10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended March 31, 2013

OR

o 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 incorporation or organization)	(I.R.S. Employer 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 12 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 o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o.   No x.

As of April 30, 2013, there were 30,031,706 shares outstanding of the registrant’s Common Stock, $.10 par value.

CAMBREX CORPORATION AND SUBSIDIARIES

Table of Contents

			Page No.
Part I	Financial Information
	Item 1.	Financial Statements.
		Consolidated Balance Sheets	3
		Consolidated Income Statements	4
		Consolidated Statements of Comprehensive Income	5
		Consolidated Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7 - 19
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	20- 23
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	24
	Item 4.	Controls and Procedures.	24
Part II	Other Information
	Item 1.	Legal Proceedings.	25
	Item 1A.	Risk Factors.	25
	Item 6.	Exhibits.	25
Signatures			26

Forward-Looking Statements

This document contains and incorporates by reference forward-looking statements including statements regarding expected performance, especially the Company’s estimate relating to the amount and timing of required capital expenditures under its Phase 3 supply agreement signed during 2012, the Company’s belief that cash flows from operations, along with funds available from the revolving line of credit, will be adequate to meet the operational and debt servicing needs of the Company, as well as other statements relating to expectations with respect to sales, research and development expenditures, earnings per share, capital expenditures, the outcome of pending litigation (including environmental proceedings and remediation investigations) and related estimates of potential liability, acquisitions, divestitures, collaborations or other expansion opportunities.  These statements may be identified by the fact that they use words such as “may,” “will,” “could,” “should,” “would,”  “expect,” “anticipate,” “intend,” “estimate,” “believe” or similar expressions.  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.  The factors described in Item 1A of Part I contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2012, captioned “Risk Factors,” or otherwise described in the Company’s filings with the Securities and Exchange Commission, as well as any cautionary language in the Company’s Annual Report on Form 10-K for the period ended December 31, 2012, provide examples of such risks and uncertainties that may cause the Company’s actual results to differ materially from the expectations the Company describes in its forward-looking statements, including, but not limited to, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and regulations (particularly environmental issues), tax rates, interest rates, technology, manufacturing and legal issues, including the outcome of outstanding litigation disclosed in the Company’s public filings, changes in foreign exchange rates, uncollectible receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, and the Company’s ability to receive regulatory approvals for its products, as well as risks relating to a Phase 3 supply agreement signed during 2012 including that the Company will expend significant resources to expand its manufacturing facilities without any assurance that the new agreement will generate any revenue beyond that would be earned under termination provisions within the agreement, that the customer’s product candidate will be successful in Phase 3 trials or obtain the necessary regulatory approvals to commercialize the product candidate, that the customer’s Phase 3 program will not be terminated early, that anticipated quantities will not be meaningfully reduced, that the planned Phase 3 and pre-launch activities will proceed on the timeline anticipated, if at all, that the Company’s expansion will proceed on the anticipated timeline without disruption to existing customers or its new customer and without disruption to the Company’s and its customers’ ability to meet key product delivery milestones.

The forward-looking statements are based on the beliefs and assumptions of Company management and the information available to Company management as of the date of this report.  The Company cautions investors not to place significant reliance on expectations regarding future results, levels of activity, performance, achievements or other forward-looking statements.  The information contained in this Quarterly Report on Form 10-Q is provided by the Company as of the date hereof, and, unless required by law, the Company does not undertake and specifically disclaims any obligation to update these forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of new information, future events or otherwise.

2

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

 (in thousands, except share data)

	March 31,			December 31,
	2013			2012
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	31,877		$	23,551
Trade receivables, net		41,070			43,094
Inventories, net		74,066			71,221
Prepaid expenses and other current assets		8,727			6,104
Total current assets		155,740			143,970
Property, plant and equipment, net		155,735			151,815
Goodwill		36,426			37,312
Intangible assets, net		3,910			4,091
Investments in and advances to partially-owned affiliates		15,241			15,094
Deferred income taxes		37,588			39,262
Other non-current assets		5,878			2,924
Total assets	$	410,518		$	394,468
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	25,725		$	27,612
Deferred revenue		12,055			11,570
Accrued expenses and other current liabilities		39,414			43,844
Total current liabilities		77,194			83,026
Long-term debt		73,000			64,000
Deferred income taxes		19,838			18,577
Accrued pension benefits		54,630			55,373
Other non-current liabilities		14,129			10,195
Total liabilities		238,791			231,171
Stockholders' equity:
Common stock, $.10 par value; authorized 100,000,000, issued 31,816,829 and 31,704,230 shares at respective dates		3,181			3,169
Additional paid-in capital		105,023			104,173
Retained earnings		116,431			105,263
Treasury stock, at cost, 1,790,873 and 1,795,082 shares at respective dates		(15,269	)		(15,217	)
Accumulated other comprehensive loss		(37,639	)		(34,091	)
Total stockholders' equity		171,727			163,297
Total liabilities and stockholders' equity	$	410,518		$	394,468

See accompanying notes to unaudited consolidated financial statements.

3

CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Income Statements

 (unaudited – in thousands, except per share data)

	Three months ended
	March 31,
	2013			2012
Gross sales	$	74,581		$	70,559
Commissions, allowances and rebates		163			535
Net sales		74,418			70,024
Other		467			204
Net revenues		74,885			70,228
Cost of goods sold		50,136			47,800
Gross profit		24,749			22,428
Operating expenses:
Selling, general and administrative expenses		11,104			9,960
Research and development expenses		2,194			2,358
Total operating expenses		13,298			12,318
Gain on sale of asset		4,680			-
Operating profit		16,131			10,110
Other expenses/(income):
Interest expense, net		495			651
Other (income)/expenses, net		(32	)		8
Equity in losses of partially-owned affiliates		481			208
Income before income taxes		15,187			9,243
Provision for income taxes		3,762			2,205
Income from continuing operations		11,425			7,038
Loss from discontinued operations, net of tax		(257	)		-
Net income	$	11,168		$	7,038
Basic earnings/(loss) per share of common stock:
Income from continuing operations	$	0.38		$	0.24
Loss from discontinued operations, net of tax	$	(0.01	)	$	-
Net income	$	0.37		$	0.24
Diluted earnings/(loss) per share of common stock:
Income from continuing operations	$	0.37		$	0.24
Loss from discontinued operations, net of tax	$	(0.01	)	$	-
Net income	$	0.36		$	0.24
Weighted average shares outstanding:
Basic		29,970			29,602
Effect of dilutive stock based compensation		818			284
Diluted		30,788			29,886

See accompanying notes to unaudited consolidated financial statements.

4

CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(unaudited – in thousands)

	Three months ended
	March 31,
	2013			2012
Net income	$	11,168		$	7,038
Other comprehensive income:
Foreign currency translation adjustments		(3,836	)		5,973
Foreign currency forward contracts, net of tax of $0 and $73 at respective dates		-			(165	)
Interest rate swap agreement, net of tax of $31 and $0 at respective dates		56			(380	)
Pension plan amortization of net actuarial loss and prior service cost, net of tax of $116 and $13 at respective dates		232			299
Comprehensive income	$	7,620		$	12,765

See accompanying notes to unaudited consolidated financial statements.

5

CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

 (unaudited – in thousands)

	Three months ended
	March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	11,168		$	7,038
Adjustments to reconcile net income to cash flows:
Depreciation and amortization		5,333			5,486
Gain on sale of assets		(4,603	)		-
Increase in inventory reserve		1,284			1,219
Stock based compensation included in net income		493			357
Deferred income tax provision		1,918			(95	)
Equity in losses of partially-owned affiliates		481			208
Other		266			252
Changes in assets and liabilities:
Trade receivables		1,547			(1,991	)
Inventories		(5,181	)		(4,886	)
Prepaid expenses and other current assets		(2,142	)		625
Accounts payable and other current liabilities		(2,052	)		(1,416	)
Deferred revenue		485			416
Other non-current assets and liabilities		4,696			(1,367	)
Discontinued operations:
Net cash used in discontinued operations		(45	)		(1,080	)
Net cash provided by operating activities		13,648			4,766
Cash flows from investing activities:
Capital expenditures		(15,577	)		(2,616	)
Proceeds from sale of assets		1,909			-
Advances to partially-owned affiliates		(441	)		-
Net cash used in investing activities		(14,109	)		(2,616	)
Cash flows from financing activities:
Long-term debt activity:
Borrowings		12,500			-
Repayments		(3,500	)		(14,000	)
Proceeds from stock options exercised		619			-
Other		(302	)		64
Net cash provided by/(used in) financing activities		9,317			(13,936	)
Effect of exchange rate changes on cash and cash equivalents		(530	)		642
Net increase/(decrease) in cash and cash equivalents		8,326			(11,144	)
Cash and cash equivalents at beginning of period		23,551			31,921
Cash and cash equivalents at end of period	$	31,877		$	20,777

See accompanying notes to unaudited consolidated financial statements.

6

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(1) Basis of Presentation

Unless otherwise indicated by the context, "Cambrex" or the "Company" means Cambrex Corporation and subsidiaries.

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company.  In the opinion of management, the financial statements include all adjustments, which are of a normal and recurring nature, except as otherwise described herein, and are necessary for a fair statement of financial position and results of operations in conformity with U.S. generally accepted accounting principles (“GAAP”).  These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2012.

The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results expected for the full year.

For all periods presented, discontinued operations primarily relate to expenses for environmental remediation at sites of divested businesses.

(2)  Impact of Recently Issued Accounting Pronouncements

Comprehensive Income

In February 2012, the FASB issued “Comprehensive Income:  Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“AOCI”)” which improves the reporting of reclassifications out of AOCI.  The amendment requires an entity to report the effect of significant reclassifications out of AOCI on the respective line items in net income.  For other amounts not required to be reclassified to net income, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about these amounts. This amendment became effective January 1, 2013 and the effect of adopting this updated guidance did not have an impact on the Company’s financial position or result of operations.

(3)  Net Inventories

Inventories are determined on a first-in, first-out basis and stated at the lower of cost or market.

Net inventories at March 31, 2013 and December 31, 2012 consist of the following:

	March 31,		December 31,
	2013		2012
Finished goods	$	27,660	$	30,262
Work in process		28,406		23,533
Raw materials		12,940		12,352
Supplies		5,060		5,074
Total	$	74,066	$	71,221

7

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(4)  Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2013, is as follows:

Balance as of December 31, 2012	$	37,312
Translation effect		(886	)
Balance as of March 31, 2013	$	36,426

Acquired intangible assets, which are amortized, consist of the following:

		As of March 31, 2013
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	3,894	$	(584	)	$	3,310
Customer-related intangibles	10 - 15 years		755		(155	)		600
		$	4,649	$	(739	)	$	3,910

		As of December 31, 2012
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	4,011	$	(552	)	$	3,459
Customer-related intangibles	10 - 15 years		778		(146	)		632
		$	4,789	$	(698	)	$	4,091

The change in the gross carrying amount is primarily due to the impact of foreign currency translation.

Amortization expense was $64 and $63 for the three months ended March 31, 2013 and 2012, respectively.

Amortization expense related to current intangible assets is expected to be approximately $250 for 2013 and for each of the next four years.

(5)  Investments in and Advances to Partially-Owned Affiliates

Investments in and advances to partially-owned affiliates consist primarily of the Company’s equity interest in Zenara Pharma (“Zenara”).  The Company recorded a loss of $438 and $485 for the three months ended March 31, 2013 and 2012, respectively, related to Zenara.  These amounts include amortization expense of $238 and $256, for the three months ended March 31, 2013 and 2012, respectively. In the first three months of 2013, the Company advanced $300 to Zenara.

8

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(5)  Investments in and Advances to Partially-Owned Affiliates (continued)

Investments in and advances to partially-owned affiliates also includes a loss of $43 and income of $277 for the three months ended March 31, 2013 and 2012, respectively, related to an investment in a European joint venture.  In the first three months of 2013, the Company advanced $141 to the European joint venture.

(6)  Income Taxes

The provision for income taxes for the three months ended March 31, 2013 totaled $3,762 and resulted in an effective tax rate of 24.8%.  For the three months ended March 31, 2013 the effective tax rate includes a benefit of approximately $1,300 due to changes in tax laws and expense of approximately $1,500 related to the sale of an office building.

In 2009, a subsidiary of the Company was examined by a European tax authority, which challenged the business purpose of the deductibility of certain intercompany transactions from 2003 and issued two formal assessments against the subsidiary.  In 2010, the Company filed appeals to litigate the matter.  The first court date related to this matter was held in 2011, after which the court issued its ruling in favor of the Company.  The tax authorities appealed this ruling and the appeals court also ruled in the Company’s favor in 2012, however this ruling only applies to the smaller of the two assessments.   The first court date for the larger of the two assessments was held in September 2012, and the Company has not yet received the court’s ruling.  For the three months ended March 31, 2013, the Company decreased its reserve for unrecognized tax benefits for this matter by $139, including $177 of foreign currency translation. The Company still believes this dispute to be in the early stages of the judicial process since any ruling reached by any of the courts may be subject to further appeals, and as such the final date of resolution of this matter is uncertain at this time.  However, within the next twelve months it is possible that factors such as new developments, settlements or judgments may require the Company to increase its reserve for unrecognized tax benefits by up to approximately $8,000 or decrease its reserve by approximately $6,000, including penalties and interest.  If the court rules against the Company in subsequent court proceedings, a payment for a substantial portion of the judgment, including any penalties and interest, will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself.

(7)  Derivatives and Hedging Activities

The Company operates internationally and is exposed to fluctuations in foreign exchange rates and interest rates in the normal course of business.  The Company, from time to time, uses hedging instruments to reduce exposure to market risks resulting from fluctuations in interest rates and foreign exchange rates.

All financial instruments involve market and credit risks.  The Company is exposed to credit losses in the event of non-performance by the counterparties to the contracts.  While there can be no assurance, the Company does not anticipate non-performance by these counterparties.

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures, as deemed appropriate.  This hedging strategy mitigates some of the impact of short-term foreign exchange rate movements on the Company’s local operating results primarily in Sweden and Italy.  The Company’s primary market risk relates to exposures to foreign currency exchange rate fluctuations on transactions entered into by these international operations that are denominated primarily in U.S. dollars, Swedish Krona and Euros.

9

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(7)  Derivatives and Hedging Activities (continued)

The Company’s foreign currency forward contracts substantially offset gains and losses on the transactions being hedged.  The Company’s foreign currency forward contracts generally have varying maturities with none exceeding twelve months.

In the past, all foreign currency forward contracts had been designated as cash flow hedges and, accordingly, changes in the fair value of these derivatives were not included in earnings but were included in AOCI.  Changes in the fair value of the derivative instruments reported in AOCI were recorded into earnings as a component of product revenue or expense, as applicable, when the forecasted transaction occurred.  The ineffective portion of all hedges was recognized in current-period earnings and was immaterial to the Company's financial results.

There were no foreign currency forward contracts outstanding at March 31, 2013 and December 31, 2012.

Interest Rate Swap

The Company entered into an interest rate swap in March 2012 to reduce the impact of changes in interest rates on its floating rate debt.  The swap is a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without the exchange of the underlying notional debt amount.

The swap contract outstanding at March 31, 2013 has been designated as a cash flow hedge and, accordingly, changes in the fair value of this derivative are not recorded in earnings but are recorded each period in AOCI and reclassified into earnings as interest expense in the same period during which the hedged transaction affects earnings.  The ineffective portion of all hedges is recognized in earnings and has been immaterial to the Company's financial results.

As of March 31, 2013, the interest rate swap had a notional value of $60,000, at a fixed rate of 0.92%, maturing in September 2015.  The fair value of this swap is based on quoted market prices and was in a loss position of $843 and $930 at March 31, 2013 and December 31, 2012, respectively.  This loss is reflected in the Company’s balance sheet under the caption “Accrued expenses and other current liabilities.”

Assuming current market conditions continue, a loss of $405 is expected to be reclassed out of AOCI into earnings within the next twelve months.

(8)  Fair Value Measurements

U.S. GAAP establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.  A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

10

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(8)  Fair Value Measurements (continued)

The following tables provide the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2013 and December 31, 2012:

				Fair Value Measurements at March 31, 2013 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(843	)	$	-	$	(843	)	$	-
Total	$	(843	)	$	-	$	(843	)	$	-
				Fair Value Measurements at December 31, 2012 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(930	)	$	-	$	(930	)	$	-
Total	$	(930	)	$	-	$	(930	)	$	-

The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at current market interest rates using observable benchmarks for the LIBOR forward rates at the end of the period.

As of March 31, 2013, there had not been any significant impact to the fair value of the Company’s derivative liabilities due to its own credit risk.

The Company’s financial instruments also include cash and cash equivalents, accounts receivables, accounts payables and accrued liabilities.  The carrying amount of these instruments approximates fair value because of their short-term nature.  The carrying amount of the Company’s long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.

11

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(9)  Accumulated Other Comprehensive Income/(Loss)

The following table provides the changes in AOCI by component, net of tax, for the three months ended March 31, 2013:

	Foreign Currency Translation Adjustments			Interest Rate Swap Agreement			Pension Plans			Total
Balance as of December 31, 2012	$	5,177		$	(600	)	$	(38,668	)	$	(34,091	)
Other comprehensive loss before reclassifications		(3,836	)		(13	)		-			(3,849	)
Amounts reclassified from accumulated other comprehensive loss		-			69			232			301
Net current-period other comprehensive (loss)/income		(3,836	)		56			232			(3,548	)
Balance as of March 31, 2013	$	1,341		$	(544	)	$	(38,436	)	$	(37,639	)

The following table provides the reclassifications out of AOCI by component for the three months ended March 31, 2013:

Details about AOCI Components	Amount Reclassified from AOCI			Affected Line Item in the Consolidated Income Statement
Losses on cash flow hedge:
Interest rate swap	$	(107	)	Interest expense, net
	$	38		Tax benefit
	$	(69	)	Net of tax
Amortization of defined benefit pension items:
Actuarial losses	$	(292	)	Selling, general and administrative expenses
Actuarial losses		(28	)	Cost of goods sold
Prior service costs		(28	)	Selling, general and administrative expenses
		(348	)	Total before tax
		116		Tax benefit
	$	(232	)	Net of tax
Total reclassification for the period	$	(301	)

(10)  Stock Based Compensation

The Company recognizes compensation costs for stock options awarded to employees based on their grant-date fair value.  The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model.  The weighted-average fair value per share for stock options granted to employees during the three months ended March 31, 2013 was $6.55.  No stock options were granted during the three months ended March 31, 2012.

