<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 29, 1994
CAMBREX CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
1-10638 22-2476135
(Commission File Number) (IRS Employer Identification No.)
</TABLE>
One Meadowlands Plaza, East Rutherford, New Jersey 07073
(Address of Principal Executives Offices) (Zip Code)
Registrant's telephone number, including area code: (201) 804-3000
<PAGE> 2
AMENDMENT NO. 1
The undersigned registrant hereby amends the following portion of its Current
Report dated October 26, 1994 on Form 8-K as set forth in the pages attached
hereto:
Item 7. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
CAMBREX CORPORATION
(Registrant)
Dated: December 29, 1994 By: /s/ PETER TRACEY
-----------------------------
Peter Tracey,
Executive Vice President/Chief Financial Officer
Total # of pages 20
of which this is page 1
<PAGE> 3
COMBINED FINANCIAL STATEMENTS OF THE NOBEL/PROFARMACO GROUP
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants 3
Combined Balance Sheets as of December 31, 1993 and 1992 4
Combined Statements of Operations for the years ended
December 31, 1993, 1992, and 1991 5
Combined Statements of Cash Flows for the years ended
December 31, 1993, 1992, and 1991 6
Notes to Combined Financial Statements 7-13
Proforma Condensed Combined Balance Sheets as of September 30, 1994 (Unaudited) 15
Proforma Condensed Combined Statements of Operations for the nine months
ended September 30, 1994 (Unaudited) 16
Proforma Condensed Combined Balance Sheets as of December 31, 1993 (Unaudited) 17
Proforma Condensed Combined Statements of Operations for the year ended
December 31, 1993 (Unaudited) 18
</TABLE>
2
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of Cambrex Corporation:
We have audited the accompanying combined balance sheets of the
Nobel/Profarmaco Group (the "Group") as of December 31, 1993 and 1992, and the
related combined statements of operations and cash flows for each of the three
years in the period ended December 31, 1993. These combined financial
statements are the responsibility of the management of the Group. Our
responsibility is to express an opinion on these combined financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Group as of
December 31, 1993 and 1992, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
As discussed in Note 8 to the combined financial statements, in 1993, the Group
changed its method of accounting for income taxes.
COOPERS & LYBRAND L.L.P.
Parsippany, New Jersey
December 27, 1994
3
<PAGE> 5
NOBEL/PROFARMACO GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1993 1992
---- -----
<S> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,273 $ 16,964
Receivables:
Trade accounts, less allowance for doubtful accounts of
$762 and $228 at respective dates . . . . . . . . . . . . . . . . . . . . . . . 11,894 10,815
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,252 4,255
----- -----
15,146 15,070
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,825 24,280
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,302 1,108
------- -------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,042 57,422
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . 41,195 45,108
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 2,401
------- -------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,470 $ 104,931
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . $ 14,526 $ 17,190
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Short-term borrowings and Current
portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,779 15,626
------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 25,305 33,125
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,229 1,424
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,697 7,571
------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,231 42,160
Commitments and contingencies
Net investment in the Nobel/Profarmaco Group . . . . . . . . . . . . . . . . . . . 61,239 62,771
------- --------
Total liabilities and net investments in
the Nobel/Profarmaco Group . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,470 $ 104,931
======= ========
</TABLE>
See accompanying notes to combined financial statements.
4
<PAGE> 6
NOBEL/PROFARMACO GROUP
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $83,984 $93,177 $90,331
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . 58,678 73,698 71,456
Selling, general and administrative . . . . . . . . . . . . . . . 14,388 17,921 19,112
Research and development . . . . . . . . . . . . . . . . . . . . 2,466 2,930 4,809
------- -------- --------
Total operating expenses . . . . . . . . . . . . . . . . . . . 75,532 94,549 95,377
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . 8,452 (1,372) (5,046)
Other income (expenses)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . 1,391 3,055 6,369
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . (3,552) (8,674) (12,641)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . (250) 31,958 (1,239)
------- -------- --------
Income (loss) before income taxes . . . . . . . . . . . . . . . . 6,041 24,967 (12,557)
Provision (benefit) for income taxes . . . . . . . . . . . . . . . 843 (346)
------- -------- --------
Income (loss) before cumulative effect of
a change in accounting principle . . . . . . . . . . . . . . . . 5,198 25,313 (12,557)
Cumulative effect of change in method of accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,153
------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $6,351 $25,313 ($12,557)
======= ======== ========
</TABLE>
See accompanying notes to combined financial statements.
