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, 2002

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. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No

The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $973,042,420 as of June 30, 2002.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of February 28, 2003, there were 25,859,188 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 2003 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, Rutherford Chemicals and All Other. 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 Company's overall strategy for the Human Health and Biosciences
segments is to focus on niche markets that have global opportunities, build on
strong customer relations to enhance its 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. Niche market focus: The Company participates in niche markets
requiring significant technical expertise.

2. Market leadership: The Company is a leading supplier of essential
products and services to accelerate drug discovery, development and
manufacturing, for which pricing is not the primary determinant of
the buying decision.

3. Continued margin expansion: The Company reviews product and service
profitability on a continuing basis to eliminate those not meeting
operating profit goals and replaces them with products and services
that can generate higher financial returns.

The Company has a number of key strategic initiatives:

1. Continue the transition to a pure-play life sciences company.

2. Increase revenue targets generated by new product introductions
through continued investment in research and development.

3. The Company will drive growth in strategic business segments through
the prudent acquisition of product lines, technologies, and
capabilities to increase the Company's position in its niche markets.

4. The Company will maintain its ongoing commitment to continuous
improvement and cost reduction to improve productivity and manage
costs.

5. The Company will leverage its broad capabilities and reputation
across the market segments in which they participate.

6. The Company plans to introduce or acquire new products and services
that bring the Company closer to the patient and provide life science
testing services.

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 business unit, Rutherford Chemicals, Inc. Rutherford
Chemicals, Inc. includes 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., Middlesbrough, United Kingdom.
In the fourth quarter 2002, the Company announced that it had engaged a
financial advisor to assist the Company in investigating strategic alternatives
for the Rutherford Chemicals segment.

On October 30, 2001, Cambrex completed the acquisition of the Marathon
Biopharmaceuticals ("Marathon") business, located in Hopkinton, Massachusetts,
for approximately $26,000 in cash through a

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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. Goodwill was recorded
at approximately $11,035 and other identifiable intangibles were recorded at
$2,153. Subsequent to the acquisition, the acquired subsidiary's formal name was
changed to Cambrex Bio Science Hopkinton, Inc.

On June 1, 2001, Cambrex 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 $120,000 in cash, which was funded by an existing line of
credit facility. Additional purchase price payments of up to $25,000 may be made
depending on future business performance over the four years following the date
of purchase. No additional performance-based payments have been made to date.
Assets acquired and liabilities assumed have been recorded at their estimated
fair values. Goodwill was recorded at approximately $117,800, including
incremental deal costs. In addition, identifiable intangible assets of $3,382
was recorded. Subsequent to the acquisition, the acquired subsidiary's formal
name was changed to Cambrex Bio Science Baltimore, Inc.

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 $4,500. 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. As part of the transaction, CasChem also entered into a
five-year supply agreement with Arizona Chemical to manufacture a line of toll
oil based products used in the lubricant and lithographic ink markets.

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.
The acquired patents and other intangibles are being amortized over 20 years.
Subsequent to the acquisition, the acquired subsidiary's formal name was changed
to Cambrex Bio Science Nottingham Limited.

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. Subsequent to the acquisition,
the acquired subsidiary's formal name was changed to Cambrex Profarmaco Landen
NV.

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In 2002, the Company changed the names of their life sciences subsidiaries
to leverage capabilities and reputation across the corporation. The new
subsidiary names are listed below:

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 Conti BC NV (now known as Cambrex Profarmaco Landen NV) acquired
in March 2000, Lumitech Limited (now known as Cambrex Bio Science Nottingham
Limited) acquired July 2000, and the Arizona Chemical product lines licensed
in August 2000, are included from dates of acquisition.

(2) Sales from Cambrex Bio Science Baltimore, Inc. acquired in June 2001, and
Cambrex Bio Science Hopkinton, Inc. acquired in October 2001, are included
from dates of acquisition.

Human Health: The Human Health segment is primarily comprised of
pharmaceutical ingredients derived from organic chemistry. Products and services
are supplied globally to innovative and generic drug companies. Products include
active pharmaceutical ingredients and advanced pharmaceutical intermediates.
Services include development and manufacturing services.

The Human Health Segment is classified into four principal product groups:
(1) Active Pharmaceutical Ingredients, (2) Pharmaceutical Intermediates, (3)
Imaging Chemicals, and (4) Other. These products are sold to a diverse group of
more than 1,100 customers, with two customers accounting for more than 10% of
2002 sales in this segment; one a distributor representing multiple customers,
accounting for 15.6%, and a second accounting for 12.7%. Many of these products
are also sold through agents. Also, one active pharmaceutical ingredient makes
up 15.6% of 2002 sales in this segment.
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This table summarizes the gross sales for this product segment:

Human Health sales of $209,074 increased $9,216 or 4.6% including the
favorable effects of foreign currency. Human Health sales growth would have been
1.8% without the currency impact of the weaker U.S. dollar.

Active Pharmaceutical Ingredients ("APIs") are manufactured under Food and
Drug Agency current good manufacturing practices (cGMP) for use as the active
ingredients in prescription and over-the-counter drugs. APIs include active
ingredients used in products for gastro-intestinal, cardiovascular, endocrine,
central nervous system, respiratory, diuretics, anti-infective,
anti-inflammatory, immunology and various other uses. APIs sales of $171,794
were $6,337 or 3.8% above the prior year due primarily to the introduction of an
amphetamine product used to treat attention deficit disorders, higher sales of
gastrointestinal APIs used to treat ulcerative colitis to meet increased demand,
partly offset by lower sales of cardiovascular actives due to customer inventory
reductions and competitive pricing pressures and a new insomnia product shipment
in 2001 for clinical trials which did not repeat in 2002.

Pharmaceutical Intermediates sales of $24,194 were $865 or 3.5% below 2001
primarily due to lower sales of an antihistamine product due to falloff in
customer demand and a 2002 shipment of a new anti-infective product for use in
clinical trials which was less than the 2001 shipment, partially offset by
higher sales of an intermediate used in a therapeutic drug for treatment of
end-stage kidney disease.

Imaging chemicals sales were higher than 2001 by $3,448 or 41.8% due to
higher demand in 2002.

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, cell culture media supplements, and
cell therapy services), endotoxin detection products, electrophoresis and
chromatography products, and contract biopharmaceutical manufacturing services
at clinical and commercial scale for the biotechnology and pharmaceutical
industries. The Company utilizes both fermentation and mammalian cell culture
technologies. Services include media optimization, cell banking and
purification. The Company manufactures more than 1,800 products which are sold
to more than 14,000 customers worldwide with one customer accounting for 10.7%
of 2002 sales in this category.

This table summarizes the gross sales for this product segment:

Gross sales of $163,302 were $38,329 or 30.7% above 2001 due primarily to
the impact of the biopharmaceutical manufacturing acquisitions completed during
the second half of 2001 (sales growth of 9.1% excluding the effect of the
acquisitions), and increased sales of endotoxin protection products reflecting
the

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impact of a more focused sales force and introduction of FDA compliant software
in mid 2002, higher Media and Serum sales (primarily liquid form) due to market
share gains in Europe and strong shipments of Normal Human Cells reflecting
improved product supply and quality. These increases were partly offset by the
impact of the sale of the In Vitro Diagnostic cell business during the first
quarter of 2002. Biosciences segment sales growth would have been 29.0% without
the currency impact of the weaker U.S. dollar.

Rutherford Chemicals: The Rutherford Chemicals segment includes operations
in animal health, agriculture, and specialty and fine chemicals. These products
are used in feed additive, agriculture, photography, pigments, polymers,
fuel/oil addition, catalysts, telecommunications, coatings, electronics,
specialty plastics and other specialty additives. These products are sold to
approximately 1,300 customers with no one customer accounting for over 10% of
2002 sales in this segment.

This table summarizes the gross sales for this product segment:

Gross sales of $129,318 in 2002 declined $14,585 or 10.1% below 2001,
reflecting lower demand and timing of production campaigns for crop protection
products, lower demand for certain performance enhancing chemicals, and
continued weakness in the telecommunications and industrial coatings industries.

All Other: This segment includes specialty and fine chemicals and animal
and health products not manufactured at the Rutherford Chemicals facilities.
These products are sold to approximately 140 customers with one customer
representing 43.8% of 2002 sales in this segment. Also, two products account for
more than 10% of 2002 sales in this segment. An agriculture/animal health
product that accounted for 43.8% and a performance enhancing chemical that makes
up 11.0%.

Gross sales of $20,482 in 2002 were $9,978 or 32.8% below the prior year
period of $30,460, reflecting lower feed additive sales due to customer
inventory management, the impact of a customer bringing in-house the manufacture
of a performance enhancing polymer product, as well as customer inventory
reductions in another performance enhancing polymer product.

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

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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
remaining international markets are served principally through an extensive
network of independent distributors. The Company has implemented e-commerce
software to market and sell these products in the U.S.

For the Rutherford Chemicals segment, 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.

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 4%, 5% and 5% of gross revenues
in 2002, 2001 and 2000, respectively, is produced by the Company by a process
involving the high temperature reaction of acetaldehyde, formaldehyde 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 decreased approximately 20.6% during
2002 after increasing 2.0% in 2001. 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 2002 decreased
approximately 16.0% from 2001 after increasing 16.0% in 2001 from 2000. The
average price of ammonia in 2002 decreased approximately 25.3% from 2001 after
increasing 23.8% in 2001 from 2000. The Company obtains acetaldehyde,
formaldehyde and ammonia 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 Cambrex Bio Science Rockland, Inc. and Cambrex Bio Science
Copenhagen ApS in electrophoresis 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

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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 335 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 $17,629, $19,619 and $14,267 in 2002, 2001
and 2000, respectively, on research and development efforts.

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 120 United States patents which
have various expiration dates beginning in 2003 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 Rutherford Chemicals segment 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.

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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 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 #24 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

Present and Future Environmental Expenditures: The Company's policy is to
comply with all legal requirements of applicable environmental, health and
safety laws and regulations. The Company believes it is in general compliance
with such requirements and has adequate professional staff and systems in place
to remain in compliance. In some cases, compliance can only be achieved by
capital expenditures, and the Company made capital expenditures of approximately
$4,417 in 2002, $3,900 in 2001, and $5,300 in 2000 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, 2002 the Company had 2,216 employees worldwide (980 of whom
were from international operations) compared with 2,079 employees at December
31, 2001 and 1,852 at December 31, 2000.

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 expiring September 17, 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. Cambrex Karlskoga AB, Cambrex Profarmaco Landen NV, Cambrex Profarmaco
Cork Limited, and Cambrex Profarmaco Milano S.r.l. production, administration,
scientific and technical employees are represented by various local and national
unions. The Company believes its labor relations are satisfactory.

