-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HoBYecGDyzF59lavAZjrIEUXWfCjN9Eq8vYyUsgNhKn+HPH5avRsN9Fcoc7cNjeH 7pKBWtnXWQCSKGy8Y7qMog== 0000950123-97-006696.txt : 19970813 0000950123-97-006696.hdr.sgml : 19970813 ACCESSION NUMBER: 0000950123-97-006696 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMBREX CORP CENTRAL INDEX KEY: 0000820081 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] 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: 97656471 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 CAMBREX CORPORATION 1 CONFORMED 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, 1997 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, 1997, there were 11,794,829 shares outstanding of the registrant's Common Stock, $.10 par value. 2 CAMBREX CORPORATION AND SUBSIDIARIES Form 10-Q For The Quarter Ended June 30, 1997 Table of Contents
Page No. Part I Financial information Condensed consolidated balance sheets as of June 30, 1997 and December 31, 1996 3 Condensed consolidated income statements for the three months and six months ended June 30, 1997 and 1996 4 Condensed consolidated statements of cash flows for the six months ended June 30, 1997 and 1996 5 Notes to condensed consolidated financial statements 6-9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 Part II Other information Item 4. Matters Submitted to a Vote of Securities Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Exhibit 11 - Computation of Earnings Per Share 16 Exhibit 27 - Financial Data Schedule 17
- 2 - 3 Part 1 - FINANCIAL INFORMATION CAMBREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share data)
June 30, December 31, 1997 1996 --------- ------------ ASSETS Current assets: Cash and cash equivalents ...................... $ 7,186 $ 7,353 Trade and other receivables, less allowances for doubtful accounts of $1,072 and $1,453 at respective dates ........................ 55,818 56,750 Inventories .................................... 67,452 64,209 Deferred tax assets ............................ 5,117 5,009 Other current assets ........................... 3,921 3,541 --------- --------- Total current assets ....................... 139,494 136,862 Property, plant and equipment, net ................. 208,708 216,481 Intangible assets, net ............................. 42,452 49,573 Other noncurrent assets ............................ 2,485 1,528 --------- --------- Total assets ............................... $ 393,139 $ 404,444 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities ....... $ 51,707 $ 54,754 Income taxes payable ........................... 5,998 8,085 Short-term debt ................................ 3,631 3,880 Current portion of long-term debt .............. 263 7,231 --------- --------- Total current liabilities .................. 61,599 73,950 Long-term debt ..................................... 62,865 60,152 Deferred tax liabilities ........................... 22,617 21,587 Other noncurrent liabilities ....................... 19,951 19,710 --------- --------- Total liabilities .......................... 167,032 175,399 --------- --------- Stockholders' equity: Common stock ................................... 1,279 1,275 Additional paid-in capital ..................... 149,912 149,191 Retained earnings .............................. 95,735 80,608 Additional minimum pension liability ........... (553) (553) Treasury stock, at cost; 1,049,069 and 1,049,895 shares at respective dates .................. (9,585) (9,449) Shares held in trust, at cost; 145,428 and 132,126 shares at respective dates ......... (894) (718) Cumulative translation adjustment .............. (9,787) 8,691 --------- --------- Total stockholders' equity ................. 226,107 229,045 --------- --------- Total liabilities and stockholders' equity . $ 393,139 $ 404,444 ========= =========
See accompanying notes to condensed consolidated financial statements. - 3 - 4 CAMBREX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (unaudited) (in thousands, except per-share data)
