CAMBREX CORP, 10-K, 1998-03-20

CAMBREX CORP
10-K, 1998-03-20
INDUSTRIAL ORGANIC CHEMICALS

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UNITED STATES
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, 1997

[ ] 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 $551,406,933 as of February 28, 1998.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of February 28, 1998, there were 11,947,239 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 1998 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 and fine
chemicals, as well as products and services to the biotechnology industry. The
Company operates in two segments, biotechnology and pharmaceutical specialty and
fine chemicals. The pharmaceutical specialty and fine chemicals segment includes
five product categories: active pharmaceutical ingredients, 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. Focus on niche products requiring high technical expertise.

2. Be a leading supplier of core products, for which price competition
is not the primary market determinant.

3. Review products and product lines continually and eliminate those
not meeting operating profit goals and replace 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 nine 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 directly related to getting the
products to market; 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 3, 1997, the Company completed the acquisition of all of the
outstanding common stock of BioWhittaker, Inc. ("BioWhittaker") for
approximately $133,500. BioWhittaker, which is located on 116 acres in
Walkersville, Maryland, develops, produces and sells cell culture and endotoxin
detection products to the biotechnology and pharmaceutical industries for
research and for the commercial manufacture of biopharmaceutical products.

On January 5, 1998, the Company completed the acquisition of all of the
assets of the chiral intermediates business of Celgene Corporation for $7,500
plus future royalties of up to $7,500 based upon sales. The product line, which
has been re-named Chiragene, will produce optically active, complex, organic
compounds that are critical to the production of modern active pharmaceutical
ingredients.

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(dollars in thousands, except share data)
1
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PRODUCTS

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

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997(1) 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Biotechnology.............................. $ 13,577 $ -- $ --
Active Pharmaceutical Ingredients.......... 103,962 97,582 96,827
Pharmaceutical Intermediates............... 74,694 71,202 69,097
Organic Intermediates...................... 70,771 73,049 77,792
Performance Enhancers...................... 70,549 75,632 69,973
Polymer Systems............................ 46,530 52,014 54,381
-------- -------- --------
Gross Sales................................ $380,083 $369,479 $368,070
======== ======== ========
</TABLE>

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

(1) Sales from BioWhittaker, acquired in October 1997, are included from the
date of acquisition.

The Company uses its technical expertise in a wide range of chemical and
biological processes to meet the needs of its customers for high quality
products for specialized applications. These applications include:
biotechnology, consisting of cell culture and endotoxin detection products;
active pharmaceutical ingredients 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.

Biotechnology: This category consists of cell culture products, including
living cell cultures, cell culture media and cell culture media supplements, and
endotoxin detection products supplied to the biotechnology and pharmaceutical
industries. The Company manufactures more than 1,100 products which are sold to
more than approximately 12,000 customers worldwide with no one customer
accounting for more than 10% of sales in this category.

This table summarizes the gross sales for this product category from the
date of acquisition:

<TABLE>
<CAPTION>
1997
-------
<S> <C>
Cell culture................................................ $ 9,126
Endotoxin detection......................................... 3,539
Other....................................................... 912
-------
$13,577
=======
</TABLE>

Active Pharmaceutical Ingredients: Pharmaceutical products are classified
into nine therapeutic product groups. Cambrex sells products in six of these
principal product groups: (1) gastrointestinal preparations, (2) cardiovascular,
(3) central nervous system, (4) endocrine products, (5) respiratory products,
and (6) other actives, including anti-infective, anti-inflammatory products,
immunology, diuretics and other preparations. These products are sold to a
diverse group of more than 400 customers with two customers accounting for 32%
of 1997 sales in this category. Many of these products are also sold through
agents.

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

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(dollars in thousands, except share data)
2
<PAGE> 4

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1997 1996 CHANGE CHANGE
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Gastrointestinal.................... $ 34,732 $31,503 $ 3,229 10%
Cardiovascular...................... 23,791 21,806 1,985 9
Central Nervous System.............. 10,634 8,809 1,825 21
Endocrine........................... 10,014 7,438 2,576 35
Respiratory......................... 7,661 9,409 (1,748) (19)
Other Actives....................... 17,130 18,617 (1,487) (8)
-------- ------- ------- ---
$103,962 $97,582 $ 6,380 7%
======== ======= ======= ===
</TABLE>

Gastrointestinal products increased 10% mostly due to the introduction of a
new generic product used in the Japanese market as an anti-ulcerative.
Cardiovascular active ingredients increased mainly due to growth in current
markets, and sales of central nervous system products were up 21% due to
increases in several of the products in this category. Endocrine active
ingredients increased 35% as the result of a favorable mix of products and
customers. Respiratory active ingredients decreased by 19% due to one product
which decreased after very high 1996 levels. Other actives were affected by
lower sales of anti-inflammatory active ingredients.

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 650 customers, with one customer accounting for 13% of
1997 sales in this category. These products are mainly produced in cGMP
facilities.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1997 1996 CHANGE CHANGE
------- ------- ------- ------
<S> <C> <C> <C> <C>
Health............................... $20,814 $19,548 $ 1,266 6%
X-Ray Media.......................... 16,876 21,552 (4,676) (22)
Cosmetics............................ 8,816 6,609 2,207 33
Other Pharmaceutical Intermediates... 28,188 23,493 4,695 20
------- ------- ------- ---
$74,694 $71,202 $ 3,492 5%
======= ======= ======= ===
</TABLE>

Other pharmaceutical intermediates were positively impacted by the sales of
an advanced intermediate of a new protease inhibitor for AIDS treatment, and the
manufacture of aminopyridine used in a variety of pharmaceutical products.
Health products increased 6% mainly due to increased sales of a modifier for
food starch and another intermediate for a new molecular compound in cooperation
with a major ethical pharmaceutical company. X-ray media products were adversely
affected due to a major customer changing their formulation and, thus, reducing
inventory. The customer has switched to another x-ray media product that the
Company also manufactures. Cosmetic products increased 33% due to higher sales
of several smaller products manufactured in and sold to the European market.

Organic Intermediates: This category consists of three product groups: (1)
intermediates used for crop protection chemicals, (2) feed additives and (3)
pigment intermediates. These products are sold to approximately 200 customers.
Two customers accounted for 25% and 18% of 1997 sales in this category.

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

(dollars in thousands, except share data)
3
<PAGE> 5

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1997 1996 CHANGE CHANGE
------- ------- ------- ------
<S> <C> <C> <C> <C>
Crop Protection...................... $30,170 $31,671 $(1,501) (5)%
Feed Additives....................... 29,634 29,889 (255) (1)
Pigment Intermediates................ 10,967 11,489 (522) (5)
------- ------- ------- ---
$70,771 $73,049 $(2,278) (3)%
======= ======= ======= ===
</TABLE>

Crop protection was affected by the unusual amount of a pyridine derivative
used in the manufacture of herbicides shipped in 1996 under a renegotiated
contract. Shipments in 1997 have returned to normal levels. Pyridine, the
largest product in crop protection, was at 1996 levels. Feed additives saw a
minor decrease in Niacinamide Feed Grade B3 due to reduced pricing in the
beginning of 1997, although the prices increased during the second half of the
year. Pigment intermediates were down 5% due to the loss of its major customer
for this product in the Far East.

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) polymers, (3)
catalysts (4) photographic chemicals, and (5) additives for the fuel/oil
industry. These products are sold to approximately 750 customers with no one
customer accounting for over 10% of 1997 sales in this category.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1997 1996 CHANGE CHANGE
------- ------- ------- ------
<S> <C> <C> <C> <C>
Specialty Additives.................. $18,158 $22,870 $(4,712) (21)%
Polymers............................. 16,664 16,084 580 4
Catalysts............................ 15,990 15,833 157 1
Photographic......................... 10,164 12,326 (2,162) (18)
Fuel/Oil............................. 9,573 8,519 1,054 12
------- ------- ------- ---
$70,549 $75,632 $(5,083) (7)%
======= ======= ======= ===
</TABLE>

Specialty additives decreased 21% due to lower pyridine derivatives, which
returned to pre-1996 volume levels. Photographic products decreased 18% due to a
major customer reducing volume by one-half of normal levels. Fuel/oil products
were up 12% from 1996 because of increases in castor based products used in
various lubricating applications and increases of a product used as a hardener
for epoxy resins and an additive to lubricating oils.

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
1997 sales in this category.

This table summarizes the gross sales for this product category:

<TABLE>
<CAPTION>
%
1997 1996 CHANGE CHANGE
------- ------- ------- ------
<S> <C> <C> <C> <C>
Telecommunications................... $18,144 $18,809 $ (665) (4)%
Coatings............................. 17,921 19,138 (1,217) (6)
Engineering Plastics................. 6,179 8,179 (2,000) (24)
Biomedical........................... 4,286 5,888 (1,602) (27)
------- ------- ------- ---
$46,530 $52,014 $(5,484) (11)%
======= ======= ======= ===
</TABLE>

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(dollars in thousands, except share data)
4
<PAGE> 6

Polymers were all at lower levels than 1996. Telecommunication products
were down slightly due to a major customer changing its specification of an
encapsulant product, however, the new product is also made by the Company.
Engineering plastics decreased 24% due to a major customer losing to a
competitor their largest business in producing high performance plastics mainly
for the electronics industry. Biomedicals decreased 27% due to management's
decision to eliminate products not meeting gross margin goals.

MARKETING AND DISTRIBUTION

The Company's active pharmaceutical ingredients and pharmaceutical
intermediates are generally high value, low volume products requiring
significant technical expertise for their 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 there 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 the biotechnology category, the Company markets and sells its products
in the United States, principally through its own direct sales force, and
internationally, principally through an extensive network of independent
distributors. The Company directly serves the British and Irish markets through
a wholly owned subsidiary, BioWhittaker UK LTD, located outside London.

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 continue to
do so in the future.

Pyridine, which accounted for 7%, 8% and 8% of gross revenues in 1997, 1996
and 1995, 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
increased approximately 13% during 1997 after decreasing 11% in 1996. Formalin's
feedstock is methanol, which experienced increased prices in 1997 over 1996 due
in part to market growth for methanol and its derivatives. The continued
unscheduled global methanol plant outages also helped feed the price growth in
1997. Ammonia is widely available, and the cost of ammonia decreased by 15% in
1997.

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

(dollars in thousands, except share data)
5
<PAGE> 7

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.

For the biotechnology products, the Company buys materials from many
suppliers and is generally not dependent on any one supplier or group of
suppliers. Nonetheless, although there is a well-established market for certain
cell culture products, its price is unstable and supplies, at times, could be
limited since the availability of these raw materials tend to be cyclical. The
Company's supply of these raw materials is generally adequate to meet current
demand.

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. Nearly 110 employees are
involved directly in research and development activities worldwide.

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
will be required to pay royalties to Oxford Asymmetry for any technology
licensed.

The Company entered into several research and development agreements in
1997. 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 to develop processes specifically designed
to fit into the Company's cGMP manufacturing facilities. In April, 1997, the
Company formed two separate agreements with the Science Applications
International Corporation (a.k.a. Zelinsky Institute) to secure the special
knowledge and talents of Russian scientists. In May, 1997, the Company formed an
alliance with Fine Tech Ltd., of Technicon City, Israel, in which the Company
will provide Fine Tech funding over the next three years for process improvement
on existing and newly-developed generic drugs to be manufactured in the
Company's cGMP facilities.

Although there have been no products brought to market as a result of these
alliances and agreements, the company is evaluating several products for
possible commercialization. The estimated commitments for the research &
development agreements over the next three years is approximately $3,000.

The Company spent approximately $10,600, $9,200 and $7,500 in 1997, 1996
and 1995, respectively, on research and development efforts. The Company also
incurred a one-time non-cash expense of $14,000 in 1997 related to the value of
in-process research and development efforts underway at the time of the
acquisition of BioWhittaker.

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.

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

(dollars in thousands, except share data)
6
<PAGE> 8

The Company currently owns approximately 105 United States patents which
have various expiration dates beginning in 1998 through 2015 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. In conjunction with the
acquisition of BioWhittaker, the Company acquired patent and other proprietary
rights, which are material to the endotoxin detection products, allergy tests
kits and the ELVIS(TM) cell culture products.

