SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
for the transition period from __________ to __________.
Commission File No.: 3-37791
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
CAMBREX CORPORATION SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the
the plan and the address of its principal executive office:
CAMBREX CORPORATION
ONE MEADOWLANDS PLAZA
EAST RUTHERFORD, NEW JERSEY 07073
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administration Committee of the Plan has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
Cambrex Corporation Savings Plan
Date June 28, 2004 /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)
CAMBREX CORPORATION SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
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PAGE
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Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2003 3
Notes to Financial Statements 4-10
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at End of Year) 11
Exhibits:
Exhibit 23 - Consent of Independent Registered Public Accounting Firm
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator
of the Cambrex Corporation Savings Plan:
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Cambrex Corporation Savings Plan (the "Plan") as of December 31, 2003 and
2002, and the changes in net assets available for benefits for the year ended
December 31, 2003, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with 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 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.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 25, 2004
CAMBREX CORPORATION SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
----------- -----------
Investments at Fair Value:
Non-participant Directed:
Cambrex Stock Fund ........... $ -- $21,899,732
Participant Directed:
Cambrex Stock Fund ........... 19,604,634 6,016,298
Mutual Funds ................. 47,293,173 46,678,566
Loans to Participants: ............. 469,340 1,030,699
----------- -----------
Net Assets Available for Benefits $67,367,147 $75,625,295
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
CAMBREX CORPORATION SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
2003
------------
Additions:
Contributions
Employee .................................. $ 5,500,962
Rollovers ................................. 134,932
Employer .................................. 2,508,785
------------
Total contributions .................. 8,144,679
Interest and dividends ........................ 917,857
Net appreciation in the fair value of
investments ................................ 2,610,961
------------
Total additions ...................... 11,673,497
Deductions:
Benefit payments .............................. (19,384,867)
Transfer out .................................. (513,595)
Administrative expenses ....................... (33,183)
------------
Total deductions ..................... (19,931,645)
------------
Net decrease ......................... (8,258,148)
Net assets available for benefits,
Beginning of year ........................... 75,625,295
------------
End of year ................................. $ 67,367,147
============
The accompanying notes are an integral part of these financial statements.
3
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following brief description of the Cambrex Corporation Savings Plan
(the "Plan") is provided for general information purposes only.
Participants should refer to the Plan document for more complete
information.
GENERAL
The Plan is a defined contribution plan to provide all eligible employees
of Cambrex Corporation (the "Company") and its subsidiaries a vehicle to
accumulate savings. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The Plan was designed to
enhance the existing retirement program for employees of the Company. The
assets of the Plan are maintained, and transactions therein are executed,
by Fidelity Management Trust Company (the "Trustee"). Fidelity also serves
as recordkeeper and custodian of the Plan.
ELIGIBILITY FOR PARTICIPATION
Each employee who was a participant in a previous plan shall continue as a
participant under the provisions of the Plan as of the Effective Date, as
defined by the Plan document. All other employees, except those covered
under a collective bargaining agreement who must bargain for the benefit,
who work at least 20 hours per week or 1,000 hours per year, are eligible
to participate in the Plan on the first of the month following completion
of thirty consecutive days of service.
CONTRIBUTIONS
Participants may elect to make, through payroll deduction, contributions
in whole percentages of at least 1%, and not more than 50%, of their
compensation on a before-tax or after-tax basis. Pre-tax participant
contributions may not exceed the smaller of 50% of the participant's base
compensation or $12,000 in 2003. Effective January 1, 2003, the Plan was
amended to reflect certain provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001, including allowing eligible
participants who attain age 50 in the calendar year to make additional
"catch up" contributions in 2003. The catch-up contribution itself is
limited to $2,000 in 2003 and will increase in thousand dollar increments
to $5,000 in 2006. Thereafter, the catch-up contribution limit will be
indexed for inflation.
The Company matches 100% of employees' contributions based on the first 3%
of their compensation; an additional 50% of the contribution based on the
succeeding 3%; and no match with respect to contributions in excess of 6%.
All Company matching is made in the form of Company common stock.
Effective April 2003, participants can self-direct balances in this fund
at anytime after the employer contribution is made. Active participants
who are covered by a Collective Bargaining Agreement to which the Company
is a party are not entitled to matching employer contributions unless the
collective bargaining agreement specifically provides otherwise.
Effective, November 10, 2003 there are no active participants covered by a
Collective Bargaining Agreement.
4
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
INVESTMENT OPTIONS
The Plan maintains investments in mutual funds, bond funds, U.S.
Government securities and Company stock. Participants may invest their
contributions, in multiples of ten percent, in one or more of the
following funds:
Cambrex Stock Fund - The fund consists primarily of Cambrex Corporation
common stock with a small portion in short-term liquid investments. The
fund was established to allow employees to invest in Cambrex Corporation
common stock and to invest the employer match.
Founders Growth Fund - The fund primarily invests in common stocks as well
as foreign securities. The fund seeks long-term growth of capital.
