CAMBREX CORP - 10-K Annual Report

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

FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

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 $641,852,184 as of June 30, 2004.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of February 28, 2005, there were 26,391,752 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 2005 Annual
Meeting are incorporated by reference into Part III of this report.
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CAMBREX CORPORATION

INDEX TO ANNUAL REPORT ON
FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 2004

1

PART I

ITEM 1 BUSINESS.

GENERAL

Cambrex Corporation (the "Company" or "Cambrex"), a Delaware corporation,
began business in December 1981. Cambrex is a life sciences company dedicated to
providing products and services that accelerate and improve the discovery and
commercialization of human therapeutics. The Company primarily supplies its
products and services worldwide to pharmaceutical and biopharmaceutical
companies, generic drug companies, biotechnology companies and research
organizations. The Company reports results in three segments: Bioproducts,
Biopharma and Human Health. Each of these segments includes multiple product
categories. The Company's overall strategy is to focus on niche markets that
have global opportunities, build on strong customer relationships to enhance its
new products pipeline, and support state-of-the-art technology, while being an
industry leader in regulatory compliance, environmental, health and safety
performance, and customer service.

The Company uses a consistent business approach in each of its segments:

- Market Leadership: The Company secures leading market positions through
its proprietary technologies and specialized capabilities. The Company
leverages its broad capabilities and reputation across the life sciences
market segments in which it participates.

- Niche Market Focus: The Company participates in niche markets that
require significant technical expertise that provides market
differentiation.

- Acquisition and Licensing: The Company drives growth in strategic
business segments through the prudent acquisition of products, product
lines, technologies, and capabilities to enhance the Company's position
in its niche markets and move the Company closer to the patient.

- New Product Programs: The Company introduces innovative products to drive
organic growth and continues to invest in research and product
development.

- Margin Expansion: The Company reviews the growth and profitability of its
businesses on an ongoing basis to ensure resources are appropriately
allocated. The Company will de-emphasize or eliminate offerings not
meeting operating profit goals.

- Operational Excellence: The Company maintains its commitment to improve
productivity and customer service levels and reduce costs. The Company
works in a highly regulated industry and maintains its commitment to
excellent quality and regulatory compliance systems.

MARKET OVERVIEW AND GROWTH DRIVERS

The Company participates in markets that serve the healthcare industry.
Customers include companies and institutions that discover and commercialize
therapeutics including traditional drugs made using organic chemistry, or, more
recently, products made using biotechnology and cells.

The aging population, continued investment in healthcare research and drug
development and the necessity to develop life saving therapeutics to address
unmet needs drives business growth in life sciences companies serving the
healthcare market. Aging "baby boomers" in the United States, Europe and Japan
are entering retirement which may provide an enormous healthcare opportunity.
This group typically has more education, a higher socio-economic level, and
higher demands for healthcare services than previous generations. Their use of
the internet may offer new sales and marketing opportunities to the healthcare
market.

Healthcare investment comes from a variety of segments. Large
pharmaceutical and biotechnology companies invest billions in new drug discovery
and development. Research institutions may be funded by the

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government, business or private sectors. The U.S. government's funding of
BioShield, which went into effect in 2004, provides new incentives to companies
to develop vaccines and drugs to counter bioterrorism. Investments in emerging
drug companies from venture capital and initial public offerings were also up in
2004 versus prior year. Healthcare investment increases the demand for Cambrex
products and services by providing customers the financial resources to move
their research and development projects from the laboratory to the clinic, and
eventually, to the patient.

It is estimated that getting a new drug to market may take up to sixteen
years. With the need to get new drugs to market faster, pharmaceutical companies
make huge investments in drug discovery. There is the need for a continuing
stream of innovative research tools that accelerate the drug discovery process.
More and more cellular models are being used to understand the mechanism of
disease and the efficacy and toxicity of drug candidates. Demand for rapid,
accurate tests to assess drug candidates is growing greater than 20% annually.
Cambrex is a leading provider of testing products used in the drug discovery
process.

Once a drug is identified, companies need to develop a robust process for
the manufacture of clinical and commercial quantities. Product testing and
quality processes need to be integrated into the manufacturing process. This is
a critical step to getting a commercially viable drug to market. Cambrex
manufactures active pharmaceutical ingredients at laboratory, clinical and
commercial scale at facilities around the world and maintains an industry
leading quality record.

Large pharmaceutical and biotechnology companies may outsource the
development and manufacturing of a drug substance to manage multiple internal
priorities, access new technologies or additional capacity, preserve needed
capital or ensure multiple sources of supply. Emerging pharmaceutical,
biotechnology and generic drug companies typically outsource all process
development and manufacturing.

New drugs are typically patented. When the patent expires, the drug may be
manufactured and marketed in a generic form. Growth in the generic drug market
is driven by the continuing stream of drug patents that will expire in the
future and favorable market forces that encourage the use of generic
pharmaceuticals as a more cost effective health care alternative to higher
priced branded drugs. In the United States and many countries in Europe,
governments and prescription benefit management companies provide incentives for
generic substitution to reduce costs. Cambrex's active pharmaceutical
ingredients are used in over 100 niche generic drugs globally.

The market for human therapeutics is highly regulated by the Food and Drug
Administration (FDA) and other regulatory agencies through the development,
manufacturing and commercialization process. The FDA approves human therapeutics
and regulates manufacturing. Excellent regulatory and quality systems are
essential to serve the industry. In 2004, the FDA modified its manufacturing
regulations to encourage companies to improve and optimize manufacturing
processes, which presents manufacturers, like Cambrex, new opportunities to
reduce product costs and cycle times for their clients.

The healthcare market continues to evolve.

- In recent years, there have been fewer FDA drug approvals and weaker drug
development pipelines in large pharmaceutical companies. To bolster the
number of drugs in development, large pharmaceutical companies have
entered into partnerships and alliances with emerging pharmaceutical
companies. Emerging companies continue to drive innovation with over two
thirds of the products in phase I clinical trials.

- Competition from Asia has increased their capabilities in drug substance
manufacturing and finished dosage form drugs. Although there has been
limited direct impact on niche products, the presence of these
competitors has resulted in downward pricing pressure on active
pharmaceutical ingredients. Regulatory compliance and long-term quality
may determine the long term impact of these competitors.

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- Weaker pharmaceutical pipelines have resulted in reduced demand and
excess capacity for branded drug substance manufacturing made by organic
chemistry, resulting in the retirement of facilities by several U.S. and
European competitors in 2004.

- The Medicare Modernization Act (MMA) may negatively impact future
pharmaceutical company profits by limiting price increases and effecting
changes in supply chain management. In contrast, it may also offer
improved commercial opportunities to companies with more efficient and
cost effective supply chains via broader access to patients and a larger
number of prescriptions.

- The regulatory environment supporting generic drugs remains favorable and
will probably extend to generic biopharmaceuticals in the future.

- Recent regulatory mis-steps and related negative publicity may cause
pharmaceutical companies to focus additional resources on reputation
management and community relations.

STRATEGY

The Company expects to continue to provide innovative life sciences
products and services for the bioresearch and therapeutics markets. The Company
will use its expertise in drug discovery tools, testing reagents, kits and
services and the manufacture of drug substances to expand its product portfolio.
Through internal developments and targeted acquisitions, the Company also
intends to broaden its current list of products and services. The introduction
of complementary offerings will drive organic growth and expand the Company's
footprint in the life sciences markets. New technologies, products, and
infrastructure may also come from licensing or acquisition. Long term, the
Company also expects to market and sell therapeutics, whether developed by our
customers or the Company, to certain specialty markets.

DEVELOPMENT OF THE BUSINESS

The discussion below provides insight to the general development of our
business, including the material acquisitions and disposition of assets, over
the past five years.

On March 2, 2000, the Company acquired Conti BPC NV in Landen, Belgium for
approximately $5 million in cash and assumed debt. Conti BPC NV, now renamed
Cambrex Profarmaco Landen NV, is a manufacturer and supplier of pharmaceutical
intermediates and active pharmaceutical ingredients.

On July 24, 2000, the Company acquired LumiTech, Limited in Nottingham,
England for $4.3 million in cash. LumiTech, Limited, now renamed Cambrex Bio
Science Nottingham Limited, provides products and services used in the high
throughput screening market for drug discovery.

On June 4, 2001, the Company acquired Bio Science Contract Production Corp.
in Baltimore, Maryland for approximately $125 million in cash. Bio Science
Contract Production Corp., now renamed Cambrex Bio Science Baltimore, Inc.,
manufactures purified bulk biologics and pharmaceutical ingredients. The
acquisition provided the Company with entry into the contract bioprocessing
market.

On October 31, 2001, the Company acquired Marathon Biopharmaceuticals Inc.
in Hopkinton, Massachusetts for approximately $26 million in cash through a
share purchase of CoPharma Inc. Marathon, now renamed Cambrex Bio Science
Hopkinton, Inc., is a full-service cGMP manufacturer of biopharmaceutical
ingredients and purified bulk biologics for pre-clinical evaluation, clinical
trials and commercial scale quantities.

On January 1, 2002, the Company realigned the organization to focus on life
sciences. The operating units that primarily produced specialty and fine
chemicals, and animal health and agriculture products were combined under a new
subsidiary, Rutherford Chemicals, Inc.

On November 10, 2003, the Company sold its Rutherford Chemicals business
for a sale price of up to $65 million, consisting of $55 million in cash paid at
closing, a $2 million subordinated 12% interest bearing

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note, and an $8 million performance-based cash earn-out if certain future
operating profit targets are achieved. The sale of Rutherford Chemicals
represents the completion of the transformation from a specialty chemical
organization into a leading life sciences company.

On October 2, 2004, Cambrex France SARL, one of the Company's subsidiaries,
acquired Genolife SA for approximately $6 million in cash. Genolife, located in
Saint Beauzire, France, specializes in rapid microbial detection testing for the
pharmaceutical, agriculture, food, and cosmetic industries. The acquisition
complements the endotoxin and mycoplasma detection product lines and builds upon
the Company's testing reagent and service franchise.

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 presents
gross sales from the Company's three segments:

Bioproducts: The Bioproducts segment consists of research products
(including cell biology products, cell based assays and molecular biology
products) and therapeutic applications (including endotoxin detection products,
biotherapeutic media and serum products and cell therapy products). The Company
manufactures more than 1,800 products which are sold to more than 14,000
customers worldwide with no one customer accounting for over 10% of 2004 sales
in this segment.

This table summarizes the gross sales for this product segment:

Gross sales of $136,108 were $16,810 or 14.1% above 2003. Bioproducts sales
were favorably impacted 4.0% due to exchange rates reflecting a weaker U.S.
dollar.

Research products of $70,657 were $8,007 or 12.8% higher than prior year
due to increased sales in cell biology products due to strong market demand in
the U.S. and Europe, higher media and serum products sales due to increased
supply and increased demand in North America, Europe and Asia and higher sales
of assays due to increased market demand in North America. The favorable effect
of foreign currency exchange also contributed to the higher sales.

Therapeutic applications sales of $65,451 were $8,803 or 15.5% higher than
prior year due to higher sales of endotoxin detection products reflecting
increased purchasing levels in the U.S. and rest of world and timing of
shipments and increased sales of cell therapy products due to the addition of
new customers.

Biopharma: The Biopharma segment consists of the Company's contract
biopharmaceutical process development and manufacturing business. Biopharma
sales of $43,270 were $858 or 1.9% below 2003. The sales decrease primarily
reflects reduced billings in our biopharmaceutical manufacturing business driven
by the completion or timing of projects and a change in contract terms from time
and material to milestone

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payments offset by higher reimbursable materials revenue due to timing of
current projects. There are three customers that individually account for more
than 10% of 2004 sales in this segment. They represent 23.0%, 22.7%, and 22.2%
of 2004 sales in this segment.

Human Health: The Human Health segment is primarily comprised of the
custom development and manufacture 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 three product groups: (1)
active pharmaceutical ingredients (APIs), (2) pharmaceutical intermediates, and
(3) other. These products are sold to a diverse group of more than 1,100
customers, with two customers individually accounting for more than 10% of 2004
sales in this segment; one, a distributor representing multiple customers,
accounting for 17.1%, and a second pharmaceutical company, accounting for 10.6%.
Many of these products are also sold through agents. One active pharmaceutical
ingredient makes up 13.3% of 2004 sales in this segment.

This table summarizes the gross sales for this product segment:

Human Health sales of $259,737 increased $17,572 or 7.3% including a 5.6%
favorable impact due to exchange rates reflecting the weaker U.S. dollar.

APIs sales of $200,555 were $16,923 or 9.2% above the prior year due
primarily to higher demand for cardiovascular and gastrointestinal APIs due to
higher demand and a favorable currency impact. Pharmaceutical intermediates
sales of $27,365 were $3,016 or 12.4% above 2003 primarily due to higher sales
of custom development products, an end-stage kidney treatment product due to
increased demand and favorable currency effect.

Other sales of $31,817 were $2,367 or 6.9% below the prior year as pricing
pressure from offshore competition negatively impacted sales of feed additive
products.

MARKETING AND DISTRIBUTION

The Company's Human Health and Biopharma segments generally include higher
value, low-to-medium volume niche products requiring significant technical
expertise to develop and manufacture. Marketing generally requires significant
cooperative effort among a highly trained sales and marketing staff, a
scientific staff that can assess the technical fit and estimate manufacturing
economics, and the business unit management to determine the strategic and
business fit. The process to take a client's project from the clinical trial
stage to a commercial, approved therapeutic may take from two to seven years.
The process to take generic active pharmaceutical ingredients from bench
development to amended new drug application (ANDA) approval may take five to
seven years. The Company has agents in those areas where direct sales efforts
are not economical.

For the Bioproducts 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 also implemented an
e-commerce website to market and sell these products in the U.S. and Europe.

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RAW MATERIALS

The Company uses a wide array of raw materials in the conduct of its
businesses.

For its Human Health products, the Company generally will have a primary
and secondary supplier for its critical raw materials. Long-term contracts are
in effect for most of the critical raw materials used. Prices for these raw
materials are generally stable except for the petroleum based solvents where
prices can vary with market conditions.

For its Bioproducts products, the Company buys materials from many
suppliers and is generally not dependent on any one supplier or group of
suppliers. Bovine spongiform encephalopathy, also known as mad cow disease, has
impacted where the Company can import fetal bovine serum from. 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 electrophoresis media products incorporating Agarose. A
long-term contract is in effect for this supply.

The other key raw materials used by all segments of 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 that warrant a significant technical expertise, 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 137 employees are
involved directly in research and development activities worldwide.

The Cambrex Center of Technical Excellence, a research and development
organization located in The Technology Centre of New Jersey in North Brunswick,
NJ, helps 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 $19,659, $17,123 and $15,794 in 2004, 2003 and 2002,
respectively, on research and development efforts.

PATENTS AND TRADEMARKS

The Company has patent protection in most of its product areas. In
addition, the Company also relies on know-how and trade secrets related to 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 180 United States patents which
have various expiration dates through 2023 and which cover selected items in
each of the Company's major product areas. The Company also owns foreign
equivalents of many of its United States patents. In addition, the Company has
applied for patents for various inventions and is in the process of preparing
patent applications for other inventions. The Company owns patent and other
proprietary rights to the endotoxin detection products which are material to the
product lines.

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 Poietics(R), Clonetics(R), MYCOAlert(R),
NuSieve(R), Reliant(R), Latitude(R), PAGEr(R), MetaPhor(R), AccuGENE(R) and
BioWhittaker(TM.)

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The Company requires employees to sign confidentiality, ownership of
inventions and non-compete agreements where appropriate.

COMPETITION

In the Bioproducts 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, innovative product development and on
time delivery.

In the Biopharma segment, the competitors include therapeutic companies and
other companies that supply contract biopharmaceutical development and
manufacturing services to biotech companies. Generally, the competition focuses
on larger quantities and scale of manufacturing capacity. Cambrex differentiates
its services by concentrating on small to medium scale process development and
manufacturing services, an excellent regulatory compliance record, experience
producing vaccines and approved drugs, a commitment to quality, and world-class
early development services.

In the Human Health segment, the Company has two primary groups of
competitors; those that produce generic active pharmaceutical ingredients and
those that produce branded active pharmaceutical ingredients and intermediates.
For generic active pharmaceutical ingredients, there are approximately five
primary competitors which are located in Europe. For competitors that provide
custom development and manufacturing services for branded active pharmaceutical
ingredients, there are approximately twenty competitors, six of which are large
multinational companies that also produce fine chemicals. More recently,
competitors from Asia have entered the market for larger active pharmaceutical
ingredients. While there has been limited or no impact on the products the
Company produces, it is expected that their regulatory compliance and product
quality will determine the long term impact of these competitors in the market.
If the Company perceives significant competitive risk and a need for large
technical or financial commitment, it generally negotiates long term contracts
or guarantees from its customers.

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

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actions of its subsidiaries may support the direct assertion against the Company
of environmental liabilities of its subsidiaries.

Known environmental matters which may result in liabilities to the Company
and the related estimates and accruals are summarized in Note #23 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

Present and Future Environmental Expenditures: The Company's policy is to
comply with all legal requirements of applicable environmental, health and
safety laws and regulations. The Company believes it is in general compliance
with such requirements and has adequate professional staff and systems in place
to remain in compliance. In some cases, compliance can only be achieved by
capital expenditures, and the Company made capital expenditures of approximately
$6,725 in 2004, $4,032 in 2003, and $3,752 in 2002 for environmental projects.
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 may increase. The Company considers
costs for environmental compliance to be a normal cost of doing business, and
includes such costs in pricing decisions.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

The following risk factors and other information included in this Annual
Report on Form 10-K should be carefully considered. If any of the following
risks occur, the Company's business, financial condition, operating results and
cash flows could be materially adversely affected. The risks and uncertainties
described below are not the only ones the Company faces. Additionally, risks and
uncertainties not presently known to the Company or that it currently deems
immaterial also may impair its business, financial condition, operating results
and cash flows.

WE MAY PURSUE TRANSACTIONS THAT MAY CAUSE US TO EXPERIENCE SIGNIFICANT CHARGES
TO EARNINGS THAT MAY ADVERSELY AFFECT OUR STOCK PRICE AND FINANCIAL CONDITION.

We regularly review potential transactions related to technologies,
products or product rights and businesses complementary to our business. These
transactions could include mergers, acquisitions, strategic alliances or
licensing agreements. In the future, we may choose to enter into these
transactions at any time. As a result of acquiring businesses or entering into
other significant transactions, we have previously experienced, and may continue
to experience, significant charges to earnings for merger and related expenses
that may include transaction costs, closure costs or costs related to the
write-off of acquired in-process research and development. These costs may also
include substantial fees for investment bankers, attorneys, accountants and
financial printing costs and severance and other closure costs associated with
the elimination of duplicate or discontinued products, employees, operations and
facilities. Although we do not expect these charges to have a material adverse
effect upon our overall financial condition, these charges could have a material
adverse effect on our results of operations for particular quarters or years and
they could possibly have an adverse impact upon the market price of our common
stock.

IF WE MAKE ACQUISITIONS, WE MAY EXPERIENCE DIFFICULTY INTEGRATING THE BUSINESSES
WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

An important part of our business growth strategy is to acquire products,
product lines, technologies and capabilities, including through the acquisition
of businesses, to enhance the Company's position in its niche markets and move
the Company closer to the patient. We continually explore and conduct
discussions with many third parties regarding possible acquisitions. Our ability
to continue to achieve our goals may depend upon our ability to effectively
integrate such businesses, to achieve cost efficiencies and to manage these
businesses as part of our company. However, we may experience difficulty
integrating the merged companies which could have a material adverse effect on
the operating results or financial condition of the combined company. As a
result of uncertainty following an acquisition and during the integration
process, we could

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experience disruption in our business or employee base. There is also a risk
that key employees of the combined company may seek employment elsewhere,
including with competitors, or that valued employees may be lost upon the
elimination of duplicate functions. If we are not able to successfully blend our
products and technologies with the acquired business to create the advantages
the acquisition was intended to create, it may affect our results of operations,
our ability to develop and introduce new products and the market price of our
common stock. Furthermore, there may be overlap between our products, services
or customers, and the combined company may create conflicts in relationships or
other commitments detrimental to the integrated businesses.

