FORM 8-K
 

 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 2006
CAMBREX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
     
1-10638   22-2476135
     
(Commission   (I.R.S. Employer
File Number)   Identification No.)
ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073
(Address of principal executive offices)
(201) 804-3000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting materials pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2b under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

CAMBREX CORPORATION
FORM 8-K
CURRENT REPORT
OCTOBER 27, 2006
     
Item 2.01
  Completion of Acquisition or Disposition of Assets
 
    
 
  On October 27, 2006 Cambrex Corporation and Subsidiaries (“Cambrex” or the “Company”) completed the sale of two non-strategic facilities within its Human Health segment to a holding company controlled by International Chemical Investors II S.A. (“ICIG”) of Luxembourg. The facilities, which are located in Cork, Ireland (“Cork”) and Landen, Belgium (“Landen”), manufacture small molecule active pharmaceutical ingredients and advanced intermediates. The Company received nominal consideration.
 
    
Item 2.06
  Material Impairments
 
    
 
  Cambrex recorded a goodwill impairment charge of $2,092 during the third quarter of 2006 for Landen. This charge removed the remainder of the goodwill for Landen and resulted from lower cash flow projections to compute the implied fair value of goodwill as a result of current market conditions.
 
    
Item 8.01
  Other Events.
 
 
  On October 30, 2006, the Company issued a press release announcing the completion of the sale of Cork and Landen. A copy of the press release is attached as exhibit 99.1.
 
    
Item 9.01
  Financial Statements and Exhibits
  (b)   Pro forma financial information.
 
      Unaudited Pro forma Consolidated Income Statements for the six months ended June 30, 2006 and 2005.
 
      Unaudited Pro forma Consolidated Income Statements for the years ended December 31, 2005, 2004 and 2003.
 
      Unaudited Pro forma Consolidated Balance Sheet as of June 30, 2006.
 
  (c)   Exhibits.
 
  99.1   Press release dated October 30, 2006.

1

 

Basis of Presentation
     The following unaudited pro forma consolidated financial statements give effect to the divestiture of the Cork and Landen facilities to be accounted for as a discontinued operation in accordance with FAS 144. These unaudited pro forma consolidated financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements and notes thereto of Cambrex Corporation, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006.
     The unaudited pro forma consolidated income statements give effect to the divestiture as if it had occurred on January 1, 2003. The unaudited pro forma balance sheet assumes the divestiture had occurred on June 30, 2006.
     The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred had the divestiture been consummated at the dates indicated, nor is it necessarily indicative of future operating results or financial position of the Company.

2

 

Cambrex Corporation
Consolidated Income Statement — Pro forma
For the Six Months Ended June 30, 2006
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     Reported  
    (1)     (3)                  
Gross sales
     243,184       (19,805 )     —       223,379  
Commissions & freight
     1,173       (260 )     —       913  
 
                        
Net Sales
     242,011       (19,545 )     —       222,466  
Other revenue
     2,145       44       —       2,189  
 
                                
Net revenue
     244,156       (19,501 )     —       224,655  
 
                                
Cost of goods sold
     156,463       (16,852 )     —       139,611  
 
                                
Gross profit
     87,693       (2,649 )     —       85,044  
 
                                
Operating expenses:
                                
Selling, general and administrative
     57,305       (2,437 )     366  (4)     55,234  
Research and development
     11,493       (436 )     —       11,057  
 
                        
Total operating expenses
     68,798       (2,873 )     366       66,291  
 
                                
Operating profit
     18,895       224       (366 )     18,753  
 
                                
Other expenses:
                                
Interest expense, net
     9,648       (38 )     —       9,610  
Other expense, net
     116       —       —       116  
 
                                
Income from continuing operations before taxes
     9,131       262       (366 )     9,027  
 
                             —  
Income taxes
     9,332       340       —       9,672  
 
                        
Loss before cumulative effect of a change in accounting principle
     (201 )     (78 )     (366 )     (645 )
 
                                
Weighted average shares outstanding (basic)
     26,701                       26,701  
Loss before cumulative effect of a change in accting principle
     (0.01 )                     (0.02 )
 
                                
Weighted average shares outstanding (diluted)
     26,701                       26,701  
Loss before cumulative effect of a change in accounting principle
     (0.01 )                     (0.02 )
See accompanying notes to the unaudited pro forma consolidated financial statements.