5
<PAGE> 7
NOBEL/PROFARMACO GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 6,351 $ 25,313 $(12,557)
Depreciation and amortization . . . . . . . . . . . . . . . . . 6,684 8,447 9,406
Cumulative effect of change in method of accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . (1,153)
Net insurance gain resulting from explosion. . . . . . . . . . . (30,023)
Loss from sale of business . . . . . . . . . . . . . . . . . . . 2,960
Changes in assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . (2,327) 3,942 (1,039)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . (6,300) 729 769
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . (496)
Other current assets . . . . . . . . . . . . . . . . . . . . (2,525) 1,858 (233)
Accounts payable and accrued liabilities . . . . . . . . . . 116 185 (1,803)
Income taxes payable . . . . . . . . . . . . . . . . . . . . 620 404 (8)
Other non-current assets and liabilities . . . . . . . . . . 229 (6,503) 449
--------- --------- --------
Net cash provided from (used in) operations . . . . . . . . . 1,199 4,352 (2,056)
--------- --------- --------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . (7,831) (19,154) (7,922)
Additions to intangibles . . . . . . . . . . . . . . . . . . . . (159) (1,402)
Proceeds from sale of business . . . . . . . . . . . . . . . . . 12,405
Insurance Proceeds from explosion . . . . . . . . . . . . . . . 42,324
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 275 1,451
--------- --------- --------
Net cash (used in) provided from investing activities . . . . (7,595) 23,286 4,532
--------- --------- --------
Cash flows from financing activities:
Net activity with Parent Company . . . . . . . . . . . . . . . . 1,622 (794) 1,766
Long-term debt activity (including current
portion)
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 16,773
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . (2,603) (11,486) (20,153)
Proceeds from issuance of common stock . . . . . . . . . . . 8,325
--------- --------- --------
Net cash (used in) financing activities . . . . . . . . . . . (981) (3,955) (1,614)
--------- --------- --------
Effect of exchange rates on cash . . . . . . . . . . . . . . . . . (2,314) (7,797) 79
Net (decrease) increase in cash . . . . . . . . . . . . . . . . . . (9,691) 15,886 941
Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . 16,964 1,078 137
--------- --------- --------
Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . $ 7,273 $ 16,964 $ 1,078
========= ========= ========
Supplemental disclosure:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,552 $ 8,674 $12,641
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . $ 1,201
</TABLE>
See accompanying notes to combined financial statements.
6
<PAGE> 8
NOBEL/PROFARMACO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
(1) THE COMPANY
The combined financial statements of the Nobel/Profarmaco Group (hereafter
referred to as the "Group") includes the accounts of Nobel Chemicals AB, Nobel
Chemicals International AB, Profarmaco Nobel S.r.l., and three sales companies.
The primary operations and production of the Group are within Nobel
chemicals AB and Profarmaco Nobel S.r.l. which are located in Karlskoga, Sweden
and Paullo, Italy, respectively. The sales companies of the Group are located
in the United States, the United Kingdom, and Germany. The primary function
of such sales companies is to distribute the Group's products to its own and
nearby markets. The Group's customer base is located in Europe, North and
South America, and the Far East.
The Group's operations are focused upon two areas; pharmaceutical
chemicals and fine chemicals. The pharmaceutical operations produce active
ingredients for generic and proprietary pharmaceutical companies. The fine
chemical operations develop and manufacture a broad range of nitrated
compounds and derivatives for sale as intermediate chemicals in pigments and
dyes, agrochemicals, x-ray contrast media, vitamins and cosmetic products.
Prior to October of 1994, the parent of all of the companies within the
Group was Akzo Nobel AB located in Stockholm, Sweden. In October of 1994, all
of the common stock of the entities within the Group were purchased by Cambrex
Corporation ("Cambrex"), a U.S. company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The combined financial statements include the accounts of the Group. All
significant intercompany balances and transactions have been eliminated.
Cash Equivalents
Temporary cash investments with an original maturity of less than three
months are considered cash equivalents.