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

In Biotechnology, no one company is known to compete with the Company in
all of its product groups, but in each group competition is offered by a number
of companies, including, in some cases, firms substantially larger and with
greater financial resources than the Company. The markets in which the Company
competes are generally concentrated and are highly competitive, with competition
centering on product specifications, quality, depth of product line, price,
technical support, timely product development and speed of delivery.

Because of the nature of the Company's products in its active
pharmaceutical ingredients 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 active pharmaceutical
ingredients and pharmaceutical intermediates is more typical of chemical
markets. Competition exists from other producers of the Company's products and
from 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 Company's plants
because as with other companies engaged in the chemical business, 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
transferal 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.

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(dollars in thousands, except share data)
7
<PAGE> 9

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 Chemical
Corporation (a subsidiary of Cambrex) by the United States District Court of New
Jersey in a matter that has been pending since 1991. The opinion addressed
Cosan's liability for contamination at a site in Clifton, New Jersey which was
previously owned and operated by Cosan. In the opinion, Cosan was found liable
for past remediation costs in the amount of approximately $800 plus prejudgment
interest on such costs. Additionally, Cosan was found primarily responsible for
the future remediation costs for the site. The judge also awarded treble damages
on the past costs, prejudgment interest and future costs. To avoid treble
damages for future costs, Cosan entered into an Administrative Consent Order
with the State to perform a major portion of the future remediation at the site.
During 1997, the judge reversed the decision regarding prejudgment interest.
Also, during 1997, both Cosan and the plaintiffs appealed various aspects of the
decision. In January 1998, the appeals were heard before the United States Court
of Appeals for the Third Circuit. A decision has not been rendered. The
estimated range of costs for this case have been considered in the Company's
reserve assessment.

During November 1997, a settlement was reached between Nepera, Inc. (a
subsidiary of the Company), a former owner of the Nepera facility and the
original owner of the facility pertaining to past and future costs of
remediating two sites. Under the terms of the settlement, the original site
owner has placed in escrow approximately $13,000 to provide for past and future
remediation costs at the two sites in exchange for a release from the
requirement to clean up the two sites. After certain administrative proceedings,
the funds will be placed in a Trust for the benefit of remediating the two sites
on behalf of Nepera and the other former site owner. As permitted under the
terms of the agreement, Nepera is eligible to recover and has sought to recover
$2,400 of past costs from this settlement which was recognized in the results of
operations and a receivable for this amount in the 1997 financial statements.
The remaining funds available from this settlement should be sufficient to
provide for the future remediation costs for these two sites based upon current
estimates of such costs.

Known environmental matters which may result in liabilities to the Company
and the related estimates and accruals are summarized in Note #21 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
$2,800 in 1997, $4,800 in 1996, and $4,000 in 1995 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, 1997 the Company had 1,790 employees worldwide (567 of whom
were from our international operations) compared with 1,292 employees at
December 31, 1996 and 1,336 at December 31, 1995.

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

(dollars in thousands, except share data)
8
<PAGE> 10

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, 2001; 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, 2000;
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 1998.

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 1997, 1996 and 1995 amounted to $48,852, $50,243, and $50,608,
respectively. Sales from international operations were $152,079 in 1997,
$151,466 in 1996 and $144,883 in 1995. Refer to Note #19 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

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

(dollars in thousands, except share data)
9
<PAGE> 11

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 Active pharmaceutical ingredients;
Pharmaceutical intermediates; Performance
enhancers; Polymer systems
North Haven, CT 4 acres Humphrey Pharmaceutical intermediates; Performance
enhancers
Charles City, IA 57 acres Salsbury Active pharmaceutical ingredients;
Pharmaceutical intermediates; Organic
intermediates; Performance enhancers
Zeeland, MI 14 acres Zeeland Pharmaceutical intermediates; Performance
enhancers
Walkersville, MD 116 acres BioWhittaker Biotechnology
Middlesbrough, England 12 acres Seal Sands Pharmaceutical intermediates; Organic
intermediates; Performance enhancers;
Polymer systems
Karlskoga, Sweden 42 acres Nordic Active pharmaceutical ingredients;
Pharmaceutical intermediates; Organic
intermediates; Performance enhancers
Paullo (Milan), Italy 13 acres Profarmaco Active pharmaceutical ingredients
</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, sixty-six acres of undeveloped land adjacent to the
Zeeland facility and eighty-one acres used as grazing fields for the Company's
animals in Walkersville, Maryland. 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
product groups are each manufactured at a single facility, and production of
such products would not be transferable 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

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

(dollars in thousands, except share data)
10
<PAGE> 12

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........................ 60 President and Chief Executive Officer
Peter Tracey......................... 56 Executive Vice President-Corporate
Development
Douglas H. MacMillan................. 51 Vice President, Chief Financial Officer
Peter E. Thauer...................... 58 Vice President-Law & Environment, General
Counsel & Corporate Secretary
Steven M. Klosk...................... 40 Executive Vice President-Administration
Claes Glassell....................... 46 Vice President-Cambrex, President,
International
Salvatore J. Guccione................ 35 Vice President-Corporate Development
Ronnie D. Carroll.................... 57 Vice President-Technology
Rudi E. Moerck....................... 51 President of Salsbury Chemicals, Inc.,
President of Fine Chemicals Group
John J. Stanulonis................... 51 Vice President and General Manager of
Heico Chemicals, Inc. and The Humphrey
Chemical Company, Inc.
Thomas N. Bird....................... 53 President of Nepera, Inc.
Robert M. Parlman.................... 47 Vice President and General Manager of
Zeeland Chemicals, Inc.
John V. Van Hulle.................... 40 President of CasChem, Inc. and Cosan
Chemical Corporation, President of the
Specialty Chemicals Group
Noel L. Buterbaugh................... 65 President of BioWhittaker, Inc.
Cyril C. Baldwin, Jr................. 70 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 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.

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

(dollars in thousands, except share data)
11
<PAGE> 13

Mr. Tracey announced his retirement effective December 31, 1997, and now
serves as an advisor to the CEO. Mr. Tracey was appointed Executive Vice
President-Corporate Development in April 1997. 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. MacMillan was appointed Vice President and Chief Financial Officer in
April 1997. He was most recently Vice President, Chief Financial Officer for
Morgan Products, Ltd., a manufacturer and distributor of building products
traded on the New York Stock Exchange. Prior to his work with Morgan Products,
he was Chief Financial Officer of Varlen Corporation, a manufacturer of
petroleum analysis and automotive and scientific instruments.

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.

Mr. Glassell was appointed President, International in November 1997. 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 and
Profarmaco, he joined Cambrex as a result of the 1994 acquisition of Nordic and
Profarmaco. 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. 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 ISP.

Dr. Carroll joined the Company in September 1997 as Vice
President-Technology. Mr. Carroll had been with Bristol-Myers Squibb for 14
years, most recently as Vice President, Chemical Development for Bristol-Myers
Squibb Technical Operations. Prior to working for Bristol-Myers Squibb, Dr.
Carroll was with Pfizer, Inc. in Groton, CT.

Dr. Moerck was appointed President of the Fine Chemicals Group in November
1997. Mr. 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.

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

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

(dollars in thousands, except share data)
12
<PAGE> 14

Chemicals Services, Inc., and from 1980 to 1987 he held various management
positions with Harshaw/Filtrol Partnership.

Mr. Bird joined the Company in June 1997, as President of Nepera, Inc. Mr.
Bird was previously President of the consulting firm of Bavier, Bulgar and
Goodyear since 1994. Prior to that, Mr. Bird maintained various vice
presidential positions with Commercial Intertech Corporation in their Fluid
Purification Group.

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 the Specialty Chemicals Group in
November 1997. 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.

Mr. Buterbaugh has been with the Company since October 1997 and has been
President of BioWhittaker since 1979 and CEO since 1992. Mr. Buterbaugh has had
extensive experience in the biotechnology industry, as well as managing at a New
York Stock Exchange company and overseeing several acquisitions and
divestitures.

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.

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.
Effective March 5, 1998 the Company will be listed on the New York Stock
Exchange (NYSE), continuing under the symbol CBM. 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>
1997
First Quarter............................................ $38 1/8 $32
Second Quarter........................................... 39 3/4 32 7/8
Third Quarter............................................ 52 7/16 39 5/8
Fourth Quarter........................................... 49 3/4 43 5/8
</TABLE>

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

(dollars in thousands, except share data)
13
<PAGE> 15

<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>

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

* 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.

As of March 13, 1998, the Company estimates that there were approximately
2,410 beneficial holders of the outstanding Common Stock of the Company.

The quarterly dividend on common stock was $.05 per share for 1997 and
1996.

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, 1997 are derived from
the audited financial statements. The consolidated financial statements of the
Company as of December 31, 1997 and December 31, 1996 and for each of the years
in the three year period ended December 31, 1997 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,
----------------------------------------------------------
1997(1)(2) 1996 1995 1994(3) 1993(4)
---------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER-SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME DATA:
Gross sales....................... $380,083 $369,479 $368,070 $249,683 $203,308
Net revenues...................... 374,215 359,385 357,176 241,634 197,203
Gross profit...................... 113,962 101,336 99,780 57,881 51,778
Selling, general and
administrative................. 52,688 45,879 47,751 31,216 29,286
Research and development.......... 10,600 9,183 7,526 5,689 5,843
Non-recurring in-process R&D
charge......................... 14,000 -- -- -- --
Operating profit.................. 36,674 46,274 44,503 20,976 16,649
Interest expense, net............. 5,330 5,799 10,508 4,581 2,771
Other (income) expense, net....... (1,263) (194) 2,779 (497) 446
Income before taxes............... 32,607 40,669 31,216 16,892 13,412
Net income........................ 17,776 28,225 19,670 11,126 8,641
EARNINGS PER SHARE DATA*:
Earnings per common share and
common share equivalents:
Basic.......................... $ 1.50 $ 2.43 $ 2.06 $ 1.41 $ 1.16
Diluted........................ $ 1.46 $ 2.37 $ 1.96 $ 1.31 $ 1.11
Weighted average shares
outstanding:
Basic.......................... 11,814 11,608 9,539 7,875 7,442
Diluted........................ 12,210 11,896 10,053 8,511 7,923
DIVIDENDS PER COMMON SHARE*......... $ 0.20 $ 0.17 $ 0.13 $ 0.13 $ 0.13
</TABLE>

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

(dollars in thousands, except share data)
14
<PAGE> 16

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

(1) Includes the results of BioWhittaker, Inc. from the date of acquisition
effective October, 1997.

(2) Includes the non-recurring charge for in-process research and development
associated with the acquisition of BioWhittaker.

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

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

* 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. All earnings per
share calculations reflect the adoption of SFAS No. 128, "Earnings per
Share."

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,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Gross sales................................ 100.0% 100.0% 100.0%
Net revenues............................... 98.5 97.3 97.0
Gross profit............................... 30.0 27.4 27.1
Selling, general and administrative........ 13.9 12.4 13.0
Research and development................... 2.8 2.5 2.0
Non-recurring in-process R&D charge........ 3.6 -- --
Operating profit........................... 9.6 12.5 12.1
Interest expense........................... 1.4 1.6 2.9
Other (income) expense, net................ (0.3) (0.1) 0.8
Net income................................. 4.7 7.6 5.3
</TABLE>

The Company's product mix has changed over the periods indicated,
principally due to the BioWhittaker acquisition and management's continued focus
on higher value pharmaceutical products. The following tables show the gross
sales of the Company's six product categories, in dollars and as a percentage of
the Company's total gross sales for the years ended December 31, 1997, 1996 and
1995, as well as the gross profit by product category for 1997, 1996 and 1995.