Fidelity Magellan Fund - The fund invests primarily in common stocks
seeking capital appreciation.
Fidelity Investment Grade Bond - The fund invests primarily in U.S.
dollar-denominated investment-grade bonds (those of medium and high
quality) seeking to obtain a high level of current income consistent with
preservation of capital.
Fidelity Growth & Income Portfolio - The fund invests primarily in common
stocks with a focus on those that pay current dividends and show potential
for capital appreciation.
Fidelity Asset Manager - The fund invests in stocks, bonds, short-term
instruments and other investments seeking a high level of current income.
The fund also considers the potential for capital appreciation.
Fidelity Worldwide - The fund invests in securities issued anywhere in the
world, primarily in common stocks. The fund seeks to allocate investments
across countries and regions considering the size of the market in each
country and region relative to the size of the world market to provide the
growth of capital.
Fidelity Retirement Government Money Market Portfolio - The fund invests
primarily in U.S. Government securities and repurchase agreements for
those securities seeking as high a level of current income as is
consistent with the security of principal and liquidity.
Spartan US Equity Index - The fund normally invests in common stocks
included in the Standard & Poor's 500 stock index. The fund seeks to
provide investment results that correspond to the total return performance
of common stocks publicly traded in the United States.
Fidelity Short - Intermediate Government Portfolio - The fund invests
primarily in U.S. Government securities and instruments related to U.S.
Government securities seeking a high level of current income in a manner
consistent with preserving principal.
Strong Advisor Small Cap Value - The fund invests primarily in stocks of
small-capitalization companies with a focus on stocks that are undervalued
relative to the market based on earnings, cash flow, or asset value. The
fund seeks to provide capital appreciation.
5
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
VESTING
A participant's contributions to the Plan shall always be fully and
immediately vested. Participants shall vest in the matching employer
contributions at a rate of twenty percent (20%) for each year of service
completed. If not already fully vested under the preceding basis,
participants shall be 100% vested in their matching employer contributions
upon normal retirement date, permanent disability, or death. At the time
of termination, any unvested employer contributions are applied to a
forfeiture account within the Plan. These forfeited
Company contributions are accumulated in a forfeiture account and are
available to reduce subsequent Company contributions. Forfeitures for 2003
and 2002 were $103,941 and $92,393, respectively. Cumulative unused
balances in the forfeiture accounts amounted to $94,475 and $180,859 at
December 31, 2003 and 2002, respectively.
WITHDRAWALS DURING EMPLOYMENT
Contributing participants may make withdrawals from their after-tax
account balances prior to their termination of employment by filing
written requests with the Plan Administration Committee. Pre-tax
contributions are available only as provided by Internal Revenue Service
regulation.
DISTRIBUTION OF BENEFITS OTHER THAN WITHDRAWALS
Participants, upon termination of employment for reasons other than
retirement, death or disability, shall receive all vested amounts in their
account balances in all investment funds in the form of a lump sum
payment. Provided the vested amount for distribution is in excess of
$5,000, such participants must elect to receive a distribution of benefit
prior to the first anniversary of their severance date or at age 65.
DEATH, DISABILITY OR RETIREMENT
If participants' terminations of employment are due to death, disability
or retirement, all vested amounts credited to their accounts are payable
in one lump sum to them or their designated beneficiary.
LOANS TO PARTICIPANTS
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to the lesser of 50% of their vested account balance or
$50,000, subtracting the participants' highest outstanding loan balances
over the previous twelve months. Only one outstanding loan is allowed at
any given time, and no more than one loan will be approved for any
participant in any twelve-month period. There are two types of loans
available: a regular loan, with a repayment period from one year up to
five years; and a primary residence loan, with a repayment period from one
year up to 15 years. Loans are collateralized by the balance in the
participant's account and bear interest at 0.5% above the prime rate
determined each October 1, or the first business day thereafter. The
amounts borrowed are transferred from the investment funds to the
participant loan fund on a proportional basis. On a monthly basis,
repayments of principal and interest are transferred to the investment
funds.
PLAN TERMINATION
Although the Company has not expressed any intention to do so, the Company
has the right under the Plan to temporarily or permanently discontinue its
employer contributions to the Plan or to terminate or partially terminate
the Plan at any time subject to the provisions set forth by ERISA. In the
event of, and upon, the Company's termination or partial termination of
the Plan or complete discontinuance of contributions, the interest in the
portion of each participant's account balance attributable to employer
contributions shall become fully vested. Unless the Company's Board of
Directors (the "Board") deems otherwise, termination of the Plan shall not
accelerate any such payments for the benefit of the participants or their
beneficiaries, but the assets shall continue to be held for distribution
and application in the manner prescribed by the Board.
6
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting.
NET APPRECIATION (DEPRECIATION)
The Plan presents in the "Statement of Changes in Net Assets Available for
Benefits" the net appreciation (depreciation) in the fair value of its
investments, which consists of the realized gains or losses recognized
from the disposition of investments and the unrealized appreciation
(depreciation) on those investments.