3

 

Cambrex Corporation
Consolidated Income Statement — Pro forma
For the Six Months Ended June 30, 2005
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     Reported  
    (1)     (3)                  
Gross sales
     226,633       (20,663 )     —       205,970  
Commissions & freight
     2,665       (371 )     —       2,294  
 
                        
Net Sales
     223,968       (20,292 )     —       203,676  
Other revenue
     4,711       (218 )     —       4,493  
 
                                
Net revenue
     228,679       (20,510 )     —       208,169  
 
                                
Cost of goods sold
     145,147       (19,515 )     —       125,632  
 
                                
Gross profit
     83,532       (995 )     —       82,537  
 
                                
Operating expenses:
                                
Selling, general and administrative
     51,815       (2,552 )     357 (4)     49,620  
Research and development
     11,739       (451 )     —       11,288  
 
                        
Total operating expenses
     63,554       (3,003 )     357       60,908  
 
                                
Operating profit
     19,978       2,008       (357 )     21,629  
 
                                
Other expenses:
                                
Interest expense, net
     5,481       (19 )     —       5,462  
Other expense, net
     97       2       —       99  
 
                                
Income from continuing operations before taxes
     14,400       2,025       (357 )     16,068  
 
                             —  
Income taxes
     3,230       335       —       3,565  
 
                        
Income before cumulative effect of a change in accounting principle
     11,170       1,690       (357 )     12,503  
 
                                
Weighted average shares outstanding (basic)
     26,373                       26,373  
Income before cumulative effect of a change in accting principle
     0.42                       0.47  
 
                                
Weighted average shares outstanding (diluted)
     26,549                       26,549  
Income before cumulative effect of a change in accounting principle
     0.42                       0.47  
See accompanying notes to the unaudited pro forma consolidated financial statements.

4

 

Cambrex Corporation
Consolidated Income Statement — Pro forma
For the Year Ended December 31, 2005
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     Reported  
    (2)     (3)                  
Gross sales
     451,986       (37,225 )     —       414,761  
Commissions & freight
     3,437       (787 )     —       2,650  
 
                        
Net Sales
     448,549       (36,438 )     —       412,111  
Other revenue
     6,548       (189 )     —       6,359  
 
                                
Net revenue
     455,097       (36,627 )     —       418,470  
Cost of goods sold
     293,760       (35,705 )     —       258,055  
 
                                
Gross profit
     161,337       (922 )     —       160,415  
 
                                
Operating expenses:
                                
Selling, general and administrative
     107,610       (5,066 )     714 (4)     103,258  
Research and development
     22,331       (861 )     —       21,470  
Asset impairments
     107,177       (24,794 )     —       82,383  
 
                        
Total operating expenses
     237,118       (30,721 )     714       207,111  
 
                                
Operating profit
     (75,781 )     29,799       (714 )     (46,696 )
 
                                
Other expenses:
                                
Interest expense, net
     10,815       (14 )     —       10,801  
Other expense, net
     40       3       —       43  
 
                                
Loss before taxes
     (86,636 )     29,810       (714 )     (57,540 )
 
                                
Income taxes
     23,822       2,591       —       26,413  
 
                        
Net loss
     (110,458 )     27,219       (714 )     (83,953 )
 
                                
Weighted average shares outstanding (basic)
     26,456                       26,456  
Net loss
     (4.18 )                     (3.17 )
 
                                
Weighted average shares outstanding (diluted)
     26,456                       26,456  
Net loss
     (4.18 )                     (3.17 )
See accompanying notes to the unaudited pro forma consolidated financial statements.

