CAMBREX CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 2001

OR

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-10638

CAMBREX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 22-2476135
(STATE OR OTHER JURISDICTION
OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE MEADOWLANDS PLAZA, 07073
EAST RUTHERFORD, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)

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

(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 $1,002,102,147 as of February 28, 2002.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of February 28, 2002, there were 25,922,455 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 2002 Annual
Meeting are incorporated by reference into Part III of this report.
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PART I

ITEM 1 BUSINESS.

GENERAL

Cambrex Corporation (the "Company" or "Cambrex"), a Delaware corporation,
began business in December 1981. The Company primarily provides products and
services worldwide to the life sciences industry. Cambrex operates in four
segments, Human Health, Biosciences, Animal Health/Agriculture, and Specialty
and Fine Chemicals. Each of these segments includes various product categories.
The Company has continued to evolve into a life science based organization
through acquisitions and internal investments. The Human Health, Biosciences,
and Animal Health/Agriculture segments facilitate all the ongoing analysis of
the business in the area of life sciences. Currently, the Company's overall
strategy for these segments is to focus on niche markets that have global
opportunities, build on strong customer relations to enhance our new products
pipeline, and support state-of-the-art technology, while being a leader in
environmental, health and safety performance.

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

1. Focus on niche products requiring significant technical expertise.

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

3. Review products on a continuing basis and eliminate those not meeting
operating profit goals and replace those products with ones
generating higher returns.

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

The Company announced in late November 2001 a plan to realign its
businesses in recognition of the Company's strategic emphasis on the growing
opportunities in the life sciences industry. Effective January 1, 2002, the
operating units that primarily produce specialty and fine chemicals and animal
health and agriculture products were combined under a new subsidiary, Rutherford
Chemicals, Inc. Rutherford Chemicals, Inc. will include CasChem, Inc., Bayonne,
New Jersey; Cosan Chemical Corporation, Carlstadt, New Jersey; Heico Chemicals,
Inc., Delaware Water Gap, Pennsylvania; Nepera, Inc., Harriman, New York;
Zeeland Chemicals, Inc., Zeeland, Michigan; and Seal Sands Chemicals Ltd.,
Teeside, United Kingdom.

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
May 12, 1998, Cambrex purchased the assets of the biopharmaceutical
manufacturing and distribution business of Boehringer Ingelheim Bioproduct
Partnership. The assets acquired included a state-of-the-art cell culture and
media manufacturing facility in Verviers, Belgium, and inventory for certain
cell culture, endotoxin detection and molecular biology products.

On January 9, 1998, the Company completed the acquisition of the chiral
intermediates business of Celgene Corporation for approximately $11,328 plus
future royalties of up to $7,500 based upon sales. The product line produces
compounds that are important in the production of modern active pharmaceutical
ingredients.

On January 4, 1999, the Company acquired Poietic Technologies, Inc., a
leading supplier of normal human cells of hematopoietic origin. Terms of the
transaction were $2,500 in cash and future consideration based on the
performance of the business.

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(dollars in thousands, except share data)
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On March 12, 1999, the Company completed the purchase of Irotec
Laboratories, Ltd., a manufacturer of active pharmaceutical ingredients located
in Cork, Ireland. Cambrex paid approximately $37,560 for the business, which
included a new $15,000 cGMP (current good manufacturing practices)
pharmaceutical manufacturing plant that came on line in the third quarter of
1999.

On July 12, 1999, the Company acquired BioWhittaker Molecular Applications,
Inc. (formerly the BioProducts division of the FMC Corporation) for
approximately $38,000. The business, which serves the life sciences industry, is
the world's largest manufacturer of electrophoresis media based on the natural
polymer agarose. Electrophoresis media products are used to separate and analyze
proteins and sequence DNA, work critical to the development and manufacture of
new biopharmaceuticals. High purity agarose is also used to make chromatography
media for large-scale separation and purification of biologicals, important in
pharmaceutical applications. The transaction, structured as a purchase of
assets, includes two operating facilities located in Rockland, Maine and
Copenhagen, Denmark, and a number of U.S. and foreign patents associated with
the business.

On March 2, 2000, the Company completed the acquisition of Conti BC NV, a
manufacturer and supplier of pharmaceutical intermediates and active
pharmaceutical ingredients, located in Landen, Belgium. The Company paid
approximately $6,200 in cash and assumed debt for the business. At the time of
the transaction, goodwill was recorded at $451 and is being amortized over 20
years.

On July 24, 2000, the Company completed the acquisition of Lumitech, LTD,
an emerging company based in Nottingham, United Kingdom, which provides products
and services used in the high throughput screening market for drug discovery.
The Company paid approximately $4,700 in cash at closing, the majority of which
was recorded as patents and other intangibles, with additional future
performance-based payments of up to $16,000 due over the next five years. The
acquired patents and other intangibles are being amortized over 15-20 years.

On August 29, 2000, Cambrex Corporation announced that its CasChem, Inc.
subsidiary had licensed the castor oil based ester products business from
Arizona Chemical, Jacksonville, FL through a perpetual licensing agreement for
approximately $4.5 million. The agreement provided CasChem with process
technologies, customer lists, and supply of raw materials. The ester products
are used in personal care and coatings applications. The license cost is
included in intangible assets and is being amortized over 10 years. As part of
the transaction, CasChem has also entered into a five-year supply agreement with
Arizona Chemical to manufacture a line of tall oil based products used in the
lubricant and lithographic ink markets.

On June 1, 2001, Cambrex Corporation completed its acquisition of the Bio
Science Contract Production Corporation ("Bio Science") biopharmaceutical
manufacturing business in Baltimore, Maryland. The business involves the cGMP
manufacture of purified bulk biologics and pharmaceutical ingredients. The total
purchase price was approximately $120 million in cash, which was funded by an
existing line of credit facility. Additional purchase price payments of up to
$25 million may be made depending on future business performance over the next
four years. Assets acquired and liabilities assumed have been recorded at their
estimated fair values and are subject to adjustment when additional information
concerning asset and liability valuations is finalized. At the time of the
transaction, goodwill was recorded at approximately $122 million, including
incremental deal costs, and is being amortized over 20 years.

On October 30, 2001, Cambrex Corporation completed the acquisition of
Marathon Biopharmaceuticals ("Marathon"), located in Hopkinton, Massachusetts,
for approximately $26 million in cash through a share purchase of CoPharma Inc.
Marathon is a full-service cGMP manufacturer of biopharmaceutical ingredients
and purified bulk biologics for pre-clinical evaluation, clinical trials and
commercial scale quantities. This acquisition strengthens Cambrex's existing
capabilities for producing pre-clinical, clinical and commercial quantities of
bulk biologics. Assets acquired and liabilities assumed have been recorded at
their estimated fair values and are subject to adjustment when additional
information concerning assets and liability valuation is finalized. At the time
of the transaction goodwill was recorded at approximately $16.3 million.
Subsequent to the acquisition, the acquired company's formal name was changed to
Cambrex Bio Science MA, Inc.
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PRODUCTS

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 and services for specialized applications. The following table sets
forth for the periods indicated information concerning gross sales from the
Company's four segments:

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(1) Sales from Irotec Laboratories, acquired in March 1999, and BioWhittaker
Molecular Applications, acquired in July 1999, are included from the dates
of acquisition.

(2) Sales from Conti BC NV acquired in March 2000, Lumitech Limited acquired
July 2000, and the Arizona Chemical product lines licensed in August 2000,
are included from dates of acquisition.

(3) Sales from Bio Science acquired in June 2001, and Marathon, acquired in
October 2001, are included from dates of acquisition.

Human Health: The Human Health Segment is classified into seven principal
product groups: (1) Active Pharmaceutical Ingredients, (2) Pharmaceutical
Intermediates, (3) Imaging Chemicals, (4) Personal Care Ingredients, (5)
Biomedical Urethanes, (6) Catalysts, and (7) Other. These products are sold to a
diverse group of more than 1,100 customers, with one customer, a distributor
representing multiple customers, accounting for 14.8% of 2001 sales in this
segment. Many of these products are also sold through agents.

This table summarizes the gross sales for this product segment.

Human Health sales of $242,995 increased $9,109 (4%) despite the
unfavorable effects of foreign currency which reduced sales by 2.2%.

Active Pharmaceutical Ingredients are manufactured under FDA regulation for
use as the active ingredients in prescription and over-the-counter drugs. Active
Pharmaceutical Ingredients includes active ingredients used in products for
gastro-intestinal, cardiovascular, endocrine, central nervous system,
respiratory, diuretics, anti-infective, anti-inflammatory, immunology and
various other uses. Active Pharmaceutical Ingredients sales of $174,483 were
$3,309 (2%) above the prior year due primarily to increased demand and timing of
shipments for cardiovascular, central nervous system and gastrointestinal
actives. Also contributing were new product introductions used in treatments for
insomnia and prostate cancer. Partly offsetting these

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increases were lower sales of a generic used in the treatment of ulcerative
colitis, and a cardiovascular supplement, due to competitive pricing pressures.
The Diltiazem price decrease was offset by lower manufacturing cost reflecting a
change in chemical processing. In addition, sales of a urinary incontinence
active were lower due to a customer decision to bring manufacturing in-house.

Pharmaceutical Intermediates sales of $30,542 were $1,015 (3%) above 2000
primarily due to higher sales of an intermediate used in a therapeutic drug for
treatment of end-stage kidney disease and a new antiviral product currently in
clinical trials. These increases were partly offset by lower sales of an
intermediate used in an antihistamine, due to customer production and inventory
issues and a cough suppressant ingredient, due to foreign competition.

Personal Care Ingredients sales of $21,011 were $5,499 (35%) above 2000 due
to the full year impact of the August 2000 Arizona product line license
agreement.

Catalysts sales were lower by $1,482 (21%) due to reduced demand of a
chemical resolving agent.

Other product category changes from prior year were not significant.

Biosciences: This segment consists of cell culture products (including
living cell cultures, cell culture media and cell culture media supplements),
endotoxin detection products, electrophoresis and chromatography products, and
contract biopharmaceutical manufacturing for the biotechnology and
pharmaceutical industries. The Company manufactures more than 1,800 products
which are sold to more than 14,000 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 segment:

Gross sales of $124,973 were $28,741 (30%) above 2000 due to the impact of
contract biopharmaceutical manufacturing acquisitions and increased shipments of
cell culture and endotoxin detection products. The acquisitions in the contract
bioprocessing area include the results of Bio Science, acquired in July 2001 and
Marathon, acquired in October 2001.

Animal Health/Agriculture: This segment consists of three product groups:
(1) Vitamin B-3 used in feed additives and for veterinary products, (2) Animal
Health products used in disease prevention and (3) Agricultural Intermediates
used in crop protection. These products are sold to approximately 200 customers.
Three customers accounted for 25.9%, 26.2% and 22.7% of 2001 sales in this
segment.

This table summarizes the gross sales for this product segment:

Animal Health sales of $14,220 were $1,920 (12%) below 2000 due to
inventory adjustments made by a major feed additive customer.

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Agricultural Intermediate sales of $33,991 were up $821 (2%) due to
increased requirements in crop protection and the timing of significant customer
campaigns.

Specialty and Fine Chemicals: This segment consists of two product groups:
(1) Performance Enhancing Chemicals and (2) Polymer Systems. Performance
Enhancing Chemicals are complex chemicals designed to impart special properties
when small quantities are included in the formulation of specific products.
These chemicals, which include over 100 products, are used in photography,
pigments, polymers, fuel/oil addition, catalysts and other specialty additives.
Polymer Systems are monomers or two component polymer systems for use in small
volume, high performance applications. These polymers include applications used
in coatings, telecommunications, electronics and engineering plastics. These
products are sold to approximately 1,100 customers with no one customer
accounting for over 10% of 2001 sales.

This table summarizes the gross sales for this product category:

Performance Enhancing Chemicals sales of $48,518 were $18,486 (28%) below
2000 levels. Key decreases were in sales of photographic products due to lower
demand and pigment industry products due to the elimination of certain lower
margin products.

Polymer Systems sales of $27,868 were down $11,334 (29%) due primarily to
lower sales of encapsulants and other telecommunication products, coating
additives (primarily castor oil derivatives) and plastics additives. The polymer
business has been impacted greatly by an overall economic slowdown in these
industries.

MARKETING AND DISTRIBUTION

The Company's Human Health segment generally includes high value,
low-medium volume products requiring significant technical expertise for their
development and manufacture. Marketing generally requires significant
cooperative effort among a small highly trained sales and marketing staff, a
technical staff who can assess the technical fit and estimate manufacturing
economics, and the business unit 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. Sales of established products may be handled by
agents in those areas where direct sales efforts are not economical.