Financial Instruments
Financial instruments consist principally of accounts receivable.
Concentration of credit risk exists inasmuch as the Company sells its products
to customers primarily in the chemical and pharmaceutical industries. However,
receivables are spread among many customers and are geographically dispersed.
No customer represents more than 10% of sales or receivables.
Inventories
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market.
7
<PAGE> 9
NOBEL/PROFARMACO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
Property, Plant and Equipment
Property, plant and equipment is stated at cost, net of accumulated
depreciation. Plant and equipment are depreciated on a straight-line basis
over the estimated useful lives for each applicable asset group as follows:
Buildings and improvements . . . . . . . . 20-36 years
Machinery and equipment . . . . . . . . . . 5-10 years
Intangible Assets
Intangible assets are recorded at cost and amortized on a straight-line
basis as follows:
Patents . . . . . . . . . . . . . . Amortized over the remaining
life of individual patents
(average 5 years)
Goodwill . . . . . . . . . . . . . 5-20 years
Product technology . . . . . . . . 5 to 17 years
Trademarks and other . . . . . . . 1 to 20 years
Receivables and payables in foreign currencies
The balance sheets of foreign entities included in the Group are translated
according to the current rate method which provides that assets and liabilities
are translated at period end rates. Income statements are translated at the
average rate for the period. Translation differences arising from the
translation of income statements and balance sheets are recorded directly to
the Net Investment in Group.
Income Taxes
Entities within the Group file income tax returns in their respective
countries of domicile. Deferred taxes are recorded based upon differences
between the financial statement and tax bases of assets and liabilities, and
available tax credit carryforwards.
8
<PAGE> 10
NOBEL/PROFARMACO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
(3) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
---- ----
<S> <C> <C>
Finished goods . . . . . . . . . . . . . . . . . . . . . $17,028 $11,928
Work-in-progress . . . . . . . . . . . . . . . . . . . . 6,428 8,266
Raw materials . . . . . . . . . . . . . . . . . . . . . . 2,646 3,599
Supplies . . . . . . . . . . . . . . . . . . . . . . . . 723 487
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . $26,825 $24,280
======= =======
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1993 1992
---- ----
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . $857 $ 994
Buildings and improvements . . . . . . . . . . . . . . . 18,999 21,737
Machinery and equipment . . . . . . . . . . . . . . . . . 71,352 75,216
Construction in progress . . . . . . . . . . . . . . . . 5,768 6,449
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 96,976 104,396
Accumulated depreciation . . . . . . . . . . . . . . . . (55,781) (59,288)
-------- --------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,195 $ 45,108
======== ========
</TABLE>
Depreciation expense amounted to $4,867, $5,913 and $6,348 for the years
ended December 31, 1993, 1992 and 1991, respectively.
(5) INTANGIBLE ASSETS
Components of intangible assets, net of accumulated amortization, are as
follows:
<TABLE>
<CAPTION>
December 31,
-----------------------
1993 1992
---- ----
<S> <C> <C>
Patents . . . . . . . . . . . . . . . . . . . . . . . . . $ 585
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 632
Product technology . . . . . . . . . . . . . . . . . . . $177 365
Trademarks and other . . . . . . . . . . . . . . . . . 56 819
---- ----
Total . . . . . . . . . . . . . . . . . . . . . . . . . $233 $2,401
==== =====
</TABLE>
Patents and goodwill were fully amortized during 1993.
9
<PAGE> 11
NOBEL/PROFARMACO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS)
(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1993 1992
---- ----
<S> <C> <C>
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 7,620 $ 8,862
Salaries, wages and employee
benefits payable . . . . . . . . . . . . . . . . . . . . . . 3,285 3,589
Other accrued liabilities . . . . . . . . . . . . . . . . . 3,670 4,739
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $14,575 $17,190
======= =======
</TABLE>
(7) DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
---- ----
<S> <C> <C>
Short-term $10,779 $15,626
Long-term . . . . . . . . . . . . . . . . . . . . . . . . 1,229 1,424
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $12,008 $17,050
======= =======
</TABLE>
Short term debt consists primarily of term notes in the amounts of $7,630
and $10,878 as of December 31, 1993 and 1992, respectively. This debt matured
in April of 1994. Interest accrues at approximately LIBOR plus 1% and is
payable quarterly in respect of the principle amount of the loan outstanding
from the drawdown date until maturity. The remaining short term debt consists
primarily of interest bearing advances from customers.