IF WE FAIL TO IMPROVE THE OPERATIONS OF FUTURE ACQUIRED BUSINESSES, WE MAY BE
UNABLE TO ACHIEVE OUR GROWTH STRATEGY.

Some of the businesses we have acquired or will acquire had or may have
significantly lower operating margins than we do and/or operating losses prior
to the time we acquired them. In the past, we have occasionally experienced
temporary delays in improving the operating margins of these acquired
businesses. In the future, if we are unable to improve the operating margins of
acquired businesses or operate them profitably, we may be unable to achieve our
growth strategy.

PHARMACEUTICAL, BIOPHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES MAY DISCONTINUE OR
DECREASE THEIR USAGE OF OUR SERVICES.

We depend on pharmaceutical, biopharmaceutical and biotechnology companies
that use our services for a large portion of our revenues. Although there has
been a trend among these companies to outsource drug production functions, this
trend may not continue. We have experienced increasing pressure on the part of
our customers to reduce spending, including the use of our services, as a result
of negative economic trends generally and in the pharmaceutical industry. If
these companies discontinue or decrease their usage of our services, including
as a result of a slowdown in the overall United States or foreign economies, our
revenues and earnings could be lower than we expect and our revenues may
decrease or not grow at historical rates.

COMPETITION IN THE LIFE SCIENCES RESEARCH MARKET, AND/OR A REDUCTION IN DEMAND
FOR OUR PRODUCTS, COULD REDUCE SALES.

The markets for our products are competitive and price sensitive. Other
life science suppliers have significant financial, operational, sales and
marketing resources, and experience in research and development. These and other
companies may have developed or could in the future develop new technologies
that would compete with our products or even render our products obsolete. If a
competitor develops superior technology or cost-effective alternatives to our
products or services, our business, operating results, and financial condition
could be seriously harmed. In addition, demand for our products may weaken due
to reduction in research and development budgets, loss of distributors or other
factors, which would have an adverse effect on our financial condition.

The markets for certain of our products are also subject to specific
competitive risks and can be highly price competitive. Our competitors have
competed in the past by lowering prices on certain products. Our competitors may
lower prices on these or other products in the future and we may, in certain
cases, respond by lowering our prices. This would reduce revenues and profits.
Conversely, failure to anticipate and respond to price competition may hurt our
market share.

We believe that customers in our markets display loyalty to their initial
supplier of a particular product. Therefore, it may be difficult to generate
sales to potential customers who have purchased products from competitors. To
the extent we are unable to be the first to develop and supply new products, our
competitive position may suffer.

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OUR FAILURE TO OBTAIN NEW CONTRACTS OR RENEWED CONTRACTS OR CANCELLATION OF
EXISTING CONTRACTS MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, AND MAKE OUR REVENUE DIFFICULT TO PREDICT.

Many of our contracts are short-term in duration. As a result, we must
continually replace our contracts with new contracts to sustain our revenue. In
addition, many of our long-term contracts may be cancelled or delayed by clients
for any reason upon notice. Contracts may be terminated for a variety of
reasons, including termination of product development, failure of products to
satisfy safety requirements, unexpected or undesired results from use of the
product or the client's decision to forego a particular study. Our failure to
obtain new contracts or renew contracts or the cancellation or delay of existing
contracts could have a material adverse effect on our business, financial
condition and results of operations.

Furthermore, because our revenue is primarily generated on a
contract-by-contract or purchase order basis, our revenue is difficult to
predict and contributes to the variability of our financial results from period
to period. In addition, we do not believe that a backlog of contracts is a
meaningful indicator of our future revenue because of the possibility that the
contracts may be terminated.

THE BIOPHARMA BUSINESS SEGMENT HAS EXPERIENCED AND MAY CONTINUE TO EXPERIENCE
SIGNIFICANT VOLATILITY IN PROFITABILITY AND THERE ARE NO ASSURANCES THAT IT WILL
RETURN TO ITS HISTORIC PROFITABILITY LEVEL.

The Company's Biopharma business unit provides process development and
manufacturing services on a contract basis to biopharmaceutical companies. This
business has a very high fixed cost structure and its customers are often
dependent on the availability of funding and pursuing drugs that are in earlier
stages of clinical trials, and thus have high failure rates. Losses of one or
more customers can result in significant swings in profitability from quarter to
quarter and year to year. Returning to historic profitability levels is
dependent on the Company generating significant additional revenues from
existing and new customers, which can not be absolutely assured.

THE COMPANY COULD BE SUBJECT TO ADDITIONAL GOODWILL IMPAIRMENT CHARGES IN THE
FUTURE.

During the third quarter 2004, the Company recorded an impairment charge of
$48,720 to reduce the goodwill recorded in the acquisition of the Baltimore
site. The Company still has a substantial amount of goodwill related to this
business and others, which may be subject to additional impairment charges if
the business units do not perform at or near projected levels in the future.
Certain other facilities do not have enterprise values that are significantly
higher than the carrying value of goodwill.

Should the profit forecast for these businesses be revised significantly
downward the Company may incur additional goodwill impairment charges.

OUR OPERATING RESULTS MAY UNEXPECTEDLY FLUCTUATE IN FUTURE PERIODS.

The Company's revenue and operating results have fluctuated, and could
continue to fluctuate, on a quarterly basis. The operating results for a
particular quarter may be lower than expected as a result of a number of
factors, including the timing of contracts; the delay or cancellation of a
contract; the mix of services provided; seasonal slowdowns in different parts of
the world; the timing of start-up expenses for new services and facilities; and
changes in government regulations. Because a high percentage of the Company's
costs are relatively fixed in the short term (such as the cost of maintaining
facilities and compensating employees), any one of these factors could have a
significant impact on the Company's quarterly results. In some quarters, the
Company's revenue and operating results may fall below the expectations of
securities analysts and investors due to any of the factors described above. In
such event, the trading price of the Company's common stock would likely
decline, even if the decline in revenue did not have any long-term adverse
implications for the Company's business.

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11

OUR MARKET SHARE DEPENDS ON NEW PRODUCT INTRODUCTIONS AND ACCEPTANCE.

Rapid technological change and frequent new product introductions are
typical for the market for certain of our products and services. Our future
success will depend in part on continuous, timely development and introduction
of new products that address evolving market requirements and are attractive to
customers. We believe successful new product introductions provide a significant
competitive advantage because customers make an investment of time in selecting
and learning to use a new product, and are reluctant to switch thereafter. We
spend significant resources on internal research and development, as well as on
technology development elsewhere to support our effort to develop and introduce
new products. To the extent that we fail to introduce new and innovative
products, we could fail to obtain an adequate return on these investments and
could lose market share to our competitors, which may be difficult to regain. An
inability, for technological or other reasons, to develop successfully and
introduce new products could reduce our growth rate or otherwise damage our
business.

In the past, we have experienced, and may experience in the future, delays
in the development and introduction of products. We cannot be assured that we
will keep pace with the rapid change in life sciences research, or that our new
products will adequately meet the requirements of the marketplace or achieve
market acceptance. Some of the factors affecting market acceptance of our
products include:

- availability, quality and price as compared to competitive products;

- the functionality of new and existing products;

- the timing of introduction of our products as compared to competitive
products;

- scientists' and customers' opinions of the product's utility and our
ability to incorporate their feedback into future products;

- general trends in life sciences research.

The expenses or losses associated with unsuccessful product development
activities or lack of market acceptance of our new products could adversely
affect our business, financial condition and results of operations.

FAILURE TO OBTAIN PRODUCTS AND COMPONENTS FROM THIRD-PARTY MANUFACTURERS COULD
AFFECT OUR ABILITY TO MANUFACTURE AND DELIVER OUR PRODUCTS.

We rely on third-party manufacturers to supply many of our raw materials,
product components, and in some case, entire products. In addition, we have a
single source for supplies of some raw materials and components to our products.
Manufacturing problems may occur with these and other outside sources. If such
problems occur, we cannot ensure that we will be able to manufacture our
products profitably or on time.

ANY SIGNIFICANT REDUCTION IN GOVERNMENT REGULATION OF THE DRUG DEVELOPMENT
PROCESS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

The design, development, testing, manufacturing and marketing of
biotechnology and pharmaceutical products are subject to extensive regulation by
governmental authorities, including the FDA and comparable regulatory
authorities in other countries. The Company's business depends in part on strict
government regulation of the drug development process. Legislation may be
introduced and enacted from time to time to modify regulations administered by
the FDA and governing the drug approval process. Any significant reduction in
the scope of regulatory requirements or the introduction of simplified drug
approval procedures could have a material adverse effect on the Company's
business, financial condition and results of operations.

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VIOLATIONS OF CGMP AND OTHER GOVERNMENT REGULATIONS COULD HAVE A MATERIAL
ADVERSE AFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

All facilities and manufacturing techniques used for manufacturing of
products for clinical use or for commercial sale in the United States must be
operated in conformity with current Good Manufacturing Practices ("cGMP")
regulations as required by the FDA. The Company's facilities are subject to
scheduled periodic regulatory and customer inspections to ensure compliance with
cGMP and other requirements applicable to such products. A finding that the
Company had materially violated these requirements could result in regulatory
sanctions, the loss of a customer contract, the disqualification of data for
client submissions to regulatory authorities and/or a mandated closing of the
Company's facilities. Any such material violations would have a material adverse
effect on the Company's business, financial condition and results of operations.

LITIGATION MAY HARM OUR BUSINESS OR OTHERWISE NEGATIVELY IMPACT OUR MANAGEMENT
AND FINANCIAL RESOURCES.

Substantial, complex or extended litigation could cause the Company to
incur large expenditures and distract our management. For example, lawsuits by
employees, stockholders, collaborators, distributors, customers, or end-users of
our products or services could be very costly and substantially disrupt our
business. Disputes from time to time with such companies or individuals are not
uncommon, and we cannot assure you that we will always be able to resolve such
disputes out of court or on terms favorable to the Company.

The Company is involved in a number of lawsuits including a class action
lawsuit filed against Cambrex and certain former and current Company officers
alleging the failure to disclose in a timely fashion the restatement of results
for the five-year period ending December 31, 2001 as discussed in the risk
factor immediately below, as well as the loss of a significant contract at our
Baltimore facility. If this matter, or any of the Company's other lawsuits, is
resolved in an unfavorable manner, they could have a material adverse effect on
the operating results and cash flows in future periods.

THE SEC INVESTIGATION INTO OUR INTER-COMPANY ACCOUNTING MATTER COULD HURT OUR
BUSINESS.

The Securities and Exchange Commission ("SEC") is currently conducting an
investigation into the Company's inter-company accounting issue. The
investigation began during the first half of 2003 after the Company voluntarily
disclosed certain matters related to inter-company accounts for the five-year
period ending December 31, 2001 that resulted in the restatement of the
Company's financial statements for those years. The Company is fully cooperating
with the SEC and does not expect further revisions to its historical financial
statements relating to these issues. This investigation could lead to an adverse
outcome and adversely affect our business, financial condition, results of
operations and cash flows.

LOSS OF KEY PERSONNEL COULD HURT OUR BUSINESS.

The Company depends on a number of key executives. The loss of services of
any of the Company's key executives could have a material adverse effect on the
Company's business.

The Company also depends on its ability to attract and retain qualified
scientific and technical employees. There is a significant shortage of, and
intense competition for, qualified scientific and technical employees. There can
be no assurance the Company will be able to retain its existing scientific and
technical employees, or to attract and retain additional qualified employees.
The Company's inability to attract and retain qualified scientific and technical
employees would have a material adverse effect on the Company's business,
financial condition and results of operations.

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13

POTENTIAL PRODUCT LIABILITY CLAIMS, ERRORS AND OMISSIONS CLAIMS IN CONNECTION
WITH SERVICES WE PERFORM AND POTENTIAL LIABILITY UNDER INDEMNIFICATION
AGREEMENTS BETWEEN US AND OUR OFFICERS AND DIRECTORS COULD ADVERSELY AFFECT OUR
EARNINGS AND FINANCIAL CONDITION.

The Company manufactures products intended for use by the public. In
addition, the Company's services include the manufacture of pharmaceutical and
biologic products to be tested in human clinical trials and for consumption by
humans. These activities could expose the Company to risk of liability for
personal injury or death to persons using such products, although the Company
does not presently market or sell the products to end users. The Company seeks
to reduce its potential liability through measures such as contractual
indemnification provisions with clients (the scope of which may vary from
client-to-client, and the performances of which are not secured), exclusion of
services requiring diagnostic or other medical services, and insurance
maintained by clients. The Company could be materially and adversely affected if
it were required to pay damages or incur defense costs in connection with a
claim that is outside the scope of the indemnification agreements, if the
indemnity, although applicable, is not performed in accordance with its terms or
if the Company's liability exceeds the amount of applicable insurance or
indemnity. In addition, the Company could be held liable for errors and
omissions in connection with the services it performs. The Company currently
maintains product liability and errors and omissions insurance with respect to
these risks. There can be no assurance, however, that the Company's insurance
coverage will be adequate or that insurance coverage will continue to be
available on terms acceptable to the Company.

The Company also indemnifies its officers and directors for certain events
or occurrences while the officer or director is, or was serving, at the
Company's request in such capacity. The maximum potential amount of future
payments the Company could be required to make under these indemnification
agreements is unlimited; however, the Company has a "Director and Officer"
insurance policy that covers a portion of any potential exposure. The Company
could be materially and adversely affected if it were required to pay damages or
incur legal costs in connection with a claim above its insurance limits.

ASSESSMENTS BY VARIOUS TAX AUTHORITIES MAY BE MATERIALLY DIFFERENT THAN WE HAVE
PROVIDED FOR AND WE MAY EXPERIENCE SIGNIFICANT VOLATILITY IN OUR ANNUAL AND
QUARTERLY EFFECTIVE TAX RATE.

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. While the Company believes that it has adequately provided for any
such assessments, future settlements may be materially different than we have
provided for and negatively affect our earnings.

During 2004, the geographic shift of forecasted income resulted in the
recording of a valuation allowance against all net domestic deferred tax assets,
except those for which the company has viable tax planning strategies. Going
forward, until such time as the Company's domestic profitability is restored and
considered by management to be sustainable for the foreseeable future, the
Company will not record the income tax benefit or expense for domestic pre-tax
losses and income respectively, and as such may experience significant
volatility in its effective tax rate. As of December 31, 2004 the Company had
identified tax planning strategies that preserved approximately $13 million of
net tax attributes. Should the Company continue to experience domestic losses,
these tax planning strategies may also be negatively affected which could result
in future increases to our domestic deferred tax asset valuation allowance.

WE HAVE A SIGNIFICANT AMOUNT OF DEBT THAT COULD ADVERSELY AFFECT OUR FINANCIAL
CONDITION.

The Company has a revolving credit facility of approximately $269 million
of which $120 million was outstanding at December 31, 2004, and privately placed
debt of $100 million. This is a significant amount of debt. If we are unable to
generate sufficient cash flow or otherwise obtain funds necessary to make
required payments on the notes, including from cash and cash equivalents on
hand, we will be in default under the terms of the loan agreements, and
indentures under which we have outstanding debt securities.

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14

Even if we are able to meet our debt service obligations, the amount of
debt we have could adversely affect us in a number of ways, including:

- limiting our ability to obtain any necessary financing in the future for
working capital, capital expenditures, debt service requirements, or
other purposes;

- limiting our flexibility in planning for, or reacting to, changes in our
business;

- placing us at a competitive disadvantage relative to our competitors who
have lower levels of debt;

- making us more vulnerable to a downturn in our business or the economy
generally;

- requiring us to use a substantial portion of our cash to pay principal
and interest on our debt, instead of contributing those funds to other
purposes such as working capital and capital expenditures.

INTERNATIONAL UNREST OR FOREIGN CURRENCY FLUCTUATIONS COULD ADVERSELY AFFECT OUR
RESULTS.

Our international revenues, which include revenues from our non-U.S.
subsidiaries and export sales from the U.S., represented 61% of our product
revenues in 2004 and 61% of our product revenues in 2003. We expect that
international revenues will continue to account for a significant percentage of
our revenues for the foreseeable future.

There are a number of risks arising from our international business,
including:

- foreign currencies we receive for sales outside the U.S. could be subject
to unfavorable exchange rates with the U.S. dollar and reduce the amount
of revenue that we recognize;

- the possibility that unfriendly nations or groups could boycott our
products;

- general economic and political conditions in the markets in which we
operate;

- potential increased costs associated with overlapping tax structures;

- more limited protection for intellectual property rights in some
countries;

- unexpected changes in regulatory requirements;

- the difficulties of compliance with a wide variety of foreign laws and
regulations;

- longer accounts receivable cycles in certain foreign countries; and

- import and export licensing requirements.

A significant portion of our business is conducted in currencies other than
the U.S. dollar, which is our reporting currency. We recognize foreign currency
gains or losses arising from our operations in the period incurred. As a result,
currency fluctuations between the U.S. dollar and the currencies in which we do
business have caused and will continue to cause foreign currency transaction
gains and losses. We cannot predict the effects of exchange rate fluctuations
upon our future operating results because of the number of currencies involved,
the variability of currency exposures, and the potential volatility of currency
exchange rates. We engage in limited foreign exchange hedging transactions to
manage our foreign currency exposure, but our strategies are short-term in
nature and may not adequately protect our operating results from the full
effects of exchange rate fluctuations.

THE MARKET PRICE OF OUR STOCK COULD BE VOLATILE.

The market price of our common stock has been subject to volatility and, in
the future, the market price of our common stock may fluctuate substantially due
to a variety of factors, including:

- quarterly fluctuations in our operating income and earnings per share
results;

- technological innovations or new product introductions by us or our
competitors;
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15

- economic conditions;

- disputes concerning patents or proprietary rights;

- changes in earnings estimates and market growth rate projections by
market research analysts;

- sales of common stock by existing holders;

- loss of key personnel; and

- securities class actions or other litigation.

The market price for our common stock may also be affected by our ability
to meet analysts' expectations. Any failure to meet such expectations, even
slightly, could have an adverse effect on the market price of our common stock.
In addition, the stock market is subject to extreme price and volume
fluctuations. This volatility has had a significant effect on the market prices
of securities issued by many companies for reasons unrelated to the operating
performance of these companies.

INCIDENTS RELATED TO HAZARDOUS MATERIALS COULD ADVERSELY AFFECT OUR BUSINESS.

Portions of our operations require the controlled use of hazardous
materials. Although we are diligent in designing and implementing safety
procedures to comply with the standards prescribed by federal, state, and local
regulations, the risk of accidental contamination of property or injury to
individuals from these materials cannot be completely eliminated. In the event
of such an incident, we could be liable for any damages that result, which could
adversely affect our business.

Additionally, any incident could partially or completely shut down our
research and manufacturing facilities and operations.

We generate waste that must be transported to approved storage, treatment
and disposal facilities. The transportation and disposal of such waste are
required to meet applicable state and federal statutes and regulations. The
storage, treatment and disposal of such waste potentially exposes us to
environmental liability if, in the future, such transportation and disposal is
deemed to have violated such statues and/or regulations or if the storage,
treatment and disposal facilities are inadequate and are proved to have damaged
the environment.

The Company is also party to several environmental remediation
investigations and cleanups and, along with other companies, has been named a
"potential responsible party" for certain waste disposal sites. The Company has
also retained the liabilities with respect to certain pre-closing environmental
matters associated with the sale of the Rutherford Chemicals business. After
reviewing information currently available, management believes any amount paid
in excess of accrued liabilities will not have a material effect on its
business, financial condition or results of operations. However, these matters,
if resolved in a manner different from the estimates, could have a material
adverse effect on financial condition, operating results and cash flows when
resolved in future reporting periods.

THE POSSIBILITY WE WILL BE UNABLE TO PROTECT OUR TECHNOLOGIES COULD AFFECT OUR
ABILITY TO COMPETE.

