CAMBREX CORP, 10-K, 1997-03-21

CAMBREX CORP
10-K, 1997-03-21
INDUSTRIAL ORGANIC CHEMICALS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

[ ] 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)

<TABLE>
<S> <C>
DELAWARE 22-2476135
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

ONE MEADOWLANDS PLAZA,
EAST RUTHERFORD, NEW JERSEY 07073
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201)-804-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- - --------------------------------------------------------------------------------------------
<S> <C>
Common Stock, $.10 par value American Stock Exchange
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $366,359,752 as of February 28, 1997.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of February 28, 1997, there were 11,745,296 shares outstanding of the
registrant's Common Stock, $.10 par value.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for the 1997 Annual
Meeting are incorporated by reference into Part III of this report.

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<PAGE> 2

PART I

ITEM 1 -- BUSINESS.

GENERAL

Cambrex Corporation (the "Company" or "Cambrex"), a Delaware corporation,
began business in December 1981 through its predecessor, and now wholly-owned
subsidiary, CasChem, Inc.

The Company manufactures and markets a broad line of specialty chemicals
and commodity chemical intermediates and also manufactures chemicals to customer
specifications. There are five product categories: pharmaceutical bulk actives;
pharmaceutical intermediates; organic intermediates; performance enhancers; and
polymer systems. Currently the Company's overall strategy for these categories
is to focus on niche markets that have global opportunities, build on strong
customer relations to fill our new products' pipeline, and support the capital
and state-of-the-art technology, while being leaders in environmental, health
and safety performance.

Within each of the product categories, the Company uses a consistent
business approach:

1. It focuses on niche products requiring high technical experience.

2. Core products are those in which the Company is a leading supplier,
and for which price competition is not the primary market
determinant.

3. Products and product lines are continually reviewed and those not
meeting operating profit goals are eliminated and replaced with new
products with higher returns.

In order to manage a business with a large number of products and a dynamic
business mix, the Company runs a decentralized organization. The business is
conducted by eight subsidiary organizations headed by an experienced business
manager. Each subsidiary controls all the resources required for the success of
its business and is responsible for its financial performance. Cambrex provides
oversight of the subsidiaries and, where performance is considered
unsatisfactory, becomes directly involved to help correct any deficiencies. It
also provides support services that are not fundamental to the success of the
subsidiaries' business endeavors; such services include finances, risk
management, and pension and benefits management.

Important objectives of the Company are to expand its operations through
internal growth and to make strategic acquisitions of product lines, technology
and companies that have substantial positions in niche markets.

On October 12, 1994, the Company completed the acquisition of the stock of
Nobel's Pharma Chemistry Business ("Nordic/Profarmaco") from Akzo Nobel for
$130,300. The business consists of Nobel Chemicals AB (now Nordic Synthesis AB.,
"Nordic") in Karlskoga, Sweden, Profarmaco Nobel S.r.1. (now Profarmaco S.r.1.,
"Profarmaco") in Milan, Italy and sales companies in Germany, England and the
United States. Nordic and Profarmaco manufacture fine chemical intermediates and
bulk active ingredients for pharmaceutical products.

- - ---------------

(dollars in thousands, except share data)

1
<PAGE> 3

PRODUCTS

The following table sets forth for the periods indicated information
concerning gross sales from the Company's five product categories:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994(1)
--------- --------- ---------
<S> <C> <C> <C>
Pharmaceutical bulk actives................ $ 97,582 $ 96,827 $ 23,774
Pharmaceutical intermediates............... 71,202 69,097 48,861
Organic intermediates...................... 73,049 77,792 64,472
Performance enhancers...................... 75,632 69,973 59,210
Polymer systems............................ 52,014 54,381 53,366
-------- -------- --------
Gross sales................................ $ 369,479 $ 368,070 $ 249,683
======== ======== ========
</TABLE>

- - ---------------

(1) Sales from Seal Sands, acquired in January 1994, and Nordic and Profarmaco,
acquired in October 1994, are included from the date of acquisition.

The Company manufactures and markets a broad line of specialty chemicals.
It uses its technical expertise in a wide range of chemical processes to meet
the needs of its customers for high quality products for specialized
applications. These applications include: pharmaceutical bulk actives produced
under Food and Drug Administration (FDA) regulation for use in prescription and
over-the-counter drug products; pharmaceutical intermediates produced in current
Good Manufacturing Practices (cGMP) facilities for use in the production of
pharmaceuticals, cosmetics, food additives and other healthcare products;
organic intermediates used in the production of herbicides, insecticides, feed
additives, pigments, and other complex organic molecules; performance enhancers
which are complex chemicals designed to impart special properties when small
quantities are included in the formulation of specific products; and polymer
systems which are monomers or two component polymer systems for use in small
volume, high performance applications.

Pharmaceutical bulk actives. Pharmaceutical products are classified into
nine therapeutic product groups. Cambrex sells products in six of these
principal product groups: (1) gastro-intestinal preparations, (2)
cardiovascular, (3) respiratory products, (4) central nervous system, (5)
anti-inflammatory, and (6) other actives, including anti-infective, endocrine
products, immunology, diuretics and other preparations. These products are sold
to a diverse group of more than 400 customers with one customer accounting for
12% of 1996 sales in this category. Many of these products are also sold through
agents.

Products in this category are manufactured under FDA registration for use
as the active ingredients in prescription and over-the-counter drugs.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1996 1995 CHANGE CHANGE
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Gastro-intestinal.................... $ 31,503 $ 31,928 $ (425) (1)%
Cardiovascular....................... 21,806 20,229 1,577 8
Respiratory.......................... 9,409 6,951 2,458 35
Central Nervous System............... 8,809 8,903 (94) (1)
Anti-inflammatory.................... 7,966 8,343 (377) (5)
Other Actives........................ 18,089 20,473 (2,384) (12)
------- ------- ------- ---
$ 97,582 $ 96,827 $ 755 1%
======= ======= ======= ===
</TABLE>

Cardiovascular bulk actives increased mainly due to the sales of a product
to new countries as well as new customers. Respiratory actives were 35% above
prior year due to a 66% increase in one product with increased U.S. market
demands. Gastro-intestinal products were affected by the ordering pattern of a
major customer

- - ---------------

(dollars in thousands, except share data)

2
<PAGE> 4

for sulfasalazine/mesalamine, used to treat ulcerative colitis. Other actives
were below 1995 due to reduced sales of endocrine bulk actives.

Pharmaceutical intermediates. This category consists of four product
groups: (1) intermediates used in the manufacture of vitamins and other health
care products, (2) x-ray contrast media intermediates, (3) intermediates for the
cosmetic industry, and (4) other pharmaceutical intermediates. These products
are sold to approximately 700 customers, with no one customer accounting for
over 10% of 1996 sales in this category. These products are mainly produced in
cGMP facilities.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1996 1995 CHANGE CHANGE
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Health............................... $ 19,548 $ 20,003 $ (455) (2)%
X-Ray Media.......................... 21,552 18,372 3,180 17
Cosmetics............................ 6,609 6,411 198 3
Other Pharmaceutical Intermediates... 23,493 24,311 (818) (3)
------- ------- ------- ---
$ 71,202 $ 69,097 $ 2,105 3%
======= ======= ======= ===
</TABLE>

X-ray media products increased 17% mainly due to U.S. sales of 5-NIPA
compounds to a customer who was in the process of shifting its production to the
U.S. markets. Other pharmaceutical intermediates were adversely affected by the
loss of a contract to manufacture PMPA for the dextromethorphan market (used in
over-the-counter cough suppressants), and the reduced sales of various other
intermediates used in dextromethorphan products. During 1996, a customer
prematurely terminated a five-year supply agreement for the manufacture of PMPA
which extended through 1999. As a result of the premature termination, the
Company reached a settlement agreement with the particular customer whereby the
Company would receive payments during 1996 and for the next three years. The
Company recognized income, net of related costs, of approximately $1,100 during
the three months ended December 31, 1996. The introduction of an advanced
intermediate of a new protease inhibitor for AIDS treatment partially offsets
the decrease attributed to the lost sales of PMPA.

Organic intermediates. This category consists of three product groups: (1)
feed additives (2) intermediates used for crop protection chemicals, and (3)
pigment intermediates. These products are sold to approximately 200 customers.
Two customers accounted for 25% and 18% of 1996 sales in this category.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1996 1995 CHANGE CHANGE
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Feed additives....................... $ 29,889 $ 37,387 $(7,498) (20)%
Crop Protection...................... 31,671 30,454 1,217 4
Pigment Intermediates................ 11,489 9,951 1,538 15
------- ------- ------- ---
$ 73,049 $ 77,792 $(4,743) (6)%
======= ======= ======= ===
</TABLE>

Feed additives decreased 20% due to reduced pricing and increased
competition in the feedgrade Vitamin B3 markets, and to lower organo-arsenical
feed additives as a result of escalated grain prices and increased price
competition to end-users. The crop protection intermediates increase was due to
the renegotiaton of a contract for a pyridine derivative used in the herbicide
market. Pyridine, which is the largest product in crop protection, was down from
1995, as the major customer took product at 1993 levels after two years at above
contract levels. Pigment intermediates were 15% above 1995 levels due to
increased market share of PNBA, a pigment used primarily in dyes and UV
protection agents.

- - ---------------

(dollars in thousands, except share data)

3
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Performance enhancers: These products are complex chemicals designed to
impart special properties, such as flame retardancy or rapid curing, when small
quantities are included in the formulation of specific products. This category
consists of five product groups: (1) specialty additives, (2) catalysts, (3)
polymers, (4) photographic chemicals, and (5) additives for the fuel/oil
industry. These products are sold to approximately 1,300 customers with no one
customer accounting for over 10% of 1996 sales in this category.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1996 1995 CHANGE CHANGE
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Specialty Additives.................. $ 22,870 $ 16,210 $ 6,660 41%
Catalysts............................ 15,833 16,985 (1,152) (7)
Polymers............................. 16,084 15,722 362 2
Photographic......................... 12,326 12,197 129 1
Fuel/Oil............................. 8,519 8,859 (340) (4)
------- ------- ------- ---
$ 75,632 $ 69,973 $ 5,659 8%
======= ======= ======= ===
</TABLE>

This category includes increases in specialty additives of 41% from 1995
primarily due to a 33% increase in sales of pyridine derivatives to world
markets and customers not previously served. Photographic products were affected
by a customer requiring additional inventory of a polymer used in instant film.
Sales of catalysts were affected by reduced demand for products to the
dextromethorphan markets.

Polymer systems: The products in this category are monomers or two
component polymer systems for use in small volume, high performance
applications. This category consists of four product groups: (1)
telecommunications and electronics industries, (2) coatings, (3) high
performance engineering plastics, and (4) biomedical. Polymer systems are sold
to an estimated 400 customers with no one customer accounting for over 10% of
1996 sales in this category.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1996 1995 CHANGE CHANGE
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Telecommunications................... $ 18,809 $ 23,710 $(4,901) (21)%
Coatings............................. 19,138 17,574 1,564 9
Engineering plastics................. 8,179 8,093 86 1
Biomedical........................... 5,888 5,004 884 18
------- ------- ------- ---
$ 52,014 $ 54,381 $(2,367) (4)%
======= ======= ======= ===
</TABLE>

Telecommunications products decreased 21% primarily as a result of the
Company's strategic decision to no longer provide product to AT&T. Sales of
Bufferite fiber optic gels to other customers also declined as products were
reformulated to provide lower cost products, while improving the Company's
margins. Coatings increases were due to sales of castor oil based products to a
major paint manufacturer. Biomedicals grew 18% due to price increases and growth
at a major customer, as a result of higher demand for their end-use products.
Engineering plastics were at the same level as prior year.

MARKETING AND DISTRIBUTION

The Company's pharmaceutical bulk actives and pharmaceutical intermediates
are generally high value, low volume products requiring significant technical
efforts for the development and manufacture. Marketing generally requires
significant cooperative effort between a small highly trained marketing staff, a
technical staff who can assess the technical fit and estimate manufacturing
economics, and the business management to determine the strategic and business
fit. Such a process may take from two to five years before a commercial product
is fully established. Because of this long lead time and the complexity of the
technical efforts, these

- - ---------------

(dollars in thousands, except share data)

4
<PAGE> 6

are usually long-term relationships with major corporations who become
significant customers. Sales of established products may be handled by agents in
those areas where direct sales efforts are uneconomic.

For other product categories, marketing and distribution is more typical of
chemical companies, with products being sold to customers from inventory in
volumes ranging from rail cars to five gallon pails. Sales may be handled by
company sales people, distributors or agents as appropriate.

RAW MATERIALS

The Company uses a wide array of raw materials in the conduct of its
businesses. The Company uses significant amounts of castor oil and compounds
derived from petroleum feedstocks in manufacturing a limited number of its
products.

The Company believes it is one of the largest purchasers of castor oil in
the United States, and has the ability to take delivery and store a large
quantity of castor oil on site. Castor oil is used primarily in the manufacture
of the Company's polymer systems for coatings and telecommunication
applications. Under advantageous market conditions, the Company sells this
commodity in bulk quantities as simple castor oil derivatives.

Castor oil, which is not produced in the United States, is an agricultural
product, the market price of which is affected by natural factors relating to
the castor bean crop from which the oil is produced. Castor oil is produced
commercially in a few foreign countries, with India currently being the largest
exporter. The Company has been able to obtain adequate supplies of castor oil
generally at acceptable prices in the past and expects to be able to do so in
the future.

Pyridine, which accounted for 8%, 8% and 13% of gross revenues in 1996,
1995 and 1994, respectively, is produced by the Company by a process involving
the high temperature reaction of acetaldehyde, formalin and ammonia.
Acetaldehyde is available from two suppliers in North America. The price of
acetaldehyde decreased approximately 11% during 1996 after increasing 15% during
1995. Formalin's feedstock is methanol, which is also used by the petro-chemical
industry in the manufacture of methyl-tert-butyl-ether (MTBE). In 1994 and 1995,
the production of and demand for MTBE had increased rapidly in connection with
its use as a gasoline additive. This increased demand had caused the price of
formalin to increase by approximately 50% in 1994 and an additional 23% in 1995.
As methanol prices have decreased in 1996, however, the pricing of formalin has
declined by 28% to below 1994 levels. Ammonia is widely available, and the cost
of ammonia decreased by 4% in 1996.

The Company obtains acetaldehyde and formalin pursuant to long-term supply
contracts under which the price for the raw material adjusts to market
conditions, with a time lag. The Company sometimes has difficulty passing on
price increases to its customers, particularly if the increases are precipitous
rather than general.

The other key raw materials used by the Company are advanced organic
intermediates and generally have been in adequate supply from multiple
suppliers.

RESEARCH AND DEVELOPMENT

The Company's research and development program is designed to increase the
Company's competitiveness through improving its technology and developing
processes for the manufacture of new products to meet customer requirements. The
goals are to improve the Company's manufacturing processes so as to reduce
costs, improve quality and increase capacity; and to identify market
opportunities which warrant a significant technical effort, and offer the
prospects of a long-term, profitable business relationship. Research and
development activities are performed at most of the Company's manufacturing
facilities in both the United States and Europe. Eighty-five employees are
involved directly in research and development activities worldwide. In November
1995, the Company formed a strategic alliance with Oxford Asymmetry, Ltd.

- - ---------------

(dollars in thousands, except share data)

5
<PAGE> 7

(located near Oxford in the United Kingdom). The Company will commercialize
technologies and products developed by Oxford Asymmetry, and provides financial
support for their research and development group. The Company provides Oxford
Asymmetry with $1,000 per year which is included in research and development
expense for the year ended December 31, 1996. In addition, the Company will be
required to pay royalties to Oxford Asymmetry for any technology licensed. In
February, 1997, the Company signed a cooperative agreement with Albany Molecular
Research, Inc. of Albany, New York. The Company will provide Albany Molecular
Research financial support at a minimum of $2,340 over the next three years to
develop processes specifically designated to fit into the Company's cGMP
manufacturing facilities.

The Company spent approximately $9,200, $7,500 and $5,700 in 1996, 1995 and
1994, respectively, on research and development.

PATENTS AND TRADEMARKS

The Company has patent protection in some of its product areas. However,
the Company relies primarily on know-how in many of its manufacturing processes
and techniques not generally known to other chemical companies, for developing
and maintaining its market position.

The Company currently owns approximately 71 United States patents which
have varying durations and which cover selected items in each of the Company's
major product areas. The Company also owns the foreign equivalent of many of its
United States patents. In addition, the Company has applied for patents for
various concepts and is in the process of preparing patent applications for
other concepts.

The Company has trademarks registered in the United States and a number of
foreign countries for use in connection with the Company's products and
business. The Company believes that many of its trademarks are generally
recognized in its industry. Such trademarks include Naturechem(R),
Bufferite(R)and Vitride(R).

The Company requires employees to sign confidentiality and non-compete
agreements where appropriate.

COMPETITION

Because of the nature of the Company's products in its pharmaceutical bulk
actives and pharmaceutical intermediates categories and its strategic approach,
it is not possible to identify a group of direct competitors. Where competition
exists, it is typically specific to a certain product, or is focused early in
the process, when an initial market position is being established. If the
Company perceives significant competitive risk and a need for large technical or
financial commitment, it generally negotiates long-term contracts or capital
guarantees from its targeted customer before proceeding.

Competition for the Company's products other than pharmaceutical bulk
actives and pharmaceutical intermediates is more typical of chemical markets.
Competition exists from other producers of the Company's products and other
products that may offer equivalent properties. Competition in these areas are
generally based on customer service, product quality and pricing.

ENVIRONMENTAL AND SAFETY REGULATIONS AND PROCEEDINGS

General: Production of certain of the Company's chemicals involves the use,
storage and transportation of toxic and hazardous materials. The Company's
operations are subject to extensive international and domestic federal, state
and local laws and regulations relating to the storage, handling, emission,
transportation and discharge of materials into the environment and the
maintenance of safe conditions in the work place. The Company maintains
environmental and industrial safety and health compliance programs at its
plants, and believes that its manufacturing operations are in general compliance
with all applicable safety, health and environmental laws.

The Company's acquisitions were made subject to known environmental
conditions. Also, risks of substantial costs and liabilities are inherent in
certain plant operations and certain products produced at the

- - ---------------

(dollars in thousands, except share data)

6
<PAGE> 8

Company's plants, as they are with other companies engaged in the chemical
business, and there can be no assurance that significant costs and liabilities
will not be incurred. Additionally, prevailing legislation tends to hold
chemical companies primarily responsible for the proper disposal of their
chemical wastes even after transferral to third party waste disposal facilities.
Moreover, other future developments, such as increasingly strict environmental,
safety and health laws and regulations, and enforcement policies thereunder,
could result in substantial costs and liabilities to the Company and could
subject the Company's handling, manufacture, use, reuse, or disposal of
substances or pollutants at its plants to more rigorous scrutiny than at
present. Although the Company has no direct operations and conducts its business
through subsidiaries, certain legal principles that provide the basis for the
assertion against a parent company of liability for the actions of its
subsidiaries may support the direct assertion against the Company of
environmental liabilities of its subsidiaries.

During January 1997, an opinion was rendered against Cosan, Inc. (a
subsidiary of Cambrex) by the District Court of New Jersey in a matter that has
been pending since 1991. The opinion states that Cosan contributed to
contamination at a site in Clifton, New Jersey which was previously owned and
operated by Cosan. Pursuant to the opinion, Cosan is liable for past
environmental investigation and remediation costs approximating $800 plus
interest, as well as future remediation costs of the site. In addition, treble
damages on all past and future costs, plus interest, were assessed against
Cosan. Cosan intends to appeal this opinion with the District Court of New
Jersey and believes that the treble damages component of the opinion are
unprecedented. The estimated range of costs for this case have been considered
in the Company's year-end reserve assessment.