12

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(10)  Stock Based Compensation (continued)

For the three months ended March 31, 2013 and 2012, the Company recorded $408 and $316, respectively, in selling, general and administrative expenses for stock options.  As of March 31, 2013, the total compensation cost related to unvested stock options not yet recognized was $3,972.  The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 2.5 years.

For the three months ended March 31, 2013 and 2012, the Company recorded $22 and $41, respectively, in selling, general and administrative expenses for restricted stock awards.  As of March 31, 2013 the total compensation cost related to unvested restricted stock not yet recognized was $5.  The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 0.2 years.

The Company grants equity-settled performance shares (“PSs”) to certain executives.  PS awards provide the recipient the right to receive a certain number of shares of the Company’s common stock in the future, which depends on the Company’s level of achievement of revenue and EBITDA growth as compared to the revenue and EBITDA growth of the members of a specified peer group of companies over a three-year period.  The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company.  For the three months ended March 31, 2013 and 2012, the Company recorded $63 and $0, respectively, in selling, general and administrative expense related to these PS awards.

The Company grants cash-settled performance share units (“PSUs”) to certain executives.  PSU awards provide the recipient the right to receive the cash value of a certain number of shares of the Company’s common stock in the future, which depends on the Company’s level of achievement of revenue and EBITDA growth as compared to the revenue and EBITDA growth of the members of a specified peer group of companies over a three-year period.  The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company.  For the three months ended March 31, 2013 and 2012, the Company recorded expense of $541 and a benefit of $24, respectively, in selling, general and administrative expenses for PSU awards.  The increase is primarily the result of the Company’s recent performance compared to a peer group and the Company’s higher share price.

The following table is a summary of the Company’s stock options:

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2012		2,264,399		$	7.02
Granted		10,000		$	11.44
Exercised		(114,599	)	$	5.40
Forfeited or expired		(2,950	)	$	10.42
Outstanding at March 31, 2013		2,156,850		$	7.13
Exercisable at March 31, 2013		1,143,074		$	6.16

The aggregate intrinsic value for all stock options exercised for the three months ended March 31, 2013 and 2012 was $766 and $33, respectively.  The aggregate intrinsic values for all stock options outstanding and exercisable as of March 31, 2013 were $12,308 and $7,672, respectively.

13

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(10)  Stock Based Compensation (continued)

The following table is a summary of the Company’s nonvested stock options and restricted stock:

	Nonvested Stock Options					Nonvested Restricted Stock
	Number of Shares			Weighted- Average Grant-Date Fair Value		Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2012		1,029,776		$	4.62		31,145		$	5.76
Granted		10,000		$	6.55		-		$	-
Vested during period		(25,000	)	$	2.69		(29,450	)	$	5.54
Forfeited		(1,000	)	$	3.39		-		$	-
Nonvested at March 31, 2013		1,013,776		$	4.69		1,695		$	9.64

(11)  Retirement Plans

Domestic Pension Plan

The components of net periodic benefit cost for the Company’s domestic plan (which was frozen in 2007) for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Interest cost	$	764		$	821
Expected return on plan assets		(956	)		(918	)
Recognized actuarial loss		234			216
Amortization of prior service cost		-			15
Net periodic benefit cost	$	42		$	134

The Company’s Supplemental Executive Retirement Plan (which was frozen in 2007) is non-qualified and unfunded.  Net periodic benefit costs for the three months ended March 31, 2013 and 2012 were $54 and $55, respectively.

14

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(11)  Retirement Plans (continued)

International Pension Plan

The components of net periodic benefit cost for the Company’s international plan for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Service cost	$	188		$	165
Interest cost		166			200
Recognized actuarial loss		72			50
Amortization of prior service benefit		(2	)		(2	)
Net periodic benefit cost	$	424		$	413

(12)  Contingencies

The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities.  The Company continually assesses all known facts and circumstances as they pertain to all legal and environmental matters and evaluates the need for reserves and disclosures as deemed necessary based on these facts and circumstances.  These matters, either individually or in the aggregate, could result in actual costs that are significantly higher than the Company’s current assessment and could have a material adverse effect on the Company's operating results and cash flows in future reporting periods.  While these matters, specifically environmental matters, could have a material adverse effect on the Company’s financial condition, based upon past experience, it is likely that payments significantly in excess of current reserves, if required, would be made over an extended number of years.

Environmental

In connection with laws and regulations pertaining to the protection of the environment, the Company and its subsidiaries are a party to several environmental proceedings and remediation investigations and cleanups and, along with other companies, have been named a potentially responsible party (“PRP”) for certain waste disposal sites ("Superfund sites").  Additionally, the Company has retained the liability for certain environmental proceedings associated with discontinued operations.

It is the Company’s policy to record appropriate liabilities for environmental matters where remedial efforts are probable and the costs can be reasonably estimated.  Such liabilities are based on the Company’s best estimate of the undiscounted future costs required to complete the remedial work.  Each of these matters is subject to various uncertainties, and it is possible that some of these matters will be decided unfavorably against the Company.  The resolution of such matters often spans several years and frequently involves regulatory oversight or adjudication.  Additionally, many remediation requirements are fluid and are likely to be affected by future technological, site and regulatory developments.  Consequently, the ultimate liability with respect to such matters, as well as the timing of cash disbursements cannot be determined with certainty.

15

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(12)  Contingencies (continued)

In matters where the Company has been able to reasonably estimate its liability, the Company has accrued for the estimated costs associated with the study and remediation of applicable sites.  These reserves were $5,365 and $5,096 at March 31, 2013 and December 31, 2012, respectively.  The increase in the reserve includes adjustments to reserves of $396 partially offset by payments of $121 and the impact of currency translation of $6.  The reserves are adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information become available.  Based upon available information and analysis, the Company's current reserve represents management's best estimate of the probable and estimable costs associated with environmental proceedings including amounts for current investigation fees where full investigation and remediation costs may not be estimable at the reporting date.  Given the uncertainties regarding the outcome of investigative and study activities, the status of laws, regulations, enforcement, policies, the impact of other PRPs, technology and information related to individual sites, the Company does not believe it is possible to currently develop an estimate of the range of reasonably possible environmental loss in excess of its reserves.

CasChem

As a result of the sale of the Bayonne, New Jersey facility, the Company became obligated to investigate site conditions and conduct required remediation under the New Jersey Industrial Site Recovery Act.  The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the New Jersey Department of Environmental Protection’s (“NJDEP”) private oversight program.  The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs.  As of March 31, 2013, the Company’s reserve was $171 to cover costs associated with current investigative work.

Cosan

In response to the NJDEP, the Company completed its initial investigation and submitted the results of the investigation and a proposed remediation plan to the NJDEP for its Cosan Clifton, New Jersey site.  The NJDEP subsequently rejected the remediation plan and requested additional investigative work at the site and that work is on-going.  The reserve was $740 at March 31, 2013, which was based on the initial remedial action plan.  The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the NJDEP private oversight program.  The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs.  It is expected that the estimated remediation costs will be revised in the second quarter of 2013.  Although the costs of the revised remediation plan cannot yet be estimated, it is expected that this reserve will increase next quarter.

Additionally, the Company has a reserve of $833 for the Cosan Carlstadt, New Jersey site based on the investigations completed to date and the proposed remediation plan submitted to the NJDEP for its approval. The NJDEP has subsequently required the Company to perform additional investigative work prior to approval of the remediation plan.  The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the NJDEP private oversight program.  The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs.

16

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(12)  Contingencies (continued)

Berry’s Creek

The Company received a notice from the United States Environmental Protection Agency (“USEPA”) that two former subsidiaries of the Company are considered PRPs at the Berry’s Creek Study Area in New Jersey.  These subsidiaries are among many other PRPs that were listed in the notice.  Pursuant to the notice, the PRPs have been asked to perform a remedial investigation and feasibility study of the Berry’s Creek site. The Company has joined the group of PRPs and entered into an Administrative Settlement Agreement (“Agreement”) and Order on Consent with the USEPA agreeing to jointly conduct or fund an appropriate remedial investigation and feasibility study of the Berry’s Creek site with the other PRPs in the Agreement. The PRPs have engaged consultants to perform the work specified in the Agreement and develop a method to allocate related costs among the PRPs.  As of March 31, 2013, the Company’s reserve was $210 to cover the current phase of investigation based on a tentative agreement on the allocation of the site investigation costs among the PRPs.  The investigation is ongoing and at this time it is too early to predict the extent of additional liabilities.

Maybrook Site

The Company’s Nepera, Inc. subsidiary (“Nepera”) is named a PRP of the Maybrook site in Hamptonburgh, New York by the USEPA in connection with the discharge, under appropriate permits, of wastewater at that site prior to Cambrex's acquisition of Nepera in 1986.  The USEPA also issued the Company a Notice of Potential Liability and the Company signed a consent decree to complete the Record of Decision (“ROD”) and has provided the USEPA with appropriate financial assurance to guarantee the obligation under the consent decree.  The PRPs began to implement a soil remedial action at this site in the third quarter of 2011 which was completed in 2012 pending approval by the USEPA.  The PRPs will continue implementing the ground water remedial actions at the site in 2013. As of March 31, 2013, the Company’s reserve was $362 to cover remaining costs associated with the soil remediation and on-going ground water remediation including long-term monitoring.

Harriman Site

Nepera, together with Pfizer as successor to Warner Lambert, is also named a responsible party for its former Harriman, New York production facility by the New York State Department of Environmental Conservation (“NYSDEC”).  A final ROD describing the Harriman site remediation responsibilities for Pfizer and the Company was issued in 1997 (the "1997 ROD") and implemented under a federal Consent Decree with NYSDEC.  Site clean-up work under the 1997 ROD is on-going and is being jointly performed by Pfizer and the Company, with NYSDEC oversight.  ELT Harriman, LLC ("ELT"), the current owner of the Harriman site, conducted other investigation and remediation activities under a separate NYSDEC directive.

In December 2010, the NYSDEC notified the Company, Pfizer, ELT and former owner Vertellus Specialties Holdings that NYSDEC intended to implement a site-wide re-characterization of the Harriman site under a single, new Administrative Consent Order.  This development may lead to increased liabilities for the Company, in which case, the Company intends to pursue available indemnities against other parties under contract and common law.  There are on-going discussions between the NYSDEC and all parties to try to resolve this matter.  To date, negotiations have been unsuccessful in fully resolving disputes as to which parties may be responsible for different remediation activities at the Harriman site.  As of March 31, 2013, the reserve recorded by the Company for the Harriman site was $300, which represents the Company’s best estimate to complete the 1997 ROD.

17

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(12)  Contingencies (continued)

Scientific Chemical Processing (“SCP”) Superfund Site

Nepera was named a PRP of the SCP Superfund site, located in Carlstadt, New Jersey, in the early 1980’s along with approximately 130 other PRPs.  The site is a former waste processing facility that accepted various waste for recovery and disposal including processing wastewater from Nepera.  The PRPs are in the process of implementing a final remedy at the site.  The SCP Superfund site has also been identified as a PRP in the Berry’s Creek Superfund site (see previous discussion). For over a decade, the remediation has been funded by de minimus settlements and by the insurers of the SCP Superfund site’s owners and operators.  However, due to an unexpected increase in remediation costs at the site and costs to contribute to the Berry’s Creek investigation, the PRP group has approved the assessment of an additional cash contribution by the PRP group.  While the Company continues to dispute the methodology used by the PRP group to arrive at its allocation for the cash contribution, the Company has paid the initial funding requests.  The Company does not currently maintain a reserve for the SCP Superfund site.  Costs associated with remediation at the site, and SCP’s current allocation of Berry’s Creek investigative costs are each expected to be communicated to the Company by SCP in 2013.

Newark Bay Complex Litigation

CasChem and Cosan have been named as two of several hundred third-party defendants in a third-party complaint filed in February 2009, by Maxus Energy Corporation (“Maxus”) and Tierra Solutions, Inc. (“Tierra”).  The original plaintiffs include the NJDEP, the Commissioner of the NJDEP and the Administrator of the New Jersey Spill Compensation Fund, which originally filed suit in 2005 against Maxus, Tierra and other defendants seeking recovery of cleanup and removal costs for alleged discharges of dioxin and other hazardous substances into the Passaic River, Newark Bay, Hackensack River, Arthur Kill, Kill Van Kull and adjacent waters (the “Newark Bay Complex”).  Maxus and Tierra are now seeking contributions from third-party defendants, including subsidiaries of the Company, for cleanup and removal costs for which each may be held liable in the primary lawsuit. Maxus and Tierra also seek recovery for cleanup and removal costs that each has incurred or will incur relating to the Newark Bay Complex.  The Company has entered into a tentative settlement agreement with the original plaintiffs, which, if approved by the Court, would dismiss the lawsuit and provide the Company with some protections from certain claims.  The settlement would resolve any claims that the original plaintiffs have against the Company and would require Maxus and Tierra to re-file their claims against the Company in federal court.  Final approval of the settlement is not expected from the Court until September 2013.  The Company reserved $324 in the first quarter of 2013 for this matter.

The Company is involved in other environmental matters where the range of liability is not reasonably estimable at this time and it is not foreseeable when information will become available to provide a basis for adjusting or recording a reserve, should a reserve ultimately be required.

Litigation and Other Matters

Lorazepam and Clorazepate

In 1998, the Company and a subsidiary were named as defendants along with Mylan Laboratories, Inc. (“Mylan”) and Gyma Laboratories, Inc. (“Gyma”) in a proceeding instituted by the Federal Trade Commission in the United States District Court for the District of Columbia (the “District Court”).  Suits were also commenced by several State Attorneys General and class action complaints by private plaintiffs in various state courts.  The suits alleged violations of the Federal Trade Commission Act arising from exclusive license agreements between the Company and Mylan covering two active pharmaceutical ingredients (Lorazepam and Clorazepate).

18

CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share data)

(Unaudited)

(12)  Contingencies (continued)

All cases have been resolved except for one brought by four health care insurers. In the remaining case, the District Court entered judgment after trial in 2008 against Mylan, Gyma and Cambrex in the total amount of $19,200, payable jointly and severally, and also a punitive damage award against each defendant in the amount of $16,709.  In addition, at the time, the District Court ruled that the defendants were subject to a total of approximately $7,500 in prejudgment interest.  The case is currently pending before the District Court following a January 2011 remand by the Court of Appeals where briefing related to whether the court has jurisdiction over certain self-funded customer plaintiffs has been completed and the parties are currently waiting for a ruling by the court.

In 2003, Cambrex paid $12,415 to Mylan in exchange for a release and full indemnity against future costs or liabilities in related litigation brought by the purchasers of Lorazepam and Clorazepate, as well as potential future claims related to the ongoing matter.  Mylan has submitted a surety bond underwritten by a third-party insurance company in the amount of $66,632.  In the event of a final settlement or final judgment, Cambrex expects any payment required by the Company to be made by Mylan under the indemnity described above.

(13)  Gain on Sale of Asset

For the three months ended March 31, 2013, the Company recorded a gain on the sale of an office building of approximately $4,700.  The carrying value of the building was not material.  The Company received cash of approximately $1,900 and a secured note of approximately $3,200 as of March 31, 2013.

19

CAMBREX CORPORATION AND SUBSIDIARIES

(in thousands, except share data)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The following significant events occurred during the first quarter of 2013:

· Sales increased 5.7% on a reported basis compared to the first quarter of 2012.  Sales, excluding currency impact, increased 4.7%.

· Gross margins increased on a reported basis, and excluding the impact of currency, to 33.2% from 31.8% in the first quarter of 2012.

· Debt, net of cash, increased $674.

Results of Operations

Comparison of First Quarter 2013 versus First Quarter 2012

Gross sales in the first quarter of 2013 of $74,581 were $4,022 or 5.7% higher than the first quarter of 2012. Excluding a 1.0% favorable impact of foreign exchange compared to the first quarter of 2012, sales increased 4.7% as a result of higher volumes sold (+3.9%) and higher pricing (+0.8%).  The increase was primarily due to higher custom development sales, where the Company provides products and services related to its customers’ clinical phase projects, and certain branded active pharmaceutical ingredients.

The following table reflects sales by geographic area for the first quarters of 2013 and 2012:

	First quarter
	2013		2012
Europe	$	45,207	$	37,541
North America		25,564		29,948
Asia		2,510		1,818
Other		1,300		1,252
Total gross sales	$	74,581	$	70,559

Gross margins in the first quarter of 2013 increased to 33.2% from 31.8% in the first quarter of 2012.  Gross margins were positively impacted by higher sales and production volumes (+4.9%) and higher pricing (+0.5%) partially offset by unfavorable product mix (-3.7%).  Gross profit in the first quarter of 2013 was $24,749 compared to $22,428 in the same period last year.  Foreign currency did not have an impact on gross margins in the first quarter of 2013.

Selling, general and administrative (“SG&A”) expenses of $11,104 in the first quarter of 2013 increased compared to $9,960 in the first quarter of 2012.  The increase is mainly due to increased personnel costs including approximately $600 related to performance units’ expense as a result of a higher Cambrex share price and additional shares expected to vest due to recent favorable performance against its peers.  SG&A as a percentage of gross sales, was 14.9% and 14.1% in the first quarters of 2013 and 2012, respectively.