Three months ended Six months ended June 30, June 30, ---------------------- ----------------------- 1997 1996 1997 1996 -------- ------- -------- -------- Gross sales ........................... $100,773 $92,969 $193,914 $189,686 Commissions & freight ............ 2,065 2,291 3,924 4,623 Sales, returns and allowances ..... 446 462 870 1,060 -------- ------- -------- -------- Net sales ............................. 98,262 90,216 189,120 184,003 Other revenues .................... 457 53 1,493 191 -------- ------- -------- -------- Net revenues .......................... 98,719 90,269 190,613 184,194 Operating expenses: Cost of goods sold ................ 68,649 64,283 132,804 131,742 Selling, general and administrative expenses ........................ 13,336 10,329 26,580 23,221 Research and development .......... 2,436 2,367 4,640 4,517 -------- ------- -------- -------- Total operating expenses ........ 84,421 76,979 164,024 159,480 -------- ------- -------- -------- Operating profit ...................... 14,298 13,290 26,589 24,714 Other (income) expenses: Interest expense - net ............ 1,106 1,672 2,239 3,465 Other - net ....................... 174 35 380 132 -------- ------- -------- -------- Income before income taxes ............ 13,018 11,583 23,970 21,117 Provision for income taxes ............ 4,166 4,055 7,670 7,392 -------- ------- -------- -------- Net income ............................ $ 8,852 $ 7,528 $ 16,300 $ 13,725 ======== ======= ======== ======== Weighted average shares outstanding*: Primary ....................... 12,017 11,860 12,006 11,841 Fully diluted ................. 12,037 11,885 12,027 11,877 Net income per share*: Primary ....................... $ 0.74 $ 0.63 $ 1.36 $ 1.16 ======== ======= ======== ======== Fully diluted ................. $ 0.74 $ 0.63 $ 1.36 $ 1.16 ======== ======= ======== ========
*Share and per share data reflect adjustments for a three-for-two stock split in the form of a 50% stock dividend paid in July, 1996. 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, ------------------------ 1997 1996 -------- -------- Cash flows from operating activities: Net income ......................................... $ 16,300 $ 13,725 Depreciation and amortization ...................... 14,978 13,950 Deferred income taxes .............................. 924 (1,181) Changes in assets and liabilities: Receivables ........................................ (965) (1,741) Inventories ........................................ (6,649) 775 Other current assets ............................... (527) 738 Accounts payable and accrued liabilities ........... (1,196) (7,466) Income taxes payable ............................... (99) 5,206 Other noncurrent assets and liabilities ............ 228 4,789 -------- -------- Net cash provided from operating activities .... 22,994 28,795 -------- -------- Cash flows from investing activities: Capital expenditures ............................... (16,171) (13,516) Other investing activities ......................... -- (1,309) -------- -------- Net cash (used in) investing activities ........ (16,171) (14,825) -------- -------- Cash flows from financing activities: Dividends .......................................... (1,173) (767) Net increase (decrease) in short-term debt ......... 293 (811) Long-term debt activity (including current portion): Borrowings ..................................... 27,800 13,700 Repayments ..................................... (32,041) (28,711) Proceeds from the issuance of common stock ......... 415 2,630 Proceeds from the sale of treasury stock ........... 174 751 -------- -------- Net cash (used in) financing activities ........ (4,532) (13,208) -------- -------- Effect of exchange rate changes on cash ................ (2,458) (213) -------- -------- Net (decrease) increase in cash ........................ (167) 549 Cash at beginning of period ............................ 7,353 4,841 -------- -------- Cash at end of period .................................. $ 7,186 $ 5,390 ======== ======== Supplemental disclosure: Interest paid ...................................... $ 2,182 $ 3,027 Income taxes paid .................................. $ 1,635 $ 2,856 Depreciation expense ............................... $ 12,215 $ 11,169 Non-cash financing activities: Liabilities established in connection with exercise of stock options ................................ $ 176 $ 718
See accompanying notes to condensed consolidated financial statements. - 5 - 6 CAMBREX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands, except per-share amounts) (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, results of operations and cash flows in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 1996. The results of operations for the six months ended June 30, 1997 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, 1997 and December 31, 1996 consist of the following:
June 30, December 31, 1997 1996 ------- ------------ Finished goods ...... $28,262 $29,443 Work in process ..... 19,329 15,463 Raw materials ....... 14,345 13,179 Fuel oil and supplies 5,516 6,124 ------- ------- Total ........... $67,452 $64,209 ======= =======
