-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ix7gAIWpFFNNp+hHU6sn+jTwZPWcMCSEGOFkPvPprUjx8nuGFbGL8f5B+8NLKg2I sfF/udhWmuj4ywwyj4+A1Q== 0000950123-94-001319.txt : 19940817 0000950123-94-001319.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950123-94-001319 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMBREX CORP CENTRAL INDEX KEY: 0000820081 STANDARD INDUSTRIAL CLASSIFICATION: 2800 IRS NUMBER: 222476135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10638 FILM NUMBER: 94543251 BUSINESS ADDRESS: STREET 1: ONE MEADOWLANDS PLZ CITY: E RUTHERFORD STATE: NJ ZIP: 07073 BUSINESS PHONE: 2018043000 MAIL ADDRESS: STREET 1: ONE MEADOWLANDS PLAZA CITY: E. RUTHERFORD STATE: NJ ZIP: 07073 10-Q 1 FORM 10-Q CAMBREX CORP. 6/30/94 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q /X/ QUARTERLY REPORT PURSUANT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to ------------------- ------------------- Commission file number 1-10638 CAMBREX CORPORATION ------------------- (Exact name of registrant as specified in its charter) DELAWARE 22-2476135 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073 -------------------------------------------------------- (Address of principal executive offices) (201) 804-3000 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS As of August 1, 1994, there were 5,247,024 shares outstanding of the registrant's Common Stock, $.10 par value. Page 1 of 14 2 CAMBREX CORPORATION AND SUBSIDIARIES Form 10-Q For The Quarter Ended June 30, 1994 Table of Contents
Page No. -------- Part I Financial information Condensed consolidated balance sheets as of June 30, 1994 and December 31, 1993 3 Condensed consolidated income statements for the three months and six months ended June 30, 1994 and 1993 4 Condensed consolidated statements of cash flows for the six months ended June 30, 1994 and 1993 5 Notes to condensed consolidated financial statements 6 - 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 11 Part II Other information Item 4. Matters Submitted to a Vote of Securities Holders 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 Exhibit 11 - Computation of Earnings Per Share 14
3 Part 1 - FINANCIAL INFORMATION CAMBREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
June 30, December 31, 1994 1993 --------- ------------- ASSETS Current assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48 $ 161 Trade and other receivables, less allowances for doubtful accounts of $430 and $355 at respective dates . . . . . . . . . . . . . . . . . . 32,815 28,015 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 39,040 33,730 Deferred tax asset . . . . . . . . . . . . . . . . . . . . . 1,243 1,315 Other . . . . . . . . . . . . . . . . . . . . . . . . . . 3,456 3,557 ------ ------ Total current assets . . . . . . . . . . . . . . . . . . 76,602 66,778 Property, plant and equipment, net . . . . . . . . . . . . . . . 97,099 89,784 Intangible assets, net . . . . . . . . . . . . . . . . . . . . . 11,780 7,621 Other noncurrent assets . . . . . . . . . . . . . . . . . . . . . 541 2,662 ------- ------- Total assets . . . . . . . . . . . . . . . . . . . . . . $186,022 $166,845 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities . . . . . . . . . . $ 23,761 $ 20,872 Income taxes payable . . . . . . . . . . . . . . . . . . . . 3,305 3,409 Current portion of long-term debt . . . . . . . . . . . . . . 4,008 4,000 ------- ------- Total current liabilities . . . . . . . . . . . . . . . 31,074 28,281 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 45,737 36,261 Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . 6,793 5,986 Other noncurrent liabilities . . . . . . . . . . . . . . . . . . 8,748 8,748 ------- ------- Total liabilities . . . . . . . . . . . . . . . . . . . 92,352 79,276 ------- ------- Stockholders' equity: Common stock . . . . . . . . . . . . . . . . . . . . . . . . 603 601 Additional paid-in capital . . . . . . . . . . . . . . . . . 73,014 72,627 Retained earnings . . . . . . . . . . . . . . . . . . . . . . 30,846 25,859 Additional minimum pension liability . . . . . . . . . . . . (692) (1,030) Treasury stock, at cost; 786,913 and 819,049 shares at respective dates . . . . . . . . . . . . . . . . (10,101) (10,488) -------- -------- Total stockholders' equity . . . . . . . . . . . . . . . 93,670 87,569 -------- -------- Total liabilities and stockholders' equity . . . . . . . $ 186,022 $ 166,845 ======== ========
See accompanying notes to condensed consolidated financial statements. - 3 - 4 CAMBREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) (in thousands, except per-share amounts)