For the Biosciences segment, the Company markets and sells its products in
the United States and Europe principally through its own direct sales force. The
Company directly serves the European markets through its wholly-owned
subsidiaries, BioWhittaker UK LTD, located outside London, and BioWhittaker,
Europe located in Belgium, and BioWhittaker Molecular Applications located in
Denmark. The remaining international markets are served principally through an
extensive network of independent distributors. The Company is currently
implementing e-commerce software to market and sell these products.

For the Specialty and Fine Chemicals segment and some Animal
Health/Agriculture segment products, marketing and distribution is more typical
of specialty chemical companies, with products being sold to customers from
inventory in volumes ranging from rail cars to five gallon containers. Sales may
be handled by Company salespeople, distributors or agents, as appropriate.

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RAW MATERIALS

The Company uses a wide array of raw materials in the conduct of its
businesses. The Company's specialty chemical facility in Bayonne, New Jersey,
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.
Castor oil is used primarily in the manufacture of the Company's polymer systems
for coatings, telecommunication, and electronic applications. 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 generally able to obtain adequate supplies of castor oil at acceptable
prices in the past and expects to be able to continue to do so in the future.

Pyridine, which accounted for approximately 5%, 5% and 6% of gross revenues
in 2001, 2000 and 1999, respectively, is produced by the Company by a process
involving the high temperature reaction of acetaldehyde, formalin and ammonia.
Acetaldehyde is available from a limited number of suppliers in North America.
The Company uses one primary supplier in the U.S. at competitive prices. The
average price of acetaldehyde increased approximately 2.0% during 2001 after
increasing 32.0% in 2000. While formaldehyde is available from multiple sources,
a majority is obtained from a local supplier in the U.S. at competitive prices.
The average price of formaldehyde in 2001 increased approximately 16% from 2000
after increasing 18% in 2000 from 1999. The Company obtains acetaldehyde and
formalin pursuant to long-term supply contracts under which the price for the
raw material adjusts to market conditions.

For its biosciences 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 raw
fetal bovine serum, its price and supply are cyclical and fluctuate. The Company
also is dependent on one company for the raw materials used to make Agarose
products (used by BioWhittaker Molecular Applications in electrophoeresis media
products). A long term contract is in effect for this supply.

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 introduce innovative products, improve manufacturing processes 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. Approximately 337 employees are
involved directly in research and development activities worldwide.

At the end of 2000, the Company completed its initial investment in the
Cambrex Center of Technical Excellence, a new research and development
organization. The 42,000 square foot site is located in The Technology Centre of
New Jersey in North Brunswick. The new facility helps to place the Company in a
unique position to be a full-service resource for pharmaceutical and
biotechnology companies throughout the drug development cycle.

The Company spent approximately $19,619, $14,267 and $14,255 in 2001, 2000
and 1999, respectively, on research and development efforts.

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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 life sciences companies for
developing and maintaining its market position.

The Company currently owns approximately 160 United States patents which
have various expiration dates beginning in 2002 through 2019 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.

The Company has trademarks registered in the United States and a number of
other 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), Poietics(TM),
Clonetics(TM), Auto-LAL(TM), SeaPlaque(TM), IsoGel(R), NuSieve(R), Reliant(TM),
Long Ranger(R), Singel(R), Latitude(R) and PAGEr(TM).

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

COMPETITION

Because of the nature of the Company's products in its Human Health segment
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.

In the Biosciences segment, 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 and performance, quality, depth
of product line, price, technical support, timely product development and speed
of delivery.

Competition for the Company's Specialty and Fine Chemicals and Animal
Health/Agriculture segments 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 is generally
based on product performance, customer service, product quality and pricing.

ENVIRONMENTAL AND SAFETY REGULATIONS AND PROCEEDINGS

General: Certain products manufactured by the Company involve 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 conducts detailed environmental due diligence on all
acquisitions. The Company's acquisitions were made with consideration of any
known environmental conditions. Also, as with other companies engaged in the
chemical business, risks of substantial costs and liabilities are inherent in
certain

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plant operations and certain products produced at the Company's plants.
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. 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.

Known environmental matters which may result in liabilities to the Company
and the related estimates and accruals are summarized in Note #23 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
$3,900 in 2001, $5,300 in 2000, and $5,600 in 1999 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, 2001 the Company had 2,079 employees worldwide (817 of whom
were from international operations) compared with 1,852 employees at December
31, 2000 and 1,860 at December 31, 1999.

All hourly plant employees at the Bayonne, New Jersey facility are
represented by Local 2-406 of the Paper, Allied and Chemical Workers
International Union under a contract ex ring September 17, 2003; the hourly
plant employees at the Carlstadt, New Jersey plant are represented by Local 76B
of the Amalgamated Industrial Union of Jamaica, New York under a contract ex
ring November 30, 2003; 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, 2004. Nordic, Profarmaco, Conti and
Irotec production, administration, scientific and technical employees are
represented by various local and national unions. The Company believes its labor
relations are satisfactory.

SEASONALITY

Like many other businesses in the life sciences and specialty and fine
chemicals industries, the Company experiences some seasonality primarily due to
planned plant shutdowns by the Company and certain customers in the third
quarter. 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.

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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 2001, 2000 and 1999 amounted to $45,041, $50,910 and $40,610,
respectively. Sales from international operations were $232,921 in 2001,
$230,476 in 2000, and $218,389 in 1999. Refer to Note #21 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

ITEM 2 PROPERTIES.

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

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The Company owns all the above facilities and properties, with the
exception of the leased facilities in Nottingham, England, Copenhagen, Denmark,
Baltimore, Maryland and Hopkinton, Massachusetts. The Company also leases 31,000
square feet in North Brunswick, New Jersey for its Center of Technical
Excellence, which has a 10 year term ending March 27, 2010. In addition, the
Company owns a four acre site and buildings in North Haven, CT and 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
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, with proper
lead time, 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
existing Cambrex 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 and
Note #23 to the Cambrex Corporation and Subsidiaries Consolidated Financial
Statements with respect to various proceedings involving the Company in
connection with environmental matters. The Company is party to a number of other
proceedings also discussed in Note #23. Management is of the opinion that while
the ultimate liability resulting from those proceedings, as well as
environmental matters, may have a material effect upon the results of operations
in any given year, they will not have a material adverse effect upon the
Company's liquidity nor its financial position.

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

None

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ITEM 10 EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table lists the executive officers of the Company:

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

Mr. Mack was elected Chairman of the Board of Directors on October 28,
1999. He also retains his position as Chief Executive Officer. 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.

Mr. Glassell was appointed President and Chief Operating Officer, and was
elected as a director in July 2001. Previously, he had been Executive Vice
President and Chief Operating Officer since July 2000. From July 1998 to July
2000 Mr. Glassell held the position of President, Pharmaceutical Group. Mr.
Glassell was appointed President, International in November 1997. Mr. Glassell
was appointed Vice President of Cambrex in November 1994. 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. 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.

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Mr. Guccione was appointed Senior Vice President in January 2001 and Chief
Financial Officer in April 2001. Previously, he held the position of Senior Vice
President, Corporate Development since January 2001. 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, and had
other various positions in Corporate Development at ISP from 1987-1993.

Mr. Thauer was appointed Senior Vice President, Law & Environment in
January 2001. Mr. Thauer was previously 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. Antonelli was appointed Vice President and Treasurer in April 1999. His
prior position was Treasurer which he held since April 1998. He joined the
Company in June 1995 as Director of Taxes. Prior to joining the Company, Mr.
Antonelli was Corporate Tax Manager at InterMetro Industries, a worldwide
manufacturer and distributor of storage and shelving systems. Mr. Antonelli is a
Certified Public Accountant who has worked for PriceWaterhouse, KPMG and Parente
Randolph.

Mr. Bird was appointed Vice President, Corporate Development in January
2002. Since January 2001, he held the position of Vice President, Business
Development, Life Sciences. Prior to that, Mr. Bird served as President,
Biosciences Group since July 1998. Mr. Bird joined the Company in June 1997, as
President of Nepera, Inc. He 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. Carroll was appointed Vice President and Chief Technology Officer,
Pharmaceutical Technology in January 2002. He 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.

Mr. Congiusti was appointed Vice President, Information Technology in
November 1998. Mr. Congiusti joined the Company in September 1994 as Director,
Information Services. Prior to joining the Company, from 1984 to 1994, he held
various senior information systems management positions at International
Specialty Products and American Cyanamid Company.

Mr. Hopkins was appointed Vice President, Finance in April 2001. He joined
the Company in January 1999 as Vice President and Controller. Prior to joining
the Company, from 1988 to 1998, he held various senior financial positions with
ARCO Chemical Company, a manufacturer and marketer of specialty chemicals and
chemical intermediates. Mr. Hopkins is a Certified Public Accountant and was an
Audit Manager for Coopers & Lybrand prior to joining ARCO Chemical.

Dr. Marshak was appointed to the position of Vice President and Chief
Technology Officer, Biotechnology in January 2002. He joined the Company in
August 2000 as Vice President, Research and Development, BioSciences Group.
Prior to joining Cambrex, Dr. Marshak held various Research and Development
positions with Osiris Therapeutics, Inc. from 1999 to 2000, most recently as
Executive Scientific Advisor. From 1986 to 1994 he was a Senior Staff
Investigator with Cold Spring Harbor Laboratory.

Mr. Baldwin was named Chairman Emeritus on October 28, 1999. Mr. Baldwin
was Chairman of the Board from July 1991 to October 28, 1999, 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
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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.

Effective March 5, 1998 the Company's Common Stock, $.10 par value, was
listed on the New York Stock Exchange (NYSE), continuing under the symbol CBM.
From November 15, 1990 to March 5, 1998, the Company's Common Stock had been
traded on the American Stock Exchange (AMEX). The following table sets forth the
closing high and low sales price of the Common Stock as reported on the NYSE:

As of February 28, 2002, the Company estimates that there were
approximately 5,800 beneficial holders of the outstanding Common Stock of the
Company.

The quarterly dividend on common stock was $0.03 for 2001 and 2000.

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, 2001 are derived from
the audited financial statements. The consolidated financial statements of the
Company as of December 31, 2001 and December 31, 2000 and for each of the years
in the three year period ended December 31, 2001 and the report of independent
accountants 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.

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(1) Includes the results of Bio Science from the date of acquisition effective
June 2001, the results of Marathon from the date of acquisition effective
October 2001.

(2) Includes the results of Conti BC NV from the date of acquisition effective
March 2000, the results of Lumitech Limited from the date of acquisition
effective July 24, 2000 and the results of the Arizona Chemical products
from the date of license effective August 2000.

(3) Includes the results of Irotec Laboratories, Ltd. from the date of
acquisition effective March 1999 and the results of BioWhittaker Molecular
Applications, Inc. from the date of acquisition effective July 1999.

(4) Includes royalty income of $19,298 in net revenues related to a technology
license agreement with Mylan Laboratories for the use of intellectual
property.

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

(6) Includes a $14,000 non-recurring charge for in-process research and
development associated with the acquisition of BioWhittaker.

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

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are those which we believe require the
most subjective or complex judgments; often as a result of the need to make
estimates about the effect of matters that are inherently uncertain. The Company
bases its estimates on historical experience and on other various assumptions
that are deemed reasonable by management under each applicable circumstance. A
discussion of our critical accounting policies, the underlying judgments and
uncertainties affecting their application and the likelihood that materially
different amounts would be reported under different conditions or using
different assumptions, is as follows:

Asset Valuations and Review For Potential Impairments

Our review of our long-lived assets, principally fixed assets, goodwill and
other intangibles requires us to initially estimate the undiscounted future cash
flow of these assets, whenever events or changes in circumstances indicate that
the carrying amount of these assets may not be fully recoverable. If such
analysis indicates that a possible impairment may exist, as described in Note 2
to the accompanying financial statements, we are required to then estimate the
fair value of the asset, determined by third party and internal appraisals and
valuations, as deemed appropriate, or estimated discounted future cash flows,
which includes making estimates of the timing of the future cashflows, discount
rates and reflecting varying degrees of perceived risk. The determination of
fair value includes numerous uncertainties, such as the impact of competition on
future sales and margin, operating, selling and administrative costs, interest
and discount rates, technological changes, consumer demand and governmental
regulations. We believe that we have made reasonable estimates and judgments in
determining whether our long-lived assets and goodwill have been impaired,
however, if there is a material change in the assumptions used in our
determination of fair values or if there is a material change in economic
conditions or circumstances influencing fair value, we could be required to
recognize certain impairment charges in the future.