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

(dollars in thousands, except share data)
15
<PAGE> 17

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
GROSS SALES
Biotechnology.............................. $ 13,577 $ -- $ --
Active Pharmaceutical Ingredients.......... 103,962 97,582 96,827
Pharmaceutical Intermediates............... 74,694 71,202 69,097
Organic Intermediates...................... 70,771 73,049 77,792
Performance Enhancers...................... 70,549 75,632 69,973
Polymer Systems............................ 46,530 52,014 54,381
-------- -------- --------
Total Gross Sales........................ $380,083 $369,479 $368,070
======== ======== ========
Total Net Revenues....................... $374,215 $359,385 $357,176
======== ======== ========
Total Gross Profit....................... $113,962 $101,336 $ 99,780
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
GROSS SALES DISTRIBUTION
Biotechnology.............................. 3.5% --% --%
Active Pharmaceutical Ingredients.......... 27.3 26.4 26.3
Pharmaceutical Intermediates............... 19.7 19.3 18.8
Organic Intermediates...................... 18.6 19.8 21.1
Performance Enhancers...................... 18.7 20.5 19.0
Polymer Systems............................ 12.2 14.0 14.8
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

1997-1996 GROSS SALES & GROSS PROFIT BY PRODUCT CATEGORY

<TABLE>
<CAPTION>
1997
--------------------------------
GROSS GROSS GROSS
SALES PROFIT $ PROFIT %
-------- -------- --------
<S> <C> <C> <C>
Biotechnology................................ $ 13,577 $ 6,696 49.3%
Active Pharmaceutical Ingredients............ 103,962 42,794 41.2%
Pharmaceutical Intermediates................. 74,694 18,761 25.1%
Organic Intermediates........................ 70,771 10,362 14.6%
Performance Enhancers........................ 70,549 20,238 28.7%
Polymer Systems.............................. 46,530 15,111 32.5%
-------- -------- ----
$380,083 $113,962 30.0%
======== ======== ====
</TABLE>

<TABLE>
<CAPTION>
1996
--------------------------------
GROSS GROSS GROSS
SALES PROFIT $ PROFIT %
-------- -------- --------
<S> <C> <C> <C>
Biotechnology................................ $ -- $ -- --%
Active Pharmaceutical Ingredients............ 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>

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

(dollars in thousands, except share data)
16
<PAGE> 18

1997 COMPARED TO 1996

Gross sales in 1997 were $10,604 above 1996. Increases in active
pharmaceutical ingredients and pharmaceutical intermediates were offset by lower
sales in our organic intermediates, performance enhancers, and polymer systems
product categories. Biotechnology sales (from the acquisition of BioWhittaker in
the fourth quarter 1997) were $13,577.

The effect of foreign currency exchange rates on gross sales for the year
resulted in a reduction in sales of $8,551 compared to 1996. Gross sales for
1997 would have been $388,634 using 1996 exchange rates compared to 1996 sales
of $369,479.

BIOTECHNOLOGY sales of $13,577 are from BioWhittaker since the date of
acquisition. Their products include cell culture and endotoxin detection
products.

ACTIVE PHARMACEUTICAL INGREDIENTS of $103,962 were $6,380 (7%) above 1996.
Increases in the gastrointestinal products of $3,229, endocrine of $2,576,
cardiovascular product group of $1,985 and central nervous system of $1,825 more
than offset decreases in respiratory of $1,748 and the other active ingredients
of $1,487.

Gastrointestinal active ingredients were $34,732, an increase of $3,229
(10%) from 1996. This increase is mainly attributable to the introduction of a
new generic product in the Japanese market used as an anti-ulcerative, which
resulted in new product sales of $6,264 in 1997.

Cardiovascular active ingredients were $23,791, an increase of $1,985 (9%)
from 1996. 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 Isosorbide-5-mononitrate, used as a vasodilator in
pretreatments, which had strong volume growth in 1997.

Respiratory actives were $7,661, a decrease of $1,748 (19%) from 1996. The
key product in this category is Cromoglycate sodium, which, after very high 1996
levels, decreased to historical sales levels.

Central nervous system active ingredients of $10,634 were $1,825 (21%)
above 1996. Increases occurred in several of the 23 products making up this
group.

Endocrine actives were $10,014, a $2,576 (35%) increase from 1996, as a
result of a favorable mix of products and customers.

Other active ingredients were $17,130, a decrease of $1,487 (8%) from 1996,
and included items for anti-inflammatory, diuretics, anti-infective, immunology
and various other uses. Sales of ketoprofen (a generic anti-inflammatory)
decreased $1,058 due to lower volume development as the result of price
pressure.

PHARMACEUTICAL INTERMEDIATES of $74,694 were $3,492 above 1996 (5%). Other
pharmaceutical intermediates increased $4,695, cosmetic products increased
$2,207, and health products increased $1,266, offsetting the decreases in X-Ray
Media of $4,676.

Health products of $20,814 increased by $1,266 (6%) from 1996 in various
products, including a modifier for food starch and another intermediate for a
new molecular compound in cooperation with a major ethical pharmaceutical
company.

X-ray Media products, which include 5 NIPA compounds, of $16,876 decreased
$4,676 (22%) due to a major customer changing their formulation and thus reduced
demand in 1997. The customer has switched to another x-ray media product that
the Company also manufactures.

Cosmetic products of $8,816 were $2,207 (33%) above 1996 due to higher
sales of several smaller products manufactured and sold to the European market.

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

(dollars in thousands, except share data)
17
<PAGE> 19

Other Pharmaceutical Intermediates of $28,188 increased $4,695 (20%) due to
the effect of sales of an advanced intermediate of a new protease inhibitor for
AIDS treatment, and the manufacture of Amino-pyridine used in a variety of
pharmaceutical products.

ORGANIC INTERMEDIATES of $70,771 were $2,278 below 1996 (3%). The Crop
Protection category decreased $1,501 and pigments decreased $522. Feed Additives
was at the same level as 1996.

Feed additives of $29,634 were consistent with 1996 levels. The decision to
exit a low margin poultry feed additive was offset by increased feed grade
Vitamin B3 sales.

Crop protection intermediates of $30,170 decreased $1,501 (5%) from 1996.
The decrease was due to the unusual amount of a pyridine derivative used in the
manufacture of herbicides shipped in 1996 under a renegotiated contract. The
shipments in 1997 returned to normal levels. Pyridine, which is the largest
product in crop protection, was at 1996 levels.

Pigments intermediates of $10,967 decreased $522 (5%) from 1996. Continued
gain in market share of PNBA, a pigment used in dyes and UV protection agents,
was offset by reduced demand for 4,3-CNBA, used in dyestuffs and pigments for
pharmaceuticals, whose main customer for this product changed supplier and is
now sourcing from the Far East.

PERFORMANCE ENHANCERS of $70,549 were $5,083 below 1996 (7%). Specialty
additives decreased $4,712 and photographic products decreased $2,162. Polymer
products increased $580 from 1996, Catalysts increased $157 and fuel/oil
products increased $1,054.

Specialty additives of $18,158 decreased $4,712 (21%) from 1996. The key
decrease was due to pyridine derivatives returning to pre-1996 sales as the
result of decreased demand in the Asian market.

Polymer products of $16,664 increased $580 (4%) over 1996. The increase was
due to a wider usage of a crosslinking agent to improve the performance of
polycarbonate resins by a major customer, as well as to increases in
antioxidants with continued growth in the U.S. markets.

Photographic products of $10,164 decreased $2,162 (18%) from 1996 due to
the expected reduction in volume by one-half of normal levels from a customer.

Fuel/oil products of $9,572 increased $1,053 (12%) from 1996. The increase
was in castor based products used in various lubricating applications and
increased sales of K-12, used as a hardener for epoxy resins and an additive to
lubricating oils.

POLYMER SYSTEMS of $46,530 were $5,484 below 1996 (11%). All product
categories decreased with telecommunications $665, coatings $1,217, engineering
plastics $2,000, and biomedicals down $1,602.

Telecommunications of $18,144 decreased $665 (4%) from 1996 primarily as a
result of a major customer's decision to change their specification of an
encapsulant product. The Company also makes the new product, but it took some
time for customers to reduce existing inventories.

Coatings of $17,921 decreased $1,217 (6%) from 1996 due to reduced sales of
low margin castor based products as a result of management's decision to focus
on higher margin products.

Biomedicals of $4,286 decreased $1,602 (27%) from 1996 due to a management
decision to eliminate products not meeting gross margin goals.

Engineering plastics of $6,179 decreased $2,000 (24%) from 1996 due to a
major customer losing to a competitor their largest market of a product used in
producing high performance plastics mainly used in the electronics industry.

Export sales from U.S. businesses were at $48,852 compared with $50,243 in
1996. International sales, comprised of all sales from our operations in Europe,
totaled $152,079 as compared with $151,466 in 1996.

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

(dollars in thousands, except share data)
18
<PAGE> 20

Total gross profit in 1997 increased to $113,962, resulting in a higher
gross margin percentage of 30.0% of gross sales compared with 27.4% in 1996. The
gross margin increase was due to an improved product mix of sales to include
higher pharmaceutical actives and intermediates, production efficiencies, and
increased plant throughput, in line with management's continued focus on higher
performing, more profitable product lines. Excluding the BioWhittaker
acquisition, the gross margin would have been 29.3%.

Selling, general and administrative expenses as a percentage of gross sales
were 13.8% in 1997, up from 12.4% in 1996. The 1997 expense of $52,688 was
$6,809 (15%) above 1996 primarily due to addition of BioWhittaker in the fourth
quarter 1997 and incremental expenses associated with tax planning strategies.
Expenses were reduced by a $2,400 recovery of previously incurred environmental
costs as a result of a settlement with a prior owner of one of the Company's
operating facilities.

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. No adjustments were made to this reserve
in 1997.

Research and development expenses of $10,600 were 2.8% of gross sales in
1997, and represented a 15% increase from 1996. A portion of this increase was
due to costs associated with the Albany Molecular contract and the addition of
BioWhittaker.

As previously announced in November 1997, Cambrex recorded a charge of
$14,000 in the fourth quarter 1997 for the value of in-process research and
development at the time of the acquisition of BioWhittaker, Inc. which was
completed on October 3, 1997. This charge, which is consistent with
pharmaceutical industry practice, reflects the recognition of the value of the
continuing efforts to develop new products in the biotechnology marketplace.
These research and development projects were not commercially viable and had no
alternative future use at the date of acquisition. Management intends to
continue funding these projects, which will permit BioWhittaker to maintain its
market leadership position.

The operating profit in 1997 was $36,674, including the non-recurring
charge for in-process research and development of $14,000, versus $46,274 in
1996. Excluding the charge, operating profit would have been $50,674.

Net interest expense of $5,330 in 1997 reflected a decrease of $469 (8%)
from 1996. The decrease was due to an average interest rate in 1997 of 6.84%
compared to 7.4% in 1996 offset by the additional borrowings used to finance the
BioWhittaker acquisition combined with an increase in the average outstanding
debt.

Other income in 1997 was $1,263 compared with $194 in 1996. Other income
included a gain of $954 on the settlement of an intercompany foreign denominated
loan. Additionally, 1997 other income included the final resolution and receipt
of the settlement proceeds due from the 1996 premature termination of a contract
by the customer of $766, offset by a charge of $507 for the settlement of a
legal matter reached during the year.

The provision for income taxes for 1997 resulted in an effective rate of
45.5%, which includes the $14,000 non-recurring charge for in-process research
and development, versus 30.6% in 1996. The effective tax rate in 1997 would have
been 31.8% excluding the $14,000 charge, which is not deductible for tax
purposes. The 1997 effective tax rate is the result of continued tax planning
efforts to minimize the impact of foreign taxes. In 1996, 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.

The Company's net income in 1997 was $17,776, including $14,000 for the
non-recurring charge for in-process research and development, compared to
$28,225 in 1996. Excluding this charge, net income in 1997 would have been
$31,776.

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(dollars in thousands, except share data)
19
<PAGE> 21

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.
Active pharmaceutical ingredients were at the same level as 1995.

ACTIVE PHARMACEUTICAL INGREDIENTS 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 gesture-intestinal of $425,
anti-inflammatory bulk actives of $377 and the other bulk actives of $2,384.

Gastro-intestinal active ingredients 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 active ingredients 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 active ingredients of $8,809 were at the same level
as 1995, and included Bromazepan, Alprazolam and Lorazepam among 19 products.

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

Other active ingredients 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.

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 suppressants),
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.

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(dollars in thousands, except share data)
20
<PAGE> 22

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.

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,
totaled $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.

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(dollars in thousands, except share data)
21
<PAGE> 23

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.

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 active pharmaceutical
ingredients which added $73,053 and pharmaceutical intermediates $20,236.

ACTIVE PHARMACEUTICAL INGREDIENTS 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 active ingredients 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 active ingredients were $20,229. The key products in this
total included Diltiazem Hcl, Isosorbide-5-mononitrate, Sotalol Hcl and
Acebutolol Hcl.