20

Results of Operations (continued)

Comparison of First Quarter 2013 versus First Quarter 2012 (continued)

Research and development (“R&D”) expenses of $2,194 were 2.9% of gross sales in first quarter of 2013, compared to $2,358 or 3.3% of gross sales in the first quarter of 2012. The decrease is primarily related to increased absorption of R&D expenses into inventory and cost of goods sold as a result of higher revenue-generating custom development activity.

During the first quarter of 2013, the Company recorded a gain on the sale of an office building of approximately $4,700.  The carrying value of the building was not material.  The Company received cash of approximately $1,900 and a secured note of approximately $3,200 as of March 31, 2013.

Operating profit in the first quarter of 2013 was $16,131 compared to $10,110 in the first quarter of 2012.  As described above, the increase in operating profit is primarily due to a benefit related to a gain on sale of an office building and higher gross profit partially offset by higher SG&A expenses.

Net interest expense was $495 in the first quarter of 2013 compared to $651 in the first quarter of 2012. The decrease in net interest expense is attributed to lower average debt partially offset by higher interest rates as well as higher capitalized interest as a result of multiple large capital projects that began in late 2012.  The average interest rate on debt was 2.5% in the first quarter of 2013 versus 2.0% in the first quarter of 2012 primarily due to a higher proportion of fixed rate debt to floating rate date pursuant to an interest rate swap agreement in place since March 2012.

Equity in losses of partially-owned affiliates of $481 and $208 in the first quarters of 2013 and 2012, respectively, primarily represents the Company’s portion of Zenara’s loss.  These amounts include amortization expense of $238 and $256, for the first quarters of 2013 and 2012, respectively.  The first quarters of 2013 and 2012 also include expense of $43 and income of $277, respectively, related to an investment in a European joint venture.

The tax provision from continuing operations in the first quarter of 2013 was $3,762 compared to $2,205 in the first quarter of 2012.  The effective tax rate in the first quarter of 2013 was 24.8% compared to 23.9% in the first quarter of 2012.  The effective tax rate in first quarter of 2013 includes a benefit of approximately $1,300 due to changes in tax laws and expense of approximately $1,500 related to the sale of an office building.

In 2009, a subsidiary of the Company was examined by a European tax authority, which challenged the business purpose of the deductibility of certain intercompany transactions from 2003 and issued two formal assessments against the subsidiary.  In 2010, the Company filed appeals to litigate the matter.  The first court date related to this matter was held in 2011, after which the court issued its ruling in favor of the Company.  The tax authorities appealed this ruling and the appeals court also ruled in the Company’s favor in 2012, however this ruling only applies to the smaller of the two assessments.   The first court date for the larger of the two assessments was held in September 2012, and the Company has not yet received the court’s ruling.  For the first quarter of 2013, the Company decreased its reserve for unrecognized tax benefits for this matter by $139, including $177 of foreign currency translation.  The Company still believes this dispute to be in the early stages of the judicial process since any ruling reached by any of the courts may be subject to further appeals, and as such the final date of resolution of this matter is uncertain at this time.  However, within the next twelve months it is possible that factors such as new developments, settlements or judgments may require the Company to increase its reserve for unrecognized tax benefits by up to approximately $8,000 or decrease its reserve by approximately $6,000, including penalties and interest.  If the court rules against the Company in subsequent court proceedings, a payment for a substantial portion of the judgment, including any penalties and interest, will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself.

21

Results of Operations (continued)

Comparison of First Quarter 2013 versus First Quarter 2012 (continued)

Income from continuing operations in the first quarter of 2013 was $11,425, or $0.37 per diluted share, versus $7,038, or $0.24 per diluted share in the same period a year ago.

Liquidity and Capital Resources

During the first three months of 2013, cash provided by operations was $13,648 versus $4,766 in the same period a year ago.  This increase was due to an upfront payment related to an amendment to an existing supply agreement, improved accounts receivable collections and higher net income, excluding non-cash items.

Cash flows in the first three months of 2013 related to capital expenditures were $15,577 compared to $2,616 in 2012.  The majority of the funds in 2013 were used for expansion of the Company’s large scale manufacturing capacity to support expected growth.  Funds used in the first three months of 2012 were mainly used for capital improvements to existing facilities.

Cash flows provided by financing activities in the first three months of 2013 were $9,317 compared to $13,936 used in the same period a year ago.  Borrowings under the Company’s credit facility in 2013 were primarily used to fund the Company’s domestic capital project to expand manufacturing capacity.  The cash outflows in 2012 were used to pay down the Company’s debt.

As a result of the items described above and the impact of foreign currency, cash and cash equivalents increased $8,326 in the first three months of 2013.

The Company believes that cash flows from operations, along with funds available from the revolving line of credit, will be adequate to meet the operational and debt servicing needs of the Company for the foreseeable future, but no assurances can be given that this will continue to be the case.

The Company’s forecasted cash flow from future operations may be adversely affected by various factors including, but not limited to, declines in customer demand, increased competition, the deterioration in general economic and business conditions, increased environmental remediation, returns on assets within the Company’s domestic pension plans that are significantly below expected performance, as well as other factors. See the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the period ended December 31, 2012 for further explanation of factors that may negatively impact the Company’s cash flows.

Any change in the current status of these factors could adversely impact the Company’s ability to fund operating cash flow requirements.

22

Impact of Recent Accounting Pronouncements

Comprehensive Income

In February 2012, the FASB issued “Comprehensive Income:  Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“AOCI”)” which improves the reporting of reclassifications out of AOCI.  The amendment requires an entity to report the effect of significant reclassifications out of AOCI on the respective line items in net income.  For other amounts not required to be reclassified to net income, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about these amounts. This amendment became effective January 1, 2013 and the effect of adopting this updated guidance did not have an impact on the Company’s financial position or result of operations.

23

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no significant change in the Company’s exposure to market risk during the first three months of 2013.  For a discussion of the Company’s exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2012.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter covered by this report that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

24

PART II - OTHER INFORMATION

CAMBREX CORPORATION AND SUBSIDIARIES

Item 1. Legal Proceedings

See the discussion under Part I, Item 1, Note 12 to the Company’s Consolidated Financial Statements.

Item 1A. Risk Factors

There have been no material changes to the Company’s risk factors and uncertainties during the first three months of 2013.  For a discussion of the Risk Factors, refer to Part I, Item 1A, “Risk Factors,” contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2012.

Item 6. Exhibits

Exhibit 10.1* 2009 Long-Term Incentive Plan (as amended and restated as of April 25, 2013)

Exhibit 10.3* Form of Non-Employee Directors Stock Option Agreement

Exhibit 31.1* Section 302 Certification Statement of the Chief Executive Officer.

Exhibit 31.2* Section 302 Certification Statement of the Chief Financial Officer.

Exhibit 32** Section 906 Certification Statements of the Chief Executive Officer Chief Financial Officer.

Exhibit 101.INS*** XBRL Instance Document

Exhibit 101.SCH*** XBRL Taxonomy Extension Schema

Exhibit 101.CAL*** XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.DEF*** XBRL Taxonomy Extension Definition Linkbase

Exhibit 101.LAB*** XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE*** XBRL Taxonomy Extension Presentation Linkbase

*  Filed herewith

**  Furnished herewith

*** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise not subject to liability.

25

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/Gregory P. Sargen
	Gregory P. Sargen
	Executive Vice President and
	Chief Financial Officer
	(On behalf of the Registrant and as the Registrant's Principal Financial Officer)

Dated:  May 3, 2013

26

EX-10.1

Exhibit 10.1

CAMBREX CORPORATION

2009 LONG TERM INCENTIVE PLAN

(as amended and restated, effective April 25, 2013)

1.             Purpose.  The purpose of the Cambrex Corporation 2009 Long Term Incentive Plan is to further align the interests of eligible participants with those of the Company’s shareholders by providing long-term incentive compensation opportunities tied to the performance of the Company and its Common Stock.  The Plan is intended to advance the interests of the Company and increase shareholder value by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company’s business is largely dependent.

2.             Definitions.  Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:

“Award” means an award of a Stock Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit, Performance Award or Stock Award granted under the Plan.

“Award Agreement” means an agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant.

“Board” means the Board of Directors of the Company.

“Change in Control” shall have the meaning set forth in Section 12.2 hereof.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer the Plan.

“Common Stock” means the Company’s common stock, par value $0.01 per share.

“Company” means Cambrex Corporation, a Delaware corporation or any successor thereto.

“Covered Transaction” means any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Committee), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.

“Date of Grant” means the date on which an Award under the Plan is granted by the Committee or such later date as the Committee may specify to be the effective date of an Award.

“Effective Date” shall have the meaning set forth in Section 15.3 hereof.

“Eligible Person” means any person who is an employee, director, consultant or other personal service provider of the Company or any of its Subsidiaries.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, with respect to a share of Common Stock as of a given date, the average of the highest and lowest reported sales prices as reported on the New York Stock Exchange or other principal exchange on which the Common Stock is then listed or if such exchange was closed on such day or, if it was open but the Common Stock was not traded on such day, then on the next preceding day that the Common Stock was traded on such exchange, as reported by such responsible reporting service as the Committee may select.  If the Common Stock is not listed on any such exchange, “Fair Market Value” shall be such value as determined by the Board in its discretion and, to the extent necessary, shall be determined in a manner consistent with Section 409A of the Code and the regulations thereunder.

“Incentive Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of Section 422 of the Code and the regulations thereunder.

“Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

“Participant” means any Eligible Person who holds an outstanding Award under the Plan.

“Performance Award” means an Award that is denominated by a cash amount (but excluding, for the avoidance of doubt, an Award the value of which is determined based on the value of Common Stock but payable in cash) to an Eligible Person under Section 10 hereof and payable based upon the attainment of pre-established business and/or individual Performance Goals over a specified performance period.

“Performance Goals” shall have the meaning set forth in Section 10.3 hereof.

“Plan” means the Cambrex Corporation 2009 Long Term Incentive Plan as set forth herein, effective and as may be amended from time to time as provided in Section 15 hereof.

“Policy” shall have the meaning set forth in Section 13.3(b) of the Plan.

“Restricted Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that are issued subject to such vesting and transfer restrictions as the Committee shall determine, and such other conditions, as are set forth in the Plan and the applicable Award Agreement.

“Restricted Stock Unit” means a contractual right granted to an Eligible Person under Section 9 hereof representing notional unit interests equal in value to a share of Common Stock to be paid or distributed at such times, and subject to such conditions, as set forth in the Plan and the applicable Award Agreement.

“Service” means a Participant’s employment with the Company or any Subsidiary or a Participant’s service as a director, consultant or other service provider with the Company, as applicable.

“Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 11 hereof that are issued free of transfer restrictions and forfeiture conditions.

“Stock Appreciation Right” means a contractual right granted to an Eligible Person under Section 7 hereof entitling such Eligible Person to receive a payment, representing the excess of the Fair Market Value of a share of Common Stock over the base price per share of the right, at such time, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

“Stock Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

“Subsidiary” means an entity (whether or not a corporation) that is wholly or majority owned or controlled, directly or indirectly, by the Company or any other affiliate of the Company that is so designated, from time to time, by the Committee, during the period of such affiliated status; provided, however, that with respect to Incentive Stock Options, the term “Subsidiary” shall include only an entity that qualifies under Section 424(f) of the Code as a “subsidiary corporation” with respect to the Company.

3.             Administration.

3.1          Committee Members.  The Plan shall be administered by a Committee comprised of no fewer than two members of the Board who are appointed by the Board to administer the Plan.  To the extent deemed necessary by the Board, each Committee member shall satisfy the requirements for (i) an “independent director” under rules adopted by the New York Stock Exchange or other principal exchange on which the Common Stock is then listed, (ii) a “nonemployee director” for purposes of such Rule 16b−3 under the Exchange Act and (iii) an “outside director” under Section 162(m) of the Code.  Notwithstanding the foregoing, the mere fact that a Committee member shall fail to qualify under any of the foregoing requirements shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.  No member of the Committee shall be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Award thereunder.

3.2          Committee Authority.  It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions.  The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine the Eligible Persons to whom Awards shall be granted under the Plan, (ii) prescribe the restrictions, terms and conditions of all Awards, (iii) interpret the Plan and terms of the Awards, (iv) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and interpret, amend or revoke any such rules, (v) make all determinations with respect to a Participant’s Service and the termination of such Service for purposes of any Award, (vi) correct any technical defect(s) or technical omission(s) or reconcile any technical inconsistency(ies) in the Plan or any Award thereunder and (vii) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Eligible Person who are foreign nationals or employed outside of the United States.   The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly situated.  The Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company or such attorneys, consultants, accountants or other advisors as it may select.  All interpretations, determinations, and actions by the Committee shall be final, conclusive, and binding upon all parties.

3.3          Delegation of Authority.  The Committee shall have the right, from time to time, to delegate to one or more officers of the Company the authority of the Committee to grant and determine the terms and conditions of Awards granted under the Plan, subject to the requirements of Section 157(c) of the Delaware General Corporation Law (or any successor provision) and such other limitations as the Committee shall determine.  In no event shall any such delegation of authority be permitted with respect to Awards granted to any member of the Board or to any Eligible Person who is subject to Rule 16b−3 under the Exchange Act is a covered employee under Section 162(m) of the Code.  The Committee shall also be permitted to delegate, to any appropriate officer or employee of the Company, responsibility for performing certain ministerial functions under the Plan.  In the event that the Committee’s authority is delegated to officers or employees in accordance with the foregoing, all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to such officer or employee for such purpose.  Any action undertaken in accordance with the Committee’s delegation of authority hereunder shall have the same force and effect as if such action was undertaken directly by the Committee and shall be deemed for all purposes of the Plan to have been taken by the Committee.

4.             Shares Subject to the Plan.

4.1           Number of Shares Reserved.  The total number of shares of Common Stock that are reserved for issuance under the Plan shall be 3,500,000.  Notwithstanding the foregoing, no more than 1,050,000 shares of Common Stock shall be issued pursuant to Restricted Stock Awards, Restricted Stock Unit Awards and Stock Awards, in the aggregate.  Up to the total number of shares available for awards to employee Participants may be issued in satisfaction of Incentive Stock Options, but nothing in this Section 4.1 will be construed as requiring that any, or any fixed number of, Incentive Stock Options be awarded under the Plan. Any shares of Common Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares.

4.2           Share Replenishment.  To the extent that an Award is canceled, expired, forfeited, surrendered, settled in cash, settled by delivery of fewer shares than the number underlying the Award or otherwise terminated without delivery of the shares to the Participant, the shares of Common Stock retained by or returned to the Company will not be deemed to have been delivered under the Plan, and will be available for future Awards under the Plan. Shares that are (i) withheld from an Award or separately surrendered by the Participant in payment of the exercise or purchase price or taxes relating to such an Award or (ii) not issued or delivered as a result of the net settlement of an outstanding Stock Option or Stock Appreciation Right shall be deemed to constitute delivered shares and will not be available for future Awards under the Plan.

4.3           Adjustments.   In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718, the Administrator will make appropriate adjustments to the maximum number of shares of Common Stock specified in the first and second sentences of Section 4.1 that may be delivered under the Plan and the per-individual annual limits set forth in Sections 6.1, 7.1, 8.1, 9.1 and 11.1, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of the Plan or Awards affected by such change.  The Committee may also make adjustments of the type described in the immediately preceding sentence to take into account distributions to stockholders other than those provided for in the immediately preceding sentence, or any other event, if the Committee determines that adjustments are appropriate to avoid distortion in the operation of the Plan. Notwithstanding the foregoing, (a) any such adjustments shall be made with due regard for the requirements of, or the requirements for exemption from, Section 409A of the Code and (b) in the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be made in a manner consistent with the requirements of Section 424(a) of the Code, in either case, as determined by the Committee.

4.4           Effect of Covered Transaction.  Except as otherwise provided in an Award Agreement, the following provisions will apply in the event of a Covered Transaction:

(a) Assumption or Substitution.  If the Covered Transaction is one in which there is an acquiring or surviving entity, the Committee shall have the right, but not the obligation, to provide (i) for the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

(b) Cash-Out of Awards.   Subject to Section 4.4(e) below, the Committee shall have the right, but not the obligation, to cancel, as of immediately prior to the Covered Transaction, any Award granted on or following the Effective Date, and to pay to each affected Participant in connection with the cancellation of such Participant’s Awards, such amount, if any, that the Committee, in its sole discretion and in good faith, determines to be the equivalent value of such Award (e.g., in the case of a Stock Option or Stock Appreciation Right, the amount of the “in-the-money” value), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Committee determines (a “cash-out”).

(c) Acceleration of Certain Awards.  Subject to Section 4.4(e) below, the Committee shall have the right, but not the obligation, to provide that any Award requiring exercise will become exercisable, in full or in part and/or that the delivery of any shares of Common Stock remaining deliverable under any outstanding Award of Restricted Stock Units or Performance Awards to the extent payable in Common Stock will be accelerated in full or in part, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction.

(d) Termination of Awards Upon Consummation of Covered Transaction.  Except as the Committee may otherwise determine in any case, each Award will automatically terminate (and in the case of any unvested portion of an outstanding Restricted Stock Award, will automatically be forfeited) upon consummation of the Covered Transaction, other than Awards assumed pursuant to Section 4.4(a) above.

(e) Additional Limitations.  Any share of Common Stock and any cash or other property delivered pursuant to Section 4.4(b) or Section 4.4(c) above with respect to an Award may, in the discretion of the Committee, contain such restrictions, if any, as the Committee deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  For purposes of the immediately preceding sentence, a cash-out under Section 4.4(b) above or acceleration under Section 4.4(c) above will not, in and of itself, be treated as the lapsing (or satisfaction) of a performance or other vesting condition.  In the case of any shares of Common Stock issued under a Restricted Stock Award that do not vest and are not forfeited in connection with the Covered Transaction, the Committee may require that any amounts delivered, exchanged or otherwise paid in respect of such Common Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Committee deems appropriate to carry out the intent of the Plan.

