UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20459
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): November 10, 2003
CAMBREX CORPORATION
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(Exact name of Registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-10638 22-2476135
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(Commission File Number) (IRS Employer Identification No.)
One Meadowlands Plaza, East Rutherford, New Jersey 07073
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(Address of principal executive offices) (Zip Code)
201-804-3000
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(Registrant's telephone number, including area code)
CAMBREX CORPORATION
FORM 8-K
CURRENT REPORT
NOVEMBER 10, 2003
Item 2. Acquisition or Disposition of Assets
On November 10, 2003, Cambrex Corporation ("Cambrex", the "Company" or
"Registrant") completed the sale of the Rutherford Chemicals business to a
subsidiary of Arsenal Capital Partners. The sale agreement specifies proceeds of
$55.0 million in cash received at closing, a $2.0 million subordinated 12%
interest bearing note receivable due in full in 5-1/2 years, and an $8.0 million
performance based cash earn-out if future operating profit targets are achieved
in each of the next three years. These proceeds are before fees and expenses
associated with the transaction and a working capital adjustment. Net proceeds
from the cash received at closing will be used to repay outstanding debt on the
Company's bank facility.
Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information.
Unaudited Pro Forma Condensed Consolidated Income Statements
for the nine months ended September 30, 2003 and 2002.
Unaudited Pro Forma Condensed Consolidated Income Statements
for the years ended December 31, 2002, 2001, and 2000.
Unaudited Pro Forma Consolidated Balance Sheet as of September
30, 2003.
Notes to Unaudited Pro Forma Consolidated Financial
Statements.
(c) Exhibits.
10. Amended and Restated Asset Sale Agreement dated October
17, 2003, between the Registrant and Rutherford Acquisition
Corp, a subsidiary of Arsenal Capital Partners.
Basis of Presentation
The following unaudited pro forma consolidated financial statements
reflect the divestiture of the Rutherford Chemicals business after giving effect
to pro forma adjustments described in the accompanying Notes to Unaudited Pro
Forma Consolidated Financial Statements. 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, 2002 and Quarterly Report on Form 10-Q as
of September 30, 2003 and for the nine months ended September 30, 2003 and 2002,
respectively.
The unaudited pro forma consolidated income statements give effect to
the divestiture as if it had occurred on January 1, 2000. The unaudited pro
forma balance sheet gives effect to the divestiture as if it had occurred on
September 30, 2003.
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.
CAMBREX CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL(1) CHEMICALS(2) ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ---------
Gross sales 303,526 303,526
Commissions & allowances 2,891 2,891
------- ------- -------- -------
Net sales 300,635 - - 300,635
Other revenue 6,899 6,899
------- ------- -------- -------
NET REVENUES 307,534 - - 307,534
Cost of goods sold 183,170 183,170
------- ------- -------- -------
GROSS PROFIT 124,364 - - 124,364
Operating expenses:
Selling, general & administrative 72,936 72,936
Legal settlement 11,342 11,342
Research and development 12,576 12,576
------- ------- -------- -------
Total operating expenses 96,854 - - 96,854
OPERATING PROFIT 27,510 - - 27,510
Other expenses/(income):
Interest expense, net 8,301 (1,791)(3) 6,510
Other (income), net (207) - (207)
------- ------- -------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES 19,416 - 1,791 21,207
Income taxes 18,274 - (4) 18,274
------- ------- -------- -------
INCOME FROM CONTINUING OPERATIONS 1,142 - 1,791 2,933
======= ======= ======== =======
Basic and diluted earnings from continuing operations per share:
Per share - basic 0.04 0.11
Weighted average shares outstanding - basic 25,769 25,769
Per share - diluted 0.04 0.11
Weighted average shares outstanding-diluted 26,032 26,032
See accompanying notes to the unaudited pro forma consolidated financial
statements.
CAMBREX CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL(1) CHEMICALS(2) ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ---------
Gross sales 294,655 294,655
Commissions & allowances 2,926 2,926
------- ------- -------- -------
Net sales 291,729 - - 291,729
Other revenue 5,097 5,097
------- ------- -------- -------
NET REVENUES 296,826 - - 296,826
Cost of goods sold 161,393 161,393
------- ------- -------- -------
GROSS PROFIT 135,433 - - 135,433
Operating expenses:
Selling, general & administrative 64,594 64,594
Restructuring and other charges 2,538 2,538
Research and development 11,672 11,672
------- ------- -------- -------
Total operating expenses 78,804 - - 78,804
OPERATING PROFIT 56,629 - - 56,629
Other expenses/(income):
Interest expense, net 8,673 (1,711)(3) 6,962
Other expense, net 3,453 3,453
------- ------- -------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES 44,503 - 1,711 46,214
Income taxes 11,170 599 (4) 11,769
------- ------- -------- -------
INCOME FROM CONTINUING OPERATIONS 33,333 - 1,112 34,445
======= ======= ======== =======
Basic and diluted earnings from continuing operations per share:
Per share - basic 1.28 1.33
Weighted average shares outstanding-basic 25,967 25,967
Per share - diluted 1.25 1.29
Weighted average shares outstanding-diluted 26,665 26,665
See accompanying notes to the unaudited pro forma consolidated financial
statements.