5

 

Cambrex Corporation
Consolidated Income Statement — Pro forma
For the Year Ended December 31, 2004
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     Reported  
    (2)     (3)                  
Gross sales
     439,115       (43,209 )     —       395,906  
Commissions & freight
     2,258       (701 )     —       1,557  
 
                        
Net Sales
     436,857       (42,508 )     —       394,349  
Other revenue
     6,800       (21 )     —       6,779  
 
                                
Net revenue
     443,657       (42,529 )     —       401,128  
 
                                
Cost of goods sold
     272,917       (35,694 )     —       237,223  
 
                                
Gross profit
     170,740       (6,835 )     —       163,905  
 
                                
Operating expenses:
                                
Selling, general and administrative
     102,769       (5,634 )     640 (4)     97,775  
Research and development
     19,659       (900 )     —       18,759  
Asset impairments
     48,720       —       —       48,720  
 
                        
Total operating expenses
     171,148       (6,534 )     640       165,254  
 
                                
Operating profit
     (408 )     (301 )     (640 )     (1,349 )
 
                                
Other expenses:
                                
Interest expense, net
     10,950       (277 )     —       10,673  
Other expense, net
     73       39       —       112  
 
                                
Loss from continuing operations before taxes
     (11,431 )     (63 )     (640 )     (12,134 )
 
                                
Income taxes
     14,461       152       —       14,613  
 
                        
Loss from continuing operations
     (25,892 )     (215 )     (640 )     (26,747 )
 
                                
Weighted average shares outstanding (basic)
     26,094                       26,094  
 
                                
Loss from continuing operations
     (0.99 )                     (1.03 )
 
                                
Weighted average shares outstanding (diluted)
     26,094                       26,094  
 
                                
Loss from continuing operations
     (0.99 )                     (1.03 )
See accompanying notes to the unaudited pro forma consolidated financial statements.

6

 

Cambrex Corporation
Consolidated Income Statement — Pro forma
For the Period Ended December 31, 2003
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     Reported  
    (2)     (3)                  
Gross sales
     405,591       (38,700 )     —       366,891  
Commissions & freight
     3,780       (732 )     —       3,048  
 
                        
Net Sales
     401,811       (37,968 )     —       363,843  
Other revenue
     8,833       56       —       8,889  
 
                                
Net revenue
     410,644       (37,912 )     —       372,732  
 
                                
Cost of goods sold
     248,238       (30,848 )     —       217,390  
 
                                
Gross profit
     162,406       (7,064 )     —       155,342  
 
                                
Operating expenses:
                                
Selling, general and administrative
     95,117       (3,755 )     643  (4)     92,005  
Research and development
     17,123       (876 )     —       16,247  
Legal settlement
     11,342       —       —       11,342  
 
                        
Total operating expenses
     123,582       (4,631 )     643       119,594  
 
                                
Operating profit
     38,824       (2,433 )     (643 )     35,748  
 
                                
Other expenses:
                                
Interest expense, net
     11,840       (197 )     —       11,643  
Other expense, net
     139       (27 )     —       112  
 
                                
Income from continuing operations before taxes
     26,845       (2,209 )     (643 )     23,993  
 
                                
Income taxes
     26,600       (571 )     —       26,029  
 
                        
 
                                
Income/(loss) from continuing operations
     245       (1,638 )     (643 )     (2,036 )
 
                                
Weighted average shares outstanding (basic)
     25,775                       25,775  
 
                                
Income/(loss) from continuing operations
     0.01                       (0.08 )
 
                                
Weighted average shares outstanding (diluted)
     26,174                       26,174  
 
                                
Income/(loss) from continuing operations
     0.01                       (0.08 )
See accompanying notes to the unaudited pro forma consolidated financial statements.