Endocrine active ingredients were $8,919 and included two key
items -- Glipizide and Clormadinone.

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

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

Other active ingredients 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.

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(dollars in thousands, except share data)
22
<PAGE> 24

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.

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.

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(dollars in thousands, except share data)
23
<PAGE> 25

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.

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. There were no provisions
made in 1995 or 1994. A discussion of such matters is included in the footnotes
to the financial statements.

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.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operations was $52,579 for the year ended December 31,
1997 compared with $66,785 in 1996. The decrease in cash flow is primarily due
to increased inventories, as well as decreased income taxes payable due to the
timing of foreign tax payments, and payments made during 1997 for the favorable
settlement reached with the Internal Revenue Service at the end of 1996.

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(dollars in thousands, except share data)
24
<PAGE> 26

Capital expenditures were $35,935 in 1997, $32,396 in 1996, and $46,398 in
1995. The largest expenditures in 1997 were for new business projects including
the construction of pilot plants at Salsbury Chemicals and Zeeland Chemicals
which incorporate cGMP capabilities. These facilities have begun actual
production in the fourth quarter of 1997. Other expenditures were mostly for
plant upgrades, including additional batch still capabilities at our Harriman
facility.

On September 16, 1997, the Company entered into a new five year Credit
Agreement (the "Agreement") with a bank group headed by The Chase Manhattan Bank
as Administrative Agent and The First National Bank of Chicago as Documentation
Agent. The bank group has a total of 13 domestic banks and 7 international
banks. The Agreement provides the Company with a $400,000 borrowing facility.
The new Agreement replaces the previously existing Revolving Credit Agreement
with NBD Bank, N.A.

The Company has pledged 66% of the common stock of the Company's foreign
subsidiaries as collateral. The Agreement permits the Company to choose between
various interest rate options. Under the Agreement, the interest rate options
available to the Company are: (a) U.S. Prime rate or (b) LIBOR plus the
applicable margin (ranging from .225% of 1% to .5% of 1%) or (c) Competitive Bid
at a LIBOR Rate Borrowing or a Fixed Rate Borrowing to be determined by auction.
The applicable margin is adjusted based upon the Funded Indebtedness to Cash
Flow Ratio of the Company. Additionally, the Company pays a commitment fee of
between .15% to .25% on the entire portion of the Agreement.

On September 18, 1997, the Company utilized $60,000 of the Agreement in
order to repay the then outstanding balance under the previously existing
Revolving Credit Agreement. On September 30, 1997, the Company borrowed $126,000
to finance the acquisition of the outstanding common stock of BioWhittaker. Of
this amount, $116,000 was utilized on September 30, 1997 to acquire the 93% of
BioWhittaker shares which had been tendered at that date. The Company
subsequently utilized the remaining portion to finance the acquisition of the
remaining 7% of BioWhittaker on October 3, 1997.

The undrawn borrowing availability under the Agreement as of December 31,
1997 was $207,400. There is $192,600 outstanding as of December 31, 1997.
Management is of the opinion that these amounts, together with cash flows from
operations, are adequate for meeting the company's operating, financing and
capital requirements.

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) under the old credit agreement.

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 in October, 1994, 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 currently uses foreign currency forward
exchange and has used put and call option contracts in the past to mitigate the
effect of short-term foreign exchange rate movements on the Company's operating
results. The notional amount of these contracts is $42,829 which the Company
estimates to be approximately 56% of the foreign currency exposure during the
period covered resulting in a deferred currency loss of $122 at December 31,
1997. An additional $3,597 of the foreign currency exposure is protected through
export financing.

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(dollars in thousands, except share data)
25
<PAGE> 27

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 #21 to the consolidated financial
statements and incorporated herein by reference.

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.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" requires that comprehensive income and its components be
reported in the financial statements. The Company is required to adopt this
standard in 1998 and is currently evaluating this standard.

Statement of Financial Accounting Standards No. 131 "Disclosures About
Segments of an Enterprise and Related Information" requires that publicly traded
companies report financial and descriptive information about its reportable
operating segments. The Company is required to adopt this standard in 1998 and
is currently evaluating the impact of this standard.

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(dollars in thousands, except share data)
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<PAGE> 28

Statement of Financial Accounting Standards No. 132 "Employers' Disclosures
About Pensions and Other Postretirement Benefits" changes current financial
statement disclosure requirements from those that were required under Financial
Accounting Standard No. 87, "Employers' Accounting for Pensions," Financial
Accounting Standard No. 88, "Employers' Accounting for Settlement and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and
Financial Accounting Standard No. 106, "Employers' Accounting for Postretirement
Benefit Other Pensions." The Company is required to adopt this standard in 1998
and is currently evaluating this standard.

The Company is in the process of implementing new information and
transaction systems which are year 2000 compliant. The implementation at all
current Company sites is anticipated to be completed by the end of 1998.

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........................... 28
Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 29
Consolidated Income Statements for the Years Ended December
31, 1997,
1996 and 1995.......................................... 36
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995.............. 31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.......................... 32
Notes to Consolidated Financial Statements.................. 33
Consolidated Quarterly Financial Data (unaudited) for the
Years Ended December 31, 1997 and 1996.................... 58
</TABLE>

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

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(dollars in thousands, except share data)
27
<PAGE> 29

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 (the "Company") as of December 31, 1997 and 1996,
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, 1997, 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, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, 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 16, 1998

28
<PAGE> 30

CAMBREX CORPORATION AND SUBSIDIARIES

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

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 21,469 $ 7,353
Receivables:
Trade accounts, less allowance for doubtful accounts of
$1,705 and $1,453 at respective dates................. 55,733 52,910
Other.................................................. 6,150 3,840
-------- --------
61,883 56,750
Inventories, net.......................................... 91,733 64,209
Deferred tax assets....................................... 5,947 5,009
Prepaid expenses and other current assets................. 3,622 3,541
-------- --------
Total current assets.............................. 184,654 136,862
Property, plant and equipment, net.......................... 237,342 216,481
Intangible assets, net...................................... 127,003 49,573
Other assets................................................ 3,427 1,528
-------- --------
Total assets...................................... $552,426 $404,444
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 58,471 $ 54,754
Income taxes payable...................................... 4,857 8,085
Short-term debt........................................... 3,597 3,880
Current portion of long-term debt......................... 986 7,231
-------- --------
Total current liabilities......................... 67,911 73,950
Long-term debt.............................................. 194,325 60,152
Deferred tax liabilities.................................... 43,436 21,587
Other noncurrent liabilities................................ 20,800 19,710
-------- --------
Total liabilities................................. 326,472 175,399

Commitments and contingencies
Stockholders' equity:
Common Stock, $.10 par value; issued 12,967,287 and
12,769,175 shares at respective dates.................. 1,295 1,275
Additional paid-in capital................................ 154,406 149,191
Retained earnings......................................... 96,027 80,608
Additional minimum pension liability...................... -- (553)
Treasury stock, at cost; 1,040,561 and 1,049,895 shares at
respective dates....................................... (9,458) (9,449)
Shares held in trust, at cost; 180,277 and 132,126 shares
at respective dates.................................... (1,275) (718)
Cumulative translation adjustment......................... (15,041) 8,691
-------- --------
Total stockholders' equity........................ 225,954 229,045
-------- --------
Total liabilities and stockholders' equity........ $552,426 $404,444
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.
29
<PAGE> 31

CAMBREX CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Gross sales................................................ $380,083 $369,479 $368,070
Net revenues............................................... 374,215 359,385 357,176
Cost of goods sold....................................... 260,253 258,049 257,396
-------- -------- --------
Gross profit............................................... 113,962 101,336 99,780
Selling, general and administrative...................... 52,688 45,879 47,751
Research and development................................. 10,600 9,183 7,526
Non-recurring in-process R&D charge...................... 14,000 -- --
-------- -------- --------
Operating profit........................................... 36,674 46,274 44,503
Other (income) expenses
Interest income.......................................... (238) (353) (638)
Interest expense......................................... 5,568 6,152 11,146
Other -- net............................................. (1,263) (194) 2,779
-------- -------- --------
Income before income taxes................................. 32,607 40,669 31,216
Provision for income taxes................................. 14,831 12,444 11,546
-------- -------- --------
Net income................................................. $ 17,776 $ 28,225 $ 19,670
======== ======== ========

Earnings per share of common stock and common stock
equivalents*:
Basic.................................................... $ 1.50 $ 2.43 $ 2.06
Diluted.................................................. $ 1.46 $ 2.37 $ 1.96

Weighted average shares outstanding*:
Basic.................................................... 11,814 11,608 9,539
Diluted.................................................. 12,210 11,896 10,053
</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. All earnings per share
calculations reflect the adoption of SFAS No, 128, "Earnings per Share."
See accompanying notes to consolidated financial statements.
30
<PAGE> 32

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 PAR VALUE STOCK PAID-IN RETAINED PENSION TREASURY
ISSUED ($.10) (PAR $.10) CAPITAL EARNINGS LIABILITY STOCK
---------- --------- ---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
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)
Net income.............................. 17,776
Cash dividends at $0.20 per share....... (2,357)
Exercise of stock options............... 198,112 20 3,555 (201)
Tax benefit of stock options
exercised............................. 718
Reduction of additional minimum pension
liability............................. 553
Shares issued to Board of Directors..... 134 54
Shares issued under savings plan........ 808 138
Adjustment for foreign currency
translation...........................
---------- ------ ---- -------- ------- ----- -------
Balance at December 31, 1997.............. 12,967,287 $1,295 $ -- $154,406 $96,027 $ -- $(9,458)
========== ====== ==== ======== ======= ===== =======

SHARES CUMULATIVE TOTAL
HELD IN TRANSLATION STOCKHOLDERS'
TRUST ADJUSTMENT EQUITY
------- ----------- -------------
<S> <C> <C> <C>
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............... (718) 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.............. $ (718) $ 8,691 $229,045
Net income.............................. 17,776
Cash dividends at $0.20 per share....... (2,357)
Exercise of stock options............... (557) 2,817
Tax benefit of stock options
exercised............................. 718
Reduction of additional minimum pension
liability............................. 553
Shares issued to Board of Directors..... 188
Shares issued under savings plan........ 946
Adjustment for foreign currency
translation........................... (23,732) (23,732)
------- -------- --------
Balance at December 31, 1997.............. $(1,275) $(15,041) $225,954
======= ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

31
<PAGE> 33

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
Cash flows from operations:
Net income................................................ $ 17,776 $ 28,225 $ 19,670
Depreciation and amortization............................. 31,122 28,493 24,961
Non-recurring in-process R&D charge....................... 14,000 -- --
Recognition of reimbursement for past environmental
costs.................................................. (2,400) -- --
Gain realized on settlement of intercompany foreign
denominated loan....................................... (954) -- --
Provision for inventories................................. 2,489 1,099 3,052
Reversal of tax contingencies............................. -- (1,500) --
Reversal of environmental contingencies................... -- (1,000) --
Deferred income taxes..................................... 4,236 1,721 751
Loss on disposal of property, plant and equipment......... -- -- 1,562
Changes in assets and liabilities (net of assets and
liabilities acquired):
Receivables, net....................................... 2,321 1,205 (4,296)
Inventories............................................ (8,815) 6,284 (9,952)
Prepaid expenses and other current assets.............. 323 1,663 (1,409)
Accounts payable and accrued liabilities............... (5,418) (6,199) 8,013
Income taxes payable................................... (2,792) 6,620 958
Other noncurrent assets and liabilities................ 691 174 1,254
--------- -------- --------
Net cash provided from operations................. 52,579 66,785 44,564
--------- -------- --------
Cash flows from investing activities:
Capital expenditures...................................... (35,935) (32,396) (46,398)
Acquisition of businesses (net of cash acquired).......... (128,916) -- --
Other investing activities................................ -- (1,345) (2,038)
--------- -------- --------
Net cash (used in) investing activities........... (164,851) (33,741) (48,436)
--------- -------- --------
Cash flows from financing activities:
Dividends................................................. (2,357) (1,933) (1,289)
Net increase (decrease) in short-term debt................ 370 (1,025) (47,663)
Long-term debt activity (including current portion):
Borrowings............................................. 235,900 44,000 73,884
Repayments............................................. (109,649) (80,599) (90,257)
Proceeds from the issuance of common stock................ 3,575 6,116 65,367
Proceeds from the sale of treasury stock.................. 933 790 1,434
--------- -------- --------
Net cash provided from (used in) financing
activities...................................... 128,772 (32,651) 1,476
--------- -------- --------
Effect of exchange rate changes on cash..................... (2,384) 2,119 (1,850)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ 14,116 2,512 (4,246)
Cash and cash equivalents at beginning of year.............. 7,353 4,841 9,087
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 21,469 $ 7,353 $ 4,841
========= ======== ========
Supplemental disclosure:
Interest paid (net of capitalized interest)............ $ 5,275 $ 6,859 $ 12,254
Income taxes paid...................................... $ 13,344 $ 3,695 $ 5,321
Noncash transactions:
Additional minimum pension liability (eliminated from)
charged to stockholders' equity...................... $ (553) $ (197) $ 750
Liabilities established under deferred compensation
plan................................................. $ 557 $ 718 $ --
Tax benefit on stock options exercised................. $ 718 $ 1,406 $ 2,721
Liabilities assumed in connection with acquisition..... $ 1,253 $ -- $ --
</TABLE>

See accompanying notes to consolidated financial statements.
32
<PAGE> 34

CAMBREX CORPORATION AND SUBSIDIARIES

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

(1) THE COMPANY

Cambrex Corporation and Subsidiaries ( the "Company" or "Cambrex")
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
operates in two segments, biotechnology and pharmaceutical specialty and fine
chemicals. The pharmaceutical specialty and fine chemicals segment includes five
product categories: active pharmaceutical ingredients, 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, and long-term debt. At December
31, 1997, the carrying amount of these financial instruments approximate their
fair value. The carrying amounts for cash and cash equivalents, trade
receivables, and short-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.