CAMBREX CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ---------
Gross sales 522,176 127,746 394,430
Commissions & allowances 5,392 805 4,587
------- ------- -------- -------
Net sales 516,784 126,941 - 389,843
Other revenue 10,159 936 9,223
------- ------- -------- -------
NET REVENUES 526,943 127,877 - 399,066
Cost of goods sold 326,767 108,235 218,532
------- ------- -------- -------
GROSS PROFIT (LOSS) 200,176 19,642 - 180,534
Operating expenses:
Selling, general & administrative 98,563 9,987 88,576
Restructuring and other charges 14,501 10,263 4,238
Vitamin B-3 provision 10,000 10,000 -
Research and development 17,629 1,835 15,794
------- ------- -------- -------
Total operating expenses 140,693 32,085 - 108,608
OPERATING PROFIT (LOSS) 59,483 (12,443) - 71,926
Other expenses/(income):
Interest expense/(income), net 11,237 (27) (2,281)(3) 8,983
Other expense/(income), net 64 (3,481) 3,545
------- ------- -------- -------
INCOME/(LOSS) BEFORE TAXES 48,182 (8,935) 2,281 59,398
Income taxes 11,949 (2,387) 798 (4) 15,134
------- ------- -------- -------
NET INCOME/(LOSS) 36,233 (6,548) 1,483 44,264
======= ======= ======== =======
Basic and diluted earnings per share:
Per share - basic 1.40 1.71
Weighted average shares outstanding-basic 25,954 25,954
Per share - diluted 1.37 1.67
Weighted average shares outstanding-diluted 26,520 26,520
See accompanying notes to the unaudited pro forma consolidated financial
statements.
CAMBREX CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ---------
Gross Sales 499,194 141,452 357,742
Commissions & allowances 4,259 606 3,653
------- ------- -------- -------
Net sales 494,935 140,846 - 354,089
Other revenue 3,920 (8) 3,928
------- ------- -------- -------
NET REVENUES 498,855 140,838 - 358,017
Cost of goods sold 319,520 120,662 198,858
------- ------- -------- -------
GROSS PROFIT 179,335 20,176 - 159,159
Operating expenses:
Selling, general & administrative 91,651 10,259 81,392
Restructuring and other charges 18,649 16,627 2,022
Vitamin B-3 Provision 4,400 4,400 -
Research and development 19,619 2,240 17,379
------- ------- -------- -------
Total operating expenses 134,319 33,526 - 100,793
OPERATING PROFIT/(LOSS) 45,016 (13,350) - 58,366
Other expenses/(income):
Interest expense, net 10,567 (35) (2,759)(3) 7,843
Other (income)/expense, net (277) 46 (323)
------- ------- -------- -------
INCOME/(LOSS) BEFORE TAXES 34,726 (13,361) 2,759 50,846
Income taxes 9,414 (3,762) 966 (4) 14,142
------- ------- -------- -------
NET INCOME/(LOSS) 25,312 (9,599) 1,793 36,704
======= ======= ======== =======
Basic and diluted earnings per share:
Per share - basic 0.99 1.43
Weighted average shares outstanding - basic 25,648 25,648
Per share - diluted 0.96 1.39
Weighted average shares outstanding - diluted 26,495 26,495
See accompanying notes to the unaudited pro forma consolidated financial
statements.
CAMBREX CORPORATION
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2000
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL(5) CHEMICALS(6) ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ---------
Gross sales 492,544 166,039 326,505
Commissions & allowances 4,976 4,132 844
------- ------- -------- -------
Net sales 487,568 161,907 - 325,661
Other revenue 4,527 (176) 4,703
------- ------- -------- -------
NET REVENUES 492,095 161,731 - 330,364
Cost of goods sold 314,600 129,199 185,401
------- ------- -------- -------
GROSS PROFIT 177,495 32,532 - 144,963
Operating expenses:
Selling, general & administrative 85,714 10,071 75,643
Restructuring - - -
Vitamin B-3 Provision - - -
Research and development 14,267 2,465 11,802
------- ------- -------- -------
Total operating expenses 99,981 12,536 - 87,445
OPERATING PROFIT 77,514 19,996 - 57,518
Other expenses/(income):
Interest expense/(income), net 11,487 (78) (3,555)(3) 8,010
Other (income), net (329) (116) (213)
------- ------- -------- -------
INCOME BEFORE TAXES 66,356 20,190 3,555 49,721
Income taxes 19,649 6,478 1,244 (4) 14,415
------- ------- -------- -------
NET INCOME 46,707 13,712 2,311 35,306
======= ======= ======== =======
Basic and diluted earnings per share
Per share - basic 1.87 1.41
Weighted average shares outstanding - basic 25,015 25,015
Per share - diluted 1.79 1.35
Weighted average shares outstanding-diluted 26,157 26,157
See accompanying notes to the unaudited pro forma consolidated financial
statements.