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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.

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 2002, 2001 and 2000 amounted to $50,930, $45,041 and $50,910,
respectively. Sales from international operations were $241,113 in 2002,
$232,921 in 2001, and $230,476 in 2000. Refer to Note #22 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

AVAILABLE INFORMATION

This annual report on Form 10-K, as well as the Company's reports on Form
10-Q, and current reports on Form 8-K, are made available free of charge on the
Company's Internet website www.cambrex.com as soon as reasonably practicable
after such material is electronically filed with or furnished to the Securities
and Exchange Commission.

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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 42,000
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, eighty-one acres in
Walkersville, Maryland and a three acre site in Carlstadt, New Jersey. 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 #24 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 #24. 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.

In connection with the restatement disclosed in Note 2 to the accompanying
financial statements, the Company voluntarily contacted and made various
disclosures regarding certain inter-company accounting controls and procedures
to the Securities and Exchange Commission ("SEC"). As a result of the voluntary
disclosures, the SEC began an informal inquiry relating to the inter-company
accounting matter discussed further in Note 2. The Company is fully cooperating
with the SEC's inquiry.

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:

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(1) Resigned effective January 31, 2003.

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. Effective January 31, 2003, Mr. Mack was re-appointed President. 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 has resigned from his positions at Cambrex effective January
31, 2003. Prior to his resignation he was appointed President and Chief
Operating Officer, and 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

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12

lighting fixture manufacturer. From 1985 to January 1988, he was Vice President,
Administration for Lightolier, Inc., a subsidiary of The Genlyte Group, Inc.

Mr. Guccione was appointed Executive Vice President, Corporate Strategy and
Development in December 2002. He also served as Senior Vice President and Chief
Financial Officer from May 2001 through December 2002. 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. Beshar joined the Company on December 5, 2002 as Senior Vice President
and Chief Financial Officer. Prior to joining Cambrex, Mr. Beshar was Senior
Vice President and Chief Financial Officer for Dendrite International. Prior to
Dendrite, he was Executive Vice President, Finance and Chief Financial Officer
for Expanets, Inc. from November 1998 through January 2002. Mr. Beshar has
served as Chief Financial Officer for other businesses in his career and has
been the President and Chief Executive Officer of a company privately owned by
Merrill Lynch Capital Partners.

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, Tax and Treasurer in April
1999. His prior position was Treasurer and Director of Taxation 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. From January 2001 to January 2002, 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.

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.
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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, 2003, the Company estimates that there were
approximately 4,400 beneficial holders of the outstanding Common Stock of the
Company.

The quarterly dividend on common stock was $0.03 for 2002 and 2001.

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, 2002 are derived from
the audited financial statements. The consolidated financial statements of the
Company as of December 31, 2002 and December 31, 2001 and for each of the years
in the three year period ended December 31, 2002 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.

Cambrex Corporation restated its results for the five year period from
1997-2001. This restatement resulted from a fourth quarter 2002 management
review of the inter-company processes and controls which identified certain
discrepancies in the inter-company accounts. Based upon this review, the Company
has determined that certain administrative and other charges were not properly
expensed in these prior periods. The cumulative overstatement of earnings was
approximately $6.1 million before taxes or $5.1 million, after taxes. Selling,
general and administrative expenses were increased in 2001, 2000, 1999 and 1998
by $1.7 million, $3.5 million, $0.2 million and $0.8 million, respectively, and
decreased in 1997 by $0.1 million. Net income was overstated by $1.3 million,
$2.9 million, $0.2 million and $0.8 million in 2001, 2000, 1999 and 1998,
respectively and understated by $0.1 million in 1997. In addition,
reclassifications of certain balance sheet accounts were also determined to be
necessary. The effects of such items and the specific accounts affected are
reflected in Note 2 to the accompanying financial statements. This restatement
did not have any impact on the Company's cash flows nor on 2002 reported results
from operations.

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(1) Includes the results of Cambrex Bio Science Baltimore, Inc. from the date of
acquisition effective June 2001, the results of Cambrex Bio Science
Hopkinton, Inc. from the date of acquisition effective October 2001.

(2) Includes the results of Cambrex Profarmaco Landen NV from the date of
acquisition effective March 2000, the results of Cambrex Bio Science
Wokingham 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 Cambrex Profarmaco Cork Limited from the date of
acquisition effective March 1999 and the results of Cambrex Bio Science
Rockland, Inc. and Cambrex Bio Science Copenhagen ApS from the date of
acquisition effective July 1999.

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15

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:

Revenue Recognition

Revenues are recognized when title to products and risk of loss are
transferred to customers. Additional conditions for recognition of revenue are
that collection of sales proceeds is reasonably assured and the Company has no
further performance obligations.

Sales terms to certain customers include remittance of discounts if certain
conditions are met. Additionally, sales are generally made with a limited right
of return under certain conditions. The Company estimates these rebates and
estimated returns at the time of sale based on the terms of agreements with
customers and historical experience and recognizes revenue net of these
estimated costs. The Company continually monitors the adequacy of procedures
used to estimate these reductions by comparison of estimated reductions to
actual reductions.

Asset Valuations and Review For Potential Impairments

Our review of our long-lived assets, principally fixed assets, 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. Our review of
goodwill is done annually in accordance with SFAS 142 as of December 31
utilizing a discounted cash flow analysis. If such analysis indicates that a
possible impairment may exist, as described in Note 3 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 cash flows, 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 24 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.

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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.

Income Taxes

The Company applies an asset and liability approach to accounting for
income taxes. Deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. The
recoverability of deferred tax assets is dependent upon the Company's assessment
that it is more likely than not that sufficient future taxable income will be
generated in the relevant tax jurisdiction to utilize the deferred tax asset. In
the event the Company determines that future taxable income will not be
sufficient to utilize the deferred tax asset, a valuation allowance is recorded.
The Company's valuation allowances primarily relate to net operating loss
carryforwards in certain state and foreign jurisdictions with little or no
history of generating taxable income.

Research and Development ("R&D"), Including In-Process R&D ("IPR&D")

Many of the Company's products are subject to regulation by governmental
authorities, principally the Food and Drug Administration ("FDA") in the United
States and equivalent authorities in international markets. Research and
development expenses are charged to the consolidated statement of operations
when incurred, as the Company considers that regulatory and other uncertainties
inherent in the development of new products preclude it from capitalizing
development costs.

With respect to completed acquisitions, acquired products or projects which
have achieved technical feasibility, signified by FDA or comparable regulatory
body approval, are capitalized as intangible assets because it is probable that
the costs will give rise to future economic benefits. Estimates of the values of
these intangible assets are subject to the estimation process described in
"Goodwill and Intangible Assets" above.

Acquired products or projects which have not achieved technical
feasibility, (i.e., regulatory approval) are charged to the statement of
operations on the date of acquisition. In connection with its acquisitions, the
Company generally utilizes independent appraisers in the determination of IPR&D
charges. The amount of this charge is determined based on a variety of factors
including the estimated future cash flows of the product or project, the
likelihood of future benefit from the product or project, and the level of risk
associated with future research and development activities related to the
product or project.

Employee Benefit Plans

The Company provides a range of benefits to employees and retired
employees, including pensions, post-retirement, post employment and health care
benefits. The Company records annual amounts relating to these plans based on
the calculations, which include various actuarial assumptions, including
discount rates, assumed rates of return, compensation increases, turnover rates,
and health care cost trend rates. The Company reviews its actuarial assumptions
on an annual basis and makes modifications to the assumptions based on current
rates and trends when it is deemed appropriate to do so. The effect of the
modifications is

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17

generally recorded and amortized over future periods. The Company believes that
the assumptions utilized for recording obligations under its plans are
reasonably based on input from actuaries.

RESTATEMENT OF RESULTS

Cambrex Corporation restated its results for the five year period from
1997-2001. This restatement resulted from a fourth quarter 2002 management
review of the inter-company processes and controls which identified certain
discrepancies in the inter-company accounts. Based upon this review, the Company
has determined that certain administrative and other charges were not properly
expensed in these prior periods. The cumulative overstatement of earnings was
approximately $6.1 million before taxes or $5.1 million, after taxes. Selling,
general and administrative expenses were increased in 2001, 2000, 1999 and 1998
by $1.7 million, $3.5 million, $0.2 million and $0.8 million, respectively, and
decreased in 1997 by $0.1 million. Net income was overstated by $1.3 million,
$2.9 million, $0.2 million and $0.8 million in 2001, 2000, 1999 and 1998,
respectively and understated by $0.1 million in 1997. This restatement did not
have any impact on the Company's cash flows nor on 2002 reported results from
operations.

RESULTS OF OPERATIONS

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

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, 2002, 2001 and 2000, as well as the gross profit by product
segment for 2002 and 2001.

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18

2002-2001 GROSS SALES & GROSS PROFIT BY PRODUCT SEGMENT

2002 COMPARED TO 2001

Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets. The effect
of this adoption was to cease amortization of goodwill and certain
indefinite-lived intangible assets. On a pro-forma basis to reflect FASB No.
142, 2001 net income would have been $34,126 versus the $25,312 reported last
year.

The net income for 2002 was $36,233 versus $25,312 in the same period a
year ago. The 2002 results include special charges, before taxes, of $28,176
($19,738 after taxes) consisting of $9,489 for impaired assets and facility
closure costs in the Rutherford Chemicals business, $3,962 for Rutherford
goodwill impairment, $10,000 for an accrual for vitamin B-3 settlement and
litigation costs, $3,089 for an investment impairment, $586 for a Rutherford
inventory write off and $1,050 for severance costs. The inventory write off is
recorded in Cost of goods sold, the investment impairment is recorded in Other
expenses and all other items above have been charged to operating expenses. In
addition, the 2002 results also include special benefit items, before taxes of
$6,380 ($3,980 after taxes) comprised of a $2,620 benefit from the final
insurance claim settlement related to the previously disclosed reactor outage at
a Rutherford Chemicals site, which is recorded against Cost of goods sold and a
$3,760 favorable arbitration award within Rutherford Chemicals related to a
disputed product line agreement which is recorded in Other income. The award
reimbursed the Company for lost profits for the years 2001 through 2005. All
items have been charged to operating expenses with the exception of the
inventory write off and insurance benefit which are reflected in Cost of goods
sold, the investment impairment and favorable arbitration award which are
reflected in Other expenses. The net special items above reduced income before
taxes in 2002 by $21,796 and net income by $15,758. In 2001, the Company
recorded special charges of $27,475 before taxes ($20,057 after taxes) comprised
of $18,649 for restructuring charges and asset write downs related to the
Rutherford Chemicals business charged to operating expenses, $4,426 of inventory
write downs charged to cost of sales, and $4,400 for a Vitamin B-3 litigation
provision. (See Notes 17, 18, 19 and 24 for further discussion of these special
items).