(3) Earnings Per Common Share Earnings per common share of common stock are computed on the basis of the weighted average shares of common stock outstanding plus common stock equivalent shares arising from the effect of dilutive stock options, using the treasury stock method. On July 24, 1996, the Company's Board of Directors approved a three-for-two stock split of the Company's Common Stock, $0.10 par value, effected in the form of a 50% stock dividend to holders of record on July 8, 1996. All share and per share data, including stock option plan information, have been adjusted to reflect the impact of the three-for-two stock split. The effect of the split was presented retroactively within stockholders' equity at December 31, 1996 by transferring the par value for the additional shares issued from additional paid-in capital to common stock. - 6 - 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) 4) Future Impact of Recent Accounting Pronouncements Statement of Financial Accounting Standards No. 128 "Earnings Per Share" changes the reporting requirements for earnings per share (EPS) for publicly traded companies by replacing primary EPS with basic EPS and changing the disclosures associated with this change. The Company is required to adopt this standard in the fourth quarter of 1997 and is currently evaluating the impact of this standard. Statement of Financial Accounting Standards No. 129 "Disclosure of Information About Capital Structure" requires all companies to disclose specific information concerning the entity's capital structure. The Company is required to adopt this standard in the fourth quarter of 1997 and anticipates that the adoption of this standard will not have an effect on the current presentation of such information. Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" requires that comprehensive income and its components be reported in the financial statements. The Company is required to adopt this standard in 1998 and is currently evaluating this standard. Statement of Financial Accounting Standards No. 131 "Disclosures About Segments of an Enterprise and Related Information" requires that publicly traded companies report financial and descriptive information about its reportable operating segments. The Company is required to adopt this standard in 1998 and is currently evaluating the impact of this standard. 5) Short-term Debt Short-term debt at June 30, 1997 and December 31, 1996 consists of the following:
June 30, December 31, 1997 1996 -------- ------------ Export financing facility, Italy ............. $2,391 $2,760 Overdraft protection ......................... 1,240 1,120 ------ ------ Total .................................... $3,631 $3,880 ====== ======
6) Long-term Debt Long-term debt at June 30, 1997 and December 31, 1996 consists of the following:
June 30, December 31, 1997 1996 -------- ------------ Bank credit facilities ................. $61,900 $66,000 Capital lease .......................... -- 13 Notes payable .......................... 1,228 1,370 ------- ------- Subtotal .......................... 63,128 67,383 Less: current portion ................. 263 7,231 ------- ------- Total .............................. $62,865 $60,152 ======= =======
- 7 - 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) As of March 31, 1997, the Company opted to borrow $72,500 of the $100,000 available under the revolving credit facility to prepay the then outstanding balance due on the term loan. The outstanding balance of $61,900 at June 30, 1997 is under the revolving credit facility, which is due October 11, 1999. The Company met all the bank covenants for the first six months of 1997. (7) Derivative Financial Instruments The Company uses derivative financial instruments to reduce exposures to market risks resulting from fluctuations in interest rates and foreign exchange. The Company does not enter into financial instruments for trading or speculative purposes. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap and forward exchange contracts. However, the Company does not anticipate nonperformance by the counterparties. Gains and losses on foreign currency forward exchange contracts pertaining to existing assets or liabilities, or hedges of firm commitments are deferred and are recognized in income as part of the related transactions. Interest Rate Swap Agreements The Company enters into interest rate swap agreements to reduce the impact of changes in interest rates on its floating rate debt. The swap agreements are contracts to exchange floating rate for fixed interest payments periodically over the life of the agreements without the exchange of the underlying notional amounts. Notional amounts provide an indication of the extent of the Company's involvement in such agreements but do not represent its exposure to market risk. Interest expense under these agreements, and the respective debt instruments that they hedge, are recorded at the net effective interest rate of the hedged transactions. Foreign Exchange Instruments The Company's policy is to enter into forward exchange contracts to hedge foreign currency transactions. This hedging mitigates the impact of short-term foreign exchange rate movements on the Company's operating results primarily in the United Kingdom, Sweden and Italy. The Company's primary market risk relates to exposure to foreign currency exchange rate fluctuations on transactions entered into by these foreign operations which are denominated primarily in U.S. dollars, Deutsche marks and British pound sterling. As a matter of policy, the Company does not hedge to protect the translated results of foreign operations. Generally, the Company's forward exchange contracts do not subject the Company's results of operations to risk due to exchange rate movements because gains and losses on these contracts generally offset gains and losses on the transactions being hedged. The forward exchange contracts have varying maturities with none exceeding twelve months. The Company makes net settlements for forward exchange contracts at maturity, based upon negotiated rates at inception of the contracts. - 8 - 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (8) Shares Held in Trust In 1995, the Company amended its non-qualified deferred compensation plan to permit plan participants to defer receipt of Company stock which would otherwise have been issued to the participants upon the exercise of Company's stock options. Such shares are held in trust and thus are included as a reduction of equity. The Company has established a corresponding liability to the plan participants in the amount of $894 and $718 which is included in other noncurrent liabilities at June 30, 1997 and December 31, 1997, respectively. (9) Other Income/Expense Other expense of $174 for the quarter ended June 30, 1997 compares to $35 in the same period in 1996. The 1997 net expense reflects the final resolution and receipt of the settlement proceeds due from the 1996 premature termination of the PMPA contract by the customer, offset by a charge for the settlement of a legal matter reached during the quarter. (10) Contingencies Refer to Form 10-K for the fiscal year ended December 31, 1996, for disclosure of existing contingencies related to environmental issues. - 9 - 10 CAMBREX CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) RESULTS OF OPERATIONS The second quarter 1997 results were higher than the second quarter 1996 due to higher sales and gross margins, partially offset by higher operating expenses. Additionally, the effective tax rate for the quarter ended June 30, 1997 was 32% as compared with 35% for the same period in 1996. The following table shows the gross sales of the Company's five product categories, in dollars and as a percentage of the Company's total gross sales, as well as the net revenues and gross profit for the second quarter 1997 and 1996.
Second Quarter Ended June 30, ---------------------------------------------------- 1997 1996 ----------------------- -------------------- $ % $ % --------- ----- -------- ----- Pharmaceutical bulk actives.......................... $ 27,234 27.0% $ 22,192 23.9% Pharmaceutical intermediates......................... 19,385 19.2 18,185 19.5 Organic intermediates................................ 23,295 23.1 19,636 21.1 Performance enhancers ............................... 18,822 18.7 19,199 20.7 Polymer systems...................................... 12,037 12.0 13,757 14.8 --------- ----- -------- ----- Total gross sales ............................. $ 100,773 100.0% $ 92,969 100.0% ========= ===== ======== ===== Total net revenues............................. $ 98,719 $ 90,269 ========= ======== Total gross profit............................. $ 30,070 $ 25,986 ========= ========
The following table shows the gross sales and gross profit of the Company's five product categories, and gross profit as a percentage of each product category, for the second quarter 1997 and 1996.