CAMBREX CORPORATION
BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
CAMBREX
CONSOLIDATED RUTHERFORD PRO FORMA
HISTORICAL CHEMICALS(7) ADJUSTMENTS PRO FORMA
------------ ------------ ----------- ---------
CURRENT ASSETS
Cash and cash equivalents 41,835 41,835
Trade receivables, net 54,681 54,681
Inventories, net 76,348 76,348
Deferred tax asset 21,433 21,433
Assets held for sale 65,558 65,558 -
Other current assets 25,790 25,790
------- ------ --------- -------
TOTAL CURRENT ASSETS 285,645 65,558 - 220,087
Property, plant and equipment, net 256,221 256,221
Goodwill and other tangibles 268,859 268,859
Other assets 12,915 12,915
------- ------ --------- -------
OTHER ASSETS 823,640 65,558 - 758,082
======= ====== ========= =======
CURRENT LIABILITIES
Accounts payable and accrued liabilities 71,711 71,711
Liabilities held for sale 9,905 9,905 -
Short-term debt and current portion of long-term debt 2,299 2,299
------- ------ --------- -------
TOTAL CURRENT LIABILITIES 83,915 9,905 - 74,010
Long-term debt 253,686 (53,055)(8) 200,631
Deferred tax liabilities 52,984 52,984
Other liabilities 52,599 (1,150)(9) 51,449
------- ------ --------- -------
TOTAL LIABILITIES 443,184 9,905 (54,205) 379,074
STOCKHOLDERS' EQUITY 380,456 55,653 54,205 379,008
------- ------ --------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 823,640 65,558 - 758,082
======= ====== ========= =======
See accompanying notes to the unaudited pro forma consolidated financial
statements.
Cambrex Corporation
Notes to Pro forma Consolidated Financial Statements
(Unaudited)
(1) Reflects results of continuing operations of the Company as filed in
the Company's Form 10-Q filed on November 12, 2003 for the third
quarter 2003, which excludes the Rutherford Chemicals business which
was reported as a discontinued operation for the respective period.
(2) For the nine month periods ended September 30, 2003 and 2002, the
Rutherford Chemicals business has already been reflected as a
discontinued operation in the historical financial statements filed on
Form 10-Q on November 12, 2003 for the third quarter 2003.
(3) Reflects the reduction of interest expense attributable to the
application of cash proceeds from the sale of the Rutherford Chemicals
business to the Company's long-term debt balance. The interest expense
reduction was calculated using the average interest rate for each
period presented which was 4.5%, 4.3%, 4.3%, 5.2% and 6.7% for the nine
month periods ended September 30, 2003 and 2002 and for the years ended
December 31, 2002, 2001 and 2000, respectively. An increase in the
variable interest rate of 1/8% would have resulted in higher annual
interest expense reduction of approximately $66 for each period.
(4) Eliminates the income tax benefit of the reduction in interest expense
at a U.S. federal statutory rate of 35%. For the nine month period
ended September 30, 2003, there was no income tax benefit assumed due
to the Company's recording of a valuation allowance for all net
domestic deferred tax assets as of September 30, 2003. (See the
Company's third quarter 2003 Form 10-Q, note (6), filed on November 12,
2003 for further discussion).
(5) Reflects the results of operations of the Company including the
Rutherford Chemicals business which was not reported as a discontinued
operation until September 30, 2003.
(6) Eliminates the results of operations of the Rutherford Chemicals
business for the respective periods as if the divestiture had been
completed on January 1, 2000.
(7) Eliminates the net assets and liabilities of the Rutherford Chemicals
business as if the divestiture had been completed on September 30,
2003.
(8) Reflects the application of the estimated cash proceeds from the sale
of the Rutherford Chemicals business, net of fees and expenses and
working capital adjustment, to the outstanding long-term debt balance.
These cash proceeds exclude the earn-out arrangement and any potential
collection of the $2.0 million note receivable.
(9) Reflects the write-off of net pension and post-retirement plan
liabilities that resulted from the curtailment accounting associated
with the sale of the Rutherford Chemicals business.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
CAMBREX CORPORATION
By: /s/ Luke M. Beshar
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Luke M. Beshar
Senior Vice President and
Chief Financial Officer
Date: November 25, 2003