Environmental and Litigation Contingencies

We periodically assess the potential liabilities related to any lawsuits or
claims brought against us. See Note 23 in the accompanying financial statements
for a discussion of our current environmental and litigation matters, reserves
recorded and our position with respect to any related uncertainties. While it is
typically very difficult to determine the timing and ultimate outcome of these
actions, we use our best judgment to determine if it is probable that we will
incur an expense related to a settlement for such matters and whether a
reasonable estimation of such probable loss, if any, can be made. Given the
inherent uncertainty related to the eventual outcome of litigation and
environmental matters, it is possible that all or some of these matters may be
resolved for amounts materially different from any provisions that we may have
made with respect to their resolution.

Allowance For Doubtful Accounts and Inventory Obsolescence Reserves

The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of customers were to deteriorate, this may result in an
impairment of their ability to make payments to the Company, and additional
allowances may be required.

The Company establishes reserves for its inventories to recognize estimated
obsolescence and unusable items on a continual basis. Market conditions
surrounding products are also considered periodically to determine if there are
any net realizable valuation matters which would require a write down of any
related inventories. If market or technological conditions change, it may result
in additional inventory reserves and write downs deemed necessary by management.

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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.

The following tables show the gross sales of the Company's four segments,
in dollars and as a percentage of the Company's total gross sales for the years
ended December 31, 2001, 2000 and 1999, as well as the gross profit by product
segment for 2001 and 2000.

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2001-2000 GROSS SALES & GROSS PROFIT BY PRODUCT SEGMENT

2001 COMPARED TO 2000

Gross sales in 2001 increased 1.3% to $499,194 from $492,544 in 2000. Sales
in the Human Health (up 3.9%) and Biosciences (up 29.9%) increased compared to
2000 and more than offset the decreases in Animal Health/Agriculture (down 2.5%)
and Specialty and Fine Chemicals segments (down 28.1%).

The effect of foreign currency exchange rates on gross sales for the year
had a negative impact on sales of 1.4% or $7,107 compared to 2000. Gross sales
would have been $506,301 using 2000 exchange rates compared to 2000 sales of
$492,544.

The unfavorable effects of foreign currencies are attributable primarily to
exchange rate fluctuations in the Italian Lira, Swedish Krona, Pounds Sterling
and Irish Punt against the U.S. dollar in 2001.

The Human Health Segment gross sales of $242,995 were $9,109 (3.9%) above
2000 due primarily to higher sales of generics used in cardiovascular, central
nervous systems and gastrointestinal preparations and new product introductions,
including an intermediate used in a product to treat end-stage kidney disease
and actives used in insomnia and prostate cancer treatment products. These
increases were partly offset by the unfavorable impact of foreign currencies
which reduced sales by 2.2% or $5.4 million, and lower sales of a cardiovascular
supplement, due to a price decrease. This price decrease was offset by lower
manufacturing cost reflecting a change in chemical processing. In addition,
lower sales were experienced in a generic used in the treatment of ulcertative
colitis due to competitive pricing pressure and in a gastrointestinal active due
to a customer decision to bring manufacturing in-house.

The BioSciences Segment gross sales of $124,973 were $28,741 (29.9%) above
2000 primarily due to the acquisition of Bio Science in June 2001, and Marathon
in October 2001, as well as increased shipments of cell culture, including
liquid media, flex pack and powder formulations. In addition, endotoxin
detection sales increased due to more focused marketing and production efforts.

The Animal Health/Agriculture Segment gross sales of $54,840 were $1,380
(2.5%) below 2000. This decrease was mainly due to lower sales of Animal Health
and certain crop protection products; primarily 3-Nitro, 2-Cyanopyridine and
pyridine derivatives.

The Specialty and Fine Chemicals Segment gross sales of $76,386 were
$29,820 (28.1%) below 2000 due to lower sales in telecommunications, coatings,
performance enhancing products and weak photographic demand. Reduced sales in
telecommunications and coating products have been influenced by a general
economic slowdown in those industries. In addition, lower sales of a
polycarbonate additive were due to a customer decision to move production
in-house.

Export sales from U.S. businesses of $45,041 in 2001 compared to $50,910 in
2000. International sales from European operations totaled $232,921 in 2001
compared to $230,476 in 2000.

Total gross profit of $179,335 was $1,840 above 2000 due to increased gross
profit in the Bioscience Segment, due to higher volume in the base businesses,
and the impact of two contract biopharmaceutical manufacturing acquisitions
completed during the year. The Human Health Segment also benefited from

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increased volume, as well as favorable product mix. These increases resulted
despite special charges for inventory write-offs recorded in the fourth quarter
2001 of $2 million in the Bioscience Segment and $2.5 million in the Human
Health Segment for discontinued products manufactured at Rutherford Chemical
facilities (See Note 17). The Bioscience segment inventory write-off was related
to excess and obsolete inventories. The higher gross profits in the Life Science
Segments were partly offset by lower gross profits and margins in the Specialty
and Fine Chemical and Animal Health/Agricultural Segments, both of which were
primarily impacted by lower volumes. In addition, the Animal Health/Agricultural
Segment was impacted by increased raw material and energy costs during the year.
The overall gross margin of 35.9%, including the fourth quarter inventory write
downs of $4.5 million, was approximately flat compared to the prior year.

Selling, general and administrative expenses as a percentage of gross sales
were 18.0% in 2001 versus 16.7% for 2000. Administration costs increased due to
the added costs and higher amortization expense associated with the June 2001
Bio Science Contract Production Corporation acquisition, the full year impact of
the August 2000 Arizona product line license and October 2001 Marathon
acquisition, as well as additional sales and marketing costs in the Bioscience
Segment. In addition, the Company experienced higher insurance premiums during
2001 compared to 2000.

In the fourth quarter, as a result of the Company's previously announced
business restructuring which created Rutherford Chemicals, Inc., together with
an impairment charge within those businesses, the Company incurred Restructuring
and Other charges of $18.6 million, comprised of asset write-downs of $17.2
million and severance costs of $1.4 million (See Note 17).

The Company increased its provision for potential settlements and legal
costs related to Vitamin B-3 litigation by $4.4 million.

Research and development expenses of $19,619 were 3.9% of gross sales in
2001, and were above 2000 levels by $5.4 million or 1% of gross sales. This
increase was associated with the strengthening of the R&D group in the
Biosciences Segment and costs associated with the expansion of the Cambrex
Center of Technical Excellence.

The operating profit in 2001 was $46,680, a decrease of 42.4% (8.5%
excluding the effect of the Restructuring and other charges, inventory write
downs and the Vitamin B-3 accrual) compared to 2000. This decrease, excluding
the special charges, primarily reflects weakness in the gross margin and profit
in the non-life science businesses, higher Research and Development spending and
amortization costs associated with acquisitions. This decrease is partly offset
by the higher gross profit in the Life Science businesses.

Net interest expense of $10,567 in 2001 reflected a decrease of $920 from
2000 reflecting lower average interest rates, partly offset by a higher average
debt balance due to financing of acquisitions and lower interest income in 2001
due to a temporary cash buildup in 2000. The average interest rate was 5.2% in
2001 versus 6.7% in 2000.

The provision for income taxes in 2001 resulted in an effective rate of 27%
versus 29% in 2000. The decrease in the tax rate was due to the favorable
outcome of tax audits and R&D tax credit programs. In addition, the Company
continues to benefit from international tax treaties and foreign income taxed at
a lower overall effective tax rate as compared to the U.S. statutory rate.

The Company's net income in 2001 decreased to $26,565 (which includes
$20,057 after-tax impact of restructuring, Vitamin B-3 provision and other
charges) compared with net income of $49,605 in 2000.

2000 COMPARED TO 1999

Gross sales in 2000 increased 1.6% to $492,544 from $484,560 in 1999. Sales
in the Human Health (up 3.6%), Biosciences (up 14.7%), and Animal
Health/Agriculture (up 1%) segments increased compared to 1999 and more than
offset the decrease in the Specialty and Fine Chemicals Segment (down 11%).

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The effect of foreign currency exchange rates on gross sales for the year
resulted in a negative impact on sales of 3.4% or $16,658 compared to 1999.
Gross sales would have been $509,202 using 1999 exchange rates compared to 1999
sales of $484,560.

The unfavorable effects of foreign currencies are attributable primarily to
significant exchange rate fluctuations in the Italian Lira, Swedish Krona, Pound
Sterling and Irish Punt against the U.S. dollar in 2000.

The Human Health Segment gross sales of $233,886 were $8,226 (3.6%) above
1999 due primarily to sales generated by the acquisition of Irotec in Ireland in
March 1999 and Conti in Belgium in March 2000, new U.S. business related to a
cardiovascular reformulation, as well as other new products, and increased sales
of a cough suppressant ingredient. These increases were partially offset by
lower sales of gastro-intestinal products and the unfavorable impact of foreign
currency which reduced segment sales 5.0%. The Company also eliminated certain
lower margin x-ray products which were under pricing pressure.

The BioSciences Segment gross sales of $96,232 were $12,345 (14.7%) above
1999 primarily due to the acquisition of BioWhittaker Molecular Applications,
Inc. (formerly the BioProducts business of FMC Corporation) in July 1999, as
well as increased shipments of cell culture and electrophoresis products. The
segment sales were lower as a result of decreased emphasis on serum and
allergy/diagnostic sales coupled with supply issues for LAL (endotoxin
detection) and certain cell products.

The Animal Health/Agriculture Segment gross sales of $56,220 were $525 (1%)
above 1999. This increase was mainly due to increased sales of agricultural
intermediates; primarily 2-Cyanopyridine and pyridine derivatives. Animal Health
products were also above 1999 due to increased shipments of a poultry feed
additive. These increases were partially offset by lower Vitamin B-3 sales due
to reduced shipments to the animal feed markets and lower prices compared to
1999.

The Specialty and Fine Chemicals Segment gross sales of $106,206 were
$13,112 (11%) below 1999 due to lower specialty additive revenues used in
plastic resins and fuel oil, castor oil based products sold to the commodity
markets, and encapsulants used in telecommunications.

Export sales from U.S. businesses of $50,910 in 2000 compared to $40,610 in
1999. International sales from European operations totaled $230,476 in 2000
compared to $218,389 in 1999.

Total gross profit of $177,495 was $10,332 above 1999 due to the improved
gross margin on the Human Health Segment sales due primarily to increased
volume, favorable product mix and lower spending, the Biosciences Segments'
operating efficiencies and full year impact of the second quarter 1999
acquisition of BioWhittaker Molecular Applications. These increases were
partially offset by declines in the Animal health/ Agriculture Segment, due to
plant operational problems, higher raw material and energy costs, and the
Specialty and Fine Chemicals segment due primarily to lower plant volume. The
gross margin for 2000 was 36.0% versus 34.5% in 1999.

Selling, general and administrative expenses as a percentage of gross sales
were 16.7% in 2000 versus 16.1% for 1999. Administration costs increased due to
the acquisitions of Biowhittaker Molecular Applications in July 1999, Conti in
March 2000 and Irotec in March 1999, and the shutdown of The Humphrey Chemical
Company, Inc. These increases were partially offset by the continued benefit
from the consolidation of administrative functions in the Specialty and Fine
Chemical, and Animal Health/Agriculture businesses, as well as a first quarter
insurance recovery related to previously incurred environmental expenses.

Research and development expenses of $14,267 were 2.9% of gross sales in
2000, and were at the same levels as 1999.

The operating profit in 2000 was $81,024, an increase of 17.1% (7.7%
excluding the effect of Vitamin B-3 accrual) compared to 1999. This increase is
due to the increased sales and improved gross margin.

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Net interest expense of $11,487 in 2000 reflected an increase of $1,764
from 1999 as a result of the additional financing for acquisitions and increased
interest rates. The average interest rate was 6.7% in 2000 versus 6.1% in 1999.

The provision for income taxes in 2000 resulted in an effective rate of 29%
versus 32% (excluding the effect of the $6,000 Vitamin B-3 accrual in 1999). The
decrease in the tax rate was due to the favorable outcome of tax audits, R&D tax
credit programs and reconciliation of actual tax filings with previous accruals.
In addition, the Company continues to benefit from international tax treaties
and foreign income taxed at a lower overall effective tax rate as compared to
the U.S. statutory rate.

The Company's net income in 2000 increased to $49,605 compared with net
income of $44,132 in 1999 (excluding the impact of the $6,000 Vitamin B-3
accrual in 1999).