The reported results reflect higher sales in the Human Health and
Biosciences Segments, higher margins in the Biosciences segment, the favorable
special items noted above, and the reduced amortization expense as a result of
the adoption of FASB No. 142. These items are partly offset by lower sales in
Rutherford

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19

Chemicals and All Other segments, higher administrative expenses and higher
interest costs due to funding the 2001 acquisitions.

Gross sales for 2002 increased 4.6% to $522,176 from $499,194 in 2001.
Sales in the Biosciences and Human Health segments increased compared to 2001
more than offsetting the decrease in the Rutherford Chemicals and All Other
segments.

The effect of foreign currency exchange rates on gross sales for the year
resulted in an increase in sales of $8,975 or 1.7% compared to 2001. Gross sales
would have been $513,201 using 2001 exchange rates compared to 2001 sales of
$499,194. The favorable effects of foreign currencies are attributable primarily
to significant exchange rate fluctuations in the Euro, Swedish Krona and Pounds
Sterling against the U.S. dollar in 2002.

The Human Health Segment gross sales of $209,074 were $9,216 or 4.6% above
2001. Gross sales were above the prior year primarily due to sales of a new
amphetamine product used to treat attention deficit disorder, higher sales of
gastrointestinal API's to meet increased demand, continued growth of a
pharmaceutical intermediate used in therapeutic treatment of end-state kidney
disease, higher market share in imaging products worldwide, and higher sales of
central nervous system API's due to increased worldwide demand. Partly
offsetting these increases was lower sales of cardiovascular actives due to
customer inventory reductions and competitive pressures, lower sales of an
antihistamine product due to fall off in customer demand and the effect of a
smaller shipment made in 2002 vs. 2001 of an anti-infective product for use in
clinical trials. Human Health segment sales growth would have been 1.8% without
the currency impact of the weaker U.S. dollar.

The Biosciences Segment gross sales of $163,302 increased 30.7% in 2002
compared to the prior year period primarily due to the impact of the
biopharmaceutical manufacturing acquisitions completed during the second half of
2001 (sales growth of 9.1% excluding the effect of the acquisitions), and
increased sales of endotoxin protection products reflecting the impact of a more
focused sales force and introduction of FDA compliant software in mid 2002,
higher Media and Serum sales (primarily liquid form) due to market share gains
in Europe and strong shipments of Normal Human Cells reflecting improved product
supply and quality. These increases were partly offset by the impact of the sale
of the IVD cell business during the first quarter of 2002. Bioscience segment
sales growth would have been 29.0% without the currency impact of the weaker
U.S. dollar.

The Rutherford Chemicals Segment gross sales of $129,318 in 2002 declined
$14,585 or 10.1% versus 2001, reflecting lower demand and timing of production
campaigns for crop protection products, lower demand for certain performance
enhancing chemicals, and continued weakness in the telecommunications and
industrial coatings industries. These decreases were partly offset by increased
sales of feed additive and a polymer product produced overseas due to successful
price negotiations with customer.

The All Other Segment gross sales of $20,482 in 2002 were $9,978 or 32.8%
below the prior year period of $30,460, reflecting lower feed additive sales due
to customer inventory management, and the impact of a customer bringing in-house
the manufacture of a performance enhancing polymer product, as well as customer
inventory build-ups on another performance enhancing polymer product.

Export sales from U.S. businesses of $50,930 in 2002 compared to $45,041 in
2001. International sales from European operations totaled $241,113 in 2002
compared to $232,921 in 2001. The $522,176 of sales in 2002 consisted of
$292,743, $190,620, $27,544 and $11,269 to North America, Europe, Asia and rest
of world, respectively.

Gross profit in 2002 was $200,176 compared to $179,335 in 2001. Gross
margin in 2002 increased to 38.3% from 35.9% in 2001. Included in the 2002 gross
margins is a $2,620 benefit from an insurance settlement recorded against Cost
of goods sold. This item concerns a Rutherford Chemicals business. Margins also
include a special charge of $586 in the third quarter 2002 for a Rutherford
Chemicals inventory write-down related to the Rutherford Chemicals asset
impairments. These items increased the overall 2002 gross margin by 0.4%. The
Human Health gross margins were up slightly compared to the prior year due to a
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20

favorable product mix, which was aided by the Company's hedging strategy and
overall higher production in most European plants. The Bioscience segment
margins increased slightly due to favorable product mix and higher volumes in
the base business partly offset by under absorption of fixed costs at the
biopharmaceutical contract manufacturing sites. Excluding the favorable items
discussed above, lower Rutherford Chemicals and All Other segment margins
primarily reflect lower volumes.

Selling, general and administrative expenses as a percentage of gross sales
were 18.9% in 2002, compared to 18.4% (15.8% on a pro-forma basis considering
adoption of SFAS No. 142) for the same period in 2001. Higher administrative
costs, excluding the impact of SFAS 142, were due primarily to the impact of the
second half 2001 biopharmaceutical manufacturing acquisitions, a reduction of
environmental accruals in the second quarter 2001, and higher insurance premiums
and employee benefit expenses in 2002.

Research and development expenses of $17,629 were 3.4% of gross sales in
2002, compared to $19,619 or 3.9% of gross sales in 2001, reflecting staff
reductions mainly in Rutherford Chemicals locations.

The operating profit in 2002 was $59,483 compared to $45,016 in 2001
($57,750 on a pro-forma basis considering adoption of SFAS No. 142). The results
reflect higher sales in the Human Health and Biosciences segments, higher
margins in the Bioscience segment, the favorable insurance settlement noted
above and the reduced amortization expense as a result of the adoption of FASB
No. 142, offset by lower sales in Rutherford Chemicals and All Other segments,
and higher administrative expenses.

Net interest expense of $11,237 in 2002 increased $670 from 2001 reflecting
the higher average debt balance due to financing of the 2001 acquisitions,
partly offset by lower average interest rates. The average interest rate was
4.3% for the year 2002 versus 5.2% in 2001.

The provision for income taxes in 2002 resulted in an effective rate of
24.8% as compared with 27.1% in the same period of 2001. The decrease reflects
the tax effect of the restructuring and special charges, a change in the
geographic mix of income and the impact of the continuing R&D tax credit
programs.

2001 COMPARED TO 2000

Gross sales in 2001 increased 1.4% to $499,194 from $492,544 in 2000. Sales
in Human Health and Biosciences increased 6.6% and 29.9%, respectively compared
to 2000 and more than offset the decreases in Rutherford Chemicals which were
down 15.3% and All Other segments which were down 21.8%.

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 in 2001, 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 $199,858 were $12,438 or 6.6% 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 2.5% or $5.0 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 ulcerative
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 or 29.9% above
2000 primarily due to the acquisition of Cambrex Bio Science Baltimore, Inc. in
June 2001, and Cambrex Bio Science Hopkinton, Inc. in October 2001, as well as
increased shipments of cell culture, including liquid media, flex pack and
powder

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21

formulations. In addition, endotoxin detection sales increased due to more
focused marketing and production efforts.

The Rutherford Chemicals Segment gross sales of $143,903 were $26,017 or
15.3% below 2000 due to lower sales in telecommunications, coatings, and
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.

The All Other Segment gross sales of $30,460 were $8,512 or 21.8% below
2000 due to lower sales of a polycarbonate additive which a customer decided to
move 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. The $499,194 of sales in 2001 consisted of
$281,477, $182,541, $23,393 and $11,783 to North America, Europe, Asia and rest
of world, respectively.

Total gross profit of $179,335 was $1,840 above 2000 due to increased gross
profit in the Biosciences 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
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 $2,000 in the Biosciences segment and $2,426 in the Rutherford Chemicals
segment for discontinued products (See Note 17 for further discussion of these
charges). The Biosciences segment inventory write-off was related to excess and
obsolete inventories. The higher gross profits in the Human Health and
Biosciences segments were partly offset by lower gross profits and margins in
the Rutherford Chemicals and All Other segments, both of which were primarily
impacted by lower volumes. In addition, the Rutherford Chemicals 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
$4,426, was approximately flat compared to the prior year.

Selling, general and administrative expenses as a percentage of gross sales
were 18.4% in 2001 versus 17.4% for 2000. Administration costs increased due to
the added costs and higher amortization expense associated with the June 2001
Cambrex Bio Science Baltimore, Inc. acquisition, the full year impact of the
August 2000 Arizona product line license and October 2001 Cambrex Bio Science
Hopkinton, Inc. acquisition, as well as additional sales and marketing costs in
the Biosciences 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 $18,649, comprised of asset write-downs of $17,243 and
severance costs of $1,406 (See Note 17 for further discussion of these charges).

In 2001, the Company increased its provision for potential settlements and
legal costs related to Vitamin B-3 litigation by $4,400. (See Note 24 for
further discussion of this charge).

Research and development expenses of $19,619 were 3.9% of gross sales in
2001, and were above 2000 levels by $5,352 or 1.1% 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 $45,016, compared to $77,514 in 2000. This
decrease reflects the special charges discussed above, 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 Human Health and
Biosciences 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
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(dollars in thousands, except share data)
22

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
27.1% versus 29.6% 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 $25,312 (which includes
$20,057 after-tax impact of restructuring, Vitamin B-3 provision and other
charges) compared with net income of $46,707 in 2000.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operations was $104,340 for the year ended December 31,
2002, up from $55,186 in 2001. The increase in cash flow is due primarily to an
insurance recovery during the year, increases in current and long-term
liabilities and lower inventory purchases versus the prior year. In 2002, the
Company received approximately $7,400 in an insurance settlement related to
mechanical problems with a reactor at one of its chemicals facilities. Current
liabilities were higher due to an increase in the estimated Vitamin B-3
litigation settlement and legal costs, higher current pension liabilities, and
the timing of various payments. Long-term liabilities increased over prior year
due to higher pension and other post-retirement benefit liabilities. Cash flows
used in investing activities included capital expenditures of $50,303. Cash
flows used in financing activities of $49,236 included net repayments of debt of
$45,901, payment of dividends of $3,117 and the purchase of treasury stock of
$5,549, partially offset by $5,049 in proceeds from the exercise of stock
options.

Capital expenditures were $50,303, $42,948 and $39,456 in 2002, 2001 and
2000, respectively, In 2002, part of the funds were used for new production
facilities at Charles City, Iowa, LAL and Cell Therapy expansions at
Walkersville, Maryland, and a Lab upgrade at Karlskoga, Sweden.

In November 2001, the Company entered into a $430,000 Revolving Credit
Agreement with a group of banks led by JPMorganChase as the lead agency bank.
The agreement consisted of a 364-day renewable senior revolving credit facility
for $161,000, and a 5-year senior revolving credit facility for $269,000.