Inventories

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

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>

33
<PAGE> 35
CAMBREX CORPORATION AND SUBSIDIARIES

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

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
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 1997, 1996 and 1995 amounted
to $1,045, $677 and $749, 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. Total capitalized software
development costs amounted to $2,487 and $2,806 in 1997 and 1996.

The cost of capitalized software is amortized over five years using the
straight line method. Amortization expense related to software development costs
was $467, $27 and $0 for the years ended December 31, 1997, 1996 and 1995,
respectively.

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.

Revenue Recognition

Revenues are generally recognized when products are shipped.

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.

34
<PAGE> 36
CAMBREX CORPORATION AND SUBSIDIARIES

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

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
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, 1997, 1996 and
1995, the cumulative amount of unremitted earnings of non-U.S. subsidiaries was
$16,140, $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.

Environmental Remediation Costs

The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable, as well as
an estimate of legal costs associated with specific environmental matters.
Accruals for estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study. Such accruals are adjusted as further information develops or
circumstances change. Costs of future expenditures for environmental remediation
obligations are not discounted to their present value.

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 as a
component of other revenues in 1997 and as a component of other income in 1996
and 1995. Gains or losses relating to intercompany transactions of a long-term
investment nature are accumulated in stockholders' equity. Foreign currency net
transaction gains (losses) were $2,668, $194, and ($1,400) in 1997, 1996 and
1995, respectively.

Earnings Per Common Share

Earnings per share of Common Stock for 1997, 1996 and 1995 reflect the
adoption of SFAS No. 128, "Earnings per Share." All diluted earnings per share
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.

35
<PAGE> 37
CAMBREX CORPORATION AND SUBSIDIARIES

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

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Earnings per share calculations are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
NUMERATOR:
Income available to common stockholders....... $17,776 $28,225 $19,670
DENOMINATOR:
Basic weighted average shares outstanding*.... 11,814 11,608 9,539
Effect of dilutive stock options.............. 396 288 514
------- ------- -------
Diluted weighted average shares outstanding... 12,210 11,896 10,053
Basic earnings per share...................... $ 1.50 $ 2.43 $ 2.06
Diluted earnings per share.................... $ 1.46 $ 2.37 $ 1.96
</TABLE>

- - ---------------
* Share and per share date reflect adjustments for a three-for-two split in the
form of a 50% stock dividend paid in July, 1996. All earnings per share
calculations reflect the adoption of SFAS No. 128, "Earnings per Share."

(3) ACQUISITIONS AND DIVESTITURES

On September 30, 1997, the Company acquired approximately 93% of the
outstanding common stock of BioWhittaker for approximately $116,000. The
remaining 7% of the outstanding common stock was subsequently acquired on
October 3, 1997 for an additional $10,000. The acquisition price was
approximately $133,500 (including acquisition costs of $7,500) which was
financed by the Company's new Credit Agreement. The acquisition has been
accounted for as a purchase transaction and as such, the purchase price has been
allocated to the fair value of assets and liabilities acquired. The excess of
the purchase price over the fair value of the net assets acquired was
approximately $48,000 and has been recorded as goodwill and will be amortized
over 20 years. The allocation to in-process research and development of $14,000
represents the value of BioWhittaker's research and development efforts which
had not reached commercial viability with no alternative future use and were,
therefore, immediately expensed as required by generally accepted accounting
principles.

Unaudited pro forma results of operations of the Company and BioWhittaker
for the years ended December 31, 1997 and 1996, as if it had occurred on January
1, 1996 are listed below.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net revenues........................................... $416,871 $410,844
Net income............................................. 17,146 21,564
Earnings per share
Basic............................................. $ 1.45 $ 1.86
Diluted........................................... $ 1.40 $ 1.81
</TABLE>

The unaudited pro forma adjustments give effect to the depreciation of
property, plant and equipment, amortization of the goodwill, interest on the
debt assumed to finance the acquisition, and the tax effects of each of these
items. The unaudited pro forma information is not necessarily indicative of the
results of operations that would have occurred had the combination been in
effect at January 1, 1996, nor of future results of operations of the combined
companies.

36
<PAGE> 38
CAMBREX CORPORATION AND SUBSIDIARIES

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

(3) ACQUISITIONS AND DIVESTITURES -- (CONTINUED)
The fair value of assets acquired and liabilities assumed are as follows
(giving effect to the total purchase price):

<TABLE>
<S> <C>
Cash...................................................... $ 4,557
Receivables............................................... 6,795
Inventories............................................... 25,389
Deferred tax asset........................................ 770
Other current assets...................................... 556
Property, plant and equipment............................. 24,190
In-process research and development....................... 14,000
Other identified intangibles.............................. 41,590
Goodwill.................................................. 47,859
Other assets.............................................. 89
Accounts payable and accrued liabilities.................. (10,458)
Income taxes payable...................................... (1,073)
Long term debt............................................ (1,755)
Deferred tax liabilities.................................. (19,036)
--------
$133,473
========
</TABLE>

(4) FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

37
<PAGE> 39
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,
------------------
1997 1996
------- -------
<S> <C> <C>
Finished goods........................................... $42,974 $29,443
Work in process.......................................... 25,217 15,463
Raw materials............................................ 18,254 13,179
Supplies................................................. 5,288 6,124
------- -------
Total............................................... $91,733 $64,209
======= =======
</TABLE>

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1997 1996
--------- ---------
<S> <C> <C>
Land................................................. $ 10,555 $ 8,132
Buildings and improvements........................... 76,476 55,120
Machinery and equipment.............................. 256,689 229,358
Furniture and fixtures............................... 6,555 7,603
Construction in progress............................. 19,194 26,845
--------- ---------
Total........................................... 369,469 327,058
Accumulated depreciation............................. (132,127) (110,577)
--------- ---------
Net............................................. $ 237,342 $ 216,481
========= =========
</TABLE>

Depreciation expense amounted to $24,666, $22,788, and $19,493 for the
years ended December 31, 1997, 1996 and 1995, respectively.

(7) INTANGIBLE ASSETS

Components of intangible assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Goodwill............................................... $100,229 $ 59,024
Other.................................................. 55,977 14,563
-------- --------
Total............................................. 156,206 73,587
Accumulated amortization............................... (29,203) (24,014)
-------- --------
Net............................................... $127,003 $ 49,573
======== ========
</TABLE>

Amortization expense amounted to $6,456, $5,705 and $5,468 for the years
ended December 31, 1997, 1996 and 1995 respectively.

38
<PAGE> 40
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,
------------------
1997 1996
------- -------
<S> <C> <C>
Accounts payable......................................... $28,174 $30,205
Salaries, wages and employee benefits payable............ 15,208 13,596
Other accrued liabilities................................ 15,089 10,953
------- -------
Total............................................... $58,471 $54,754
======= =======
</TABLE>

(9) INCOME TAXES

Income before taxes consisted of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Domestic...................................... $13,195 $31,611 $22,543
Foreign....................................... 19,412 9,058 8,673
------- ------- -------
Total.................................... $32,607 $40,669 $31,216
======= ======= =======
</TABLE>

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

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Current:
Federal.................................. $ 2,670 $ 3,783 $ 5,951
State.................................... 427 598 460
Foreign.................................. 7,498 6,342 4,384
------- ------- -------
10,595 10,723 10,795
------- ------- -------
Deferred:
Federal.................................. 2,272 922 1,008
State.................................... 143 (527) (22)
Foreign.................................. 1,821 1,326 (235)
------- ------- -------
4,236 1,721 751
------- ------- -------
Total............................... $14,831 $12,444 $11,546
======= ======= =======
</TABLE>

39
<PAGE> 41
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 1997, 1996 and 1995 as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Income tax at Federal statutory rate.......... $11,412 $14,234 $10,926
State and local taxes (benefits), net of
Federal income tax benefits................. 605 (239) 285
Difference between Federal statutory rate and
statutory rates on foreign income........... (1,666) 1,771 656
Reversal of tax contingency for IRS audit
settlement.................................. (728) (1,500) --
Return to provision adjustment................ -- (1,066) --
Research and experimentation credits.......... (399) (484) --
Write off of acquired in-process research and
development................................. 4,900 -- --
Other......................................... 707 (272) (321)
------- ------- -------
$14,831 $12,444 $11,546
======= ======= =======
</TABLE>

The components of deferred tax assets and liabilities as of December 31,
1997 and 1996 relate to temporary differences and carryforwards as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Acquisition reserves................................... $ 732 $ 732
Net operating loss carryforwards....................... 3,896 3,703
Inventory.............................................. 1,235 1,677
Employee benefits...................................... 2,365 883
Receivables............................................ 136 238
------- -------
Net current deferred tax assets........................ 8,364 7,233
Valuation allowances................................... (2,417) (2,224)
------- -------
Total net deferred tax assets.................. $ 5,947 $ 5,009
======= =======
Deferred tax liabilities:
Depreciation........................................... $29,937 $25,366
Environmental reserves................................. (1,261) (2,341)
Intangibles............................................ 14,659 (1,585)
Other.................................................. 101 147
------- -------
Total net non-current deferred tax
liabilities.................................. $43,436 $21,587
======= =======
</TABLE>

Included within the change in the cumulative translation adjustment for the
year ended December 31, 1997 is $1,608 related to the translation of deferred
tax assets and liabilities.

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 $3,896 and $3,703 at December 31,
1997 and 1996, the majority of which are available on an indefinite carryforward
basis. However, valuation reserves have

40
<PAGE> 42
CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES -- (CONTINUED)
been established against certain NOLs to reflect uncertainties associated with
the realizability of such future benefits.

During 1997, the Company concluded some of the ongoing matters with the
Internal Revenue Service related to audits for the years 1988 through 1993.

During December 1996, the Company reached a settlement agreement with the
Internal Revenue Service related to audits for the years 1998 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 $2,300 (Lire 4.0 billion),
Export Financing of $4,500 (Lire 8.0 billion) and Advances on Uncleared Deposits
of $1,700 (Lire 3.0 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, 1997 and 1996 consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1996
-------- -------
<S> <C> <C>
Export financing facility............................... $ 3,597 $ 2,760
Overdraft protection.................................... -- 1,120
-------- -------
Total......................................... $ 3,597 $ 3,880
======== =======
</TABLE>

(11) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1996
-------- -------
<S> <C> <C>
Bank credit facilities(a)............................... $192,600 $66,000
Capitalized leases...................................... -- 13
Notes payable(b)........................................ 2,711 1,370
-------- -------
Subtotal........................................... 195,311 67,383
Less: current portion(c)................................ 986 7,231
-------- -------
Total................................................... $194,325 $60,152
======== =======
</TABLE>

(a) On September 16, 1997, the Company entered into a new five year Credit
Agreement (the "Agreement") with a bank group headed by The Chase Manhattan Bank
as Administrative Agent and The First National Bank of Chicago as Documentation
Agent. The bank group has a total of 13 domestic banks and 7 international
banks. The Agreement provides the Company with a $400,000 borrowing facility.
The new Agreement replaces the previously existing Revolving Credit Agreement
with NBD Bank, N.A.