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operations was $55,186 for the year ended December 31,
2001 compared with $86,672 in 2000. The decrease in cash flow is primarily due
to a decrease in accounts payable and accrued liabilities and higher prepaid
expenses, partially offset by lower inventory purchases and lower accounts
receivable. The decrease in accounts payable and accrued expenses reflects
Vitamin B-3 payments, lower inventory purchases, as well as the timing of
various liability payments. Cash flows used in investing activities included
capital expenditures of $42,948, and the acquisitions of Bio Science Contract
Production Corporation and Marathon Biopharmaceuticals for $146,640. Cash flows
provided from financing activities of $137,102 included net borrowings of debt
of $133,007, payments of $3,075 in dividends and the purchase of treasury stock
of $3,901 partially offset by $11,016 in proceeds from the exercise of stock
options.

Capital expenditures were $42,948 in 2001, $39,456 in 2000 and $30,529 in
1999. In 2001, part of the funds were used for a water treatment plant at
Profarmaco Srl in Italy, a laboratory upgrade at the Nordic Synthesis AB
facility in Sweden, operating and financial systems upgrades at the BioWhittaker
facility in Maryland and a number of miscellaneous plant upgrades throughout the
Company.

On November 29, 2001, the Company obtained new credit facilities from a
group of banks led by JPMorganChase as lead arranger and administrative agent.
The credit facilities provide for an aggregate amount of $430 million,
consisting of a 364-day renewable, senior revolving credit facility for
$161,250, and a 5-year senior revolving credit facility in the amount of
$268,750. The 5-year agreement will expire in November 2006. The new agreements
renew and extend the approximately $300 million of existing bank debt which was
scheduled to mature in September 2002.

This 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 an applicable margin
(ranging from .575% - 1.25%) or (c) Money Market Rate plus an applicable margin
(ranging from .575% - 1.25%). The applicable margin is based upon the ratio of
consolidated funded indebtedness to consolidated EBITDA of the Company.
Additionally, the Company pays a commitment fee of between .15% to .30% on the
entire portion of the Agreement. The 2001 and 2000 average interest rates were
5.2% and 6.7%, respectively.

In June 2001 the Company borrowed approximately $120 million to finance the
acquisition of the Bio Science Contract Production Corporation ("Bio Science")
manufacturing business in Baltimore, Maryland. The Company also borrowed
approximately $17 million to finance the acquisition of CoPharma, Inc.
("Marathon") located in Hopkinton, Massachusetts in October 2001.

The undrawn borrowing availability under the Agreement as of December 31,
2001 was $131,650. There was $298,350 outstanding as of December 31, 2001.

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At December 31, 2001 our contractual obligations with initial or remaining
terms in excess of one year were as follows:

See Notes 11 and 22 in the accompanying financial statements for additional
information regarding our debt and other commitments.

Management believes that existing sources of capital, together with cash
flows from operations, will be sufficient to meet foreseeable cash flow
requirements. A key to our access to liquidity is the maintenance of our strong
long-term credit ratings and ability to meet debt covenants to maintain certain
levels of net worth, an interest coverage ratio and leverage ratios. The company
met all bank covenants during 2001 and does not anticipate any covenant
compliance issues in the coming year. Management also believes that the company
will maintain its strong long-term credit ratings. Any events which change the
status of our ability to meet debt covenants or maintain our credit ratings
could adversely impact our ability to fund operations.

Our forecasted cash flow from future operations may be adversely affected
by various factors including, but not limited to, declines in customer demand,
increased competition, the deterioration in general economic and business
conditions, as well as other factors. Any change in the current status of these
factors could adversely impact the Company's ability to fund operating cash flow
requirements.

FINANCIAL INSTRUMENTS

The Company is exposed to market risks arising from adverse changes in
interest rates and foreign currency exchange rates. In the normal course of
business, the Company uses a variety of techniques and instruments, including
derivatives, as part of its overall risk management strategy.

Currency Risk Management

The Company's primary market risk relates to exposure to foreign currency
exchange rate fluctuations on transactions entered into by international
operations which are primarily denominated in the U.S. dollar, Euro currency,
and British pound sterling. The Company currently uses foreign currency exchange
forward contracts to mitigate the effect of short-term foreign exchange rate
movements on the Company's operating results. The net notional amount of these
contracts at December 31, 2001, excluding $3,282 of inter-company contracts, was
$40,009, which the Company estimates to be approximately 67% of the non-local
currency exposure during the period. Unrealized foreign exchange contract losses
do not subject the Company's actual results to risk as gains or losses on these
contracts generally offset gains or losses on the transactions that are hedged.

Given the unlikely scenario that the operating companies' non-local
currency collections match their forecast, and that all exchange rates move 10%
against their local currencies, no more than $2,002 of pre-tax profits for a
twelve-month period would be at risk. This is based on a non-hedged risk of
$20,020. This residual risk allows for an over-forecasting margin of error and
prevents over hedging of actual operating risk. As of December 31, 2001, the
combined non-local currency forecasted net collections amounted to $92,692.
Offsetting this exposure are the expected $28,484 U.S. dollar inter-company
payments from the combined European sites. The remaining $64,208 forecasted
exposure was partially hedged ($44,188) with major banks to reduce the
non-hedged risk to $20,020.

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Interest Rate Management

Each of the interest rate options in the Revolving Credit Agreement
includes floating rates. This arrangement has the advantage of making lower
interest rates available in a declining market. However, it also exposes the
company to any upward swings in interest rates. For example, based on the
company's current net debt outstanding, an annual interest rate increase of 100
basis points would increase interest expense and thus decrease the company's
after-tax profitability by $1,892.

The Company has employed a plan to control interest rate risk. To limit the
risk of interest rates rising above a tolerable level, the Company would pay a
premium now in order to obtain a fixed interest rate at a predetermined cost in
the future. That premium, or Swap, stabilizes interest costs by converting
floating or variable rates to fixed rates through a contract with a financial
institution. We monitor the Company's debt position and market trends to protect
it from any unforeseen shifts in interest rates.

As of December 31, 2001, the Company had ten interest rate Swaps in place
with an aggregate notional value of $100,000, at an average rate of 5.39%, and
with varying maturity dates through the year 2005. The Company's strategy has
been to cover approximately 40% of outstanding bank debt with interest rate
protection. At December 31, 2001, the coverage is approximately 34% as the
Company is considering several fixed rate financial transactions which would
increase the proportional amount of fixed rate debt.

ENVIRONMENTAL

In connection with laws and regulations pertaining to the protection of the
environment, the Company is a party to several environmental remediation
investigations and cleanups and, along with other companies, has been named a
"potentially responsible party" for certain waste disposal sites (Superfund
sites). Each of these matters is subject to various uncertainties, and it is
possible that some of these matters will be decided unfavorably against the
Company. The Company had accruals, included in current accrued liabilities and
other non-current liabilities, of $1,400 and $2,300 at December 31, 2001 and
2000, respectively, for costs associated with the study and remediation of
Superfund sites and the Company's current and former operating sites for matters
that are probable and reasonably estimable. Based on currently available
information and analysis, the Company's accrual represents management's best
estimate of what it believes are the reasonably possible and estimated
environmental cleanup related costs of a non-capital nature. During the past
three-year period, cash payments for environmental cleanup related matters were
$0, $0 and $200 for 2001, 2000 and 1999, respectively. There were no provisions
for environmental contingencies during the past three-year period. The Company
reduced reserves by approximately $900 and $1,100 during 2001 and 2000,
respectively, as a result of revised estimates. In addition, the Company settled
certain environmental claims involving the Cosan Chemical Corporation (a
subsidiary) with insurance companies for $1,812 in 2000 and $1,150 in 1999.
After reviewing information currently available, management believes any amounts
paid in excess of the accrued liabilities will not have a material effect on its
financial position or results of operations. However, these matters, if resolved
in a manner different from those assumed in the current estimates could have a
material adverse effect on financial condition, operating results and cash flows
when resolved in a future reporting period.

LITIGATION

The Company and its subsidiary Profarmaco S.r.l. ("Profarmaco") were named
as defendants in a proceeding instituted by the Federal Trade Commission ("FTC")
on December 21, 1998, in the United States District Court for the District of
Columbia. The complaint alleges that exclusive license agreements which
Profarmaco entered into with Mylan Laboratories, Inc. ("Mylan") covering the
drug master files for (and therefore the right to buy and use) two active
pharmaceutical ingredients ("APIs"), lorazepam and clorazepate, were part of an
effort on Mylan's part to restrict competition in the supply of lorazepam and
clorazepate and to increase the price charged for these products when Mylan sold
them as generic pharmaceuticals. The complaint further alleges that these
agreements violate the Federal Trade Commission

- ---------------
(dollars in thousands, except share data)
22

Act, and that Mylan, Cambrex, Profarmaco, and Gyma Laboratories of America,
Inc., Profarmaco's distributor in the United States, engaged in an unlawful
restraint of trade and cons red to monopolize and attempted to monopolize the
markets for the generic pharmaceuticals incorporating the A s. A lawsuit making
similar allegations against the Company and Profarmaco, and seeking injunctive
relief and treble damages, has been filed by the Attorneys General of 31 states
in the United States District Court for the District of Columbia on behalf of
those states and persons in those states who were purchasers of the generic
pharmaceuticals.

The Company and Profarmaco have also been named in purported class action
complaints brought by private plaintiffs in various state courts on behalf of
purchasers of lorazepam and clorazepate in generic form, making allegations
essentially similar to those raised in the FTC's complaint and seeking various
forms of relief including treble damages.

On February 9, 2001, a federal court in Washington, DC entered an Order and
Stipulated Permanent Injunction as part of a settlement of the FTC and Attorneys
General's suits. Under these settlement documents Mylan agreed to pay over $140
million on its own behalf and on behalf of most of the other defendant companies
including Cambrex and Profarmaco. In the Order and Injunction, the settling
defendants also agreed to monitor certain future conduct.

The Company strongly believes that its licensing arrangements with Mylan
were made in accordance with regulatory requirements and will vigorously defend
the various other lawsuits and class actions. The private litigation continues.
However, the Company and Mylan terminated the exclusive license to the drug
master files as of December 31, 1998. In entering these licensing arrangements,
the Company elected not to raise the price of its products and had no control or
influence over the pricing of its final generic product. Mylan had been fully
covering the costs for the defense and indemnity of Cambrex and Profarmaco under
certain obligations set forth in the license agreements. Cambrex agreed to cover
separate legal defense costs incurred for Cambrex and Profarmaco on a going
forward basis beginning August 1, 2000. These costs have not been and are not
expected to be significant.

On May 14, 1998, the Company's Nepera subsidiary, a manufacturer and seller
of niacinamide (Vitamin B-3), received a Federal Grand Jury subpoena for the
production of documents relating to the pricing and possible customer allocation
with regard to that product. The Company understands that the subpoena was
issued as part of the Federal Government's ongoing anti-trust investigation into
various business practices in the vitamin industry generally. In the fourth
quarter of 1999, the Company reached a settlement with the Government concerning
Nepera's alleged role in Vitamin B-3 violations from 1992 to 1995. On October
13, 2000, the Government settlement was finalized with Nepera entering into a
voluntary plea agreement with the Department of Justice. Under this agreement,
Nepera entered a plea of guilty to one count of price fixing and market
allocation of Vitamin B-3 from 1992 to 1995 in violation of section one of the
Sherman Act and has agreed to pay a fine of $4.0 million. Under the plea
agreement, Nepera was on probation for a one-year period which has ex red. The
fine was paid in February 2001. Nepera has been named as a defendant, along with
several other companies, in a number of private civil actions brought on behalf
of alleged purchasers of Vitamin B-3.

An accrual of $6.0 million was recorded in the fourth quarter 1999 to cover
the anticipated government settlement, related litigation, and legal expenses.
Based on recent discussions with various plaintiffs counsel, as well as current
estimates of expenditures for legal fees, an additional accrual of $4.4 million
was established in the fourth quarter of 2001. As a result, the balance of this
accrual as of December 31, 2001 was approximately $4.4 million. This accrual has
been recorded in Accounts Payable and Accrued Liabilities.