7

 

Cambrex Corporation
Consolidated Balance Sheet — Pro forma
As of June 30, 2006
(Unaudited)
                                 
    Cambrex     Pro forma     Other     Pro forma  
    As Reported     Adjustments     Adjustments     June 30, 2006  
    (1)     (3)                  
Current assets
                                
 
                                
Cash and cash equivalents
     30,283       (2,631 )     1,995 (5)     29,647  
Trade receivables, net
     74,314       (5,493 )     —       68,821  
Inventories, net
     110,452       (15,565 )     —       94,887  
Other current assets
     15,746       (607 )     —       15,139  
 
                        
Total current assets
     230,795       (24,296 )     1,995       208,494  
 
                                
Property, plant and equipment, net
     240,052       (28,604 )     —       211,448  
Goodwill
     98,963       (2,090 )     —       96,873  
Other intangibles, net
     50,800       —       —       50,800  
Other assets
     5,469       —       —       5,469  
 
                        
 
                                
Total assets
     626,079       (54,990 )     1,995       573,084  
 
                        
 
                                
Current liabilities
                                
Trade accounts payable
     37,790       (4,594 )     711 (6)     33,907  
Accrued liabilities
     49,567       (4,875 )     800 (7)     45,492  
Short-term debt and current portion of long-term debt
     1,782       —       —       1,782  
 
                        
Total current liabilities
     89,139       (9,469 )     1,511       81,181  
 
                                
Long-term debt
     186,020       —       —       186,020  
Deferred tax liabilities
     29,160       (1,205 )     —       27,955  
Other liabilities
     63,537       (6,800 )     1,368 (6)     58,105  
 
                        
Total liabilities
     367,856       (17,474 )     2,879       353,261  
 
                                
Common stock
     2,920       —       —       2,920  
Paid in capital
     220,738       —       —       220,738  
Retained earnings
     60,137       —       (39,142 )(8)     20,995  
Treasury stock
     (20,943 )     —       —       (20,943 )
Accumulated other comprehensive income
     (4,629 )     742 (9)     —       (3,887 )
 
                        
 
                                
Stockholders’ equity
     258,223       742       (39,142 )     219,823  
 
                        
 
                                
Total liabilities and stockholders’ equity
     626,079       (16,732 )     (36,263 )     573,084  
 
                        
See accompanying notes to the unaudited pro forma consolidated financial statements.

8

 

Cambrex Corporation
Notes to Pro forma Consolidated Financial Statements
(Unaudited)
(1)   Reflects financial position and results of Cambrex as filed in the Company’s Form 10-Q filed on August 8, 2006 for the period ended June 30, 2006.
(2)   Reflects results of Cambrex as filed in the Company’s Form 10-K filed on May 26, 2006 for the years ended December 31, 2005, 2004 and 2003.
(3)   Reflects the results of Cork and Landen included in the financial statements of Cambrex (“Cambrex As Reported” columns) for all periods presented in this Form 8-K.
(4)   Reflects corporate allocations originally charged to Cork and Landen that would remain an expense of Cambrex upon divestiture.
(5)   Reflects the portion of Cork and Landen’s cash that was excluded from the sale.
(6)   Reflects a legal liability retained by Cambrex.
(7)   Estimated transaction costs.
(8)   Reflects the loss on the sale of Cork and Landen had the transaction occurred on June 30, 2006.
(9)   Reflects the Cumulative Translation Adjustment recorded on Cork and Landen’s books that will be realized (-$2,114) and Cork’s additional minimum pension liability transferred to ICIG ($2,856).

9

 

SIGNATURES
Pursuant to the requirements 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/ Luke M. Beshar
 
       
 
      Luke M. Beshar
 
      Executive Vice President and
 
      Chief Financial Officer
 
      (On behalf of the Registrant and
 
      as the Registrant’s Principal
 
      Financial Officer)
Dated: November 2, 2006

10