5.             Eligibility and Awards.

5.1           Designation of Participants.  Any Eligible Person may be selected by the Committee to receive an Award and become a Participant under the Plan.  The Committee has the authority, in its discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of Awards to be granted, the number of shares of Common Stock or units subject to Awards to be granted and the terms and conditions of such Awards consistent with the terms of the Plan.  In selecting Eligible Persons to be Participants, and in determining the type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant or appropriate.

5.2           Determination of Awards.  The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance with its authority under Section 3.2 hereof.  An Award may consist of one type of right or benefit hereunder or of two or more such rights or benefits granted in tandem.

5.3            Award Agreements.  Each Award granted to an Eligible Person under the Plan may be represented in an Award Agreement as more fully described in Section 14.1.  The terms of all Awards under the Plan shall be as determined by the Committee.

 5.4           No Fractional Shares.  No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional shares of Common Stock or whether such fractional shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

6.              Stock Options.

6.1           Grant of Stock Options.  A Stock Option may be granted to any Eligible Person selected by the Committee, except that an Incentive Stock Option may only be granted to an Eligible Person satisfying the conditions of Section 6.7(a) hereof.   Each Stock Option shall be designated on the Date of Grant, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified Stock Option.  The maximum number of shares of Common Stock that may be subject to Stock Options granted to any Participant during any calendar year shall be limited to 1,000,000 shares of Common Stock (subject to adjustment as provided in Section 4.3 hereof). All Stock Options granted under the Plan are intended to comply with the requirements for exemption under Section 409A of the Code.

6.2           Exercise Price.  The exercise price per share of a Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Date of Grant.  The Committee may in its discretion specify an exercise price per share that is higher than the Fair Market Value of a share of Common Stock on the Date of Grant.

6.3           Vesting of Stock Options.  The Committee shall, in its discretion, prescribe the time or times at which or the conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable.  The requirements for vesting and exercisability of a Stock Option may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified Performance Goal(s) or on such other terms and conditions as approved by the Committee in its discretion.  The Committee may accelerate the vesting or exercisability of any Stock Option in its discretion, without regard to the tax consequences of such acceleration.  If the vesting requirements of a Stock Option are not satisfied, the Award shall be forfeited.

6.4           Term of Stock Options.  The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested Stock Option may be exercised; provided, however, that the maximum term of a Stock Option shall be ten (10) years from the Date of Grant.  The Stock Option of a Participant whose Service with the Company or one of its Subsidiaries is terminated for any reason shall terminate on the earlier of (i) unless otherwise provided in an Award Agreement, and except for termination for Cause (as described in Section 13.2 hereof), the date that is ninety (90) days following termination of Service of the Participant and (ii) the maximum term of the Stock Option.

6.5           Stock Option Exercise; Tax Withholding.  Subject to such terms and conditions as specified in an Award Agreement, a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, together with payment of the aggregate exercise price and applicable withholding tax.  Payment of the exercise price shall be made in the manner set forth in the Award Agreement, and unless otherwise provided by the Committee at the time of payment: (i) in cash or by cash equivalent acceptable to the Committee, (ii) in shares of Common Stock valued at the Fair Market Value of such shares on the date of exercise, (iii) through an open-market, broker-assisted sales transaction pursuant to which the Company is promptly delivered the amount of proceeds necessary to satisfy the exercise price, (iv) by a combination of the methods described above or (v) by such other method as may be approved by the Committee and set forth in the Award Agreement.  In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable under such of the methods described above for the payment of the exercise price as may be approved by the Committee and set forth in the Award Agreement.

6.6           Limited Transferability of Nonqualified Stock Options.  All Stock Options shall be nontransferable except (i) upon the Participant’s death as provided in Section 14.2 hereof and (ii) subject to prior approval by the Committee, in the case of Nonqualified Stock Options only, for the gratuitous transfer of all or part of the Stock Option to a Participant’s “family member” (as defined for purposes of the Form S−8 registration statement under the Securities Act of 1933), as may be approved by the Committee in its discretion at the time of proposed transfer.  The transfer of a Nonqualified Stock Option may be subject to such terms and conditions as the Committee may in its discretion impose from time to time.  Subsequent transfers of a Nonqualified Stock Option shall be prohibited.

6.7           Additional Rules for Incentive Stock Options.

(a)           Eligibility.  An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee for purposes of Treasury Regulation §1.421−7(h) with respect to the Company or any Subsidiary that qualifies as a “subsidiary corporation” with respect to the Company for purposes of Section 424(f) of the Code.

(b)           Other Terms and Conditions; Nontransferability.  Any Incentive Stock Option granted hereunder shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as are deemed necessary or desirable by the Committee, which terms, together with the terms of the Plan, shall be intended and interpreted to cause such Incentive Stock Option to qualify as an “incentive stock option” under Section 422 of the Code.  An Award Agreement for an Incentive Stock Option may provide that such Stock Option shall be treated as a Nonqualified Stock Option to the extent that certain requirements applicable to “incentive stock options” under the Code shall not be satisfied.  An Incentive Stock Option shall by its terms be nontransferable other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a Participant only by such Participant.

(c)           Disqualifying Dispositions.  If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within two years following the Date of Grant or one year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require.

6.8           Repricing Prohibited.  Subject to the anti-dilution adjustment provisions contained in Section 4.3 hereof, without the prior approval of the Company’s shareholders,  neither the Committee nor the Board shall cause the cancellation, substitution or amendment of a Stock Option that would have the effect of reducing the exercise price of such a Stock Option previously granted under the Plan or otherwise approve any modification to such a Stock Option, that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the New York Stock Exchange or other principal exchange on which the Common Stock is then listed.

7.              Stock Appreciation Rights.

7.1           Grant of Stock Appreciation Rights.  Stock Appreciation Rights may be granted to any Eligible Person selected by the Committee.  Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by the Participant or that provides for the automatic payment of the right upon a specified date or event.  The maximum number of shares of Common Stock that may be subject to Stock Appreciation Rights granted to any Participant during any calendar year shall be limited to 1,000,000 shares of Common Stock (subject to adjustment as provided in Section 4.3 hereof).  Stock Appreciation Rights shall be non-transferable, except as provided in Section 14.2 hereof.  All Stock Appreciation Rights granted under the Plan are intended to comply with the requirements for exemption under Section 409A of the Code.

7.2           Stand-Alone Stock Appreciation Rights.  A Stock Appreciation Right may be granted without any related Stock Option.  The Committee shall in its discretion provide in an Award Agreement the time or times at which or the conditions upon which, a Stock Appreciation Right or portion thereof shall become vested and/or exercisable.  The requirements for vesting and exercisability of a Stock Appreciation Right may be based on the continued Service of a Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified Performance Goal(s) or on such other terms and conditions as approved by the Committee in its discretion.  If the vesting requirements of a Stock Appreciation Right are not satisfied, the Award shall be forfeited.  The Committee may accelerate the vesting or exercisability of any Stock Appreciation Right upon a Change in Control or upon termination of Service under certain circumstances as set forth in the Award Agreement or otherwise.  A Stock Appreciation Right will be exercisable or payable at such time or times as determined by the Committee; provided, that the maximum term of a Stock Appreciation Right shall be ten (10) years from the Date of Grant.  The base price of a Stock Appreciation Right granted without any related Stock Option shall be determined by the Committee in its discretion; provided, however, that the base price per share of any such freestanding Stock Appreciation Right shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Date of Grant.

7.3           Tandem Stock Option/Stock Appreciation Rights.  A Stock Appreciation Right may be granted in tandem with a Stock Option, either on the Date of Grant or at any time thereafter during the term of the Stock Option.  A tandem Stock Option/Stock Appreciation Right will entitle the holder to elect, as to all or any portion of the number of shares subject to the Award, to exercise either the Stock Option or the Stock Appreciation Right, resulting in the reduction of the corresponding number of shares subject to the right so exercised as well as the tandem right not so exercised.  A Stock Appreciation Right granted in tandem with a Stock Option hereunder shall have a base price per share equal to the per share exercise price of the Stock Option, will be vested and exercisable at the same time or times that a related Stock Option is vested and exercisable, and will expire no later than the time at which the related Stock Option expires.

7.4           Payment of Stock Appreciation Rights.  A Stock Appreciation Right will entitle the holder, upon exercise or other payment of the Stock Appreciation Right, as applicable, to receive an amount determined by multiplying: (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise or payment of the Stock Appreciation Right over the base price of such Stock Appreciation Right, by (ii) the number of shares as to which such Stock Appreciation Right is exercised or paid.  Payment of the amount determined under the foregoing may be made, as approved by the Committee and set forth in the Award Agreement, in shares of Common Stock valued at their Fair Market Value on the date of exercise or payment, in cash or in a combination of shares of Common Stock and cash, subject to applicable tax withholding requirements.

7.5           Repricing Prohibited.  Subject to the anti−dilution adjustment provisions contained in Section 4.3 hereof, without the prior approval of the Company’s shareholders, neither the Committee nor the Board shall cause the cancellation, substitution or amendment of a Stock Appreciation Right that would have the effect of reducing the base price of such a Stock Appreciation Right previously granted under the Plan or otherwise approve any modification to such Stock Appreciation Right that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the New York Stock Exchange or other principal exchange on which the Common Stock is then listed.

8.              Restricted Stock Awards.

8.1           Grant of Restricted Stock Awards.  A Restricted Stock Award may be granted to any Eligible Person selected by the Committee.  The maximum number of shares of Common Stock that may be subject to Restricted Stock Awards granted to a Participant during any one calendar year shall be limited to 600,000 shares of Common Stock (subject to adjustment as provided in Section 4.3 hereof).  The Committee may require such payment, if any, for a Restricted Stock Award as it deems appropriate or may grant a Restricted Stock Award without requiring payment, subject in each case to the requirements of applicable Delaware law.

8.2           Vesting Requirements.  The restrictions imposed on shares granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement.  The requirements for vesting of a Restricted Stock Award may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified Performance Goal(s) designed to meet the requirements for exemption under Section 162(m) of the Code or on such other terms and conditions as approved by the Committee in its discretion.  The Committee may accelerate the vesting of a Restricted Stock Award upon a Change in Control or upon termination of Service under certain circumstances, as set forth in the Award Agreement.  If the vesting requirements of a Restricted Stock Award shall not be satisfied, the Award shall be forfeited and the shares of Stock subject to the Award shall be returned to the Company.

8.3           Transfer Restrictions.  Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge or charge until all applicable restrictions are removed or have expired, except as provided in Section 14.2 hereof.  Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Stock Award being forfeited and returned to the Company.  The Committee may require in an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that certificates representing the shares granted or sold under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired.

8.4           Rights as Shareholder.  Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant shall have all rights of a shareholder with respect to the shares granted to the Participant under a Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.  The Committee may provide in an Award Agreement for the payment of cash dividends and distributions to the Participant at such times as paid to shareholders generally or at the times of vesting of the Restricted Stock Award. Any Common Stock received as a stock dividend or distribution will be subject to the same restrictions as the underlying Restricted Stock Award.

8.5           Section 83(b) Election.  If a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall comply with the applicable requirements for such an election prescribed by the regulations under Section 83 of the Code.  The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under Section 83(b) of the Code.

9.              Restricted Stock Units.

9.1           Grant of Restricted Stock Units.  A Restricted Stock Unit may be granted to any Eligible Person selected by the Committee.   The maximum number of shares of Common Stock that may underlie Restricted Stock Units granted to a Participant during any one calendar year shall be limited to 600,000 shares (subject to adjustment as provided in Section 4.3 hereof).  Restricted Stock Units shall be subject to such restrictions and conditions as the Committee shall determine.  Restricted Stock Units shall be non-transferable except as provided in Section 14.2 hereof.

9.2           Vesting of Restricted Stock Units.  On the Date of Grant, the Committee shall, in its discretion, determine any vesting requirements with respect to Restricted Stock Units, which shall be set forth in the Award Agreement.  The requirements for vesting of a Restricted Stock Unit may be based on the continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods), on the attainment of a specified Performance Goal(s) designed to meet the requirements for exemption under Section 162(m) of the Code or on such other terms and conditions as approved by the Committee in its discretion.  The Committee may accelerate the vesting of a Restricted Stock Unit upon a Change in Control or upon termination of Service under certain circumstances, as set forth in the Award Agreement.

9.3           Payment of Restricted Stock Units.  Restricted Stock Units shall become payable to a Participant at the time or times determined by the Committee and set forth in the Award Agreement, which may be upon or following the vesting of the Award.  Payment of a Restricted Stock Unit may be made, as approved by the Committee and set forth in the Award Agreement, in cash or in shares of Common Stock or in a combination thereof, subject to applicable tax withholding requirements.  Any cash payment of a Restricted Stock Unit shall be made based upon the Fair Market Value of the Common Stock, determined on such date or over such time period as determined by the Committee.

9.4           Dividend Equivalent Rights. Restricted Stock Units may be granted together with a Dividend Equivalent Right with respect to the shares of Common Stock subject to the Award, which may be accumulated and may be deemed reinvested in additional Restricted Stock Units or may be accumulated in cash, as determined by the Committee in its discretion, and will be paid at the time the underlying Restricted Stock Unit is payable. Dividend Equivalent Rights shall be subject to forfeiture under the same conditions as apply to the underlying Restricted Stock Units.

9.5           No Rights as Shareholder.  The Participant shall not have any rights as a shareholder with respect to the shares subject to an Restricted Stock Unit until such time as shares of Common Stock are delivered to the Participant pursuant to the terms of the Award Agreement.

10.           Performance Awards.

10.1         Grant of Performance Awards.  A Performance Award may be granted to any Eligible Person selected by the Committee.  Payment amounts may be based on the attainment of specified levels of attainment with respect to the Performance Goals, including, if applicable, specified threshold, target and maximum performance levels.  The requirements for vesting maybe also based upon the continued Service of the Participant with the Company or a Subsidiary during the respective performance period and on such other conditions as determined by the Committee and set forth in an Award Agreement.  The maximum amount of cash compensation that may be paid to a Participant during any one calendar year under Performance Awards shall be $3,000,000.  Performance Awards shall be non-transferable, except as provided in Section 14.2 hereof.

10.2         Award Agreements.  Each Performance Award shall be evidenced by an Award Agreement that shall specify the performance period and such other terms and conditions as the Committee, in its discretion, shall determine.  The performance period of a Performance Award shall be greater than one (1) year and shall in no event exceed five (5) years.The Committee may accelerate the vesting of a Performance Award upon a Change in Control or termination of Service under certain circumstances, as set forth in the Award Agreement.

10.3         Performance Goals.  For purposes of Performance Awards, as well as for other performance-based Awards under the Plan, the Committee may set Performance Goals based upon the achievement of Company-wide, departmental or individual goals or any other basis determined by the Committee in its discretion.  For purposes hereof, “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Committee, in its discretion, to be applicable to a Participant with respect to an Award.  As determined by the Committee, in the case of any Performance Award or other performance-based Award intended to qualify for the performance-based compensation exception under Section 162(m) of the Code and the regulations thereunder, the Performance Goals applicable to an Award shall provide for a targeted level or levels of achievement using one or more of the following measures (measured either absolutely or by reference to an index or indices or the performance of one or more companies and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): (1) net earnings; (2) earnings per share; (3) net debt; (4) sales growth; (5) revenue;  (6) net income; (7) operating profit (including, but not limited to, net operating profit); (8) return measures (including, but not limited to, return on assets, capital, equity or sales); (9) cash flow (including, but not limited to, operating cash flow and free cash flow); (10) earnings (including, but not limited to, earnings before or after taxes, interest, depreciation and/or amortization); (11) share price (including, but not limited to growth measures and total shareholder return); (12) expense targets; (13) customer satisfaction; (14) market share; (15) economic value added; (16) working capital; (17) the formation of joint ventures or the completion of other corporate transactions; (18) new product introduction and/or revenue related to new product introduction or (19) any combination of or a specified increase in any of the foregoing.  Notwithstanding the achievement of any Performance Goal, the Committee, in its discretion, may, to the extent provided in an Award Agreement, reduce or eliminate some or all of the amount payable to any Participant with respect toa Performance Award or other such performance-based Award under the Plan that would otherwise be payable in respect of the Performance Award, based on such factors as the Committee may deem relevant, but the Committee may not increase any such amount above the amount established in accordance with the relevant Award Agreement or the Plan.  The Committee may exercise the discretion provided for by the foregoing sentence in a non-uniform manner among Participants.

10.4         Section 162(m) Compliance.  For purposes of qualifying grants of Performance Awards as well as other Awards under the Plan intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall make such determinations with respect to a Performance Award or such other Award as required by Section 162(m) of the Code within ninety (90) days (the “Establishment Deadline”) after the beginning of the performance period (or such other time period as is required under Section 162(m) of the Code).  As and to the extent required by Section 162(m) of the Code, the terms of a Performance Award or other Award under the Plan that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code must state, in terms of an objective formula or standard, the method of computing the amount of compensation payable under such Award, and must preclude discretion to increase the amount of compensation payable under the terms of such Award (but may allow the Committee discretion to decrease the amount of compensation payable), but may be subject to Performance Adjustments, if so determined by the Committee.  For purposes of the immediately preceding sentence, “Performance Adjustment” means the establishment of a provision requiring, upon the future occurrence of one or more specified Triggering Factors (as defined below), an automatic adjustment in a specified Performance Goal or Goals, or the measurement thereof, that reflects (in a manner and to an extent that are objectively determinable and are irrevocably established not later than the Establishment Deadline) the impact of such Triggering Fact or Factors.  For purposes of the Plan, “Triggering Factor” means an objectively defined event or occasion for adjustment – for example, but not by way of limitation, a change in accounting standards or an acquisition or disposition affecting earnings by more than a specified percentage, or foreign exchange fluctuations – the occurrence of which does not depend on the unilaterally exercised discretion of the Company or the Committee.  It is intended that all Performance Adjustments be consistent with the performance-based compensation provisions of Section 162(m).