Three months ended Six months ended June 30, June 30, -------------------- --------------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net revenues . . . . . . . . . . . . . . . $ 58,224 $ 52,779 $109,271 $100,427 Operating expenses: Cost of goods sold . . . . . . . . . . 43,631 38,569 83,275 74,299 Selling, general and administrative expenses . . . . . . . . . . . . . . 7,938 7,687 14,214 14,677 Research and development . . . . . . . 1,188 1,464 2,401 2,823 ------- ------- ------- ------- Total operating expenses . . . . . . 52,757 47,720 99,890 91,799 ------- ------- ------- ------- Operating profit . . . . . . . . . . . . . 5,467 5,059 9,381 8,628 Other (income) expenses: Interest expense - net . . . . . . . . 670 727 1,033 1,404 Other - net . . . . . . . . . . . . . . (219) 243 (47) 173 ------- ------- ------- ------ Income before income taxes . . . . . . . . 5,016 4,089 8,395 7,051 Provision for income taxes . . . . . . . . 1,636 1,662 2,887 2,830 ------- ------ ------- ------- Net income . . . . . . . . . . . . . . . $ 3,380 $ 2,427 $ 5,508 $ 4,221 ======= ====== ======= ======= Weighted average shares outstanding: Primary . . . . . . . . . . . . . 5,648 5,191 5,643 5,174 Fully diluted . . . . . . . . . . 5,648 5,466 5,643 5,468 Net income per share: Primary . . . . . . . . . . . . . $ 0.60 $ 0.47 $ 0.98 $ 0.82 ======= ======= ======= ======= Fully diluted . . . . . . . . . . $ 0.60 $ 0.45 $ 0.98 $ 0.79 ======= ======= ======= =======
See accompanying notes to condensed consolidated financial statements. - 4 - 5 CAMBREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
Six months ended June 30, ------------------------- 1994 1993 ------- ------- Cash flows from operations . . . . . . . . . . . . . . . . . . . . . . . . $ 13,057 $ 9,531 Changes in assets and liabilities: Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,561) (3,105) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,714) (3,382) Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . 203 (24) Accounts payable and accrued liabilities . . . . . . . . . . . . . . . 623 1,946 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . (206) 928 Other noncurrent assets and liabilities . . . . . . . . . . . . . . . . 2,121 881 ------- ------- Net cash provided from operations . . . . . . . . . . . . . . . . 9,523 6,775 ------- ------- Cash flows from investing activities: Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (7,514) (6,209) Acquisition of businesses . . . . . . . . . . . . . . . . . . . . . . . (11,840) ( 5,800) ------ ------ Net cash (used in) investing activities . . . . . . . . . . . . . (19,354) (12,009) ------ ------ Cash flows from financing activities: Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (521) (479) Long-term debt activity (including current portion): . . . . . . . . . Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,664 21,804 Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,200) (16,591) Proceeds from the issuance of common stock . . . . . . . . . . . . . . 59 217 Proceeds from the sale of treasury stock . . . . . . . . . . . . . . . 716 661 ------ ------- Net cash provided from financing activities . . . . . . . . . . . 9,718 5,612 ------ ------- Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . (113) 378 Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 161 564 ------ ------- Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48 $ 942 ====== ======= Supplemental disclosure: Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,307 $ 1,344 Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,289 $ 2,851
See accompanying notes to condensed consolidated financial statements. - 5 - 6 CAMBREX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands) (1) Basis of Presentation Unless otherwise indicated by the context, "Cambrex" or the "Company" means Cambrex Corporation and subsidiaries. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared from the records of the Company. In the opinion of management, the financial statements include all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of financial position and results of operations in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 1993. The results of operations for the six months ended June 30, 1994 are not necessarily indicative of the results to be expected for the full year. (2) Inventories Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market and include material, labor, and overhead. Inventories at June 30, 1994 and December 31, 1993 consist of the following:
June 30, December 31, 1994 1993 --------- --------------- Finished goods . . . . . . . . . . . . . $19,864 $17,988 Raw materials . . . . . . . . . . . . . 17,013 13,878 Fuel oil and supplies . . . . . . . . . 2,163 1,864 ------ ------ $39,040 $33,730 ====== ======
(3) Earnings Per Common Share The calculation of primary earnings per common share is based on the weighted average number of common shares and common share equivalents outstanding during the applicable period. For 1993, fully diluted earnings per share assumes conversion of the outstanding convertible subordinated notes that were converted in September 1993, and the elimination of related interest expense net of tax. - 6 - 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) 4) Acquisition On January 31, 1994, the Company completed the acquisition of the assets of Hexcel Corporation's fine chemicals business located in Middlesbrough, England, for approximately $7,300 and the assumption of certain current liabilities in the amount of $2,700. The facility is now known as Seal Sands Chemicals Ltd. On May 27, 1994, the Company purchased the Topanol product line from Zeneca Limited to compliment its operations at the Seal Sands facility. 5) Long-term Debt Long-term debt at June 30, 1994 and December 31, 1993 consists of the following:
June 30, December 31, 1994 1993 ---- ---- Bank credit facilities (a) . . . . . . . . . . . . . . . $ 45,575 $36,111 Capital lease . . . . . . . . . . . . . . . . . . . . . 20 0 Industrial development revenue bond . . . . . . . . . . 4,150 4,150 ------ ------ Subtotal . . . . . . . . . . . . . . . . . . . 49,745 40,261 Less: current portion . . . . . . . . . . . . . . . . . 4,008 4,000 ------ ------ Total . . . . . . . . . . . . . . . . . . . . $ 45,737 $ 36,261 ====== ======
(a) On January 31, 1994, the Company amended the Revolving Credit and Term Loan Agreement (Credit Agreement) with NBD Bank, N.A., National Westminster NJ, and United Jersey Bank. The new Credit Agreement provides for additional revolving credit facility flexibility as follows: It is designed to allow for automatic extensions of termination date. The current termination date is January 31, 1997. It permits the Company to specify a portion of the borrowing to be designated in various acceptable currencies. Under the Credit Agreement, the interest rate options available approximate London Interbank Offering Rates (LIBOR) for the appropriate currency plus no more than 1 1/2%, or the U.S. Prime Rate. On June 30, 1994, the rate was LIBOR+1%. A commitment fee of between 250/1000 of 1% and 125/1000 of 1% is paid on the unused portion of the revolving credit facilities. Additionally, the restrictive covenant for net worth was updated. All other covenants remain unchanged. The Company met all bank covenants for the first half of 1994. 6) Postemployment Benefits Statement of Financial Accounting Standard No. 112 "Employers' Accounting for Postemployment Benefits" (SFAS 112) requires the recognition on an accrual basis of all types of postemployment benefits provided to former or inactive employees subsequent to employment but before retirement. The Company currently provides limited benefits in this regard. The Company will adopt SFAS 112 effective January 1, 1994. The impact of SFAS 112 implementation upon the Company's operating results is expected to be immaterial. - 7 - 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (7) Contingencies There have been no significant changes in the existing contingencies related to environmental issues. Refer to Form 10-K for the fiscal year ended December 31, 1993. - 8 - 9 CAMBREX CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The second quarter 1994 net revenues increased 10% to $58,224,000 from $52,779,000 in the previous year. The $5,445,000 of increased revenue included sales from the Company's Seal Sands Chemicals Ltd. facility located in England, acquired on January 31, 1994, and from the agricultural intermediates and additives products, which increased by $4,228,000 over the second quarter 1993.
Three months ended Six months ended June 30, June 30, --------------------- ------------------- (in thousands) (in thousands) 1994 1993 1994 1993 ---- ---- ---- ---- Revenues: Health & pharmaceuticals . . . . . . . . . . . $ 14,372 $ 14,731 $ 28,610 $ 29,546 Agricultural intermediates & additives . . . . . . . . . . . . . . . 16,745 12,517 30,659 25,074 Specialty & fine chemicals . . . . . . . . . . 16,603 13,736 29,883 25,090 Performance chemicals . . . . . . . . . . . . 8,147 9,069 15,488 14,379 Coatings . . . . . . . . . . . . . . . . . . . 4,975 4,158 8,989 9,025 ------ ------ ------- ------- Total gross revenues . . . . . . . . . . . $ 60,842 $ 54,211 $ 113,629 $ 103,114 ====== ====== ======= ======= Total net revenues . . . . . . . . . . . . $ 58,224 $ 52,779 109,271 100,427 ====== ====== ======= =======
Health and Pharmaceuticals' revenues decreased $359,000 (2%) from 1993. Shipments of USP Vitamin B(3) and its chemical precursors declined due to customers changing order patterns and reduced sales to foreign markets. These decreases have been offset by a 64% increase in our generic drug used for ulcerative colitis, and a new product under contract at our Zeeland facility, used as an intermediate for over-the-counter cough suppressants. Agricultural Intermediates and Additives' revenues increased by $4,228,000 (34%) over 1993. The continued growth in this market is due to a 50% increase in shipments for feed additives used to enhance chicken growth, improve feed performance and control disease. Feed Grade Vitamin B3 and its intermediates had an 80% increase in sales due to a recovery in sales to the Asia/Pacific area and the added capability of bagging the finished product that allowed penetration of the European market. Specialty and Fine Chemicals' revenues increased $2,867,000 (21%) over 1993. Seal Sands Chemicals Ltd. (acquired on January 31, 1994) accounted for $3,613,000 in sales of specialty chemicals of which $3,300,000 are new products to Cambrex. Reduced sales in this category were due mainly to reduced domestic and foreign shipments of photographic chemical intermediates. - 9 - 10 Performance Chemicals' revenues decreased $922,000 (10%) from prior year. The decline was due to the elimination of a low margin fiber optic gel product, and reduced sales of encapsulants due to loss of a major customer last year in the U.S. and a decline in sales to a key international customer. Coatings' revenues increased $817,000 (20%) over 1993. This improvement was due to improved market conditions in paints and coatings demand by the automotive and housing industries. Gross profit in the second quarter 1994 of $14,593,000 (25.1% of sales) compared