All debt was satisfied by Akzo Nobel AB, the Group's parent, prior to the
purchase of the Group by Cambrex in October 1994.
(8) INCOME TAXES
Effective January 1, 1993, the Group adopted Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes "(SFAS 109). The
cumulative effect of this change was the recognition of a deferred tax benefit
of $1,153.
In summary, SFAS 109 requires the determination of deferred tax assets and
liabilities by applying applicable tax rates to the difference between the
financial statement and tax bases of assets and liabilities. Additionally, it
requires separate balance sheet disclosure of deferred tax assets and
liabilities and has different recognition criteria for certain deferred tax
assets than Accounting Principles Board Opinion No. 11, the standard under
which the Group's financial statements were previously prepared. As permitted
under SFAS109, prior year financial statements have not been restated.
The provision/(benefit) for income taxes varies from the statutory rates in
1993 and 1992 primarily as a result of capital contributions to/from the parent
company as well as revaluations of plant, property and equipment which are
considered in the computation of local income tax liabilities. Such
differences have been treated as a permanent difference in these financial
statements. There is no benefit for income taxes in 1991 as the Group cannot
avail itself of tax loss carrybacks within its local tax jurisdictions.
10
<PAGE> 12
NOBEL/PROFARMACO GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS)
(8) INCOME TAXES (CONTINUED)
The Group has tax loss carry forwards in Sweden totalling approximately
$1,473 to offset against future taxable income generated in Sweden on an
indefinite carry forward basis. Accordingly, the Group has recognized a
deferred tax asset relating to these carry forwards in 1993. During that year,
$657 of those net operating losses were utilized resulting in a remaining
deferred tax asset of $496 at December 31, 1993. In addition, the Group has
approximately $7,224 in potential tax loss carry forwards for which they have
applied for approval with the Swedish tax authorities. It is uncertain
whether the Group will receive such approval and, therefore, be able to
realize the benefit of such carryforwards. Therefore, no related asset has
been recorded.
(9) NET INVESTMENT IN THE NOBEL/PROFARMACO GROUP
The net investment in the Nobel/Profarmaco Group represents the net
investment of the Group's parent company as well as the net of all loans,
advances, intercompany balances with the Group's parent company and
subsidiaries, and translation adjustments.
(10) OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consist of the following:
December 31
----------------
1993 1992
Pension Liabilities $4,330 $5,105
Accrual for severance pay 2,367 2,466
----- -----
$6,697 $7,571
===== =====
Nobel Chemicals AB participates in a defined benefit pension plan
(non-contributory for employees) which cover essentially all employees in its
Swedish operations. This plan (Swedish FPG/PRI pensions) forms part of a
Swedish multi-employer pension plan which is centrally administered. The level
of benefits and actuarial assumptions are established jointly for all plans,
and cannot unilaterally be changed by the participating companies. A
prerequisite for joining the FPG/PRI system is that a company reports the
actuarially calculated pension obligation as a liability in its balance sheet.
In Sweden, the pension liabilities are generally not funded. Pension
costs, including the interest on unfunded costs for the years ended December
31, 1993 and 1992 amounted to $163 and $551 respectively.
Since the pension plans are unfunded, the accumulated and projected benefit
obligations exceed plan assets. A summary of the funded status of the
significant plans is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
---- ----
<S> <C> <C>
Accumulated benefit obligation and vested
benefit obligation . . . . . . . . . . . . . . . . . $3,093 $3,628
Additional benefits due to salary
increases . . . . . . . . . . . . . . . . . . . . . . . 963
------ ------
Projected benefit obligation (PBO) . . . . . . . . . . . $3,093 $4,591
====== ======
Projected benefit obligation in excess
of plan assets . . . . . . . . . . . . . . . . . . . . $3,093 $4,591
Unrecognized net gain . . . . . . . . . . . . . . . . . 832
Unrecognized transition liability . . . . . . . . . . . 405 514
------ ------
Accrued pension liability . . . . . . . . . . . . . . . $4,330 $5,105
====== ======
</TABLE>
11
<PAGE> 13
(10) OTHER NON-CURRENT LIABILITIES (CONTINUED)
Assumptions used for the defined plans for the three years were:
Discount rate . . . . . . . . . . . . . . . . . . . 7.5%
Rates of increase in compensation levels . . . . . . 4.5%
Inflation rate . . . . . . . . . . . . . . . . . . . . . 3.5%
As the Group's benefit plan has no assets, no expected return on assets is
included in the computation of the pension liability and expense.