Known environmental matters which may result in liabilities to the Company
and the related estimates and accruals are summarized in Note #20 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

Present and Future Environmental Expenditures: The Company's policy is to
comply with all legal requirements of applicable environmental, health and
safety laws and regulations. The Company believes it is in general compliance
with such requirements and has adequate professional staff and systems in place
to remain in compliance. In some cases, compliance can only be achieved by
capital expenditures, and the Company made capital expenditures of approximately
$4,800 in 1996, $4,000 in 1995, and $2,500 in 1994 for environmental projects.
The Company anticipates that capital requirements will increase in subsequent
years as a result of the Clean Air Act Amendments and other pending
environmental laws. Additionally, as the environmental proceedings in which the
Company is involved progress from the remedial investigation and feasibility
study stage to implementation of remedial measures, related expenditures will
most likely increase. The Company considers costs for environmental compliance
to be a normal cost of doing business, and includes such costs in pricing
decisions.

EMPLOYEES

At December 31, 1996 the Company had 1,292 employees worldwide (567 of whom
were from our international operations) compared with 1,336 employees at both
December 31, 1995 and 1994.

All hourly plant employees at the Bayonne, New Jersey facility are
represented by Local 8-406 of the Oil, Chemical and Atomic Workers International
Union under a contract expiring September 17, 1997; the hourly plant employees
at the Carlstadt, New Jersey plant are represented by the Amalgamated Industrial
Union of East Orange, New Jersey under a contract expiring November 30, 1997;
and the hourly plant employees at the Harriman, New York facility are
represented by Local 810 of the International Brotherhood of Teamsters under a
contract expiring June 30, 1998. Nordic and Profarmaco production,
administration, scientific and technical employees are represented by various
local and national unions. The contracts with these unions expire at various
times through December 31, 1998. The Company believes its labor relations are
satisfactory, and will begin negotiations for the renewal of contracts expiring
in 1997.

- - ---------------

(dollars in thousands, except share data)

7
<PAGE> 9

SEASONALITY

Like many other businesses in the specialty chemicals industry, the Company
experiences some seasonality. Operating results for any quarter, however, are
not necessarily indicative of results for any future period. In particular, as a
result of various factors such as acquisitions and plant shutdowns, the Company
believes that period-to-period comparisons of its operating results should not
be relied upon as an indication of future performance.

EXPORT AND INTERNATIONAL SALES

The Company exports numerous products to various areas, principally Western
Europe, Asia and Latin America. Export sales from the Company's domestic
operations in 1996, 1995 and 1994 amounted to $50,243, $50,608, and $44,135,
respectively. Sales from international operations were $151,466 in 1996,
$144,883 in 1995 and $34,803 in 1994, due to acquisition activity in 1994. Refer
to Note #18 to the Cambrex Corporation and Subsidiaries Consolidated Financial
Statements.

ITEM 2 -- PROPERTIES.

Set forth below is information relating to the Company's manufacturing
facilities:

<TABLE>
<CAPTION>
OPERATING
LOCATION ACREAGE SUBSIDIARY PRODUCT LINES MANUFACTURED
- - ----------------------- --------- ----------- -----------------------------------------------
<S> <C> <C> <C>
Bayonne, NJ 8 acres CasChem Pharmaceutical intermediates; Performance
enhancers; Polymer systems
Carlstadt, NJ 3 acres Cosan Performance enhancers; Polymer systems
Harriman, NY 29 acres Nepera Pharmaceutical intermediates; Organic
intermediates; Performance enhancers
Delaware Water Gap, PA 12 acres Heico Pharmaceutical bulk actives; Pharmaceutical
intermediates; Performance enhancers; Polymer
systems
North Haven, CT 4 acres Humphrey Pharmaceutical intermediates; Performance
enhancers
Charles City, IA 57 acres Salsbury Pharmaceutical bulk actives; Pharmaceutical
intermediates; Organic intermediates;
Performance enhancers
Zeeland, MI 14 acres Zeeland Pharmaceutical intermediates; Performance
enhancers
Middlesbrough, England 12 acres Seal Sands Pharmaceutical bulk actives;
Pharmaceutical intermediates; Organic
intermediates; Performance enhancers; Polymer
systems
Karlskoga, Sweden 42 acres Nordic Pharmaceutical bulk actives; Pharmaceutical
intermediates; Organic intermediates;
Performance enhancers
Paullo (Milan), Italy 13 acres Profarmaco Pharmaceutical bulk actives
</TABLE>

The Company owns all the above facilities and properties, with the
exception of the twelve acre tract it leases in Middlesbrough, England. In
addition, the Company owns thirty-one acres of undeveloped land adjacent to the
North Haven facility, one hundred and three acres of undeveloped land adjacent
to the Harriman facility and sixty-six acres of undeveloped land adjacent to the
Zeeland facility. The Company believes its facilities to be in good condition,
well maintained and adequate for its current needs.

Most of the Company's products are manufactured in multi-purpose
facilities. Each product has a unique requirement for equipment, and occupies
such equipment for varying amounts of time. This, combined with the variations
in demand for individual products, makes it difficult to estimate actual overall
capacity subject to regulatory approval. It is generally possible to transfer
the manufacturing of a particular product to another facility should capacity
constraints dictate. However, the Company's pyridine and arsenical feed additive

- - ---------------

(dollars in thousands, except share data)

8
<PAGE> 10

product groups are each manufactured at a single facility, and production of
such products would not be transferrable to another site.

The Company plans to continue to expand capacity to meet growing needs by
process improvements and construction of new facilities where needed.

ITEM 3 -- LEGAL PROCEEDINGS.

See "Environmental and Safety Regulations and Proceedings" under Item 1
hereof with respect to various proceedings involving the Company in connection
with environmental matters. The Company is party to a number of other
proceedings. Management is of the opinion that while the ultimate liability
resulting from those proceedings, as well as environmental 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 Company's liquidity nor its financial
position.

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 10 -- EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table lists the executive officers of the Company and the
chief operating officers of the Company's operating subsidiaries:

<TABLE>
<CAPTION>
NAME AGE OFFICE(1)
----------------------------- --- ------------------------------------------------
<S> <C> <C>
James A. Mack................ 59 President and Chief Executive Officer
Peter Tracey................. 55 Executive Vice President, Finance, Chief
Financial Officer
Peter E. Thauer.............. 57 Vice President, Law & Environment, General
Counsel & Corporate Secretary
Steven M. Klosk.............. 39 Executive Vice President, Administration
Rudi E. Moerck............... 50 President of Salsbury Chemicals, Inc.
John J. Stanulonis........... 50 Vice President and General Manager of Heico
Chemicals, Inc. and The Humphrey Chemical
Company, Inc.
Salvatore J. Guccione........ 34 Vice President, Corporate Development
Richard J. Seidel............ 55 President and Chief Operating Officer of Nepera,
Inc.
Robert M. Parlman............ 46 Vice President and General Manager of
John V. Van Hulle............ 39 Zeeland Chemicals, Inc. President of CasChem,
Inc. and Cosan Chemical Corporation
Claes Glassell............... 45 Vice President of Cambrex Managing Director of
Cambrex Limited
Cyril C. Baldwin, Jr......... 69 Chairman of the Board
</TABLE>

- - ---------------

(1) Unless otherwise indicated, positions shown are with the Company.

The Company's executive officers are elected by the Board of Directors and
serve at the Board's discretion.

Mr. Mack has been Chief Executive Officer since Mr. Baldwin's retirement on
April 1, 1995. Mr. Mack was appointed President and Chief Operating Officer and
a director of the Company in February 1990. For five years prior thereto he was
Vice President in charge of the worldwide Performance Chemicals businesses of
Olin Corporation, a manufacturer of chemical products, metal products, and
ammunition and defense-related

- - ---------------

(dollars in thousands, except share data)

9
<PAGE> 11

products. Mr. Mack was Executive Vice President of Oakite Products, Inc. from
1982 to 1984. Prior to joining Oakite, he held various positions with The
Sherwin-Williams Company, most recently as President and General Manager of the
Chemicals Division from 1977 to 1981. Mr. Mack is a past Chairman of the Board
of Governors of the Synthetic Organic Chemical Manufacturing Association and is
a member of the Board of Trustees of the Michigan Tech Alumni Fund.

Mr. Tracey was appointed Executive Vice President and Chief Financial
Officer in November 1994. Mr. Tracey joined the Company in November 1990 as Vice
President and Chief Financial Officer. For three years prior to joining Cambrex,
he was Vice President-Finance and Chief Financial Officer for Joyce
International Inc., a manufacturer of office products. From 1986 to 1987, he was
Vice President-Finance and Chief Financial Officer for Robotic Vision Systems,
Inc., a manufacturer of industrial automation systems. Prior to 1986, Mr. Tracey
was a principal in the firm of Sirius Management Consultants.

Mr. Thauer was appointed Vice President-Law & Environment in December 1992,
and General Counsel and Corporate Secretary in August 1989. From 1987 until he
joined Cambrex, he was Counsel to the business and finance group of the firm of
Crummy, Del Deo, Dolan, Griffinger and Vecchione. From 1971 to 1987, Mr. Thauer
had held various positions with Avon Products, Inc., including U. S. Legal
Department Head and Corporate Assistant Secretary.

Mr. Klosk was appointed Executive Vice President, Administration in October
1996. Mr. Klosk joined the Company in October 1992 as Vice President,
Administration. From February 1988 until he joined Cambrex, he was Vice
President, Administration and Corporate Secretary for The Genlyte Group, Inc., a
lighting fixture manufacturer. From 1985 to January 1988, he was Vice President,
Administration for Lightolier, Inc., a subsidiary of The Genlyte Group, Inc.

Dr. Stanulonis joined the Company in April 1996 as Vice President and
General Manager of Heico Chemicals, Inc. and The Humphrey Chemical Company. From
1995 until he joined Cambrex, he was Vice President, Marketing for Novan
International, Inc. From 1988 to 1994 he was General Manager of CWM Chemicals
Services, Inc., and from 1980 to 1987 he held various management positions with
Harshaw/Filtrol Partnership.

Dr. Moerck joined the Company in September 1996 as President of Salsbury
Chemicals, Inc. From 1994 to 1996 he held executive positions with Harris
Specialty Chemicals. From 1990 to 1994 he was Vice President, Marketing, Sales
and Applied Research with Troy Corporation. From 1979 to 1990 he held various
managerial positions with Degussa Corporation.

Mr. Guccione joined the Company in December 1995 as Vice President,
Corporate Development. Prior to joining the Company, from 1993 to 1995, he held
the position of Vice President and General Manager of the International
Specialty Products (ISP) Personal Care Division. He also served as Director of
Corporate Development for International Specialty Products.

Mr. Seidel joined the Company in November 1995 as President and Chief
Operating Officer of Nepera, Inc. He was most recently Vice President/General
Manager for the Petreco Division of Petrolite Corporation. Prior to this, he
served in various management positions at Petrolite and Gulf Oil Corporation.

Dr. Parlman joined the Company as Vice President and General Manager of
Zeeland Chemicals, Inc. in March 1994. Prior to such time, he was Vice President
and General Manager of the Tretolite Division of Petrolite. Dr. Parlman has
extensive experience in market development and research and development.

Mr. Van Hulle was appointed President of CasChem, Inc. and Cosan Chemical
Corporation in December 1994. He joined CasChem in July 1994 as Executive Vice
President. For more than five years prior thereto he was General Manager of the
Fine Chemicals Group for General Chemical Corporation, and had extensive
experience with Air Products & Chemicals, Inc.

- - ---------------

(dollars in thousands, except share data)

10
<PAGE> 12

Mr. Glassell was appointed Vice President of Cambrex in November 1994. As
Managing Director and President of Cambrex Limited, he is responsible for
Cambrex's European operations. After extensive management experience at
Nordic/Profarmaco, he joined Cambrex as a result of the Nordic/Profarmaco
Acquisition. In 1989, he joined Nordic as President and CEO for Nordic's
Chemistry Business. From 1986 to 1989, he worked for the agricultural division
of Berol Europe Ltd.

Mr. Baldwin has been Chairman of the Board since July 1991, and a director
of the Company since it began business in December 1981. On January 26, 1995,
Mr. Baldwin announced his retirement, effective April 1, 1995, as Chief
Executive Officer of the Company, a position he also held since December 1981.
Mr. Baldwin retired as an employee of the Company effective April 30, 1995. He
is a member of the Environmental and Governance Committees of the Company's
Board of Directors, and he is a director of Church & Dwight Co., Inc. and
Congoleum Corporation.

PART II

ITEM 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) Since November 15, 1990, the Company's Common Stock, $.10 par value,
has been traded on the American Stock Exchange (AMEX) under the symbol CBM. The
Common Stock previously had been quoted on the National Association of
Securities Dealers Automated Quotation (NASDAQ) National Market System. The
following table sets forth the closing high and low sales prices of the Common
Stock as reported on AMEX:

<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
1996*
First Quarter............................................ $31 3/4 $25 7/8
Second Quarter........................................... 34 1/8 28 1/4
Third Quarter............................................ 34 1/8 29 7/8
Fourth Quarter........................................... 34 1/2 29 3/4
</TABLE>

<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
1995*
First Quarter............................................ $20 5/8 $17 3/4
Second Quarter........................................... 23 5/8 20 3/4
Third Quarter............................................ 28 7/8 22 5/8
Fourth Quarter........................................... 28 3/8 24
</TABLE>

- - ---------------

* Share and per share data reflect adjustments for a three-for-two stock split
in the form of a 50% stock dividend paid in July, 1996.

(b) As of March 14, 1997, the Company estimates that there were approximately
1,621 beneficial holders of the outstanding Common Stock of the Company.

- - ---------------

(dollars in thousands, except share data)

11
<PAGE> 13

ITEM 6 -- SELECTED FINANCIAL DATA.

The following selected consolidated financial data of the Company for each
of the years in the five year period ended December 31, 1996 are derived from
audited financial statements. The consolidated financial statements of the
Company as of December 31, 1996 and December 31, 1995 and for each of the years
in the three year period ended December 31, 1996 and the accountants' reports
thereon are included elsewhere in this annual report. The data presented below
should be read in conjunction with the financial statements of the Company and
the notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994(1) 1993(2) 1992(3)
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME DATA:
Gross sales....................... $369,479 $368,070 $249,683 $203,308 $184,878
Net revenues...................... 359,385 357,176 241,634 197,203 179,452
Gross profit...................... 101,336 99,780 57,881 51,778 46,036
Selling, general and
administrative................. 45,879 47,751 31,216 29,286 28,201
Research and development.......... 9,183 7,526 5,689 5,843 4,046
Operating profit.................. 46,274 44,503 20,976 16,649 13,789
Interest expense, net............. 5,799 10,508 4,581 2,771 2,437
Other (income) expense, net....... (194) 2,779 (497) 446 1,054
Income before taxes............... 40,669 31,216 16,892 13,412 10,298
Net income........................ 28,225 19,670 11,126 8,641 6,230
EARNINGS PER SHARE DATA*:
Earnings per common share and
common share equivalents:
Primary........................ $ 2.37 $ 1.96 $ 1.31 $ 1.09 $ 0.85
Fully diluted.................. $ 2.37 $ 1.95 $ 1.30 $ 1.07 $ 0.82
Weighted average shares
outstanding:
Primary........................ 11,897 10,053 8,511 7,923 7,332
Fully diluted.................. 11,910 10,104 8,549 8,226 7,863
DIVIDENDS PER COMMON SHARE*......... $ 0.17 $ 0.13 $ 0.13 $ 0.13 $ 0.13
BALANCE SHEET DATA:
(at end of period)
Working capital................... $ 62,912 $ 69,865 $ 19,925 $ 38,497 $ 35,852
Total assets...................... 404,444 402,553 360,477 166,845 148,406
Long-term obligations............. 60,152 99,643 115,975 36,261 39,808
Total stockholders' equity........ 229,045 189,484 101,966 87,569 75,177
</TABLE>

- - ---------------

(1) Includes the results of Seal Sands and Nordic/Profarmaco from their
respective dates of acquisition, January 31, 1994 and October 12, 1994,
through December 31, 1994.

(2) Includes the results of Viscosity Oil's fiber optic gel business from March
12, 1993, the date of acquisition, through December 31, 1993.

(3) Includes the results of Zeeland Chemicals, Inc. from March 31, 1992, the
date of acquisition, through December 31, 1992.

* Share and per share data reflect adjustments for a three-for-two stock split
in the form of a 50% stock dividend paid in July, 1996.

- - ---------------

(dollars in thousands, except share data)

12
<PAGE> 14

ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items
from the selected consolidated financial information as a percentage of gross
sales.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Gross sales................................ 100.0% 100.0% 100.0%
Net revenues............................... 97.3 97.0 96.8
Gross profit............................... 27.4 27.1 23.2
Selling, general and administrative........ 12.4 13.0 12.5
Research and development................... 2.5 2.0 2.3
Operating profit........................... 12.5 12.1 8.4
Interest expense........................... 1.6 2.9 1.8
Other (income) expense, net................ (0.1) 0.8 (0.2)
Net income................................. 7.6 5.3 4.5
</TABLE>

The Company's product mix has changed substantially over the periods
indicated, principally as a result of acquisitions. The following tables show
the gross sales of the Company's five product categories, in dollars and as a
percentage of the Company's total gross sales for the years ended December 31,
1996, 1995 and 1994, as well as the gross profit by product category for 1996
and 1995.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
GROSS SALES
Pharmaceutical bulk actives................ $ 97,582 $ 96,827 $ 23,774
Pharmaceutical intermediates............... 71,202 69,097 48,861
Organic intermediates...................... 73,049 77,792 64,472
Performance enhancers...................... 75,632 69,973 59,210
Polymer systems............................ 52,014 54,381 53,366
-------- -------- --------
Total gross sales........................ $369,479 $368,070 $249,683
======== ======== ========
Total net revenues....................... $359,385 $357,176 $241,634
======== ======== ========
Total gross profit....................... $101,336 $ 99,780 $ 57,881
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
GROSS SALES DISTRIBUTION
Pharmaceutical bulk actives................ 26.4% 26.3% 9.5%
Pharmaceutical intermediates............... 19.3 18.8 19.6
Organic intermediates...................... 19.8 21.1 25.8
Performance enhancers...................... 20.5 19.0 23.7
Polymer systems............................ 14.0 14.8 21.4
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

- - ---------------

(dollars in thousands, except share data)

13
<PAGE> 15

1996-1995 GROSS SALES & GROSS PROFIT BY PRODUCT CATEGORY

<TABLE>
<CAPTION>
1996
----------------------------------
GROSS GROSS GROSS
SALES PROFIT $ PROFIT %
-------- -------- --------
<S> <C> <C> <C>
Pharmaceutical bulk actives.................. $ 97,582 $ 32,063 32.9%
Pharmaceutical intermediates................. 71,202 15,824 22.2%
Organic intermediates........................ 73,049 15,046 20.6%
Performance enhancers........................ 75,632 24,066 31.8%
Polymer systems.............................. 52,014 14,337 27.6%
-------- -------- ----
$369,479 $101,336 27.4%
======== ======== ====
</TABLE>

<TABLE>
<CAPTION>
1995
----------------------------------
GROSS GROSS GROSS
SALES PROFIT $ PROFIT %
-------- -------- --------
<S> <C> <C> <C>
Pharmaceutical bulk actives.................. $ 96,827 $ 33,627 34.7%
Pharmaceutical intermediates................. 69,097 16,817 24.3%
Organic intermediates........................ 77,792 16,098 20.7%
Performance enhancers........................ 69,973 20,256 28.9%
Polymer systems.............................. 54,381 12,982 23.9%
-------- -------- ----
$368,070 $ 99,780 27.1%
======== ======== ====
</TABLE>

1996 COMPARED TO 1995

Gross sales in 1996 were at the same level as 1995. Increases in
performance enhancers and pharmaceutical intermediates were offset by lower
sales in our organic intermediates and polymer systems product categories.
Pharmaceutical bulk actives were at the same level as 1995.