10.5         Payment of Performance Awards.  Payment of Performance Awards or other such performance-based Awards will generally be made as soon as practicable after the expiration of the applicable performance period if the applicable Performance Goals have been achieved or partially achieved, as determined by the Committee in its discretion, by the Company or the Participant during the relevant performance period and in the case of Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, will take such steps as it determines to be sufficient to satisfy the related certification requirement under Section 162(m); provided, however, that a deferred payment date may be established by the Committee and set forth in the Award Agreement.  Payment of the Performance Awards or other such performance-based Awards may be made in cash or in shares of Common Stock or in a combination thereof, subject to applicable tax withholding requirements.  Any payment of a Performance Award or other such performance-based Awards in Common Stock shall be made based upon the Fair Market Value thereof, determined on such date or over such time period as determined by the Committee.

10.6         Adjustments of Incorrect Determinations.  If at any time after the date on which a Participant has been granted or becomes vested in a Performance Award or other Award under the Plan based upon the achievement of a Performance Goal, the Committee determines that the earlier determination as to the achievement of the Performance Goal was based on incorrect data and that in fact the Performance Goal had not been achieved or had been achieved to a lesser extent than originally determined and a portion of a Performance Award or other such Award would not have been granted, vested or paid given the correct data, then (i) such portion of the Performance Award or other such Award that was granted shall be forfeited and any related shares of Common Stock (or, if such shares were disposed of, the cash equivalent) shall be returned to the Company as provided by the Committee, (ii) such portion of the Performance Award or other such Award that became vested shall be deemed to be not vested and any related shares of Common Stock (or, if such shares were disposed of, the cash equivalent) shall be returned to the Company as provided by the Committee and (iii) such portion of the Performance Award or other such Award paid to the Participant shall be paid by the Participant to the Company upon notice from the Company as provided by the Committee.

11.           Stock Awards.

11.1         Grant of Stock Awards.  A Stock Award may be granted to any Eligible Person selected by the Committee.  A Stock Award may be granted for past Services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other valid purpose as determined by the Committee.  The Committee shall determine the terms and conditions of such Awards, and such Awards may be made without vesting requirements.  In addition, the Committee may, in connection with any Stock Award, require the payment of a specified purchase price.  The maximum number of shares of Common Stock that may be subject to Stock Awards granted to a Participant during any one calendar year shall be limited to 200,000 shares (subject to adjustment as provided in Section 4.3 hereof).

11.2         Rights as Shareholder.  Subject to the foregoing provisions of this Section 11 and the applicable Award Agreement, upon the issuance of the Common Stock under a Stock Award the Participant shall have all rights of a shareholder with respect to the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.

12.           Change in Control.

12.1         Effect on Grants.  Unless otherwise provided in an Award Agreement with respect to an Award, in the event of a Change in Control, as of the date such Change in Control is effected, (i) any outstanding Stock Options and Stock Appreciation Rights, which are not then vested and exercisable, shall become fully vested and immediately exercisable in their entirety and (ii) any outstanding Restricted Stock Awards, Restricted Stock Units, Stock Awards and Performance Awards, which are not then vested or payable, shall become fully vested and payable to the Participant. In the case of a Covered Transaction that is also a Change in Control, any action taken by the Committee pursuant to Section 4.4 will be given effect only after taking into account this Section 12.1.  The Committee shall also have the authority, in its discretion, to provide in an Award Agreement for the effect of a Change in Control on an Award, including the application of any of the foregoing upon the occurrence of another event in connection with a Change in Control (such as termination of employment) or any other consequence that the Committee determines is consistent with the terms of the Plan.

12.2         Definition of Change in Control.For purposes of the Plan, unless otherwise defined in an Award Agreement, “Change in Control” shall mean the occurrence of (i) a change in ownership of the Company under paragraph (a) below, (ii) a change in effective control of the Company under paragraph (b) below or (iii) a change in the ownership of a substantial portion of the assets of the Company under paragraph (c) below.

(a) Change in the Ownership of the Company.  A change in the ownership of the Company shall occur on the date that any one person or more than one person acting as a group (as defined in paragraph (d)), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company.  However, if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company (or to cause a change in the effective control of the corporation (within the meaning of paragraph (b) below). An increase in the percentage of stock owned by any one person or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only when there is a transfer of stock of the Company and stock in the Company remains outstanding after the transaction.

(b) Change in the Effective Control of the Company.  A change in the effective control of the Company shall occur on the date that either (i) any one person or more than one person acting as a group (within the meaning of Sections 13(d) and 14(d) of the Exchange Act; provided, that in no event shall a person be deemed to be acting as a group if such person would not otherwise be considered to be acting as a group, within the meaning of paragraph (d) hereof), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company; provided, however, that an acquisition of voting stock directly from the Company shall not constitute a change in effective control of the Company; or (b) a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors prior to the date of the appointment or election.

(c) Change in the Ownership of a Substantial Portion of the Company’s Assets.  A change in the ownership of a substantial portion of the Company’s assets shall occur on the date that any one person or more than one person acting as a group (as defined in paragraph (d)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to (i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (iii) a person or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company or (iv) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (d).  For purposes of this paragraph (c), a person's status is determined immediately after the transfer of the assets.

(d) Persons Acting As a Group.  For the purposes of paragraphs (a), (b) and (c), persons will not be considered to be acting as a group solely because they purchase or own assets or stock of the same corporation at the same time or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of assets or stock or similar business transaction with the corporation.  If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of assets or stock or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(e) Interpretation.  Notwithstanding anything to the contrary herein or in any Award Agreement, if Section 409A of the Code applies to an Award, an event that would otherwise qualify as a “Change in Control” as defined herein or in the applicable Award Agreement (and that would affect the timing of payment of any amounts subject to Section 409A of the Code under such Award) shall not be deemed a “Change in Control” for purposes of such Award unless it also qualifies as a “change in control event” as defined in Treasury Regulation Section 1.409A-3(a)(5).

13.           Forfeiture Events.

13.1         General.  The Committee may specify in an Award Agreement at the time of the Award that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.  Such events shall include, but shall not be limited to, termination of Service for Cause, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant or other conduct by the Participant that is detrimental to the business or reputation of the Company.

13.2         Termination for Cause.  Unless otherwise provided by the Committee and set forth in an Award Agreement, if a Participant’s employment with the Company or any Subsidiary shall be terminated for “Cause” (as such term may be defined in the relevant Award Agreement), such Participant’s rights, payments and benefits with respect to an Award shall be subject to cancellation, forfeiture and/or recoupment, as provided in Section 13.3 below.  The Company shall have the power to determine whether the Participant has been terminated for Cause and the date upon which such termination for Cause occurs.  Any such determination shall be final, conclusive and binding upon the Participant.  In addition, if the Company shall reasonably determine that a Participant has committed or may have committed any act which could constitute the basis for a termination of such Participant’s employment for Cause, the Company may suspend the Participant’s rights to exercise any option, receive any payment or vest in any right with respect to any Award pending a determination by the Company of whether an act has been committed which could constitute the basis for a termination for Cause as provided in this Section 13.2.

13.3         Right of Recapture.

(a)  General.  If at any time within one (1) year after the date on which a Participant exercises a Stock Option or Stock Appreciation Right or on which Restricted Stock vests or becomes payable or on which a Performance Award is paid to a Participant, or on which income otherwise is realized by a Participant in connection with an Award, (i) a Participant terminates from Service for Cause or (ii) after termination of Service for any other reason, the Committee determines in its discretion either that, (a) while employed, the Participant had engaged in an act which would have warranted termination from Service for Cause or (b) after termination, the Participant has engaged in conduct that violates any continuing obligation or duty of the Participant in respect of the Company or any Subsidiary, then any gain realized by the Participant from the exercise, vesting, payment or other realization of income by the Participant in connection with an Award, shall be paid by the Participant to the Company upon notice from the Company.  Such gain shall be determined as of the date on which the gain is realized by the Participant, without regard to any subsequent change in the Fair Market Value of a share of Common Stock.  The Company shall have the right to offset such gain against any amounts otherwise owed to the Participant by the Company (whether as wages, vacation pay or pursuant to any benefit plan or other compensatory arrangement).

(b)  Accounting Restatement.  If a Participant receives compensation pursuant to an Award under the Plan (whether a Stock Option, Performance Award or otherwise) based on financial statements that are subsequently required to be restated in a way that would decrease the value of such compensation, the Participant will forfeit and repay to the Company the difference between what the Participant received and what the Participant should have received based on the accounting restatement, in accordance with the Company’s compensation recovery or “clawback” policy, as may be in effect from time to time, which shall be consistent with the provisions of Section 10D of the Exchange Act and the rules, regulations and requirements adopted thereunder by the Securities and Exchange Commission and/or any national securities exchange on which the Company’s equity securities may be listed  (the “Policy”).   By accepting an Award hereunder, the Participant acknowledges and agrees that the Policy shall apply to such Award, and all incentive-based compensation payable pursuant to such Award shall be subject to forfeiture and repayment pursuant to the terms of the Policy.  Although not required to give effect to the provisions of this Section 13.3(b), the Committee may, as it deems appropriate, amend the Plan to reflect the terms of the Policy.

14.           General Provisions.

14.1         Award Agreement.  To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock or Restricted Stock Units subject to the Award, the exercise price, base price or purchase price of the Award, the time or times at which an Award will become vested, exercisable or payable and the term of the Award.  The Award Agreement may also set forth the effect on an Award of a Change in Control or a termination of Service under certain circumstances.  The Award Agreement shall be subject to and incorporate, by reference or otherwise, all of the applicable terms and conditions of the Plan, and may also set forth other terms and conditions applicable to the Award as determined by the Committee consistent with the limitations of the Plan.  The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement.  The Committee need not require the execution of an Award Agreement by a Participant, in which case, acceptance of the Award by the Participant shall constitute agreement by the Participant to the terms, conditions, restrictions and limitations set forth in the Plan and the Award Agreement as well as the administrative guidelines of the Company in effect from time to time.

14.2         No Assignment or Transfer; Beneficiaries.  Except as provided in Section 6.6 hereof, Awards under the Plan shall not be assignable or transferable by the Participant, and shall not be subject in any manner to assignment, alienation, pledge, encumbrance or charge, except for gratuitous transfers of all or part of an Award to the extent permitted by the Committee in its sole discretion.  Notwithstanding the foregoing, in the event of the death of a Participant while employed by the Company or any of its Subsidiaries, except as otherwise provided by the Committee in an Award Agreement, an outstanding Award may be exercised by or shall become payable to the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee or, in the absence of an authorized beneficiary designation, by the a legatee or legatees of such Award under the participant's last will or by such Participant's executors, personal representatives or distributees of such Award in accordance with the Participant’s will or the laws of descent and distribution.  The Committee may provide in the terms of an Award Agreement or in any other manner prescribed by the Committee that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death.

14.3         Deferrals of Payment.  The Committee may in its discretion permit a Participant to defer the receipt of payment of cash or delivery of shares of Common Stock that would otherwise be due to the Participant by virtue of the exercise of a right or the satisfaction of vesting or other conditions with respect to an Award; provided, however, that such discretion shall not apply in the case of a Stock Option or Stock Appreciation Right.  If any such deferral is to be permitted by the Committee, the Committee shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount.

14.4         No Right to Employment or Continued Service.  Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person or any Participant any right to continue in the Service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any of its Subsidiaries to terminate the employment or other service relationship of an Eligible Person or a Participant for any reason at any time.

14.5         Rights as Shareholder.  A Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities.  Except as provided in Section 4.3 hereof, no adjustment or other provision shall be made for dividends or other shareholder rights, except to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights.  The Committee may determine in its discretion the manner of delivery of Common Stock to be issued under the Plan, which may be by delivery of stock certificates, electronic account entry into new or existing accounts or any other means as the Committee, in its discretion, deems appropriate. The Committee may require that the stock certificates be held in escrow by the Company for any shares of Common Stock or cause the shares to be legended in order to comply with the securities laws or other applicable restrictions or should the shares of Common Stock be represented by book or electronic account entry rather than a certificate, the Committee may take such steps to restrict transfer of the shares of Common Stock as the Committee considers necessary or advisable.

14.6         Section 409A Compliance.  To the extent applicable, it is intended that the Plan and all Awards hereunder comply with the requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, and that the Plan and all Award Agreements shall be interpreted and applied by the Committee in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A of the Code.  In the event that any (i) provision of the Plan or an Award Agreement, (ii) Award, payment, transaction or (iii) other action or arrangement contemplated by the provisions of the Plan is determined by the Committee to not comply with the applicable requirements of Section 409A of the Code and the Treasury Regulations and other guidance issued thereunder, the Committee shall have the authority to take such actions and to make such changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements; provided, that no such action shall adversely affect any outstanding Award without the consent of the affected Participant.  No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of Service will be made or provided unless and until such termination is also a “separation from service,” as determined in accordance with Section 409A of the Code. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if a Participant is a “specified employee” as defined in Section 409A of the Code at the time of termination of Service with respect to an Award, then solely to the extent necessary to avoid the imposition of any additional tax under Section 409A of the Code, the commencement of any payments or benefits under the Award shall be deferred until the date that is six months following the Participant’s termination of Service (or such other period as required to comply with Section 409A).  In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

14.7         Securities Law Compliance.  No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met.  As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable action to meet such requirements.  The Committee may impose such conditions on any shares of Common Stock issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares.  The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that the shares of Common Stock are being acquired only for investment purposes and without any current intention to sell or distribute such shares.

14.8         Non-United States Participants and Jurisdictions.  Notwithstanding any provision in the Plan to the contrary, in order to foster and promote achievement of the purposes of the Plan or to comply with provisions of laws in other countries in which the Company operates or has employees, the Committee, in its discretion, shall have the power and authority, to the extent not inconsistent with the intent of the Plan, to (i) determine which Eligible Persons who are foreign nationals or who are employed outside of the United States are eligible to participate in the Plan, (ii) modify the terms and conditions of any Awards made to such Eligible Persons and (iii) establish subplans and modify exercise and payment procedures and other Award terms and procedures to the extent such actions may be necessary or advisable to comply with any tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws.  Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of the Plan, not inconsistent with the intent of the Plan, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose.

14.9         Substitute Awards in Corporate Transactions.  Nothing contained in the Plan shall be construed to limit the right of the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity.  Without limiting the foregoing, the Committee may grant Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such person.  The terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose.

14.10       Tax Withholding.  The Participant shall be responsible for payment of any taxes or similar charges required by law to be paid or withheld from an Award or an amount paid in satisfaction of an Award.  Any required withholdings shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award.  The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.

14.11       Unfunded Plan.  The adoption of the Plan and any reservation of shares of Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement.  Except upon the issuance of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan.  Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations under the Plan.

14.12       Other Compensation and Benefit Plans.  The adoption of the Plan shall not affect any other share incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of share incentive or other compensation or benefit program for employees of the Company or any Subsidiary.  The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled under any other compensation or benefit plan or program of the Company or a Subsidiary, including, without limitation, under any pension or severance benefits plan, except to the extent specifically provided by the terms of any such plan.

14.13       Plan Binding on Transferees.  The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries.

14.14       Severability.  If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

14.15       Governing Law.  The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Delaware, without reference to the principles of conflicts of laws, and to applicable Federal securities laws.

15.           Term; Amendment and Termination; Shareholder Approval.

15.1         Term.  Subject to Section 15.2 hereof, the term of the Plan will be ten (10) years from the date of its original adoption by the Board, as provided in the first sentence of Section 15.3 hereof.

15.2         Amendment and Termination.  The Board may from time to time and in any respect, amend, modify, suspend or terminate the Plan.  Notwithstanding the foregoing, no amendment, modification, suspension or termination of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award.

15.3         Shareholder Approval.  The Plan was originally adopted by the Board, and was approved by the Company’s shareholders at the Company’s annual meeting of shareholders on April 23, 2009 and subsequently amended as of April 28, 2011.  This amendment and restatement of the Plan has been adopted by the Board, and shall become effective subject to, and upon, its approval by the Company’s shareholders on the date of the Company’s 2013 annual meeting of shareholders (the “Effective Date”).  The Board may seek the approval of any amendment, modification, suspension or termination by the Company’s shareholders to the extent it deems necessary or advisable in its discretion for purposes of compliance with Section 162(m) or Section 422 of the Code, the listing requirements of the New York Stock Exchange or other exchange or securities market or for any other purpose.  At the discretion of the Board, for purposes of compliance with Section 162(m) of the Code, the Performance Goals (or other designated performance goals) shall again be subject to approval by the Company's shareholders no later than the first shareholder meeting that occurs in the year following the fifth (5th) anniversary of the Effective Date.

EX-10.3

Exhibit 10.3

CAMBREX CORPORATION

2012 EQUITY INCENTIVE PLAN

FOR NON-EMPLOYEE DIRECTORS

STOCK OPTION AGREEMENT

THIS AGREEMENT (this “Agreement”) made and entered into as of the ___ day of _______, 20__, by and between CAMBREX CORPORATION (the “Corporation”), and «Name» (the “Optionee”), evidences the grant to Optionee on __________ (the “Grant Date”) of an option (the “Stock Option”) to purchase the number of shares of Stock specified below, subject to the terms of this Agreement and the Cambrex Corporation 2012 Equity Incentive Plan for Non-Employee Directors (the “Plan”).

1.         General.  The Stock Option is subject to the terms of the Plan, which are incorporated herein by reference, and to the provisions of this Agreement to the extent not inconsistent with the Plan.  Each capitalized term used in this Agreement and not separately defined herein shall have the meaning ascribed to it in the Plan.

2.         Shares Subject to Stock Option.  The Stock Option, which is a Nonqualified Stock Option, shall be exercisable at a purchase price of _____ per share for up to _______ shares (the “Shares”) of Stock, subject to the terms and conditions of the Plan and this Agreement.