Under Italian law, severance pay accrues in favor of employees which they
(or in the event of their death, their heirs) are entitled to collect upon
termination of employment. The amount payable related to each year's service
is calculated on the basis of the remuneration of such year and is subject to
annual revaluations based on increases in the Italian cost of living index.
Provision of the effect of such revaluations is made as increases in the cost
of living index are realized.
(11) OTHER INCOME AND EXPENSE
There were no individually significant components in other expense in 1993.
Other income in 1992 consisted primarily of $30,023 representing insurance
proceeds net of related losses from an explosion at Nobel Chemicals during the
same year.
(12) FOREIGN OPERATIONS AND EXPORT SALES
The nature and geographical locations of the Group's operations are
described in Note 1. Sales outside the United States are geographically
dispersed among the European countries, South America and the Far East and are
summarized as follows:
<TABLE>
<S> <C> <C> <C>
United States $27,511 $26,087 $22,820
Non-United States 56,473 67,090 67,511
------ ------ -------
Total sales $83,984 $93,177 $90,331
======= ======= =======
</TABLE>
(13) COMMITMENTS
The Group has operating leases expiring on various dates through the year
1999. The leases are primarily for office and laboratory equipment and
vehicles. At December 31, 1993, future minimum commitments under operating
lease arrangements were as follows:
<TABLE>
<S> <C>
Year ended December 31:
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 624
1995 . . . . . . . . . . . . . . . . . . . . . . . . . 613
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 594
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . 574
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 537
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 330
-----
Net minimum commitments . . . . . . . . . . . $3,272
=====
</TABLE>
Total operating lease expense totaled $699, $1,103 and $968 for the years
ended December 31, 1993, 1992 and 1991, respectively.
12
<PAGE> 14
CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO COMBINED FINANCIAL
STATEMENTS - (CONTINUED)
(IN THOUSANDS)
(14) CONTINGENCIES
Contingencies exist for the Group relating to litigation and claims
arising out of the normal course of business. However, management is of the
opinion that while the ultimate liability resulting from these matters may
have a material effect upon the results of operations in any given year, they
will not have a material adverse effect upon the Group's financial position.
13
<PAGE> 15
CAMBREX CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
During 1994, Cambrex acquired the Nobel Chemicals Group (as described in
Note 1 to the attached Combined Financial Statements), the Fine Chemicals
Business of the Hexcel Corporation located in Teeside, United Kingdom, and the
Topanol product line of Zeneca Limited.
The following unaudited pro forma combined statement of operations for
the nine months ended September 30, 1994 and for the year ended December 31,
1993, gives effect to the acquisitions as if they occurred on January 1, 1993.
Actual debt incurred to finance these acquisitions during 1994 differs from the
debt presented in these pro forma financial statements. This is primarily
attributable to the assumption that cash outflows related to these businesses
which would have occurred during the period from January 1993 through September
1994 would have been funded through additional debt.
The proforma information for the nine month period ended September 30, 1994,
is derived from the unaudited interim financial statements of Cambrex, the
Nobel/Profarmaco Group and the other acquisitions for the period then ended.
The pro forma information for the year ended December 31, 1993 is derived
from the audited financial statements of Cambrex, the Nobel/Profarmaco Group
and the other acquisitions for the year then ended. Such proforma information,
in the opinion of Cambrex management, reflects adjustments necessary for a fair
presentation of results. The unaudited pro forma statements give effect to the
transactions under the purchase method of accounting and the assumptions and
adjustments as described in the accompanying note.
The unaudited pro forma financial statements may not be indicative of the
results that actually would have occurred if the combination had been in effect
on the dates indicated or of future results of operations of the combined
companies. The unaudited pro forma financial statements should be read in
conjunction with the financial statements and notes of Cambrex as filed in its
Annual Report on Form 10-K for the year ended December 31, 1993, and subsequent
filings, and the financial statements of the Nobel/Profarmaco Group included
elsewhere herein.