PHARMACEUTICAL BULK ACTIVES of $97,582 were at the same level as 1995.
Increases in the cardiovascular product group of $1,577 and respiratory bulk
actives of $2,458 offset decreases in gastro-intestinal of $425,
anti-inflammatory bulk actives of $377 and the other bulk actives of $2,384.

Gastro-intestinal bulk actives were $31,503, a decrease of $425 (1%) from
1995. This decrease is mainly attributable to Sulfasalazine/Mesalamine, used to
treat ulcerative colitis, as a major customer had high inventories in the last
quarter of 1995 and did not reorder until the second quarter 1996.

Cardiovascular bulk actives were $21,806, an increase of $1,577 (8%) from
1995. The key products in this total included Diltiazem Hcl, Amiodarone Hcl,
Isosorbide-5-mononitrate, Sotalol Hcl and Acebutolol Hcl. The increase is mainly
due to the sales of Amiodarone Hcl, used as an anti-arithmic, in new countries
as well as to new customers in 1996.

Respiratory actives were $9,409, an increase of $2,458 (35%) from 1995. The
key product in this category is Cromoglycate sodium which had increased 66% due
to increased demand in U.S. markets.

Central nervous system bulk actives of $8,809 were at the same level as
1995, and included Bromazepan, Alprazolam and Lorazepam among 19 products.

Anti-inflammatory bulk actives were $7,966, a $377 (5%) decrease from 1995.
Included among 12 products are Ketoprofen, Magnesium Salicyliate (for backache
formulas) and Naproxen sodium.

Other bulk actives were $18,089, a decrease of $2,384 (12%) from 1995, and
included items for endocrine, diuretics, anti-infective, immunology and various
other uses. One product decreased $1,132 due to a lack of availability of raw
materials for production in 1996, but is expected to return to 1995 levels in
1997.

- - ---------------

(dollars in thousands, except share data)

14
<PAGE> 16

PHARMACEUTICAL INTERMEDIATES of $71,202 were $2,105 above 1995 (3%).
Cosmetic products increased $198 and X-Ray Media products increased $3,180,
offsetting the decreases in Other Pharmaceutical Intermediates of $818 and
Health products of $455.

Health products of $19,548 decreased by $455 (2%) from 1995 in various
products, including Niacinamide USP and Pyridine.

X-Ray Media products, which include 5 NIPA compounds, of $21,552 increased
$3,180 (17%) with the largest increase ($2,067) from one of our U.S. facilities,
due to a shift in production by a major customer in 1996 from Europe to the U.S.

Cosmetic products of $6,609 were $198 (3%) above 1995 due to higher sales
of our proprietary Naturechem product line.

Other Pharmaceutical Intermediates of $23,493 decreased $818 (3%) due to
the effect of the loss of the PMPA contract and reduced demand for
dextromethorphan intermediates (used in over-the-counter cough suppresants),
offset by the initial sales of an advanced intermediate of a new protease
inhibitor for AIDS treatment.

ORGANIC INTERMEDIATES of $73,049 were $4,743 below 1995 (6%). The feed
additives category decreased $7,498 and offset the increases in crop protection
of $1,217 and pigments of $1,538.

Feed additives of $29,889 decreased $7,498 (20%) due to reduced pricing and
increased competition in the feed grade Vitamin B3 markets. Sales of
organo-arsenical feed additives, the largest product in feed additives, was down
7% from 1995 due to escalated grain prices and increased price competition to
end-users.

Crop protection intermediates of $31,671 increased $1,217 (4%) from 1995.
The increase was due to the renegotiation of a contract for a pyridine
derivative used in the manufacture of herbicides in the first quarter 1996.
However, Pyridine, which is the largest product in crop protection, was down
from 1995, due to a major customer purchasing at 1993 levels after two years
(1994 and 1995) at above contract levels.

Pigments intermediates of $11,489 increased $1,538 (15%) from 1995, due to
the gain in market share of PNBA, a pigment used in dyes and UV protection
agents.

PERFORMANCE ENHANCERS of $75,632 were $5,659 above 1995 (8%). Specialty
additives increased $6,660, photographic products increased $129 and polymer
products increased $362 from 1995. Catalysts decreased $1,152 and fuel/oil
products decreased $340.

Specialty additives of $22,870 increased $6,660 (41%) from 1995. The key
increase was the sales of pyridine derivatives to world markets and customers
not previously served.

Catalysts products of $15,833 decreased $1,152 (7%) from 1995. This
decrease is primarily attributable to lower demand for various catalysts sold by
one of our U.S. facilities in the dextromethorphan markets.

Polymer products of $16,084 increased $362 (2%) over 1995. The increase was
a crosslinking agent to improve the performance of polycarbonate resins, due to
wider usage of the product by a major customer.

Photographic products of $12,326 increased $129 (1%) from 1995 due to a
customer requiring additional inventory of a polymer used in instant film in the
first quarter 1996.

Fuel/oil products of $8,519 decreased $340 (4%) from 1995. The decrease was
in castor based products used in grease applications.

POLYMER SYSTEMS of $52,014 were $2,367 below 1995 (4%), Telecommunications
decreased $4,901 and was partially offset by coatings which increased $1,564,
and biomedicals of $884. Engineering plastics were at the same level as 1995.

- - ---------------

(dollars in thousands, except share data)

15
<PAGE> 17

Telecommunications of $18,809 decreased $4,901 (21%) from 1995 primarily as
a result of the Company's strategic decision to no longer provide product to
AT&T.

Coatings of $19,138 increased $1,564 (9%) from 1995 due to the sales of
castor based products to a major coatings manufacturer.

Biomedicals of $5,888 increased $884 from 1995 due to both increased demand
of end-use products and increased pricing.

Export sales from U.S. businesses were at $50,243 compared with $50,608 in
1995. International sales, comprised of all sales from our operations in Europe,
totalled $151,466 as compared with $144,883 in 1995.

During 1996, the PMPA contract with our U.S. facility in Zeeland, Michigan
was terminated prematurely by the customer. A settlement had been agreed upon
that entitles the Company to payments in 1996 and for the next three years.
Accordingly, the Company recognized income, net of related costs, of
approximately $1,100 during 1996.

Total gross profit in 1996 increased to $101,336, resulting in a higher
gross margin percentage of 27.4% of gross sales compared with 27.1% in 1995. The
gross margin increase was due to an improved product mix of sales, production
efficiencies, and increased plant throughput, in line with management's
continued focus on higher performing, more profitable product lines.

Selling, general and administrative expenses as a percentage of gross sales
were 12.4% in 1996, down from 13.0% in 1995. The 1996 expense of $45,879 was
$1,872 (4%) below 1995 primarily due to lower legal and environment costs. Such
reductions are the result of recoveries from third parties and reserve reversals
that exceeded our outlays related to remediation programs in 1996.

The Company conducts periodic reviews of its environmental and litigation
matters, prepares estimates of the range of potential future costs of each
matter wherever possible, and adjusts the accruals for environmental
contingencies as circumstances warrant. In 1996, this accrual was reduced by
$1,000 to reflect our remaining estimated exposure.

Research and development expenses of $9,183 were 2.5% of gross sales in
1996, and represented a 22% increase from 1995. A portion of this increase was
due to costs associated with the Oxford Asymmetry contract of $1,000.

The operating profit in 1996 increased to $46,274 from $44,503 in 1995 due
to the improved gross margins and the aforementioned reductions in selling,
general and administrative expenses.

Net interest expense of $5,799 in 1996 reflected a decrease of $4,709 (45%)
from 1995. The decrease was due to strong cash flow and to the decreased
outstanding debt as a result of the equity offering in mid-1995. The interest
rate in 1996 was 7.4% compared to 7.7% in 1995.

Other income in 1996 was $194 compared with other expense of $2,779 in
1995. The difference included 1996 foreign currency transaction gains versus
currency losses in 1995.

The provision for income taxes for 1996 resulted in an effective rate of
30.6% versus 37.0% in 1995. The Company recorded a $1,500 reversal of tax
reserves as a result of a settlement with the Internal Revenue Service related
to audits for the years 1988 through 1991. During January 1997, the Company
implemented tax strategies which, based upon projected domestic and
international taxable income, should have a favorable impact on the effective
tax rate for 1997 and beyond. However, actual results could differ in the event
of changes in tax regulations or deviations in projections.

The Company's net income increased 43.5% to $28,225 compared with a net
income of $19,670 in 1995 primarily due to increased margins and reduced
selling, general and administrative expenses and interest.

- - ---------------

(dollars in thousands, except share data)

16
<PAGE> 18

1995 COMPARED TO 1994

Gross sales in 1995 increased $118,387 (48%) over 1994. Increases occurred
in all phases of the business with key increases in pharmaceutical bulk actives
which added $73,053 and pharmaceutical intermediates $20,236.

PHARMACEUTICAL BULK ACTIVES of $96,827 were $73,053 above 1994.
Nordic/Profarmaco increased $72,869. The sales of Magnesium Salicyliate (the
active ingredient in backache formulas) accounted for the rest of the increase
$416.

Gastro-intestinal bulk actives were $31,928. This category is mainly
Sulfasalazine/Mesalamine, made in bulk in the U.S. and at Nordic, which are used
to treat ulcerative colitis.

Cardiovascular bulk actives were $20,229. The key products in this total
included Diltiazem Hcl, Isosorbide-5-mononitrate, Sotalol Hcl and Acebutolol
Hcl.

Endocrine bulk actives were $8,919 and included two key items -- Glipizide
and Clormadinone.

Central nervous system bulk actives were $8,903 and included Bromazepam and
Lorazepam among 20 products.

Anti-inflammatory bulk actives were $8,343 and include among 15 products,
Ketoprofen, Magensium Salicyliate (for backache formulas) and Pranoprofen.

Other bulk actives were $18,505 and included items for respiratory system,
diuretics, anti-infective, immunology and various other uses. All had higher
sales than 1994 due to the Nordic/Profarmaco acquisition.

PHARMACEUTICAL INTERMEDIATES of $69,097 were $20,236 above 1994 (41%).
Nordic/Profarmaco increased $17,270 and excluding the Nordic/Profarmaco
increase: Health decreased $1,661; Cosmetic decreased $2,967; X-Ray Media
increased $1,339; and Other Pharmaceutical Intermediates increased $6,255.

Health products of $20,003 increased $172 with Nordic increasing $1,833 and
all Other Business decreasing $1,661 due to two discontinued product lines
(Citrates $913 and Hydrogels $1,922) partially offset by higher Pyridine sales
of $939.

X-Ray Media products, which include 5 NIPA compounds of $18,372, increased
$13,038 with Nordic increasing $11,699 and all other businesses increasing
$1,339.

Cosmetic products of $6,411 decreased $2,967 from 1994 due to sale of the
Wickhen product line in 1994 ($2,700 in reduced sales).

Other Pharmaceutical Intermediates of $24,311 increased $9,993 with Nordic
increasing $3,738 and all the other businesses increasing $6,255. This increase
was due to sales of the two intermediates used in the formulation of
dextromethorphan, an over-the-counter cough suppressant ($4,951 increase), and
Mandelic Acid ($1,702 increase).

ORGANIC INTERMEDIATES of $77,792 were $13,320 above 1994 (21%). Nordic
increased $9,515 in this category. Excluding the effect of Nordic, crop
protection intermediates increased $3,104 and feed additives increased $701. The
pigment intermediates were all Nordic business.

Feed additives of $37,387 increased $632 due in part to improved pricing of
feed grade Vitamin B3. Sales of organo-arsenical feed additives, the largest
product in feed additives, remained at 1994 levels.

Crop protection intermediates of $30,454 increased $5,169 from 1994. The
increase was due to greater off-take of pyridine derivatives used in the
manufacture of herbicides. Pyridine, which is the largest product in crop
protection, was at the 1994 level.

- - ---------------

(dollars in thousands, except share data)

17
<PAGE> 19

Pigments intermediates of $9,951 increased $7,519 from 1994 due to the full
year effect of the Nordic acquisition. These intermediates are used in various
industrial products including inks, dyes and color additives.

PERFORMANCE ENHANCERS of $69,973 were $10,763 above 1994 (18%). Nordic
increased $4,579. Excluding the Nordic increase: photographic products decreased
$127 from 1994 levels; catalysts increased $965; specialty additives increased
$1,618; fuel/oil products increased $996; and polymer products increased $2,732.

Specialty additives of $18,241 increased $3,978 from 1994. This includes
Nordic's sales increase of $2,360. Other increases include castor oil based
products.

Catalysts products of $16,985 increased $3,128 from 1994. This increase
includes Nordic's added sales of $2,163 and increases in various other catalysts
of $965.

Polymer products of $15,722 increased $2,788 over 1994. The key increases
were products used as a crosslinking agent to improve the performance of
polycarbonate resins, as a dye receptor in acrylic fibers for textiles, and an
anti-oxidant used in plastics.

Photographic products of $10,166 decreased $127 from 1994 mainly due to
reduced sales of a polymer used in instant film, due to a customer continuing to
reduce inventory levels in 1995. (Refer to the 1994 Form 10-K).

Fuel/oil products of $8,859 increased $996 over 1994. Key increase was in
various alkenyl succinic anhydrides (ASA's) used in rust inhibitors, and fuel
and oil detergents.

POLYMER SYSTEMS of $54,381 were $1,013 above 1994. Engineering plastics
increased $2,970 from 1994 and helped to offset reductions in coatings of $657
and telecommunications of $1,320. Biomedicals of $5,004 were at the same level
as 1994.

Telecommunications of $23,710 decreased $1,320 from 1994 due to reduced
encapsulant sales. This reduction was the result of good weather, and declining
applications, as domestic customers replace cable lines with fiber optics.

Coatings of $17,574 decreased $657 from 1994 due to reduced sales to paint
manufacturers.

Engineering plastics of $8,093 increased $2,970 from 1994. This increase
was due to the growing demand for a product used in high performance polysulfone
engineering plastics in electronic and industrial applications, such as computer
and television screens, and automobile parts.

Export sales from U.S. businesses increased to $50,608 from $44,135 in
1994. International sales, comprised of all sales from our acquired operations
in Europe, totaled $144,883 as compared with $34,803 in 1994.

Total gross profit of $99,780 increased by $41,899, or 72.4%, from 1994.
This was due to the increased sales and higher gross margin percentage which
increased to 27.1% of gross sales from 23.2% in 1994. The gross margin increase
was due to an improved product mix of sales, reduced cost for major raw
materials which affected the 1994 margin, and price increases gained in 1995.

Selling, general and administrative expenses as a percentage of gross sales
was 13.0% in 1995, up from 12.5% in 1994. The 1995 expense of $47,751 was
$16,535 (53.0%) above 1994. The increased operating expenses of acquisitions
made in 1994 accounted for most of the increase. Other increases included bonus
accruals of $1,400.

- - ---------------

(dollars in thousands, except share data)

18
<PAGE> 20

Research and development expenses were 2.0% of gross sales in 1995, and
represented a 0.3% decrease from 1994. Research and development spending
increased to $7,526 from $5,689 in 1994. The 1994 acquisitions accounted for all
of this increase.

The operating profit in 1995 increased 112% to $44,503 from $20,976 in
1994. The increased operating profits were due to the full year effect of 1994
acquisitions and to increased gross margins.

Net interest expense of $10,508 in 1995 reflected an increase of $5,927
from 1994. The increase was due to $138,000 in financing activities necessary
for the acquisitions of Seal Sands and Nordic/Profarmaco. Additionally, the
interest rate in 1995 was 7.7% compared to 6.2% in 1994.

The provision for income taxes for 1995 resulted in an effective rate of
37.0% versus 34.1% in 1994. The rate increased due to the mix of income between
international and domestic subsidiaries.

Other expense in 1995 was $2,779 compared with other income of $497 in
1994. The difference included 1995 currency losses at Nordic and Profarmaco, as
well as the writedowns of the carrying value of equipment no longer in use.

The Company's net income increased 76.8% to $19,670 compared with a net
income of $11,126 in 1994.

1994 COMPARED TO 1993

Gross sales in 1994 increased $46,375 due to the Seal Sands acquisition and
the Nordic/Profarmaco acquisition, and to increased sales of animal feed
additives (in organic intermediates). The table below shows the contribution of
the acquisitions to the product categories and the changes in the continuing
business.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
ACQUIRED BASE
BUSINESSES BUSINESS
1994 1994(1) 1994 1993
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
Pharmaceutical bulk actives..... $ 23,774 $ 12,219 $ 11,555 $ 9,818
Pharmaceutical intermediates.... 48,861 4,418 44,443 42,151
Organic intermediates........... 64,472 2,720 61,752 56,261
Performance enhancers........... 59,210 10,330 48,880 49,379
Polymer systems................. 53,366 5,116 48,250 45,699
-------- ------- -------- --------
Gross sales........... $249,683 $ 34,803 $214,880 $203,308
======== ======= ======== ========
</TABLE>

- - ---------------
(1) Includes Seal Sands, Nordic and Profarmaco acquisitions.

PHARMACEUTICAL BULK ACTIVES' revenues of $23,774 increased $13,956 (142%).
The increase included $11,874 from the Nordic/Profarmaco acquisition and from
increased sales from a generic drug for ulcerative colitis, which recovered from
depressed levels in 1993.

The Nordic/Profarmaco acquisition increased the pharmaceutical bulk actives
category and includes products for cardiovascular, gastro-intestinal, central
nervous system and other actives for the anti-infective, respiratory, endocrine,
anti-inflammatory, immunology, and other bulk actives markets.

Gastro-intestinal bulk actives increased $6,753 (93%) over 1993 to $14,033.
Profarmaco sales were $3,700, and the increase of $3,000 from the base business
was from the sales of a generic drug for ulcerative colitis.

PHARMACEUTICAL INTERMEDIATES' revenues of $48,861 increased $6,710 (16%)
over 1993. The increase included Nordic/Profarmaco sales of $4,360 and increases
in the other pharmaceutical intermediates, primarily intermediates used in cough
suppressants.

- - ---------------

(dollars in thousands, except share data)

19
<PAGE> 21

Sales of health intermediates represented $19,831, or 41%, of this
category's 1994 gross revenues and were $1,629 lower than 1993. The main
decrease of $1,800 in sales was due to the end of a contract to make citrates at
the Company's Zeeland, Michigan facility. Reduced shipments of Vitamin B3 due to
price competition and reduced sales of pyridine based products due to reduced
pricing and lower sales volume to a key customer, were offset by higher sales of
a starch modifier.

Sales of cosmetic intermediates represented $9,378, or 19%, of this
category's 1994 gross revenues and were $338 higher than 1993. In the fourth
quarter of 1994, the Wickhen line of cosmetic products was sold.

Sales of x-ray media represented $5,334, or 11%, of this category's 1994
gross revenues and were $1,286 above 1993. This increase is due to the
acquisition of Nordic in 1994.

Sales of other pharmaceutical intermediates represented $14,318, or 29%, of
this category's 1994 gross revenues and were $6,715 higher than 1993. The key
increase of existing business was due to growth in two intermediates for
dextromethorphan, an over-the-counter cough suppressant. Growth for one
intermediate, an established product, was supplemented by sales under a contract
for a second intermediate used in the synthesis of this material.