3.         Expiration Date.  If not earlier terminated, the Stock Option shall terminate in all respects, and no attempted exercise as to any shares covered by the Stock Option shall be honored after, _______, 20__ (the “Expiration Date”).

4.         Vesting.

(a)           Vesting.  Except as otherwise provided in the Plan or this Agreement, the Stock Option shall be exercisable in full from and after the earlier of the date that is six months following the Grant Date or the date (if any) on which the Optionee ceases to be a director of the Corporation by reason of death or disability (as determined by the Administrator), but in no event later than the Expiration Date.

(b)           Change in Control.  The Stock Option, to the extent outstanding and not already exercisable, shall become exercisable upon the occurrence of a Change in Control, subject to the provisions of Section 7(b) of the Plan.

5.         Effect of Cessation of Service.

(a)           Unvested Stock Options.  Except as otherwise determined by the Administrator, any portion of the Stock Option held by an Optionee that is not exercisable on the date such Optionee’s service as a director ceases (determined after taking into account the effect of any death, disability or Change in Control under Section 4 above) shall be deemed to have expired immediately prior to such cessation of service.

(b)           Cessation of Service.  Subject to Section 5(c) below, if the Optionee’s service as a director ceases for any reason, any portion of the Stock Option that is exercisable at the time of such cessation shall remain exercisable until the earlier of (i) the first (1st) anniversary following such cessation and (ii) the Expiration Date, whereupon the Stock Option will automatically and immediately terminate in full.

(c)           Death or Disability Following Cessation of Service.  If the death or disability (as determined by the Administrator) of the Optionee occurs during the one-year period immediately following cessation of the Optionee’s service as a director and while the Stock Option is still outstanding and exercisable, then any portion of the Stock Option that was exercisable at the time of the Optionee’s death or Disability shall remain exercisable until the earlier of (i) the first (1st) anniversary of the Optionee’s death or Disability and (ii) the Expiration Date, whereupon the Stock Option will automatically and immediately terminate in full.

6.         Exercise of Stock Option.  Each election to exercise this Stock Option shall be in writing in a form acceptable to the Administrator, signed (including by means of an electronic signature in a form acceptable to the Administrator) by the Optionee or the Optionee’s executor, administrator, or legally appointed representative (in the event of the Optionee’s incapacity) or the person or persons to whom this Stock Option is transferred by will or the applicable laws of descent and distribution and received by the Corporation at its principal office, accompanied by payment in full.  Subject to the further terms and conditions provided in the Plan and rules prescribed by the Administrator, the purchase price of the shares as to which any portion of a Stock Option is to be exercised shall be paid (A) in full in cash or by certified check, bank draft or money order, or (B) by delivery of shares of Stock owned by the Optionee, or (C) by any other or combination of these or other means approved by the Administrator.

7.         Transfer of Stock Option.  The Stock Option shall not be assignable or transferable except by will or the laws of descent and distribution, and, except to the extent required by law, no right or interest of the Optionee with respect to the Stock Option shall be subject to any lien, obligation or liability of the Optionee.  All rights with respect to the Stock Option shall be exercisable during the Optionee’s lifetime only by the Optionee.  Any attempt at assignment, transfer, pledge, hypothecation or other disposition of the Stock Option contrary to the provisions hereof, and the levy of an attachment or similar proceeding upon the Stock Option, shall be null and void.

8.         Certain Adjustments.  If there shall occur any change with respect to the outstanding shares of Stock by reason of any stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Corporation’s capital structure that constitutes an equity restructuring within the meaning of FASB 718, the Stock Option shall be adjusted as provided in Section 7(d)(1) of the Plan.  The Stock Option may also be adjusted to take into account distributions to stockholders other than those provided for in Section 7(d)(1) of the Plan, or any other event, as provided under Section 7(d)(2) of the Plan.  The Corporation shall not be required to issue fractional shares upon exercise of the Stock Option after a change as provided for in this Section 8, but shall, to the extent practicable, make an adjustment in cash on the basis of the current market value of any fractional share.

9.         Governing Law.  The Stock Option shall be construed and given effect in accordance with the laws of the State of Delaware other than the conflict of laws provisions thereof.

10.       Headings.  The headings used in this Agreement are for convenience only and shall not affect the interpretation of the provisions set forth herein.

11.       Notice.  Whenever notice is required to be given under the terms of this Agreement (including the Plan), except as otherwise expressly provided herein, such notice shall be in writing and delivered in person by the party giving notice (or by his, her or its agent) or by registered or certified mail as follows:

(i)           If to the Corporation, to it at:

One Meadowlands Plaza

East Rutherford, New Jersey 07073

Attention: Corporate Secretary

(ii)           if to the Optionee or his or her legal representative, at their respective last known addresses as shown in the records of the Corporation, or in the absence of any such record for the Optionee’s legal representative, to the Optionee’s last known address as shown in the records of the Corporation, or

(iii)          to such other address with respect to either party as such party shall notify the other.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

CAMBREX CORPORATION

By:

Title:

Optionee

«Name»

EX-31.1

Exhibit 31.1

Cambrex Corporation

Certification Pursuant to Rule 13a – 14(a) and Rule 15d – 14(a)

of the Securities Exchange Act, as Amended

I, Steven M. Klosk, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cambrex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/Steven M. Klosk
	Steven M. Klosk
	President and Chief Executive Officer
Dated:  May 3, 2013

EX-31.2

Exhibit 31.2

Cambrex Corporation

Certification Pursuant to Rule 13a – 14(a) and Rule 15d – 14(a)

of the Securities Exchange Act, as Amended

I, Gregory P. Sargen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cambrex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15 (f))  for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/Gregory P. Sargen
	Gregory P. Sargen
	Executive Vice President and
	Chief Financial Officer
Dated:  May 3, 2013

EX-32

Exhibit 32

CAMBREX CORPORATION

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Cambrex Corporation (the “Company”) on form 10-Q for the period ending March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his respective knowledge:

1. The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/Steven M. Klosk

Steven M. Klosk

President and Chief Executive Officer

/s/Gregory P. Sargen

Gregory P. Sargen

Executive Vice President and Chief Financial Officer

Dated:  May 3, 2013

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Stock Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option expense	$ 408	$ 316
Weighted-average fair value per share (in dollars per share)	$ 6.55
Number of Shares [Roll Forward]
Outstanding, beginning balance (in shares)	2,264,399
Granted (in shares)	10,000	0
Exercised (in shares)	(114,599)
Forfeited or expired (in shares)	(2,950)
Outstanding, ending balance (in shares)	2,156,850
Options exercisable (in shares)	1,143,074
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 7.02
Granted (in dollars per share)	$ 11.44
Exercised (in dollars per share)	$ 5.40
Forfeited or expired (in dollars per share)	$ 10.42
Outstanding, ending balance (in dollars per share)	$ 7.13
Exercisable, ending balance (in dollars per share)	$ 6.16
Aggregate intrinsic value exercised	766	33
Aggregate intrinsic value outstanding	12,308
Aggregate intrinsic value exercisable	7,672
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock expense	22	41
Weighted average vesting period	2 months 12 days
Nonvested Restricted Stock Number of Shares [Roll Forward]
Nonvested, beginning balance (in shares)	31,145
Granted (in shares)	0
Vested during period (in shares)	(29,450)
Forfeited (in shares)	0
Nonvested, ending balance (in shares)	1,695
Nonvested Restricted Stock, Weighted-Average Grant-Date Fair Value [Roll Forward]
Nonvested, beginning balance (in dollars per share)	$ 5.76
Granted (in dollars per share)	$ 0
Vested during period (in dollars per share)	$ 5.54
Forfeited (in dollars per share)	$ 0
Nonvested, ending balance (in dollars per share)	$ 9.64
Compensation cost and weighted average vesting period information [Line Items]
Total compensation cost related to unvested share-based awards not yet recognized	5
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period	3 years
Performance Shares [Member] | Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance share expense	63	0
Cash Settled Performance Share Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period	3 years
Cash Settled Performance Share Units [Member] | Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance share unit expense	541	(24)
Nonvested Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average vesting period	2 years 6 months
Compensation cost and weighted average vesting period information [Line Items]
Total compensation cost related to unvested share-based awards not yet recognized	$ 3,972
Nonvested Stock Options, Number of Shares [Roll Forward]
Nonvested, beginning balance (in shares)	1,029,776
Granted (in shares)	10,000
Vested during period (in shares)	(25,000)
Forfeited (in shares)	(1,000)
Nonvested, ending balance (in shares)	1,013,776
Nonvested Stock Options, Weighted-Average Grant-Date Fair Value [Roll Forward]
Nonvested, beginning balance (in dollars per share)	$ 4.62
Granted (in dollars per share)	$ 6.55
Vested during period (in dollars per share)	$ 2.69
Forfeited (in dollars per share)	$ 3.39
Nonvested, ending balance (in dollars per share)	$ 4.69

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Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2013

Stock Based Compensation [Abstract]

Summary of stock options activity

The following table is a summary of the Company's stock options: 

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2012		2,264,399		$	7.02
Granted		10,000		$	11.44
Exercised		(114,599	)	$	5.40
Forfeited or expired		(2,950	)	$	10.42
Outstanding at March 31, 2013		2,156,850		$	7.13
Exercisable at March 31, 2013		1,143,074		$	6.16

Summary of nonvested stock option and restricted stock

The following table is a summary of the Company's nonvested stock options and restricted stock:

	Nonvested Stock Options					Nonvested Restricted Stock
	Number of Shares			Weighted- Average Grant-Date Fair Value		Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2012		1,029,776		$	4.62		31,145		$	5.76
Granted		10,000		$	6.55		-		$	-
Vested during period		(25,000	)	$	2.69		(29,450	)	$	5.54
Forfeited		(1,000	)	$	3.39		-		$	-
Nonvested at March 31, 2013		1,013,776		$	4.69		1,695		$	9.64

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Impact of Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2013

Impact of Recently Issued Accounting Pronouncements [Abstract]

Impact of Recently Issued Accounting Pronouncements

(2)         Impact of Recently Issued Accounting Pronouncements

Comprehensive Income

In February 2012, the FASB issued "Comprehensive Income: Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income ("AOCI")" which improves the reporting of reclassifications out of AOCI. The amendment requires an entity to report the effect of significant reclassifications out of AOCI on the respective line items in net income. For other amounts not required to be reclassified to net income, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about these amounts. This amendment became effective January 1, 2013 and the effect of adopting this updated guidance did not have an impact on the Company's financial position or result of operations.

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Investments in and Advances to Partially-Owned Affiliates (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Advances to partially-owned affiliates	$ 441	$ 0
Zenara Pharma [Member]
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Equity method investment, summarized financial information, net income (loss)	(438)	(485)
Equity method investment, summarized financial information, amortization expense	238	256
Advances to partially-owned affiliates	300
European Joint Venture [Member]
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Equity method investment, summarized financial information, net income (loss)	(43)	277
Advances to partially-owned affiliates	$ 141

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			3 Months Ended	12 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Mar. 31, 2013 Technology-based intangibles [Member]	Dec. 31, 2012 Technology-based intangibles [Member]	Mar. 31, 2013 Customer related intangibles [Member]	Dec. 31, 2012 Customer related intangibles [Member]	Mar. 31, 2013 Customer related intangibles [Member] Minimum [Member]	Dec. 31, 2012 Customer related intangibles [Member] Minimum [Member]	Mar. 31, 2013 Customer related intangibles [Member] Maximum [Member]	Dec. 31, 2012 Customer related intangibles [Member] Maximum [Member]
Goodwill [Roll Forward]
Balance as of December 31, 2012	$ 37,312
Translation effect	(886)
Balance as of March 31, 2013	36,426
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization Period				20 years	20 years			10 years	10 years	15 years	15 years
Gross Carrying Amount	4,649		4,789	3,894	4,011	755	778
Accumulated Amortization	(739)		(698)	(584)	(552)	(155)	(146)
Net Carrying Amount	3,910		4,091	3,310	3,459	600	632
Amortization expense	64	63
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract]
Amortization expense for current intangible assets, for year one	250
Amortization expense for current intangible assets, for year two	250
Amortization expense for current intangible assets, for year three	250
Amortization expense for current intangible assets, for year four	250
Amortization expense for current intangible assets, for year five	$ 250

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Taxes [Abstract]
Income Tax Expense (Benefit)	$ 3,762	$ 2,205
Effective tax rate (in hundredths)	24.80%
Income tax reconciliation, change in tax laws	(1,300)
Income tax reconciliation, sale of office building	1,500
Maximum [Member]
Income Tax Contingency [Line Items]
Potential future increase/(decrease) to unrecognized tax benefits	8,000
Minimum [Member]
Income Tax Contingency [Line Items]
Potential future increase/(decrease) to unrecognized tax benefits	(6,000)
Non-US Jurisdiction [Member]
Income Tax Contingency [Line Items]
Number of formal assessments	2
Amount in which the reserve for unrecognized tax benefits changed due to foreign currency translation	177
Increase/(Decrease) in reserve for unrecognized tax benefits	$ (139)

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Derivatives and Hedging Activities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Foreign Currency Forward Contracts [Member]
Foreign Currency Derivatives [Abstract]
Notional amount of cash flow hedge instruments	$ 0	$ 0
Interest Rate Swap [Member]
Derivative Instruments [Abstract]
Notional amount of interest rate derivatives	60,000
Interest rate swap, fixed rate (in hundredths)	0.92%
Maturity date	Sep. 28, 2015
Fair value of swap	(843)	(930)
Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months, net	$ (405)

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Basis of Presentation

3 Months Ended

Mar. 31, 2013

Basis of Presentation [Abstract]

Basis of Presentation

(1)       Basis of Presentation

Unless otherwise indicated by the context, "Cambrex" or the "Company" means Cambrex Corporation and subsidiaries.

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company. In the opinion of management, the financial statements include all adjustments, which are of a normal and recurring nature, except as otherwise described herein, and are necessary for a fair statement of financial position and results of operations in conformity with U.S. generally accepted accounting principles ("GAAP"). These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2012.

The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results expected for the full year.

For all periods presented, discontinued operations primarily relate to expenses for environmental remediation at sites of divested businesses.

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Changes In accumulated other comprehensive income [Roll Forward]
Beginning balance	$ (34,091)
Other comprehensive loss before reclassifications	(3,849)
Amounts reclassified from accumulated other comprehensive loss	301
Net current-period other comprehensive (loss)/income	(3,548)
Ending balance	(37,639)
Reclassification Adjustments Out Of AOCI [Abstract]
Interest expense, net	495	651
Selling, general and administrative expenses	11,104	9,960
Cost of goods sold	50,136	47,800
Net income	11,168	7,038
Amounts reclassified from accumulated other comprehensive income [Member]
Reclassification Adjustments Out Of AOCI [Abstract]
Net income	(301)
Foreign Currency Translation Adjustments [Member]
Changes In accumulated other comprehensive income [Roll Forward]
Beginning balance	5,177
Other comprehensive loss before reclassifications	(3,836)
Amounts reclassified from accumulated other comprehensive loss	0
Net current-period other comprehensive (loss)/income	(3,836)
Ending balance	1,341
Interest Rate Swap Agreement [Member]
Changes In accumulated other comprehensive income [Roll Forward]
Beginning balance	(600)
Other comprehensive loss before reclassifications	(13)
Amounts reclassified from accumulated other comprehensive loss	69
Net current-period other comprehensive (loss)/income	56
Ending balance	(544)
Interest Rate Swap Agreement [Member] | Amounts reclassified from accumulated other comprehensive income [Member]
Reclassification Adjustments Out Of AOCI [Abstract]
Interest expense, net	(107)
Tax benefit	38
Net of Tax	(69)
Pension Plans [Member]
Changes In accumulated other comprehensive income [Roll Forward]
Beginning balance	(38,668)
Other comprehensive loss before reclassifications	0
Amounts reclassified from accumulated other comprehensive loss	232
Net current-period other comprehensive (loss)/income	232
Ending balance	(38,436)
Pension Plans [Member] | Amounts reclassified from accumulated other comprehensive income [Member]
Reclassification Adjustments Out Of AOCI [Abstract]
Total before tax	(348)
Tax benefit	116
Net of Tax	(232)
Actuarial Loss [Member] | Amounts reclassified from accumulated other comprehensive income [Member]
Reclassification Adjustments Out Of AOCI [Abstract]
Selling, general and administrative expenses	(292)
Cost of goods sold	(28)
Prior Service Cost [Member] | Amounts reclassified from accumulated other comprehensive income [Member]
Reclassification Adjustments Out Of AOCI [Abstract]
Selling, general and administrative expenses	$ (28)

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Consolidated Balance Sheets (unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 31,877	$ 23,551
Trade receivables, net	41,070	43,094
Inventories, net	74,066	71,221
Prepaid expenses and other current assets	8,727	6,104
Total current assets	155,740	143,970
Property, plant and equipment, net	155,735	151,815
Goodwill	36,426	37,312
Intangible assets, net	3,910	4,091
Investments in and advances to partially-owned affiliates	15,241	15,094
Deferred income taxes	37,588	39,262
Other non-current assets	5,878	2,924
Total assets	410,518	394,468
Current liabilities:
Accounts payable	25,725	27,612
Deferred revenue	12,055	11,570
Accrued expenses and other current liabilities	39,414	43,844
Total current liabilities	77,194	83,026
Long-term debt	73,000	64,000
Deferred income taxes	19,838	18,577
Accrued pension benefits	54,630	55,373
Other non-current liabilities	14,129	10,195
Total liabilities	238,791	231,171
Stockholders' equity:
Common stock, $.10 par value; authorized 100,000,000, issued 31,816,829 and 31,704,230 shares at respective dates	3,181	3,169
Additional paid-in capital	105,023	104,173
Retained earnings	116,431	105,263
Treasury stock, at cost, 1,790,873 and 1,795,082 shares at respective dates	(15,269)	(15,217)
Accumulated other comprehensive loss	(37,639)	(34,091)
Total stockholders' equity	171,727	163,297
Total liabilities and stockholders' equity	$ 410,518	$ 394,468