14
<PAGE> 16
CAMBREX CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1994
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Cambrex Adjustments Pro Forma
Corporation Acquired (see Note)
----------- -------- ---------- -----------
As Reported Businesses (Unaudited)
----------- ---------- ---------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary cash
investments . . . . . . . . . . . . . . . . $ 48 $ 5,464 $ (5,023)(1) $ 489
Trade and other receivables . . . . . . . . . 35,297 20,032 55,329
Inventories . . . . . . . . . . . . . . . 35,171 24,342 59,513
Other current assets . . . . . . . . . . . . . 4,634 4,493 9,127
-------- ------- -------- --------
Total current assets . . . . . . . . . 75,150 54,331 (5,023) 124,458
Property, plant and equipment, net . . . . . . . 98,167 55,262 10,079(2) 163,508
Intangible assets, net . . . . . . . . . . . . . 11,320 413 40,321(3) 52,054
Other non-current assets . . . . . . . . . . . . 1,287 1,287
-------- ------- -------- --------
Total assets . . . . . . . . . . . . . . $185,924 $110,006 $ 45,377 $341,307
======== ======= ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities . . . $ 27,229 $ 20,120 $ 47,349
Income taxes payable . . . . . . . . . . . . . 3,582 3,018 $ (2,544)(4) 4,056
Current portion of long-term debt . . . . . . 4,010 2,062 6,072
-------- ------- -------- --------
Total current liabilities . . . . . . . . 34,821 25,200 (2,544) 57,477
Long-term debt . . . . . . . . . . . . . . . 38,306 1,330 130,242(5) 169,878
Deferred taxes . . . . . . . . . . . . . . . 7,195 7,195
Other non-current liabilities . . . . . . . . . . 8,748 7,849 16,597
-------- ------- -------- --------
Total liabilities . . . . . . . . . . . . 89,070 34,379 127,698 251,147
-------- ------- -------- --------
Equity:
Common stock . . . . . . . . . . . . . . . 607 607
Additional paid-in capital . . . . . . . . . . 73,423 73,423
Retained earnings . . . . . . . . . . . . . . 33,024 (6,694) 26,330
Additional minimum pension liability . . . . . (692) (692)
Cumulative translation adjustment . . . . . . 411 411
Treasury stock at cost (921,251 shares) . . . (9,919) (9,919)
Net investment in Group . . . . . . . . . . . 75,627 (75,627)
-------- ------- --------- --------
Total liabilities and net investmnet
in Group . . . . . . . . . . . . . . . $185,924 $110,006 $ 45,377 $341,307
======== ======= ========= ========
</TABLE>
See accompanying note to unaudited pro forma combined balance sheet
15
<PAGE> 17
CAMBREX CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Cambrex Adjustments Pro Forma
Corporation Acquired (see Note)
----------- -------- ---------- -----------
As Reported Businesses (Unaudited)
----------- ---------- ----------------------------
<S> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . $166,879 $82,532 $ 713(6) $250,124
Operating costs:
Cost of goods sold . . . . . . . . . . . . 127,618 54,205 $ 1,078(7) 182,901
Selling, general and
administrative expenses . . . . . . . . . 21,773 13,422 2,296(7) 37,491
Research and development . . . . . . . . . 3,612 2,304 54(6) 5,970
-------- -------- ------- --------
Total . . . . . . . . . . . . . . . 153,003 69,931 3,428 226,362
-------- -------- ------- --------
Operating Income (loss) . . . . . . . . . . . . . 13,876 12,601 (2,715) 23,762
Other income (expenses):
Interest income . . . . . . . . . . . . . . . 3 1,017 (1,001)(8) 19
Interest expense . . . . . . . . . . . . . . . (1,532) (1,426) (4,350)(9) (7,308)
Other - net . . . . . . . . . . . . . . . (74) 233 159
-------- -------- ------- --------
Income (loss) before income taxes . . . . . . . . 12,273 12,425 (8,066) 16,632
Provision (benefit) for
income taxes . . . . . . . . . . . . . . . . 4,325 4,160 (2,544)(10) 5,941
-------- -------- ------- --------
Net income (loss) . . . . . . . . . . . . . . . . $ 7,948 $ 8,265 $ (5,522) $ 10,691
========= ======== ======= ========
Weighted average number of shares outstanding:
Primary . . . . . . . . . . . . . . . 5,655 5,655
====== ======