In November 2002, the 364-day senior revolving credit facility matured and
was successfully renewed. The current capacity for the senior revolving credit
facility is $157,500 under the 364-day facility and $268,750 under the five-year
facility, for a total of $426,250. The five-year agreement expires in November
2006.

The Revolving Credit Agreement allows the Company to choose among various
interest rate options and to specify the portion of the borrowing to be covered
by specific interest rates. Under the Revolving Credit Agreement the interest
rate options available to the Company are the following:

1) U.S. Prime Rate,

2) LIBOR plus an applicable margin that ranges from .575% to 1.25%, or

3) Money Market rate plus an applicable margin that ranges from .575% to
1.25%.

The Applicable Rate (margin or credit spread) on outstanding debt is based
upon the ratio of consolidated funded indebtedness to consolidated modified
EBITDA. The Company also pays a facility fee between .15% to .30% on the entire
revolving credit facility. The 2002 and 2001 average interest rates were 4.31%
and 5.23%, respectively.

The undrawn borrowing under the Agreement as of December 31, 2002 was
$168,900. Of this amount, $152,143 is available to be borrowed due to limits
established in the Revolving Credit Agreement. There was $257,350 outstanding as
of December 31, 2002.

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(dollars in thousands, except share data)
23

At December 31, 2002 our contractual obligations with initial or remaining
terms in excess of one year were as follows:

See Notes 11 and 23 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 2002 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.

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 business unit, Rutherford Chemicals, Inc. Rutherford
Chemicals, Inc. includes 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, Limited, Middlesbrough, United
Kingdom. In the fourth quarter 2002, the Company announced that it had engaged a
financial advisor to assist the Company in investigating strategic alternatives
for the Rutherford Chemicals segment.

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,
Swedish Krona 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 notional amount
of these contracts at December 31, 2002 was $29,564 which includes inter-company
contracts of $9,594. The Company estimates the forward contracts to be
approximately 48% 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 a scenario that the operating companies' non-local currency
collections match their forecasts, and all exchange rates move 10% against their
local currencies, no more than $3,157 of pre-tax profits for a twelve-month
period would be at risk. This is based on unhedged risk of $31,574. This
residual risk allows for an over-

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(dollars in thousands, except share data)
24

forecasting margin of error and prevents over hedging of actual operating risk.
As of December 31, 2002, the non-local forecasted currency exposures were
$84,859. Offsetting this exposure are expected $23,720 U.S. Dollar inter-company
payments from the combined European sites. The remaining $61,138 forecasted
exposure was partially hedged ($29,564) with major banks and through offsetting
inter-company hedge contracts to reduce the non-hedged risk to $31,574.

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 rate 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 unexpected annual interest rate
increase of 100 basis points (1%) could increase interest expense and thus
decrease the Company's after-tax profitability by approximately $1,500.

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 Swap stabilizes interest costs by
converting floating or variable rates to fixed rates through a contract with a
financial institution. The Company monitors the debt position and market trends
to protect it from any unforeseen shifts in interest rates.

The Company has employed a plan to mitigate interest rate risk by entering
into interest rate swap agreements to convert floating rates to fixed interest
rates. As of December 31, 2002, the Company had seventeen interest rate Swaps in
place with an aggregate notional value of $135,000, at an average fixed rate of
4.34%, and with varying maturity dates through the year 2006. The Company's
strategy has been to cover a portion of outstanding bank debt with interest rate
protection. At December 31, 2002, the coverage was approximately 52%.

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 other non-current liabilities, of
$1,550 and $1,400 at December 31, 2002 and 2001, 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, there were no cash
payments for environmental cleanup related matters. In 2002, a provision of $150
was recorded for a chemical site as a result of the development of an initial
remediation estimate based on the current conclusions of the ongoing
investigation of the site. There were no provisions recorded for environmental
contingencies in 2001. The Company reduced reserves by approximately $900 and
$1,100 during 2001 and 2000, respectively, as a result of revised estimates
based on information obtained from continued investigation and remedial plan
development and resolution of proceedings related to Superfund site owners and
insurers. 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.

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(dollars in thousands, except share data)
25

LITIGATION

The Company and its subsidiary Profarmaco S.r.l. (currently known as
Cambrex Profarmaco Milano S.r.l.) 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 alleged
that exclusive license agreements which Cambrex Profarmaco Milano S.r.l. 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 alleged that these agreements violated
the Federal Trade Commission Act, and that Mylan, Cambrex, Cambrex Profarmaco
Milano S.r.l., and Gyma Laboratories of America, Inc., Cambrex Profarmaco Milano
S.r.l.'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 API's. A lawsuit making similar
allegations against the Company and Cambrex Profarmaco Milano S.r.l., and
seeking injunctive relief and treble damages, was 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 Cambrex Profarmaco Milano S.r.l. 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
$140,000 on its own behalf and on behalf of most of the other defendant
companies including Cambrex and Cambrex Profarmaco Milano S.r.l. In the Order
and Injunction, the settling defendants also agreed to monitor certain future
conduct. The private litigation continues.

The Company strongly believes that its licensing arrangements with Mylan
were made in accordance with regulatory requirements. 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 Cambrex Profarmaco Milano S.r.l. under
certain obligations set forth in the license agreements. Cambrex agreed to cover
separate legal defense costs incurred for Cambrex and Cambrex Profarmaco Milano
S.r.l. on a going forward basis beginning August 1, 2000. The Company recently
entered into discussions with Mylan regarding the final resolution of all
outstanding claims. The outcome of these discussions is not currently
determinable.

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 approximately $4,000. Under the plea
agreement, Nepera was on probation for a one-year period 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.

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(dollars in thousands, except share data)
26

An accrual of $6,000 was recorded in the fourth quarter 1999 to cover the
anticipated government settlements, related litigation, and legal expenses.
Based on discussions with various plaintiffs counsel, as well as then current
estimates of expenditures for legal fees, an additional accrual of $4,400 was
established in the fourth quarter of 2001. The Company believed that the current
reserves would be sufficient to cover resolution of the remaining related
litigation matters. However, during 2002, based on ongoing negotiations and
other information developed during the year, the Company determined that the
remaining litigation matters would be more costly than previously anticipated.
Therefore, during the third and fourth quarters of 2002, the Company increased
reserves by $6,000 and $4,000, respectfully. The balance of this accrual as of
December 31, 2002 was approximately $9,034. 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.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143"). The standard requires that legal
obligations associated with the retirement of tangible long-lived assets be
recorded at fair value when incurred and was adopted by the Company on January
1, 2003. Adoption of SFAS 143 did not have a material effect on the Company's
consolidated financial position or results of operations.

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 144 became effective on
January 1, 2002. For long-lived assets to be held and used, the new rules
continue previous guidance to recognize impairment when the undiscounted cash
flows will not recover its carrying amount. The impairment to be recognized will
continue to be measured as the difference between the carrying amount and fair
value of the asset. The computation of fair value now removes goodwill from
consideration and incorporates a probability-weighted cash flow estimation
approach. The previous guidance provided in SFAS 121 is to be applied to assets
to be disposed of by sale. Long-lived assets to be disposed by other than sale
will now recognize impairment at the date of disposal, but will be considered
assets to be held and used until that time. The Company adopted SFAS 144 as of
January 1, 2002.

In May 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of FAS No. 4, 44 and 64, Amendment of FAS 13, and Technical
Corrections as of April 2002" ("SFAS 145"). The statement rescinds SFAS 4 (as
amended by SFAS 64), which required extraordinary item treatment for gains and
losses on extinguishments of debt, and SFAS 44, which does not affect the
Company. Additionally, the statement amends certain provisions of SFAS 13 and
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The provisions of SFAS 145 related to extinguishments of debt are
effective for the Company beginning January 1, 2003, and all other provisions
are effective for transactions occurring or financial statements issued on or
after May 5, 2002. The Company has determined that the effects on its financial
statements resulting from adoption will not be material.

In June 2002, the FASB issued Statement of Financial Accounting Standard
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS 146"). This Statement addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." This Statement eliminates

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(dollars in thousands, except share data)
27

the definition and requirements for recognition of exit costs in Issue 94-3, and
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. This Statement also
establishes that fair value is the objective for initial measurement of the
liability. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002, with early application encouraged. Any
charges associated with future restructuring programs will be recorded in
accordance with SFAS 146. This will spread the recognition of the restructuring
expenses over a number of accounting periods as compared to EITF 94-3.

In December 2002, the FASB issued Statement of Financial Accounting
Standard No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure" ("SFAS 148"). This Statement provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employees compensation from the intrinsic method. SFAS 148 also
amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, "Interim
Financial Reporting," to require disclosure in the summary of significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. While the SFAS 148 does not
amend SFAS 123 to require companies to account for employee stock options using
the fair value method, the disclosure provisions of SFAS 148 are applicable to
all companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of SFAS 123 or the
intrinsic value method of APB 25. SFAS 148's amendment of the transition and
annual disclosure requirements of SFAS 123 are effective for fiscal years ending
after December 15, 2002. The Company has adopted the disclosures provision of
SFAS 148 as of December 31, 2002, and will continue to use the intrinsic value
method of APB 25. The Company is currently considering the alternatives provided
within SFAS 148 for future periods.

In November 2002, FASB Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" was issued. FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The required disclosures
are effective for financial statements of interim or annual periods ending after
December 15, 2002. The Company is assessing the potential impact on its results
from operations from the adoption of FIN 45.

In January 2003, FIN No. 46, "Consolidation of Variable Interest Entities"
("FIN 46") was issued. The interpretation provides guidance on consolidating
variable interest entities and applies immediately to variable interests created
after January 31, 2003. The guidelines of the interpretation will become
applicable for the Company in its third quarter 2003 financial statements for
variable interest entities created before February 1, 2003. The interpretation
requires variable interest entities to be consolidated if the equity investment
at risk is not sufficient to permit an entity to finance its activities without
support from other parties or the equity investors lack certain specified
characteristics. The Company has reviewed FIN 46 to determine its impact, if
any, on future periods, and does not anticipate any material accounting or
disclosure requirement under the provisions of the interpretation.

In January 2003, the Emerging Issues Task Force (EITF) released EITF 00-21:
"Accounting for Revenue Arrangements with Multiple Deliverables." EITF 00-21
clarifies the timing and recognition of revenue from certain transactions that
include the delivery and performance of multiple products or services. EITF
00-21 is effective for revenue arrangements entered into during fiscal periods
beginning after June 15, 2003. The Company is currently reviewing the impact of
this EITF.