Gross Gross Gross Sales Profit $ Profit % ------- --------- -------- 1997 Pharmaceutical bulk actives.......................... $ 27,234 $ 11,938 43.8% Pharmaceutical intermediates......................... 19,385 4,816 24.8 Organic intermediates................................ 23,295 4,038 17.3 Performance enhancers................................ 18,822 5,114 27.2 Polymer systems...................................... 12,037 4,164 34.6 --------- -------- ---- Total........................................... $ 100,773 $ 30,070 29.8% ========= ======== ====
- 10 - 11
Gross Gross Gross Sales Profit $ Profit % -------- -------- -------- 1996 Pharmaceutical bulk actives.......................... $ 22,192 $ 6,978 31.4% Pharmaceutical intermediates......................... 18,185 4,665 25.7 Organic intermediates................................ 19,636 4,325 22.0 Performance enhancers................................ 19,199 6,571 34.2 Polymer systems...................................... 13,757 3,447 25.1 -------- -------- ---- Total........................................... $ 92,969 $ 25,986 28.0% ======== ======== ====
Gross sales in the second quarter 1997 increased to $100,773 compared to $92,969 in the second quarter 1996 due to increases in the Pharmaceutical Bulk Actives, Pharmaceutical Intermediates and Organic Intermediates categories. These increases were offset by decreases in the Performance Enhancers and Polymer Systems product categories. Pharmaceutical bulk actives of $27,234 were $5,042 (23%) above the second quarter 1996. Sales of Diltiazem, an anti-anginal preparation, were favorably affected by the increase in export sales due to customer demand. Sales of Sulfasalazine, used for ulcerative colitis, returned to a more normal level after a 1996 disruption in the order patterns. Additionally, two new products for treating ulcers and for central nervous disorders were introduced in the second quarter of 1997, amounting to sales of $3.2 million. Pharmaceutical intermediates of $19,385 were $1,200 (7%) above the second quarter 1996 primarily due to the continued shipments of an intermediate for a protease inhibitor used in the treatment of AIDS. This more than offset the lower sales to the Dextromethorphan market (cough suppressant). Additionally, a new product used as an intermediate for health actives generated $0.5 million in sales and Aminopyridine shipments showed continued growth. Organic intermediates of $23,295 were $3,659 (19%) above the second quarter 1996 due to higher sales of pyridine derivatives for the herbicide markets as a result of timing differences in 1996 shipments. Performance enhancers of $18,822 were $377 (2%) below the second quarter 1996. Key decreases occurred in photographic products due to an anticipated contract price reduction, and in catalysts which were negatively affected by production equipment problems. Production has resumed at lower than normal levels in the third quarter, 1997. Polymer systems of $12,037 were $1,720 (13%) lower than the second quarter 1996 primarily in the engineering plastics markets. Sales of a monomer for polyether sulphone plastics continues to be affected by lower demand from the major customer. This situation is expected through the rest of 1997. Export sales from U.S. businesses of $12,060 in the second quarter 1997 compared to $13,635 in the second quarter 1996 due to the continued decreased demand in the Dextromethorphan market. International sales from our European operations totaled $40,685 for the same period in 1997 as compared with $38,151 in 1996. - 11 - 12 Total gross profit of $30,070 increased $4,084, or 16%, from the second quarter 1996 resulting in a higher gross margin percentage which increased to 29.8% from 28.0%. The gross margin improvement was due to the good product mix in the pharmaceutical bulk actives, continued review of lower margin products, improved plant operations, and reduced plant spending, partially offset by increased raw materials costs in our manufacture of pyridine derivatives. Selling, general and administrative and research and development expenses as a percentage of gross sales was 15.6%, up from 13.7% in the second quarter 1996. The second quarter 1997 expense of $15,772 was $3.1 million (24%) above 1996. The 1996 second quarter operating expenses of $12,696 included the recovery of legal expenses and the reduction of reserves associated with the Nordic reorganization. Net interest expense of $1,106 reflected a decrease of $566 from 1996. This decline was due to the additional cash flow from operations used to pay down a net $25.7 million of outstanding loans from June, 1996. The average interest rate was 7.2% in the second quarter 1997 vs. 7.3% in 1996. Other expense of $174 for the quarter ended June 30, 1997 compares to $35 in the same period in 1996. The 1997 net expense reflects the final resolution and receipt of the settlement proceeds due from the 1996 premature termination of the PMPA contract by the customer, offset by a charge for the settlement of a legal matter reached during the quarter. The provision for income taxes for the second quarter resulted in an effective rate of 