While it is not possible to predict with certainty the outcome of the above
litigation matters and various other lawsuits, it is the opinion of management
that the ultimate resolution of these proceedings should not have a material
adverse effect on the Company's results of operations, cash flows and financial
position. These matters, if resolved in an unfavorable manner, could have a
material effect on the operating results and cash flows when resolved in a
future reporting period.
- ---------------
(dollars in thousands, except share data)
23

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 133 "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 was originally
effective for all fiscal quarters of all fiscal years beginning after June 15,
1999. In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 137 "Accounting for Derivative Instruments and
Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133"
(SFAS 137). SFAS 137 defers the effective date of FASB 133 for all fiscal
quarters of all fiscal years beginning after June 15, 2000 (January 1, 2001 for
the Company). In addition, Statement of Financial Accounting Standard No. 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities"
was issued in June 2000 which amended certain accounting and reporting standards
of SFAS 133. SFAS 133, as amended, requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Changes in the fair
value of the derivative instruments reported in other comprehensive income will
be reclassified as earnings in the period in which earnings are impacted by the
variability of the cash flows of the hedged item. The Company adopted this
statement effective January 1, 2001. Adoption of this statement resulted in an
after-tax reduction of other comprehensive income of $86.

In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141 "Business Combinations" (SFAS 141) and
142 "Goodwill and Other Intangible Assets" (SFAS 142).

SFAS 141 addresses the accounting and reporting requirements for business
combinations. This Statement requires that all business combinations be
accounted for under the purchase method, as well as some additional disclosures.
SFAS 141 is effective for all business combinations completed after June 30,
2001. Adoption of this Statement had no impact on the Company's results.

SFAS 142 addresses the accounting and reporting for goodwill and other
intangible assets. The Statement adopts a more aggregate view of goodwill and
bases the accounting for goodwill on the units of the combined entity into which
an acquired entity is integrated. Goodwill and intangible assets with indefinite
useful lives will not be amortized but rather will be tested for impairment at
least annually. Identifiable intangible assets that have finite lives will
continue to be amortized over their remaining useful lives. SFAS 142 is
effective on January 1, 2002; however, goodwill and intangibles acquired after
June 30, 2001 are subject immediately to the provisions of this Statement. The
impact of this statement did not have a material impact on 2001 results.

The Company will adopt the provisions of SFAS 142 in its first quarter
ended March 31, 2002. The Company is in the process of preparing for its
adoption of SFAS 142 and is making the determinations as to what its reporting
units are and what amounts of goodwill, intangible assets, other assets, and
liabilities should be allocated to those reporting units. The Company will also
evaluate the useful lives assigned to its intangible assets. SFAS 142 requires
that goodwill be tested annually for impairment using a two-step process. The
first step is to identify any potential impairment and, in transition, this step
must be measured as of the beginning of the fiscal year. However, a company has
six months from the date of adoption to complete the first step. The Company
expects to complete that first step of the goodwill impairment test during the
first quarter of 2002. The second step of the goodwill impairment test measures
the amount of the impairment loss (measured as of the beginning of the year of
adoption), if any, and must be completed by the end of the Company's fiscal
year. Intangible assets deemed to have an indefinite life will be tested for
impairment using a one-step process which compares the fair value to the
carrying amount of the asset as of the beginning of the fiscal year, and
pursuant to the requirements of SFAS 142 will be completed during the first
quarter of 2002.

While the Company is currently finalizing the impact that adoption will
have on its 2002 annual results, management believes that there will be no
substantial adjustments in the valuation of its goodwill and other
- ---------------
(dollars in thousands, except share data)
24

indefinite lived intangible assets. The net reduction in amortization expense is
expected to be approximately $13.0 million (before income taxes), or $9.0
million after taxes, versus 2001 amortization of $14.0 million. Only certain
portions of the Company's amortization are deductible for tax purposes.

In August, 2001, the FASB issued Statement of Financial Accounting Standard
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
144). SFAS 144 primarily addresses the financial accounting and reporting for
the impairment or disposal of long-lived assets. SFAS is effective on January 1,
2002. Adoption of this Statement is not expected to impact the Company's
results.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements. Investors should be
aware of factors that could cause Cambrex actual results to vary materially from
those projected in the forward-looking statements. These factors include, but
are not limited to, global economic trends; competitive pricing or product
development activities; markets, alliances, and geographic expansions developing
differently than anticipated; government legislation and/or regulation
(particularly on environmental issues); and technology, manufacturing and legal
issues.

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:

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

- ---------------
(dollars in thousands, except share data)
25

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Cambrex Corporation:

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, stockholders' equity and cash flows
present fairly, in all material respects, the financial position of Cambrex
Corporation and its subsidiaries at December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

Florham Park, New Jersey
January 18, 2002

26

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
27

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
28

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements.
29

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements.
30

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") primarily
provides products and services worldwide to the lifesciences industry. The
Company operates in four segments, Human Health, Biosciences, Animal
Health/Agriculture, and Specialty and Fine Chemicals.

(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 inter-company balances and
transactions have been eliminated in consolidation.

Cash Equivalents

Temporary cash investments with an original maturity of less than three
months and virtually no risk of loss in value are considered cash equivalents.

Derivative Instruments

Derivative financial instruments are used by the Company primarily for
hedging purposes to mitigate a variety of working capital, investment and
borrowing risks. The use and mix of hedging instruments can vary depending on
business and economic conditions and management's risk assessments. The Company
uses a variety of strategies, including foreign currency forward contracts and
transaction hedging, to minimize or eliminate foreign currency exchange rate
risk associated with substantially all of its foreign currency transactions.
Gains and losses on these hedging transaction are generally recorded in earnings
in the same period as they are realized, which is usually the same period as the
settlement of the underlying transactions. The Company uses interest rate
derivative instruments only as hedges or as an integral part of borrowings. As
such, the differential to be paid or received in connection with these
instruments is accrued and recognized in income as an adjustment to interest
expense.

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:

Buildings and improvements............................ 15 to 20 years
Machinery and equipment............................... 5 to 10 years
Furniture and fixtures................................ 3 to 5 years

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 2001, 2000 and 1999 amounted
to $1,482, $1,307 and $1,670, respectively.

31

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Intangible Assets

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

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

The Company continually evaluates the reasonableness of its amortization of
intangibles. If it becomes probable that expected future undiscounted cash flows
associated with intangible assets are less than their carrying value, the assets
are written down to their fair value.

Impairment of Long-Lived Assets

The Company assesses the impairment of its long-lived assets, including
intangible assets, and property, plant and equipment, whenever economic events
or changes in circumstances indicate that the carrying amounts of the assets may
not recoverable. Long lived assets are considered to be impaired when the sum of
the undiscounted expected future operating cash flows is less than the carrying
amounts of the related assets.

Revenue Recognition

Revenues are recognized when products are shipped and title has passed to
the customer. Royalties are recognized as earned in accordance with royalty
agreements. The majority of the agreements call for royalties to be earned based
on a percentage of sales of the licensee.

Income Taxes

Deferred income taxes reflect the differences between assets and
liabilities recognized for financial reporting purposes and amounts recognized
for tax purposes. Deferred taxes are based on tax laws currently enacted.

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 a repatriation of a portion of accumulated foreign
earnings and consider applicable foreign tax credits. The repatriation of
dividends in a prior year occurred due to an expected tax law change, and there
is no plan to repatriate dividends in the future. Cambrex has adopted a policy
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 on their
unremitted earnings. At December 31, 2001, 2000 and 1999, the cumulative amount
of unremitted earnings of non-U.S. subsidiaries was $23,842, $0, and $49,427,
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

32

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Environmental Costs

In the ordinary course of business, like most other industrial companies,
the Company is subject to extensive and changing federal, state, local and
foreign environmental laws and regulations, and has made provisions for the
estimated financial impact of environmental cleanup related costs. The Company's
policy is to accrue environmental cleanup related costs of a non-capital nature
when those costs are believed to be probable and can be reasonably estimated.
The quantification of environmental exposures requires an assessment of many
factors, including changing laws and regulations, advancements in environmental
technologies, the quality of information available related to specific sites,
the assessment stage of each site investigation, preliminary findings and the
length of time involved in remediation or settlement. Such accruals are adjusted
as further information develops or circumstances change. For certain matters,
the Company expects to share costs with other parties. Costs of future
expenditures for environmental remediation obligations are not discounted to
their present value. Recoveries of environmental remediation costs from other
parties are recorded as assets when their receipt is deemed certain.

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 relating to
transactions of a long-term investment nature are accumulated in stockholders'
equity. Gains or losses resulting from foreign currency transactions are
included in the results of operations as a component of other revenues in 2001,
2000 and 1999. Foreign currency net transaction (losses) gains were ($2,051),
($1,157) and $83 in 2001, 2000 and 1999, respectively.

Earnings Per Common 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.

Earnings per share calculations are as follows:

33

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Freight Billing and Costs

The Company bills a substantial portion of freight cost incurred on
shipments to customers. Freight costs are reflected in cost of goods sold and
amounts billed to customers are recorded within net revenues. These amounts are
not material to the Company's operating results.

Reclassification

Certain reclassifications have been made to prior year disclosures to
conform with current year presentation.

(3) ACQUISITIONS

On October 30, 2001, Cambrex Corporation completed the acquisition of
Marathon Biopharmaceuticals ("Marathon"), located in Hopkinton, Massachusetts,
for approximately $26 million in cash through a share purchase of CoPharma Inc.
Marathon is a full-service cGMP manufacturer of biopharmaceutical ingredients
and purified bulk biologics for pre-clinical evaluation, clinical trials and
commercial scale quantities. This acquisition strengthens Cambrex's existing
capabilities for producing pre-clinical, clinical and commercial quantities of
bulk biologics. Assets acquired and liabilities assumed have been recorded at
their fair estimated fair values and are subject to adjustment when additional
information concerning assets and liability valuation is finalized. At the time
of the transaction, pending receipt of asset and liability appraisals, goodwill
was recorded at approximately $16.3 million. Assets acquired include $6.7
million of fixed assets, $0.7 million in inventories, $5.7 million deferred tax
assets and approximately $3.4 million in accounts payable and accrued
liabilities. The goodwill associated with this transaction is not deductible for
tax purposes. Subsequent to the acquisition, the company's formal name was
changed to Cambrex Bio Science MA.

On June 1, 2001, Cambrex Corporation completed its acquisition of the Bio
Science Contract Production Corporation ("Bio Science") biopharmaceutical
manufacturing business in Baltimore, Maryland. The business involves the cGMP
manufacture of purified bulk biologics and pharmaceutical ingredients. The total
purchase price was approximately $120 million in cash, which was funded by an
existing line of credit facility. Additional purchase price payments of up to
$25 million may be made depending on future business performance over the next
four years. Assets acquired and liabilities assumed have been recorded at their
estimated fair values and are subject to adjustment when additional information
concerning asset and liability valuations is finalized. At the time of the
transaction, goodwill was recorded at approximately $122 million, including
incremental deal costs, and is being amortized over 20 years.

On March 2, 2000, the Company completed the acquisition of Conti BC NV, a
manufacturer and supplier of pharmaceutical intermediates and active
pharmaceutical ingredients, located in Landen, Belgium. The Company paid
approximately $6,200 in cash and assumed debt for the business. At the time of
the transaction, goodwill was recorded at $451 and is being amortized over 20
years.

On July 24, 2000, the Company completed the acquisition of Lumitech,
Limited, an emerging company based in Nottingham, United Kingdom, which provides
products and services used in the high throughput screening market for drug
discovery. The Company paid approximately $4,700 in cash at closing, the
majority of which was recorded as patents and other intangibles, with additional
future performance-based payments of up to $16,000 due over the next five years.
No additional performance-based payments have been made to date. The acquired
patents and other intangibles are being amortized over 15-20 years.

On August 29, 2000, Cambrex Corporation announced that its CasChem, Inc.
subsidiary had licensed the castor oil based ester products business from
Arizona Chemical, Jacksonville, FL through a perpetual

34

CAMBREX CORPORATION AND SUBSIDIARIES

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

(3) ACQUISITIONS -- (CONTINUED)

licensing agreement for approximately $4.5 million. The agreement provides
CasChem with process technologies, customer lists, and supply of raw materials.
The ester products are used in personal care and coatings applications. The
license cost is included in intangible assets at December 31, 2000 and is being
amortized over 10 years. As part of the transaction, CasChem entered into a
five-year supply agreement with Arizona Chemical to manufacture a line of tall
oil based products used in the lubricant and lithographic ink markets.

On January 4, 1999, the Company acquired Poietic Technologies, Inc.
("Poietics"), a leading supplier of normal human cells of hematopoietic origin.
The Company paid $2,500 cash and may pay future consideration based on the
performance of the business. No additional payments have been made to date.