ORGANIC INTERMEDIATES' revenues of $64,472 increased $8,211 (15%). This
increase included $2,430 of new products from Nordic and $5,780 of increases
from the Company's existing feed additive business.

The sales of animal feed additives were $36,755, or 57%, of this category's
1994 revenues, up $6,171 from 1993. Sales of organo-arsenical feed additives
used to control disease and to enhance chicken growth and improve feed
performance, increased 25% over the prior year due to growth in poultry
production coupled with the customer's penetration of domestic and international
markets. All sales of this product are made to ALPHARMA under a long-term
contract. Sales of feed grade Vitamin B3 increased due to the installation of
new packaging facilities late in 1993 which allowed penetration of non-U.S.
markets. Shipments of Vitamin B3 intermediates to India and the Asia/Pacific
area also increased. While volume increased, the feed grade Vitamin B3 market
experienced lower prices due to competitive pricing, adversely affecting margins
on these products. Prices were increased in the fourth quarter 1994 and are
anticipated to increase in the first quarter 1995, although no assurances can be
given that such price increases will occur.

Sales of crop protection intermediates used in the manufacture of
herbicides and insecticides amounted to $25,285, or 39.2% of this category's
1994 gross revenues and remained at the 1993 sales level. Sales of pyridine, the
largest item in this group, were up 12% from 1993. The largest pyridine customer
is Zeneca, Inc. who uses it in herbicide manufacture. The Company produces
another major pyridine compound and is the exclusive supplier of this product to
Dow Elanco who uses it in production of a different herbicide. Sales of this
compound decreased 21% in 1994 due to the customer reducing inventory levels
after very high customer production in 1993. Sales of other pyridine derivatives
in this category increased $756 from 1993 due to competitive pressures.

Pigment intermediates represented $2,432, or 4%, of this category's 1994
revenues. These products are all produced by Nordic.

PERFORMANCE ENHANCERS' revenues of $59,210 increased $9,831 (20%). This
increase included $9,627 in sales from the Seal Sands acquisition.

Sales of specialty additives represented $14,263, or 24%, of this
category's 1994 revenues and were $492 lower than 1993. This was due to a
reduction in castor based products.

Sales of catalyst products represented $13,857, or 23%, of this category's
1994 revenues and were $1,670 higher than 1993. The increase is primarily
attributable to tin based catalysts used in various industrial applications.

- - ---------------

(dollars in thousands, except share data)

20
<PAGE> 22

Sales of polymer products represented $12,934, or 22%, of this category's
1994 revenues and were $8,812 higher than 1993. This increase includes $7,112 in
sales attributable to the Seal Sands acquisition. In existing operations,
increases occurred in an application for a product used as a dye receptor in
acrylic yarns.

Sales of photographic chemical products were $10,293, or 17%, of this
category's 1994 revenues, $1,234 lower than 1993. The decrease was in sales of a
polymer used in instant film, due to our customer reaching their desired
inventory levels.

Sales of products to the fuel/oil industries represented $7,863, or 13%, of
this category's 1994 revenues and were $1,075 higher than 1993.

POLYMER SYSTEMS' revenues of $53,366 increased $7,669 (17%). This increase
included $5,118 in sales from the Seal Sands acquisition of a product used in
the manufacture of high performance plastics and represented 34% of their 1994
sales.

Telecommunications products represented $25,030, or (47%), of this
category's sales, and was on the same level as 1993. Higher product sales to the
electronics industry was offset by lower sales of encapsulants.

Coatings products represented $18,231, or (34%), of this category's sales,
and was $1,650 higher than 1993. This increase was mainly due to a 14% growth in
castor based products used in coatings for the housing and automotive
industries.

Engineering plastics represented $5,123, or (10%), of this category's
sales, and included $5,100 in sales from our Seal Sands facility for a product
used in high performance plastics.

Biomedical products represented $4,984, or (9%), of this category's sales,
and was $993 higher than 1993, due to increased foreign market share.

Export sales increased by $6,839, or 18.3%, to $44,135. Exports were 17.7%
of gross revenues in 1994 versus 18.3% in 1993. International sales, comprised
of all sales from our acquired operations in Europe, totaled $34,803.

Total gross profit of $57,881 increased by $6,103, or 11.8%, from 1993. The
increased gross profit was principally due to the Nordic/Profarmaco and Seal
Sands acquisitions, and to sales increases in health and pharmaceuticals and
agricultural intermediates and additives. The gross profit as a percent of gross
sales declined from 25.5% in 1993 to 23.2% in 1994. Without the acquisition of
Nordic/Profarmaco, the gross profit percent would have been 22.2% in 1994. Loss
of margin was principally due to sales price decreases and raw material price
increases in the pyridine and related businesses, and higher manufacturing costs
due to weather related problems in the first quarter 1994.

Selling, general and administrative expenses as a percentage of gross sales
was 12.5% in 1994, down from 14.4% in 1993. The 1994 expense of $31,216 was
$1,930 (6.6%) above 1993. The increased operating expenses of the new
acquisitions were mostly offset by reduced spending, including staff reductions,
reduced legal costs, and lower environmental provisions.

Periodically, the Company conducts a comprehensive review of its
environmental and litigation issues, prepares estimates of the range of
potential costs of each issue wherever possible, and adjusts the accruals for
environmental contingencies as circumstances warrant. No additional
environmental provision was recorded in 1994. The 1993 provision was $1,029. A
discussion of such matters is included in the footnotes to the financial
statements. A settlement with insurance companies relating to coverage of
environmental remediation costs allowed us to recover $1,000 of legal expenses
spent in 1993 and 1994, pursuing this recovery.

Research and development expenses of $5,689 were 2.3% of gross sales in
1994, and represented a 2.6% decrease from 1993. Decreased spending at our
Harriman and Bayonne facilities were offset by increased spending to our other
domestic facilities and at our newly acquired sites in England, Sweden and
Italy. This

- - ---------------

(dollars in thousands, except share data)

21
<PAGE> 23

was consistent with our strategic focus on the Health and Pharmaceuticals and
Fine Chemicals product categories.

The operating profit in 1994 increased 26.0% to $20,976 from $16,649 in
1993. The increased operating profits were due to the acquisition of
Nordic/Profarmaco; and to cost reductions in selling, general and
administration, and in research and development.

Net interest expense of $4,581 in 1994 reflected an increase of $1,810 from
1993. The increase was due to $138,000 in financing activities necessary for the
acquisitions of Seal Sands and Nordic/Profarmaco and higher interest rates.

Other income in 1994 was $497 compared with other expense of $446 in 1993.
The difference included 1994 currency gains at Profarmaco.

The provision for income taxes for 1994 resulted in an effective rate of
34.1% versus 35.6% in 1993.

The Company's net income increased 28.8% to $11,126 compared with a net
income of $8,641 in 1993.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operations was $66,785 for the year ended December 31,
1996 compared with $44,564 in 1995. The increase in cash flow is primarily due
to increased earnings and additional depreciation, as well as reductions in
accounts receivables and inventories.

Capital expenditures were $32,396 in 1996, $46,398 in 1995, and $20,825 in
1994. The largest expenditures in 1996 include the purchase of the headquarters
office building by Profarmaco and the construction of the Tolterodine facility
by Nordic. In addition, two of our U.S. operations have started construction on
pilot plants which incorporate cGMP capabilities. These facilities are expected
to be completed in 1997.

On September 21, 1994, the Company entered into a $225,000 Loan Agreement
(the "Credit Agreement") with a syndicate of lenders (the "Banks") and with NBD
Bank, N.A., as Agent. The Credit Agreement provided for (i) a one-year $50,000
bridge loan, due October 11, 1995; (ii) a $75,000 term loan, with mandatory
$1,000 quarterly payments until September 20, 1997 and mandatory quarterly
payments of $3,938 for each quarter thereafter until September 30, 2001; and
(iii) a $100,000 revolving credit facility, due October 11, 1997. The revolving
credit facility will be extended for successive two-year periods subsequent to
October 11, 1997 unless either the Company or the Banks elect not to so extend
the facility. The facility has been extended through October 11, 1999.

The Credit Agreement permits the Company to choose from various interest
rate options and to specify the portion of the borrowing to be covered by each
interest rate option. It also contains various restrictive covenants, which
require the Company to maintain a minimum consolidated net worth level, certain
financial ratios and deferred pledge of assets, as defined in the Credit
Agreement. The Company has entered into interest rate swap agreements to reduce
the impact of changes in interest rates on its floating rate long-term
obligations. As of December 31, 1996, the Company had outstanding four interest
rate swap agreements, having a total notional amount of $40,000. Those
agreements effectively change the Company's interest rate exposure from variable
rate to fixed percentage.

On October 11, 1994, the Company borrowed $32,200 and Pound Sterling 4,265
under the Credit Agreement to repay all of its obligations under the Old Credit
Agreement, and the Old Credit Agreement was terminated. On October 12, 1994, the
Company borrowed $126,000 under the Credit Agreement, including all of the
$50,000 bridge loan facility and all of the $75,000 seven-year term loan, to
finance the acquisition of Nordic and Profarmaco.

On July 24, 1995, the Company raised $62,572 in a public offering, which
was used to pay down outstanding debt ($50,000 short-term bridge loan, $12,572
long-term).

- - ---------------

(dollars in thousands, except share data)

22
<PAGE> 24

The Company has undrawn borrowing capacity of approximately $100,000 under
the Credit Agreement as of December 31, 1996, which can be used for general
corporate purposes. Management is of the opinion that these amounts, together
with other available sources of capital, are adequate for meeting the Company's
financing and capital requirements.

Effective July 24, 1996, the Board of Directors approved a three-for-two
split of the Company's Common Stock, $.10 par value, in the form of a 50% stock
dividend for holders of record on July 8, 1996.

After giving effect to a three-for-two stock split approved by the
Company's Board of Directors on July 24, 1996, the Company paid cash dividends
of $0.17 per share in 1996. A regular cash dividend has been declared by the
Board of Directors on the Company's Common Stock since the fourth quarter, 1989.

The Company buys materials and sells products in a variety of currencies in
various parts of the world. Its results are therefore impacted by changes in the
relative value of currencies in which it deals. Prior to the acquisition of
Nordic and Profarmaco, this risk was not considered to be significant and the
Company had no program to mitigate foreign currency risk.

The Company's primary market risk relates to exposure to foreign currency
exchange rate fluctuations on transactions entered into by our foreign
operations which are primarily denominated in the U.S. dollar, Deutsche mark and
British pound sterling. The Company uses foreign currency forward exchange and
put and call option contracts to mitigate the effect of short-term foreign
exchange rate movements on the Company's operating results. The notional amount
of these contracts is $40,285 which the Company estimates to be approximately
64% of the foreign currency exposure during the period covered resulting in a
deferred currency gain of $79 at December 31, 1996. An additional $2,760 of the
foreign currency exposure is protected through export financing.

ENVIRONMENTAL

The Company maintains environmental and industrial safety and health
compliance programs at its plants, and believes that its manufacturing
operations are in general compliance with all applicable safety, health and
environmental laws.

Through the activities of its predecessors and third parties in connection
with the handling and disposal of hazardous and other wastes, the Company may
become liable, irrespective of fault, for certain site remediation costs under
federal and state environmental statutes. Descriptions of such environmentally
related contingencies are presented in Note #20 to the consolidated financial
statements and incorporated herein by reference.

During January 1997, an opinion was rendered against Cosan, Inc. (a
subsidiary of Cambrex) by the District Court of New Jersey in a matter that has
been pending since 1991. The opinion states that Cosan contributed to
contamination at a site in Clifton, New Jersey which was previously owned and
operated by Cosan. Pursuant to the opinion, Cosan is liable for past
environmental investigation and remediation costs approximating $800 plus
interest, as well as future remediation costs of the site. In addition, treble
damages on all past and future costs, plus interest, were assessed against
Cosan. Cosan intends to appeal this opinion with the District Court of New
Jersey and believes that the treble damages component of the opinion are
unprecedented. The estimated range of costs for this case has been considered in
the Company's year-end reserve assessment.

The resolution of such matters often spans several years and frequently
involves regulatory oversight and/or adjudication. Additionally, many
remediation requirements are not fixed and are likely to be affected by future
technological, site and regulatory developments. Consequently, the ultimate
extent of liabilities with respect to such matters as well as the timing of
related cash disbursements cannot be determined with certainty. 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 Company's
liquidity nor its financial position.

- - ---------------

(dollars in thousands, except share data)

23
<PAGE> 25

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

The AICPA's Statement of Position 96-1 "Environmental Remediation
Liabilities" requires that environmental remediation liabilities including
related legal costs be accrued when it is probable that an environmental
remediation will be required and such remediation efforts can be reasonably
estimated. The Company is required to adopt this standard in 1997. The Company
currently considers the criteria of this standard in establishing its
environmental liabilities with the exception of the requirement to accrue for
certain future external legal costs. The Company anticipates that the adoption
of this standard will not have a material impact on its result of operations.

Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this standard in 1996 with no material impact
on its results of operations.

Statement of Financial Accounting Standards No. 123 "Accounting for Stock
Based Compensation" establishes financial accounting and reporting standards for
stock-based employee compensation plans. The Company has elected the disclosure
only option available under this pronouncement. Such disclosure is presented in
Note #14 to the consolidated financial statements and incorporated herein by
reference.

Statement of Financial Accounting Standards No. 128 "Earnings Per Share"
changes the reporting requirements for earnings per share (EPS) for publicly
traded companies by replacing primary EPS with basic EPS and changing the
disclosures associated with this change. The Company is required to adopt this
standard in 1998 and is currently evaluating the impact of this standard.

ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following consolidated financial statements and selected quarterly
financial data of the Company are filed under this item:

<TABLE>
<CAPTION>
PAGE NUMBER
(IN THIS
REPORT)
---------------
<S> <C>
Report of Independent Accountants.............................................. 25
Consolidated Balance Sheets as of December 31, 1996 and 1995................... 26
Consolidated Income Statements for the Years Ended December 31, 1996, 1995 and
1994......................................................................... 27
Consolidated Statements of Stockholders' Equity for the Years Ended December
31, 1996, 1995 and 1994...................................................... 28
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996,
1995 and 1994................................................................ 29
Notes to Consolidated Financial Statements..................................... 30
Selected Quarterly Financial Data (unaudited) for the Years Ended December 31,
1996 and 1995................................................................ 52
</TABLE>

The consolidated financial statements and financial statement schedule are
filed pursuant to Item 14 of this report.

24
<PAGE> 26

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
of Cambrex Corporation:

We have audited the accompanying consolidated balance sheets of Cambrex
Corporation and Subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows and the
consolidated financial statement schedule for each of the three years in the
period ended December 31, 1996, as listed in Item 14(a) of this Form 10-K. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Cambrex Corporation and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. In addition, in our opinion, the consolidated
financial statement schedule referred to above, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly,
in all material respects, the information required to be included therein.

COOPERS & LYBRAND L.L.P.

Parsippany, New Jersey
January 17, 1997

25
<PAGE> 27

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 7,353 $ 4,841
Receivables:
Trade accounts, less allowance for doubtful accounts of $1,453 and
$1,261 at respective dates....................................... 52,910 52,342
Other............................................................. 3,840 5,995
-------- --------
56,750 58,337
Inventories.......................................................... 64,209 71,234
Deferred tax assets.................................................. 5,009 4,544
Other current assets................................................. 3,541 5,178
-------- --------
Total current assets......................................... 136,862 144,134
Property, plant and equipment, net..................................... 216,481 205,683
Intangible assets, net................................................. 49,573 51,665
Other assets........................................................... 1,528 1,071
-------- --------
Total assets................................................. $404,444 $402,553
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities............................. $ 54,754 $ 62,444
Income taxes payable................................................. 8,085 3,012
Short-term debt...................................................... 3,880 4,705
Current portion of long-term debt.................................... 7,231 4,108
-------- --------
Total current liabilities.................................... 73,950 74,269
Long-term debt......................................................... 60,152 99,643
Deferred tax liabilities............................................... 21,587 19,400
Other noncurrent liabilities........................................... 19,710 19,757
-------- --------
Total liabilities............................................ 175,399 213,069

Commitments and contingencies
Stockholders' equity:
Common Stock, $.10 par value; issued 12,769,175 and 8,195,831 shares
at respective dates............................................... 1,275 818
Additional paid-in capital........................................... 149,191 142,453
Retained earnings.................................................... 80,608 54,316
Additional minimum pension liability................................. (553) (750)
Treasury stock, at cost; 1,049,895 and 715,447 shares at respective
dates............................................................. (9,449) (9,160)
Shares held in trust, at cost; 132,126 and 0 shares at respective
dates............................................................. (718) --
Cumulative translation adjustment.................................... 8,691 1,807
-------- --------
Total stockholders' equity................................... 229,045 189,484
-------- --------
Total liabilities and stockholders' equity................... $404,444 $402,553
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

26
<PAGE> 28

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER-SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Gross sales................................................ $369,479 $368,070 $249,683
Net revenues............................................... 359,385 357,176 241,634
Cost of goods sold....................................... 258,049 257,396 183,753
-------- -------- --------
Gross profit............................................... 101,336 99,780 57,881
Selling, general and administrative...................... 45,879 47,751 31,216
Research and development................................. 9,183 7,526 5,689
-------- -------- --------
Operating profit........................................... 46,274 44,503 20,976
Other (income) expenses
Interest income.......................................... (353) (638) (95)
Interest expense......................................... 6,152 11,146 4,676
Other -- net............................................. (194) 2,779 (497)
-------- -------- --------
Income before income taxes................................. 40,669 31,216 16,892
Provision for income taxes................................. 12,444 11,546 5,766
-------- -------- --------
Net income................................................. $ 28,225 $ 19,670 $ 11,126
======== ======== ========

Earnings per share of common stock and common stock
equivalents*:
Primary.................................................. $ 2.37 $ 1.96 $ 1.31
Fully diluted............................................ $ 2.37 $ 1.95 $ 1.30

Weighted average shares outstanding*:
Primary.................................................. 11,897 10,053 8,511
Fully diluted............................................ 11,910 10,104 8,549
</TABLE>

- - ---------------

* Share and per share data reflect adjustments for a three-for-two stock split
in the form of a 50% stock dividend paid in July, 1996.
See accompanying notes to consolidated financial statements.