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(dollars in thousands, except share data)
28

FORWARD-LOOKING STATEMENTS

This document may contain "forward-looking statements" for the purposes of
the Securities and Exchange Commission's "safe harbor" provisions under the
Private Securities Litigation Reform Act of 1995 and Rule 3B-6 under the
Exchange Act, without limitation, statements regarding expected performance,
especially expectations with respect to sales, research and development
expenditures, earnings per share, capital expenditures, acquisitions,
divestitures, collaborations, or other expansion opportunities.

The forward-looking statements contained herein involve risks and
uncertainties that may cause results to differ materially from the Company's
expectations including but not limited to, global economic trends,
pharmaceutical outsourcing trends, competitive pricing or product developments,
government legislation and/or regulations (particularly environmental issues),
technology, manufacturing and legal issues, unfavorable results from FDA
inspections, delays in FDA approval of customers' new products, timing of
shipments, changes in foreign exchange rates, performance of minority
investments, uncollectable receivables, loss on disposition of assets,
cancellation or delays in renewal of contracts, and lack of suitable raw
materials or packing materials.

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 15 of this report.

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(dollars in thousands, except share data)
29

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
of Cambrex Corporation:

In our opinion, the accompanying consolidated financial statements listed
in the index on page 29 of this Form 10-K present fairly in all material
respects, the consolidated financial position of Cambrex Corporation and
Subsidiaries (the "Company") as of December 31, 2002 and 2001 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2002, 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.

As discussed in Note 5 to the consolidated financial statements, the
Company has adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," effective January 1, 2002.

As discussed in Note 2, the 2001 and 2000 consolidated financial statements
have been restated.

PRICEWATERHOUSECOOPERS LLP

Florham Park, New Jersey
February 28, 2003

30

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
31

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
32

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
33

CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements.
34

CAMBREX CORPORATION AND SUBSIDIARIES

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

(1) THE COMPANY

Cambrex Corporation and Subsidiaries (the "Company" or "Cambrex") primarily
provides products and services worldwide to the life sciences industry. The
Company operates in four segments, Human Health, Biosciences, Rutherford
Chemicals and All Other.

(2) RESTATEMENT OF FINANCIAL RESULTS

Cambrex Corporation restated its results for the five year period from
1997-2001. This restatement resulted from a fourth quarter 2002 management
review of the inter-company processes and controls which identified certain
discrepancies in the inter-company accounts. Based upon this review, the Company
has determined that certain administrative and other charges were not properly
expensed in these prior periods. The cumulative overstatement of earnings was
approximately $6.1 million before taxes or $5.1 million, after taxes. Selling,
general and administrative expenses were increased in 2001, 2000, 1999 and 1998
by $1.7 million, $3.5 million, $0.2 million and $0.8 million, respectively, and
decreased in 1997 by $0.1 million. Net income was overstated by $1.3 million,
$2.9 million, $0.2 million and $0.8 million in 2001, 2000, 1999 and 1998,
respectively and understated by $0.1 million in 1997. In addition,
reclassifications of certain balance sheet accounts were also determined to be
necessary. The effects of such items and the specific accounts affected are
reflected in the "Consolidated Balance Sheet" section of the table below. This
restatement did not have any impact on the Company's cash flows nor on 2002
reported results from operations.

A summary of the effects of the restatement on the accompanying
Consolidated Income Statements and Consolidated Balance Sheet follows:

Consolidated Income Statements

35

CAMBREX CORPORATION AND SUBSIDIARIES

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

(2) RESTATEMENT OF FINANCIAL RESULTS -- (CONTINUED)

Consolidated Balance Sheet

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

(a) The reclassifications impacting other comprehensive income reflects currency
translation adjustments.

(3) 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.

The Company formally documents all relationships between hedging
instruments and hedged items, as well as its risk management objectives and
strategies for undertaking various hedging relationships. All cash flow hedges
are linked to transactions and the Company assesses effectiveness at inception
and on a quarterly basis. If it is determined that a derivative instrument is
not highly effective or the transaction is no longer deemed probable of
occurring, the Company discontinues hedge accounting.

36

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Inventories

Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market. The determination of market value involves
assessment of numerous factors, including costs to dispose of inventory and
estimated selling prices. Reserves are recorded to reduce carrying value for
inventory determined to be damaged, obsolete or otherwise unsaleable.

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

Expenditures for additions, major renewals or betterments are capitalized
and expenditures for maintenance and repairs are charged to income as incurred.

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) expenses, 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 2002, 2001 and 2000 amounted
to $1,041, $1,482 and $1,307, respectively.

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................................ No amortization is being
recorded in accordance
with SFAS No. 142
Product technology...................... 5 to 17 years
Non-compete agreements.................. 5 years
Trademarks and other.................... up 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. On January 1, 2002 the Company adopted
Statement of Financial Accounting Standards ("SFAS") 142, "Goodwill and Other
Intangible Assets." SFAS 142 applies to all goodwill and intangibles acquired in
a business combination. Under SFAS 142, all goodwill and certain intangibles
determined to have indefinite lives, including goodwill and indefinite lived
intangibles acquired before initial application of the standard, will not be
amortized but will be tested for impairment within six months of adoption of the
statement, and at least annually thereafter. Intangible assets other than
goodwill will be amortized over their useful lives and reviewed for impairment
in accordance with SFAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

37

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Impairment of Long-Lived Assets

The Company assesses the impairment of its long-lived assets under SFAS
144, 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 and risk of
loss has passed to the customer. Royalties are recognized as earned in
accordance with royalty agreements. Revenue is recorded net of returns and
discounts and allowances offered to customers. The Company estimates returns and
discounts at the time of sale based on the terms of the agreements and
historical experience. The Company continually evaluates the adequacy of these
methods used to estimate returns and discounts. Service based revenue is
recognized as work is performed or completed, and payment is assured, in
accordance with individual customer contracts.

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 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,
2002, 2001 and 2000, the cumulative amount of unremitted earnings of non-U.S.
subsidiaries was $0, $23,842 and $0 respectively.

Use of Estimates

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

Environmental Costs

In the ordinary course of business, 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, including estimated litigation costs,
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

38

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

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 2002,
2001 and 2000. Foreign currency net transaction gain (losses) were $1,019,
($2,051) and ($1,157) in 2002, 2001 and 2000, 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:

For the year ended December 31, 2002, 2001 and 2000, approximately
1,223,000, 416,000, and 981,000 shares respectively, were not included in the
diluted EPS calculation because the option price was greater than the market
price.

Freight Billing and Costs

The Company bills a 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.

Stock Based Compensation

At December 31, 2003, the Company has seven stock-based employee
compensation plans currently in effect, which are described more fully in Note
14. The Company accounts for those plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. No stock-based employee compensation cost is reflected
in net income, as all options granted under those plans had an exercise price
equal to the market value of the underlying common
39

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

stock on the date of grant. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.

The pro forma compensation expense of $1,714, $6,994, and $8,869 for 2002,
2001 and 2000, 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 2002, 2001 and 2000, respectively: (i) average
dividend yield of 0.30%, 0.30% and 0.52% (ii) expected volatility of 33.77%,
30.28% and 28.8%, (iii) risk-free interest rate ranging from 3.84% to 4.84%,
3.86% to 5.13%, and 5.31% to 6.69%, and (iv) expected life of 4-6 years.

Comprehensive income

SFAS 130, "Reporting Comprehensive Income," requires foreign currency
translation adjustments and certain other items, which were reported separately
in stockholders' equity, to be included in other comprehensive income (loss).
Included within accumulated other comprehensive income for the Company are
foreign currency translation adjustments, changes in the fair value related to
derivative instruments classified as cash flow hedges, net of related tax
benefit, and changes in the minimum pension liability, net of related tax
benefit. Total comprehensive income (loss) for the years ended 2002, 2001 and
2000 is included in the Statement of Stockholders' Equity.

The components of Accumulated Other Comprehensive Income (Loss) in
Stockholders' Equity are as follows:

Software and Development Costs

In 2002, 2001 and 2000, the Company capitalized purchased software from a
third party vendor and software development costs incurred under the provisions
of SOP 98-1, "Accounting for the Cost of Computer Software Developed or Obtained
for Internal Use." Capitalized costs include only (1) external direct costs of
materials and services incurred in developing or obtaining internal use
software, (2) payroll and payroll-related costs for employees who are directly
associated with and who devote substantial time to the internal-use

40

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

software project, and (3) interest costs incurred, while developing internal-use
software. Amortization begins when assets are ready for their intended purpose
and were placed in service.

Research and development costs, business process re-engineering costs,
training and computer software maintenance costs are expensed as incurred.
Software development costs are being amortized using the straight-line method
over the expected life of the product.

Segment Information

SFAS 131, "Disclosure about Segments of an Enterprise and Related
Information" requires segment information to be prepared using the "management"
approach. The management approach is based on the method that management
organizes the segments within the Company for making operating decisions and
assessing performance. SFAS 131 also requires disclosures about products and
services, geographic areas, and major customers.

Reclassification

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

(4) ACQUISITIONS

On October 30, 2001, Cambrex Corporation completed the acquisition of
Marathon Biopharmaceuticals ("Marathon"), located in Hopkinton, Massachusetts,
for approximately $26,000 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. Goodwill was recorded at approximately $11,035
and other identifiable intangibles were $2,153. Assets acquired include $9,900
of fixed assets, $700 in inventories, $5,700 deferred tax assets and
approximately $3,400 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
Hopkinton, Inc.

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 $120,000 in cash, which was funded by an
existing line of credit facility. Additional purchase price payments of up to
$25,000 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. Goodwill was recorded at approximately $117,800,
including incremental deal costs. In addition, identifiable intangible assets of
$3,382 have been recorded. Subsequent to the acquisition, the Company's formal
name was changed to Cambrex Bio Science Baltimore, Inc.

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. Subsequent to the acquisition,
the Company's formal name was changed to Cambrex Profarmaco Landen NV.

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

41

CAMBREX CORPORATION AND SUBSIDIARIES

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

(4) ACQUISITIONS -- (CONTINUED)

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 20 years. Subsequent to the acquisition, the Company's formal name was
changed to Cambrex Bio Science Nottingham Limited.

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 $4,500. 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.

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

(5) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Goodwill and Intangible Assets:

The Company adopted SFAS 142, "Goodwill and Other Intangible Assets" in the
first quarter of fiscal 2002. The effect of this adoption was to cease
amortization of goodwill and certain other indefinite-lived intangible assets,
which resulted in a decrease in amortization expense for the year ended December
31, 2002 of approximately $8,814 million after income taxes. The Company has
established reporting units based on its current segment structure for purposes
of testing goodwill for impairment. Goodwill has been assigned to the reporting
units to which the value of the goodwill relates. The Company completed the
first step of the transitional goodwill impairment test and has determined that
no impairment existed at January 1, 2002. The Company will evaluate goodwill and
other intangible assets at least on an annual basis and whenever events and
changes in circumstances suggest that the carrying amount may not be recoverable
based on the estimated future cash flows.