On March 12, 1999, Cambrex completed the acquisition of Irotec Laboratories
Ltd. ("Irotec"), a supplier of active pharmaceutical ingredients (APIs) located
in Cork, Ireland. Cambrex paid approximately $37,560 for the business, net of
cash acquired. The excess of the purchase price over the fair value of the net
assets acquired was approximately $9,330 and was recorded as goodwill and is
being amortized over 20 years using the straight-line method.

On July 12, 1999, Cambrex completed the acquisition of FMC Corporation's
BioProducts business, which operates as BioWhittaker Molecular Applications,
Inc. ("BMA"). The business, which serves the life sciences industry, is the
world's largest manufacturer of electrophoresis media based on the polymer
agarose. The transaction includes two operating facilities in Rockland, Maine
and Copenhagen, Denmark. Cambrex paid approximately $38,000 for the business.
The excess of the purchase price over the fair value of the net assets acquired
was approximately $25,420 and was recorded as goodwill and is being amortized
over 20 years using the straight-line method.

On January 9, 1998, Chiragene, a newly formed subsidiary of Cambrex
Corporation, acquired substantially all of the assets of the chiral intermediate
business of Celgene Corporation for approximately $11,328. The purchase
agreement included an upfront payment of $7,500 paid at closing plus future
royalties based upon sales. While the present value of the potential future
royalties was $7,500 based upon a formula disclosed in the purchase agreement,
the amount included in the purchase allocation was $3,750 which represents the
minimum guaranteed royalty payouts. Purchase price in excess of the fair value
of the net assets was approximately $5,000 and was recorded as goodwill and is
being amortized over 15 years.

On May 12, 1998, Cambrex completed the acquisition of certain assets of the
biopharmaceutical manufacturing and distribution business of Boerhinger
Ingelheim Bioproduct Partnership (BIBP) for $3,871, including acquisition cost
of $621. The assets acquired included a state-of-the-art cell culture and media
manufacturing facility in Verviers, Belgium, and inventory for certain cell
culture, endotoxin detection and molecular biology products. The company now
operates as BioWhittaker Europe SPRL.

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. The excess of the purchase price over the fair value of
the net assets acquired was approximately $40,000 and was recorded as goodwill
and is being amortized over 20 years using the straight-line method. 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.

The above acquisitions have been accounted for under the purchase method of
accounting and accordingly the results of operations of the acquisitions are
included in the accompanying consolidated

35

CAMBREX CORPORATION AND SUBSIDIARIES

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

(3) ACQUISITIONS -- (CONTINUED)

financial statements from the date of acquisition. Assets acquired and
liabilities assessed have been recorded at their fair values.

(4) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In July, 2001 the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No.'s 141 "Business Combinations"
(SFAS 141) and 142 "Goodwill and Other Intangible Assets" (SFAS 142).

SFAS 141 addresses the accounting and reporting requirements for business
combinations. This Statement requires that all business combinations be
accounted for under the purchase method, as well as some additional disclosures.
SFAS 141 is effective for all business combinations completed after June 30,
2001. Adoption of this Statement had no impact on the Company's results.

SFAS 142 addressed the accounting and reporting for goodwill and other
intangible assets. The Statement adopts a more aggregate view of goodwill and
bases the accounting for goodwill on the units of the combined entity into which
an acquired entity is integrated. Goodwill and intangible assets with indefinite
useful lives will not be amortized but rather will be tested for impairment at
least annually. Identifiable intangible assets that have finite lives will
continue to be amortized over their remaining useful lives. SFAS 142 will be
effective on January 1, 2002; however, goodwill and intangibles acquired after
June 30, 2001 will be subject immediately to the provisions of this Statement.
The impact of this statement will not have a material impact on 2001 results.

The Company will adopt the provisions of SFAS 142 in its first quarter
ended 3/31/2002. The Company is in the process of preparing for its adoption of
SFAS 142 and is making the determinations as to what its reporting units are and
what amounts of goodwill, intangible assets, other assets, and liabilities
should be allocated to those reporting units. The Company will also evaluate the
useful lives assigned to its intangible assets. SFAS 142 requires that goodwill
be tested annually for impairment using a two-step process. The first step is to
identify any potential impairment and, in transition, this step must be measured
as of the beginning of the fiscal year. However, a company has six months from
the date of adoption to complete the first step. The Company expects to complete
that first step of the goodwill impairment test during the first quarter of
2002. The second step of the goodwill impairment test measures the amount of the
impairment loss (measured as of the beginning of the year of adoption), if any,
and must be completed by the end of the Company's fiscal year. Intangible assets
deemed to have an indefinite life will be tested for impairment using a one-step
process which compares the fair value to the carrying amount of the asset as of
the beginning of the fiscal year, and pursuant to the requirements of SFAS 142
will be completed during the first quarter of 2002.

While the Company is currently evaluating the final impact that the
adoption will have on its 2002 annual results, management believes that there
will be no substantial adjustments in the valuation of its goodwill and other
indefinite lived intangible assets. The net reduction in amortization expenses
is expected to be approximately $13.0 million (before income taxes), versus 2001
amortization of $14.0 million. Only certain portions of the Company's
amortization are deductible for tax purposes.

In August, 2001, the FASB issued Statement of Financial Accounting Standard
No. 144, "Accounting for the impairment or Disposal of Long-Lived Assets" (SFAS
144). SFAS 144 primarily addresses the financial accounting and reporting for
the impairment or disposal of long-lived assets. SFAS will be effective on
January 1, 2001. Adoption of this Statement will have no impact on the Company's
results.

36

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) NET INVENTORIES

Net inventories consist of the following:

(6) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

Depreciation expense amounted to $36,766, $31,939 and $33,118 for the years
ended December 31, 2001, 2000 and 1999, respectively.

(7) INTANGIBLE ASSETS

Intangible assets consist of the following:

Amortization expense amounted to $14,031, $10,155 and $9,210 for the years
ended December 31, 2001, 2000 and 1999, respectively.

37

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:

(9) INCOME TAXES

Income (loss) before taxes consisted of the following:

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

38

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 2001, 2000 and 1999 as follows:

The components of deferred tax assets and liabilities as of December 31,
2001 and 2000 relate to temporary differences and carryforwards as follows:

39

CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES -- (CONTINUED)

Included within the change in the cumulative translation adjustment for the
year ended December 31, 2001 is $443 related to the translation of deferred tax
assets and liabilities of international operations.

Under the tax laws of the various 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
NOL carryforwards aggregated approximately $2,430 and $2,732 at December 31,
2001 and 2000. The change in valuation allowance for the years ended December
31, 2001 and 2000 was $2,196 and $2,689, respectively. A valuation allowance has
been established since management believes that it is not more likely than not
that the full amount of deferred tax assets will be realized.

During 1998, the Company made an election which allowed the Italian
subsidiary to deduct for tax purposes previously non-deductible intangible
assets. The result of this election was a charge to 1998 earnings of $3,420 that
resulted in net favorable tax benefits of $1,326, $1,928, and $1,493 for 2001,
2000 and 1999, respectively, plus $1,259 projected for future years.

(10) SHORT-TERM DEBT

The Company has lines of credit in Italy with local banks (the "Facility").
The Facility is short-term and provides three types of financing with the
following limits: Overdraft Protection of $2,000, Export Financing of $4,000 and
Advances on Uncleared Deposits of $900. The Overdraft Protection and Export
Financing facilities bear interest at varying rates when utilized, however,
Advances on Uncleared Deposits bear no interest.

Short-term debt at December 31, 2001 and 2000 consists of the following:

The 2001 and 2000 average interest rates were 3.9% and 6.9%, respectively.

(11) LONG-TERM DEBT

Long-term debt consists of the following:

(a) On November 29, 2001, the Company obtained new credit facilities from a
group of banks led by JPMorganChase as lead arranger and administrative agent.
The credit facilities provide for an aggregate amount of $430 million,
consisting of a 364-day renewable, senior revolving credit facility for
$161,250, and a
40

CAMBREX CORPORATION AND SUBSIDIARIES

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

(11) LONG-TERM DEBT -- (CONTINUED)

5-year senior revolving credit facility in the amount of $268,750. The 5-year
agreement will expire in November 2006. The new agreements renew and extend the
approximately $300 million of existing bank debt which was scheduled to mature
in September 2002. 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: (1) U.S. Prime rate or (2) LIBOR plus the
applicable margin (ranging from .575% to 1.25%) or (3) Money Market Rate plus
the applicable margin (ranging from .575% to 1.25%). The applicable margin is
adjusted based upon the ratio of consolidated Funded Indebtedness to
consolidated EBITDA of the Company. Additionally, the Company pays a commitment
fee of between .15% to .30% on the entire portion of the Agreement. The 2001 and
2000 average interest rates were 5.2% and 6.7%, respectively.

The credit facilities are primarily used to finance the Company's acquisition
activities. The undrawn borrowing availability under the agreement as of
December 31, 2001 was $131,650.

The Agreement is subject to financial covenants requiring the Company to
maintain certain levels of net worth, an interest coverage ratio and leverage
ratios, as well as a limitation on indebtedness. The Company met all of the bank
covenants during 2001.

(b) The Company assumed six capital leases as part of the acquisition of Irotec
in 1999 of $5,436. These leases are for various plant and equipment expiring in
2006 to be repaid in 28 equal quarterly installments. There is $2,934
outstanding at December 31, 2001. The Company also assumed three capital leases
as part of the acquisition of Bio Science Contract Production Corp. in June,
2001 of $12,100. The leases are for buildings and improvements and phone
systems. There is $11,227 outstanding at December 31, 2001.

The Company assumed a note payable as part of the acquisition of BioWhittaker in
1997 of $1,253. The note, bearing interest at 8%, was payable in annual
installments of $340 and was fully paid off in 2001. There was $289 outstanding
as of December 31, 2000.

Aggregate maturities of long-term debt are as follows:

2002........................................................ $ 2,205
2003........................................................ 2,215
2004........................................................ 2,239
2005........................................................ 1,750
2006........................................................ 299,767
Thereafter.................................................. 4,353
--------
Total............................................. $312,529
========

(12) DERIVATIVES AND FAIR VALUE OF 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
or put and call contracts. However, the Company does not anticipate
non-performance by the counterparties.

Effective January 1, 2001, the Company adopted (SFAS 133) Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities," which establishes accounting and reporting standards for
derivative financial instruments. The Company's policy is to enter into forward
exchange contracts and/or currency options to hedge foreign currency
transactions. This hedging

41

CAMBREX CORPORATION AND SUBSIDIARIES

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

(12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)

strategy 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 exposures to foreign
currency exchange rate fluctuations on transactions entered into by these
international operations which are denominated primarily in U.S. dollars,
Swedish Krona, Euros, 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 substantially offset gains and losses
on the transactions being hedged. The forward exchange contracts have varying
maturities with none exceeding twelve months. The Company makes net settlements
for forward exchange contracts at maturity, based upon negotiated rates at
inception of the contracts. The Company also 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 debt amounts.

All forward and swap contracts outstanding at January 1 and December 31,
2001 have been designated as cash flow hedges and accordingly, changes in the
fair value of derivatives are recorded each period in other comprehensive
income. Changes in the fair value of the derivative instruments reported in
other comprehensive income will be reclassified as earnings in the period in
which earnings are impacted by the variability of the cash flows of the hedged
item. The ineffective portion of all hedges are recognized in current-period
earnings and is immaterial to the Company's financial results. Adoption of this
statement resulted in an after-tax reduction of other comprehensive income of
$86. The unrealized net loss recorded in comprehensive income at December 31,
2001 was $1,770. This amount will be reclassified into earnings as the
underlying forecasted transactions occur. All transition amounts and the balance
of unrealized losses included in comprehensive income at December 31, 2001 will
be recognized in earnings over the next twelve months. The net loss recognized
in earnings related to foreign currency forward contracts during the twelve
months ended December 31, 2001 was $3,144. The net loss on interest rate swap
contracts recognized in interest expense was $1,186 for the twelve months ended
December 31, 2001.

Interest Rate Swap Agreements

The notional amounts provide an indication of the extent of the Company's
involvement in such agreements but do not represent its exposure to market risk.
The following table shows the notional amounts outstanding, maturity dates, and
the weighted average receive and pay rates of interest rate swap agreements as
of December 31, 2001.

42

CAMBREX CORPORATION AND SUBSIDIARIES

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

(12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)

Interest expense under these agreements, and the respective debt
instruments that they hedge, are recorded at the net effective interest rate of
the hedged transactions. The fair value of these agreements were based on quoted
market prices and was ($2,185) at December 31, 2001.

Foreign Exchange Instruments

The table below reflects the notional and fair value amounts of foreign
exchange contracts at December 31, 2001 and 2000.