Our success depends to a significant degree upon our ability to develop
proprietary products and technologies. However, we cannot be assured that
patents will be granted on any of our patent applications. We also cannot be
assured that the scope of any of our issued patents will be sufficiently broad
to offer meaningful protection. We only have patents issued in selected
countries. Therefore, third parties can make, use, and sell products covered by
our patents in any country in which we do not have patent protection. In
addition, our issued patents or patents we license could be successfully
challenged, invalidated or circumvented so that our patent rights would not
create an effective competitive barrier. We provide our customers the right to
use our products under label licenses that are for research purposes only. These
licenses could be

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16

contested, and we cannot be assured that we would either be aware of an
unauthorized use or be able to enforce the restrictions in a cost-effective
manner.

If a third party claimed an intellectual property right to technology we
use, we may need to discontinue an important product or product line, alter our
products and processes, defend our right to use such technology in court or pay
license fees. Although we may under these circumstances attempt to obtain a
license to such intellectual property, we may not be able to do so on favorable
terms, or at all. Additionally, if our products are found to infringe a third
party's intellectual property, we may be required to pay damages for past
infringement, and lose the ability to sell certain products or receive licensing
revenues.

COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSE.

Changing laws, regulations and standards relating to corporate governance
and public disclosure including the Sarbanes-Oxley Act of 2002 are creating
uncertainty for companies. These new or changed laws and standards are subject
to multiple interpretations, in many cases due to their lack of specification.
As a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies which could result in higher
costs necessitated by revisions to disclosures and governance practices. We are
committed to maintaining high standards of corporate governance and public
disclosure. As a result of the efforts to comply with the evolving laws and
regulations increased general and administrative expenses have been experienced
and are likely to continue. In particular, our efforts to comply with Section
404 of the Sarbanes-Oxley Act of 2002, and the related assessments have required
commitment of significant internal and external financial and operational
resources.

EMPLOYEES

At December 31, 2004, the Company had 1,938 employees worldwide (885 of
whom were from international operations) compared with 1,861 employees at
December 31, 2003 and 1,879 at December 31, 2002.

Cambrex Karlskoga AB, Cambrex Profarmaco Landen NV, Cambrex 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.

SEASONALITY

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, plant shutdowns, and the timing of large contract revenue streams,
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 2004, 2003 and 2002 amounted to $29,945, $22,100 and $23,684,
respectively. Sales from international operations were $238,673 in 2004,
$223,666 in 2003, and $207,082 in 2002. Refer to Note #21 to the Cambrex
Corporation and Subsidiaries Consolidated Financial Statements.

AVAILABLE INFORMATION

This annual report on Form 10-K, the Company's quarterly reports on Form
10-Q, the Company's current reports on Form 8-K, and amendments to those reports
filed or furnished pursuant to Section 13(a) or

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17

15(d) of the Securities Exchange Act of 1934, 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 ("SEC"). The most recent certifications by
the Company's Chief Executive Officer and Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to this
annual report on Form 10-K. Last year, the Company filed with the New York Stock
Exchange the Annual Chief Executive Officer Certification as required by Section
303A.12.(a) of the New York Stock Exchange Listed Company Manual.

Reports filed by the Company with the SEC may be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at
www.sec.gov that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC.

The following corporate governance documents are available free of charge
on the Company's website: the charters of our Audit, Compensation and Governance
Committees, our Corporate Governance Guidelines and our Code of Business Conduct
and Ethics. These corporate governance documents are also available in print to
any stockholder requesting a copy from our corporate secretary at our principal
executive offices. Information contained on our website is not part of this
report. We will also post on our website any amendments to or waivers of our
Code of Business Conduct and Ethics that relate to our Chief Executive Officer,
Chief Financial Officer and Principal Accounting Officer.

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18

ITEM 2 PROPERTIES.

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

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, 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

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19

to regulatory approval. It is generally possible, with proper lead time and
customer approval, to transfer the manufacturing of a particular product to
another facility should capacity constraints dictate.

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

ITEM 3 LEGAL PROCEEDINGS.

See "Environmental and Safety Regulations and Proceedings" under Item 1 and
Note #23 to the Cambrex Corporation and Subsidiaries Consolidated Financial
Statements with respect to various proceedings involving the Company in
connection with environmental matters. The Company is party to a number of other
proceedings also discussed in Note #23. Management is of the opinion that while
the ultimate liability resulting from those proceedings, as well as
environmental matters, may have a material effect upon the results of operations
in any given year, they will not have a material adverse effect upon the
Company's liquidity nor its financial position.

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

None

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20

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table lists the executive officers of the Company:

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

Mr. Mack joined Cambrex in February 1990 and currently serves in the role
of Executive Chairman of the Board of Directors. In August 2004, Mr. Leone was
appointed President and Chief Executive Officer, to replace Mr. Mack, who was
appointed Executive Chairman of the Board. Mr. Mack was appointed President and
Chief Operating Officer and a director of Cambrex when he joined the Company in
February 1990. In April 1995, he was named Chief Executive Officer with the
retirement of the former Chief Executive Officer, Mr. Cyril Baldwin. In January
2003, Mr. Mack was reappointed to the position of President, while also
retaining his position of Chief Executive Officer. In October 1999, Mr. Mack was
elected Chairman of the Board of Directors. Prior to joining Cambrex, Mr. Mack
was Vice President in charge of the worldwide Performance Chemicals business of
Olin Corporation. 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. Leone was appointed President and Chief Executive Officer of Cambrex
and a member of the Board of Directors in August 2004. Previously, Mr. Leone was
President of the Global Dermatology Division of Aventis Pharmaceuticals, Inc.
and Senior Vice President of Aventis Pharmaceuticals, Inc. from 2003 to 2004.
From 1996 to 2003, he was with Aventis Pharmaceuticals, Inc., most recently in
the role of Senior Vice President and Chief Operating Officer of U.S. Commercial
Operations. From 1998 to 1999, he was Senior Vice President and General Manager
of Rhone-Poulenc Rorer Pharmaceuticals and from 1996 to 1997, he was President
and General Manager of Rhone-Poulenc Rorer Pharmaceuticals. From 1984 to 1996,
Mr. Leone was with American Home Products Corporation, serving in various
general management, marketing and business development roles, most recently
holding the position of Vice President and General

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Manager of Wyeth-Lederle Vaccines and Pediatrics. From 1974 to 1984, Mr. Leone
was with Pfizer, Inc., serving in various marketing and operations roles.

Mr. Mossman joined Cambrex in February 2003 and currently serves in the
role of Executive Vice President and Chief Operating Officer. He joined the
Company as President of the Pharmaceuticals Business Unit and was appointed to
the position of President and Chief Executive Officer of the Cambrex
Pharmaceutical and Biopharmaceutical Business Units in October 2003. In August
2004, he was appointed to his current position of Executive Vice President and
Chief Operating Officer. Prior to joining Cambrex, Mr. Mossman was with Dixie
Chemical Company, Inc. from 1983 through 2003 and served in the role of
President since 1990. From 1979 through 1980, Mr. Mossman was General Manager,
Thiokol Specialty Chemicals Division and from 1972 through 1979, he was
President and Cofounder of Southwest Specialty Chemical Company, Inc.

Mr. Beshar serves in the role of Executive Vice President and Chief
Financial Officer, having joined Cambrex in December 2002. Upon his initial
appointment to Cambrex, he was named Senior Vice President and Chief Financial
Officer and in January 2004 was appointed Executive Vice President and Chief
Financial Officer. Prior to joining Cambrex, Mr. Beshar was Senior Vice
President and Chief Financial Officer with Dendrite International. Prior to
Dendrite, he was Executive Vice President, Finance and Chief Financial Officer
for Exp@nets, Inc. from 1998 through 2002. Mr. Beshar has served as Chief
Financial Officer for other businesses in his career and has been the President
and Chief Financial Officer of a company privately owned by Merrill Lynch
Capital Partners. Mr. Beshar is a member of the Board of Directors of PNY
Technologies, Inc.

Dr. Carroll joined Cambrex in September 1997 as Vice President Technology
and has served in the role of Vice President and Chief Technology Officer,
Pharmaceutical Technologies since January 2002. Prior to joining Cambrex, Dr.
Carroll had been with Bristol-Myers Squibb from 1983 to 1997, most recently in
the role of Vice President, Chemical Development for Bristol-Myers Squibb
Technical Operations. Dr. Carroll was with Pfizer, Inc. from 1966 to 1983 in
various research and development roles.

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

Mr. Eansor joined Cambrex in October 2000 as Vice President and General
Manager, BioTherapeutics Business Unit and currently serves in the role of
President, Bioproducts Business Unit to which he was appointed in July 2002.
Prior to joining Cambrex, Mr. Eansor was with R. P. Scherer North America from
1981 until 2000, serving in various roles, including Vice President of
Pharmaceutical Operations, Vice President Operations, and General Manager.

Mr. Klosk joined Cambrex in October 1992 and currently serves in the role
of Chief Operating Officer, Cambrex Biopharmaceutical Business Unit and
Executive Vice President, Administration of Cambrex Corporation. Mr. Klosk
joined the Company as Vice President, Administration. He was appointed Executive
Vice President, Administration in October 1996 and was promoted to the position
of Executive Vice President, Administration and Chief Operating Officer for the
Cambrex Pharma and Biopharmaceutical Business Unit in October 2003. In January
2005, Mr. Klosk assumed direct responsibility for the leadership of the
Biopharmaceutical Business Unit as Chief Operating Officer and continues to
serve as a corporate officer as Executive Vice President, Administration. From
February 1988 until he joined Cambrex, Mr. Klosk was Vice President,
Administration and Corporate Secretary for The Genlyte Group, Inc. From 1985 to
1988, he was Vice President, Administration for Lightolier, Inc., a subsidiary
of The Genlyte Group, Inc.

Dr. Marshak joined Cambrex in August 2000 as Vice President -- Research and
Development, BioSciences Group and has served in the role of Vice President and
Chief Technology Officer, Biotechnology, since January 2002. Prior to joining
Cambrex, Dr. Marshak held various Research and Development positions

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22

with Osiris Therapeutics, Inc. from 1999 to 2000, most recently as Executive
Scientific Advisor. From 1986 to 1994, he was a Senior Staff Investigator with
Cold Spring Harbor Laboratory.

Mr. Morrison joined Cambrex in July 2004 as Vice President, Tax. From 2002
until 2004, he held the position of Vice President, Corporate Taxation with
Movado Group, Inc. From 1998 to 2000, he was with Calvin Klein, Inc., as Tax
Director and Ernst & Young as Senior Tax Manager, US Corporate Tax from 1996 to
1998. Prior experience includes BCE Telecom Corporation from 1988 to 1995 and
Pirelli Cable Corporation from 1986 to 1988, serving in various management roles
in corporate taxation.

Dr. Russolo is President of the Cambrex Profarmaco Business Unit and joined
the Company in 1994 with the acquisition of Profarmaco Nobel S.r.l. in Milan
Italy, where he served as Managing Director since 1982. Dr. Russolo joined
Profarmaco Nobel S.r.l. in 1971. Upon the acquisition of Profarmaco Nobel
S.r.l., Dr. Russolo continued serving in the role of Managing Director until
2000, when he was appointed to his current position.

Mr. Sargen joined Cambrex as Vice President, Finance in February 2003.
Previously, he was with Exp@nets, Inc. from 1999 through 2002, serving in the
roles of Executive Vice President, Finance/Chief Financial Officer and Vice
President/Corporate Controller. From 1996 to 1998, he was with Fischer
Scientific International's Chemical Manufacturing Division, serving in the roles
of Vice President, Finance and Controller. Mr. Sargen has also held various
positions in finance, accounting and audit with Merck & Company, Inc., Heat and
Control, Inc., and Deloitte & Touche.

Mr. Silvey joined Cambrex in August 2004 as Vice President, Internal Audit.
Prior to joining the Company, he was with Automatic Data Processing (ADP) from
2002 to 2004 as Vice President, Financial and Operational Audit. From 1998 to
2002, he was with Lucent Technologies, most recently in the role of Chief
Financial Officer, Americas' -- Lucent Worldwide Services. From 1995 to 1998, he
was with CR Bard, Inc., serving in various finance and audit roles. From 1990 to
1995, he was with KPMG Peat Marwick LLP as Audit Manager.

Mr. Thauer joined the Company in August 1989 and has served in the role of
Senior Vice President, Law and Environment, General Counsel, and Corporate
Secretary since January 2001. Upon joining the Company, he was appointed to the
position of General Counsel and Corporate Secretary and was appointed Vice
President, Law and Environment in December 1992. From 1987 until 1989, 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 held various positions
with Avon Products, Inc., including U.S. Legal Department Head and Corporate
Assistant Secretary.

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23

PART II

ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

The Company's Common Stock, $.10 par value is listed on the New York Stock
Exchange (NYSE) under the symbol CBM. 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, 2005, the Company estimates that there were
approximately 2,512 beneficial holders of the outstanding Common Stock of the
Company.

The quarterly dividend on common stock was $0.03 for 2004 and 2003.

2004 Equity Compensation Table

The following table provides information as of December 31, 2004 with
respect to shares of common stock that may be issued under the Company's
existing equity compensation plans.

2000 EMPLOYEE PERFORMANCE STOCK OPTION PLAN (NOT APPROVED BY SECURITY HOLDERS)

The 2000 Employee Performance Stock Option Plan provides for the grant of
stock options (both incentive stock options and "non-qualified" stock options)
primarily to key employees of the Company and its subsidiaries who are not
executive officers. The plan is generally administered by the Compensation
Committee of the Board, which has full authority, subject to the terms of the
plan, to determine the provision of awards, including the amount and type of the
awards and vesting schedules, as well as to interpret the plan.

Individual award agreements set forth the applicable vesting schedule for
such awards, which are based on the Company's publicly traded share price but
which may also be based on the passage of time or otherwise. In general,
following a "change in control" (as defined in the plan), each stock option will
be canceled in exchange for a cash settlement equal to the excess of the "change
in control price," which means

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24

the highest price per share paid or offered in any bona fide transaction related
to a change in control (as determined by the Compensation Committee), over the
exercise price of the stock option.

Stock options are granted with an exercise price of not less than one
hundred percent of the fair market value of the underlying Cambrex common stock
on the date of grant. Stock options are not exercisable more than ten years from
the date of grant.

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, 2004 are derived from
the audited financial statements. The consolidated financial statements of the
Company as of December 31, 2004 and December 31, 2003 and for each of the years
in the three year period ended December 31, 2004 and the report of independent
registered public accounting firm thereon are included elsewhere in this annual
report. On November 10, 2003, the Company completed the sale of the Rutherford
Chemicals business (See Note #13 consolidated financial statements). As a
result, the businesses comprising the Rutherford Chemicals segment are being
reported as a discontinued operation for all periods presented. The data
presented below should be read in conjunction with the financial statements of
the Company and the notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere herein.

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(1) 2004 results include a goodwill impairment charge related to the Baltimore
reporting unit of the Biopharma segment of $48,720.

(2) 2003 results include a pre-tax charge of $11,342 recorded in operating
expenses for the settlement of certain class action lawsuits involving Mylan
Laboratories and the establishment of valuation allowances against net
domestic deferred tax assets totaling $21,487 within the provision for
income taxes.

(3) 2002 results include a pre-tax charge of $4,238 for asset impairment and
severance related to the closure of a small manufacturing facility and a
$7,344 pre-tax charge for investment impairments recorded in other expense.

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

(5) 2001 results include a pre-tax charge of $2,022 related to the closure of a
small manufacturing facility and $2,000 for inventory write-offs in the
Bioproducts segment.

(6) Includes the results of Cambrex Profarmaco Landen NV from the date of
acquisition effective March 2000 and the results of Cambrex Bio Science
Wokingham Limited from the date of acquisition effective July 2000.

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26

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

EXECUTIVE OVERVIEW

The Company's business consists of three segments: Bioproducts, Biopharma
and Human Health. The Bioproducts segment consists of research products and
therapeutic applications. The Biopharma segment consists of the Company's
contract biopharmaceutical process development and manufacturing business. The
Human Health segment is primarily comprised of active pharmaceutical ingredients
derived from organic chemistry and pharmaceutical intermediates.

Members of the senior management team regularly review key financial
metrics and the status and strategy of operating initiatives within our
business. These metrics include sales growth, gross margin performance,
operating income margins, cash flows from operations, working capital levels,
and return on capital employed at both a business unit and consolidated level in
addition to earnings per share at a consolidated level. Management reviews this
information on a monthly basis through extensive business unit reviews which
include, among other operating issues, detailed discussions related to
significant sales opportunities, proposed and ongoing investments in new
businesses or property plant and equipment, cost reduction efforts, and the
status of new product development.

In 2004, the Company continued to see strong growth across many product
categories within its Bioproducts segment. The Bioproducts segment is primarily
driven by biotechnology research spending levels, the overall demand for
endotoxin detection products and services and the Company's ability to
continually provide product upgrades and innovative new products and services.

The loss of a large customer in 2003 whose product did not receive FDA
approval negatively affected our Biopharma segment and the Company continues to
take aggressive steps to replace this business. The Company believes its
Biopharma business will experience more volatility than its other businesses
until such time that it is able to secure more long-term commercial contracts,
but believes the overall growth trend predicted for the contract
biopharmaceutical manufacturing market will result in significant long-term
growth for businesses providing these services.

In the Human Health segment, the Company saw net sales growth primarily
driven by the impact of a weaker U.S. dollar, with increases in sales of several
active pharmaceutical ingredients offset by reductions in others, and pricing
pressure within certain product categories. This segment is driven primarily by
patent expirations of branded drugs, population demographics, pressures to
contain health care costs, the level of capacity available for outsourcing and
the level of outsourcing by branded pharmaceutical companies.

During 2004, the Company evaluated the carrying value of the goodwill
related to its Baltimore site, which is reported in the Biopharma segment, and
determined that it may not be recoverable due to the lowering of Baltimore's
revenue and operating income forecasts for 2004 and beyond versus prior
projections. The Company tested for impairment and determined that the carrying
value exceeded its fair value, as determined by using a discounted cash flow
model. Management utilized appraisals to determine the value of its tangible and
identifiable intangible assets for purposes of determining the implied fair
value of goodwill. Upon completion of the assessment, the Company recorded a
non-cash impairment charge of $48,720 to reduce the carrying value of goodwill
in the Baltimore reporting unit to its estimated fair value of $65,584. Refer to
Note #5 for further details.

During 2003, the Company completed its transformation to a pure life
sciences company with the sale of the Rutherford Chemicals business unit during
the fourth quarter.

During 2003, the Company settled its Mylan lawsuit and took a pre-tax
charge for approximately $11,342 as discussed more fully below and in Note #23,
and recorded valuation allowances against net domestic deferred tax assets
totaling $21,487 within the Provision for income taxes, explained more fully
below and in Note #9. The Company's tax rate may experience volatility from the
mix of domestic and foreign earnings until such time that domestic operations
achieve sustainable profitability.

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27

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.
Actual results or amounts could differ from estimates and the differences could
have a material impact on the consolidated financial statements. 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 in our Bioproducts and Human Health segments are generally
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 which are classified as allowances and rebates.

Some contracts in our Bioproducts and Biopharma segments are based on time
and materials and revenue for those are recognized as services are performed.
The Biopharma segment also utilizes contracts that contain milestone based
payments. The Company utilizes the EITF-91-6 "Revenue Recognition of Long-term
Power Sales Contracts" model for recording revenue from these contracts. Under
this method, revenue is based on the cost of efforts (since contract
commencement) up to the reporting date, divided by the total estimated
contractual cost (from the contract commencement to the end of the development
arrangement), multiplied by the total expected contractual payments under the
arrangement. However, revenue is limited to the amount of nonrefundable cash
payments received or contractually receivable at the reporting date.

In each of our segments we have certain contracts that contain multiple
deliverables. These deliverables often include process development services and
commercial production. The Company follows the guidance contained in EITF 00-21
"Accounting for Revenue Arrangements with Multiple Deliverables". Revenue for
each element is recognized when delivered to the customer based on the fair
value of the element as determined based on sales price when sold separately.

Amounts billed in advance are recorded as deferred revenue on the balance
sheet.