27
<PAGE> 29

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK NONVOTING ADDITIONAL
---------------------- COMMON ADDITIONAL MINIMUM SHARES
SHARES PAR VALUE STOCK PAID-IN RETAINED PENSION TREASURY HELD IN
ISSUED ($.10) (PAR $.10) CAPITAL EARNINGS LIABILITY STOCK TRUST
---------- --------- ---------- ---------- -------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993......... 6,014,681 $ 601 $ -- $ 72,627 $25,859 $ (1,030) $(10,488) $ --
Net income......................... 11,126
Cash dividends at $0.13 per
share............................ (1,050)
Exercise of stock options.......... 64,100 6 395
Reversal of additional minimum
pension liability................ 1,030
Shares issued under savings plan... 651 798
Adjustment for foreign currency
translation......................
---------- ------ ---- -------- ------- ------- -------- -----
Balance at December 31, 1994......... 6,078,781 $ 607 $ -- $ 73,673 $35,935 $ -- $ (9,690) $ --
Net income......................... 19,670
Cash dividends at $0.13 per
share............................ (1,289)
Exercise of stock options.......... 392,050 39 2,755
Tax benefit of stock options
exercised........................ 2,721
Shares issued in public offering... 1,725,000 172 62,400
Additional minimum pension
liability........................ (750)
Shares issued under savings plan... 904 530
Adjustment for foreign currency
translation......................
---------- ------ ---- -------- ------- ------- -------- -----
Balance at December 31, 1995......... 8,195,831 $ 818 $ -- $142,453 $54,316 $ (750) $ (9,160) $ --
Net income......................... 28,225
Cash dividends at $0.17 per
share............................ (1,933)
Exercise of stock options.......... 334,650 33 4,677 (856) (718)
Tax benefit of stock options
exercised........................ 1,406
Reduction of additional minimum
pension liability................ 197
Shares issued to Board of
Directors........................ 87 62
Shares issued under savings plan... 992 505
Three-for-two stock split.......... 4,238,694 424 (424)
Adjustment for foreign currency
translation......................
---------- ------ ---- -------- ------- ------- -------- -----
Balance at December 31, 1996......... 12,769,175 $ 1,275 $ -- $149,191 $80,608 $ (553) $ (9,449) $(718)
========== ====== ==== ======== ======= ======= ======== =====

CUMULATIVE TOTAL
TRANSLATION STOCKHOLDERS'
ADJUSTMENT EQUITY
----------- -------------
<S> <C> <C>
Balance at December 31, 1993......... $ -- $ 87,569
Net income......................... 11,126
Cash dividends at $0.13 per
share............................ (1,050)
Exercise of stock options.......... 401
Reversal of additional minimum
pension liability................ 1,030
Shares issued under savings plan... 1,449
Adjustment for foreign currency
translation...................... 1,441 1,441
------ --------
Balance at December 31, 1994......... $ 1,441 $ 101,966
Net income......................... 19,670
Cash dividends at $0.13 per
share............................ (1,289)
Exercise of stock options.......... 2,794
Tax benefit of stock options
exercised........................ 2,721
Shares issued in public offering... 62,572
Additional minimum pension
liability........................ (750)
Shares issued under savings plan... 1,434
Adjustment for foreign currency
translation...................... 366 366
------ --------
Balance at December 31, 1995......... $ 1,807 $ 189,484
Net income......................... 28,225
Cash dividends at $0.17 per
share............................ (1,933)
Exercise of stock options.......... 3,136
Tax benefit of stock options
exercised........................ 1,406
Reduction of additional minimum
pension liability................ 197
Shares issued to Board of
Directors........................ 149
Shares issued under savings plan... 1,497
Three-for-two stock split..........
Adjustment for foreign currency
translation...................... 6,884 6,884
------ --------
Balance at December 31, 1996......... $ 8,691 $ 229,045
====== ========
</TABLE>

See accompanying notes to consolidated financial statements.

28
<PAGE> 30

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ------- ---------
<S> <C> <C> <C>
Cash flows from operations:
Net income................................................... $ 28,225 $19,670 $ 11,126
Depreciation and amortization................................ 28,493 24,961 15,937
Provision for inventories.................................... 1,099 3,052 --
Reversal of tax contingencies................................ (1,500) -- --
Reversal of environmental contingencies...................... (1,000) -- --
Deferred income taxes........................................ 1,721 751 3,183
Loss on disposal of property, plant and equipment............ -- 1,562 --
Changes in assets and liabilities:
Receivables............................................... 1,205 (4,296) (3,349)
Inventories............................................... 6,284 (9,952) (1,212)
Other current assets...................................... 1,663 (1,409) (44)
Accounts payable and accrued liabilities.................. (6,199) 8,013 3,625
Income taxes payable...................................... 6,620 958 (1,852)
Other noncurrent assets and liabilities................... 174 1,254 15
-------- ------- ---------
Net cash provided from operations.................... 66,785 44,564 27,429
-------- ------- ---------
Cash flows from investing activities:
Capital expenditures......................................... (32,396) (46,398) (20,825)
Acquisition of businesses.................................... -- -- (131,697)
Other investing activities................................... (1,345) (2,038) --
Proceeds from sale of product lines.......................... -- -- 2,152
-------- ------- ---------
Net cash (used in) investing activities.............. (33,741) (48,436) (150,370)
-------- ------- ---------
Cash flows from financing activities:
Dividends.................................................... (1,933) (1,289) (1,050)
Net (decrease) increase in short-term debt................... (1,025) (47,663) 50,784
Long-term debt activity (including current portion):
Borrowings................................................ 44,000 73,884 134,679
Repayments................................................ (80,599) (90,257) (56,244)
Proceeds from the issuance of common stock................... 6,116 65,367 401
Proceeds from the sale of treasury stock..................... 790 1,434 1,449
-------- ------- ---------
Net cash (used in) provided from financing
activities......................................... (32,651) 1,476 130,019
-------- ------- ---------
Effect of exchange rate changes on cash........................ 2,119 (1,850) 1,848
-------- ------- ---------
Net increase (decrease) in cash................................ 2,512 (4,246) 8,926
Cash at beginning of year...................................... 4,841 9,087 161
-------- ------- ---------
Cash at end of year............................................ $ 7,353 $ 4,841 $ 9,087
-------- ------- ---------
Supplemental disclosure:
Interest paid............................................. $ 6,859 $12,254 $ 4,996
Income taxes paid......................................... $ 3,695 $ 5,321 $ 4,854
Noncash transactions:
Additional minimum pension liability charged to
(eliminated from) stockholders' equity.................. $ (197) $ 750 $ (1,030)
Liabilities established under deferred compensation
plan.................................................... $ 718 $ -- $ --
</TABLE>

See accompanying notes to consolidated financial statements.

29
<PAGE> 31

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(1) THE COMPANY

Cambrex Corporation manufactures and markets a broad line of pharmaceutical
related products, specialty chemicals, fine chemicals and commodity chemical
intermediates to a diverse customer base for use in a wide variety of
applications. The Company sells these products under five product categories:
Bulk Pharmaceuticals, Pharmaceutical Intermediates, Organic Intermediates,
Performance Enhancers and Polymer Systems.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

Cash Equivalents

Temporary cash investments with an original maturity of less than three
months are considered cash equivalents.

Financial Instruments

The financial instruments of the Company consist of cash and cash
equivalents, trade receivables, short-term debt, current portion of long-term
debt, and long-term debt. At December 31, 1996, the carrying amount of these
financial instruments approximate their fair value. The carrying amounts for
cash and cash equivalents, trade receivables, short-term debt, and current
portion of long-term debt approximate fair value because of the short maturity
of these instruments. The carrying amount for long-term debt approximates fair
value due to the variable nature of the interest rate.

The Company places its cash equivalents with financial institutions and
limits the amount of credit exposure to any one financial institution.
Concentrations of credit risk with respect to trade receivables are limited due
to the large numbers of customers comprising the Company's customer base, and
their dispersion across different business and geographic areas. No one customer
represents more than 10% of sales or receivables.

Gains and losses on foreign currency forward exchange contracts pertaining
to existing assets or liabilities, or hedges of firm commitments are deferred
and are recognized in income as part of the related transactions. Although the
purpose for using put and call option contracts is to mitigate currency risk,
these particular instruments do not qualify for hedge accounting under generally
accepted accounting principles and accordingly, must be adjusted to market value
at the end of each accounting period. Gains and losses on forward exchange and
put and call option contracts to date have not been material.

Inventories

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

30
<PAGE> 32

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
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:

<TABLE>
<S> <C>
Buildings and improvements............................ 15 to 20 years
Machinery and equipment............................... 5 to 10 years
Furniture and fixtures................................ 3 to 5 years
</TABLE>

When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts, and any resulting gain
or loss is reflected in other (income) expense, net. Interest is capitalized in
connection with the construction and acquisition of assets. The capitalized
interest is recorded as part of the cost of the asset to which it relates and is
amortized over the asset's estimated useful life. Total interest capitalized in
connection with ongoing construction activities in 1996, 1995 and 1994 amounted
to $677, $749 and $461, respectively.

Software Development Costs

The Company capitalizes development costs of computer software used
internally; which include consulting for modifications and implementation, and
costs for employees dedicated solely to the project. The cost of capitalized
software is amortized over five years using the straight line method. Total
capitalized software development costs amounted to $2,806 in 1996.

Intangible Assets

Intangible assets are recorded at cost and amortized on a straight-line
basis as follows:

<TABLE>
<S> <C>
Patents................................. Amortized over the remaining
life of individual patents
(average 5 years)
Goodwill................................ 4 to 20 years
Product technology...................... 5 to 17 years
Non-compete agreements.................. 5 years
Trademarks and other.................... 1 to 40 years
</TABLE>

At each balance sheet date, the Company evaluates the recoverability of
intangibles based upon expectations of non-discounted cash flows and operating
income for each subsidiary having material intangible assets.

Impairment of Long-Lived Assets

Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
requires that long-lived assets and certain identifiable intangibles held and to
be used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted this standard in 1996 with no material impact
on its results of operations.

31
<PAGE> 33

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Income Taxes

The provision for income taxes is based upon income recognized for
financial statement purposes and includes the effect of deferred taxes. These
deferred taxes are the result of transactions which are recognized in different
periods for financial and income tax reporting.

The Company and its eligible subsidiaries file a consolidated U.S. income
tax return. Certain subsidiaries which are consolidated for financial reporting
are not eligible to be included in the consolidated U.S. income tax return. U.S.
income taxes are provided on planned repatriation of a portion of foreign
earnings and consider applicable foreign tax credits. Cambrex also intends to
indefinitely reinvest the unremitted earnings of certain non-U.S. subsidiaries,
and as such, separate provisions for income taxes have been determined for these
entities and U.S. taxes have not been provided. At December 31, 1996 and 1995,
the cumulative amount of unremitted earnings of non-U.S. subsidiaries was $3,605
and $2,742, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Foreign Currency

The functional currency of the Company's foreign subsidiaries is the
applicable local currency. The translation of the applicable foreign currencies
into U.S. dollars is performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date and for revenue and expense accounts
and cash flows using average rates of exchange prevailing during the year.
Adjustments resulting from the translation of foreign currency financial
statements are accumulated in a separate component of stockholders' equity until
the entity is sold or substantially liquidated. Gains or losses resulting from
foreign currency transactions are included in the results of operations, except
for those relating to intercompany transactions of a long-term investment nature
which are accumulated in stockholders' equity.

Earnings Per Common Share

Earnings per share of Common Stock for 1996, 1995 and 1994 are computed on
the basis of the weighted average shares of common stock outstanding plus common
equivalent shares arising from the effect of dilutive stock options, using the
treasury stock method. Under the assumption that the July 24, 1995 public
offering of 2,587,500 shares, the proceeds of which were used to reduce the
Company's outstanding debt, had occurred on January 1, 1995, the pro forma
earnings per share for 1995 would have been $1.86.

(3) ACQUISITIONS AND DIVESTITURES

(a) On October 12, 1994, the Company completed the acquisition of the stock
of Nobel's Pharma Chemistry Business ("Nordic/Profarmaco") from Akzo Nobel for
$130,300. The business consists of Nobel Chemicals AB (now Nordic Synthesis AB,
"Nordic") in Karlskoga, Sweden, Profarmaco Nobel S.r.1. (now Profarmaco S.r.1.,
"Profarmaco") in Milan, Italy and sales companies in Germany, England and the
United States. Nordic and Profarmaco manufacture fine chemical intermediates and
bulk active ingredients for pharmaceutical products. The transaction was
accounted for as a purchase and was financed with the

32
<PAGE> 34

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(3) ACQUISITIONS AND DIVESTITURES -- (CONTINUED)
Company's credit agreement, and resulted in goodwill of $46,757 which is being
amortized on a straight line basis over 15 years.

On January 31, 1994, Cambrex purchased substantially all of the assets of
Hexcel Corporation's Fine Chemicals Business located in Middlesbrough, England,
for $7,400 and the assumption of certain current liabilities in the amount of
$2,100. The business, now known as Seal Sands Chemicals, Ltd., "Seal Sands",
manufactures chemical intermediates used in the pharmaceutical, photographic,
water treatment, health care, and plastics industries. On May 27, 1994, the
Company purchased the Topanol product line from Zeneca Limited to complement the
Seal Sands operation for $4,600. These transactions were accounted for as
purchases and were financed with the Company's credit agreement, and resulted in
goodwill of $1,881 for Seal Sands and $3,744 for Topanol which are being
amortized on a straight line basis over 10 years and 4 years, respectively.

(b) Unaudited pro forma results as if the Nordic/Profarmaco and Seal Sands
acquisitions and the Topanol product line purchase had occurred at January 1,
1994 is presented below. The pro forma financial information is not necessarily
indicative of results of operations that would have occurred had the
combinations been in effect at the beginning of the period nor of future results
of operations of the combined companies.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
------------
<S> <C>
Net revenues.................................................... $328,538
Net income...................................................... 13,990
Earnings per share
Primary..................................................... $1.65
Fully diluted.............................................. $1.63
</TABLE>

(c) In 1994, the Company sold three small businesses: Wickhen cosmetic
esters, black and white photographic chemicals and the Hydrogels business for a
total of $2,152. No gain or loss resulted from the sales of these businesses.

(4) FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The AICPA's Statement of Position 96-1 "Environmental Remediation
Liabilities" requires that environmental remediation liabilities, including
related legal costs, be accrued when it is probable that an environmental
remediation will be required and such remediation efforts can be reasonably
estimated. The Company is required to adopt this standard in 1997. The Company
currently considers the criteria of this standard in establishing its
environmental liabilities with the exception of the requirement to accrue for
certain future external legal costs. The Company anticipates that the adoption
of this standard will not have a material impact on its results of operations.

33
<PAGE> 35

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(5) INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Finished goods........................................... $29,443 $30,409
Work in process.......................................... 15,463 19,093
Raw materials............................................ 13,179 15,931
Supplies................................................. 6,124 5,801
------- -------
Total............................................... $64,209 $71,234
======= =======
</TABLE>

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Land................................................... $ 8,132 $ 7,956
Buildings and improvements............................. 55,120 50,127
Machinery and equipment................................ 229,358 200,218
Furniture and fixtures................................. 7,603 5,846
Construction in progress............................... 26,845 29,283
-------- --------
Total............................................. 327,058 293,430
Accumulated depreciation............................... (110,577) (87,747)
-------- --------
Net............................................... $216,481 $205,683
======== ========
</TABLE>

Depreciation expense amounted to $22,788, $19,493 and $13,983 for the years
ended December 31, 1996, 1995 and 1994, respectively.

(7) INTANGIBLE ASSETS

Components of intangible assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Goodwill............................................... $ 59,024 $ 54,947
Other.................................................. 14,563 14,457
-------- --------
Total............................................. 73,587 69,404
Accumulated amortization............................... (24,014) (17,739)
-------- --------
Net............................................... $ 49,573 $ 51,665
======== ========
</TABLE>

34
<PAGE> 36

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(8) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The components of accounts payable and accrued liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Accounts payable....................................... $ 30,205 $ 29,901
Salaries, wages and employee benefits payable.......... 13,596 17,661
Other accrued liabilities.............................. 10,953 14,882
-------- --------
Total............................................. $ 54,754 $ 62,444
======== ========
</TABLE>

(9) INCOME TAXES

Income before taxes consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Domestic...................................... $31,611 $22,543 $15,571
Foreign....................................... 9,058 8,673 1,321
------- ------- -------
Total.................................... $40,669 $31,216 $16,892
======= ======= =======
</TABLE>

The provision for income taxes consists of the following expenses
(benefits):

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Current:
Federal..................................... $ 3,783 $ 5,951 $3,142
State....................................... 598 460 529
Foreign..................................... 6,342 4,384 (1,088)
------- ------- ------
10,723 10,795 2,583
------- ------- ------
Deferred:
Federal..................................... 922 1,008 1,537
State....................................... (527) (22) 328
Foreign..................................... 1,326 (235) 1,318
------- ------- ------
1,721 751 3,183
------- ------- ------
Total.................................. $12,444 $11,546 $5,766
======= ======= ======
</TABLE>

35
<PAGE> 37

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(9) INCOME TAXES -- (CONTINUED)
The provision for income taxes differs from the statutory Federal income
tax rate of 35% for 1996 and 1995 and 34% for 1994 as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Income tax at Federal statutory rate........... $14,234 $10,926 $5,743
State and local taxes (benefits), net of
Federal income tax benefits.................. (239) 285 566
Difference between Federal statutory rate and
statutory rates on foreign income............ 1,771 656 (350)
Reversal of tax contingency for IRS audit
settlement................................... (1,500) -- --
Return to provision adjustment................. (1,066) -- --
Research and experimentation credits........... (484) -- --
Other.......................................... (272) (321) (193)
------- ------- ------
Provision for income taxes..................... $12,444 $11,546 $5,766
======= ======= ======
</TABLE>

The components of deferred tax assets and liabilities as of December 31,
1996 and 1995 relate to temporary differences and carryforwards as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Acquisition reserves................................... $ 732 $ 2,274
Net operating loss carryforwards....................... 3,703 1,051
Inventory.............................................. 1,677 1,784
Employee benefits...................................... 883 198
Receivables............................................ 238 288
------- -------
Net current deferred tax assets........................ 7,233 5,595
Valuation allowances................................... (2,224) (1,051)
------- -------
Total net deferred tax assets.................. $ 5,009 $ 4,544
======= =======
Deferred tax liabilities:
Depreciation........................................... $25,366 $24,085
Environmental reserves................................. (2,341) (3,054)
Intangibles............................................ (1,585) (707)
Alternative minimum tax credits........................ -- (921)
Research and experimentation credits................... -- (12)
Other.................................................. 147 9
------- -------
Total net non-current deferred tax
liabilities.................................. $21,587 $19,400
======= =======
</TABLE>

Under the tax laws of various foreign countries in which the Company
operates, net operating losses (NOLs) may be carried forward, subject to
statutory limitations, to reduce taxable income in future years. The tax effect
of such foreign NOLs aggregated approximately $3,703 and $1,051 at December 31,
1996 and 1995, the majority of which are available on an indefinite carryforward
basis. However, valuation reserves have been established against certain NOLs to
reflect uncertainties associated with the realizability of such future benefits.

36
<PAGE> 38

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(9) INCOME TAXES -- (CONTINUED)
During December 1996, the Company reached a settlement agreement with the
Internal Revenue Service related to audits for the years 1988 through 1991.
Reversal of reserves no longer needed for this matter increased income by
$1,500.

(10) SHORT-TERM DEBT

Profarmaco has lines of credit in Italy with five local banks (the
"Facility"). The Facility is short-term and provides three types of financing
with the following limits: Overdraft Protection of $2,600 (Lire 4 billion),
Export Financing of $6,900 (Lire 10.5 billion) and Advances on Uncleared
Deposits of $2,300 (Lire 3.5 billion). The Overdraft Protection and Export
Financing facilities bear interest at varying rates when utilized, however,
Advances on Uncleared Deposits (Ricevute Bancarie) bear no interest.

Short-term debt at December 31, 1996 and 1995 consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- ---------
<S> <C> <C>
Export financing facility............................... $ 2,760 $ 3,645
Overdraft protection.................................... 1,120 1,060
------ ------
Total......................................... $ 3,880 $ 4,705
====== ======
</TABLE>

(11) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- ---------
<S> <C> <C>
Bank credit facilities(a)............................... $ 66,000 $ 102,500
Capitalized leases...................................... 13 25
Notes payable(b)........................................ 1,370 1,226
-------- ---------
Subtotal........................................... 67,383 103,751
Less: current portion(c)................................ 7,231 4,108
-------- ---------
Total................................................... $ 60,152 $ 99,643
======= ========
</TABLE>

(a) On September 21, 1994, the Company entered into a Loan Agreement (the
"Credit Agreement") with NBD Bank, N.A., United Jersey Bank, National
Westminster NJ, Wachovia Bank of Georgia, N.A., BHF-Bank, The First National
Bank of Boston, Chemical Bank New Jersey, N.A., and National City Bank. The
Credit Agreement provided for a one year bridge loan in the aggregate principal
amount of $50,000 due October 11, 1995, as well as provides a seven year term
loan in the aggregate principal amount of $75,000 (payable $1,000 per quarter
for twelve quarters and $3,938 for the remaining quarters beginning December
1994), and a revolving credit facility in the aggregate principal amount of
$100,000 due October 11, 1999 (evergreen renewal; automatic two year extensions
if non-renewal notice not given). As of December 31, 1996, there were no
borrowings under the revolving credit facility.