The Company has pledged 66% of the common stock of the Company's foreign
subsidiaries as collateral. The Agreement permits the Company to choose between
various interest rate options and to specify the portion of the borrowing to be
covered by specific interest rate options. Under the Agreement, the interest
rate options available to the Company are: (a) U.S. Prime rate or (b) LIBOR plus
the applicable margin (ranging from .225% of 1% to .5% of 1%) or (c) Competitive
Bid at a LIBOR Rate Borrowing or a Fixed Rate

41
<PAGE> 43
CAMBREX CORPORATION AND SUBSIDIARIES

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

(11) LONG-TERM DEBT -- (CONTINUED)
Borrowing to be determined by auction. The applicable margin is adjusted based
upon the Funded Indebtedness to Cash Flow Ratio of the Company. Additionally,
the Company pays a commitment fee of between .15% to .25% on the entire portion
of the Agreement. The 1997 and 1996 average interest rates were 6.8% and 7.4%.

On September 18, 1997, the Company utilized $60,000 of the Agreement in
order to repay the then outstanding balance under the previously existing
Revolving Credit Agreement. On September 30, 1997, the company borrowed $126,000
to finance the acquisition of the outstanding common stock of BioWhittaker. Of
this amount, approximately $116,000 was utilized on September 30, 1997. On
October 3, 1997, an additional $12,000 was utilized to acquire the remaining 7%
of BioWhittaker's common stock. The undrawn borrowing availability under the
Agreement as of December 31, 1997 was $207,400.

The Agreement is subject to financial covenants requiring the Company to
maintain certain levels of net worth and an interest coverage ratio, as well as
a limitation on indebtedness. The Company met all of the bank covenants for
1997.

(b) As part of the October 12, 1994 acquisition of Nordic and 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. There is $931 and $1,200 outstanding as of December 31, 1997 and 1996,
respectively.

The Company also assumed a note payable as part of the acquisition of
BioWhittaker in 1997 of $1,253. The note, bearing interest at 8%, is payable in
annual installments of $340 and expires in 2001. There is $1,016 outstanding as
of December 31, 1997.

<TABLE>
<S> <C>
1998...................................... $ 986
1999...................................... 408
2000...................................... 425
2001...................................... 417
2002...................................... 192,750
Thereafter................................ 325
--------
Total................................ $195,311
========
</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
rates. 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
non-performance 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

42
<PAGE> 44
CAMBREX CORPORATION AND SUBSIDIARIES

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

(12) DERIVATIVE FINANCIAL INSTRUMENTS -- (CONTINUED)
outstanding, maturity dates, and the weighted average receive and pay rates of
interest rate swap agreements as of December 31, 1997.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
--------------------------------------
WEIGHTED AVG.
RATE
NOTIONAL MATURITY --------------
AMOUNTS DATE RECEIVE PAY
-------- -------- ------- ---
<S> <C> <C> <C> <C>
Interest rate swaps....................... $10,000 1998 5.8% 6.1%
Interest rate swaps....................... $10,000 1998 5.9% 5.9%
Interest rate swaps....................... $10,000 2000 5.9% 6.1%
Interest rate swaps....................... $20,000 2000 5.9% 5.9%
</TABLE>

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 $49,939 at December 31, 1997.

Foreign Exchange Instruments

The Company's policy is to enter into forward exchange contracts and/or
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.

At December 31, 1996, the Company's foreign currency options were 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. All foreign
currency options outstanding as of December 31, 1996 matured during the first
six months of 1997.

<TABLE>
<CAPTION>
1997
--------------------------------------
UNREALIZED
NOTIONAL FAIR ---------------
AMOUNTS VALUE GAINS LOSSES
-------- ------- ----- ------
<S> <C> <C> <C> <C> <C>
Forward exchange contracts... $22,173 $22,295 $ 85 $207
</TABLE>

<TABLE>
<CAPTION>
1996
---------------------------------------------------
UNREALIZED PREMIUMS
NOTIONAL FAIR --------------- RECEIVED/
AMOUNTS VALUE 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>

43
<PAGE> 45
CAMBREX CORPORATION AND SUBSIDIARIES

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

(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, 1997 and 1996. Authorized shares of Nonvoting Common Stock were
730,746 at December 31, 1997 and 1996.

At December 31, 1997, authorized shares of Common Stock were reserved for
issuance as follows:

<TABLE>
<S> <C>
Stock option plans.......................................... 1,765,350
Cambrex savings plan........................................ 91,028
---------
Total shares........................................... 1,856,378
=========
</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 were 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 $25.30 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
under the Company's then existing Revolving 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, 1997 and 1996, no shares of Nonvoting Common Stock were
outstanding.

The Company held treasury stock of 1,040,561 and 1,049,895 shares at
December 31, 1997 and 1996, respectively, and are used for issuance to the
Cambrex Savings Plan. In 1997 and 1996, shares were also issued to the Board of
Directors as compensation.

44
<PAGE> 46
CAMBREX CORPORATION AND SUBSIDIARIES

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

(13) STOCKHOLDERS' EQUITY -- (CONTINUED)
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, 1997 and 1996, there was no
preferred stock outstanding.

(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. Under APB
25, the Company recognized compensation expense of $360, $240, and $0 for 1997,
1996, and 1995, respectively. 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 under SFAS 123.

Had compensation cost for the Company's 1997, 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 1997, 1996 and 1995 would
approximate the pro forma amounts below:

<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
<S> <C> <C> <C>
Net income -- as reported.................... $17,776 $ 28,225 $19,670
======= ======== =======
Net income -- pro forma...................... $16,079 $ 26,946 $19,617
======= ======== =======
Diluted earnings per share -- as reported.... $ 1.46 $ 2.37 $ 1.96
======= ======== =======
Diluted earnings per share -- pro forma...... $ 1.32 $ 2.27 $ 1.95
======= ======== =======
</TABLE>

The pro forma compensation expense of $1,697, $1,279 and $53 for 1997 and
1996 and 1995, respectively, was calculated based on the fair value of each
option primarily using the Black-Scholes option-pricing model

45
<PAGE> 47
CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCK OPTIONS -- (CONTINUED)
with the following assumptions for 1997 and 1996, respectively: (i) average
dividend yield of 1.33% and 1.45%, (ii) expected volatility of 25.5% and 23%,
(iii) risk-free interest rate ranging from 6.03% to 6.85% and from 5.44% to
7.74% and (iv) expected life of 4-5 years. The 1997 and 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, 1997, 1,708,650 options had been exercised. Shares of
Common Stock subject to outstanding options under the stock option plans were as
follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------ --------------------
WEIGHTED AVERAGE
---------------------- WEIGHTED
OPTION REMAINING AVERAGE
AUTHORIZED PRICE PER CONTRACTUAL EXERCISE NUMBER EXERCISE
FOR ISSUANCE OUTSTANDING SHARE $ LIFE (YRS.) PRICE $ OF SHARES PRICE $
------------ ----------- --------------- ----------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1983 Plan............ 324,000 25 11.875 0.1 11.88 25 11.88
1987 Plan............ 300,000 -- -- -- -- -- --
1989 Plan............ 600,000 -- -- -- -- -- --
1992 Plan............ 150,000 38,525 11.875 - 24.75 6.8 14.74 38,525 14.74
1993 Plan............ 450,000 252,500 13.25 - 25.50 5.8 14.28 252,500 14.28
1994 Plan............ 150,000 50,175 13.25 - 27.375 6.5 16.66 50,175 16.66
1996 Plan............ 1,500,000 1,016,050 24.75 - 48.625 8.2 30.54 895,300 8.34
--------- --------- ---------
Total
shares..... 3,474,000 1,356,775 11.875 - 48.625 26.56 1,236,025
========= ========= =========
</TABLE>

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

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
-------------------
FAIR
VALUE $
NUMBER OF EXERCISE AT GRANT OPTIONS
SHARES PRICE $ DATE EXERCISABLE
--------- -------- -------- -----------
<S> <C> <C> <C> <C>
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 15.375 894,825
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 23.03 456,113
Granted............................................. 233,400 42.18 13.85
Exercised........................................... (198,113) 21.08
Cancelled........................................... (15,000) 28.78
---------
Outstanding at December 31, 1997......................... 1,356,775 26.56 1,236,025
=========
</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

46
<PAGE> 48
CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)
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.

The net periodic pension expense for both 1997 and 1996 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.

The funded status of these plans, incorporating these fourth quarter
contributions, as of September 30, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
OVERFUNDED OVERFUNDED
------------------ ------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................ $(22,917) $(18,908)
Non-vested benefits.................................... (1,421) (1,202)
-------- --------
Accumulated benefit obligation......................... (24,338) (20,110)
Additional benefits based on estimated future salary
levels.............................................. (1,484) (1,406)
-------- --------
Projected benefit obligation for service rendered through
September 30, 1997 and 1996............................ (25,822) (21,516)
Plan assets at fair market value......................... 26,320 21,898
-------- --------
Plan assets in excess of PBO............................. 498 382
Unrecognized net transition (asset)...................... -- (98)
Unrecognized prior service benefit (cost)................ 878 (152)
Other -- unrecognized net gain (loss) on past
experience............................................. (650) 650
Additional minimum liability............................. -- (553)
-------- --------
Prepaid (accrued) pension cost as of September 30, 1997
and 1996............................................... 726 229
4th quarter contributions................................ 18 84
-------- --------
Prepaid (accrued) pension cost as of December 31, 1997
and 1996............................................... $ 744 $ 313
======== ========
</TABLE>

Assumptions used to develop the U.S. 1997 and 1996 net periodic pension
expense and the September 30, 1997 and 1996 actuarial present value of projected
benefit obligations:

<TABLE>
<CAPTION>
JANUARY 1, 1997 JANUARY 1, 1996
--------------- ---------------
OVERFUNDED OVERFUNDED
--------------- ---------------
<S> <C> <C>
PENSION EXPENSE
Weighted-average discount rate............................ 7.75% 7.5%
Expected long-term rate of return on assets............... 8.5% 8.5%
Rate of increase in future compensation levels
(non-collective bargained employees)................... 5.0% 5.0%
</TABLE>

47
<PAGE> 49
CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
OVERFUNDED OVERFUNDED
------------------ ------------------
<S> <C> <C>
ACTUARIAL PRESENT VALUE OF PROJECTED BENEFIT OBLIGATIONS
Weighted-average discount rate........................... 7.25% 7.75%
Expected long-term rate of return on assets.............. 8.5% 8.5%
Rate of increase in future compensation levels
(non-collective bargained employees).................. 5.0% 5.0%
</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, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
UNDERFUNDED UNDERFUNDED
----------------- -----------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits.......................................... $(7,299) $(6,733)
------- -------
Accumulated benefit obligation........................... (7,299) (6,733)
Additional benefits based on estimated future salary
levels................................................ (1,004) (1,162)
------- -------
Projected benefit obligation for service rendered through
December 31, 1997 and 1996............................... (8,302) (7,895)
Plan assets at fair market value........................... 2,196 1,573
------- -------
Funded status.............................................. (6,107) (6,322)
Unrecognized net transition (asset)........................ (308) (382)
Unrecognized prior service cost............................ 56 60
Other unrecognized net loss (gain) on past experience...... 109 189
------- -------
Accrued pension liability.................................. $(6,250) $(6,455)
======= =======
</TABLE>

Assumptions used to develop the 1997 and 1996 actuarial present value of
projected benefit obligations for the Company's foreign pension plans:

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -----------------
<S> <C> <C>
ACTUARIAL PRESENT VALUE OF PROJECTED BENEFIT OBLIGATIONS
Weighted-average discount rate........................... 6.5% to 7.0% 7.5% to 8.0%
Expected long-term rate of return on assets.............. 10% 10%
Rate of increase in future compensation levels........... 3.5% to 5.0% 4.5% to 6.0%
</TABLE>

48
<PAGE> 50
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
$1,662, $1,508 and $1,209 in 1997, 1996 and 1995, respectively, and were
comprised of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost.................................. $ 1,603 $ 1,491 $ 1,106
Interest cost on projected benefit
obligation.................................. 2,183 1,949 1,898
Return on plan assets......................... (5,180) (2,571) (2,887)
Amortization of excess plan net assets at
adoption of SFAS 87......................... (135) (139) (137)
Amortization of unrecognized prior service
cost........................................ (28) (38) (40)
Amortization of unrecognized net (gain)
loss........................................ -- (14) (9)
Other items -- deferred investment gain
(loss)...................................... 3,219 830 1,278
------- ------- -------
Net pension cost.............................. $ 1,662 $ 1,508 $ 1,209
======= ======= =======
</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 $818, $672 and $575 is included in
the 1997, 1996 and 1995 net periodic pension expense, respectively.