Asset Valuations and Review for Potential Impairments

In accordance with FAS 144, our review of long-lived assets, principally
fixed assets and other amortizable intangibles requires us to estimate the
undiscounted future cash flows generated from these assets, whenever events or
changes in circumstances indicate that the carrying value may not be fully
recoverable. If undiscounted cash flows are less than carrying value, the
long-lived assets are written down to fair value which equals the discounted
cash flows.

Our review of the carrying value of goodwill and indefinite lived
intangibles is done annually or whenever events or changes in circumstances
indicate that the carrying value may not be fully recoverable in accordance with
FAS 142 utilizing a two-step process. In the first step, the fair value of the
reporting units is determined using a discounted cash flow model and compared to
the carrying value. If such analysis indicates that impairment may exist, we
then estimate the fair value of the other assets and liabilities utilizing
appraisals and discounted cash flow analyses to calculate an impairment charge.

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28

The determination of fair value for both FAS 144 and FAS 142 is judgmental
in nature and involves the use of significant estimates and assumptions,
including projected future cash flows, discount rates, determination of
appropriate market comparables and perpetual growth rates. These estimates and
assumptions could have a significant impact on whether or not an impairment
charge is recognized and the magnitude of any such charge.

As noted previously and in Note #5, in the third quarter of 2004, the
Company recorded a goodwill impairment loss of $48,720 related to its Baltimore
reporting unit. The Company's annual review for goodwill impairment, which was
performed during the fourth quarter, did not result in any additional charges
for 2004.

Environmental and Litigation Contingencies

The Company periodically assesses the potential liabilities related to any
lawsuits or claims brought against us. See Note #23 in the accompanying
financial statements for a discussion of our current environmental and
litigation matters, reserves recorded and our position with respect to any
related uncertainties. While it is typically very difficult to determine the
timing and ultimate outcome of these actions, the Company uses its best judgment
to determine if it is probable that the Company 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. If probable and estimable, the Company
accrues for the costs of clean-up, settlements and legal fees. If the aggregate
amount of the liability and the timing of the payment is fixed or reasonably
determinable, the Company discounts the amount to reflect the time value of
money. 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 the Company may have made with respect to their resolution.

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 basis 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.
When assessing the valuation allowance, the Company takes into account certain
tax planning strategies. The Company's valuation allowances primarily relate to
net operating loss carryforwards, foreign tax credits, and alternative minimum
tax credits in the U.S., where profitability is uncertain and net operating loss
carryforwards in certain state and foreign jurisdictions with little or no
history of generating taxable income.

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
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 generally recorded and amortized over future periods. The
Company believes that the assumptions utilized for recording obligations under
its plans are reasonable.

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29

RESULTS OF OPERATIONS

As discussed in Note #13 of the accompanying financial statements, on
November 10, 2003, the sale of Rutherford Chemicals was completed and
accordingly, the business comprising the Rutherford Chemicals segment is being
reported as a discontinued operation in all periods presented.

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 three segments,
in dollars and as a percentage of the Company's total gross sales for the years
ended December 31, 2004, 2003 and 2002, as well as the gross profit by product
segment for 2004 and 2003:

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30

2004-2003 GROSS SALES & GROSS PROFIT BY PRODUCT SEGMENT

2004 COMPARED TO 2003

Gross sales for 2004 increased 8.3% to $439,115 from $405,591 in 2003.
Sales in the Bioproducts and Human Health segments increased compared to 2003
more than offsetting the decrease in the Biopharma segment. Gross sales were
favorably impacted 4.5% due to the exchange rates reflecting the weakness in the
U.S. dollar primarily versus the Euro and Swedish Krona.

Gross profit in 2004 was $170,740 compared to $162,406 in 2003. Gross
margin in 2004 decreased to 38.9% from 40.0% in 2003, reflecting lower margins
in the Biopharma and Human Health segments partially offset by higher margins in
the Bioproducts segment.

The following table shows gross sales by geographic area for the years
ended December 31, 2004 and 2003:

The Bioproducts Segment gross sales in 2004 of $136,108 were $16,810 or
14.1% above 2003. Bioproducts sales were favorably impacted 4.0% due to exchange
rates reflecting a weaker U.S. dollar. The increased sales before the impact of
foreign currency are primarily due to higher sales across most product
categories including research products, endotoxin detection products,
bioservices sales and process development products due to stronger demand,
higher pricing, new products and customers and investments in sales and
marketing. These higher sales were partially offset by lower sales in
biotherapeutic serum mainly due to timing of shipments and stronger sales in
2003.

The Bioproducts segment gross margins increased primarily due to higher
sales volume, increased pricing in most product categories, lower bad debt
reserves due to favorable collections and favorable impact of foreign currency
partly offset by higher costs for raw materials.

The Biopharma Segment gross sales in 2004 of $43,270 were $858 or 1.9%
below 2003. The sales decrease primarily reflects reduced billings in our
biopharmaceutical manufacturing business driven by the completion or timing of
projects and a change in contract terms from time and material to milestone
payments. This decrease was partially offset by higher reimbursable materials
revenue due to timing of current projects. Foreign currency had no impact on
Biopharma sales.

The Biopharma segment gross margins were down significantly compared to the
prior year due to higher production costs, increased fixed costs associated with
the addition of the 2800 liter fermentation suite (a new suite which will
increase the production capabilities in the facility) and higher reimbursable
materials revenue which has very low margins.

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The Human Health Segment gross sales in 2004 of $259,737 were $17,572 or
7.3% above 2003. Human Health sales were favorably impacted 5.6% due to exchange
rates reflecting a weaker U.S. dollar. Excluding the currency impact, the
increase in sales is due mainly to higher sales of custom development products,
a pharmaceutical intermediate used for end-stage kidney treatment, higher sales
of cardiovascular, gastrointestinal and Alzheimer treatment APIs, and higher
sales of amphetamines due to higher volumes. These sales were partially offset
by lower sales of central nervous system APIs due to increasing competition
resulting in lower volumes sold.

The Human Health segment gross margins decreased due to pricing pressures
on APIs and other fine custom chemicals, unfavorable impact of foreign currency
and higher production costs partially offset by increased sales volume and
favorable product mix.

Selling, general and administrative expenses of $102,769 or 23.4% as a
percentage of gross sales in 2004 increased from $95,117 or 23.4% in 2003. Sales
and marketing expenses increased primarily due to additional sales and marketing
personnel in our Human Health and Bioproducts segments and the impact of foreign
currency exchange. Higher administrative costs are primarily due to the impact
of currency translation due to the weaker U.S. dollar, regulatory compliance
costs associated with the Sarbanes-Oxley Act and higher information technology,
legal and environmental costs, partially offset by lower medical claims, the
vesting of stock appreciation rights in the fourth quarter 2003 and lower
pension expense.

Research and development expenses of $19,659 were 4.5% of gross sales in
2004, compared to $17,123 or 4.2% of gross sales in 2003. The increase primarily
reflects investments in new product technologies for pathogen testing, higher
custom development costs and the impact of foreign currency exchange partially
offset by decreased spending for endotoxin detection technologies.

The 2004 results include a pre-tax impairment charge of $48,720. During the
third quarter of 2004, the Company evaluated whether the carrying value of the
goodwill related to its Baltimore reporting unit, which is a component of the
Biopharma segment, was recoverable due to the lowering of Baltimore's revenue
and operating income forecasts for 2004 and beyond versus prior projections. The
Company tested for impairment and determined that the carrying value exceeded
its fair value, as determined by using a discounted cash flow model. Management
utilized appraisals to value its tangible and identifiable intangible assets for
purposes of determining the implied fair value of goodwill. Upon completion of
the assessment, the Company recorded a non-cash impairment charge of $48,720 to
reduce the carrying value of goodwill in the Baltimore reporting unit to its
estimated fair value of $65,584. The Company still has a substantial amount of
goodwill related to this business and others, which may be subject to additional
impairment charges if the business units do not perform at or near projected
levels in the future. Certain other facilities do not have enterprise values
that are significantly higher than the carrying value of goodwill. Refer to Note
#5 for further details.

The 2003 results include a pre-tax provision of $11,342 (discounted to the
present value of the five year pay-out) related to an agreement reached with
Mylan Laboratories under which Cambrex will contribute $12,415 to the settlement
of consolidated litigation brought by a class of direct purchasers. Of this
amount, $6,015 has been paid as of December 31, 2004 with the balance due in
equal installments over the next four years. In exchange, Cambrex received from
Mylan a release and full indemnity against future costs or liabilities in
related litigation brought by the purchasers, as well as potential future claims
related to this matter.

The operating loss in 2004 was $408 compared to income of $38,824 in 2003.
The results reflect lower gross margins in the Biopharma and Human Health
segments partially offset by higher margins in the Bioproducts segment, the
$48,720 pre-tax charge for the goodwill impairment discussed above and higher
operating expenses. 2003 operating profit includes the $11,342 pre-tax charge
for the Mylan settlement discussed above.

Net interest expense of $10,950 in 2004 decreased $890 from 2003. 2004 net
interest expense was reduced by interest income accrued on an income tax refund,
while in 2003 interest expense also included a

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32

write off of deferred charges in 2003 associated with the 364-day renewable
senior revolving credit facility that was not renewed. Average debt balance,
year over year, was virtually unchanged, while the average interest rate, net of
the items discussed above, was 5.5% in 2004 versus 4.8% in 2003. The higher
average rate in 2004 was due to the full year impact of $100 million of
privately placed long-term debt, which carries a fixed rate that is currently
higher than the Company's revolving credit facility and the impact of slightly
higher variable interest rates on the revolver.

The Company recorded tax expense of $14,461 in 2004 compared to $26,600 in
2003. During 2003, the Company concluded that $21,487 of domestic deferred tax
assets were deemed unlikely to be realized, and as such, valuation allowances
for this amount were recorded against these assets. Since that time, the Company
has maintained a full valuation allowance on its domestic net deferred tax
assets and no tax benefit has been recognized for domestic pre-tax losses.
Accordingly, for the year ended December 31, 2004 a valuation allowance of
$24,047 on the Company's domestic net deferred tax assets, including amounts
related to the goodwill impairment charge, was recorded. The majority of the
2004 tax expense represents taxes on international profits.

The Company will continue to record a full valuation allowance on its
domestic net deferred tax assets until an appropriate level of domestic
profitability is sustained or tax strategies can be developed that would enable
the Company to conclude that it is more likely than not that a portion of the
domestic net deferred assets would be realized. If the Company continues to
report pre-tax losses in the United States, income tax benefits associated with
those losses will not be recognized and, therefore, those losses would not be
reduced by such income tax benefits. Additionally, should domestic losses
continue, it is possible that certain tax planning strategies preserving certain
domestic tax assets could be deemed inadequate, resulting in additional
valuation allowances in the future. The carryforward periods for foreign tax
credits, research and experimentation tax credits, net operating losses, and the
federal alternative minimum tax credits are 10 years, 20 years, 20 years and an
indefinite period, respectively. As such, improvements in domestic pre-tax
income in the future may result in these tax benefits ultimately being realized.
However, there is no assurance that such improvements will be achieved.

During the 2004 year-end financial reporting process, the Company
identified certain accounting adjustments principally related to amortization of
leasehold improvements, employee benefit accruals, inventory and taxes that
impacted prior years and prior quarters within 2004. The cumulative impact of
the prior years' adjustments was a reduction to net income of $475 and is not
considered material to any prior period. The prior years' adjustment of $475 has
been reflected in the restated first quarter 2004 results. The impact on net
income for the first, second and third quarters of 2004 was a decrease of $439
or $0.02 per fully diluted share, an increase of $229 or $0.01 per fully diluted
share and a decrease of $666 or $0.03 per fully diluted share, respectively. The
Company has restated the results of the first three quarters of 2004 to reflect
these adjustments.

The loss from continuing operations in 2004 was $25,892, or $0.99 per
diluted share versus income of $245, or $0.01 per diluted share in 2003. The
2004 loss from continuing operations includes a goodwill impairment charge of
$48,720 discussed above. The 2003 income from continuing operations includes a
charge of approximately $21,487 for the deferred tax valuation allowance and an
$11,342 pretax charge for the Mylan settlement both discussed above.

In the third quarter 2003, the Company announced that an agreement to sell
the Rutherford Chemicals business had been signed and on November 10, 2003 the
transaction was completed. As a result, this business is being reported as a
discontinued operation for all periods presented. The terms of sale resulted in
a write-down of assets to fair value of approximately $53,098 recorded in the
third quarter of 2003 which was based on the selling price, including fees
associated with the transaction. In 2003, loss on discontinued operations, net
of tax was $54,308 including the write-down of assets. In 2004, the Company
recorded an additional $978 loss from discontinued operations primarily
resulting from a working capital adjustment made in the first quarter of 2004.

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33

The net loss in 2004 was $26,870, or $1.03 per diluted share versus a net
loss of $54,063, or $2.07 per diluted share in the same period a year ago.

2003 COMPARED TO 2002

Gross sales for 2003 increased 2.8% to $405,591 from $394,430 in 2002.
Sales in the Human Health and Bioproducts segments increased compared to 2002
more than offsetting the decrease in the Biopharma segments. Gross sales were
favorably impacted 7.0% due to the exchange rates reflecting the weakness in the
U.S. dollar primarily versus the Euro and Swedish Krona.

Gross profit in 2003 was $162,406 compared to $177,718 in 2002. Gross
margin in 2003 decreased to 40.0% from 45.1% in 2002, reflecting lower margins
in all segments.

The following table shows sales by geographic area for the years ended
December 31, 2003 and 2002:

The Bioproducts Segment gross sales in 2003 of $119,298 were $11,428 or
10.6% above 2002. Bioproducts sales were favorably impacted 5.2% due to exchange
rates reflecting a weaker U.S. dollar. The increased sales before the impact of
foreign currency are primarily due to higher cell therapy services due to
increased demand and higher sales of normal human cells and media products due
to increased demand, higher pricing and new product launches in Europe. These
increases were partly offset by the impact of the sale of the In Vitro
diagnostic cell business during the first quarter of 2002.

The Bioproducts segment gross margins decreased primarily due to additional
bad debt reserves in 2003 and certain 2002 favorable inventory adjustments which
did not repeat in 2003, partly offset by favorable production volumes, pricing,
cost reduction activities and the favorable impact of foreign currency.

The Biopharma Segment gross sales in 2003 of $44,128 were $11,090 or 20.1%
below 2002. The sales decrease primarily reflects the reduced volumes and suite
utilization in our biopharmaceutical manufacturing business driven by the loss
of a biopharmaceutical customer whose product failed to receive FDA approval,
changes in terms of an existing contract and completion of other 2002 contracts
that were only partially replaced. Foreign currency had no impact on Biopharma
sales.

The Biopharma segment gross margins were down significantly compared to the
prior year due to lower suite utilization and lower pricing on an existing
contract.

The Human Health Segment gross sales in 2003 of $242,165 were $10,823 or
4.7% above 2002. Human Health sales were favorably impacted 9.1% due to exchange
rates reflecting a weaker U.S. dollar. Excluding the currency impact, the
decrease results from the reduced pricing and market share of certain imaging
products, lower shipments of a respiratory API due to reduced demand in the
U.S., lower shipments of cardiovascular APIs due primarily to the loss of a U.S.
customer and lower prices in Europe. Partly offsetting these decreases were
higher sales of central nervous system APIs and a hypertension API due to
increased demand, signing of a long-term sales agreement for an API to treat
Alzheimer's disease and increased sales of crop protection and feed additive
products due to high demand and successful implementation of higher capacity
production lines.

The Human Health segment gross margins decreased due to pricing pressures
on APIs and other fine custom chemicals including a volume-based rebate
adjustment and the unfavorable impact of foreign currency partly offset by
favorable product mix.
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34

Selling, general and administrative expenses of $95,117 or 23.4% as a
percentage of gross sales in 2003 increased from $85,762 or 21.7% in 2002. Sales
and marketing expenses increased primarily due to the impact of foreign currency
exchange and an investment in the Company's sales force. Higher administrative
costs reflect higher pension expenses, regulatory compliance costs associated
with the Sarbanes-Oxley Act, the costs incurred for the ongoing SEC
investigation into the restatement of results disclosed in the fourth quarter
2002, the vesting of stock appreciation rights in the fourth quarter 2003 and
the impact of currency translation due to the weaker U.S. dollar.

Research and development expenses of $17,123 were 4.2% of gross sales in
2003, compared to $15,794 or 4.1% of gross sales in 2002. The increase primarily
reflects investments in new product technologies for endotoxin detection and
molecular biology and the impact of foreign currency exchange.

The 2003 results include a pre-tax provision of $11,342 (discounted to the
present value of the five year pay-out) related to an agreement reached with
Mylan Laboratories under which Cambrex will contribute $12,415 to the settlement
of consolidated litigation brought by a class of direct purchasers. As of
December 31, 2004, $6,015 has been paid with the balance due in equal
installments over the next four years. In exchange, Cambrex received from Mylan
a release and full indemnity against future costs or liabilities in related
litigation brought by the purchasers, as well as potential future claims related
to this matter. The 2002 results include a pre-tax charge of $4,238 for asset
impairment and other charges related to the closure of a small manufacturing
facility and other severance charges.

The operating profit in 2003 was $38,824 compared to $71,924 in 2002. The
results reflect lower gross margins in all segments, the $11,342 pre-tax charge
for the Mylan settlement discussed above and higher operating expenses.

Net interest expense of $11,840 in 2003 increased $576 from 2002 reflecting
higher average interest rates due primarily to the higher fixed interest rate on
certain senior notes issued in 2003, partly offset by the lower average debt due
primarily to cash flows from operations and the proceeds from the sale of the
Rutherford Chemicals business. The average interest rate was 4.8% for the year
2003 versus 4.3% in 2002.

The provision for income taxes in 2003 resulted in an effective rate of
99.1% as compared with 24.3% in the same period of 2002. The combination of a
loss due to the sale of Rutherford Chemicals, the Mylan settlement, and a
geographic shift of forecasted income resulted in $21,487 of domestic deferred
tax assets being deemed unlikely to be realized, and as such, a valuation
allowance for this amount was recorded against these assets in 2003. The
deferred tax assets deemed unlikely to be realized for financial reporting
purposes include foreign tax credit carry-forwards, carrying a ten year life
from inception, the tax benefit related to domestic net operating losses from
continuing operations and research and experimentation tax credits that can be
carried forward 20 years, and a credit related to a federal alternative minimum
tax that can be carried forward indefinitely. The long carry-forward period for
domestic net operating losses and the alternative minimum credit and expected
improvements in domestic continuing operations may result in these tax benefits
ultimately being realized, however, there is no assurance that such improvements
can be achieved.

The income from continuing operations in 2003 was $245, or $0.01 per
diluted share versus $39,955, or $1.51 per diluted share in 2002. The 2003
income from continuing operations includes a charge of approximately $21,487 for
the deferred tax valuation allowance and a $11,342 pretax charge for the Mylan
settlement both discussed above. The 2002 results include $4,238 consisting of
an asset impairment and other charges related to the closure of a small
manufacturing facility and other severance charges and a $7,344 pre-tax charge
for investment impairments recorded in Other expense.

In the third quarter 2003, the Company announced that an agreement to sell
the Rutherford Chemicals business had been signed and on November 10, 2003 the
transaction was completed. As a result, this business is being reported as a
discontinued operation for all periods presented. The terms of sale resulted in
a write-down of assets to fair value of approximately $53,098 which was based on
the selling price, including fees associated with the transaction. In 2003, loss
on discontinued operations, net of tax was $54,308 compared to

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(dollars in thousands, except share data)
35

$6,546 in 2002. The 2003 results include the write-down of assets discussed
above. The loss in 2002 includes pre-tax charges of $10,000 for Vitamin B-3
litigation and $10,849 for asset impairment and other charges, pretax benefits
of $2,620 due to a favorable insurance settlement and $3,760 for a favorable
arbitration settlement. In addition to the special items discussed above, the
2003 loss from discontinued operations included unfavorable product mix and
higher energy and raw material prices.

The net loss in 2003 was $54,063, or $2.07 per diluted share versus net
income of $33,409, or $1.26 per diluted share in 2002.