The carrying amount reported in the consolidated balance sheets for cash
and cash equivalents, accounts receivable, accounts payable and short-term debt
approximates fair value because of the immediate or short-term maturity of these
financial instruments. The carrying amount reported for long-term debt
approximates fair value because approximately 60% of the underlying debt is at
variable rates and reprices quarterly. The remaining amount of long-term debt
has fixed rates through interest swap contracts.

(13) STOCKHOLDERS' EQUITY

The Company has two classes of common shares designated Common Stock and
Nonvoting Common Stock. Authorized shares of Common Stock were 100,000,000 and
60,000,000 at December 31, 2001 and 2000 respectively. Authorized shares of
Nonvoting Common Stock were 730,746 at December 31, 2001 and 2000.

At December 31, 2001, authorized shares of Common Stock were reserved for
issuance as follows:

Stock option plans........................................ 3,832,027
Cambrex savings plan...................................... 169,544
---------
Total shares.................................... 4,001,571
=========

Nonvoting Common Stock with a par value of $.10, 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, 2001 and 2000, no shares of Nonvoting Common
Stock were outstanding.

The Company held treasury stock of 2,234,421 and 2,193,945 shares at
December 31, 2001 and 2000, respectively, and are used for issuance to the
Cambrex Savings Plan.

The Company has authorized 5,000,000 shares of Series Preferred Stock, par
value $.10, issuable in series and with rights, powers and preferences as may be
fixed by the Board of Directors. At December 31, 2001 and 2000, there was no
preferred stock outstanding.

(14) STOCK OPTIONS

The Company has seven stock-based compensation plans currently in effect.
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
non-qualified and incentive stock options (ISO) 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

43

CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCK OPTIONS -- (CONTINUED)

both non-qualified and ISO. The 1994 Plan also provides for the granting of
non-qualified stock options to non-employee directors. The 1996 Performance
Stock Option Plan ("1996" Plan) provides for the granting of non-qualified and
ISO 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 and ISO to non-employee directors. Options granted under the 1996 and
1998 plans vest and become exercisable nine years after date of grant, subject
to acceleration if the publicly traded price of the Company's common stock
equals or exceeds levels determined by the Committee within certain time periods
or in the event of a change in control.

On April 23, 1998, the Company's stockholders approved The 1998 Performance
Stock Option Plan ("1998 Plan"), which provides for the granting of
non-qualified options and ISO intended to qualify as additional incentives to
directors and key employees. Options granted under the 1998 Plan vest and become
exercisable nine years after the date of grant, subject to acceleration if the
publicly traded price of the Company's Common Stock equals or exceeds levels
determined by the Committee within certain time periods or in the event of a
change in control. Options shall have a term of no more than ten years from the
date of grant.

On April 27, 2000, the Company's Board of Directors approved The 2000
Employee Performance Stock Option Plan ("2000 Plan"), which provides for the
granting of non-qualified options and ISO intended to qualify as additional
incentives to non-executive employees. Options granted under the 2000 Plan vest
and become exercisable nine years after the date of grant, subject to
acceleration if the publicly traded price of the Company's Common Stock equals
or exceeds levels determined by the Committee within certain time periods or in
the event of a change in control. Options shall have a term of no more than ten
years from the date of grant. In addition, stock option awards may be
transferred to a member of the Participant's immediate family or to a trust or
similar vehicle for the benefit of such transferee.

On April 26, 2001, the Company's Board of Directors approved The 2001
Performance Stock Option Plan ("2001 Plan"), which provides for the granting of
options intended to qualify as additional incentives to directors and key
employees. Options granted under the 2001 Plan shall vest and become exercisable
nine years after the date of grant, subject to acceleration if the publicly
traded price of the Company's Common Stock equals or exceeds levels determined
by the Committee within certain time periods or in the event of a change in
control. Options shall have a term of no more than ten years from the date of
grant. In addition, stock option awards may be transferred to a member of the
Participant's immediate family or to a trust or similar vehicle for the benefit
of such transferee.

The Company applies the provisions of APB Opinion No. 25 and related
Interpretations in accounting for its stock-based compensation plans. Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS 123) establishes financial accounting and reporting
standards for stock-based employee compensation plans. The Company has 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 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

44

CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCK OPTIONS -- (CONTINUED)

Company's net income, and net income per common share for 2001, 2000 and 1999
would approximate the pro forma amounts below:

The pro forma compensation expense of $9,247, $8,869, and $3,775 for 2001,
2000 and 1999, respectively, was calculated based on the fair value of each
option primarily using the Black-Scholes option-pricing model for
non-performance options and a path dependent model for performance options, with
the following assumptions for 2001, 2000 and 1999, respectively: (i) average
dividend yield of 0.30%, 0.52% and 0.56% (ii) expected volatility of 30.28%,
28.8% and 24.1%, (iii) risk-free interest rate ranging from 3.86% to 5.13%,
5.31% to 6.69%, and 5.32% to 5.42% and (iv) expected life of 4-5 years.

As of December 31, 2001, 5,544,473 options had been exercised. Shares of
Common Stock subject to outstanding options under the stock option plans were as
follows:

45

CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCK OPTIONS -- (CONTINUED)

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

(15) RETIREMENT PLANS

Domestic Pension Plans

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

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

The Company has a Supplemental Executive Retirement Plan for key
executives.

The net periodic pension expense for both 2001 and 2000 is 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.

46

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

The funded status of these plans, incorporating fourth quarter
contributions, as of September 30, 2001 and 2000 is as follows:

The components of net periodic pension cost is as follows:

The aggregate ABO (Accumulated Benefit Obligation) exceeds plan assets by
$8,737 in 2001 for all domestic plans.

47

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

International Pension Plans

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 these plans, incorporating fourth quarter
contributions, as of December 31, 2001 and 2000 is as follows:

The components of the net periodic pension cost is as follows:

48

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

The aggregate ABO for international plans exceeds plan assets by $5,357 in
2001.

The Company's net pension costs for U.S. and foreign plans included in
operating results amounted to $2,888, $3,066 and $3,579 in 2001, 2000 and 1999,
respectively.

BioWhittaker had 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 was 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. Effective May, 1999,
BioWhittaker no longer has a separate plan and is covered by the Cambrex plan.
Total target plan expenses amounted to $171 in 1999.

Savings Plan

Cambrex makes available to all employees a savings plan as permitted under
Sections 401(k) and 401(a) of the Internal Revenue Code. Employee contributions
are matched in part by Cambrex. The cost of this plan amounted to $936, $1,393
and $1,391 in 2001, 2000 and 1999, respectively.

Other

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, 2001 and 2000 there is
$1,979 and $2,030, 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,
2001 and 2000 is $1,979 and $2,030 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, 2001 and 2000 are 255,235 and 267,559,
respectively, and are included as a reduction of equity at cost. The value of
the shares held in trust and the corresponding liability of $1,369 at December
31, 2001 have been recorded in equity. 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.

49

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)

The Company elected to amortize the transition obligation of $1,853 over
twenty years. The net effect upon 2001, 2000 and 1999 pretax operating results,
including the amortization of the transition obligation, resulted in a cost of
$308, $325, and $323, respectively.

The periodic postretirement benefit cost includes the following components:

The discount rate used to determine the accumulated postretirement benefit
obligation was 7.50% and 8.00% in 2001 and 2000, respectively. The assumed
health care cost trend rate used to determine the accumulated postretirement
benefit obligation is 7% in 2001 (8% in 2000), declining ratably to 6.5% in 2002
and thereafter. A one-percentage-point increase in the assumed health care cost
trend rate would increase the accumulated postretirement benefit obligation by
$52 and would increase the sum of interest and service cost by $8. A
one-percentage-point decrease would lower the accumulated postretirement benefit
obligation by $58 and would raise the sum of interest and service cost by $9.

The cost of all health and life insurance benefits is recognized as
incurred and was approximately $3,912, $3,716, $3,312 in 2001, 2000 and 1999,
respectively. The cost of providing these benefits for the 207, 241 and 259
retirees in 2001, 2000 and 1999, respectively, is not separable from the cost of
providing benefits for the 1,262, 1,018, and 1,052 active U.S. employees in
2001, 2000 and 1999, respectively.

(17) RESTRUCTURING AND OTHER CHARGES

On November 30, 2001, the Company announced a plan to realign its
businesses which included the creation of Rutherford Chemicals, Inc., in
recognition of the Company's strategy to focus on the Life Sciences businesses.
In addition, on November 30, 2001 the Company announced its commitment to a
restructuring and cost savings program which includes impaired assets,
severance, and other costs related to the realignment

50

CAMBREX CORPORATION AND SUBSIDIARIES

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

(17) RESTRUCTURING AND OTHER CHARGES -- (CONTINUED)

of the businesses. The restructuring and cost savings program was largely
executed in the fourth quarter of 2001, with the remaining actions to be
completed by the end of 2002.

In the fourth quarter, Cambrex recorded special pre-tax charges of $23.1
million, the majority of which were non-cash items. As a result of the Company's
previously announced business restructuring which created Rutherford Chemicals,
Inc., together with an impairment charge within those businesses, the Company
incurred $18.6 million of charges to operating expense, composed of asset
write-downs of $17.2 million and severance costs of $1.4 million. The Company
also incurred $4.5 million of inventory write-downs charged to cost of sales,
consisting of $2.5 million associated with discontinued products manufactured at
Rutherford Chemical facilities and a separate $2 million Biosciences inventory
charge.

The asset write-downs consisted primarily of fixed asset write-offs and
impairments. A $10.0 million impairment charge was recorded on certain assets at
one of the Company's domestic chemical sites, based on the estimated fair value
of the assets determined by discounting the expected future cash flows. A $1.6
million impairment was also recorded related to an unused chemical facility to
recognize its estimated current fair value. In addition, a $5.6 million charge
was recorded to write-off fixed assets related to discontinued product lines at
another of the Company's domestic chemical sites.

Severance charges, which apply largely to the Company's various chemical
sites, relate to involuntary terminations of approximately 62 employees. All
affected employees received notification in the fourth quarter 2001. As of
December 31, 2001 all but one employee has been terminated.

The following table displays the activity related to the restructuring and
other charges through December 31, 2001:

(18) INSURANCE CLAIM

The Company experienced mechanical problems with a reactor located in one
of the Company's chemical facilities in both August and December 2000 which
resulted in extended plant downtime and interruption in product supply.
Consequently, sales and production of certain products were curtailed throughout
2001. Interim inspection and mechanical repairs were made to the reactor and the
reactor operated at reduced capacity for most of 2001. A replacement reactor was
installed in the fourth quarter 2001. The Company has incurred costs associated
with the reactor replacement and plant downtime that are in the process of being
reviewed by insurance carriers. The Company currently estimates that the total
amount of the claim will be approximately $13.0 million. The Company has
received progress payments on the claim and, although the claim is not yet fully
resolved, it is management's opinion, based upon a letter received documenting
the review performed and opinion of an independent insurance expert, that all
costs incurred will

51

CAMBREX CORPORATION AND SUBSIDIARIES

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

(18) INSURANCE CLAIM -- (CONTINUED)

be covered under the Company's insurance policies. As such, a receivable, which
is reflected in Other Current Assets, has been recorded in the amount of the
costs incurred to date, subject to deductible levels. However, in the unlikely
event that certain costs are deemed to be non-recoverable, the effect on the
income statement, balance sheet and statement of cash flows would not be
material.

(19) OTHER INCOME AND EXPENSE

The Other-net component of Other (income) expense was $(277), $(329) and
$555 for 2001, 2000 and 1999, respectively. 2001 consisted primarily of gains on
a marketable security, classified as trading, royalty and miscellaneous income
partly offset by asset write-offs. Included in 2000 were gains on foreign
exchange and miscellaneous non-recurring lab services. Included in 1999 are
various costs associated with loss on sale of assets and other miscellaneous
expenses.