The Credit Agreement permits the Company to choose between various interest
rate options and to specify the portion of the borrowing to be covered by each
interest rate option. Under the Revolving Credit Agreement, the interest rate
options available to the Company are: (a) U.S. prime rate plus the applicable
margin (ranging from 0% to 3/4 of 1%) or (b) LIBOR plus the applicable margin
(ranging from 1/2 of 1% to 2%). The applicable margin is adjusted based upon the
Funded Indebtedness to Cash Flow Ratio of the

37
<PAGE> 39

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(11) LONG-TERM DEBT -- (CONTINUED)
Company. The seven year term loan has the same interest rate options plus 1/2%.
Additionally, the Company pays a commitment fee of between 1/5 of 1% and 3/8 of
1% on the unused portion of the Revolving Credit facility. The 1996 and 1995
average interest rates were 7.4 % and 7.7%, respectively.

The Credit Agreement contains various restrictive covenants, which require
the Company to maintain a minimum consolidated net worth level, certain
financial ratios and deferred pledge of assets, as defined in the Credit
Agreement. If these covenants are not met, the loan is collateralized by the
assets of the Company's domestic subsidiaries and 66% of the outstanding capital
stock of the foreign subsidiaries.

On July 24, 1995, the Company raised $62,572 in a public offering which was
used to pay down outstanding short-term debt of $50,000 and outstanding
long-term debt of $12,572.

(b) As part of the October 12, 1994 acquisition of Nordic/Profarmaco, the
Company assumed a government loan made to Profarmaco to finance technological
innovations. The loan of $1,291, bearing interest at 9.21%, is amortized over
ten annual payments starting July 26, 1995 and ending July 26, 2004.

<TABLE>
<S> <C>
1997....................................... $ 7,231
1998....................................... 15,868
1999....................................... 15,879
2000....................................... 15,891
2001....................................... 11,966
Thereafter................................. 548
-------
Total................................. $ 67,383
=======
</TABLE>

(12) DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to reduce exposures to
market risks resulting from fluctuations in interest rates and foreign exchange.
The Company does not enter into financial instruments for trading or speculative
purposes. The Company is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swap, forward exchange and put and
call contracts. However, the Company does not anticipate nonperformance by the
counterparties.

Interest Rate Swap Agreements

The Company enters into interest rate swap agreements to reduce the impact
of changes in interest rates on its floating rate debt. The swap agreements are
contracts to exchange floating rate for fixed interest payments periodically
over the life of the agreements without the exchange of the underlying notional
amounts. Notional amounts provide an indication of the extent of the Company's
involvement in such agreements but do not represent its exposure to market risk.
The following table shows the notional amounts outstanding, maturity dates, and
the weighted average receive and pay rates of interest rate swap agreements as
of December 31, 1996.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-----------------------------------------
WEIGHTED AVG.
RATE
NOTIONAL MATURITY ---------------
AMOUNTS DATE RECEIVE PAY
-------- -------- ------- ---
<S> <C> <C> <C> <C>
Interest rate swaps....................... $ 30,000 1998 5.6% 6.1%
Interest rate swaps....................... $ 10,000 1999 5.5% 5.5%
</TABLE>

38
<PAGE> 40

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(12) DERIVATIVE FINANCIAL INSTRUMENTS -- (CONTINUED)
Interest expense under these agreements, and the respective debt
instruments that they hedge, are recorded at the net effective interest rate of
the hedged transactions. The fair value of these agreements were based on quoted
market prices and was $39,998 at December 31, 1996.

Foreign Exchange Instruments

The Company's policy is to enter into forward exchange contracts and
currency options to hedge foreign currency transactions. This hedging mitigates
the impact of short-term foreign exchange rate movements on the Company's
operating results primarily in the United Kingdom, Sweden and Italy. The
Company's primary market risk relates to exposure to foreign currency exchange
rate fluctuations on transactions entered into by these foreign operations which
are denominated primarily in U.S. dollars, Deutsche marks and British pound
sterling. As a matter of policy, the Company does not hedge to protect the
translated results of foreign operations. The Company's forward exchange
contracts do not subject the Company's results of operations to risk due to
exchange rate movements because gains and losses on these contracts generally
offset gains and losses on the transactions being hedged. The forward exchange
contracts have varying maturities with none exceeding twelve months. The Company
makes net settlements for forward exchange contracts at maturity, based upon
negotiated rates at inception of the contracts.

The Company's foreign currency options are comprised of cap and floor
options under which a foreign currency option is purchased at one exchange rate
and another foreign currency option for equal notional value is sold at a higher
exchange rate. The foreign currency options purchased and sold mature over the
same period with premiums paid equal to premiums received resulting in zero net
cost. The Company believes the use of these options reduces its foreign exchange
risk by mitigating the range of exposure of currency fluctuation between the put
and call exchange rates. The foreign currency options have varying maturities
with none exceeding six months.

<TABLE>
<CAPTION>
1996
-------------------------------------------------------
UNREALIZED PREMIUMS
NOTIONAL FAIR ---------------- RECEIVED/
AMOUNTS VALUES GAINS LOSSES (PAID)
-------- ------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Forward exchange contracts... $ 32,823 $32,903 $ 595 $516 $ --
Foreign currency options
purchased.................. 7,300 7,300 -- -- (86)
Foreign currency options
sold....................... 7,300 7,300 -- -- 86
</TABLE>

<TABLE>
<CAPTION>
1995
-------------------------------------------------------
UNREALIZED PREMIUMS
NOTIONAL FAIR ---------------- RECEIVED/
AMOUNTS VALUES GAINS LOSSES (PAID)
-------- ------- ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Forward exchange contracts... $ 38,940 $39,611 $ 750 $ 79 $ --
</TABLE>

(13) STOCKHOLDERS' EQUITY

The Company has two classes of common shares designated Common Stock and
Nonvoting Common Stock. Authorized shares of Common Stock were 20,000,000 at
December 31, 1996 and 1995. Authorized shares of Nonvoting Common Stock were
730,746 at December 31, 1996 and 1995.

39
<PAGE> 41

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(13) STOCKHOLDERS' EQUITY -- (CONTINUED)
At December 31, 1996, authorized shares of Common Stock were reserved for
issuance as follows:

<TABLE>
<S> <C>
Stock option plans................................................ 1,963,462
Cambrex savings plan.............................................. 13,018
---------
Total shares................................................. 1,976,480
=========
</TABLE>

On July 24, 1996, the Company's Board of Directors approved a three-for-two
stock split of the Company's Common Stock, $0.10 par value, effected in the form
of a 50% stock dividend to holders of record on July 8, 1996. All share and per
share data, including stock option plan information have been adjusted to
reflect the impact of the three-for-two stock split. The effect of the split is
presented retroactively within stockholders' equity at December 31, 1996 by
transferring the par value for the additional shares issued from additional
paid-in capital to common stock.

On May 23, 1996, the Board of Directors of the Company declared a dividend
of one Right for each outstanding share of Common Stock, $.10 par value per
share, payable on June 10, 1996 to the stockholders of record on that date.
Under certain circumstances, each Right entitles the registered holder to
purchase from the Company, one one-hundredth of a share of Series E Junior
Participating Cumulative Preferred Stock ("Preferred Stock"), or in certain
circumstances, shares of Common Stock of the Company or common stock of an
acquiring company at one-half the market price of such Common Stock or common
stock, as the case may be. The Rights are designed to make it more likely that
all stockholders of the Company receive fair and equal treatment in the event of
any proposed takeover of the Company and to guard against the use of partial
tender offers or other coercive tactics to gain control of the Company. A Right
will be granted for each share of Common Stock issued after such date and prior
to the expiration date or redemption of that Right.

The Rights will become exercisable only in the event that any person or
group of affiliated persons becomes a holder, or commences a tender or exchange
offer, that if consummated, would result in that person or group of affiliated
persons owning at least 15% of the outstanding Common Stock of the Company. Once
exercisable, each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Preferred Stock, at a price of $174 per
share, subject to adjustment. The Rights may be redeemed at a price of $.01 per
Right at any time prior to the expiration date of June 5, 2006.

On July 24, 1995, the Company completed a public offering of 2,587,500
shares of newly issued common stock at a price of $25.83 per share. The total
proceeds to the Company, net of underwriting discounts, commissions, and other
related fees, amounted to $62,572. Proceeds were used to reduce outstanding debt
existing under the Company's bank Credit Agreement.

Nonvoting Common Stock has equal rights with Common Stock, with the
exception of voting power. Nonvoting Common Stock is convertible, share for
share, into Common Stock, subject to any legal requirements applicable to
holders restricting the extent to which they may own voting stock. As of
December 31, 1996 and 1995, no shares of Nonvoting Common Stock were
outstanding.

The Company held treasury stock of 1,049,895 and 715,447 shares at December
31, 1996 and 1995, respectively, and are used for issuance to the Cambrex
Savings Plan. In 1996, shares were also issued to the Board of Directors as
compensation.

The Company has authorized 5,000,000 shares of Series Preferred Stock, par
value $0.10, issuable in series and with rights, powers and preferences as may
be fixed by the Board of Directors. At December 31, 1996 and 1995, there was no
preferred stock outstanding.

40
<PAGE> 42

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(14) STOCK OPTIONS

The Company has seven stock-based compensation plans currently in effect.
The 1983 Incentive Stock Option Plan ("1983 Plan") provides for the grant of
options intended to qualify as incentive stock options to management and other
key employees. The 1987 Stock Option Plan ("1987 Plan") provides for the
granting to key employees both non-qualified stock options and incentive stock
options. The 1989 Senior Executive Stock Option Plan ("1989 Plan") provides for
the grant of options intended to qualify as additional incentives to the
Company's Senior Executive Officers. The 1992 Stock Option Plan ("1992 Plan")
provides for the granting to key employees both non-qualified stock options and
incentive stock options. The 1993 Senior Executive Stock Option Plan ("1993
Plan") provides for the grant of options intended to qualify as additional
incentives to the Company's Senior Executive Officers. The 1994 Stock Option
Plan ("1994 Plan") provides for the granting to key employees both non-qualified
and incentive stock options. The 1994 Plan also provides for the granting of
non-qualified stock options to non-employee directors.

On April 25, 1996, the Company's stockholders approved the 1996 Performance
Stock Option Plan ("1996 Plan"), which provides for the granting of options
intended to qualify as additional incentives to management and other key
employees. The 1996 Plan also provides for the granting of non-qualified stock
options to non-employee directors. Options granted under the 1996 Plan vest nine
years after the date of grant, subject to acceleration if the publicly traded
price of the Company's Common Stock equals or exceeds certain levels.
Substantially all options available under the various plans prior to the 1996
Plan have been granted. These Plans contain various vesting provisions also
based upon time and achievement of certain stock price levels. All option awards
granted under each plan expire no more than ten years from the grant date.

The Company applies the provisions of APB Opinion No. 25 and related
Interpretations in accounting for its stock-based compensation plans. Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS 123) establishes financial accounting and reporting
standards for stock-based employee compensation plans. During 1996, the Company
adopted the disclosure only provisions available under SFAS 123. Accordingly, no
compensation cost has been recognized for stock option plans.

Had compensation cost for the Company's 1996 and 1995 grants for
stock-based compensation plans been determined based on the fair value at the
grant dates for awards under these plans consistent with SFAS 123, the Company's
net income, and net income per common share for 1996 and 1995 would approximate
the pro forma amounts below:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Net income as reported................................... $28,225 $19,670
======= =======
Net income -- pro forma.................................. $26,946 $19,617
======= =======
Earnings per share -- as reported........................ $ 2.37 $ 1.95
======= =======
Earnings per share -- pro forma.......................... $ 2.27 $ 1.95
======= =======
</TABLE>

The pro forma compensation expense of $1,279 and $53 for 1996 and 1995,
respectively, was calculated based on the fair value of each option primarily
using the Black-Scholes option-pricing model with the following assumptions: (i)
average dividend yield of 1.45%, (ii) expected volatility of 23%, (iii)
risk-free interest rate ranging from 5.44% to 7.74% and (iv) expected life of
4-5 years. The 1996 grants have been valued using a path dependent model due to
the cliff vesting with performance acceleration provisions set forth in the 1996
Plan.

As of December 31, 1996, 1,510,538 options had been exercised. Shares of
Common Stock subject to outstanding options under the stock option plans were as
follows:

41
<PAGE> 43

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(14) STOCK OPTIONS -- (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
------------------------------------------------------ OPTIONS EXERCISABLE
WEIGHTED AVERAGE --------------------
---------------------- WEIGHTED
OPTION REMAINING AVERAGE
AUTHORIZED PRICE PER EXERCISE CONTRACTUAL NUMBER EXERCISE
FOR ISSUANCE OUTSTANDING SHARE $ PRICE $ LIFE OF SHARES PRICE $
------------ ----------- --------------- -------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1983 Plan............ 324,000 8,275 11.875 - 12.125 12.12 1 8,275 12.12
1987 Plan............ 300,000 5,100 12.125 12.13 1 5,100 12.13
1989 Plan............ 600,000 0 - -- -- 0 --
1992 Plan............ 150,000 74,525 10.375 - 24.75 12.84 4 74,525 12.84
1993 Plan............ 450,000 294,500 13.25 - 25.50 14.44 7 294,500 14.44
1994 Plan............ 150,000 73,713 13.25 - 27.375 17.77 8 73,713 17.77
1996 Plan............ 1,500,000 880,375 24.75 - 32.625 27.37 9 0 --
--------- --------- -------
Total
shares..... 3,474,000 1,336,488 10.375 - 32.625 23.03 456,113 14.65
========= ========= =======
</TABLE>

Information regarding the Company's stock option plans is summarized below:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
-------------------
FAIR
VALUE $
NUMBER OF EXERCISE AT GRANT
SHARES PRICE $ DATE
--------- -------- --------
<S> <C> <C> <C>
Outstanding at December 31, 1993................................... 985,425 8.125
Granted....................................................... 573,000 14.75 --
Exercised..................................................... (96,150) 8.25
Cancelled..................................................... (750) 5.00
---------
Outstanding at December 31, 1994................................... 1,461,525 9.75
Granted....................................................... 60,375 22.75 5.86
Exercised..................................................... (588,075) 9.125
Cancelled..................................................... (1,500) 15.00
---------
Outstanding at December 31, 1995................................... 932,325 15.375
Granted....................................................... 887,876 27.75 9.95
Exercised..................................................... (475,463) 13.375
Cancelled..................................................... (8,250) 21.75
---------
Outstanding at December 31, 1996................................... 1,336,488 23.03
========
</TABLE>

(15) RETIREMENT PLANS

Pension Plans

The Company maintains two U.S. defined-benefit pension plans which cover
substantially all eligible employees: (1) the Nepera Hourly Pension Plan (the
"Nepera Plan") which covers the union employees at the Harriman, New York plant,
and (2) the Cambrex Pension Plan (the "Cambrex Plan") which covers all other
eligible employees.

Benefits for the salaried and certain hourly employees are based on salary
and years of service, while those for employees covered by a collective
bargained agreement are based on negotiated benefits and years of service. The
Company's policy is to fund pension costs currently to the extent deductible for
income tax purposes. Pension plan assets consist primarily of balanced mutual
fund investments.

42
<PAGE> 44

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(15) RETIREMENT PLANS -- (CONTINUED)
The net periodic pension expense for both 1996 and 1995 are based on a
twelve month period and on valuations of the plans as of January 1. However, the
reconciliation of funded status is determined as of the September 30 measurement
date.

In accordance with the requirements of Statement of Financial Accounting
Standard No. 87 "Employers' Accounting for Pensions" (SFAS 87), the overfunded
and underfunded U.S. plans are presented separately. However, the funded status
incorporates fourth quarter contributions to each of the plans in 1996 that
resulted in a change in the funded status as of September 30. The funded status
of these plans, incorporating these fourth quarter contributions, as of
September 30, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ --------------------------
OVERFUNDED OVERFUNDED UNDERFUNDED
------------------ ---------- -----------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits................................... $(18,908) $(13,714) $ (3,884)
Non-vested benefits............................... (1,202) (1,263) (270)
------------------ ---------- -----------
Accumulated benefit obligation.................... (20,110) (14,977) (4,154)
Additional benefits based on estimated future
salary levels.................................. (1,406) (1,214) --
------------------ ---------- -----------
Projected benefit obligation for service rendered
through September 30, 1996 and 1995............... (21,516) (16,191) (4,154)
Plan assets at fair market value.................... 21,898 16,159 3,842
------------------ ---------- -----------
Plan assets in excess of PBO/(PBO in excess of Plan
assets)........................................... 382 (32) (312)
Unrecognized net transition (asset)................. (98) (199) --
Unrecognized prior service cost..................... (152) 219 (448)
Other -- unrecognized net loss on past experience... 650 648 1,198
Additional minimum liability........................ (553) -- (750)
------------------ ---------- -----------
Prepaid (accrued) pension cost as of September 30,
1996 and 1995..................................... 229 636 (312)
4th quarter contributions........................... 84 370 103
------------------ ---------- -----------
Prepaid (accrued) pension cost as of December 31,
1996 and 1995..................................... $ 313 $ 1,006 $ (209)
============== ======== =========
</TABLE>

Assumptions used to develop the U.S. 1996 and 1995 net periodic pension
expense and the September 30, 1996 and 1995 actuarial present value of projected
benefit obligations:

<TABLE>
<CAPTION>
JANUARY 1, 1996 JANUARY 1, 1995
--------------- --------------------------
OVERFUNDED OVERFUNDED UNDERFUNDED
--------------- ---------- -----------
<S> <C> <C> <C>
PENSION EXPENSE
Weighted-average discount rate...................... 7.5% 8.5% 8.5%
Expected long-term rate of return on assets......... 8.5% 8.5% 8.5%
Rate of increase in future compensation levels (non-
collective bargained employees).................. 5.0% 5.0% N/A
</TABLE>

43
<PAGE> 45

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(15) RETIREMENT PLANS -- (CONTINUED)

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ --------------------------
OVERFUNDED OVERFUNDED UNDERFUNDED
------------------ ---------- -----------
<S> <C> <C> <C>
ACTUARIAL PRESENT VALUE OF PROJECTED BENEFIT
OBLIGATIONS:
Weighted-average discount rate.................... 7.75% 7.5% 7.5%
Expected long-term rate of return on assets....... 8.5% 8.5% 8.5%
Rate of increase in future compensation levels
(non-collective bargained employees)........... 5.0% 5.0% N/A
</TABLE>

Certain foreign subsidiaries of the Company maintain pension plans for
their employees which conform to the common practice in their respective
countries.