to $14,210,000 (26.9% of sales) in the second quarter 1993. The margin percentage was adversely affected by decreases in the price of pyridine and its derivatives; both the domestic and foreign markets have been under increased competitive pressure. Recent acquisitions also adversely affected margins, as these new businesses initally generate below normal margins. Selling, general and administrative expenses as a percentage of net revenues was 15.7% in the second quarter 1994 versus 17.3% in 1993. The second quarter 1994 expense of $9,126,000 was $25,000 below 1993. Reduced spending in sales and marketing and research and development was due to staff reductions, and non-renewal of outside research contracts. Higher administrative costs reflected the added cost of the Seal Sands acquisition, partially offset by staff reductions. Interest expense for the second quarter decreased $57,000 from 1993. This decrease is due to recording the capitalization of interest costs and the elimination in the third and fourth quarters 1993 of higher interest debt including a capital lease and convertible 9% notes. This reduction was offset by borrowings required for the Seal Sands acquisition. Other income for the second quarter 1994 was $219,000 compared with $243,000 in other expense for the second quarter 1993. The key change was an accounting reclassification at Seal Sands to record expenses consistent with Cambrex policies. The provision for income taxes was reviewed during the second quarter and has been reduced from 39.5% to approximately 34% for 1994. A favorable adjustment of $250,000 was recorded in the second quarter. Net income for the second quarter 1994 was $3,380,000 compared to $2,427,000 for the second quarter 1993. The earnings per share (fully diluted) in the second quarter 1994 were 60 cents, compared with 45 cents in 1993 (33% increase). LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity and capital resources, in the opinion of management, adequately enable the Company to meet its needs for cash. Cash flow from operations increased by $2,748,000, when compared to the first half of 1993. The majority of this increase is derived from higher net income and additional depreciation and amortization charges. - 10 - 11 The key expenditures in the quarter were from investing activities. Capital expenditures of $7,514,000 for the first half of 1994 were $1,305,000 higher than the prior year. The major capital expenditures were for a new facility to generate steam at our Charles City, Iowa plant and for a project at our Zeeland, Michigan plant providing facilities to manufacture a new product for a major customer. Funds were expended to acquire the assets of Hexcel's fine chemicals business in Middlesbrough, England, and to subsequently acquire a product line complimentary to this business. The quarterly cash dividend declared on April 28, 1994 was paid on May 27, 1994. On July 28, 1994, the Board of Directors declared a quarterly cash dividend on its common stock of 5 cents per share for all shareholders of record as of August 12, 1994. The dividend is payable on August 26, 1994. - 11 - 12 PART II - OTHER INFORMATION CAMBREX CORPORATION AND SUBSIDIARIES Item 4. Matters Submitted to a Vote of Securities Holders. Refer to Form 10-Q for the quarterly period ended March 31, 1994. Item 6. Exhibits and Reports on Form 8-K a) The exhibit filed as part of this report is listed below.
Exhibit No. Description ----------- ----------- 11 Statement of computation of per share earnings.
- 12 - 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAMBREX CORPORATION By /s/ Peter Tracey --------------------------------- Peter Tracey Vice President (On behalf of the Registrant and as the Registrant's Principal Financial Officer) Date: August 11, 1994 - 13 - 14 EXHIBIT INDEX
Exhibit No. Description ----------- ----------- 11 Statement of computation of per share earnings.
EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 CAMBREX CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (in thousands)
Three months ended June 30, ---------------------- 1994 1993 ------ ---- Income (loss) applicable to common shares: Primary earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,380 $ 2,427 Add: Interest reduction from assumed conversion of convertible subordinated notes (net of taxes): Notes issued June 11, 1985 . . . . . . . . . . . . . . . . . . . . 0 34 Notes issued October 3, 1985 . . . . . . . . . . . . . . . . . . . 0 20 ------ ------ Fully diluted earnings . . . . . . . . . . . . . . . . . . . . . . . . $ 3,380 $ 2,481 ====== ====== Weighted average number of common shares and common share equivalents outstanding during the period: Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,229 4,872 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . 419 319 ----- ----- Shares outstanding - primary . . . . . . . . . . . . . . . . . . . . . 5,648 5,191 Notes issued June 11, 1985 . . . . . . . . . . . . . . . . . . . . 0 172 Notes issued October 3, 1985 . . . . . . . . . . . . . . . . . . . 0 103 Additional stock options . . . . . . . . . . . . . . . . . . . . . 0 0 ----- ----- Shares outstanding - fully diluted . . . . . . . . . . . . . . . . . . 5,648 5,466 ===== =====
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