambrex Corporation | One Meadowlands Plaza | East Rutherford, NJ
07073 Phone 201.804.3000 | Fax 201.804.9852 | www.cambrex.com