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Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Foreign Currency Forward Contracts [Member]
Other comprehensive income/(loss):
Income taxes on derivatives	$ 0	$ 73
Interest Rate Swap Agreement [Member]
Other comprehensive income/(loss):
Income taxes on derivatives	31	0
Pension Plan [Member]
Other comprehensive income/(loss):
Income taxes on pension plans	$ 116	$ 13

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Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		3 Months Ended	12 Months Ended
	Mar. 31, 2013 Subsidary Site	Dec. 31, 2012	Mar. 31, 2013 Lorazepam and Clorazepate [Member] Plaintiff	Dec. 31, 2008 Lorazepam and Clorazepate [Member]	Dec. 31, 2003 Lorazepam and Clorazepate [Member] Indemnification Agreement [Member]	Dec. 31, 2003 Lorazepam and Clorazepate [Member] Surety Bond [Member]	Mar. 31, 2013 CasChem [Member]	Mar. 31, 2013 Cosan Clifton, New Jersey Site [Member]	Mar. 31, 2013 Cosan Carlstadt New Jersey Site [Member]	Mar. 31, 2013 Berry's Creek Site [Member]	Mar. 31, 2013 Maybrook Site [Member]	Mar. 31, 2013 Harriman Site [Member]	Mar. 31, 2013 Newark Bay Complex Litigation [Member]
Components of Environmental Loss Accrual [Abstract]
Accrual for estimated cost associated with study and remediation of applicable sites	$ 5,365	$ 5,096					$ 171	$ 740	$ 833	$ 210	$ 362	$ 300	$ 324
Adjustment to environmental and remediation reserves	396
Payments to reserves for estimated environmental and remediation cost	121
Impact of currency translation environmental study and remediation of applicable site reserves	6
Number of former subsidiaries for which notice received	2
Approximate number of other sites named PRP of SCP Superfund Site	130
Loss Contingencies [Line Items]
Number of plaintiffs in unresolved case			4
Judgment amount against Mylan, Gyma and Cambrex, payable jointly and severally				19,200
Punitive damages award				16,709
Loss contingency, prejudgment interest				7,500
Payment in exchange for release and full indemnity against future cost or liabilities					12,415
Surety bond amount						$ 66,632

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets [Abstract]

Change in carrying amount of goodwill

The change in the carrying amount of goodwill for the three months ended March 31, 2013, is as follows:

Balance as of December 31, 2012	$	37,312
Translation effect		(886	)
Balance as of March 31, 2013	$	36,426

Summary of acquired amortizable intangible assets

Acquired intangible assets, which are amortized, consist of the following:

		As of March 31, 2013
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	3,894	$	(584	)	$	3,310
Customer-related intangibles	10 - 15 years		755		(155	)		600
		$	4,649	$	(739	)	$	3,910

		As of December 31, 2012
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	4,011	$	(552	)	$	3,459
Customer-related intangibles	10 - 15 years		778		(146	)		632
		$	4,789	$	(698	)	$	4,091

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Gain on Sale of Asset (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Gain on Sale [Abstract]
Approximate gain on the sale of an office building	$ 4,700
Approximate proceeds from sale of office building	1,900
Approximate secured note received from sale of office building	$ 3,200

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Schedule of changes in accumulated other comprehensive income

The following table provides the changes in AOCI by component, net of tax, for the three months ended March 31, 2013:

	Foreign Currency Translation Adjustments			Interest Rate Swap Agreement			Pension Plans			Total
Balance as of December 31, 2012	$	5,177		$	(600	)	$	(38,668	)	$	(34,091	)
Other comprehensive loss before reclassifications		(3,836	)		(13	)		-			(3,849	)
Amounts reclassified from accumulated other comprehensive loss		-			69			232			301
Net current-period other comprehensive (loss)/income		(3,836	)		56			232			(3,548	)
Balance as of March 31, 2013	$	1,341		$	(544	)	$	(38,436	)	$	(37,639	)

Reclassifications out of accumulated other comprehensive income

The following table provides the reclassifications out of AOCI by component for the three months ended March 31, 2013:

Details about AOCI Components	Amount Reclassified from AOCI			Affected Line Item in the Consolidated Income Statement
Losses on cash flow hedge:
Interest rate swap	$	(107	)	Interest expense, net
	$	38		Tax benefit
	$	(69	)	Net of tax
Amortization of defined benefit pension items:
Actuarial losses	$	(292	)	Selling, general and administrative expenses
Actuarial losses		(28	)	Cost of goods sold
Prior service costs		(28	)	Selling, general and administrative expenses
		(348	)	Total before tax
		116		Tax benefit
	$	(232	)	Net of tax
Total reclassification for the period	$	(301	)

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Consolidated Statements of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 11,168	$ 7,038
Adjustments to reconcile net income to cash flows:
Depreciation and amortization	5,333	5,486
Gain on sale of assets	(4,603)	0
Increase in inventory reserve	1,284	1,219
Stock based compensation included in net income	493	357
Deferred income tax provision	1,918	(95)
Equity in losses of partially-owned affiliates	481	208
Other	266	252
Changes in assets and liabilities:
Trade receivables	1,547	(1,991)
Inventories	(5,181)	(4,886)
Prepaid expenses and other current assets	(2,142)	625
Accounts payable and other current liabilities	(2,052)	(1,416)
Deferred revenue	485	416
Other non-current assets and liabilities	4,696	(1,367)
Discontinued operations:
Net cash used in discontinued operations	(45)	(1,080)
Net cash provided by operating activities	13,648	4,766
Cash flows from investing activities:
Capital expenditures	(15,577)	(2,616)
Proceeds from sale of assets	1,909	0
Advances to partially-owned affiliates	(441)	0
Net cash used in investing activities	(14,109)	(2,616)
Long-term debt activity:
Borrowings	12,500	0
Repayments	(3,500)	(14,000)
Proceeds from stock options exercised	619	0
Other	(302)	64
Net cash provided by/(used in) financing activities	9,317	(13,936)
Effect of exchange rate changes on cash and cash equivalents	(530)	642
Net increase/(decrease) in cash and cash equivalents	8,326	(11,144)
Cash and cash equivalents at beginning of period	23,551	31,921
Cash and cash equivalents at end of period	$ 31,877	$ 20,777

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Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Stockholders' equity:
Common Stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common Stock, shares authorized (in shares)	100,000,000	100,000,000
Common Stock, shares issued (in shares)	31,816,829	31,704,230
Treasury stock, at cost (in shares)	1,790,873	1,795,082

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Stock Based Compensation

3 Months Ended

Mar. 31, 2013

Stock Based Compensation [Abstract]

Stock Based Compensation

(10)       Stock Based Compensation

The Company recognizes compensation costs for stock options awarded to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average fair value per share for stock options granted to employees during the three months ended March 31, 2013 was $6.55. No stock options were granted during the three months ended March 31, 2012.

For the three months ended March 31, 2013 and 2012, the Company recorded $408 and $316, respectively, in selling, general and administrative expenses for stock options. As of March 31, 2013, the total compensation cost related to unvested stock options not yet recognized was $3,972. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 2.5 years.

For the three months ended March 31, 2013 and 2012, the Company recorded $22 and $41, respectively, in selling, general and administrative expenses for restricted stock awards. As of March 31, 2013 the total compensation cost related to unvested restricted stock not yet recognized was $5. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 0.2 years.

The Company grants equity-settled performance shares ("PSs") to certain executives. PS awards provide the recipient the right to receive a certain number of shares of the Company's common stock in the future, which depends on the Company's level of achievement of revenue and EBITDA growth as compared to the revenue and EBITDA growth of the members of a specified peer group of companies over a three-year period. The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company. For the three months ended March 31, 2013 and 2012, the Company recorded $63 and $0, respectively, in selling, general and administrative expense related to these PS awards.

The Company grants cash-settled performance share units ("PSUs") to certain executives. PSU awards provide the recipient the right to receive the cash value of a certain number of shares of the Company's common stock in the future, which depends on the Company's level of achievement of revenue and EBITDA growth as compared to the revenue and EBITDA growth of the members of a specified peer group of companies over a three-year period. The peer group consists of publicly-traded life sciences companies competing in the same industry as the Company. For the three months ended March 31, 2013 and 2012, the Company recorded expense of $541 and a benefit of $24, respectively, in selling, general and administrative expenses for PSU awards. The increase is primarily the result of the Company's recent performance compared to a peer group and the Company's higher share price.

The following table is a summary of the Company's stock options: 

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2012		2,264,399		$	7.02
Granted		10,000		$	11.44
Exercised		(114,599	)	$	5.40
Forfeited or expired		(2,950	)	$	10.42
Outstanding at March 31, 2013		2,156,850		$	7.13
Exercisable at March 31, 2013		1,143,074		$	6.16

The aggregate intrinsic value for all stock options exercised for the three months ended March 31, 2013 and 2012 was $766 and $33, respectively. The aggregate intrinsic values for all stock options outstanding and exercisable as of March 31, 2013 were $12,308 and $7,672, respectively.

The following table is a summary of the Company's nonvested stock options and restricted stock:

	Nonvested Stock Options					Nonvested Restricted Stock
	Number of Shares			Weighted- Average Grant-Date Fair Value		Number of Shares			Weighted- Average Grant-Date Fair Value
Nonvested at December 31, 2012		1,029,776		$	4.62		31,145		$	5.76
Granted		10,000		$	6.55		-		$	-
Vested during period		(25,000	)	$	2.69		(29,450	)	$	5.54
Forfeited		(1,000	)	$	3.39		-		$	-
Nonvested at March 31, 2013		1,013,776		$	4.69		1,695		$	9.64

 

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	CAMBREX CORP
Entity Central Index Key	0000820081
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		30,031,706
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013

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Retirement Plans

3 Months Ended

Mar. 31, 2013

Retirement Plans [Abstract]

Retirement Plans

(11)       Retirement Plans

Domestic Pension Plan

The components of net periodic benefit cost for the Company's domestic plan (which was frozen in 2007) for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Interest cost	$	764		$	821
Expected return on plan assets		(956	)		(918	)
Recognized actuarial loss		234			216
Amortization of prior service cost		-			15
Net periodic benefit cost	$	42		$	134

The Company's Supplemental Executive Retirement Plan (which was frozen in 2007) is non-qualified and unfunded. Net periodic benefit costs for the three months ended March 31, 2013 and 2012 were $54 and $55, respectively.

International Pension Plan

The components of net periodic benefit cost for the Company's international plan for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Service cost	$	188		$	165
Interest cost		166			200
Recognized actuarial loss		72			50
Amortization of prior service benefit		(2	)		(2	)
Net periodic benefit cost	$	424		$	413

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Consolidated Income Statements (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Income Statements (unaudited) [Abstract]
Gross sales	$ 74,581	$ 70,559
Commissions, allowances and rebates	163	535
Net sales	74,418	70,024
Other	467	204
Net revenues	74,885	70,228
Cost of goods sold	50,136	47,800
Gross profit	24,749	22,428
Operating expenses:
Selling, general and administrative expenses	11,104	9,960
Research and development expenses	2,194	2,358
Total operating expenses	13,298	12,318
Gain on sale of asset	4,680	0
Operating profit	16,131	10,110
Other expenses/(income):
Interest expense, net	495	651
Other (income)/expenses, net	(32)	8
Equity in losses of partially-owned affiliates	481	208
Income before income taxes	15,187	9,243
Provision for income taxes	3,762	2,205
Income from continuing operations	11,425	7,038
Loss from discontinued operations, net of tax	(257)	0
Net income	$ 11,168	$ 7,038
Basic earnings/(loss) per share of common stock:
Income from continuing operations (in dollars per share)	$ 0.38	$ 0.24
Loss from discontinued operations, net of tax (in dollars per share)	$ (0.01)	$ 0
Net income (in dollars per share)	$ 0.37	$ 0.24
Diluted earnings/(loss) per share of common stock:
Income from continuing operations (in dollars per share)	$ 0.37	$ 0.24
Loss from discontinued operations, net of tax (in dollars per share)	$ (0.01)	$ 0
Net income (in dollars per share)	$ 0.36	$ 0.24
Weighted average shares outstanding:
Basic (in shares)	29,970	29,602
Effect of dilutive stock based compensation (in shares)	818	284
Diluted (in shares)	30,788	29,886

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Investments in and Advances to Partially-Owned Affiliates

3 Months Ended

Mar. 31, 2013

Investments in and Advances to Partially-Owned Affiliates [Abstract]

Investments in and Advances to Partially-Owned Affiliates

(5)         Investments in and Advances to Partially-Owned Affiliates

Investments in and advances to partially-owned affiliates consist primarily of the Company's equity interest in Zenara Pharma ("Zenara"). The Company recorded a loss of $438 and $485 for the three months ended March 31, 2013 and 2012, respectively, related to Zenara. These amounts include amortization expense of $238 and $256, for the three months ended March 31, 2013 and 2012, respectively. In the first three months of 2013, the Company advanced $300 to Zenara.

Investments in and advances to partially-owned affiliates also includes a loss of $43 and income of $277 for the three months ended March 31, 2013 and 2012, respectively, related to an investment in a European joint venture. In the first three months of 2013, the Company advanced $141 to the European joint venture.

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

(4)         Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2013, is as follows:

Balance as of December 31, 2012	$	37,312
Translation effect		(886	)
Balance as of March 31, 2013	$	36,426

Acquired intangible assets, which are amortized, consist of the following:

		As of March 31, 2013
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	3,894	$	(584	)	$	3,310
Customer-related intangibles	10 - 15 years		755		(155	)		600
		$	4,649	$	(739	)	$	3,910

		As of December 31, 2012
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Technology-based intangibles	20 years	$	4,011	$	(552	)	$	3,459
Customer-related intangibles	10 - 15 years		778		(146	)		632
		$	4,789	$	(698	)	$	4,091

The change in the gross carrying amount is primarily due to the impact of foreign currency translation.

Amortization expense was $64 and $63 for the three months ended March 31, 2013 and 2012, respectively.

Amortization expense related to current intangible assets is expected to be approximately $250 for 2013 and for each of the next four years.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Assets and liabilities carried at fair value measured on recurring basis

The following tables provide the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2013 and December 31, 2012:

				Fair Value Measurements at March 31, 2013 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(843	)	$	-	$	(843	)	$	-
Total	$	(843	)	$	-	$	(843	)	$	-
				Fair Value Measurements at December 31, 2012 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(930	)	$	-	$	(930	)	$	-
Total	$	(930	)	$	-	$	(930	)	$	-

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Contingencies

3 Months Ended

Mar. 31, 2013

Contingencies [Abstract]

Contingencies

(12)         Contingencies

The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. The Company continually assesses all known facts and circumstances as they pertain to all legal and environmental matters and evaluates the need for reserves and disclosures as deemed necessary based on these facts and circumstances. These matters, either individually or in the aggregate, could result in actual costs that are significantly higher than the Company's current assessment and could have a material adverse effect on the Company's operating results and cash flows in future reporting periods. While these matters, specifically environmental matters, could have a material adverse effect on the Company's financial condition, based upon past experience, it is likely that payments significantly in excess of current reserves, if required, would be made over an extended number of years.

Environmental

In connection with laws and regulations pertaining to the protection of the environment, the Company and its subsidiaries are a party to several environmental proceedings and remediation investigations and cleanups and, along with other companies, have been named a potentially responsible party ("PRP") for certain waste disposal sites ("Superfund sites"). Additionally, the Company has retained the liability for certain environmental proceedings associated with discontinued operations.

It is the Company's policy to record appropriate liabilities for environmental matters where remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are based on the Company's best estimate of the undiscounted future costs required to complete the remedial work. Each of these matters is subject to various uncertainties, and it is possible that some of these matters will be decided unfavorably against the Company. The resolution of such matters often spans several years and frequently involves regulatory oversight or adjudication. Additionally, many remediation requirements are fluid and are likely to be affected by future technological, site and regulatory developments. Consequently, the ultimate liability with respect to such matters, as well as the timing of cash disbursements cannot be determined with certainty.

In matters where the Company has been able to reasonably estimate its liability, the Company has accrued for the estimated costs associated with the study and remediation of applicable sites. These reserves were $5,365 and $5,096 at March 31, 2013 and December 31, 2012, respectively. The increase in the reserve includes adjustments to reserves of $396 partially offset by payments of $121 and the impact of currency translation of $6. The reserves are adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information become available. Based upon available information and analysis, the Company's current reserve represents management's best estimate of the probable and estimable costs associated with environmental proceedings including amounts for current investigation fees where full investigation and remediation costs may not be estimable at the reporting date. Given the uncertainties regarding the outcome of investigative and study activities, the status of laws, regulations, enforcement, policies, the impact of other PRPs, technology and information related to individual sites, the Company does not believe it is possible to currently develop an estimate of the range of reasonably possible environmental loss in excess of its reserves.

CasChem

As a result of the sale of the Bayonne, New Jersey facility, the Company became obligated to investigate site conditions and conduct required remediation under the New Jersey Industrial Site Recovery Act. The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the New Jersey Department of Environmental Protection's ("NJDEP") private oversight program. The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs. As of March 31, 2013, the Company's reserve was $171 to cover costs associated with current investigative work.

Cosan

In response to the NJDEP, the Company completed its initial investigation and submitted the results of the investigation and a proposed remediation plan to the NJDEP for its Cosan Clifton, New Jersey site. The NJDEP subsequently rejected the remediation plan and requested additional investigative work at the site and that work is on-going. The reserve was $740 at March 31, 2013, which was based on the initial remedial action plan. The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the NJDEP private oversight program. The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs. It is expected that the estimated remediation costs will be revised in the second quarter of 2013. Although the costs of the revised remediation plan cannot yet be estimated, it is expected that this reserve will increase next quarter.