LIQUIDITY AND CAPITAL RESOURCES

During 2004 cash and cash equivalents on hand increased $27,238 to $91,532.
Net cash flow from operations was $48,733 for the year ended for December 31,
2004, down from $73,286 in 2003. The decrease in cash flow is due primarily to
loss of operating cash flows from Rutherford Chemicals, an increase in accounts
receivable due to higher shipments in the fourth quarter 2004 compared to 2003,
and an increase in inventories due to timing of receipts partially offset by
lower payments in 2004 for Vitamin B-3 litigation and the Mylan legal
settlement. Cash flows used in investing activities of $44,513 in 2004 included
capital expenditures of $39,480 and the acquisition of Genolife SA for
approximately $5,256 compared to capital expenditures of $37,857 in 2003. Cash
flows from financing activities in 2004 of $16,674 included net borrowings of
debt of $13,510, proceeds from the exercise of stock options of $6,284,
partially offset by payment of dividends of $3,113. Cash flows used in financing
activities in 2003 were $60,588 including net repayments of debt of $56,253,
$2,420 to repurchase treasury stock and $3,100 to pay dividends offset by
proceeds from the exercise of stock options of $1,130.

Capital expenditures were $39,480, $37,857 and $40,443 in 2004, 2003 and
2002, respectively. In 2004, part of the funds were used for suite expansion at
our Biopharma sites; cell therapy manufacturing capabilities, upgrades to powder
media facilities and a large scale media preparation suite at our Bioproducts
sites; and warehouse upgrades and new small scale production equipment for
generic pharmaceuticals at our Human Health sites.

In November 2003, the Company amended its five-year Syndicated Senior
Revolving Credit Facility ("The 5-Year Agreement") of $268,750, which originated
in November 2001 and expires in November 2006. The 5-Year Agreement is led by
JPMorganChase as the Administrative Agent. The 5-Year Agreement was amended to
include an "accordion feature" which, if utilized, will allow for the increase
of the total commitments of up to $75,000 with bank approval.

The 5-Year 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 5-Year 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 1.20%, or

3) Money Market rate plus an applicable margin that ranges from .575% to
1.20%.

The applicable margin discussed above is based upon the ratio of
consolidated funded indebtedness to consolidated EBITDA. The Company also pays a
facility fee between .175% to .30% on the entire credit facility.

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

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(dollars in thousands, except share data)
36

As of December 31, 2004, there was $120,000 outstanding and $148,750
undrawn under the 5-year Agreement. Of the undrawn amount, $63,057 is available
to be borrowed as of December 31, 2004 due to limits established in the Credit
Agreement.

The 5-Year Agreement is subject to financial covenants requiring the
Company to maintain certain levels of net worth, interest coverage ratio,
leverage ratios and limitations on indebtedness. The Company complied with all
covenants during 2004.

In June 2003, the Company borrowed $75,000 in a private offering consisting
of 7-year guaranteed senior Notes due in June 2010 with interest payments due
semi-annually at an annual rate of 5.31%. During October 2003, the Company
borrowed an additional $25,000 in a private offering consisting of 10-year
guaranteed senior Notes due in October 2013 with interest payments due
semi-annually at an annual rate of 7.05%. These Notes rank equally with the
Company's other senior indebtedness. The funds were used primarily to pay down
existing bank debt and to provide Cambrex with longer term fixed rate debt.

The 2004 and 2003 average interest rates were 5.5% and 4.8%, respectively.

CONTRACTUAL OBLIGATIONS

At December 31, 2004, our contractual obligations with initial or remaining
terms in excess of one year were as follows:

See Notes #10, #11, #12 and #22 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 2004 and does not anticipate any covenant
compliance issues in the coming year. Any events that 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. See the Risk Factors section of this
document for further explanation of factors that may negatively impact our cash
flows. Any change in the current status of these factors could adversely impact
the Company's ability to fund operating cash flow requirements.

MARKET RISKS

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 to lower its exposure to market risks arising from adverse changes in
interest rates and foreign currency exchange rates.

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, Swedish
Krona and British pound sterling. The Company currently uses foreign currency
exchange forward
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(dollars in thousands, except share data)
37

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, 2004 was $16,692. The Company estimates the forward contracts to be
approximately 44% 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 $2,147 of pre-tax profits for a twelve-month
period would be at risk. This is based on unhedged risk of $21,471. As of
December 31, 2004, the non-local forecasted currency exposures were $38,084. Of
this forecasted exposure, $16,613 was hedged with major banks and through
offsetting inter-company hedge contracts, thereby reducing the non-hedged risk
to $21,471.

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.

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, 2004, the Company had eight interest rate swaps in
place with an aggregate notional value of $80,000, at an average fixed rate of
4.65%, 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, 2004, the coverage was approximately 67% of our
variable interest rate debt.

The 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 unforeseen
shifts in interest rates.

For example, at December 31, 2004 the company had variable debt of
$120,000, of which $80,000 is fixed by an interest rate swap. Holding all other
variables constant, if the LIBOR portion of the weighted average interest rates
in the variable rate debt increased by 100 basis points the effect on our
earnings and cash flows would have been higher interest expense of $400.

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. The Company continually assesses all known facts and
circumstances as they pertain to all legal and environmental matters and
evaluates the need for reserves and/or disclosures as deemed necessary based on
these facts and circumstances and as such facts and circumstances develop.

Environmental

In connection with laws and regulations pertaining to the protection of the
environment, the Company and/or its subsidiaries is a party to several
environmental proceedings and remediation investigations and cleanups and, along
with other companies, has been named a "potentially responsible party" for
certain waste disposal sites ("Superfund sites"). Additionally, as discussed in
the "Sale of Rutherford Chemicals" section of Note #23, the Company has retained
the liability for certain environmental proceedings associated with the
Rutherford Chemicals business. 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 resolution of such matters often spans
several years and frequently involves regulatory oversight and/or adjudication.
Additionally, many remediation requirements are not fixed and are likely to be
affected by future technological, site, and regulatory developments.
Consequently, the ultimate extent of liabilities with respect to such matters,
as well as the timing of cash disbursements cannot be determined with certainty.

In matters where the Company has been able to reasonably estimate its
liability, the Company has accrued for the estimated costs associated with the
study and remediation of Superfund sites not owned by the Company and the
Company's current and former operating sites. These accruals were $5,570 and
$5,100 at

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(dollars in thousands, except share data)
38

December 31, 2004 and 2003, respectively. The increase in the accrual is due to
currency fluctuation of $252, payments of $332 and an increase to the reserve of
$550. A portion of this increase relates to an increase in an existing reserve
associated with the on-going investigation and remediation at the Company's
Carlstadt, New Jersey location. An assessment of remedial costs based on
information currently known resulted in the increase. Based upon currently
available information and analysis, the Company's current accrual represents
management's best estimate of what it believes are the probable and estimable
costs associated with environmental proceedings, including amounts for legal and
investigation fees where a range of remediation costs may not be estimatable at
the reporting date.

The Company expects to receive information in the near future on three
matters, as described below that could impact the Company's current assessment
of its probable and estimable costs and as such may require an adjustment to the
reserves.

As a result of the sale of the Bayonne, New Jersey facility (see "Sale of
Rutherford Chemicals" section of this Note), an obligation to investigate site
conditions and conduct required remediation under the New Jersey Industrial Site
Recovery Act was triggered and the Company has retained the responsibility for
such obligation. The Company completed a Preliminary Assessment (PA) of the Site
and submitted the PA to the New Jersey Department of Environmental Protection.
The PA identified potential areas of concern based on historical operations and
proposed certain sampling at the Site. The Company has reserved for the costs of
the sampling. The results of the sampling will be used to develop an estimate of
the Company's future liability for remediation costs, if required.

In March 2000, the Company completed the acquisition of the Cambrex
Profarmaco Landen facility in Belgium. At the time of acquisition, Cambrex was
aware of certain site contamination and recorded a reserve for the estimated
costs of remediation. This property has been the subject of an extensive
on-going environmental investigation, which has been completed with no change to
the reserve warranted based on such information. The health risk assessment
related to the site contamination is on-going.

The Company's Cosan subsidiary conducted manufacturing operations in
Clifton, New Jersey from 1968 until 1979. In 1997, Cosan entered into an
Administrative Consent Order with the State of New Jersey Department of
Environmental Protection. Under the Administrative Consent Order, Cosan is
required to complete an investigation of the Clifton site conditions and conduct
remediation as may be necessary. The investigation of site conditions continues
and is expected to be completed in mid-2005. The results of the investigation
will enable the Company to estimate its liability, if any. In February 2005, the
New Jersey Federal District Court ruled that a lawsuit against Cosan by the
owners of property adjacent to the Clifton location could be placed on the
active calendar. The outcome of this matter could also affect the reserves.

The Company is involved in other matters where the range of liability is
not reasonably estimable at this time and it is not determinable when
information will become available to provide a basis for recording an accrual,
should an accrual be required.

If any of the Company's environmental matters are resolved in a more
unfavorable manner than presently estimated, these matters, either individually
or in the aggregate, could have a material adverse effect on the Company's
financial condition, operating results and cash flows when resolved in a future
reporting period.

LITIGATION AND OTHER MATTERS

Mylan Laboratories

In 1998 the Company and its subsidiary Profarmaco S.r.l. (currently known
as Cambrex Profarmaco Milano S.r.l.") ("Profarmaco") were named as defendants
(along with Mylan Laboratories, Inc. ("Mylan") and Gyma Laboratories of America,
Inc., Profarmaco's distributor in the United States) in a proceeding instituted
by the Federal Trade Commission ("FTC") in the United States District Court for
the District of Columbia (the "District Court"). The allegations arose from
exclusive license agreements between Profarmaco and Mylan covering two active
pharmaceutical ingredients ("APIs"). The FTC alleged violations of the Federal
Trade Commission Act; including unlawful restraint of trade and conspiracy to
monopolize markets for the APIs. A lawsuit making similar allegations against
the same parties seeking injunctive relief and treble damages was filed by the
Attorneys General of 31 states in the District Court on behalf of those

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(dollars in thousands, except share data)
39

states and persons in those states who were purchasers of the generic
pharmaceuticals. The FTC and Attorneys General's suits were settled in February
2001, with Mylan (on its own behalf and on behalf of Profarmaco and Cambrex)
agreeing to pay over $140,000 and with Mylan, Profarmaco and Cambrex agreeing to
monitor certain future conduct.

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

On April 7, 2003, Cambrex reached an agreement with Mylan under which
Cambrex would contribute $12,415 to the settlement of consolidated litigation
brought by a class of direct purchasers. In exchange, Cambrex and Profarmaco
received from Mylan a release and full indemnity against future costs or
liabilities in related litigation brought by purchasers, as well as potential
future claims related to this matter. In accordance with the agreement
approximately $6,015 has been paid through 2004, with the remaining $6,400 to be
paid over the next four years. Cambrex recorded an $11,342 charge (discounted to
the present value due to the five year pay-out) in the first quarter of 2003 as
a result of this settlement. As of December 31, 2004 the outstanding balance for
this liability was $5,885.

Vitamin B-3

On May 14, 1998, the Company's subsidiary, Nepera, which formerly operated
the Harriman facility and manufactured and sold 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. In
2000, Nepera reached agreement with the Government as to its alleged role in
Vitamin B-3 violations from 1992 to 1995. The Canadian government claimed
similar violations. All government suits in the U.S. and Canada have now been
concluded.

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. The actions seek injunctive relief and unspecified but substantial
damages. An accrual of $6,000 was recorded in the fourth quarter 1999 to cover
the anticipated government settlements, related litigation, and legal expenses.
During 2002 based on information developed during 2002 this accrual was
increased to $10,000. Several actions have been concluded during 2003 and 2004.
All settlement amounts are fully reserved. Additional settlements are being
discussed in several more indirect purchaser cases and we believe that current
reserves are sufficient to complete the settlements.

Litigation in the United States under the U.S. antitrust laws was commenced
some years ago by a group of European purchasers. On motion by the Vitamin B-3
defendants, the District Court dismissed the litigation, under the long-standing
rule that foreign purchasers cannot sue in U.S. courts under U.S. antitrust
statutes. Thereafter, the Federal Circuit Court for the District of Columbia
reversed the District Court's decision. The Vitamin B-3 defendants, supported by
the U.S. Department of Justice, appealed to the United States Supreme Court and
oral arguments were heard on April 29, 2004. In June 2004, the United States
Supreme Court ruled that foreign purchasers could not sue in U.S. courts under
U.S. antitrust statutes if the conduct at issue resulted in purely foreign harm.
However, the Court left open potential claims where foreign injuries suffered by
foreign plaintiffs were dependent upon domestic harm resulting from conduct that
violates the U.S. antitrust laws. The Supreme Court remanded the matter to the
Circuit Court for briefing on the issue of whether Plaintiffs preserved such a
claim in the underlying proceedings, in which case a hearing on the claim would
proceed in District Court. At December 31, 2004, the Company had an accrual of
approximately $3,043 for this matter. This accrual has been recorded in accrued
liabilities. Any adjustments to this liability will be recorded as part of
discontinued operations.

Sale of Rutherford Chemicals

The Company completed the sale of its Rutherford Chemicals business on
November 10, 2003. Under the agreement for the sale, the Company provided
standard representations and warranties and included various covenants
concerning the business, operations, liabilities and financial condition of the
Rutherford Chemicals business. Most of such representations and warranties will
survive for a period of thirty days after

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(dollars in thousands, except share data)
40

the Buyer's preparation of its audited financial statements for year-end 2004.
Therefore, claims for breaches of such representations would have to be brought
during that time frame. Certain specified representations and warranties and
covenants, such as those relating to employee benefit matters and certain
environmental matters, will survive for longer periods and claims under such
representations, warranties and covenants could be brought during such longer
periods. Under the sale agreement, the Company has indemnified the Buyer for
breaches of representations, warranties and covenants. Indemnifications for
certain but not all representations and warranties are subject to a deductible
of $750 and a cap at 25 percent of the purchase price. On March 31, 2005, the
Company received a claim by the purchasers of the Rutherford Chemicals business
claiming breach of representations and warranties contained in the October 2003
Purchase Agreement. The Company is in the process of evaluating the claim and
cannot determine at this time if it has any merit.

Under the agreement for sale, the Company has retained the liabilities
associated with existing general litigation matters related to Rutherford
Chemicals, including Vitamin B-3 as stated above. With respect to certain
pre-closing environmental matters, the Company retains the responsibility for:
(i) certain existing matters including violations, environmental testing for the
New York facility incinerator and off-site liabilities; and (ii) completing the
on-going remediation at the New York facility. Further, as a result of the sale
of the Bayonne, New Jersey facility, the obligation to investigate site
conditions and conduct required remediation under the provisions of the New
Jersey Industrial Site Recovery Act was triggered; and the Company has retained
the responsibility for completion of any such investigation and remediation.
With respect to all other pre-closing environmental liabilities, whether known
or unknown, the Buyer is responsible for the management of potential future
matters; however, the Buyer and the Company may share the costs of associated
remediation with respect to such potential future matters, subject to certain
limitations defined in the agreement for sale. The Company has accrued for
expenses which are deemed probable and estimable.

Class Action Matter

In October 2003, the Company was notified of a securities class action
lawsuit filed against Cambrex and five former and current Company officers. Five
class action suits were filed with the New Jersey Federal District Court. Under
the rules applicable to class action litigation, the various plaintiffs appeared
in Federal Court on January 12, 2004, and the Court designated the lead
plaintiff and selected counsel to represent the class. The cases were also
consolidated and an amended complaint was filed on March 30, 2004. The lawsuit
has been brought as a class action in the names of purchasers of the Company's
common stock from October 21, 1998 through July 25, 2003. The complaint alleges
that the Company failed to disclose in timely fashion the January 2003
accounting restatement and subsequent SEC investigation, as well as the loss of
a significant contract at the Baltimore facility.

The Company filed a motion to dismiss in May 2004. Thereafter the plaintiff
filed a reply brief. The Company responded and is awaiting a decision from the
Court. The Company considers the complaints to be without merit and will
vigorously defend against them. As such, the Company has recorded no reserves
related to this matter.

Securities and Exchange Commission

The Securities and Exchange Commission is currently conducting an
investigation into the Company's inter-company accounting procedures from the
period 1997-2001. The investigation began in the first half of 2003 after the
Company voluntarily disclosed certain matters related to inter-company accounts
for the five-year period ending December 31, 2001 that resulted in the
restatement of the Company's financial statements for those years. To Cambrex's
knowledge, the investigation is limited to this inter-company accounting matter,
and the Company does not expect further revisions to its historical financial
statements relating to these issues. The Company is fully cooperating with the
SEC.

Other

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

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41

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.

Additionally, as permitted under Delaware law, the Company has agreements
whereby we indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was serving, at our request in
such capacity. The term of the indemnification period is for the officer's or
director's lifetime. The maximum potential amount of future payments we could be
required to make under these indemnification agreements is unlimited; however,
we have a Director and Officer insurance policy that covers a portion of any
potential exposure.

The Company currently believes the estimated fair value of its
indemnification agreements is not significant based on currently available
information, and as such, the Company has no liabilities recorded for these
agreements as of December 31, 2004.

In addition to the matters identified above, Cambrex's subsidiaries are
party to a number of other proceedings. While it is not possible to predict with
certainty the outcome of the Company's litigation matters and various other
lawsuits and contingencies, it is the opinion of management based on information
currently available that the ultimate resolution of these matters 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

Share-Based Payment

In December 2004, the Financial Accounting Standards Board ("FASB")
published SFAS No. 123 (revised 2004) "Share-Based Payment". SFAS No. 123R
supersedes APB Opinion No. 25 "Accounting for Stock Issued to Employees", and
its related implementation guidance. This Statement eliminates the alternative
to use Opinion No. 25's intrinsic value method of accounting that was provided
in Statement 123 as originally issued. This Statement requires entities to
recognize the cost of employee services received in exchange for awards of
equity instruments based on the grant-date fair value of those awards (with
limited exceptions). This Statement shall be effective as of the beginning of
the first interim or annual period that begins after June 15, 2005. This
Statement applies to all awards granted after the required effective date and to
awards modified, repurchased, or cancelled after that date. The cumulative
effect of initially applying this Statement, if any, is recognized as of the
required effective date. The Company is in the process of reviewing the SFAS No.
123 implementation and determining its transition methodology and impact on the
second half of 2005.

Consolidation of Variable Interest Entities

In January 2003, FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). 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
became applicable for the Company in its fourth 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.

In December 2003, the FASB issued FIN 46R which requires the application of
either FIN 46 or FIN 46R by public entities created prior to February 1, 2003 at
the end of the first interim or annual reporting period ending after December
15, 2003. All entities created after January 31, 2003 by public entities were
already required to be analyzed under FIN 46, and they must continue to do so,
unless FIN 46R was adopted early. FIN 46R is applicable to all non-special
purpose entities created prior to February 1, 2003 by Public Entities that are
not small business issuers at the end of the first interim or annual reporting
period ending after March 15, 2004. The Company has reviewed FIN 46 and FIN 46R
and determined their impact did not have an effect on the Company's consolidated
financial position or results in operations.

- ---------------
(dollars in thousands, except share data)
42

Employer's Disclosure about Pensions and Other Postretirement Benefits

In May 2004, the FASB issued FASB Staff Position (FSP) No. 106-2
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug Improvement and Modernization Act ("the Act") of 2003", which supersedes
FASB issued Staff Position 106-1 of the same title. The Act allows for the
federal government to make subsidy payments (beginning in 2006) to employers
that sponsor postretirement benefit plans under which retirees receive
prescription drug benefits that are "actuarially equivalent" to the prescription
drug benefit provided under Medicare. The Staff Position clarifies the
accounting for the benefits attributable to the Act. The Company has determined
that the benefits provided under the Company's plan are not actuarially
equivalent to the Medicare Part D benefit under the Act. As a result, FSP No.
106-2 will not have any effect on the Company's consolidated financial position
or results of operations.