Fully diluted . . . . . . . . . . . . . . . 5,693 5,693
====== ======
Net income per share:
Primary . . . . . . . . . . . . . . . $ 1.41 $ 1.89
======== ======
Fully diluted . . . . . . . . . . . . . . . $ 1.40 $ 1.88
======== ======
</TABLE>
See accompanying note to unaudited pro forma combined statement of operations
16
<PAGE> 18
CAMBREX CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Cambrex Adjustments Pro Forma
Corporation Acquired (See Note)
----------- -------- ----------- ------------
As Reported Businesses (Unaudited)
----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary cash
investments . . . . . . . . . . . . . . . . . $161 $7,364 $ (6,770)(1) $ 755
Trade and other receivables . . . . . . . . . . 28,015 17,298 45,313
Inventories . . . . . . . . . . . . . . . . 33,730 29,019 62,749
Deferred tax asset . . . . . . . . . . . . . . 1,315 496 1,811
Other current assets . . . . . . . . . . . . . . 3,557 3,405 6,962
-------- -------- -------- --------
Total current assets . . . . . . . . . . 66,778 57,582 (6,770) 117,590
Property, plant and equipment, net . . . . . . . . 89,784 47,035 9,807(2) 146,626
Intangible assets, net . . . . . . . . . . . . . . 7,621 233 43,857(3) 51,711
Other non-current assets . . . . . . . . . . . . . 2,662 2,662
-------- -------- -------- --------
Total assets . . . . . . . . . . . . . . . $166,845 $104,850 $ 46,894 $318,589
======== ======== ======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities . . . . $ 20,872 $ 17,525 $ 38,397
Income taxes payable . . . . . . . . . . . . . . 3,409 53 $(3,155)(4) 307
Current portion of long-term debt . . . . . . . 4,000 10,786 14,786
-------- -------- -------- --------
Total current liabilities . . . . . . . . . 28,281 28,364 (3,155) 53,490
Long-term debt . . . . . . . . . . . . . . . . 36,261 1,241 119,769(5) 157,271
Deferred taxes . . . . . . . . . . . . . . . . 5,986 5,986
Other non-current liabilities . . . . . . . . . . . 8,748 6,697 15,445
-------- -------- -------- --------
Total liabilities . . . . . . . . . . . . . 79,276 36,302 116,614 232,192
-------- -------- -------- --------
Equity:
Common stock . . . . . . . . . . . . . . . . 601 601
Additional paid-in capital . . . . . . . . . . . 72,627 72,627
Retained earnings . . . . . . . . . . . . . . . 25,859 (1,172) 24,687
Additional minimum pension liability . . . . . . (1,030) (1,030)
Treasury stock at cost (921,251 shares) . . . . (10,488) (10,488)
Net investment in Group . . . . . . . . . . . . 68,548 (68,548)
-------- -------- -------- --------
Total liabilities and net investment
in Group . . . . . . . . . . . . . . . . $166,845 $104,850 $ 46,894 $318,589
======== ======== ======== ========
</TABLE>
See accompanying note to unaudited pro forma combined balance sheet
17
<PAGE> 19
CAMBREX CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Cambrex Adjustments Pro Forma
Corporation Acquired (see Note)
----------- -------- ---------- -----------
As Reported Businesses (Unaudited)
----------- ----------
<S> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . . . $197,203 $ 98,501 $295,704
Operating costs:
Cost of goods sold . . . . . . . . . . . . 145,425 71,339 $ 1,164(7) 217,928
Selling, general and
administrative expenses . . . . . . . . . 29,286 15,492 3,208(7) 47,986
Research and development . . . . . . . . . 5,843 2,697 8,540
-------- -------- ------- --------
Total . . . . . . . . . . . . . . . 180,554 89,528 4,372 274,454
-------- -------- ------- --------
Operating Income (loss) . . . . . . . . . . . . . 16,649 8,973 (4,372) 21,250
Other income (expenses):
Interest income . . . . . . . . . . . . . . . 41 1,391 (961)(8) 471
Interest expense . . . . . . . . . . . . . . . (2,812) (3,683) (4,595)(9) (11,090)
Other - net . . . . . . . . . . . . . . . (466) 903 437
-------- -------- ------- --------
Income (loss) before income taxes . . . . . . . . 13,412 7,584 (9,928) 11,068
Provision (benefit) for
income taxes . . . . . . . . . . . . . . . . 4,771 1,982 (3,154)(10) 3,599