In the fourth quarter of 2002, the Company performed the required annual
test for impairment. The assessment was made in conjunction with the budgeting
process and the long range planning by each reporting unit. The assessment
utilized a forecasted cash flow method discounted based on the Company's
weighted average cost of capital plus a risk adjusted factor. The Rutherford
Chemical reporting unit indicated a possible impairment due to certain external
factors which indicated increased competition and price declines. The Company
also began to reevaluate the future plans and related investment into new and
existing products. The re-evaluation indicated declining growth prospects. As a
result, the Company performed an analysis which determined a full impairment
write-off of the Rutherford goodwill of approximately $3,962 was necessary.

42

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- (CONTINUED)

The changes in the carrying amount of goodwill for the year ended December
31, 2002, are as follows:

The purchase accounting adjustments relate to the acquisitions occurred
during 2001 and they consist of $5,730 reallocation from goodwill to other
intangible assets, as well as $1,341 reallocation from goodwill to fixed assets.
These adjustments are the result of final valuations received on the assets and
liabilities acquired.

Other intangible assets that are not subject to amortization beginning
January 1, 2002, consist of the following:

Proprietary process intangibles decreased by $701 due to the sale of the
in-vitro diagnostic business. License agreements decreased by $870 due to a
reduction in basis as part of the arbitration award (See Note 19) and the sale
of a small portion of the product line initially acquired.

Intangible Assets:

Other intangible assets, which will continue to be amortized, consist of
the following:

* This category includes certain fully amortized patents, proprietary process
and non-compete agreements.

43

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- (CONTINUED)

Amortization expense amounted to $1,554, $14,031 and $10,155, for the years
ended December 31, 2002, 2001 and 2000, respectively.

The expected future amortization expense related to current intangible
assets currently recorded in the future is as follows:

Pro-forma net income and diluted earnings per share for the year ended
December 31, 2002, reflecting the adoption of SFAS No. 142, were as follows:

Accounting for Asset Retirement Obligations

In June 2001, The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143"). The standard requires that legal
obligations associated with the retirement of tangible long-lived assets be
recorded at fair value when incurred and was adopted by the Company on January
1, 2003. Adoption of SFAS 143 did not have a material effect on the Company's
consolidated financial position or results of operations.

Accounting for Impairment or Disposal of Long-Lived Assets:

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 144 became effective on
January 1, 2002. For long-lived assets to be held and used, the new rules
continue previous guidance to recognize impairment when the undiscounted cash
flows will not recover its carrying amount. The impairment to be recognized will
continue to be measured as the difference between the carrying amount and fair
value of the asset. The computation of fair value now removes goodwill from
consideration and incorporates a probability-weighted cash flow estimation
approach. The previous guidance provided in SFAS 121 is to be applied to assets
to be disposed of by sale. Long-lived assets to be disposed by other than sale
will now recognize impairment at the date of disposal, but will be considered
assets to be held and used until that time. The Company adopted SFAS 144 as of
January 1, 2002.

44

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- (CONTINUED)

Rescission of FAS No. 4, 44 and 64, Amendment of FAS 13, and Technical
Corrections as of April 2002

In May 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of FAS No. 4, 44 and 64, Amendment of FAS 13, and Technical
Corrections as of April 2002" ("SFAS 145"). The statement rescinds SFAS 4 (as
amended by SFAS 64), which required extraordinary item treatment for gains and
losses on extinguishments of debt, and SFAS 44, which does not affect the
Company. Additionally, the statement amends certain provisions of SFAS 13 and
other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The provisions of SFAS 145 related to extinguishments of debt are
effective for the Company beginning January 1, 2003, and all other provisions
are effective for transactions occurring or financial statements issued on or
after May 5, 2002. The Company has determined that the effects on its financial
statements resulting from adoption will not be material.

Accounting for Costs Associated with Exit or Disposal Activities

In June 2002, the FASB issued Statement of Financial Accounting Standard
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS 146"). This Statement addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." This Statement eliminates the definition
and requirements for recognition of exit costs in Issue 94-3, and requires that
a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. SFAS 146 also establishes that fair
value is the objective for initial measurement of the liability. SFAS 146 is
effective for exit or disposal activities that are initiated after December 31,
2002, with early application encouraged. Any charges associated with future
restructuring programs will be recorded in accordance with SFAS 146. This will
spread the recognition of the restructuring expenses over a number of accounting
periods as compared to EITF 94-3.

Accounting for Stock-Based Compensation -- Transition and Disclosure

In December 2002, the FASB issued Statement of Financial Accounting
Standard No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure" ("SFAS 148"). This Statement provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employees compensation from the intrinsic method. SFAS 148 also
amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, "Interim
Financial Reporting," to require disclosure in the summary of significant
accounting policies of the effects of an entity's accounting policy with respect
to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. While SFAS 148 does not amend
SFAS 123 to require companies to account for employee stock options using the
fair value method, the disclosure provisions of SFAS 148 are applicable to all
companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of SFAS 123 or the
intrinsic value method of APB 25. SFAS 148's amendment of the transition and
annual disclosure requirements of SFAS 123 are effective for fiscal years ending
after December 15, 2002. The Company has adopted the disclosures provision of
SFAS 148 as of December 31, 2002, and will continue to use the intrinsic value
method of APB 25. The Company is currently considering the alternatives provided
within this SFAS 148 for future periods.

Guarantor's Accounting and Disclosure Requirements for Guarantees

In November 2002, FASB Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" was issued. FIN 45

45

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- (CONTINUED)

elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that
it has issued. It also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of this Interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The required
disclosures are effective for financial statements of interim or annual periods
ending after December 15, 2002. The Company is assessing the potential impact on
its results from operations from the adoption of FIN 45.

Consolidation of Variable Interest Entities

In January 2003, FIN No. 46, "Consolidation of Variable Interest Entities"
("FIN 46") was issued. The interpretation provides guidance on consolidating
variable interest entities and applies immediately to variable interests created
after January 31, 2003. The guidelines of the interpretation will become
applicable for the Company in its third quarter 2003 financial statements for
variable interest entities created before February 1, 2003. The interpretation
requires variable interest entities to be consolidated if the equity investment
at risk is not sufficient to permit an entity to finance its activities without
support from other parties or the equity investors lack certain specified
characteristics. The Company has reviewed FIN 46 to determine its impact, if
any, on future periods, and does not anticipate any material accounting or
disclosure requirement under the provisions of the interpretation.

Accounting for Revenue Arrangements with Multiple Deliverables

In January 2003, the Emerging Issues Task Force ("EITF") released EITF
00-21: "Accounting for Revenue Arrangements with Multiple Deliverables." EITF
00-21 clarifies the timing and recognition of revenue from certain transactions
that include the delivery and performance of multiple products or services. EITF
00-21 is effective for revenue arrangements entered into during fiscal periods
beginning after June 15, 2003. The Company is currently reviewing the impact of
this EITF.

(6) NET INVENTORIES

Net inventories consist of the following:

46

CAMBREX CORPORATION AND SUBSIDIARIES

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

(7) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

Depreciation expense amounted to $39,124, $36,766 and $31,939 for the years
ended December 31, 2002, 2001 and 2000, respectively.

(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:

47

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 consists of the following expenses
(benefits):

The provision for income taxes differs from the statutory Federal income
tax rate of 35% for 2002, 2001 and 2000 as follows:

48

CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES -- (CONTINUED)

The components of deferred tax assets and liabilities as of December 31,
2002 and 2001 relate to temporary differences and carryforwards as follows:

Included within the change in the cumulative translation adjustment for the
year ended December 31, 2002 is $1,628 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 $3,309 and $2,430 at December 31,
2002 and 2001. The change in valuation allowance for the years ended December
31, 2002 and 2001 was $2,455 and $(2,196), respectively. A valuation allowance
has been established when management believes that it is more likely than not
that the full amount of deferred tax assets will not be realized.

As of December 31, 2002 approximately $10,959 of foreign tax credits were
available as credit against future U.S. income taxes. Under the U.S. Internal
Revenue Code rules, these foreign tax credits will begin to expire in 2005
through 2007. The Company believes that it will have sufficient foreign source
income to utilize these credits.

During 2002, the Company derived U.S. income tax benefits of approximately
$495 from an exclusion provided under U.S. income tax laws with respect to
certain extraterritorial income (ETI) attributable to foreign trading gross
receipts. The World Trade Organization (WTO) ruled that this ETI represents a
prohibited export subsidy under the WTO Agreement on Subsidies and
Countervailing Measures. Since the impact of this matter depends upon the
actions of both the European Union and the legislative action of the
49

CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES -- (CONTINUED)

U.S. Congress, it is not possible to predict the impact on future financial
results. If the ETI is repealed and replacement legislation is not enacted,
future results could be negatively impacted.

As a matter of course, the Company is regularly audited by federal, state
and foreign tax authorities. From time to time, these audits result in proposed
assessments. The Company has prevailed in its Swedish tax court case and is
currently awaiting a decision by the Swedish tax authorities as to whether an
appeal will be filed. The Company believes that its positions comply with
applicable law and intends to continue to vigorously defend its positions. The
Company believes that it has adequately provided for any reasonably foreseeable
outcome related to these matters, and it does not anticipate any material
earnings impact from their resolution.

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 future favorable tax benefits. These benefits were $1,259, $1,326,
and $1,928 for 2002, 2001, 2000, respectively.

(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, 2002 and 2001 consists of the following:

The 2002 and 2001 average interest rates were 2.2% and 3.9%, respectively.

(11) LONG-TERM DEBT

Long-term debt consists of the following:

(a) In November 2001, the Company entered into a $430,000 Revolving Credit
Agreement with a group of banks led by JPMorganChase as the lead agency bank.
The agreement consisted of a 364-day renewable senior revolving credit facility
for $161,000, and a 5-year senior revolving credit facility for $269,000.

50

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

In November 2002, the 364-day senior revolving credit facility matured and
was successfully renewed. The current capacity for the senior revolving credit
facility is $157,500 under the 364-day facility and $268,750 under the five-year
facility, for a total of $426,250. The five-year agreement expires in November
2006.

The Revolving Credit Agreement allows the Company to choose among various
interest rate options and to specify the portion of the borrowing to be covered
by specific interest rates. Under the Revolving Credit Agreement the interest
rate options available to the Company are the following:

1) U.S. Prime Rate,

2) LIBOR plus an applicable margin that ranges from .575% to 1.25%, or

3) Money Market rate plus an applicable margin that ranges from .575% to
1.25%.

