| CAMBREX CORP ITEM 1A RISK FACTORS 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 Companyapstas business, financial condition, operating results and cash flows could be materially adversely effected |
| 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 in the future |
| THE COMPANY &apos S ANALYSIS, CONSIDERATION AND IMPLEMENTATION OF STRATEGIC ALTERNATIVES MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS As previously announced, the Company has retained Bear Stearns & Co, Inc |
| to act as advisors to the Board of Directors in the analysis and consideration of strategic alternatives to maximize shareholder value, including the potential sale of certain assets |
| There are several strategic alternatives that may be pursued |
| - --------------- (dollars in thousands, except share data) 8 However, we are presently unable to assess what impact any particular strategic alternative will have on our stock price if accomplished, and our consideration and implementation of strategic alternatives may not be successful |
| Uncertainties and risks relating to our analysis and consideration of strategic alternatives include but are not limited to: - the analysis and consideration of strategic alternatives may disrupt operations and distract members of management and other employees, which could adversely affect our results of operations; - the process of exploring strategic alternatives may be more time consuming and expensive than currently anticipated; - we may not be able to successfully achieve the benefits of the strategic alternative undertaken; and - perceived uncertainties as to the future direction of the Company may result in the loss of employees, customers, clients or business partners |
| 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, product rights and businesses complementary to our business |
| These transactions could include mergers, acquisitions, divestitures, 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, financial printing costs, 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 impact 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 and to enhance the Companyapstas position in its niche markets |
| 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 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 effect 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 |
| - --------------- (dollars in thousands, except share data) 9 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 therapeutic production functions, this trend may not continue |
| We have observed 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 an economic 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 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 |
| 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 clientapstas decision to forego a particular study |
| The Company currently has a long-term sales contract within the Human Health segment that accounts for more than 10prca - --------------- (dollars in thousands, except share data) 10 of segment sales that is scheduled to expire at the end of 2008 |
| There is no guarantee that this contract will be renewed |
| 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 much of our revenue is resulting from short-term contracts or purchase orders and these contracts can often be terminated for many reasons |
| 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 Companyapstas Biopharma segment 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 assured |
| THE COMPANY COULD BE SUBJECT TO ADDITIONAL IMPAIRMENT CHARGES IN THE FUTURE During 2004 and 2005, the Company recorded impairment charges to reduce goodwill and long-lived assets in 2005 |
| The Company may be subject to additional impairment charges if the business units do not perform at or near projected levels in the future |
| Should the profit forecast for these businesses be revised significantly downward, the Company may incur additional impairment charges |
| OUR OPERATING RESULTS MAY UNEXPECTEDLY FLUCTUATE IN FUTURE PERIODS The Companyapstas 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 Companyapstas 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 Companyapstas quarterly results |
| In some quarters, the Companyapstas 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 Companyapstas common stock would likely decline, even if the decline in revenue did not have any long-term adverse implications for the Companyapstas business |
| OUR MARKET SHARE DEPENDS ON NEW PRODUCT INTRODUCTIONS AND ACCEPTANCE Rapid technological change and frequent new product introductions are typical of 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 - --------------- (dollars in thousands, except share data) 11 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 effecting 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 &apos and customers &apos opinions of the productapstas 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 effect our business, financial condition and results of operations |
| FAILURE TO OBTAIN PRODUCTS AND COMPONENTS FROM THIRD-PARTY MANUFACTURERS COULD EFFECT 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 cases, 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 Companyapstas 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 Companyapstas business, financial condition and results of operations |
| VIOLATIONS OF CGMP AND OTHER GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT 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 ( "e cGMP "e ) regulations as required by the FDA The Companyapstas 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 Companyapstas facilities |
| Any such material violations would have a material adverse effect on the Companyapstas business, financial condition and results of operations |
| The Securities and Exchange Commission ( "e SEC "e ) is currently conducting an investigation into the Companyapstas inter-company accounting issue |
| The investigation began during the first half of 2003 after the - --------------- (dollars in thousands, except share data) 12 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 Companyapstas 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 effect our business, financial condition, results of operations and cash flows |