(20) SEGMENT INFORMATION

The Company is involved principally in the manufacturing and marketing of
products which include: Human Health, which include Active Pharmaceutical
Ingredients produced under Food and Drug Administration (FDA) regulation for use
in prescription drug products, Pharmaceutical Intermediates produced in current
Good Manufacturing Practices (cGMP) facilities for use in the production of
pharmaceuticals and over-the-counter drug products, Imaging Chemicals used in
x-ray media, Personal Care Ingredients used in cosmetics and for the
pharmaceutical market, and Nutraceuticals used in health products; Biosciences,
consisting of cell culture and endotoxin detection products; Animal
Health/Agriculture products including Vitamin B-3 used in feed additives,
Agricultural Intermediates used in crop protection, and Animal Health products
used as feed additives; and the Specialty and Fine Chemical segment which
includes Performance Enhancing Chemicals used in photography, pigments,
specialty polymers, fuel/oil additives, catalysts, and other specialty
additives, and Polymer Systems products used in coatings, telecommunications,
electronics and engineering plastics. Many of the Company's subsidiaries operate
in more than one of these segments. The key exceptions are BioWhittaker, BMA,
Bio Science and Marathon, which solely comprise the biosciences segment. The
Company has provided financial information in order to show Gross Sales and
Gross Profit by segment. All other financial information is available only for
the Biosciences Segment and for all other segments combined. The Company
allocates Corporate expenses and interest to each of its subsidiaries. The
interest allocation is based on 12% of subsidiary working capital and 9% of net
property, plant and equipment. No customer accounts for more than 10% of
consolidated revenues.

The Company announced in late November 2001 a plan to realign its
businesses in recognition of the Company's strategic emphasis on the growing
opportunities in the life sciences industry. Effective January 1, 2002, the
operating units that primarily produce specialty and fine chemicals, and animal
health and agriculture products were combined under a new subsidiary, Rutherford
Chemicals, Inc. The chemical company will include CasChem, Inc., Bayonne, New
Jersey; Cosan Chemical Corporation, Carlstadt, New Jersey; Heico Chemicals,
Inc., Delaware Water Gap, Pennsylvania; Nepera, Inc., Harriman, New York;
Zeeland Chemicals, Inc., Zeeland, Michigan; and Seal Sands Chemicals Ltd.,
Teeside, United Kingdom.

With this realignment, the Company plans to report four operating segments
going forward in 2002: Human Health, Biosciences, Rutherford Chemical and All
Other.

52

CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) SEGMENT INFORMATION -- (CONTINUED)

The following is a summary of business segment information:

53

CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) SEGMENT INFORMATION -- (CONTINUED)

54

CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) FOREIGN OPERATIONS AND EXPORT SALES

Summarized data for the Company's operations for 2001, 2000 and 1999 are as
follows:

Export sales, included in domestic gross sales, in 2001, 2000 and 1999
amounted to $45,041, $50,910, and $40,610, respectively. No country, in any of
the given years, represents more than 10% of these export sales.

(22) 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, 2001, future minimum commitments under non-cancelable operating
lease arrangements were as follows:

Year ended December 31:
2002..................................................... $ 3,504
2003..................................................... 3,258
2004..................................................... 3,087
2005..................................................... 2,800
2006 and thereafter...................................... 5,552
-------
Total commitments................................ $18,201
=======

Total operating lease expense was $3,618, $2,545 and $2,225 for the years
ended December 31, 2001, 2000 and 1999, respectively.

On August 11, 1999, the Company completed a marketing, development and
media supply agreement with Osiris Therapeutics, Inc. allowing the Company's
BioWhittaker subsidiary to manufacture and market adult stem cell products for
the life science research market through an exclusive worldwide license from
Osiris. In addition, BioWhittaker became the exclusive supplier of culture media
to Osiris for the production of human adult stem cells in therapeutic
applications. Cambrex also purchased $5,000 of Osiris Common Stock and has
agreed to purchase an additional $2,000 of Common Stock coincident with an
Osiris initial public offering. The $5,000 paid for Osiris Common Stock is
included in Other Non-current Assets.

(23) CONTINGENCIES

The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary course
of its business activities.

55

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

Environmental

In connection with laws and regulations pertaining to the protection of the
environment, the Company is a party to several environmental remediation
investigations and cleanups and, along with other companies, has been named a
"potentially responsible party" for certain waste disposal sites (Superfund
sites). Each of these matters is subject to various uncertainties, and it is
possible that some of these matters will be decided unfavorably against the
Company. The Company had accruals, included in current accrued liabilities and
other non-current liabilities, of $1,400 and $2,300 at December 31, 2001 and
2000, respectively, for costs associated with the study and remediation of
Superfund sites and the Company's current and former operating sites for matters
that are probable and reasonably estimable. Based on currently available
information and analysis, the Company's accrual represents management's best
estimate of what it believes are the reasonably possible and estimated
environmental cleanup related costs of a non-capital nature. During the past
three-year period, cash payments for environmental cleanup related matters were
$0, $0 and $200 for 2001, 2000 and 1999, respectively. There were no provisions
for environmental contingencies during the past three-year period. The Company
reversed reserves by approximately $900, and $1,100 during 2001 and 2000,
respectively, as a result of revised estimates. In addition, the Company settled
certain environmental claims involving the Cosan Chemical Corporation (a
subsidiary) with insurance companies for $1,812 in 2000 and $1,150 in 1999,
respectively. After reviewing information currently available, management
believes any amounts paid in excess of the accrued liabilities will not have a
material effect on its financial position or results of operations. However,
these matters, if resolved in a manner different from those assumed in the
current estimates could have a material adverse effect on financial condition,
operating results and cash flows when resolved in a future reporting period.

Litigation

The Company and its subsidiary Profarmaco S.r.l. ("Profarmaco") were named
as defendants in a proceeding instituted by the Federal Trade Commission ("FTC")
on December 21, 1998, in the United States District Court for the District of
Columbia. The complaint alleges that exclusive license agreements which
Profarmaco entered into with Mylan Laboratories, Inc. ("Mylan") covering the
drug master files for (and therefore the right to buy and use) two active
pharmaceutical ingredients ("APIs"), lorazepam and clorazepate, were part of an
effort on Mylan's part to restrict competition in the supply of lorazepam and
clorazepate and to increase the price charged for these products when Mylan sold
them as generic pharmaceuticals. The complaint further alleges that these
agreements violate the Federal Trade Commission Act, and that Mylan, Cambrex,
Profarmaco, and Gyma Laboratories of America, Inc., Profarmaco's distributor in
the United States, engaged in an unlawful restraint of trade and conspired to
monopolize and attempted to monopolize the markets for the generic
pharmaceuticals incorporating the APIs. A lawsuit making similar allegations
against the Company and Profarmaco, and seeking injunctive relief and treble
damages, has been filed by the Attorneys General of 31 states in the United
States District Court for the District of Columbia on behalf of those states and
persons in those states who were purchasers of the generic pharmaceuticals.

The Company and Profarmaco have also been named in purported class action
complaints brought by private plaintiffs in various state courts on behalf of
purchasers of lorazepam and clorazepate in generic form, making allegations
essentially similar to those raised in the FTC's complaint and seeking various
forms of relief including treble damages.

On February 9, 2001, a federal court in Washington, DC entered an Order and
Stipulated Permanent Injunction as part of a settlement of the FTC and Attorneys
General's suits. Under these settlement documents Mylan has agreed to pay over
$140 million on its own behalf and on behalf of most of the other
56

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

defendant companies including Cambrex and Profarmaco. In the Order and
Injunction, the settling defendants also agreed to monitor certain future
conduct.

The Company strongly believes that its licensing arrangements with Mylan
are in accordance with regulatory requirements and will vigorously defend the
various other lawsuits and class actions. The private litigation continues.
However, the Company and Mylan have terminated the exclusive licenses to the
drug master files as of December 31, 1998. In entering these licensing
arrangements, the Company elected not to raise the price of its products and had
no control or influence over the pricing of its final generic product. Mylan had
been fully covering the costs for the defense and indemnity of Cambrex and
Profarmaco under certain obligations set forth in the license agreements.
Cambrex agreed to cover separate legal defense costs incurred for Cambrex and
Profarmaco on a going forward basis beginning August 1, 2000. These costs have
not been and are not expected to be significant.

On May 14, 1998, the Company's Nepera subsidiary, a manufacturer and seller
of niacinamide (Vitamin B-3), received a Federal Grand Jury subpoena for the
production of documents relating to the pricing and possible customer allocation
with regard to that product. The Company understands that the subpoena was
issued as part of the Federal Government's ongoing anti-trust investigation into
various business practices in the vitamin industry generally. In the fourth
quarter of 1999, the Company reached a settlement with the Government concerning
Nepera's alleged role in Vitamin B-3 violations from 1992 to 1995. On October
13, 2000, the Government settlement was finalized with Nepera entering into a
voluntary plea agreement with the Department of Justice. Under this agreement,
Nepera has entered a plea of guilty to one count of price fixing and market
allocation of Vitamin B-3 from 1992 to 1995 in violation of section one of the
Sherman Act and has agreed to pay a fine of $4.0 million. Under the plea
agreement, Nepera was placed on probation for a period of one year which has
ended. The fine was paid in February 2001. Nepera has been named as a defendant,
along with several other companies, in a number of private civil actions brought
on behalf of alleged purchasers of Vitamin B-3.

An accrual of $6.0 million was recorded in the fourth quarter 1999 to cover
the anticipated government settlements, related litigation, and legal expenses.
Based on recent discussions with various plaintiffs counsel, as well as current
estimates of expenditures for legal fees, an additional accrual of $4.4 million
was established in the fourth quarter of 2001. As a result, the balance of this
accrual as of December 31, 2001 was approximately $4.4 million. This accrual has
been recorded in Accounts Payable and Accrued Liabilities.

While it is not possible to predict with certainty the outcome of the above
litigation matters and various other lawsuits, it is the opinion of management
that the ultimate resolution of these proceedings should not have a material
adverse effect on the Company's results of operations, cash flows and financial
position. These matters, if resolved in an unfavorable manner, could have a
material effect on the operating results and cash flows when resolved in a
future reporting period.

57

CAMBREX CORPORATION

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

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

(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) The fourth quarter 2001 includes special charges of $27.5 million ($20.1
million after tax), comprised of restructuring and asset write-downs of
$18.6 million charged to operating expenses, $4.5 million of inventory
write-downs charged to cost of sales, and $4.4 million for a Vitamin B-3
provision.

58

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," "Related Party Transactions" and
"Executive Compensation" in the registrant's definitive proxy statement for the
Annual Meeting of Stockholders, to be held April 25, 2002, 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 under the caption "Executive Officers of the
Registrant."

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:

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

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
pages 64-66

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, 2001:

On December 4, 2001, the registrant filed a report on Form 8-K regarding
the Company's plan to realign its businesses in recognition of the strategic
emphasis on the life sciences industry.

On December 4, 2001, the registrant filed a report on Form 8-K regarding
its new credit facilities.

59

REPORT OF INDEPENDENT ACCOUNTANTS ON

FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of Cambrex Corporation:

Our audits of the consolidated financial statements referred to in our
report dated January 18, 2002 appearing in the 2001 Annual Report to
Shareholders of Cambrex Corporation and its subsidiaries on Form 10-K of Cambrex
Corporation and its subsidiaries also included an audit of the financial
statement schedule listed in Item 14(a) (2) of this Form 10-K. In our opinion,
this financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

Florham Park, New Jersey
January 18, 2002

60

SCHEDULE II

CAMBREX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(DOLLARS IN THOUSANDS)

- ---------------
(1) Reserve of Irotec acquired March, 1999.

(2) Reserve of BMA acquired July, 1999.

61

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/ JAMES A. MACK
------------------------------------
James A. Mack
Chairman of the Board of Directors

Date: March 21, 2002

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.

*By /s/ JAMES A. MACK
--------------------------
James A. Mack
Attorney-in-Fact

63

EXHIBIT INDEX

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

64

EXHIBIT INDEX

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

65

EXHIBIT INDEX

(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.
(C) Incorporated by reference to registrant's Annual Report on
Form 10-K dated June 5, 1989.
(D) Incorporated by reference to the indicated Exhibit to
registrant's Annual Report on Form 10-K for 1989.
(E) Incorporated by reference to the indicated Exhibit to
registrant's Registration Statement on Form S-8
(Registration No. 33-37791).
(F) Incorporated by reference to registrant's Current Report on
Form 8-K dated July 1, 1991.
(G) Incorporated by reference to the registrant's Annual Report
on Form 10-K for 1991.
(H) Incorporated by reference to the registrant's Current Report
on Form 8-K dated April 10, 1992 and Amendment No. 1 to its
Current Report.
(I) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 33-81780) dated July
20, 1994.
(J) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 33-81782) dated July
20, 1994.
(K) Incorporated by reference to registrant's Current Report on
Form 8-K dated October 26, 1994.
(L) Incorporated by reference to the registrant's Annual Report
on Form 10-K for 1994.
(M) Filed herewith.
(N) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 333-22017) 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.
(R) Incorporated by reference to the registrant's Current Report
on Form 8-K dated December 4, 2001.
(S) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 333-57404) dated
March 22, 2001.