The funded status of the Company's international pension plans as of
December 31, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
UNDERFUNDED UNDERFUNDED
----------------- -----------------
<S> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefits.......................... $(6,733) $(5,670)
------- -------
Accumulated benefit obligation........... (6,733) (5,670)
Additional benefits based on estimated
future salary levels.................. (1,162) (506)
------- -------
Projected benefit obligation for service
rendered through December 31, 1996 and
1995.................................. (7,895) (6,176)
Plan assets at fair market value......... 1,573 1,138
------- -------
Funded status............................ (6,322) (5,038)
Unrecognized net transition (asset)...... (382) (428)
Unrecognized prior service cost.......... 60 57
Other unrecognized net loss (gain) on
past experience....................... 189 (761)
------- -------
Accrued pension liability................ $(6,455) $(6,170)
======= =======
</TABLE>

Assumptions used to develop the 1996 and 1995 actuarial present value of
projected benefit obligations for the Company's foreign pension plans:

<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
ACTUARIAL PRESENT VALUE OF PROJECTED BENEFIT OBLIGATIONS
Weighted-average discount rate........................... 7.5% to 8.0% 9.0% to 9.5%
Expected long-term rate of return on assets.............. 10.0 % 10.0%
Rate of increase in future compensation levels........... 4.5% to 6.0% 5.0% to 7.0%
</TABLE>

44
<PAGE> 46

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(15) RETIREMENT PLANS -- (CONTINUED)
The Company's net pension costs included in operating results amounted to
$1,508, $1,209 and $1,157 in 1996, 1995 and 1994, respectively, and were
comprised of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost.................................. $ 1,491 $ 1,106 $ 1,242
Interest cost on projected benefit
obligation.................................. 1,949 1,898 1,757
Return on plan assets......................... (2,571) (2,887) 370
Amortization of excess plan net assets at
adoption of SFAS 87......................... (139) (137) (101)
Amortization of unrecognized prior service
cost........................................ (38) (40) --
Amortization of unrecognized net (gain)
loss........................................ (14) (9) --
Other items -- deferred investment gain
(loss)...................................... 830 1,278 (2,111)
------- ------- -------
Net pension cost.............................. $ 1,508 $ 1,209 $ 1,157
======= ======= =======
</TABLE>

Included in the net periodic pension cost is the amortization of prior
service cost over a period of twelve to nineteen years and the amortization of
the SFAS 87 transition obligation over a period of ten to seventeen years. The
pension expense for foreign pension plans of $672 and $575 is included in the
1996 and 1995 net periodic pension expense, respectively.

Savings Plan

Cambrex makes available to all employees a savings plan as permitted under
Sections 401(k) and 401(a) of the Internal Revenue Code. Employee contributions
are matched in part by Cambrex. The cost of this plan amounted to $1,534,
$1,452, and $1,449 in 1996, 1995 and 1994, respectively.

Other

In addition to the above plans, Cambrex also established a Supplemental
Executive Retirement Plan in 1994 for certain key executives. This non-qualified
plan provides supplemental pension payments in excess of qualified plan limits
imposed by Federal tax law and serves to restore the combined pension amount to
original benefit levels. For measurement purposes, a discount rate of 7.75% was
used together with an average wage increase of 5.0%. The net periodic pension
cost for 1996, 1995 and 1994 amounted to $122, $104 and $104, respectively.

The Company also has contracts with certain current and former executives
to provide consulting services to the Company after retirement as an employee
and additional retirement benefits for the remainder of the respective
executive's life. The annual expense pertaining to these contracts was $240,
$227 and $400 for 1996, 1995 and 1994, respectively.

The Company has established a non-qualified Compensation Plan for Key
Executives ("the Deferred Plan)." Under the Deferred Plan, officers and key
employees may elect to defer all or any portion of their pre-tax annual bonus
and/or annual base salary. During 1995, the Board amended the Deferred Plan to
permit officers and key employees to elect to defer receipt of Company stock
which would otherwise have been issued upon the exercise of Company options. At
December 31, 1996, 88,084 shares, 132,126 after giving effect to the
three-for-two stock split, are held in trust and are included as a reduction of
equity. The Company has established a corresponding liability to the Deferred
Plan participants in the amount of $718 which is included in other non-current
liabilities at December 31, 1996. The Deferred Plan is not funded by the
Company, but the Company has established a Deferred Compensation Trust Fund
which holds the shares issued.

45
<PAGE> 47

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(16) OTHER POSTRETIREMENT BENEFITS

Cambrex provides postretirement health and life insurance benefits
("postretirement benefits") to all eligible retired employees. Employees who
retire at or after age 55 with ten years of service are eligible to participate
in the postretirement benefit plans. The Company's responsibility for such
premiums for each plan participant is based upon years of service subject to an
annual maximum of one thousand dollars. Such plans are self-insured and are not
funded.

The Company accounts for the postretirement benefits in accordance with
Statement of Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other than Pensions" (SFAS 106). SFAS 106 requires such
benefits to be accounted for on an accrual basis. In connection with the
adoption of SFAS 106, the Company elected to amortize the transition obligation
of $1,853 over twenty years. The net effect upon 1996, 1995 and 1994 pretax
operating results, including the amortization of the transition obligation,
resulted in a cost of $316, 306, and $312, respectively.

The periodic postretirement benefit cost includes the following components:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost of benefits earned....................... $ 67 $ 57 $ 68
Interest cost on accumulated postretirement benefit
obligation.......................................... 156 159 151
Amortization of transition obligation................. 93 90 93
---- ---- ----
Total periodic postretirement benefit
cost...................................... $316 $306 $312
==== ==== ====
</TABLE>

Accumulated postretirement benefit obligation:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Retirees................................................. $ 852 $ 808
Fully eligible plan participants......................... 673 654
Other active plan participants........................... 616 623
------- -------
Accumulated postretirement benefit obligation............ 2,141 2,085
Unrecognized net loss.................................... 181 131
Unrecognized transition obligation....................... (1,482) (1,575)
------- -------
Accrued postretirement benefit cost recognized at the end
of the period.......................................... $ 840 $ 641
======= =======
</TABLE>

The discount rate used to determine the accumulated postretirement benefit
obligation was 7.75% and 7.5% in 1996 and 1995, respectively. The assumed health
care cost trend rate used to determine the accumulated postretirement benefit
obligation is 12.25%, declining ratably to 6.5% in 2002 and thereafter. A
one-percentage-point increase in the assumed health care cost trend rate would
not have a material effect upon the accumulated postretirement benefit
obligation.

The cost of all health and life insurance benefits is recognized as
incurred and was approximately $4,362, $3,825 and $3,994 in 1996, 1995 and 1994,
respectively. The cost of providing these benefits for the 207, 190 and 199
retirees in 1996, 1995 and 1994, respectively, is not separable from the cost of
providing benefits for the 725, 738, and 732 active U.S. employees.

46
<PAGE> 48

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(17) OTHER INCOME AND EXPENSE

Other income in 1996 of $194 is related to foreign currency transaction
gains.

Other expense in 1995 was $2,779 including $1,400 in foreign currency
transaction losses, and $865 for the write-off of equipment used for a specific
product, which is no longer manufactured.

(18) FOREIGN OPERATIONS AND EXPORT SALES

European sales are comprised of all sales from Nordic, Profarmaco and Seal
Sands.

Summarized data for the Company's operations for 1996, 1995 and 1994 are as
follows:

<TABLE>
<CAPTION>
DOMESTIC EUROPEAN TOTAL
-------- -------- --------
<S> <C> <C> <C>
1996
Gross sales................................ $218,013 $151,466 $369,479
Operating profit........................... 22,296 23,978 46,274
Net income................................. 22,094 6,131 28,225
Identifiable assets........................ 179,164 225,280 404,444

1995
Gross sales................................ $223,187 $144,883 $368,070
Operating profit........................... 19,763 24,740 44,503
Net income................................. 17,324 2,346 19,670
Identifiable assets........................ 176,839 225,714 402,553

1994
Gross sales................................ $214,880 $ 34,803 $249,683
Operating profit........................... 17,334 3,642 20,976
Net income................................. 10,514 612 11,126
Identifiable assets........................ 167,725 192,752 360,477
</TABLE>

Export sales, included in domestic gross sales, in 1996, 1995 and 1994
amounted to $50,243, $50,608 and $44,135, respectively. No country, in any of
the given years, represents more than 10% of these export sales.

(19) COMMITMENTS

The Company has operating leases expiring on various dates through the year
2012. The leases are primarily for office and laboratory equipment and vehicles.
At December 31, 1996, future minimum commitments under noncancelable operating
lease arrangements were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31:
-------------------------------------------
<S> <C>
1997................................ $ 1,352
1998................................ 849
1999................................ 552
2000................................ 426
2001 and thereafter................. 10,497
-------
Net commitments............................ $13,676
=======
</TABLE>

Total operating lease expense was $2,175, $2,284 and $1,958 for the years
ended December 31, 1996, 1995 and 1994, respectively.

47
<PAGE> 49

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(19) COMMITMENTS -- (CONTINUED)
In November 1995, the Company formed a strategic alliance with Oxford
Asymmetry, Ltd. (located near Oxford in the United Kingdom). The Company will
commercialize technologies and products developed by Oxford Asymmetry, and
provides financial support for their research and development group. The Company
provides Oxford Asymmetry with $1,000 per year which is included in research and
development expense for the year ended December 31, 1996.

(20) CONTINGENCIES

Contingencies exist for certain subsidiaries of Cambrex because of legal
and administrative proceedings arising out of the normal course of business.
Such contingencies include environmental proceedings directly and indirectly
against the subsidiaries, as well as matters internally identified. The
resolution of such matters often spans several years and frequently involves
regulatory oversight and/or adjudication. Additionally, many remediation
requirements are not fixed and are likely to be affected by future
technological, site, and regulatory developments. Consequently, the ultimate
extent of liabilities with respect to such matters, as well as the timing of
cash disbursements cannot be determined with certainty. 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 Company's liquidity nor
its financial position.

The following table exclusively addresses matters wherein the related
liabilities are considered estimable. It summarizes the estimated range of the
Company's share of costs associated with such matters, the related accruals, and
the activity associated with those accruals. The changes in the estimated ranges
between the current and prior year reflect revisions to estimates, the addition
of matters that were quantified for the first time during the current year, and
the satisfaction of others. The related accruals represent management's
assessment of the aggregate liability associated with estimable matters.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
------- -------
<S> <C> <C>
Estimated range of the Company's share of costs
associated with estimable matters:
Minimum................................................ $ 4,544 $ 8,697
======= =======
Maximum................................................ $16,039 $19,528
======= =======
Accrual and related activity:
Balance, beginning of year............................. $ 9,400 $10,211
Additions:
Accruals established in connection with acquisition
activity.......................................... -- 200
Reserve reversal.................................... (1,000) --
Expenditures........................................... (600) (1,011)
------- -------
Balance, end of year................................... $ 7,800 $ 9,400
======= =======
Classification of year end accrual:
Current................................................ $ 617 $ 700
Non-current............................................ 7,183 8,700
------- -------
$ 7,800 $ 9,400
======= =======
</TABLE>

During 1994, there were no income statement charges for additions to the
accrual for environmental contingencies.

48
<PAGE> 50

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(20) CONTINGENCIES -- (CONTINUED)
Significant matters wherein the related liability or range of liability is
estimable, are summarized as follows:

a) Nepera, Inc. (Nepera) was named in 1987 as a Potentially Responsible
Party (PRP) along with certain prior owners of the Maybrook Site in
Hamptonburgh, New York by the United States Environmental Protection Agency
(EPA) in connection with the disposition, under appropriate permits, of
wastewater at that site prior to Cambrex's acquisition of Nepera in 1986. The
Hamptonburgh site is on the EPA's National Priorities List for remedial work and
clean-up. However, to date the EPA has entrusted the management of the
remediation effort to the New York State Department of Environmental
Conservation (DEC). Although the periods of ownership of the site and the extent
of its use for wastewater disposal are well established, the PRP's have not been
able to agree upon an allocation method for future remediation costs. However, a
prior owner has participated with Nepera in the performance of the activities
described in the following paragraphs.

During 1992, Nepera prepared a draft Remedial Investigation/Feasibility
Study (RI/FS) report which enumerated several remediation alternatives and
submitted the Remedial Investigation portion to the DEC for review.
Consequently, although this RI/FS had not been approved by the DEC, Nepera
utilized it to revise the estimated liability for this matter previously
included in the accrual for environmental contingencies. This estimate
considered the probability of cost sharing with prior owners of the site.

During 1993, the DEC requested the performance of additional site
investigation prior to reviewing the Feasibility Study portion of the report.
Nepera prepared a plan for such additional site investigation and submitted it
for review.

During 1994, the DEC requested the performance of additional site
investigation beyond the 1993 proposed plan and requested the Feasibility Study
portion of the report. Nepera updated the RI/FS, prepared a revised plan for
additional site investigation, submitted them for review and utilized them to
update the estimated liability for this matter. Additionally, a DEC
administrative law judge issued a decision ordering one of the former owners to
remediate the site. However, that former owner is appealing the decision and
settlement discussions commenced.

During 1995, the draft RI/FS was finalized and filed with the DEC. While
similar to the 1994 draft, this final RI/FS delineated eight remediation
alternatives which Nepera utilized to update the estimated liability for this
matter.

During 1996, the DEC requested the performance of an additional pilot study
beyond the 1995 RI/FS to determine the viability of another remediation
alternative. Nepera utilized this study to update the estimated liability which
resulted in a reduction in the estimated reserve for this matter. Settlement
discussions with one former owner continued.

b) Nepera was named in 1987 as a responsible party along with certain prior
owners of Nepera's Harriman, New York production facility by the DEC in
connection with contamination at that site. Nepera believes that any remediation
to be conducted at that site is primarily related to contamination attributable
to material handling and disposal practices, including drum burial at the site,
which occurred prior to Cambrex's acquisition of Nepera in 1986. A prior owner
has participated with Nepera in the performance of the activities described in
the following paragraphs. Over the past several years, Nepera, with the
agreement of the DEC, has been performing an interim remedial measure involving
the pumping and treatment of groundwater to mitigate the possibility of
contamination progressing beyond the site boundaries.

During 1992, Nepera prepared a draft RI/FS report which enumerated several
remediation alternatives and submitted the Remedial Investigation portion to the
DEC for review. Consequently, although this RI/FS had not been approved by the
DEC, Nepera utilized it to develop a range of estimated liabilities for this

49
<PAGE> 51

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(20) CONTINGENCIES -- (CONTINUED)
matter and considered such estimates when determining the accrual for
environmental contingencies. That estimate considered the probability of cost
sharing with prior owners of the site.

During 1993, Nepera had not received commentary from the DEC concerning the
Remedial Investigation portion of the report.

During 1994, the DEC requested the Feasibility Study portion of the report.
Nepera updated the RI/FS and submitted it for review. Settlement discussions
with a former owner commenced.

During 1996, Nepera responded to the DEC's inquiries regarding the 1995
RI/FS by completing two additional FS remediation alternatives which
subsequently were accepted by the DEC. Nepera utilized these new alternatives to
update the estimated liability which resulted in a reduction in the estimated
reserve for this matter. Settlement discussions with one former owner continued.

c) Cosan, Inc. (Cosan) entered into an Administrative Consent Order in 1985
with the New Jersey Department of Environmental Protection (NJDEP) under New
Jersey's Industrial Site Recovery Act (ISRA) in order to consummate the sale of
the controlling interest in Cosan to the Company. Through that action, Cosan
became required to determine whether its facility located in Carlstadt, New
Jersey was contaminated by hazardous materials and, if appropriate, effect a
cleanup.

During 1992, based upon the results of an evaluation of the site, Cosan
proposed the installation of a groundwater recovery system to remove
contaminates from the soil. During 1996, the NJDEP approved the Remedial Action
Workplan for groundwater treatment and also approved the further RI workplan for
soils.

d) Cosan was named in 1991 as a defendant in a suit filed by the owners of
a manufacturing site in Clifton, New Jersey that had been owned and operated by
Cosan from 1968 to 1979. The plaintiffs alleged Cosan contributed to the
contamination at the site and seek to compel Cosan to contribute toward present
and future costs of remediation of the site under ISRA. During January 1997, a
judge's opinion was rendered against Cosan under which Cosan was liable for past
environmental investigation and remediation costs of approximately $800 plus
interest and is responsible for future remediation costs at the site. In
addition, the opinion assessed treble damages against Cosan under the New Jersey
Spill Act. Cosan believes such damages are unprecedented and will contest such
award on appeal.

e) Nepera was named in the early 1980's as a PRP along with approximately
130 other companies by the EPA in connection with the SCP Corporation (SCP) site
in Carlstadt, New Jersey. The site is on the EPA's National Priorities List for
remedial work and cleanup. SCP disposed of process wastewater and minor amounts
of other material for Nepera during the 1970's.

The EPA has directed an Interim Remedial Measure for this site consisting
of the construction of slurry walls and a pump and treat facility. Presently, a
proportionate allocation of responsibility has not been established. However,
Nepera's responsibility may be relatively large in relation to other parties.
Nepera is contesting the proposed basis for the allocation of responsibility for
this site, and believes it has grounds to, and will, oppose any efforts to
charge it with excessive responsibility.

During 1994, the cost of capping the site was estimated by the PRP group to
range from $5,000 to $8,000. Although such a remediation alternative has not
been approved by the EPA, Nepera has assumed it to be the minimum effort which
will be required at the site. Consequently, Nepera utilized such information to
develop

50
<PAGE> 52

CAMBREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

(20) CONTINGENCIES -- (CONTINUED)
a range of estimated liabilities for this matter and considered such estimates
when determining the accrual for environmental contingencies.

Additionally, during 1994, Nepera reached a settlement agreement with
certain insurers who agreed to pay a certain portion of future expenditures
associated with the site and incurred by Nepera. Under the terms of the
settlement, $2,450 was made available through a trust arrangement for
remediation and administrative expenditures in connection with a number of
relatively small sites. During 1996 and 1994, approximately $996 and $1,050,
respectively, were designated to be expended by the trust for past expenditures.
The remaining balance, approximately $400, will be available for future
expenditures and has been considered in the determination of the accrual for
environmental contingencies at December 31, 1996.

During 1995, the PRP commenced a Focused Feasibility Study (FFS) of soil
contamination of a portion of the site as requested by the EPA.

During 1996, the PRP group commenced an off property investigation to
determine if any contamination has moved off-site.

f) In 1992, Cambrex acquired substantially all of the assets of the fine
chemicals business of Hexcel Fine Chemicals, now known as Zeeland Chemicals,
Inc. In connection with that transaction, an accrual was recorded for estimated
future costs for environmental conditions existing as of the date of the
acquisition.

To date, there have been no significant developments in connection with
environmental conditions at that site.

g) As more fully described in Note #3, Cambrex acquired Nordic/Profarmaco.
In connection with that transaction, an accrual of $1,510 was established for
environmental conditions existing as of the date of the acquisition.
Approximately $500 was spent during 1996 for environmental permit compliance
matters.

h) CasChem, Inc. (CasChem) was subject to an investigation commenced in
1990 by agents of the EPA and the Federal Bureau of Investigation pursuant to a
search warrant indicating an interest in the handling, storage, and disposal of
hazardous wastes.

During 1994, a settlement was reached wherein CasChem pleaded guilty to the
unpermitted storage of one drum of hazardous waste and the payment of a $1,000
fine. That amount was paid during January 1995.

i) In addition to the matters identified above, Cambrex's subsidiaries are
party to a number of other proceedings. Management is of the opinion that the
ultimate liability resulting from those proceedings will not have a material
adverse effect upon Cambrex's results of operations nor its financial position.