The Applicable Rate (margin or credit spread) on outstanding debt is based
upon the ratio of consolidated funded indebtedness to consolidated modified
EBITDA of Cambrex Corporation. The Company also pays a commitment fee between
..15% to .30% on the entire revolving credit facility. The 2002 and 2001 average
interest rates were 4.3% and 5.2%, respectively.

The bank loan is collateralized by dividend and distribution rights
associated with a pledge of a portion of stock which the Company owns in a
foreign holding company. This foreign holding company owns certain of the
Company's non-U.S. operating subsidiaries.

The credit facilities are primarily used to finance the Company's
acquisition activities. The undrawn borrowing under the agreement as of December
31, 2002 was $168,900. Of this amount, $152,143 is available to be borrowed due
to limits established in the Revolving Credit Agreement.

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 2002.

(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
$2,549 outstanding at December 31, 2002. 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 $9,897 outstanding at December 31, 2002. All capital leases
are collateralized by their underlying assets.

Aggregate maturities of long-term debt are as follows:

(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 non-
performance by the other parties to the interest rate swap, forward exchange or
put and call contracts.
51

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)

However, the Company does not anticipate non-performance by the counterparties.

The Company adopted (SFAS 133) Statement of Financial Accounting Standard
No. 133 "Accounting for Derivative Instruments and Hedging Activities," and its
corresponding amendments under SFAS No. 138, (referred to hereafter as "SFAS
133"), 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 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,
2002 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,
2002 was $3,017. This amount will be reclassified into earnings as the
underlying forecasted transactions occur. The balance of unrealized losses
included in comprehensive income at December 31, 2002 will be recognized in
earnings over the next twelve months. The net gain recognized in earnings
related to foreign currency forward contracts during the twelve months ended
December 31, 2002 was $2,216. The net loss on interest rate swap contracts
recognized in interest expense was $3,624 for the twelve months ended December
31, 2002.

52

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 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, 2002.

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 in a loss position of $6,492 at December 31, 2002.

Foreign Exchange Instruments

The table below reflects the notional and fair value amounts of foreign
exchange contracts at December 31, 2002 and 2001.

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.

53

CAMBREX CORPORATION AND SUBSIDIARIES

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

(13) STOCKHOLDERS' EQUITY

The Company has two classes of common shares designated Common Stock and
Nonvoting Common Stock. Authorized shares of Common Stock were 100,000,000 and
60,000,000 at December 31, 2002 and 2001 respectively. Authorized shares of
Nonvoting Common Stock were 730,746 at December 31, 2002 and 2001.

At December 31, 2002 there were 364,662 of authorized shares of Common
Stock reserved for issuance for stock option plans.

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, 2002 and 2001, no shares of Nonvoting Common
Stock were outstanding.

The Company held treasury stock of 2,487,247 and 2,234,421 shares at
December 31, 2002 and 2001, 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, 2002 and 2001, 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 granting of
non-qualified and incentive stock options (ISO) intended to qualify as
additional incentives to the Company's Senior Executive Officers. This plan will
expire in April 2003. The 1994 Stock Option Plan ("1994 Plan") provides for the
granting to key employees both non-qualified and ISO stock options, intended to
qualify as additional incentives to management and other key employees. 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 stock options intended to
qualify as additional incentives to management and other key employees. The 1996
Plan also provides for the granting of non-qualified stock options to
non-employee directors.

The 1998 Performance Stock Option Plan ("1998 Plan") provides for the
granting of non-qualified and ISO stock options intended to qualify as
additional incentives to directors and key employees. The 2000 Employee
Performance Stock Option Plan ("2000 Plan") provides for the granting of
non-qualified options and ISO stock options intended to qualify as additional
incentives to non-executive employees. On April 26, 2001, The Company's
Stockholders 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 1996, 1998, 2000 and 2001 Plan shall become
exercisable six 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.

54

CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCK OPTIONS -- (CONTINUED)

306,200 options were exercised during 2002. Shares of Common Stock subject
to outstanding options under the stock option plans were as follows:

2002 Equity Compensation Table

55

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
bargaining agreement are based on negotiated benefits and years of service.
Effective January 1, 2003, newly hired employees (except those covered by
collective bargaining) will not participate in these plans. The Company
currently is reviewing alternative means of providing retirement benefits for
all employees.

The Company's policy is to fund pension costs currently to the full extent
required by the Internal Revenue Code. Pension plan assets consist primarily of
balanced fund investments.

The net periodic pension expense for both 2002 and 2001 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.

56

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, 2002 and 2001 is as follows:

The components of net periodic pension cost are as follows:

The aggregate ABO (Accumulated Benefit Obligation) exceeds plan assets by
$12,076 in 2002 for all qualified domestic plans.

57

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

The Company has a Supplemental Executive Retirement Plan (SERP) for key
executives. This plan is non-qualified and unfunded. It consists of two plans,
the Corporate SERP plan and the BioWhittaker SERP Plan.

The benefit obligation for these plans as of September 30, 2002 and 2001 is
as follows:

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. Based on local laws and customs, some of those plans are not funded.
For those that are funded, the amount in the trust supporting the plan is
determined on sound

58

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) RETIREMENT PLANS -- (CONTINUED)

actuarial grounds, and where applicable, in compliance with local statutes. The
funded status of these plans, incorporating fourth quarter contributions, as of
December 31, 2002 and 2001 is as follows:

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

59

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 $8,865 in
2002.

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 $2,426, $1,679
and $2,082 in 2002, 2001 and 2000, 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, 2002 and 2001 there is
$1,407 and $1,979, 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,
2002 and 2001 is $1,407 and $1,979 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, 2002 and 2001 are 253,378 and 255,235,
respectively, and are included as a reduction of equity at cost. The value of
the shares held in trust and the corresponding liability of $7,654 at December
31, 2002 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. In addition, shares are held in trust for
restricted stock grants for certain Officers. The number of shares held at
December 31, 2002 and 2001 was 85,508 and 91,227, respectively. The fair value
of these shares was $2,640 and $3,810 at 2002 and 2001, respectively.

(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.

Effective January 1, 2003, the Company made significant changes to these
benefits affecting current retirees and future retirees, both in reducing level
of benefits and reducing the subsidy the Company provides. Certain subsidiaries
and all employees hired after December 31, 2002 (excluding those covered by
collective bargaining) are not eligible for these benefits.

The Company elected to amortize the transition obligation of $1,853 over
twenty years. The net effect upon 2002, 2001 and 2000 pretax operating results,
including the amortization of the transition obligation, resulted in a cost of
$1,100, $308, and $325, respectively.

60

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)

The periodic postretirement benefit cost includes the following components:

The discount rate used to determine the accumulated postretirement benefit
obligation was 6.75% and 7.50% in 2002 and 2001, respectively. The assumed
health care cost trend rate used to determine the accumulated postretirement
benefit obligation is 6.5% in 2002 and thereafter (7% in 2001). A
one-percentage-point increase in the assumed health care cost trend rate would
increase the accumulated postretirement benefit obligation by $525 and would
increase the sum of interest and service cost by $63. A one-percentage-point
decrease would lower the accumulated postretirement benefit obligation by $683
and would raise the sum of interest and service cost by $82.

(17) RESTRUCTURING, IMPAIRMENTS AND OTHER CHARGES

2001 Actions

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 strategic emphasis on the growing opportunities in
the Life Sciences Industry. 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
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.

61

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

In the fourth quarter, Cambrex recorded special pre-tax charges of $23,075,
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 $18,649 of charges to operating expense, composed of asset write-downs
of $17,243 and severance costs of $1,406. The Company also incurred $4,426 of
inventory write-downs charged to cost of sales, consisting of $2,426 associated
with discontinued products manufactured at Rutherford Chemical facilities and a
separate $2,000 Biosciences inventory charge.

The asset write-downs consisted primarily of fixed asset write-offs and
impairments. A $10,000 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 $1,600
impairment was also recorded related to an unused chemical facility to recognize
its estimated current fair value. In addition, a $5,644 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, 2002 all 62 employees have been terminated.

The following table displays activity related to the 2001 restructuring and
other charges through December 31, 2002 (in millions):

2002 Actions

In 2002, Cambrex completed its plan to realign its businesses. In 2002, the
Company recorded net special pre-tax charges of $15,087 These charges include:
Rutherford Chemicals fixed asset impairments of $7,689, closure costs for a
small manufacturing facility at one of the Rutherford Chemicals sites of $1,800,
inventory write-downs of $586 (included in cost of sales), a goodwill impairment
for Rutherford Chemicals of $3,962, and severance costs of $1,050.

The fixed asset impairments related to certain assets at a Rutherford
Chemicals domestic site, and were based on an assessment completed in the third
quarter that indicated the return on investment was below management's
expectations. As a result, an impairment charge was recorded reflecting the
asset value associated with the discontinued product line. The closure costs
relate to another domestic Rutherford Chemicals facility and include asset write
downs, disposal, and other related costs.

62

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Severance charges, which apply to a Rutherford Chemicals domestic site and
the Corporate office, relate to the termination of approximately 19 employees.
As of January 31, 2003, all these employees have been terminated.

The accrual balance related to the 2002 actions for severance and other
costs included above was approximately $2,600 at December 31, 2002.

The following table displays the activity related to the 2002
restructuring, impairments and other charges through December 31, 2002 (in
millions):

Facility closure costs are expected to be paid within the next year.
Severance costs are expected to be paid within the next 2 years.

(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 incurred costs associated with
the reactor replacement and plant downtime of approximately $14,000 which was
fully covered by our insurance policies, subject to deductibles.

The Company experienced a fire at another one of the chemical facilities in
March 2001. Beginning in 2001 and completed in 2002, the Company has repaired
and rebuilt the affected portions of the facility. The total claim amount which
is primarily to rebuild the plant is $6,600, which we expect to be substantially
covered by our insurance policies, net of deductibles. As a result, this
incident is not expected to have any negative impact on the Company's operating
results.

(19) ARBITRATION AWARD

In April 2002, the Company received a favorable arbitration award related
to disputes concerning Rutherford Chemicals toll manufacturing and licensed
product line agreements. The arbitration decision compensated the Company for
lost profits for the years 2001 through 2005. The Company originally paid $4,500
to acquire the product line rights from Arizona Chemicals Corporation. The total
award, net of legal

63

CAMBREX CORPORATION AND SUBSIDIARIES

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

and other related costs, was $4,300, of which $540 was recorded as a reduction
of the intangible asset basis and $3,760 was recorded in Other income in the
second quarter of 2002.