BioWhittaker has established a noncontributory defined contribution target
plan for its eligible employees. Under BioWhittaker's target plan, all domestic
employees over 21 years of age who have completed one year of service with the
Company participate. The target plan is 100% Company-funded, with annual
contributions by the Company based on the employee's targeted benefit,
determined by such factors as salary and expected years of service to age 65.
Total target plan expenses recorded from the date of acquisition amounted to
$126 in 1997.

Savings Plan

Cambrex makes available to all employees, excluding BioWhittaker, 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 $1,387, $1,534, and $1,452 in 1997, 1996 and 1995, respectively.

BioWhittaker makes available to all eligible employees a contributory
401(k) plan as well. Employee contributions are matched in part by BioWhittaker.
The cost of this plan from the date of acquisition amounted to $115 in 1997.

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 7.25% was
used together with an average wage increase of 5.0%. The net periodic pension
cost for 1997, 1996 and 1995 amounted to $213, $122 and $104, respectively.

BioWhittaker also maintains a nonqualified Supplemental Executive
Retirement Program ("SERP") covering certain key employees. The SERP provides
for supplemental defined pension benefits based on compensation and years of
service. The SERP also includes a defined contribution component. For

49
<PAGE> 51
CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)
measurement purposes, a discount rate of 7.25% was used together with an average
wage increase of 5.0%. The net periodic pension cost for 1997, from the date of
acquisition, was $95.

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,
$240 and $227 for 1997, 1996 and 1995, respectively.

The Company has 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. Included within other liabilities at December 31, 1997 and 1996 there is
$2,764 and $1,028, respectively, representing the Company's obligation under the
plan. To assist in the funding of this obligation, the Company invests in
certain mutual funds and as such, included within other assets at December 31,
1997 and 1996 is $2,764 and $1,028, respectively, representing the fair value of
these funds. 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. Total shares
held in trust as of December 31, 1997 and 1996 are 180,277 and 132,126,
respectively; and are included as a reduction of equity at cost. The Company has
established a corresponding liability to the Deferred Plan participants in the
amount of $1,275 and $718 which is included in other non-current liabilities at
December 31, 1997 and 1996, respectively. The Deferred Plan is not funded by the
Company, but the Company has established a Deferred Compensation Trust Fund
which holds the shares issued.

(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 1997, 1996 and 1995 pretax
operating results, including the amortization of the transition obligation,
resulted in a cost of $285, $316, and $306, respectively.

50
<PAGE> 52
CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)
The periodic postretirement benefit cost includes the following components:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost of benefits earned........................... $ 51 $ 67 $ 57
Interest cost on accumulated postretirement benefit
obligation............................................. 150 156 159
Amortization of unrecognized
Prior service cost........................................ (9) -- --
Amortization of transition obligation..................... 93 93 90
---- ---- ----
Total periodic postretirement benefit cost................ $285 $316 $306
==== ==== ====

Accumulated postretirement benefit obligation:
</TABLE>

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Retirees.................................................... $ 1,095 $ 852
Fully eligible plan participants............................ 579 673
Other active plan participants.............................. 484 616
------- -------
Accumulated postretirement benefit obligation............... 2,158 2,141
Unrecognized net loss....................................... 240 181
Unrecognized transition obligation.......................... (1,390) (1,482)
------- -------
Accrued postretirement benefit cost recognized at the end of
the period................................................ $ 1,008 $ 840
======= =======
</TABLE>

The discount rate used to determine the accumulated postretirement benefit
obligation was 7.25% and 7.75% in 1997 and 1996, respectively. The assumed
health care cost trend rate used to determine the accumulated postretirement
benefit obligation is 11.0%, 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 on either the accumulated postretirement benefit
obligation or the service and interest cost component of the net periodic
post-retirement benefit cost.

The cost of all health and life insurance benefits is recognized as
incurred and was approximately $4,286, $4,362 and $3,825 in 1997, 1996 and 1995,
respectively. The cost of providing these benefits for the 224, 207 and 190
retirees in 1997, 1996 and 1995, respectively, is not separable from the cost of
providing benefits for the 718, 725, and 738 active U.S. employees.

(17) OTHER INCOME AND EXPENSE

Other income in 1997 was $1,263 compared with $194 in 1996. Other income
included a gain of $954 on the settlement of an intercompany foreign denominated
loan. Additionally, 1997 other income included the final resolution and receipt
of the settlement proceeds due from the 1996 premature termination of a contract
by a customer for $766, offset by a charge of $507 for the settlement of a legal
matter reached during the year.

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.

51
<PAGE> 53
CAMBREX CORPORATION AND SUBSIDIARIES

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

(18) SEGMENT INFORMATION

The Company has been involved principally in the manufacturing and
marketing of specialty and fine chemicals which include products used in
prescription and over-the-counter drugs, cosmetics, and other health care
products, as well as other complex molecules and chemicals for various multiple
end-use markets. In October 1997, the Company entered into the biotechnology
segment pursuant to the acquisition of BioWhittaker, Inc. The biotechnology
segment consists of cell culture products, including living cell cultures, cell
culture media and cell culture media supplements, and endotoxin detection
products supplied to the biotechnology and pharmaceutical industries. The
pharmaceutical specialty and fine chemicals segment includes five product
categories: active pharmaceutical ingredients, pharmaceutical intermediates,
organic intermediates, performance enhancers and polymer systems.

Following is a summary of business segment information:

<TABLE>
<CAPTION>
1997
--------
<S> <C>
GROSS SALES
Biotechnology............................................... $ 13,577
Pharmaceutical specialty and fine chemicals................. 366,506
--------
$380,083
========
OPERATING PROFIT
Biotechnology............................................... $(13,096)*
Pharmaceutical specialty and fine chemicals................. 49,770
--------
$ 36,674
========
NET INCOME
Biotechnology............................................... $(13,921)*
Pharmaceutical specialty and fine chemicals................. 31,697
--------
$ 17,776
========
INDENTIFIABLE ASSETS
Biotechnology............................................... $145,306
Pharmaceutical specialty and fine chemicals................. 385,756
Corporate................................................... 21,364
--------
$552,426
========
</TABLE>

- - ---------------
* Includes effect of non-recurring charge for $14,000 related to the value of
in-process research and development efforts underway at the time of the
acquisition of BioWhittaker, Inc., which was completed on October 3, 1997.

Depreciation for biotechnology and for pharmaceutical specialty and fine
chemicals, respectively, was $428 and $23,401. Capital expenditures for the two
segments were $886 and $32,368, respectively.

(19) FOREIGN OPERATIONS AND EXPORT SALES

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

52
<PAGE> 54
CAMBREX CORPORATION AND SUBSIDIARIES

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

(19) FOREIGN OPERATIONS AND EXPORT SALES -- (CONTINUED)
Summarized data for the Company's operations for 1997, 1996 and 1995 are as
follows:

<TABLE>
<CAPTION>
DOMESTIC EUROPEAN TOTAL
-------- -------- --------
<S> <C> <C> <C>
1997
Gross sales.................................... $228,004 $152,079 $380,083
Operating profit............................... 4,656 32,018 36,674
Net income..................................... 4,787 12,989 17,776
Identifiable assets............................ 335,637 216,789 552,426
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
</TABLE>

Export sales, included in domestic gross sales, in 1997, 1996 and 1995
amounted to $48,852, $50,243 and $50,608 respectively. No country, in any of the
given years, represents more than 10% of these export sales.

(20) 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, 1997, future minimum commitments under noncancelable operating
lease arrangements were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31:
-----------------------
<S> <C>
1997................................ $ 1,407
1998................................ 890
1999................................ 524
2000................................ 379
2001 and thereafter................. 11,160
-------
Net commitments............................ $14,360
=======
</TABLE>

Total operating lease expense was $1,939, $2,175 and $2,284 for the years
ended December 31, 1997, 1996 and 1995, respectively.

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
will be required to pay royalties to Oxford Asymmetry for any technology
licensed.

The Company also entered into several research and development agreements
in 1997. 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 to develop processes specifically
designed to fit into the Company's cGMP manufacturing facilities. In April,
1997, the Company formed two

53
<PAGE> 55
CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) COMMITMENTS -- (CONTINUED)
separate agreements with the Science Applications International Corporation
(a.k.a. Zelinsky Institute) to secure the special knowledge and talents of
Russian scientists. In May, 1997, the Company formed an alliance with Fine Tech
Ltd., of Technicon City, Israel, in which the Company will provide Fine Tech
funding over the next three years for process improvement on existing and
newly-developed generic drugs to be manufactured in the Company's cGMP
facilities. The estimated commitments for the Research & Development agreements
over the next three years is approximately $3,000.

(21) 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,
-----------------
1997 1996
------ -------
<S> <C> <C>
Estimated range of the Company's share of costs associated
with estimable matters:
Minimum................................................... $4,501 $4,544
====== =======
Maximum................................................... $9,908 $16,039
====== =======
Accrual and related activity:
Balance, beginning of year................................ $7,800 $9,400
Additions................................................. -- --
Reserve reversal.......................................... -- (1,000)
Expenditures.............................................. (355) (600)
------ -------
Balance, end of year...................................... $7,445 $7,800
====== =======
Classification of year end accrual:
Current................................................... $35 $617
Non-current............................................... 7,410 7,183
------ -------
$7,445 $7,800
====== =======
</TABLE>

During 1995, there were no income statement charges for additions to the
accrual for environmental contingencies.

54
<PAGE> 56
CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) 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 appealed 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.

During 1997, the RI/FS was updated for the additional remediation
alternative requested by the DEC. This final draft RI/FS also included an
additional alternative suggested by the Company. This final report was used to
further refine the estimate liability for this matter.

Additionally, during November 1997, a settlement was reached between
Nepera, Inc., a former owner of the site and the original owner of the site
pertaining to past and future costs of remediating this site and the Harriman
site (see b below). Under the terms of the settlement, the original site owner
has placed in escrow approximately $13,000 to provide for past and future
remediation costs at the two sites in exchange for a release from the
requirement to clean up the two sites. After certain administrative proceedings,
the funds will be placed in a Trust for the benefit of remediating the two sites
on behalf of Nepera and the other former site owner.

55
<PAGE> 57
CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) CONTINGENCIES -- (CONTINUED)
As permitted under the terms of the agreement, Nepera is eligible to
recover and has sought to recover $2,400 of past costs from this settlement
which was recognized in the results of operations and as a receivable for this
amount in the 1997 financial statements. Nepera estimates that the remaining
funds available from this settlement should be sufficient to provide for the
future remediation costs for these two sites based upon current estimates.
Accordingly, the estimated range of liability for this site have been set off
against these settlement funds and are not included in the minimum and maximum
estimates for 1997. The 1996 minimum and maximum estimates did include certain
amounts for this site.

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. During 1997, a final Record of
Decision (ROD) was issued which describes the remediation plan for the site.
Nepera utilized the ROD to update the estimated costs of remediating this site.
As noted above, during 1997, a settlement was reached with the original owner of
the site which provides for funds to be placed in escrow for the future clean-up
costs of the site. Nepera estimates that the remaining funds available from this
settlement should be sufficient to provide for the future remediation costs for
these two sites based upon current estimates. Accordingly, the estimated range
of liability for this site have been set off against these settlement funds and
are not included in the minimum and maximum estimates for 1997. The 1996 minimum
and maximum estimates did include certain amounts for this site.

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. There were no significant developments at this site during 1997.