Inventory Costs

In November 2004, the FASB published SFAS No. 151 "Inventory Costs -- an
amendment of ARB No. 43, Chapter 4". SFAS No. 151 amends the guidance in ARB No.
43, Chapter 4, "Inventory Pricing" to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). This Statement requires that those items be recognized as
current-period charges regardless of whether they meet the criteria of "so
abnormal". In addition, this Statement requires that allocation of fixed
production overheads to the cost of conversion be based on the normal capacity
of the production facility. This Statement shall be effective for inventory
costs incurred during fiscal years beginning after June 15, 2005 or earlier
application is permitted for inventory costs incurred during fiscal years
beginning after the date this Statement is issued. The Company is reviewing SFAS
No. 151 to determine its impact on the Company's financial position or results
of operations.

FORWARD-LOOKING STATEMENTS

This document may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and Rule 3B-6 under The
Securities Exchange Act of 1934, including, 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.
These statements may be identified by the fact that they use words such as
"expects," "anticipates," "intends," "estimates," "believes" or similar
expressions in connection with any discussion of future financial and operating
performance. Any forward-looking statements are qualified in their entirety by
reference to the factors discussed throughout this Form 10-K. The
forward-looking statements contained herein are based on current plans and
expectations and involve risks and uncertainties that could cause actual
outcomes and results to differ materially from current expectations including
but not limited to the risks and other factors described under the caption "Risk
Factors That May Affect Future Results" in this Form 10-K, global economic
trends, pharmaceutical outsourcing trends, competitive pricing or product
developments, government legislation and/or regulations (particularly
environmental issues), tax rate, technology, manufacturing and legal issues,
changes in foreign exchange rates, performance of minority investments,
un-collectable receivables, loss on disposition of assets, cancellation or
delays in renewal of contracts, and lack of suitable raw materials or packaging
materials. Any forward-looking statement speaks only as of the date on which it
is made, and the Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future events
or otherwise. New factors emerge from time to time and it is not possible for us
to predict which will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required in this section can be found in the "Market Risk"
section of Item 7 on pages 37-38 of this Form 10-K.

- ---------------
(dollars in thousands, except share data)
43

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.

- ---------------
(dollars in thousands, except share data)
44

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
of Cambrex Corporation:

We have completed an integrated audit of Cambrex Corporation's 2004
consolidated financial statements and of its internal control over financial
reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Our opinions, based on our audits,
are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Cambrex Corporation and its subsidiaries (the "Company") at December
31, 2004 and 2003, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2004 in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 15(a)(2) presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. The financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit of financial statements
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.

Internal control over financial reporting

Also, in our opinion, management's assessment, included in Management's
Report on Internal Control Over Financial Reporting appearing under Item 9A,
that the Company maintained effective internal control over financial reporting
as of December 31, 2004 based on criteria established in Internal Control --
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), is fairly stated, in all material respects, based on
those criteria. Furthermore, in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2004, based on criteria established in Internal
Control -- Integrated Framework issued by COSO. The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express opinions on management's assessment
and on the effectiveness of the Company's internal control over financial
reporting based on our audit. We conducted our audit of internal control over
financial reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
evaluating management's assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the

45

company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Florham Park, New Jersey
March 31, 2005

46

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
47

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

See accompanying notes to consolidated financial statements.
48

CAMBREX CORPORATION AND SUBSIDIARIES

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

See accompanying notes to consolidated financial statements.
49

CAMBREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements.
50

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 pharmaceutical and biopharmaceutical
companies, generic drug companies, biotech companies and research organizations.
The Company is dedicated to providing essential products and services to
accelerate drug discovery, development and manufacturing processes for human
therapeutics. The Company reports results in three segments: Bioproducts,
consisting of research products and therapeutic application products; Biopharma
segment, consisting of contract biopharmaceutical process development and
manufacturing services; and Human Health segment, consisting of 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 other fine custom chemicals derived from
organic chemistry.

In 2004 one customer, a distributor which represents multiple customers,
accounted for 10.1% of the Company's total consolidated gross sales. In 2003 and
2002 no single customer accounted for more than 10% of total consolidated gross
sales. As discussed in Note #13, on November 10, 2003, the sale of Rutherford
Chemicals was completed and accordingly, the business comprising the Rutherford
Chemicals segment is being reported as a discontinued operation in all periods
presented.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Cash Equivalents

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

Derivative Instruments

Derivative financial instruments are used by the Company primarily for
hedging purposes to mitigate a variety of working capital, investment and
borrowing risks. The use and mix of hedging instruments can vary depending on
business and economic conditions and management's risk assessments. The Company
uses a variety of strategies, including foreign currency forward contracts and
transaction hedging, to minimize or eliminate foreign currency exchange rate
risk associated with foreign currency transactions. Gains and losses on these
hedging transactions 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.

51

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Inventories

Inventories are stated at the lower of standard cost, which approximates 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......................... 20 to 30 years, or
term of lease if
applicable
Machinery and equipment............................ 7 to 15 years
Furniture and fixtures............................. 5 to 7 years
Computer hardware and software..................... 3 to 7 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 operating expenses. 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 2004, 2003 and 2002 amounted
to $400, $339 and $1,041, 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
Product technology...................... 5 to 18 years
Non-compete agreements.................. 5 years
Trademarks and other.................... up to 40 years

Impairment of Goodwill

In January 2002, the Company adopted FASB Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"), which
required that goodwill, and indefinite-lived other intangible assets deemed to
have an indefinite useful life, cease amortizing. The new rules also required
that goodwill and certain intangible assets be assessed for impairment using
fair value measurement techniques. The Company reviews the carrying value of
acquired intangible assets, including goodwill, to determine whether impairment
may exist on an annual basis or whenever it has reason to believe goodwill may
not be recoverable.

Goodwill impairment is determined using a two-step process. The first step
of the goodwill impairment test is used to identify potential impairment by
comparing the fair value of a reporting unit, generally the

52

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

Company's operating segments, determined using various valuation techniques,
with the primary technique being a discounted cash flow analysis. A discounted
cash flow analysis requires one to make various judgmental assumptions including
assumptions about cash flows, growth rates and discount rates. The assumptions
about future cash flows and growth rates are based on the Company's budget and
long-term plans. Discount rate assumptions are based on market participant
comparables. If the fair value of a reporting unit exceeds its carrying amount,
goodwill of the reporting unit is considered not impaired and the second step of
the impairment test is unnecessary. If the carrying amount of a reporting unit
exceeds its fair value, the second step of the goodwill impairment test is
performed to measure the amount of impairment loss, if any. The second step of
the goodwill impairment test compares the implied fair value of the reporting
unit's goodwill with the carrying amount of that goodwill. If the carrying
amount of the reporting unit's goodwill exceeds the implied fair value of that
goodwill, an impairment loss is recognized in an amount equal to that excess.
The implied fair value of goodwill is determined in the same manner as the
amount of goodwill recognized in a business combination. That is, the fair value
of the reporting unit is allocated to all of the assets and liabilities of that
unit as if the reporting unit had been acquired in a business combination and
the fair value of the reporting unit was the purchase price paid to acquire the
reporting unit.

The impairment test for other intangible assets not subject to amortization
consists of a comparison of the fair value of the intangible asset with its
carrying value. If the carrying value of the intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to that excess.

Impairment of Long-Lived Assets

The Company assesses the impairment of its long-lived assets under FAS 144,
including amortizable intangible assets, and property, plant and equipment,
whenever economic events or changes in circumstances indicate that the carrying
amounts of the assets may not be 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. If impaired, the
assets are written down to fair market value which equals discounted cash flow.

Revenue Recognition

Revenues in the Bioproducts and Human Health segments are generally
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 which are classified as allowances and rebates.

Some contracts in the Bioproducts and Biopharma segments are based on time
and materials and revenue for those contracts is recognized as services are
performed. For contracts that contain milestone based payments the Company
utilizes the EITF-91-6 "Revenue Recognition of Long-term Power Sales Contracts"
model for recording revenue. Under this method, revenue is based on the cost of
efforts (since the contract's commencement) up to the reporting date, divided by
the total estimated contractual costs (from the contract's commencement to the
end of the development arrangement), multiplied by the total expected
contractual payments under the arrangement. However, revenue is limited to the
amount of nonrefundable cash payments received or contractually receivable at
the reporting date.

53

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

In each of the segments the Company has certain contracts that contain
multiple deliverables. These deliverables often include process development
services and commercial production. The Company follows the guidance contained
in EITF 00-21 "Accounting for Revenue Arrangements with Multiple Deliverables".
Revenue for each element is recognized when that element is delivered to the
customer based on the fair value for each element as determined based on sales
price when sold separately.

Amounts billed in advance are recorded as deferred revenue on the balance
sheet.

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.
Cambrex has adopted a policy to indefinitely reinvest the un-remitted earnings
of certain non-U.S. subsidiaries, and as such, U.S. taxes have not been provided
on their un-remitted earnings. At December 31, 2004, the cumulative amount of
un-remitted earnings of non-U.S. subsidiaries was approximately $71 million.

On October 22, 2004, the President signed the American Jobs Creation Act of
2004 (the "Act"). The Act creates a temporary incentive for U.S. corporations to
repatriate accumulated earnings by providing an 85% dividends received deduction
for certain dividends from controlled foreign corporations. The Company is
evaluating whether, and to what extent, it may repatriate foreign earnings that
have not yet been remitted to the U.S.

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
their present value, unless the aggregate amount of the liability and the timing
of cash payments are fixed or reasonably determinable. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed certain.
54

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

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 the
Consolidated Income Statement. Foreign currency net transaction gains were
$1,161, $2,600 and $1,083 in 2004, 2003 and 2002, 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 2004, the effect of stock options would be anti-dilutive and is therefore
excluded.

55

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

For the year ended December 31, 2004, 2003 and 2002, 2,083,716, 2,095,939,
and 1,223,150 shares respectively, were not included in the calculation of
diluted shares outstanding 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, 2004, the Company has seven active stock-based employee
compensation plans currently in effect, which are described more fully in Note
#15. 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 related to
the stock option plans 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 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 as amended by FASB No. 148,
Accounting for Stock-Based Compensation, to stock-based employee compensation.

The pro-forma compensation expense pertaining to stock options of $4,741,
$4,981, and $1,714 for 2004, 2003 and 2002, respectively, was calculated based
on recognizing ratably over the vesting period the fair value of each option
determined using the Black-Scholes option-pricing model for non-performance
options and a path dependent model for performance options. The following
assumptions were used in the Black-Scholes model to determine fair value on
grant date of grants issued in 2004, 2003 and 2002, respectively: (i) average
dividend yield of 0.55%, 0.57% and 0.30% (ii) expected volatility of 41.75%,
40.81% and 33.77%, (iii) risk-free interest rate ranging from 2.75% to 3.95% ,
2.75% to 3.95%, and 3.84% to 4.84%, and (iv) expected life of 6-7 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
56

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

comprehensive income. 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, unrealized gain on available for sales securities and
changes in the minimum pension liability, net of related tax benefit. Total
comprehensive income for the years ended 2004 and 2003 is included in the
Statement of Stockholders' Equity.

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

Software and Development Costs

In 2004, 2003 and 2002, 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 software
project, and (3) interest costs incurred, while developing internal-use
software. Amortization begins when assets are ready for their intended purpose
and are placed in service. Capitalized software and development costs were
$1,039, $817 and $2,823 for 2004, 2003 and 2002, respectively. Software and
development costs are being amortized using the straight-line method over the
expected life of the product, which ranges from 3 to 7 years.

Research and development costs, business process re-engineering costs,
training and computer software maintenance costs are expensed as incurred.

(3) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB interpretation No. 46 "Consolidation of Variable Interest Entities" ("FIN
46"). 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 became applicable for the Company in
its fourth 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

In December 2003, the FASB issued FIN 46R which requires the application of
either FIN 46 or FIN 46R by public entities created prior to February 1, 2003 at
the end of the first interim or annual reporting period ending after December
15, 2003. All entities created after January 31, 2003 by public entities were
already required to be analyzed under FIN 46, and they must continue to do so,
unless FIN 46R is adopted early. FIN 46R will be applicable to all non-SPEs
created prior to February 1, 2003 by Public Entities that are

57

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

not small business issuers at the end of the first interim or annual reporting
period ending after March 15, 2004. The Company has reviewed FIN 46 and FIN 46R
and determined their impact did not have an effect on the Company's consolidated
financial position or results of operations.

Employer's Disclosure about Pension and Other Post-Retirement Benefits

In May 2004, the FASB issued FASB Staff Position (FSP) No. 106-2
"Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug Improvement and Modernization Act ("the Act") of 2003", which supersedes
FASB issued Staff Position 106-1 of the same title. The Act allows for the
federal government to make subsidy payments (beginning in 2006) to employers
that sponsor postretirement benefit plans under which retirees receive
prescription drug benefits that are "actuarially equivalent" to the prescription
drug benefit provided under Medicare. The Staff Position clarifies the
accounting for the benefits attributable to the Act. The Company has determined
that the benefits provided under the Company's plan are not actuarially
equivalent to the Medicare Part D benefit under the Act. As a result, FSP No.
106-2 will not have any effect on the Company's consolidated financial position
or results of operations.

Inventory Costs

In November 2004, the FASB published SFAS No. 151 "Inventory Costs -- an
amendment of ARB No. 43, Chapter 4". SFAS No. 151 amends the guidance in ARB No.
43, Chapter 4, "Inventory Pricing" to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). This Statement requires that those items be recognized as
current-period charges regardless of whether they meet the criteria of "so
abnormal". In addition, this Statement requires that allocation of fixed
production overheads to the cost of conversion be based on the normal capacity
of the production facility. This Statement shall be effective for inventory
costs incurred during fiscal years beginning after June 15, 2005 or earlier
application is permitted for inventory costs incurred during fiscal years
beginning after the date this Statement is issued. The Company is reviewing SFAS
No. 151 to determine its impact on the Company's financial position or results
of operations.

Share-Based Payment

In December 2004, the FASB published SFAS No. 123 (revised 2004)
"Share-Based Payment". SFAS No. 123R supersedes APB Opinion No. 25 "Accounting
for Stock Issued to Employees", and its related implementation guidance. This
Statement eliminates the alternative to use Opinion No. 25's intrinsic value
method of accounting that was provided in Statement No. 123 as originally
issued. This Statement requires entities to recognize the cost of employee
services received in exchange for awards of equity instruments based on the
grant-date fair value of those awards (with limited exceptions). This Statement
shall be effective as of the beginning of the first interim or annual period
that begins after June 15, 2005. This Statement applies to all awards granted
after the required effective date and to awards modified, repurchased, or
cancelled after that date. The cumulative effect of initially applying this
Statement, if any, is recognized as of the required effective date. The Company
is in the process of reviewing the SFAS No. 123 implementation and determining
its transition methodology and impact on the second half of 2005.

(4) ACQUISITIONS

In October 2004, Cambrex completed the acquisition of Genolife SA., located
in Saint Beauzire, France, for approximately $6,000 in cash. Genolife is an
innovative biotechnology company specializing in rapid microbial detection
testing for the pharmaceutical, agriculture, food and cosmetic industries. The
acquisition will expand the project offerings in the Bioproducts segment.
58

CAMBREX CORPORATION AND SUBSIDIARIES

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

(4) ACQUISITIONS -- (CONTINUED)

The acquisition was accounted for under the purchase method of accounting.
The purchase price was allocated to the acquired assets and liabilities on the
basis of their respective fair values. As a result, the Company recognized
goodwill and intangible assets of $2,063 and $2,857, respectively. The goodwill
was assigned to the Bioproducts segment. Of the $2,857 of acquired intangible
assets, $2,028 was assigned to patents with a useful life of 18 years, and $829
was assigned to developed technology with useful lifes ranging from 9 to 18
years.

Acquisitions are accounted for under the purchase method of accounting and
accordingly the results of operations of acquisitions are included in the
accompanying consolidated financial statements from the date of acquisition. The
acquisition would not have had a material impact on the results of operations
had the acquisition occurred at the beginning of 2004 and as such no proforma
results have been presented.

(5) GOODWILL AND INTANGIBLE ASSETS

In accordance with SFAS 142, "Goodwill and Other Intangible Assets" the
Company has established 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
evaluates goodwill and other intangible assets not subject to amortization 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 third quarter of 2004, the Company evaluated whether the carrying
value of the goodwill related to its Baltimore reporting unit, which is a
component of the Biopharma segment, was recoverable due to the lowering of
Baltimore's revenue and operating income forecast for the remainder of 2004 and
beyond versus prior projections. The Company tested for impairment and
determined that the carrying value exceeded its fair value, as determined by
using a discounted cash flow model. Management then valued its tangible and
identifiable intangible assets for purposes of determining the implied fair
value of goodwill. Upon completion of the assessment, the Company recorded a
non-cash impairment charge of $48,720 to reduce the carrying value of goodwill
in the Baltimore reporting unit to its estimated fair value of $65,584.

The changes in the carrying amount of goodwill for the years ended December
31, 2004 and 2003, are as follows:

59

CAMBREX CORPORATION AND SUBSIDIARIES

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

(5) GOODWILL AND INTANGIBLE ASSETS -- (CONTINUED)

Other intangible assets that are not subject to amortization beginning
January 1, 2003, consist of the following:

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.

Amortization expense amounted to $1,921, $1,626 and $1,554 for the years
ended December 31, 2004, 2003 and 2002, respectively.

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

For the year ended December 31, 2005........................ $2,134
For the year ended December 31, 2006........................ $2,117
For the year ended December 31, 2007........................ $2,040
For the year ended December 31, 2008........................ $1,740
For the year ended December 31, 2009........................ $1,636

60

CAMBREX CORPORATION AND SUBSIDIARIES

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

(6) NET INVENTORIES

Net inventories consist of the following:

(7) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

Depreciation expense was $38,937, $34,208 and $29,284 for the years ended
December 31, 2004, 2003 and 2002, respectively.

(8) ACCRUED LIABILITIES

The components of accrued liabilities are as follows:

61

CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES

(Loss)/income from continuing operations before income taxes consisted of
the following:

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

The provision for income taxes for continuing operations differs from the
statutory federal income tax rate of 35% for 2004, 2003 and 2002 as follows:

62

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,
2004 and 2003 relate to temporary differences and carryforwards as follows:

SFAS 109, Accounting for Income Taxes, requires the Company to establish a
valuation allowance against deferred tax assets when it is more likely than not
that the Company will be unable to realize those deferred tax assets in the
future. Based on the Company's current and past performance, cumulative losses
in recent years resulting from domestic operations, the market environment in
which the Company operates, and the utilization of past tax attributes, the
Company has established a valuation allowance of $75,678 against a

63

CAMBREX CORPORATION AND SUBSIDIARIES

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

(9) INCOME TAXES -- (CONTINUED)

portion of its domestic deferred tax assets. However, the Company has not
recorded a valuation allowance against domestic tax assets which are offset by
domestic deferred tax liabilities that are expected to reverse in the future. In
addition, the Company has not recorded a valuation allowance against domestic
deferred tax assets of approximately $13 million at December 31, 2004, that the
Company could utilize upon the implementation of certain tax planning
strategies. Should the Company continue to experience losses, these tax planning
strategies may be negatively affected which could result in future increases to
the domestic deferred tax asset valuation allowance. With respect to the
Company's foreign deferred tax assets, the Company has recorded a valuation
allowance of $3,334.

The Company expects to maintain a full valuation allowance against its net
domestic deferred tax assets, subject to the consideration of all prudent and
feasible tax planning strategies, until such time as the Company attains an
appropriate level of future domestic profitability and the Company is able to
conclude that it is more likely than not that its domestic deferred tax assets
are realizable. The change in the domestic valuation allowance for the years
ended December 31, 2004 and 2003 was $24,047 and $51,536, respectively. The
change in the foreign valuation allowance for the years ended December 31, 2004
and 2003 was $1,196 and ($588), respectively.

Under the tax laws of the various jurisdictions 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 $46,244 and $37,487 at
December 31, 2004 and 2003, respectively. These NOLs will expire during the
period from 2018 through 2024.

As of December 31, 2004, approximately $15,712 of foreign tax credits were
available as credits against future U.S. income taxes. Under the U.S. Internal
Revenue Code, these foreign tax credits will expire in 2010 through 2014 and are
offset by a full valuation allowance, as discussed above.

Certain adjustments to 2003 deferred tax balances and cumulative
translation adjustments have been recorded in 2004. The amounts are not
considered material to prior periods.