51
<PAGE> 53

CAMBREX CORPORATION

SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1996
Gross sales............................. $96,717 $92,969 $88,318 $91,475 $369,479
Net revenues............................ 93,925 90,269 86,046 89,145 359,385
Gross profit............................ 26,466 25,986 25,002 23,882 101,336
Net income.............................. 6,197 7,528(2) 6,101 8,399(3) 28,225
Earnings per share*:(1)
Primary............................ $ 0.52 $ 0.63 $ 0.51 $ 0.70 $ 2.37
Fully diluted...................... $ 0.52 $ 0.63 $ 0.51 $ 0.70 $ 2.37
Average shares*:
Primary............................ 11,810 11,860 11,907 11,949 11,897
Fully diluted...................... 11,826 11,885 11,918 11,954 11,910
1995
Gross sales............................. $96,078 $90,998 $90,138 $90,856 $368,070
Net revenues............................ 93,389 88,215 87,385 88,187 357,176
Gross profit............................ 24,485 25,081 25,048 25,166 99,780
Net income.............................. 4,394 5,107 5,006 5,163 19,670
Earnings per share*:(1)
Primary............................ $ 0.51 $ 0.58 $ 0.45 $ 0.44 $ 1.96
Fully diluted...................... $ 0.50 $ 0.58 $ 0.45 $ 0.44 $ 1.95
Average shares*:
Primary............................ 8,688 8,795 11,016 11,700 10,053
Fully diluted...................... 8,759 8,798 11,018 11,724 10,104
</TABLE>

- - ---------------

(1) Earnings per share calculations for each of the quarters are based on the
weighted average number of shares outstanding for each period, as such, the
sum of the quarters may not necessarily equal the earnings per share amount
for the year.

(2) Net income for the three months ended June 30, 1996 reflect the reversal of
certain reserves amounting to $1,400. Additionally, a recovery of $1,085 for
legal expenses was recognized in results of operations for the three months
ended June 30, 1996.

(3) Net income for the three months ended December 31, 1996 reflect income, net
of related costs, of approximately $1,100 recognized from the settlement
with a customer related to the premature termination of a five year supply
contract for the sale of PMPA. Additionally, a $1,000 reversal of the
Company's environmental accrual is reflected in net income for the three
months ended December 31, 1996.

52
<PAGE> 54

PART III

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

ITEM 11 -- EXECUTIVE COMPENSATION.

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information called for by Part III is hereby incorporated by reference
to the information set forth under the captions "Principal Stockholders," "Board
of Directors," "Election of Directors," and "Executive Compensation" in the
registrant's definitive proxy statement for the Annual Meeting of Stockholders,
to be held April 24, 1997, which meeting involves the election of directors,
which definitive proxy statement is being filed with the Securities and Exchange
Commission pursuant to Regulation 14A.

In addition, information concerning the registrant's executive officers has
been included in Part I above under the caption "Executive Officers of the
Registrant."

53
<PAGE> 55

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1. The following consolidated financial statements of the Company are
filed as part of this report:

<TABLE>
<CAPTION>
PAGE NUMBER
(IN THIS REPORT)
----------------
<S> <C>
Report of Independent Accountants.............................................. 25
Consolidated Balance Sheets as of December 31, 1996 and 1995................... 26
Consolidated Income Statements for the Years Ended December 31, 1996, 1995 and
1994......................................................................... 27
Consolidated Statements of Stockholders' Equity for the Years Ended December
31, 1996, 1995 and 1994...................................................... 28
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996,
1995 and 1994................................................................ 29
Notes to Consolidated Financial Statements..................................... 30
Selected Quarterly Financial Data (unaudited) for the Years Ended December 31,
1996 and 1995................................................................ 52
</TABLE>

(a) 2. (i) The following schedule to the consolidated financial statements
of the Company as filed herein and the Report of Independent Certified Public
Accountants on Schedule are filed as part of this report.

<TABLE>
<CAPTION>
PAGE NUMBER
(IN THIS REPORT)
----------------
<S> <C>
Independent Accountants' Report (included in the accountants' reports on the
registrant's consolidated financial statements).............................. 25
Schedule II -- Valuation and Qualifying Accounts............................... 55
</TABLE>

All other schedules are omitted because they are not applicable or not required
or because the required information is included in the consolidated financial
statements of the Company or the notes thereto.

(a) 3. The exhibits filed in this report are listed in the Exhibit Index on
page 57.

The registrant agrees, upon request of the Securities and Exchange
Commission, to file as an exhibit each instrument defining the rights of holders
of long-term debt of the registrant and its consolidated subsidiaries which has
not been filed for the reason that the total amount of securities authorized
thereunder does not exceed 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.

(b) Reports on Form 8-K

The registrant filed no reports on Form 8-K during the last quarter of the
year ended December 31, 1996.

54
<PAGE> 56

CAMBREX CORPORATION

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- ---------- --------
ADDITIONS
--------------------
CHARGED
BALANCE TO COST CHARGED
BEGINNING AND OTHER END OF
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS YEAR
- - ------------------------------------------- -------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1996:
Doubtful trade receivables and returns
and allowances...................... $1,261 $ 609 $ -- $ 417 $1,453
Inventory and obsolescence
provisions.......................... 8,364 1,099 -- 2,996 6,467
Year Ended December 31, 1995:
Doubtful trade receivables and returns
and allowances...................... 1,288 547 -- 574 1,261
Inventory and obsolescence
provisions.......................... 5,578 3,052 -- 266 8,364
Year Ended December 31, 1994:
Doubtful trade receivables and returns
and allowances...................... 355 280 822(1) 169 1,288
Inventory and obsolescence
provisions.......................... 1,517 280 4,184(1) 403 5,578
</TABLE>

- - ---------------

(1) Reserve of Nordic/Profarmaco and Seal Sands, acquired during 1994.

55
<PAGE> 57

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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/ CYRIL C. BALDWIN, JR.
------------------------------------
Cyril C. Baldwin, Jr.
Chairman of the Board of Directors
Date: March 21, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- - --------------------------------------------- ----------------------------- ---------------
<C> <S> <C>

/s/ CYRIL C. BALDWIN, JR. Chairman of the Board of ###
- - --------------------------------------------- Directors #
Cyril C. Baldwin, Jr. #
#
/s/ PETER TRACEY Executive Vice President -- #
- - --------------------------------------------- Finance, Principal #
Peter Tracey Financial Officer and #
Principal Accounting #
Officer #
#
/s/ ROSINA B.DIXON, M.D.* Director #
- - --------------------------------------------- #
Rosina B.Dixon, M.D. #
#
/s/ FRANCIS X. DWYER* Director #
- - --------------------------------------------- #
Francis X. Dwyer #
/s/ GEORGE J. W. GOODMAN* Director #
- - --------------------------------------------- #
George J. W. Goodman #
#
/s/ KATHRYN RUDIE HARRIGAN, PHD* Director ##
- - --------------------------------------------- ### March 21, 1997
Kathryn Rudie Harrigan, PhD ##
#
/s/ LEON J. HENDRIX, JR.* Director #
- - --------------------------------------------- #
Leon J. Hendrix, Jr. #
#
/s/ ILAN KAUFTHAL* Director #
- - --------------------------------------------- #
Ilan Kaufthal #
#
/s/ ROBERT LEBUHN* Director #
- - --------------------------------------------- #
Robert Lebuhn #
#
/s/ JAMES A. MACK* Director #
- - --------------------------------------------- #
James A. Mack #
#
/s/ DEAN P. PHYPERS* Director #
- - --------------------------------------------- #
Dean P. Phypers #
#
*By /s/ CYRIL C. BALDWIN, JR. #
- - --------------------------------------------- #
Cyril C. Baldwin, Jr. -- Attorney-in-Fact ###
</TABLE>
I,1

<PAGE> 58

EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of registrant(A) -- Exhibit 3(a).
3.2 By Laws of registrant.(E) -- Exhibit 4.2.
4.1 Form of Certificate for shares of Common Stock of registrant.(A) -- Exhibit
4(a).
4.2 Article Fourth of the Restated Certificate of Incorporation.(A) -- Exhibit 4(b).
4.3 Loan Agreement dated September 21, 1994 by and among the registrant, NBD Bank,
N.A., United Jersey Bank, National Westminster Bank NJ, Wachovia Bank of
Georgia, N.A., BHF-Bank, The First National Bank of Boston, Chemical Bank New
Jersey, N.A., and National City Bank.(K).
10.1 Purchase Agreement dated July 11, 1986, as amended, between the registrant and
ASAG, Inc.(A) -- Exhibit 10(r).
10.2 Asset Purchase Agreement dated as of June 5, 1989 between Whittaker Corporation
and the registrant.(C) -- Exhibit 10(a).
10.3 Asset Purchase Agreement dated as of July 1, 1991 between Solvay Animal Health,
Inc. and the registrant.(F).
10.4 Asset Purchase Agreement dated as of March 31, 1992 between Hexcel Corporation
and the registrant.(H).
10.5 Stock Purchase Agreement dated as of September 15, 1994 between Akzo Nobel AB,
Akzo Nobel NV and the registrant, for the purchase of Nobel Chemicals AB.(K).
10.6 Stock Purchase Agreement dated as of September 15, 1994 between Akzo Nobel AB,
Akzo Nobel and the registrant, for the purchase of Profarmaco Nobel, S.r.1.(K).
10.10 1983 Incentive Stock Option Plan, as amended.(B).
10.11 1987 Long-term Incentive Plan.(A) -- Exhibit (g).
10.12 1987 Stock Option Plan.(B).
10.13 1989 Senior Executive Stock Option Plan.(J).
10.14 1992 Stock Option Plan.(J).
10.15 1993 Senior Executive Stock Option Plan.(J).
10.16 1994 Stock Option Plan.(J).
10.17 1996 Performance Stock Option Plan.(N).
10.20 Form of Employment Agreement between the registrant and its executive officers
named in the Revised Schedule of Parties thereto.(D) -- Exhibit 10.A.
10.21 Revised Schedule of Parties to Employment Agreement (exhibit 10.20 hereto).(M).
10.22 Cambrex Corporation Savings Plan.(I).
10.23 Cambrex Corporation Supplemental Retirement Plan.(L).
10.24 Deferred Compensation Plan of Cambrex Corporation.(L).
10.25 Amendment to Deferred Compensation Plan of Cambrex Corporation(Exhibit 10.24
hereto).(P).
10.26 Cambrex Earnings Improvement Plan.(L).
10.27 Consulting Agreement dated December 15, 1994 between the registrant and Arthur
I. Mendolia.(L).
</TABLE>

- - ---------------
See legend on following page.

57
<PAGE> 59

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - ----------- --------------------------------------------------------------------------------
<C> <S>
10.28 Consulting Agreement dated December 15, 1995 between the registrant and Cyril C.
Baldwin, Jr.(L).
10.29 Consulting Agreement between the registrant and James A. Mack.(L).
10.30 Additional Retirement Payment Agreement dated December 15, 1994 between the
registrant and Arthur I. Mendolia.(L).
10.31 Additional Retirement Payment Agreement dated December 15, 1994 between the
registrant and Cyril C. Baldwin, Jr.(L).
10.32 Additional Retirement Payment Agreement between the registrant and James A.
Mack.(L).
10.40 Registration Rights Agreement dated as of June 6, 1985 between the registrant
and the purchasers of its Class D Convertible Preferred stock and 9% Convertible
Subordinated Notes due 1997.(A) -- Exhibit 10(m).
10.41 Administrative Consent Order dated September 16, 1985 of the New Jersey
Department of Environmental Protection to Cosan Chemical
Corporation.(A) -- Exhibit 10(q).
10.42 Registration Rights Agreement dated as of June 5, 1996 between the registrant
and American Stock Transfer and Trust Company.(O) -- Exhibit 1.
10.50 Manufacturing Agreement dated as of July 1, 1991 between the registrant and A.L.
Laboratories, Inc.(G).
11 Statement re computation of earnings per share.(M).
21 Subsidiaries of registrant.(M).
23 Consent of Coopers & Lybrand L.L.P. to the incorporation by reference of its
report herein in Registration Statement Nos. 33-22017, 33-21374, 33-37791,
33-81780 and 33-81782 on Form S-8 of the registrant.(M).
24 Powers of Attorney to sign this report.(M).
27 Financial Data Schedule.(M).
</TABLE>

- - ---------------

(A) Incorporated by reference to the indicated Exhibit to registrant's
Registration Statement on Form S-1 (Registration No. 33-16419).

(B) Incorporated by reference to registrant's Registration Statement on Form
S-8 (Registration No. 33-21374) and Amendment No. 1.

(D) Incorporated by reference to the indicated Exhibit to registrant's Annual
Report on Form 10-K for 1989.

(E) Incorporated by reference to the indicated Exhibit to registrant's
Registration Statement on Form S-8 (Registration No. 33-37791).

(F) Incorporated by reference to registrant's Current Report on Form 8-K dated
July 1, 1991.

(G) Incorporated by reference to the registrant's Annual Report on Form 10-K
for 1991.

(H) Incorporated by reference to the registrant's Current Report on Form 8-K
dated April 10, 1992 and Amendment No. 1 to its Current Report.

(I) Incorporated by reference to registrant's Registration Statement on Form
S-8 (Registration No. 33-81780) dated July 20, 1994.

(J) Incorporated by reference to registrant's Registration Statement on Form
S-8 (Registration No. 33-81782) dated July 20, 1994.

(K) Incorporated by reference to registrant's Current Report on Form 8-K dated
October 26, 1994.

(L) Incorporated by reference to the registrant's Annual Report on Form 10-K
for 1994.

(M) Filed herewith.

58
<PAGE> 60

(N) Incorporated by reference to registrant's Registration Statement on Form
S-8 (Registration No. 33-22017) dated February 19, 1997.

(O) Incorporated by reference to the registrant's Current Report on Form 8-A
dated June 12, 1996.

(P) Incorporated by references to the registrant's Annual Report on Form 10-K
for 1995.

<PAGE> 1

EXHIBIT 10.21

CAMBREX CORPORATION

ANNUAL REPORT ON FORM 10-K

REVISED SCHEDULE OF PARTIES

<TABLE>
<CAPTION>
NAME TITLE DATE OF AGREEMENT
-------------------- ------------------------------------------- -----------------
<S> <C> <C>
James A. Mack President and Chief 02/01/90
Executive Officer
Peter Tracey Executive Vice President 11/05/90
and Chief Financial Officer
Claes Glassell Vice President, Managing Director 10/12/94
of Cambrex Limited
Steven M. Klosk Executive Vice President of Administration 10/21/92
Peter E. Thauer Vice President, General 08/28/89
Counsel and Secretary
Salvatore J. Vice President of 12/14/95
Guccione Corporate Development

</TABLE>

<PAGE> 1

EXHIBIT 11

CAMBREX CORPORATION AND SUBSIDIARIES

COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER-SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Income applicable to common shares:
Primary earnings...................... $28,225 $19,670 $11,126 $8,641 $6,230
Add:
Interest reduction attributable to
assumed conversion of convertible
subordinated notes (Net of taxes)
Notes issued June 11, 1985.......... -- -- -- 71 136
Notes issued October 3, 1985........ -- -- -- 43 81
------- ------- ------- ------ ------
Fully diluted earnings........... $28,225 $19,670 $11,126 $8,755 $6,447
======= ======= ======= ====== ======
Weighted average number of common shares
and common share equivalents outstanding
during the year*
Common stock.......................... 11,608 9,540 7,875 7,441 7,130
Nonvoting Common stock................ -- -- -- -- --
Stock options......................... 289 513 636 482 202
------- ------- ------- ------ ------
Shares outstanding -- primary....... 11,897 10,053 8,511 7,923 7,332
Notes issued June 11, 1985............... -- -- -- 183 297
Notes issued October 3, 1985............. -- -- -- 110 180
Additional stock options................. 13 51 38 10 54
------- ------- ------- ------ ------
Shares outstanding -- fully
diluted............................. 11,910 10,104 8,549 8,226 7,863
======= ======= ======= ====== ======
Fully diluted earnings per common
share............................... $ 2.37 $ 1.95 $ 1.30 $ 1.07 $ 0.82
======= ======= ======= ====== ======
</TABLE>

- - ---------------
* Share and per share data reflects adjustments for a three-for-two stock split
in the form of a 50% stock dividend paid in July, 1996.

<PAGE> 1

EXHIBIT 21

CAMBREX CORPORATION

SUBSIDIARIES OF REGISTRANT

<TABLE>
<CAPTION>
SUBSIDIARY INCORPORATED IN:
------------------------------------------------------- ----------------
<S> <C>
CasChem, Inc. ......................................... Delaware
Cosan Chemical Corp. .................................. New Jersey
Nepera, Inc. .......................................... New York
The Humphrey Chemical Co., Inc. ....................... Delaware
Salsbury Chemicals, Inc. .............................. Iowa
Zeeland Chemicals, Inc. ............................... Michigan
Seal Sands Chemicals Limited........................... England
Profarmaco S.r.1. ..................................... Italy
Nordic Synthesis AB.................................... Sweden
</TABLE>

<PAGE> 1

EXHIBIT 23

CAMBREX CORPORATION

CONSENT OF INDEPENDENT ACCOUNTANTS

Cambrex Corporation:

We consent to the incorporation by reference in the registration statements
of Cambrex Corporation on Forms S-8 (File Nos. 33-22017, 33-21374, 33-37791,
33-81780, and 33-81782) of our report dated January 17, 1997, on our audits of
the consolidated financial statements and financial statement schedule of
Cambrex Corporation as of December 31, 1996 and 1995, and for each of the three
years in the period ended December 31, 1996, which report is included in this
Annual Report on Form 10-K.

COOPERS & LYBRAND L.L.P.

Parsippany, New Jersey
March 19, 1997

<PAGE> 1

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each officer and director of Cambrex
Corporation, a Delaware corporation, whose signature appears below constitutes
and appoints Cyril C. Baldwin, Jr., James A. Mack, and Peter Tracey, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all Annual Reports on Form 10-K which
said Cambrex Corporation may be required to file pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and any and all amendments thereto and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitutes may lawfully do or cause to be done by virtue
hereof.

IN WITNESS WHEREOF each of the undersigned has executed this instrument as
of the 23rd day of January 1997.

<TABLE>
<S> <C>
/s/ CYRIL C. BALDWIN, JR. /s/ JAMES A. MACK
- - -------------------------------------------- --------------------------------------------
Cyril C. Baldwin, Jr. James A. Mack
Chairman of the Board of Directors President, Chief Executive Officer
Director

/s/ PETER TRACEY /s/ LEON J. HENDRIX, JR.
- - -------------------------------------------- --------------------------------------------
Peter Tracey Leon J. Hendrix, Jr.
Executive Vice President-Finance Director
Chief Financial Officer

/s/ ROSINA B. DIXON /s/ ILAN KAUFTHAL
- - -------------------------------------------- --------------------------------------------
Rosina B. Dixon, M.D. Ilan Kaufthal
Director Director

/s/ FRANCIS X. DWYER /s/ ROBERT LEBUHN
- - -------------------------------------------- --------------------------------------------
Francis X. Dwyer Robert LeBuhn
Director Director

/s/ GEORGE J. W. GOODMAN /s/ DEAN P. PHYPERS
- - -------------------------------------------- --------------------------------------------
George J. W. Goodman Dean P. Phypers
Director Director

/s/ KATHRYN RUDIE HARRIGAN, PHD
- - --------------------------------------------
Kathryn Rudie Harrigan, PhD
Director
</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 7,353
<SECURITIES> 0
<RECEIVABLES> 54,363
<ALLOWANCES> 1,453
<INVENTORY> 64,209
<CURRENT-ASSETS> 136,862
<PP&E> 327,057
<DEPRECIATION> 110,576
<TOTAL-ASSETS> 404,444
<CURRENT-LIABILITIES> 73,950
<BONDS> 60,152
0
0
<COMMON> 851
<OTHER-SE> 228,194
<TOTAL-LIABILITY-AND-EQUITY> 404,444
<SALES> 358,794
<TOTAL-REVENUES> 359,385
<CGS> 258,049
<TOTAL-COSTS> 258,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,152
<INCOME-PRETAX> 40,669
<INCOME-TAX> 12,444
<INCOME-CONTINUING> 28,225
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,225
<EPS-PRIMARY> 2.37
<EPS-DILUTED> 2.37

</TABLE>