| 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, counterparties to acquisition and divestiture contracts, 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 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 above, as well as the loss of a significant contract at our Baltimore facility |
| If this matter, or any of the Companyapstas 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 |
| 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 Companyapstas key executives could have a material adverse effect on the Companyapstas business |
| The Company also depends on its ability to attract and retain 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 Companyapstas inability to attract and retain qualified scientific and technical employees would have a material adverse effect on the Companyapstas business, financial condition and results of operations |
| 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 EFFECT OUR EARNINGS AND FINANCIAL CONDITION The Company manufactures products intended for use by the public |
| In addition, the Companyapstas 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 effected 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 Companyapstas 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 Companyapstas insurance coverage will be adequate or that insurance coverage will continue to be available on terms acceptable to the Company |
| - --------------- (dollars in thousands, except share data) 13 The Company also indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was serving, at the Companyapstas 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 "e Director and Officer "e insurance policy that covers a portion of any potential exposure |
| The Company could be materially and adversely effected 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 effect our earnings |
| During 2005, the geographic shift of forecasted income resulted in the recording of a valuation allowance against all net domestic deferred tax assets |
| Going forward, until such time as the Companyapstas 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 |
| At December 31, 2005 the Company has recorded a valuation allowance against domestic indefinite lived intangible deferred tax assets of dlra16cmam926, because the Company could no longer preserve the utilization of certain tax planning strategies |
| WE HAVE A SIGNIFICANT AMOUNT OF DEBT THAT COULD ADVERSELY EFFECT OUR FINANCIAL CONDITION The Company has a dlra277cmam500 revolving credit facility of which dlra81cmam943 was outstanding at December 31, 2005 |
| In addition, the Company had privately placed notes of dlra100cmam000 (repaid in January 2006 by drawing down our existing revolving credit facility) |
| 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 |
| Even if we are able to meet our debt service obligations, the amount of debt we have could adversely effect 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 EFFECT OUR RESULTS Our international revenues, which include revenues from our non-US subsidiaries and export sales from the US, represented 62prca of our product revenues in 2005 and 61prca of our product revenues in 2004 |
| We - --------------- (dollars in thousands, except share data) 14 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 US could be subject to unfavorable exchange rates with the US 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 US 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 US 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; - 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 effected by our ability to meet analysts &apos expectations |
| Any failure to meet such expectations, even slightly, could have an adverse effect on the market price of our - --------------- (dollars in thousands, except share data) 15 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 EFFECT 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 effect 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 are 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 "e potential responsible party "e 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 the financial condition, operating results and cash flows when resolved in future reporting periods |
| THE POSSIBILITY WE WILL BE UNABLE TO PROTECT OUR TECHNOLOGIES COULD EFFECT 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 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 on a third partyapstas intellectual property, we may be required to pay damages for past infringement, and lose the ability to sell certain products or receive licensing revenues |
| - --------------- (dollars in thousands, except share data) 16 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, 2005, the Company had 2cmam041 employees worldwide (965 of whom were from international operations) compared with 1cmam938 employees at December 31, 2004 and 1cmam861 at December 31, 2003 |
| 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 Canada |
| Export sales from the Companyapstas domestic operations in 2005, 2004 and 2003 amounted to dlra47cmam115, dlra29cmam945 and dlra22cmam100, respectively |
| Sales from international operations were dlra234cmam199 in 2005, dlra238cmam673 in 2004, and dlra223cmam666 in 2003 |
| Refer to Note #17 to the Cambrex Corporation and Subsidiaries Consolidated Financial Statements |
| AVAILABLE INFORMATION This annual report on Form 10-K, the Companyapstas quarterly reports on Form 10-Q, the Companyapstas current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are made available free of charge on the Companyapstas Internet website www |
| com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC The most recent certifications by the Companyapstas 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 303A12 |
| - --------------- (dollars in thousands, except share data) 17 Reports filed by the Company with the SEC may be read and copied at the SECapstas Public Reference Room at 100 F Street, NE, Washington, DC 20549 |
| Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330 |
| 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 Companyapstas website: the charters of our Audit, Regulatory Affairs, 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 |