Additionally, the Company has a reserve of $833 for the Cosan Carlstadt, New Jersey site based on the investigations completed to date and the proposed remediation plan submitted to the NJDEP for its approval. The NJDEP has subsequently required the Company to perform additional investigative work prior to approval of the remediation plan. The Company intends to continue implementing a sampling plan at the property in 2013 pursuant to the NJDEP private oversight program. The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs.

Berry's Creek

The Company received a notice from the United States Environmental Protection Agency ("USEPA") that two former subsidiaries of the Company are considered PRPs at the Berry's Creek Study Area in New Jersey. These subsidiaries are among many other PRPs that were listed in the notice. Pursuant to the notice, the PRPs have been asked to perform a remedial investigation and feasibility study of the Berry's Creek site. The Company has joined the group of PRPs and entered into an Administrative Settlement Agreement ("Agreement") and Order on Consent with the USEPA agreeing to jointly conduct or fund an appropriate remedial investigation and feasibility study of the Berry's Creek site with the other PRPs in the Agreement. The PRPs have engaged consultants to perform the work specified in the Agreement and develop a method to allocate related costs among the PRPs. As of March 31, 2013, the Company's reserve was $210 to cover the current phase of investigation based on a tentative agreement on the allocation of the site investigation costs among the PRPs. The investigation is ongoing and at this time it is too early to predict the extent of additional liabilities.

Maybrook Site

The Company's Nepera, Inc. subsidiary ("Nepera") is named a PRP of the Maybrook site in Hamptonburgh, New York by the USEPA in connection with the discharge, under appropriate permits, of wastewater at that site prior to Cambrex's acquisition of Nepera in 1986. The USEPA also issued the Company a Notice of Potential Liability and the Company signed a consent decree to complete the Record of Decision ("ROD") and has provided the USEPA with appropriate financial assurance to guarantee the obligation under the consent decree. The PRPs began to implement a soil remedial action at this site in the third quarter of 2011 which was completed in 2012 pending approval by the USEPA. The PRPs will continue implementing the ground water remedial actions at the site in 2013. As of March 31, 2013, the Company's reserve was $362 to cover remaining costs associated with the soil remediation and on-going ground water remediation including long-term monitoring.

Harriman Site

Nepera, together with Pfizer as successor to Warner Lambert, is also named a responsible party for its former Harriman, New York production facility by the New York State Department of Environmental Conservation ("NYSDEC"). A final ROD describing the Harriman site remediation responsibilities for Pfizer and the Company was issued in 1997 (the "1997 ROD") and implemented under a federal Consent Decree with NYSDEC. Site clean-up work under the 1997 ROD is on-going and is being jointly performed by Pfizer and the Company, with NYSDEC oversight. ELT Harriman, LLC ("ELT"), the current owner of the Harriman site, conducted other investigation and remediation activities under a separate NYSDEC directive.

In December 2010, the NYSDEC notified the Company, Pfizer, ELT and former owner Vertellus Specialties Holdings that NYSDEC intended to implement a site-wide re-characterization of the Harriman site under a single, new Administrative Consent Order. This development may lead to increased liabilities for the Company, in which case, the Company intends to pursue available indemnities against other parties under contract and common law. There are on-going discussions between the NYSDEC and all parties to try to resolve this matter. To date, negotiations have been unsuccessful in fully resolving disputes as to which parties may be responsible for different remediation activities at the Harriman site. As of March 31, 2013, the reserve recorded by the Company for the Harriman site was $300, which represents the Company's best estimate to complete the 1997 ROD.

Scientific Chemical Processing ("SCP") Superfund Site

Nepera was named a PRP of the SCP Superfund site, located in Carlstadt, New Jersey, in the early 1980's along with approximately 130 other PRPs. The site is a former waste processing facility that accepted various waste for recovery and disposal including processing wastewater from Nepera. The PRPs are in the process of implementing a final remedy at the site. The SCP Superfund site has also been identified as a PRP in the Berry's Creek Superfund site (see previous discussion). For over a decade, the remediation has been funded by de minimus settlements and by the insurers of the SCP Superfund site's owners and operators. However, due to an unexpected increase in remediation costs at the site and costs to contribute to the Berry's Creek investigation, the PRP group has approved the assessment of an additional cash contribution by the PRP group. While the Company continues to dispute the methodology used by the PRP group to arrive at its allocation for the cash contribution, the Company has paid the initial funding requests. The Company does not currently maintain a reserve for the SCP Superfund site. Costs associated with remediation at the site, and SCP's current allocation of Berry's Creek investigative costs are each expected to be communicated to the Company by SCP in 2013.

Newark Bay Complex Litigation

CasChem and Cosan have been named as two of several hundred third-party defendants in a third-party complaint filed in February 2009, by Maxus Energy Corporation ("Maxus") and Tierra Solutions, Inc. ("Tierra"). The original plaintiffs include the NJDEP, the Commissioner of the NJDEP and the Administrator of the New Jersey Spill Compensation Fund, which originally filed suit in 2005 against Maxus, Tierra and other defendants seeking recovery of cleanup and removal costs for alleged discharges of dioxin and other hazardous substances into the Passaic River, Newark Bay, Hackensack River, Arthur Kill, Kill Van Kull and adjacent waters (the "Newark Bay Complex"). Maxus and Tierra are now seeking contributions from third-party defendants, including subsidiaries of the Company, for cleanup and removal costs for which each may be held liable in the primary lawsuit. Maxus and Tierra also seek recovery for cleanup and removal costs that each has incurred or will incur relating to the Newark Bay Complex. The Company has entered into a tentative settlement agreement with the original plaintiffs, which, if approved by the Court, would dismiss the lawsuit and provide the Company with some protections from certain claims. The settlement would resolve any claims that the original plaintiffs have against the Company and would require Maxus and Tierra to re-file their claims against the Company in federal court. Final approval of the settlement is not expected from the Court until September 2013. The Company reserved $324 in the first quarter of 2013 for this matter.

The Company is involved in other environmental matters where the range of liability is not reasonably estimable at this time and it is not foreseeable when information will become available to provide a basis for adjusting or recording a reserve, should a reserve ultimately be required.

Litigation and Other Matters

Lorazepam and Clorazepate

In 1998, the Company and a subsidiary were named as defendants along with Mylan Laboratories, Inc. ("Mylan") and Gyma Laboratories, Inc. ("Gyma") in a proceeding instituted by the Federal Trade Commission in the United States District Court for the District of Columbia (the "District Court"). Suits were also commenced by several State Attorneys General and class action complaints by private plaintiffs in various state courts. The suits alleged violations of the Federal Trade Commission Act arising from exclusive license agreements between the Company and Mylan covering two active pharmaceutical ingredients (Lorazepam and Clorazepate).

All cases have been resolved except for one brought by four health care insurers. In the remaining case, the District Court entered judgment after trial in 2008 against Mylan, Gyma and Cambrex in the total amount of $19,200, payable jointly and severally, and also a punitive damage award against each defendant in the amount of $16,709. In addition, at the time, the District Court ruled that the defendants were subject to a total of approximately $7,500 in prejudgment interest. The case is currently pending before the District Court following a January 2011 remand by the Court of Appeals where briefing related to whether the court has jurisdiction over certain self-funded customer plaintiffs has been completed and the parties are currently waiting for a ruling by the court.

In 2003, Cambrex paid $12,415 to Mylan in exchange for a release and full indemnity against future costs or liabilities in related litigation brought by the purchasers of Lorazepam and Clorazepate, as well as potential future claims related to the ongoing matter. Mylan has submitted a surety bond underwritten by a third-party insurance company in the amount of $66,632. In the event of a final settlement or final judgment, Cambrex expects any payment required by the Company to be made by Mylan under the indemnity described above.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

(8)          Fair Value Measurements

 

U.S. GAAP establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation; Level 3 inputs are unobservable inputs based on the Company's assumptions used to measure assets and liabilities at fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

The following tables provide the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2013 and December 31, 2012:

				Fair Value Measurements at March 31, 2013 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(843	)	$	-	$	(843	)	$	-
Total	$	(843	)	$	-	$	(843	)	$	-
				Fair Value Measurements at December 31, 2012 using:
Description	Total			Level 1		Level 2			Level 3
Interest rate swap, liabilities	$	(930	)	$	-	$	(930	)	$	-
Total	$	(930	)	$	-	$	(930	)	$	-

The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at current market interest rates using observable benchmarks for the LIBOR forward rates at the end of the period.

As of March 31, 2013, there had not been any significant impact to the fair value of the Company's derivative liabilities due to its own credit risk.

The Company's financial instruments also include cash and cash equivalents, accounts receivables, accounts payables and accrued liabilities. The carrying amount of these instruments approximates fair value because of their short-term nature. The carrying amount of the Company's long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

Income Taxes

(6)         Income Taxes

The provision for income taxes for the three months ended March 31, 2013 totaled $3,762 and resulted in an effective tax rate of 24.8%. For the three months ended March 31, 2013 the effective tax rate includes a benefit of approximately $1,300 due to changes in tax laws and expense of approximately $1,500 related to the sale of an office building.

In 2009, a subsidiary of the Company was examined by a European tax authority, which challenged the business purpose of the deductibility of certain intercompany transactions from 2003 and issued two formal assessments against the subsidiary. In 2010, the Company filed appeals to litigate the matter. The first court date related to this matter was held in 2011, after which the court issued its ruling in favor of the Company. The tax authorities appealed this ruling and the appeals court also ruled in the Company's favor in 2012, however this ruling only applies to the smaller of the two assessments. The first court date for the larger of the two assessments was held in September 2012, and the Company has not yet received the court's ruling. For the three months ended March 31, 2013, the Company decreased its reserve for unrecognized tax benefits for this matter by $139, including $177 of foreign currency translation. The Company still believes this dispute to be in the early stages of the judicial process since any ruling reached by any of the courts may be subject to further appeals, and as such the final date of resolution of this matter is uncertain at this time. However, within the next twelve months it is possible that factors such as new developments, settlements or judgments may require the Company to increase its reserve for unrecognized tax benefits by up to approximately $8,000 or decrease its reserve by approximately $6,000, including penalties and interest. If the court rules against the Company in subsequent court proceedings, a payment for a substantial portion of the judgment, including any penalties and interest, will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself.

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Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2013

Derivatives and Hedging Activities [Abstract]

Derivatives and Hedging Activities

(7)         Derivatives and Hedging Activities

The Company operates internationally and is exposed to fluctuations in foreign exchange rates and interest rates in the normal course of business. The Company, from time to time, uses hedging instruments to reduce exposure to market risks resulting from fluctuations in interest rates and foreign exchange rates.

All financial instruments involve market and credit risks. The Company is exposed to credit losses in the event of non-performance by the counterparties to the contracts. While there can be no assurance, the Company does not anticipate non-performance by these counterparties.

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts to hedge forecasted cash flows associated with foreign currency transaction exposures, as deemed appropriate. This hedging strategy mitigates some of the impact of short-term foreign exchange rate movements on the Company's local operating results primarily in Sweden and Italy. The Company's primary market risk relates to exposures to foreign currency exchange rate fluctuations on transactions entered into by these international operations that are denominated primarily in U.S. dollars, Swedish Krona and Euros.

The Company's foreign currency forward contracts substantially offset gains and losses on the transactions being hedged. The Company's foreign currency forward contracts generally have varying maturities with none exceeding twelve months.

In the past, all foreign currency forward contracts had been designated as cash flow hedges and, accordingly, changes in the fair value of these derivatives were not included in earnings but were included in AOCI. Changes in the fair value of the derivative instruments reported in AOCI were recorded into earnings as a component of product revenue or expense, as applicable, when the forecasted transaction occurred. The ineffective portion of all hedges was recognized in current-period earnings and was immaterial to the Company's financial results.

There were no foreign currency forward contracts outstanding at March 31, 2013 and December 31, 2012.

Interest Rate Swap

The Company entered into an interest rate swap in March 2012 to reduce the impact of changes in interest rates on its floating rate debt. The swap is a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without the exchange of the underlying notional debt amount.

The swap contract outstanding at March 31, 2013 has been designated as a cash flow hedge and, accordingly, changes in the fair value of this derivative are not recorded in earnings but are recorded each period in AOCI and reclassified into earnings as interest expense in the same period during which the hedged transaction affects earnings. The ineffective portion of all hedges is recognized in earnings and has been immaterial to the Company's financial results.

As of March 31, 2013, the interest rate swap had a notional value of $60,000, at a fixed rate of 0.92%, maturing in September 2015. The fair value of this swap is based on quoted market prices and was in a loss position of $843 and $930 at March 31, 2013 and December 31, 2012, respectively. This loss is reflected in the Company's balance sheet under the caption "Accrued expenses and other current liabilities."

Assuming current market conditions continue, a loss of $405 is expected to be reclassed out of AOCI into earnings within the next twelve months.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

(9)        Accumulated Other Comprehensive Income

The following table provides the changes in AOCI by component, net of tax, for the three months ended March 31, 2013:

	Foreign Currency Translation Adjustments			Interest Rate Swap Agreement			Pension Plans			Total
Balance as of December 31, 2012	$	5,177		$	(600	)	$	(38,668	)	$	(34,091	)
Other comprehensive loss before reclassifications		(3,836	)		(13	)		-			(3,849	)
Amounts reclassified from accumulated other comprehensive loss		-			69			232			301
Net current-period other comprehensive (loss)/income		(3,836	)		56			232			(3,548	)
Balance as of March 31, 2013	$	1,341		$	(544	)	$	(38,436	)	$	(37,639	)

The following table provides the reclassifications out of AOCI by component for the three months ended March 31, 2013:

Details about AOCI Components	Amount Reclassified from AOCI			Affected Line Item in the Consolidated Income Statement
Losses on cash flow hedge:
Interest rate swap	$	(107	)	Interest expense, net
	$	38		Tax benefit
	$	(69	)	Net of tax
Amortization of defined benefit pension items:
Actuarial losses	$	(292	)	Selling, general and administrative expenses
Actuarial losses		(28	)	Cost of goods sold
Prior service costs		(28	)	Selling, general and administrative expenses
		(348	)	Total before tax
		116		Tax benefit
	$	(232	)	Net of tax
Total reclassification for the period	$	(301	)

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Retirement Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Domestic Pension Plan [Member]
Components of net periodic benefit cost [Abstract]
Interest cost	$ 764	$ 821
Expected return on plan assets	(956)	(918)
Recognized actuarial loss	234	216
Amortization of prior service cost/(benefit)	0	15
Net periodic benefit cost	42	134
International Pension Plan [Member]
Components of net periodic benefit cost [Abstract]
Service cost	188	165
Interest cost	166	200
Recognized actuarial loss	72	50
Amortization of prior service cost/(benefit)	(2)	(2)
Net periodic benefit cost	424	413
Supplemental Executive Retirement Plans, Defined Benefit [Member]
Components of net periodic benefit cost [Abstract]
Net periodic benefit cost	$ 54	$ 55

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Net Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Net Inventories [Abstract]

Net Inventories

Net inventories at March 31, 2013 and December 31, 2012 consist of the following:

	March 31,		December 31,
	2013		2012
Finished goods	$	27,660	$	30,262
Work in process		28,406		23,533
Raw materials		12,940		12,352
Supplies		5,060		5,074
Total	$	74,066	$	71,221

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Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2013

Retirement Plans [Abstract]

Components of net periodic benefit cost for domestic and international plan

Domestic Pension Plan

The components of net periodic benefit cost for the Company's domestic plan (which was frozen in 2007) for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Interest cost	$	764		$	821
Expected return on plan assets		(956	)		(918	)
Recognized actuarial loss		234			216
Amortization of prior service cost		-			15
Net periodic benefit cost	$	42		$	134

International Pension Plan

The components of net periodic benefit cost for the Company's international plan for the three months ended March 31, 2013 and 2012 were as follows:

	Three months ended
	March 31,
	2013			2012
Components of net periodic benefit cost
Service cost	$	188		$	165
Interest cost		166			200
Recognized actuarial loss		72			50
Amortization of prior service benefit		(2	)		(2	)
Net periodic benefit cost	$	424		$	413

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Consolidated Statements of Comprehensive Income (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income	$ 11,168	$ 7,038
Other comprehensive income/(loss):
Foreign currency translation adjustments	(3,836)	5,973
Comprehensive income (loss)	7,620	12,765
Foreign Currency Forward Contracts [Member]
Other comprehensive income/(loss):
Derivatives net of tax	0	(165)
Interest Rate Swap Agreement [Member]
Other comprehensive income/(loss):
Derivatives net of tax	56	(380)
Pension Plan [Member]
Other comprehensive income/(loss):
Pension plan amortization of net actuarial loss and prior service cost, net of tax	$ 232	$ 299

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Net Inventories

3 Months Ended

Mar. 31, 2013

Net Inventories [Abstract]

Net Inventories

(3)         Net Inventories

Inventories are determined on a first-in, first-out basis and stated at the lower of cost or market.

Net inventories at March 31, 2013 and December 31, 2012 consist of the following:

	March 31,		December 31,
	2013		2012
Finished goods	$	27,660	$	30,262
Work in process		28,406		23,533
Raw materials		12,940		12,352
Supplies		5,060		5,074
Total	$	74,066	$	71,221

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Net Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Inventory, Net [Abstract]
Finished goods	$ 27,660	$ 30,262
Work in process	28,406	23,533
Raw materials	12,940	12,352
Supplies	5,060	5,074
Total	$ 74,066	$ 71,221

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Gain on Sale of Asset

3 Months Ended

Mar. 31, 2013

Gain on Sale [Abstract]

Gain on Sale

(13)     Gain on Sale of Asset

For the three months ended March 31, 2013, the Company recorded a gain on the sale of an office building of approximately $4,700. The carrying value of the building was not material. The Company received cash of approximately $1,900 and a secured note of approximately $3,200 as of March 31, 2013.