32% versus 35% in the comparable period in 1996. This was due to the implementation of tax planning strategies and the projected composition of taxable income between domestic and international operations. However, actual results may differ in the event of changes in tax regulations or deviations from projections. The Company's second quarter net income increased 18% to $8,852 compared with a net income of $7,528 in 1996. LIQUIDITY AND CAPITAL RESOURCES During the six months ended June 30, 1997, the Company generated cash flows from operations totaling $23.0 million, a decrease of $5.8 million over the comparable period in 1996. The decrease is attributable to a reduction in income taxes payable due to 1997 tax payments, as well as an increase in inventories and receivables after removing the impact of exchange rate fluctuations. This decrease from these factors was offset by the increased earnings in 1997. Capital expenditures were $16,171 in the first six months of 1997 as compared to $13,516 in the first six months of 1996. The major portion of the funds were used for construction of the pilot plants at our Salsbury, Iowa and Zeeland, Michigan facilities which are expected to be completed by the third quarter, 1997. - 12 - 13 Effective July 24, 1996, the Board of Directors approved a three-for-two split of the Company's Common Stock, $.10 par value, in the form of a 50% stock dividend. As of March 31, 1997, the Company opted to borrow $72,500 of the $100,000 available under the revolving credit facility to prepay the then remaining balance due on the term loan. This decision was based on the lower interest rate available under the revolving credit facility. The unutilized borrowing capacity of approximately $38,100 under the revolving credit facility of the Credit Agreement as of June 30, 1997 can be drawn on for general corporate purposes. Management is of the opinion that these amounts, together with other available sources of capital, are adequate for meeting the Company's anticipated financing and capital requirements. During the second quarter 1997, the Company paid cash dividends of $0.05 per share. The Company's primary market risk relates to exposure to foreign currency exchange rate fluctuations on transactions entered into by our foreign operations which are primarily denominated in the U.S. dollar, Deutsche mark and British pound sterling. The Company uses foreign currency forward exchange contracts to mitigate the effect of short-term foreign exchange rate movements on the Company's operating results. The notional amount of these contracts is $34,384 which the Company estimates to be approximately 49% of the foreign currency exposure during the period covered. As of June 30, 1997, the deferred currency loss on these contracts is $925. An additional $2,391 (3%) of the foreign currency exposure is protected through export financing. - 13 - 14 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, 1997. Item 6. Exhibits and Reports on Form 8-K a) The exhibits filed as part of this report are listed below.
Exhibit No. Description 11 Statement of computation of per share earnings. 27 Financial Data Schedule.
b) Reports on Form 8-K The registrant filed no reports on Form 8-K during the second quarter of the year ended December 31, 1997. - 14- 15 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/Douglas MacMillan ---------------------------------- Douglas MacMillan Vice President (On behalf of the Registrant and as the Registrant's Principal Financial Officer) Date: August 12, 1997 - 15 - EX-11 2 STATEMENT OF COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 CAMBREX CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (in thousands)
Three months ended Six months ended June 30, June 30, 1997 1996 1997 1996 ------- ------- ------- ------- Income applicable to common shares: Primary earnings ................................................ $ 8,852 $ 7,528 $16,300 $13,725 ======= ======= ======= ======= Fully diluted earnings .......................................... $ 8,852 $ 7,528 $16,300 $13,725 ======= ======= ======= ======= Weighted average number of common shares and common share equivalents outstanding during the period*: Common Stock ................................................ 11,752 11,600 11,745 11,541 Stock Options ............................................... 265 260 261 300 ------- ------- ------- ------- Shares outstanding - primary .................................... 12,017 11,860 12,006 11,841 Additional stock options .................................... 20 25 21 36 ------- ------- ------- ------- Shares outstanding - fully diluted .............................. 12,037 11,885 12,027 11,877 ======= ======= ======= =======
*Share and per share data reflect adjustments for a three-for-two stock split in the form of a 50% stock dividend paid in July, 1996. - 16 - EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1997 JUN-30-1997 7,186 0 53,722 1,072 67,452 139,494 329,147 120,439 393,139 61,599 62,865 1,279 0 0 224,828 393,139 189,120 190,613 132,804 132,804 0 0 2,303 23,970 7,670 16,300 0 0 0 16,300 1.36 1.36
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