-------- -------- ------- --------
Net income (loss) . . . . . . . . . . . . . . . . $ 8,641 $ 5,602 $(6,774) $ 7,469
======== ======== ======= ========
Weighted average number of shares outstanding:
Primary . . . . . . . . . . . . . . . 5,282 5,282
======== ========
Fully diluted . . . . . . . . . . . . . . . 5,484 5,484
======== ========
Net income per share:
Primary . . . . . . . . . . . . . . . $ 1.64 $ 1.41
======== ========
Fully diluted . . . . . . . . . . . . . . . $ 1.60 $ 1.36
======== ========
</TABLE>
See accompanying note to unaudited pro forma combined statement of operations
18
<PAGE> 20
CAMBREX CORPORATION
NOTE TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma adjustment reflects the purchase of the Nobel Chemicals Group (as
described in Note 1 to the attached financial statements), the Fine Chemicals
Business of the Hexcel Corporation located in Teeside, United Kingdom, and the
Topanol product line of Zeneca Limited by Cambrex as follows:
<TABLE>
<S> <C>
Debt incurred to finance acquisitions . . . . . . . . . . . . $119,047
========
Net carrying value of assets acquired
less liabilities assumed . . . . . . . . . . . . . . . $61,511
Adjustments to reflect fair value changes:
Property, plant and equipment . . . . . . . . . . . . . 10,897
Intangibles . . . . . . . . . . . . . . . . . . . . . . 3,000
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . 43,639
--------
Fair value of assets acquired . . . . . . . . . . . . . . . $119,047
========
</TABLE>
19
<PAGE> 21
CAMBREX CORPORATION
NOTE TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
The pro forma adjustments to the accompanying statement of operations for
the nine months ended September 30, 1994, and for the year ended December 31,
1993, assume the Businesses were acquired January 1, 1993. In summary, these
adjustments:
- - Reflect additional depreciation and amortization expense which would
have been recorded by Cambrex due to increased asset values and shorter
estimated useful lives.
- - Record additional interest expense which would have been incurred by
Cambrex in connection with the financing of the purchase of the
acquisitions at a borrowing rate of 6%.
- - Record the tax effects of the pro forma adjustments at applicable rates.
Specifically, the nature of the pro-forma adjustments represent:
1. The payment of additional interest and other expenses with cash on hand.
2. Revaluation of plant, property and equipment to fair market value (net of
accumulated depreciation on the revaluation increment).
3. The recording of goodwill and other intangibles net of accumulated
amortization.
4. Reduction of tax liabilities due to the adjustment of the provision for
income taxes.
5. The net additional long term debt required to finance the acquisitions and
operation of the acquired businesses.
6. Activities of the businesses acquired during the period January 1, 1994 to
September 30, 1994 not previously reported.
7. Additional depreciation and amortization expenses.
8. Elimination of intercompany interest income.
9. Elimination of intercompany interest expense net of interest expense
assumed to be incurred by Cambrex Corporation. The latter aggregates
$5,736 for the nine months ended September 30, 1994 and $6,992 for the
year ended December 31, 1993.
10. The recognition of the tax benefit of additional expenses to the extent tax
liabilities could be reduced.
20
<PAGE> 22
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
23 Consent of Independent Auditors
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
Nos. 33-21374, 33-37791, 33-81780, and 33-81782 on Form S-8 of Cambrex
Corporation (the "Registrant") of our report dated December 27, 1994 included
on Page 3 herein, with respect to the financial statements of the
Nobel/Profarmaco Group, as enumerated in the accompanying index on Page 2,
included on Form 8-K/A Amendment No. 1 to the Current Report dated October 26,
1994 on Form 8K of the Registrant.
COOPERS & LYBRAND L.L.P.
Parsippany, New Jersey
December 29, 1994