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 about 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 a
majority of past environmental investigation and remediation costs of
approximately $800 plus prejudgment interest on such costs and was found
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 has contested such award on appeal.
The plaintiffs also appealed certain aspects of the decision.

During 1997, the judge reversed the decision regarding prejudgment
interest. Also, during 1997 both Cosan and the plaintiffs appealed various
aspects of the decision. In January 1998, the appeals were heard before the
United States Court of Appeals for the Third Circuit. A decision has not been
rendered. The estimated range of costs for this case have been considered in the
Company's year-end reserve assessment.

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.

56
<PAGE> 58
CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) CONTINGENCIES -- (CONTINUED)
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 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. Through 1997, Nepera has recovered approximately the
full amount of this settlement for costs incurred including a recovery of
approximately $400 in 1997. There is minimal remaining balance from these
recoveries.

During 1995, the PRP group 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. There were no significant
developments during 1997 with this 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, based upon the inactivity of required action at this site,
the Company has reduced the estimate of the maximum exposure associated with
this site by $1,000. There have been no significant developments in connection
with environmental conditions at that site.

g) In connection with the acquisition of Nordic and Profarmaco in 1994, an
accrual of $1,510 was established for environmental conditions existing as of
the date of the acquisition. Approximately $100 and $500 was spent during 1997
and 1996, respectively, for environmental permit compliance matters.

h) 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.

(22) SUBSEQUENT EVENTS

On January 5, 1998, the Company acquired all of the assets of the chiral
intermediates business of Celgene Corporation for $7,500 plus future royalties
of up to $7,500 based upon sales. The acquisition has been accounted for as a
purchase and was financed with the Company's Credit Agreement. The preliminary
allocation of the purchase price results in goodwill of approximately $5,000
which will be amortized over 15 years.

57
<PAGE> 59

CAMBREX CORPORATION

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

<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER(4) YEAR
------- -------- ------- ---------- --------
<S> <C> <C> <C> <C> <C>
1997
- - -----
Gross sales........................... $93,141 $100,773 $82,638 $103,531 $380,083
Net revenues.......................... 91,894 98,719 81,365 102,237 374,215
Gross profit.......................... 27,739 30,070 24,558 31,595 113,962
Net income............................ 7,448 8,852 7,531 (6,055) 17,776
Earnings per share*:(1)
Basic............................ $ 0.63 $ 0.75 $ 0.64 $ (0.51) $ 1.50
Diluted.......................... $ 0.62 $ 0.74 $ 0.61 $ (0.51) $ 1.46
Average shares*:
Basic............................ 11,738 11,752 11,829 11,915 11,814
Diluted.......................... 11,994 12,017 12,405 12,502 12,210
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)
Basic............................ $ 0.54 $ 0.65 $ 0.52 $ 0.72 $ 2.43
Diluted.......................... $ 0.52 $ 0.63 $ 0.51 $ 0.70 $ 2.37
Average shares*:
Basic............................ 11,480 11,595 11,646 11,695 11,608
Diluted.......................... 11,810 11,859 11,907 11,949 11,896
</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.
(4) Includes non-recurring charge for in-process research and development
related to the acquisition of BioWhittaker. Additionally, the Company
recognized $2,400 as a reduction of legal expenses in the fourth quarter of
1997 related to the recovery of past environmental costs associated with a
settlement with a prior owner of one of the Company's operating facilities.

* Share and per share date reflect adjustments for a three-for-two stock split
in the form of a 50% stock dividend. All earnings per share calculations
reflect the adoption of SFAS No. 128, "Earnings per Share."

58
<PAGE> 60

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 23, 1998, 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."

59
<PAGE> 61

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........................... 28
Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 29
Consolidated Income Statements for the Years Ended December
31, 1997, 1996 and 1995................................... 30
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995.............. 31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.......................... 32
Notes to Consolidated Financial Statements.................. 33
Consolidated Quarterly Financial Data (unaudited) for the
Years Ended December 31, 1996 and 1995.................... 58
</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)..................................... 28
Schedule II -- Valuation and Qualifying Accounts............ 61
</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 .

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 the following reports on Form 8-K during the last
quarter of the year ended December 31, 1997.

<TABLE>
<CAPTION>
DATE OF REPORT ITEMS REPORTED
-------------- --------------
<S> <C>
October 8, 1997 Acquisition of BioWhittaker, Inc.
October 8, 1997 New Loan Agreement
November 26, 1997 Amendment to Form 8-K filed on October 8, 1997
related to the acquisition of BioWhittaker
</TABLE>

60
<PAGE> 62

CAMBREX CORPORATION

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------- -------- -------- ---------- --------
ADDITIONS
-------------------
CHARGED CHARGED
BALANCE TO COST TO
BEGINNING AND OTHER END OF
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS YEAR
-------------- --------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1997:
Doubtful trade receivables and returns
and allowances...................... $1,453 $ 818 $ 57(1) $ 623 $ 1,705
Inventory and obsolescence
provisions.......................... 6,467 2,489 8,225(1) 1,238 15,943
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
</TABLE>

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

(1) Reserve of BioWhittaker acquired during 1997.

61
<PAGE> 63

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 20, 1998

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/ DOUGLAS MACMILLAN Vice President -- Chief
- - ----------------------------------------------------- Financial Officer
Douglas MacMillan

/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
- - -----------------------------------------------------
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>

March 20, 1998

62
<PAGE> 64

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - ----------- -----------
<C> <S>
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).
4.4 Loan Agreement dated September 16, 1997 by and among the
registrant, Chase Manhattan Bank as Administrative Agent and
The First National Bank of Chicago as Documentation Agent.
The bank group includes 13 domestic banks and 7
international banks.(Q)
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).
10.7 Stock purchase agreement dated as of October 3, 1997 between
BioWhittaker and the registrant.(Q)
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).
</TABLE>

- - ---------------
See legend on following page.
63
<PAGE> 65

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - ----------- -----------
<C> <S>
10.26 Cambrex Earnings Improvement Plan.(L).
10.27 Consulting Agreement dated December 15, 1994 between the
registrant and Arthur I. Mendolia.(L).
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).
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.

64
<PAGE> 66

(M) Filed herewith.

(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 reference to the registrant's Annual Report on Form 10-K
for 1995.

(Q) Incorporated by reference to the registrant's Current Report on Form 8-K
dated October 8, 1997.

<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
Corporate Development
Claes Glassell Vice President -- Cambrex 10/12/94
President, International
Steven M. Klosk Executive Vice President -- 10/21/92
Administration
Peter E. Thauer Vice President -- Law and Environment, 08/28/89
General Counsel and Corporate Secretary
Salvatore J. Guccione Vice President -- 12/14/95
Corporate Development
Douglas H. MacMillan Vice President, 04/14/97
Chief Financial Officer
</TABLE>

<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
BioWhittaker, Inc...................................... Delaware
Seal Sands Chemicals Limited........................... England
Profarmaco S.r.1....................................... Italy
Nordic Synthesis AB.................................... Sweden
</TABLE>

<PAGE> 1

EXHIBIT 23

CAMBREX CORPORATION

ACCOUNTANTS' CONSENT

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 16, 1998, on our audits of
the consolidated financial statements and financial statement schedule of
Cambrex Corporation as of December 31, 1997 and 1996, and for each of the three
years in the period ended December 31, 1997, which report is included in this
Annual Report on Form 10-K.

COOPERS & LYBRAND L.L.P.

Parsippany, New Jersey
March 17, 1998

<PAGE> 1

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 Douglas H. MacMillan, 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/ DOUGLAS H. MACMILLAN /s/ LEON J. HENDRIX, JR.
- - -------------------------------------------- --------------------------------------------
Douglas H. MacMillan Leon J. Hendrix, Jr.
Vice President 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> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1997
<CASH> 7,555 7,186 29,726 21,469
<SECURITIES> 0 0 0 0
<RECEIVABLES> 58,287 53,722 53,937 57,438
<ALLOWANCES> 1,059 1,072 1,454 1,705
<INVENTORY> 67,920 67,452 93,261 91,733
<CURRENT-ASSETS> 146,005 139,494 189,056 184,654
<PP&E> 323,421 329,147 373,936 369,469
<DEPRECIATION> 114,806 120,439 126,727 132,127
<TOTAL-ASSETS> 400,517 393,139 537,181 552,426
<CURRENT-LIABILITIES> 65,119 61,599 69,280 67,911
<BONDS> 73,483 62,865 187,503 194,325
0 0 0 0
0 0 0 0
<COMMON> 1,277 1,279 1,293 1,295
<OTHER-SE> 219,461 224,828 233,617 224,659
<TOTAL-LIABILITY-AND-EQUITY> 400,517 393,139 537,181 552,426
<SALES> 90,858 189,120 269,830 371,277
<TOTAL-REVENUES> 91,894 190,613 271,978 374,215
<CGS> 64,155 132,804 189,611 260,253
<TOTAL-COSTS> 64,155 132,804 189,611 260,253
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 1,157 2,303 3,078 5,330
<INCOME-PRETAX> 10,953 23,970 34,996 32,607
<INCOME-TAX> 3,505 7,670 11,165 14,831
<INCOME-CONTINUING> 7,448 16,300 23,831 17,776
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 7,448 16,300 23,831 17,776
<EPS-PRIMARY> 0.63<F1> 1.39<F1> 2.02<F1> 1.50<F1>
<EPS-DILUTED> 0.62 1.36 1.97 1.46
<FN>
<F1>The amount is reported as EPS-BASIC AND NOT FOR EPS-PRIMARY.
</FN>

</TABLE>

<ARTICLE> 5

<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 1,024 5,390 8,342 7,353
<SECURITIES> 0 0 0 0
<RECEIVABLES> 61,115 55,582 48,796 54,363
<ALLOWANCES> 1,585 1,325 1,273 1,453
<INVENTORY> 73,049 71,097 66,055 64,209
<CURRENT-ASSETS> 147,496 146,985 135,533 136,862
<PP&E> 301,209 308,848 316,937 327,057
<DEPRECIATION> 93,195 99,054 104,785 110,576
<TOTAL-ASSETS> 408,220 409,454 404,169 404,444
<CURRENT-LIABILITIES> 72,051 73,985 69,537 73,950
<BONDS> 95,165 84,680 72,581 60,152
0 0 0 0
0 0 0 0
<COMMON> 842 834 837 851
<OTHER-SE> 197,563 207,739 215,205 228,194
<TOTAL-LIABILITY-AND-EQUITY> 408,220 409,454 404,169 404,444
<SALES> 93,925 184,194 270,067 358,794
<TOTAL-REVENUES> 93,925 184,194 270,240 359,385
<CGS> 67,459 131,742 192,787 258,049
<TOTAL-COSTS> 67,459 131,742 192,787 258,049
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 1,893 3,465 4,974 6,152
<INCOME-PRETAX> 9,534 21,117 30,502 40,669
<INCOME-TAX> 3,337 7,392 10,676 12,444
<INCOME-CONTINUING> 6,197 13,725 19,826 28,225
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 6,197 13,725 19,826 28,225
<EPS-PRIMARY> 0.54<F1> 1.19<F1> 1.71<F1> 2.43<F1>
<EPS-DILUTED> 0.52 1.16 1.67 2.37
<FN>
<F1>The amount is reported as EPS-BASIC AND NOT FOR EPS-PRIMARY.
</FN>

</TABLE>

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,841
<SECURITIES> 0
<RECEIVABLES> 53,603
<ALLOWANCES> 1,261
<INVENTORY> 71,234
<CURRENT-ASSETS> 144,134
<PP&E> 293,430
<DEPRECIATION> 87,747
<TOTAL-ASSETS> 402,553
<CURRENT-LIABILITIES> 74,269
<BONDS> 99,643
0
0
<COMMON> 818
<OTHER-SE> 188,666
<TOTAL-LIABILITY-AND-EQUITY> 402,553
<SALES> 357,176
<TOTAL-REVENUES> 357,176
<CGS> 257,396
<TOTAL-COSTS> 257,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,146
<INCOME-PRETAX> 31,216
<INCOME-TAX> 11,546
<INCOME-CONTINUING> 19,670
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,670
<EPS-PRIMARY> 2.06<F1>
<EPS-DILUTED> 1.96

<FN>
<F1>
The amount is reported as EPS-BASIC and not for EPS-PRIMARY.
</FN>

</TABLE>