On October 22, 2004, the President signed the American Jobs Creation Act of
2004 (the "Act"). The Act creates a temporary incentive for U.S. corporations to
repatriate accumulated income earned abroad by providing an 85% dividends
received deduction for certain dividends from controlled foreign corporations.
The deduction is subject to a number of limitations and uncertainty remains as
to how to interpret numerous provisions in the Act. The Company is evaluating
whether, and to what extent, it may repatriate foreign earnings that have not
yet been remitted to the U.S.

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 believes that its positions comply with applicable law
and intends to continue to defend its positions. The Company believes that it
has adequately provided for the estimated outcome related to these matters.

(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 approximately $9,000, export financing
of approximately $9,000 and advances on uncleared deposits of approximately
$300. The overdraft protection and export financing facilities bear interest at
varying rates when utilized, however, advances on uncleared deposits bear no
interest. There are no amounts outstanding as of December 31, 2004 and 2003. The
2004 and 2003 average interest rates were 1.6% and 1.7%, respectively.

64

CAMBREX CORPORATION AND SUBSIDIARIES

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

(10) SHORT-TERM DEBT -- (CONTINUED)

Short-term debt at December 31, 2004 and 2003 consists of the following:

(11) LONG-TERM DEBT

Long-term debt consists of the following:

(a) In November 2003, the Company amended its five-year Syndicated Senior
Revolving Credit Facility ("The 5-Year Agreement") of $268,750, which originated
in November 2001 and expires in November 2006, led by JPMorganChase as the
Administrative Agent. The 5-Year Agreement was amended to include an "accordion
feature" which, if utilized, will allow for the increase of the total
commitments of up to $75,000 with bank approval.

The 5-Year 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 5-Year 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 1.20%, or

3) Money Market rate plus an applicable margin that ranges from .575% to
1.20%.

The applicable margin discussed above is based upon the ratio of
consolidated funded indebtedness to consolidated EBITDA of Cambrex Corporation.
The Company also pays a facility fee between .175% to .30% on the entire credit
facility.

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

As of December 31, 2004, there was $120,000 outstanding and $148,750
undrawn under the 5-year Agreement. Of the undrawn amount, $63,057 is available
to be borrowed as of December 31, 2004 due to limits established in the Credit
Agreement.

The 5-Year Agreement is subject to financial covenants requiring the
Company to maintain certain levels of net worth, interest coverage ratio,
leverage ratios and limitations on indebtedness. The Company complied with all
covenants during 2004.

65

CAMBREX CORPORATION AND SUBSIDIARIES

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

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

(b) In June 2003, the Company borrowed $75,000 in a private offering
consisting of 7-year guaranteed senior Notes due in June 2010 with interest
payments due semi-annually at an annual rate of 5.31%. During October 2003, the
Company borrowed an additional $25,000 in a private offering consisting of
10-year guaranteed senior Notes due in October 2013 with interest payments due
semi-annually at an annual rate of 7.05%. These Notes rank equal with the
Company's other senior indebtedness. The funds were used primarily to pay down
existing bank debt and provide Cambrex with longer term fixed rate debt.

(c) The Company assumed three capital leases as part of the acquisition of
Cambrex BioScience Baltimore, Inc. in June 2001 of $12,100. The leases are for
buildings and improvements. There is $7,280 outstanding at December 31, 2004.
All capital leases are collateralized by their underlying assets.

The 2004 and 2003 average interest rates were 5.5% and 4.8% respectively.

Aggregate maturities of long-term debt are as follows:

2005........................................................ $ 1,400
2006........................................................ 121,721
2007........................................................ 1,436
2008........................................................ 1,460
2009........................................................ 1,570
Thereafter.................................................. 100,000
--------
Total............................................. $227,587
========

(12) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to reduce exposures to
market risks resulting from fluctuations in interest rates and foreign exchange
rates. The Company does not enter into financial instruments for trading or
speculative purposes. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap and forward
exchange contracts. 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 Sweden, Belgium,
England 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 that are denominated primarily in U.S. Dollars,
Swedish Krona, British Pound Sterling and Euros. 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.

66

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)

All forward and swap contracts outstanding at December 31, 2004 have been
designated as cash flow hedges and, accordingly, changes in the fair value of
derivatives are recorded each period in Accumulated other comprehensive income.
Changes in the fair value of the derivative instruments reported in Accumulated
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 is recognized in current-period
earnings and is immaterial to the Company's financial results. The unrealized
net gain recorded in Accumulated other comprehensive income at December 31, 2004
was $792. This amount will be reclassified into earnings as the underlying
forecasted transactions occur. The net gain recognized in earnings related to
foreign currency forward contracts during the twelve months ended December 31,
2004 was $1,161. The net loss on interest rate swap contracts recognized in
interest expense was $2,797 for the twelve months ended December 31, 2004.

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, 2004.

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, based on quoted
market prices, was in a loss position of $1,255 at December 31, 2004.

Foreign Exchange Instruments

The table below reflects the notional and fair value amounts of foreign
exchange contracts at December 31, 2004 and 2003.

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 since approximately 53% of the underlying debt has
variable rate terms and reprices quarterly. Of this amount, the Company has
interest rate swaps covering 67% of the outstanding debt at December 31,

67

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)

2004. The remaining 47% of the debt has fixed interest rates, however, at
current market interest rates, the carrying amount and fair market values are
not notionally different as of December 31, 2004. The balance of unrealized
gains included in comprehensive income at December 31, 2004 will be recognized
in earnings over the next 12 months.

(13) DISCONTINUED OPERATIONS -- SALE OF RUTHERFORD CHEMICALS

On November 10, 2003, the Company completed the sale of Rutherford
Chemicals. As a result of the completion of the transaction, the business
comprising the Rutherford Chemicals segment is being reported as a discontinued
operation in all periods presented. The agreement specified proceeds for the
sale of $55,000 in cash at closing, a $2,000 subordinated 12% interest bearing
note payable in full in 5 1/2 years from the closing date, and an $8,000
performance-based cash earn-out if certain future operating profit targets are
achieved in each of the next 3 years. These terms resulted in a write-down of
assets to estimated fair value of approximately $53,098 which is based on the
selling price, including fees associated with the transaction. The Company has
not included any of the performance based cash earn-out in the computation of
the $53,098 loss and income for discontinued operations will be recorded in
future periods if the Company receives any payments under the earn-out
arrangement. In the first quarter of 2004, the Company finalized the post
closing working capital adjustment. This adjustment, along with legal and other
charges associated with the sale, resulted in an additional $742 charge to
discontinued operations in the first quarter 2004. In the third quarter of 2004,
the Company incurred an additional $236 primarily for revised estimates of
environmental liabilities associated with Rutherford Chemicals. These losses
have not been tax effected, the reasons for which are more fully explained in
Note #9.

In accordance with the sale agreement, the Company has retained certain
liabilities of the Rutherford Chemicals business including existing general
litigation matters, including the Vitamin B-3 matter, pre-closing environmental
liabilities and post retirement benefits and pension liabilities. See Note #23.

The following table shows revenues and loss from the discontinued
operations:

(14) 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 at
December 31, 2004 and 2003. Authorized shares of Nonvoting Common Stock were
730,746 at December 31, 2004 and 2003.

At December 31, 2004 there were 1,004,069 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,

68

CAMBREX CORPORATION AND SUBSIDIARIES

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

(14) STOCKHOLDERS' EQUITY -- (CONTINUED)

subject to any legal requirements applicable to holders restricting the extent
to which they may own voting stock. As of December 31, 2004 and 2003, no shares
of Nonvoting Common Stock were outstanding.

The Company held treasury stock of 2,593,129 and 2,614,910 shares at
December 31, 2004 and 2003, respectively, and are used for issuance to the
Cambrex Savings Plan. In May 2000, the Board of Directors authorized the Company
to purchase an additional 1,000,000 shares of Company Stock in the open market
from time to time at a price determined by the Share Repurchase Committee. The
Company has purchased 419,300 shares under this authorization as of December 31,
2004.

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, 2004 and 2003, there was no
preferred stock outstanding.

(15) STOCK BASED COMPENSATION

The Company has seven stock-based compensation plans currently in effect.
The 1994 Stock Option Plan ("1994 Plan"), the 1996 Performance Stock Option Plan
("1996 Plan"), the 1998 Stock Option Plan ("1998 Plan"), the 2001 Performance
Stock Option Plan ("2001 Plan"), the 2003 Performance Stock Option Plan ("2003
Plan"), and the 2004 Omnibus Incentive Plan ("2004 Plan") provide for the
granting of non-qualified and incentive stock options (ISOs) intended to qualify
as additional incentives to management and other key employees. The 2000
Non-Executive Stock Option Plan ("2000 Plan") provides for the granting of
non-qualified stock options and ISOs intended to qualify as additional
incentives to non-executive employees. The 1996 Plan, the 1998 Plan, the 2001
Plan, the 2003 Plan and the 2004 Plan also provide for the granting of
non-qualified stock options to non-employee directors.

Certain options under the 1996 Plan, the 1998 Plan, the 2000 Plan, the 2001
Plan, and the 2003 Plan may become exercisable six years after the date of
grant, subject to acceleration if the publicly traded share price of the
Company's Common Stock equals or exceeds levels determined by the Compensation
Committee of the Board of Directors within certain time periods or in the event
of a change in control. Options may also become exercisable based on the passage
of time, such that the option becomes fully exercisable in a series of
cumulating portions over a four-year period. Options 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) amended by FAS 148 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.

69

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) STOCK BASED COMPENSATION -- (CONTINUED)

Shares of Common Stock subject to outstanding options under the stock
option plans were as follows:

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

70

CAMBREX CORPORATION AND SUBSIDIARIES

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

(15) STOCK BASED COMPENSATION -- (CONTINUED)

The weighted-average grant-date fair value of options granted during 2004, 2003
and 2002 was $9.68, $9.09 and $14.51, respectively, per share.

Cambrex senior executives participate in a long-term incentive plan which
rewards achievement of long-term strategic goals with restricted stock units.
Awards are made annually to key executives and vest in one-third increments on
the first, second and third anniversaries of the grant. On the third anniversary
of the grant, restrictions on sale or transfer are removed and shares are issued
to executives. In the event of termination of employment, the participant is
entitled to the vested portion of the restricted stock units and forfeits the
remaining amount; the three-year restriction remains in place. In the event of
death, retirement, or permanent disability, all shares vest and the deferred
sales restriction lapses. For the years ended December 31, 2004, 2003 and 2002
the Company recorded $952, $695 and $419 respectively, in compensation expense
for this plan. Shares are held in trust for the restricted stock grants. The
number of shares held at December 31, 2004 and 2003 was 87,314 and 73,783,
respectively. The fair value of these shares was $2,366 and $1,864 at 2004 and
2003, respectively.

In May 2003, the former Chief Executive Officer and current Executive
Chairman of the Board was granted 150,000 incentive stock appreciation rights.
In the fourth quarter 2003 these rights vested and, as such, the Chairman of the
Board is entitled to a cash settlement representing the difference in value
between the closing price of Cambrex stock on the day of the grant, which was
$19.30, and the closing price of Cambrex stock on the day the rights are
exercised. These rights terminate one year after his retirement as an employee
of the Company. These rights will be marked to market until the rights are
exercised or expire with the amount being recorded as compensation expense or
benefit in the applicable period. For the years ended December 31, 2004 and 2003
the Company recorded $276 and $894, respectively, in compensation expense.

(16) RETIREMENT PLANS

Domestic Pension Plans

The Company maintains two U.S. defined-benefit pension plans: (1) the
Nepera Hourly Pension Plan (the "Nepera Plan") which covers the union employees
at the Harriman, New York plant, which the Company sold on November 10, 2003,
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'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 2004 and 2003 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.

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CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

The funded status of these plans, incorporating fourth quarter
contributions, as of September 30, 2004 and 2003 is as follows:

Major assumptions used in determining the benefit obligation as of
September 30 for the Company's domestic pension plans are presented in the
following table:

72

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

The components of net periodic pension cost are as follows:

Major assumptions used in determining the net cost for the Company's
domestic pension plans are presented in the following table:

In making its assumption for the long-term rate of return, the Company has
utilized historical rates earned on securities allocated consistently with its
investments.

The aggregate Accumulated Benefit Obligation (ABO) as of September 30, 2004
of $48,066 exceeds plan assets by $13,179 in 2004 for all domestic plans.

The Company expects to contribute approximately $500 in cash to its two
U.S. defined-benefit pension plans in 2005.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:

The investment objective for plan assets is to achieve long-term growth of
capital with exposure to risk set at an appropriate level. The objective shall
be accomplished through the utilization of a diversified asset mix consisting of
equities (domestic and international) and taxable fixed income securities. The
account is to be managed on a fully discretionary basis to obtain the highest
total rate of return in keeping with a moderate level of risk.

73

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

The allocation of pension plan assets is as follows:

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 December 31, 2004 and 2003 is
as follows:

Major assumptions used in determining the benefit obligation as of December
31 for the Company's SERP Plans are presented in the following table:

74

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

The components of net periodic benefit cost are as follows:

Major assumptions used in determining the net cost for the Company's SERP
plans are presented in the following table:

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:

International Pension Plans

Certain foreign subsidiaries of the Company maintain pension plans for
their employees that conform to the common practice in their respective
countries. Based on local laws and customs, some of those plans are not funded.
For those plans that are funded, the amount in the trust supporting the plan is
actuarially

75

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

determined, and where applicable, in compliance with local statutes. The funded
status of these plans, as of December 31, 2004 and 2003 is as follows:

Certain adjustments were made in 2004 for the 2003 additional minimum
pension liability. The adjustments were not considered material to prior
periods.

Major assumptions used in determining the benefit obligation as of December
31, for the Company's International pension plans are presented in the following
table:

76

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

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

Major assumptions used in determining the net cost for the Company's
international pension plans are presented in the following table:

The aggregate ABO of $21,023 for international plans exceeds plan assets by
$15,835 in 2004.

The Company expects to contribute approximately $669 in cash to its
international pension plans in 2005.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:

The allocation of pension plan assets is as follows:

77

CAMBREX CORPORATION AND SUBSIDIARIES

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

(16) RETIREMENT PLANS -- (CONTINUED)

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 $2,092, $2,113
and $1,941 in 2004, 2003 and 2002, 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, 2004 and 2003 there is
$1,270 and $1,611, 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,
2004 and 2003 is $1,270 and $1,611, 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, 2004 and 2003 are 228,677 and 248,504,
respectively, and are included as a reduction of equity at cost. The value of
the shares held in trust and the corresponding liability of $6,197 at December
31, 2004 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.

(17) 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 and future retirees, both in reducing the 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.

78

CAMBREX CORPORATION AND SUBSIDIARIES

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

(17) OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)

The benefit obligation of the plan as of September 30, 2004 and 2003,
incorporating fourth quarter payments, is as follows:

The periodic postretirement benefit cost includes the following components:

Major assumptions used in determining the benefit obligation and net cost
for the Company's postretirement benefits are presented in the following table
as weighted averages:

79

CAMBREX CORPORATION AND SUBSIDIARIES

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

(17) OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as
appropriate, are expected to be paid:

The assumed health care cost trend rate used to determine the accumulated
postretirement benefit obligation is 10% in 2004 decreasing 1% per year to an
ultimate rate of 5% in 2009 (11% in 2003). A one-percentage-point increase in
the assumed health care cost trend rate would increase the accumulated
postretirement benefit obligation by $86 and would increase the sum of interest
and service cost by $7. A one-percentage-point decrease would lower the
accumulated postretirement benefit obligation by $100 and would decrease the sum
of interest and service cost by $9.

(18) RESTRUCTURING, IMPAIRMENTS AND OTHER CHARGES

2004 Actions

In the first quarter of 2004, management communicated to employees that a
workforce reduction would occur at one of the Company's European facilities
within the Human Health segment. The Company recorded a $1,000 charge in Other,
net operating expenses to accrue for the termination benefits related to the
workforce reduction of 13 employees. As of December 31, 2004 approximately $900
has been paid.

The following table displays the activity related to the 2004 reduction in
workforce reserve through December 31, 2004 (in millions):

2002 Actions

In 2002, Cambrex completed its plan to realign its businesses. In 2002, the
Company recorded special pre-tax charges of $15,087. These charges included:
Continuing operations fixed asset impairments of $1,599, closure costs for a
small manufacturing facility of $1,700 and severance costs of $939. Discontinued
operations consists of fixed asset impairments of $6,079, a goodwill impairment
of $3,962, inventory write-downs of $586 (included in cost of sales),
dismantling costs of $100 and severance of $122.

The fixed asset impairments related to certain assets at a Rutherford
Chemicals domestic site, and a domestic site included as part of continuing
operations, 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 a domestic
facility and include asset write downs, disposal, and other related costs.
80

CAMBREX CORPORATION AND SUBSIDIARIES

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

(18) 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 $200 at December 31, 2004.

The following table displays the activity related to the 2002
restructuring, impairments and other charges through December 31, 2004 (in
millions):

(19) OTHER INCOME AND EXPENSE -- NET

The Other-net component of Other (income) expense is $73, $139 and $7,890
for 2004, 2003 and 2002 respectively. The 2002 amount consisted primarily of two
equity investment impairments totaling $7,344 related to investments in emerging
technology companies. One company, in which an investment was held, had
experienced significant financial difficulties in 2002. This led Cambrex to
evaluate the 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 for $3,089. Cambrex performed an assessment in
the carrying value of the other investment and concluded that a $4,255
impairment was necessary in the second quarter 2002. Also included in the 2002
expense were $312 of costs due to a convertible debt arrangement that was
abandoned, and $194 of costs associated with an investment in a joint venture.

(20) SEGMENT INFORMATION

The Company classifies its business units into three reportable segments:
Bioproducts, consisting of research products and other therapeutic application
products, Biopharma, consisting of contract biopharmaceutical process
development and manufacturing services and Human Health, consisting of 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 other fine custom chemicals derived from
organic chemistry.

Information as to the operations of the Company in each of its business
segments is set forth below based on the nature of the products and services
offered. Cambrex evaluates performance based gross profit and operating profit.
Operating profit is most similar to income from continuing operations and a
reconciliation is

81

CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) SEGMENT INFORMATION -- (CONTINUED)

included below. Intersegment sales are not material. The Company allocates
certain corporate expenses to each of the segments.

The following is a summary of business segment information:

82

CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) SEGMENT INFORMATION -- (CONTINUED)

83

CAMBREX CORPORATION AND SUBSIDIARIES

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

(20) SEGMENT INFORMATION -- (CONTINUED)

(21) FOREIGN OPERATIONS AND EXPORT SALES

The following summarized data represents the gross sales and long lived
tangible assets for the Company's domestic and foreign entities for 2004, 2003
and 2002:

Export sales, included in domestic gross sales, in 2004, 2003 and 2002
amounted to $29,945, $22,100, and $23,684, respectively.

Sales by geographic area consist of the following:

84

CAMBREX CORPORATION AND SUBSIDIARIES

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

(22) COMMITMENTS

The Company has operating leases expiring on various dates through the year
2013. The leases are primarily for office and laboratory equipment and vehicles.
At December 31, 2004, future minimum commitments under non-cancelable operating
lease arrangements were as follows:

Total operating lease expense was $4,815, $4,205 and $5,017 for the years
ended December 31, 2004, 2003 and 2002, respectively.

The Company is party to several unconditional purchase obligations
resulting from contracts that contain legally binding provisions with respect to
quantities, pricing and timing of purchases. The Company's purchase obligations
include commitments to purchase raw materials and equipment and for the
construction of a new warehouse. At December 31, 2004 future commitments under
these obligations were as follows:

In the first quarter 2003, the Company reached an agreement with Mylan
Laboratories, Inc. under which the Company would contribute $12,415 to the
settlement of consolidated litigation brought by a class of direct purchasers.
Approximately $6,015 was paid as of December 31, 2004 in accordance with the
agreement, with the remaining $6,400 to be paid over the next four years. At
December 31, 2004 future commitments under this agreement were as follows:

85

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES

The Company is subject to various investigations, claims and legal
proceedings covering a wide range of matters that arise in the ordinary course
of its business activities. The Company continually assesses all known facts and
circumstances as they pertain to all legal and environmental matters and
evaluates the need for reserves and/or disclosures as deemed necessary based on
these facts and circumstances and as such facts and circumstances develop.