(20) OTHER INCOME AND EXPENSE

The Other-net component of Other (income) expense was $64, $(277) and
$(329) for 2002, 2001 and 2000, respectively. The 2002 amount consisted
primarily of an investment impairment of $3,089 related to a prior investment in
an emerging technology company. The company, in which the investment was held,
has experienced significant financial difficulties in recent months. This led
Cambrex to evaluate the current market value of the investment. This evaluation
indicated that a decline in the market value was other than temporary and
accordingly, an impairment charge was recorded. 2002 also included $312 in
write-off costs due to a convertible debt arrangement that was abandoned, $194
in write-off costs associated with an investment in a joint venture and $330 in
losses on the sales of miscellaneous assets. These items were partially offset
by the favorable arbitration award of $3,760 discussed in Note 19. 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.

(21) SEGMENT INFORMATION

The Company is involved principally in the manufacturing and marketing of
products and services which include: Human Health segment, which include Active
Pharmaceutical Ingredients and Pharmaceutical Intermediates produced under Food
and Drug Administration cGMP for use in the production of prescription and
over-the-counter drug products, and imaging chemicals used in x-ray media;
Biosciences segment, consisting of cell culture and endotoxin detection
products, electrophoresis and chromatography products and contract
biopharmaceutical manufacturing; Rutherford Chemicals segment consisting of
Vitamin B-3 used in feed additives, Agricultural Intermediates used in crop
protection, Performance Enhancing Chemicals used in photography, pigments,
specialty polymers, fuel/oil additives, catalysts, and other specialty
additives, Polymer Systems products used in coatings, telecommunications,
electronics and engineering plastics and Personal Care ingredients; All Other
segment, which includes Specialty and Fine Chemicals and Animal and Health
Products not manufactured at the Rutherford Chemicals facilities. 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 includes 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.,
Middlesbrough, United Kingdom.

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

64

CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) SEGMENT INFORMATION -- (CONTINUED)

The following is a summary of business segment information:

65

CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) SEGMENT INFORMATION -- (CONTINUED)

66

CAMBREX CORPORATION AND SUBSIDIARIES

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

(21) SEGMENT INFORMATION -- (CONTINUED)

(22) FOREIGN OPERATIONS AND EXPORT SALES

Summarized data for the Company's operations for 2002, 2001 and 2000 are as
follows:

Export sales, included in domestic gross sales, in 2002, 2001 and 2000
amounted to $50,930, $45,041, and $50,910, respectively. No country, in any of
the given years, represents more than 10% of these export sales.

Sales by geographic area consist of the following:

67

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) 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, 2002, future minimum commitments under non-cancelable operating
lease arrangements were as follows:

Year ended December 31:
2003..................................................... $ 4,561
2004..................................................... 4,268
2005..................................................... 3,672
2006..................................................... 3,494
2007 and thereafter...................................... 10,674
-------
Total commitments........................................ $26,669
=======

Total operating lease expense was $5,017, $3,618 and $2,545 for the years
ended December 31, 2002, 2001 and 2000, respectively.

On August 11, 1999, the Company completed a marketing, development and
media supply agreement with Osiris Therapeutics, Inc. allowing the Company's
Cambrex Bio Science Walkersville, Inc. subsidiary to manufacture and market
adult stem cell products for the life science research market through an
exclusive worldwide license from Osiris. In addition, Cambrex Bio Science
Walkersville,Inc. 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.

(24) 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.

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 other non-current liabilities, of
$1,550 and $1,400 at December 31, 2002 and 2001, 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, there were no cash
payments for environmental cleanup related matters. In 2002, a provision of $150
was recorded for a chemical site as a result of the development of an initial
remediation estimate based on the current conclusions of the ongoing
investigation of the site. There were no provisions for environmental
contingencies in 2001. The Company reversed reserves by approximately $900, and
$1,100 during 2001 and 2000, respectively, as a result of revised estimates
based on information obtained from continued investigation and remedial plan
development and resolution of proceedings related to Superfund site owners and
insurers. In addition, the Company settled certain environmental claims
involving the Cosan Chemical Corporation (a subsidiary) with insurance

68

CAMBREX CORPORATION AND SUBSIDIARIES

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

(24) CONTINGENCIES -- (CONTINUED)

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. (currently known as
Cambrex Profarmaco Milano S.r.l.) 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 alleged
that exclusive license agreements which Cambrex Profarmaco Milano S.r.l. 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 alleged that these agreements violated
the Federal Trade Commission Act, and that Mylan, Cambrex, Cambrex Profarmaco
Milano, S.r.l., and Gyma Laboratories of America, Inc., Cambrex Profarmaco
Milano S.r.l'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 Cambrex Profarmaco Milano S.r.l.,
and seeking injunctive relief and treble damages, was 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 Cambrex Profarmaco Milano S.r.l. 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
$140,000 on its own behalf and on behalf of most of the other defendant
companies including Cambrex and Cambrex Profarmaco Milano S.r.l. In the Order
and Injunction, the settling defendants also agreed to monitor certain future
conduct. The private litigation continues.

The Company strongly believes that its licensing arrangements with Mylan
are in accordance with regulatory requirements. However, the Company and Mylan
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 Cambrex Profarmaco Milano S.r.l. under
certain obligations set forth in the license agreements. Cambrex agreed to cover
separate legal defense costs incurred for Cambrex and Cambrex Profarmaco Milano
S.r.l. on a going forward basis beginning August 1, 2000. The Company recently
entered into discussions with Mylan regarding the final resolution of all
outstanding claims. The outcome of these discussions is not currently
determinable.

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

69

CAMBREX CORPORATION AND SUBSIDIARIES

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

(24) CONTINGENCIES -- (CONTINUED)

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 approximately $4,000. 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 $6,000 was recorded in the fourth quarter 1999 to cover the
anticipated government settlements, related litigation, and legal expenses.
Based on discussions with various plaintiffs counsel, as well as then current
estimates of expenditures for legal fees, an additional accrual of $4,400 was
established in the fourth quarter of 2001. The Company believed that the current
reserves would be sufficient to cover resolution of the remaining related
litigation matters. However, during 2002, based on information developed during
the year, the Company determined that the remaining litigation matters would be
more costly than previously anticipated. Therefore, during the third and fourth
quarters of 2002, the Company increased reserves by $6,000 and $4,000,
respectfully. The balance of this accrual as of December 31, 2002 was
approximately $9,034. This accrual has been recorded in accounts payable and
accrued liabilities.

Other

The Company has a $5,000 investment in a privately owned, emerging
biotechnology company that has therapeutic products in various stages of
clinical trials. The investment is monitored on a continual basis to evaluate
whether any changes in value become other than temporary. No impairment has been
recognized to date.

The Company has commitments incident to the ordinary course of business
including corporate guarantees of financial assurance obligations under certain
environmental laws for remediation, closure and/or third party liability
requirements of certain of its subsidiaries and a former operating location;
contract provisions for indemnification protecting its customers and suppliers,
etc. against third party liability for manufacture and sale of Company products
that fail to meet product warranties and contract provisions for indemnification
protecting licensees against intellectual property infringement related to
licensed Company technology or processes. The Company is still assessing the
materiality threshold of these commitments and potential impact on its results
from operations from the adoption of FIN 45.

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.

70

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 second quarter of 2002 includes a special net benefit of $2.7 million
($1.9 million after tax) comprised of $0.4 million expense for fixed asset
impairment charged to operating expenses, $2.5 million investment write-
down recorded in other expense, $3.8 million arbitration award recorded in
other income and $1.8 million benefit related to an insurance settlement
recorded in cost of sales.
(3) The third quarter 2002 includes special charges of $14.8 million ($10.2
million after tax), comprised of asset impairments, severance and a facility
closure of $8.4 million, which are recorded in operating expenses, a related
inventory write-down of $0.6 million recorded in cost of sales; an accrual
for Vitamin B-3 settlement and litigation costs of $6.0 million recorded in
operating expenses, an investment impairment of $0.6 million recorded in
other expense; and a $0.8 million benefit related to an insurance settlement
recorded in cost of sales.
(4) The fourth quarter of 2002 includes special charges of $9.7 million ($7.5
million after tax), comprised of a goodwill impairment at Rutherford sites
of $4.0 million; $4.0 million for Vitamin B-3 provision, reserve for
facility closure costs of $0.9 million and a severance program of $0.8
million.
(5) 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.

Note: Cambrex Corporation restated its results for the five year period from
1997-2001. This restatement resulted from a fourth quarter 2002 management
review of the inter-company processes and controls which identified
certain discrepancies in the inter-company accounts. Based upon this
review, the Company has determined that certain administrative and other
charges were not properly expensed in each quarter of 2001. Selling,
general and administrative expenses were increased in the first, second
and fourth quarter 2001 by $664, $533 and $490, respectively and decreased
in the third quarter by $23. Net income was overstated by $500, $401, and
$369 in the first, second and fourth quarters 2001, respectively and
understated by $17 in the third quarter 2001. This restatement did not
have any impact on the Company's cash flows nor on 2002 reported results
from operations.

71

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."

ITEM 14 CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. The Company's Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the Company's "disclosure controls and procedures" (as defined in Rules
13a-14(c) and under the Securities Exchange Act of 1934 (the "Exchange Act")) as
of a date (the "Evaluation Date") within 90 days before the filing date of this
annual report. Based on such evaluation, they have concluded that, as of the
Evaluation Date, the Company's disclosure controls and procedures were effective
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the Securities and Exchange Commission.

(b) Changes in internal controls. As disclosed in Note 2, the Company
restated its results for prior periods due to certain discrepancies in the
inter-company accounts. Effective December 31, 2002, the Company has implemented
a revised policy and procedure with respect to inter-company transactions and
accounts to ensure monthly reconciliations are performed. With the exception of
the changes in inter-company accounting procedures, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls during the period covered by this annual
report.

PART IV

ITEM 15 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.

72

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 80-82

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 did not file any reports on Form 8-K during the last quarter
of the year ended December 31, 2002.

73

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 February 28, 2003 appearing in the 2002 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 15(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
February 28, 2003

74

SCHEDULE II

CAMBREX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(DOLLARS IN THOUSANDS)

75

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
President, Chairman of the Board of
Directors

Date: March 18, 2003

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

77

CAMBREX CORPORATION

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

I, James A. Mack, certify that:

1. I have reviewed this annual report on Form 10-K of Cambrex
Corporation;

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

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

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14) for the registrant and we have:

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

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

/s/ JAMES A. MACK
--------------------------------------
James A. Mack, President
Chairman of the Board and
Chief Executive Officer

Date: March 18, 2003

78

CAMBREX CORPORATION

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

I, Luke M. Beshar, certify that:

1. I have reviewed this annual report on Form 10-K of Cambrex
Corporation;

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

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

4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14) for the registrant and we have:

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

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

/s/ LUKE M. BESHAR
--------------------------------------
Luke M. Beshar
Senior Vice President and
Chief Financial Officer

Date: March 18, 2003

79

EXHIBIT INDEX

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

80

EXHIBIT INDEX

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

81

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.