Environmental

In connection with laws and regulations pertaining to the protection of the
environment, the Company and/or its subsidiaries is a party to several
environmental proceedings and remediation investigations and cleanups and, along
with other companies, has been named a "potentially responsible party" for
certain waste disposal sites ("Superfund sites"). Additionally, as discussed in
the "Sale of Rutherford Chemicals" section of this Note, the Company has
retained the liability for certain environmental proceedings, associated with
the Rutherford Chemicals business. 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 resolution of such matters often spans
several years and frequently involves regulatory oversight and/or adjudication.
Additionally, many remediation requirements are not fixed and are likely to be
affected by future technological, site, and regulatory developments.
Consequently, the ultimate extent of liabilities with respect to such matters,
as well as the timing of cash disbursements cannot be determined with certainty.

In matters where the Company has been able to reasonably estimate its
liability, the Company has accrued for the estimated costs associated with the
study and remediation of Superfund sites not owned by the Company and the
Company's current and former operating sites. These accruals were $5,570 and
$5,100 at December 31, 2004 and 2003, respectively. The increase in the accrual
is due to currency fluctuation of $252, payments of $332 and an increase to the
reserve of $550. A portion of this increase relates to an increase in an
existing reserve associated with the on-going investigation and remediation at
the Company's Carlstadt, New Jersey location. An assessment of remedial costs
based on information currently known resulted in the increase. Based upon
currently available information and analysis, the Company's current accrual
represents management's best estimate of what it believes are the probable and
estimable costs associated with environmental proceedings including amounts for
legal and investigation fees where remediation costs may not be estimable at the
reporting date.

The Company expects to receive information in the near future on three
matters, as described below that could impact the Company's current assessment
of its probable and estimable costs and as such may require an adjustment to the
reserves.

As a result of the sale of the Bayonne, New Jersey facility (see "Sale of
Rutherford Chemicals" section of this Note), an obligation to investigate site
conditions and conduct required remediation under the New Jersey Industrial Site
Recovery Act was triggered and the Company has retained the responsibility for
such obligation. The Company completed a Preliminary Assessment (PA) of the Site
and submitted the PA to the New Jersey Department of Environmental Protection.
The PA identified potential areas of concern based on historical operations and
proposed certain sampling at the Site. The Company has reserved for the costs of
the sampling. The results of the sampling will be used to develop an estimate of
the Company's future liability for remediation costs, if required.

In March 2000, the Company completed the acquisition of the Cambrex
Profarmaco Landen facility in Belgium. At the time of acquisition, Cambrex was
aware of certain site contamination and recorded a reserve for the estimated
costs of remediation. This property has been the subject of an extensive
on-going

86

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

environmental investigation, which has been completed with no change to the
reserve warranted based on such information. The health risk assessment related
to the site contamination is on-going.

The Company's Cosan subsidiary conducted manufacturing operations in
Clifton, New Jersey from 1968 until 1979. In 1997, Cosan entered into an
Administrative Consent Order with the State of New Jersey Department of
Environmental Protection. Under the Administrative Consent Order, Cosan is
required to complete an investigation of the Clifton site conditions and conduct
remediation as may be necessary. The investigation of site conditions continues
and is expected to be completed in mid-2005. The results of the investigation
will enable the Company to estimate its liability, if any. In February 2005, the
New Jersey Federal District Court ruled that a lawsuit against Cosan by the
owners of property adjacent to the Clifton location could be placed on the
active calendar. The outcome of this matter could also affect the reserves.

The Company is involved in other matters where the range of liability is
not reasonably estimable at this time and it is not determinable when
information will become available to provide a basis for recording an accrual,
should an accrual be required.

If any of the Company's environmental matters are resolved in a more
unfavorable manner than presently estimated, these matters, either individually
or in the aggregate, could have a material adverse effect on the Company's
financial condition, operating results and cash flows when resolved in a future
reporting period.

Litigation and Other Matters

Mylan Laboratories

In 1998 the Company and its subsidiary Profarmaco S.r.l. (currently known
as Cambrex Profarmaco Milano S.r.l.") ("Profarmaco") were named as defendants
(along with Mylan Laboratories, Inc. ("Mylan") and Gyma Laboratories of America,
Inc., Profarmaco's distributor in the United States) in a proceeding instituted
by the Federal Trade Commission ("FTC") in the United States District Court for
the District of Columbia (the "District Court"). The allegations arose from
exclusive license agreements between Profarmaco and Mylan covering two active
pharmaceutical ingredients ("APIs"). The FTC alleged violations of the Federal
Trade Commission Act; including unlawful restraint of trade and conspiracy to
monopolize markets for the APIs. A lawsuit making similar allegations against
the same parties seeking injunctive relief and treble damages was filed by the
Attorneys General of 31 states in the District Court on behalf of those states
and persons in those states who were purchasers of the generic pharmaceuticals.
The FTC and Attorneys General's suits were settled in February 2001, with Mylan
(on its own behalf and on behalf of Profarmaco and Cambrex) agreeing to pay over
$140,000 and with Mylan, Profarmaco and Cambrex agreeing to monitor certain
future conduct.

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

On April 7, 2003, Cambrex reached an agreement with Mylan under which
Cambrex would contribute $12,415 to the settlement of consolidated litigation
brought by a class of direct purchasers. In exchange, Cambrex and Profarmaco
received from Mylan a release and full indemnity against future costs or
liabilities in related litigation brought by purchasers, as well as potential
future claims related to this matter. In accordance with the agreement
approximately $6,015 has been paid through 2004, with the remaining $6,400 to be
paid over the next four years. Cambrex recorded an $11,342 charge (discounted to
the present value due to the five

87

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

year pay-out) in the first quarter of 2003 as a result of this settlement. As of
December 31, 2004 the outstanding balance for this liability was $5,885.

Vitamin B-3

On May 14, 1998, the Company's subsidiary, Nepera, which formerly operated
the Harriman facility and manufactured and sold 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. In
2000, Nepera reached agreement with the Government as to its alleged role in
Vitamin B-3 violations from 1992 to 1995. The Canadian government claimed
similar violations. All government suits in the U.S. and Canada have now been
concluded.

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. The actions seek injunctive relief and unspecified but substantial
damages. An accrual of $6,000 was recorded in the fourth quarter 1999 to cover
the anticipated government settlements, related litigation, and legal expenses.
During 2002 based on information developed during 2002 this accrual was
increased to $10,000. Several actions have been concluded during 2003 and 2004.
All settlement amounts are fully reserved. Additional settlements are being
discussed in several more indirect purchaser cases and we believe that current
reserves are sufficient to complete the settlements.

Litigation in the United States under the U.S. antitrust laws was commenced
some years ago by a group of European purchasers. On motion by the Vitamin B-3
defendants, the District Court dismissed the litigation, under the long-standing
rule that foreign purchasers cannot sue in U.S. courts under U.S. antitrust
statutes. Thereafter, the Federal Circuit Court for the District of Columbia
reversed the District Court's decision. The Vitamin B-3 defendants, supported by
the U.S. Department of Justice, appealed to the United States Supreme Court and
oral arguments were heard on April 29, 2004. In June 2004, the United States
Supreme Court ruled that foreign purchasers could not sue in U.S. courts under
U.S. antitrust statutes if the conduct at issue resulted in purely foreign harm.
However, the Court left open potential claims where foreign injuries suffered by
foreign plaintiffs were dependent upon domestic harm resulting from conduct that
violates the U.S. antitrust laws. The Supreme Court remanded the matter to the
Circuit Court for briefing on the issue of whether Plaintiffs preserved such a
claim in the underlying proceedings, in which case a hearing on the claim would
proceed in District Court. The balance of this accrual as of December 31, 2004
was approximately $3,043. This accrual has been recorded in accrued liabilities.
Any adjustments to this liability will be recorded as part of discontinued
operations.

Sale of Rutherford Chemicals

The Company completed the sale of its Rutherford Chemicals business on
November 10, 2003. Under the agreement for the sale, the Company provided
standard representations and warranties and included various covenants
concerning the business, operations, liabilities and financial condition of the
Rutherford Chemicals business. Most of such representations and warranties will
survive for a period of thirty days after the Buyer's preparation of its audited
financial statements for year-end 2004. Therefore, claims for breaches of such
representations would have to be brought during that time frame. Certain
specified representations and warranties and covenants, such as those relating
to employee benefit matters and certain environmental matters, will survive for
longer periods and claims under such representations, warranties and covenants
could be brought during such longer periods. Under the sale agreement, the
Company has indemnified the Buyer for breaches of representations, warranties
and covenants. Indemnifications for certain but not all representations and
warranties are subject to a deductible of $750 and a cap at 25 percent of the
purchase price. On March 31, 2005, the Company received a claim by the
purchasers of the Rutherford Chemicals business claiming breach
88

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

of representations and warranties contained in the October 2003 Purchase
Agreement. The Company is in the process of evaluating the claim and cannot
determine at this time if it has any merit.

Under the agreement for sale, the Company has retained the liabilities
associated with existing general litigation matters related to Rutherford
Chemicals, including Vitamin B-3 as stated above. With respect to certain
pre-closing environmental matters, the Company retains the responsibility for:
(i) certain existing matters including violations, environmental testing for the
New York facility incinerator and off-site liabilities; and (ii) completing the
on-going remediation at the New York facility. Further, as a result of the sale
of the Bayonne, New Jersey facility, the obligation to investigate site
conditions and conduct required remediation under the provisions of the New
Jersey Industrial Site Recovery Act was triggered; and the Company has retained
the responsibility for completion of any such investigation and remediation.
With respect to all other pre-closing environmental liabilities, whether known
or unknown, the Buyer is responsible for the management of potential future
matters; however, the Buyer and the Company may share the costs of associated
remediation with respect to such potential future matters, subject to certain
limitations defined in the agreement for sale. The Company has accrued for
exposures which are deemed probable and estimable.

Class Action Matter

In October 2003, the Company was notified of a securities class action
lawsuit filed against Cambrex and five former and current Company officers. Five
class action suits were filed with the New Jersey Federal District Court. Under
the rules applicable to class action litigation, the various plaintiffs appeared
in Federal Court on January 12, 2004, and the Court designated the lead
plaintiff and selected counsel to represent the class. The cases were also
consolidated and an amended complaint was filed on March 30, 2004. The lawsuit
has been brought as a class action in the names of purchasers of the Company's
common stock from October 21, 1998 through July 25, 2003. The complaint alleges
that the Company failed to disclose in timely fashion the January 2003
accounting restatement and subsequent SEC investigation, as well as the loss of
a significant contract at the Baltimore facility.

The Company filed a motion to dismiss in May 2004. Thereafter the plaintiff
filed a reply brief. The Company responded and is awaiting a decision from the
Court. The Company considers the complaints to be substantially without merit
and will vigorously defend against them. As such, the Company has recorded no
reserves related to this matter.

Securities and Exchange Commission

The Securities and Exchange Commission ("SEC") is currently conducting an
investigation into the Company's inter-company accounting procedures from the
period 1997-2001. The investigation began in the first half of 2003 after the
Company voluntarily disclosed certain matters related to inter-company accounts
for the five-year period ending December 31, 2001 that resulted in the
restatement of the Company's financial statements for those years. To Cambrex's
knowledge, the investigation is limited to this inter-company accounting matter,
and the Company does not expect further revisions to its historical financial
statements relating to these issues. The Company is fully cooperating with the
SEC.

Other

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

89

CAMBREX CORPORATION AND SUBSIDIARIES

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

(23) CONTINGENCIES -- (CONTINUED)

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.

Additionally, as permitted under Delaware law, the Company has agreements
whereby we indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was serving, at our request in
such capacity. The term of the indemnification period is for the officer's or
director's lifetime. The maximum potential amount of future payments we could be
required to make under these indemnification agreements is unlimited; however,
we have a Director and Officer insurance policy that covers a portion of any
potential exposure.

The Company currently believes the estimated fair value of its
indemnification agreements is not significant based on currently available
information, and as such, the Company has no liabilities recorded for these
agreements as of December 31, 2004.

In addition to the matters identified above, Cambrex's subsidiaries are
party to a number of other proceedings. While it is not possible to predict with
certainty the outcome of the Company's litigation matters and various other
lawsuits and contingencies, it is the opinion of management based on information
currently available that the ultimate resolution of these matters 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.

90

CAMBREX CORPORATION AND SUBSIDIARIES

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

(24) CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

- ---------------
(1) During the 2004 year-end financial reporting process, the Company identified
certain accounting adjustments principally related to amortization of
leasehold improvements, employee benefit accruals, inventory and taxes that
impacted prior years and prior quarters within 2004. The aggregate impact of
the prior years' adjustments was a reduction to net income of $475 and is
not considered material to any prior period. The impact on net income for
the first, second and third quarters of 2004 was an increase of $36, an
increase of $229 or $0.01 per fully diluted share and a decrease of $666 or
$0.03 per fully diluted share, respectively. The Company has restated the
results of the first three quarters of 2004 to reflect these adjustments.
The prior years' adjustment of $475 has been reflected in the restated first
quarter results, netting to a $439 reduction to net income or $0.02 per
fully diluted share. See Note #25.
(2) 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.
(3) The first quarter 2003 includes a special pre-tax charge of $11.3 million
recorded in operating expenses for the settlement of certain class action
lawsuits involving Mylan Laboratories.

91

CAMBREX CORPORATION AND SUBSIDIARIES

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

(24) CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) -- (CONTINUED)

(4) The third quarter 2004 includes a goodwill impairment charge related to the
Baltimore reporting unit of the Biopharma segment of $48,720.

(25) RESTATEMENT OF 2004 QUARTERLY RESULTS -- UNAUDITED

During the 2004 year-end financial reporting process, the Company
identified certain accounting adjustments principally related to amortization of
leasehold improvements, employee benefit accruals, inventory and taxes that
impacted prior years and prior quarters within 2004. The cumulative impact of
the prior years' adjustments was a reduction to net income of $475 and is not
considered material to any prior period. The prior years' adjustment of $475 has
been reflected in the restated first quarter 2004 results. The impact on net
income for the first, second and third quarters of 2004 was a decrease of $439
or $0.02 per fully diluted share, an increase of $229 or $0.01 per fully diluted
share and a decrease of $666 or $0.03 per fully diluted share, respectively. The
Company has restated the results of the first three quarters of 2004 to reflect
these adjustments.

The Company also identified certain adjustments to the December 31, 2003
foreign deferred tax balances, minimum pension liability and other comprehensive
income which have been reflected as of March 31, 2004. These adjustments were
not considered material to 2003.

The restatement did not have any impact on the Company's cash flows. A
summary of the effects of the restatement on the accompanying Consolidated
Income Statements and Consolidated Balance Sheets is as follows:

CONSOLIDATED INCOME STATEMENTS

92

CAMBREX CORPORATION AND SUBSIDIARIES

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

(25) RESTATEMENT OF 2004 QUARTERLY RESULTS -- UNAUDITED -- (CONTINUED)

CONSOLIDATED INCOME STATEMENTS

93

CAMBREX CORPORATION AND SUBSIDIARIES

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

(25) RESTATEMENT OF 2004 QUARTERLY RESULTS -- UNAUDITED -- (CONTINUED)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

94

CAMBREX CORPORATION AND SUBSIDIARIES

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

(25) RESTATEMENT OF 2004 QUARTERLY RESULTS -- UNAUDITED -- (CONTINUED)

95

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

None.

ITEM 9A CONTROLS AND PROCEDURES

CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

We carried out an evaluation, with the participation of our principal
executive officer and principal financial officer, of the effectiveness of our
disclosure controls and procedures as of December 31, 2004. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that, as of December 31, 2004, our disclosure controls and procedures,
as defined in Rule 13a-15(e), were effective to ensure that information required
to be disclosed by the issuer in the reports that it files or submits under the
Securities Exchange Act of 1934 (the "Exchange Act") are recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Exchange Act Rule
13a-15(f). Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
carried out an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2004 based on the Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). Based on this evaluation, our
management concluded that our internal control over financial reporting was
effective as of December 31, 2004.

PricewaterhouseCoopers LLP, the independent registered public accounting
firm that audited our financial statements included in this Annual Report on
Form 10-K, has also audited our management's assessment of the effectiveness of
our internal control over financial reporting and the effectiveness of internal
control over financial reporting as of December 31, 2004 as stated in their
report which is included herein under Item 8.

MANAGEMENT'S CONSIDERATION OF THE 2004 INTERIM PERIOD RESTATEMENT

In coming to the conclusion that our internal control over financial
reporting was effective as of December 31, 2004, our management considered,
among other things, a significant control deficiency related to periodic
reassessment of the application of generally accepted accounting principles in
prior periods, which resulted in the need to restate our previously issued
interim financial statements as disclosed in "Note 25" to the accompanying
consolidated financial statements included in this Form 10-K. After reviewing
and analyzing the Securities and Exchange Commission's Staff Accounting Bulletin
("SAB") No. 99, "Materiality," Accounting Principles Board Opinion No. 28,
"Interim Financial Reporting," paragraph 29 and SAB Topic 5 F, "Accounting
Changes Not Retroactively Applied Due to Immateriality," and taking into
consideration (i) that the restatement adjustments did not have a material
impact on the financial statements of interim or annual periods, taken as a
whole; (ii) that the cumulative impact of the restatement adjustments on
stockholders' equity was not material to the financial statements of prior
interim or annual periods; and (iii) that we decided to restate our 2004
quarterly financial statements because the cumulative impact of the error, if
recorded in the fourth quarter of 2004, would have been material to the
quarter's reported net income, our management concluded that the restatement of
the prior period financial statements was not the result of a material weakness
in internal control over financial reporting as of December 31, 2004.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management carried out an evaluation, with the participation of our
principal executive officer and principal financial officer, of changes in our
internal control over financial reporting, as defined in Exchange Act Rule
13a-15(f). Based on this evaluation, our management determined that no change in
our internal

96

control over financial reporting occurred during the fourth quarter of fiscal
2004 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.

ITEM 9B OTHER INFORMATION

None

PART III

ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

ITEM 11 EXECUTIVE COMPENSATION.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information called for by Part III is hereby incorporated by reference
to the information set forth under the captions "Principal Stockholders,"
"Common Stock Ownership by Directors and Executive Officers," "Board of
Directors," "Election of Directors," "Section 16(a) Beneficial Ownership
Reporting Compliance," "Code of Ethics," "Compensation Committee Interlocks and
Insider Participation," "Compensation Committee Report on Executive
Compensation," "Executive and Other Compensation," "Executive and Other
Compensation," "Audit Committee Report" and "Principal Accounting Firm Fees" in
the registrant's definitive proxy statement for the Annual Meeting of
Stockholders, to be held April 28, 2005, 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"
in this Annual Report on Form 10-K.

PART IV

ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(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 Registered Public
Accounting Firm on Financial Statement Schedule are filed as part of this
report.

97

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 102-104

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 following are the Form 8-Ks filed (or furnished) during the fourth
quarter, 2004:

October 21, 2004 regarding the press release dated October 18, 2004
announcing an agreement between Cambrex and Ortec International, Inc.

October 21, 2004 regarding the press release dated October 20, 2004
announcing that Cambrex's wholly-owned subsidiary, Cambrex France SARL, acquired
Genolife SA.

October 29, 2004 regarding the press release dated October 28, 2004
announcing the financial results for the third quarter of 2004.

98

SCHEDULE II

CAMBREX CORPORATION

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(DOLLARS IN THOUSANDS)

99

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/ JOHN R. LEONE
------------------------------------
John R. Leone
President and Chief Executive
Officer

Date: March 31, 2005

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.

100

101

EXHIBIT INDEX

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

102

EXHIBIT INDEX

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

103

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.

(T) Incorporated by reference to the registrant's Current Report
on Form 8-K dated November 10, 2003.

(U) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 333-113612) dated
March 15, 2004.

(V) Incorporated by reference to registrant's Registration
Statement on Form S-8 (Registration No. 333-113613) dated
March 15, 2004.
(W) Furnished herewith.

104