PLAN EXPENSES
The Plan is not responsible for any expenses. The participant pays the
loan administration charges. The Company pays all other expenses incurred
by the Plan.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make significant estimates and assumptions that affect the
reported amounts of net assets available for benefits and disclosures of
contingent assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
7
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in funds that can invest
in a combination of stocks, bonds, fixed income securities, mutual funds,
and other investment securities. Investment securities are exposed to
various risks, such as interest rate, market and credit. Due to the level
of risk associated with certain investment securities and the level of
uncertainty related to changes in the value of investment securities, it
is at least reasonably possible that changes in risks in the near term
would materially affect participants' account balances and the amounts
reported in the Statements of Net Assets Available for Benefits and the
Statement of Changes in Net Assets Available for Benefits.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Cambrex stock is traded
on a national securities exchange and is valued at the last reported sales
price of the day. Mutual funds are valued based on the published market
value as quoted on a national securities exchange. Securities traded on
the over-the-counter market are valued at the last reported bid price.
Purchase and sale of securities are reflected on a trade date basis with
the gain or loss recognized on the sale of securities being based on the
average cost. Dividend income is recorded on the ex-dividend date.
Interest income is recorded as earned on an accrual basis. Participant
loans are valued at cost, which does not differ materially from fair
value.
The net investment gain includes interest and dividend income, net gains
or losses realized upon disposition of investments at fair value, and net
unrealized appreciation or depreciation of investments. Investment income
and gains and losses have been allocated daily by the Trustee in
proportion to the market values of the respective plans, adjusted for
contributions and distributions.
3. INVESTMENTS IN EXCESS OF 5% OF NET ASSETS
The following presents investments that represent 5% or more of the Plan's
net assets as of December 31, 2003 and 2002:
2003 2002
Cambrex Stock Fund ................. $19,604,634 $ 6,016,298
Cambrex Stock Fund * ............... -- 21,899,732
Fidelity Magellan Fund ............. 11,287,052 9,900,466
Fidelity Growth & Income Portfolio . 11,162,705 12,024,341
Fidelity Asset Manager ............. 5,228,162 5,197,824
Fidelity Retirement Government Money
Market Portfolio ................ 6,126,332 8,060,795
Spartan US Equity Index ............ 5,617,835 4,066,548
* Non-participant directed
8
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) increased in
value by $2,610,961 as follows:
Cambrex Stock Fund $(4,198,260)
Mutual Funds ..... 6,809,221
-----------
Total ..... $ 2,610,961
===========
Calculations of the portion of the total funds to be allocated to the Plan
have been made by the Trustee. The assets held by each fund are described
in the prospectus of the fund, which are available to the Plan
participants. Each fund offers different investment opportunities from
assets consisting of cash and short-term investments, corporate bonds,
common stocks, preferred stocks and government securities. Each fund has
an investment manager who exercises discretionary authority concerning
investment vehicles within the fund.
4. ASSET ALLOCATION
The Plan's investments are self-directed by the participants in a Trust
managed by the Trustee. As of December 31, 2003 and 2002, Plan investments
are allocated as follows:
2003 2002
Cambrex Stock Fund .................................. 29% 37%
Founders Growth Fund ................................ 4 3
Fidelity Magellan Fund .............................. 17 13
Fidelity Investment Grade Bond ...................... 4 4
Fidelity Growth & Income Portfolio .................. 17 16
Fidelity Asset Manager .............................. 8 7
Fidelity Worldwide Fund ............................. 1 .5
Fidelity Retirement Government Money Market Portfolio 9 11
Spartan US Equity Index ............................. 8 5
Fidelity Short - Intermediate Government Portfolio .. 2 3
Strong Advisor Small Cap Value Fund ................. 1 .5
--- ---
100% 100%
=== ===
Funds offered within the Plan are diversified, allowing employees to
self-direct participation in a broad range of funds being offered.
Employer matching contributions are made directly into the Cambrex Stock
Fund and can be transferred by participants at anytime thereafter, as
provided under Plan provisions.
5. RELATED PARTY TRANSACTIONS
The Cambrex Stock Fund invests primarily in Cambrex Corporation common
stock and maintains approximately 3-4% of its assets in cash and temporary
liquid investments. Employee contributions and the employer match are used
to buy units in the fund. Shares of Cambrex Corporation common stock are
purchased by the Trustee on the open market or in stock issued by Cambrex
at the average of the high and low trading price on the day of
contribution. All other transactions of Cambrex Corporation common shares
were traded on the New York Stock Exchange ("NYSE"). Employee and employer
contributions, dividends, and appreciation thereon can be transferred out
of the Cambrex Stock Fund or transferred to another investment fund
without restriction. These Plan transactions are permitted under the Plan
provisions and are specifically exempt from any ERISA "Party in Interest"
regulations. Each participant can exercise voting rights attributable to
the shares allocated to their account. The Cambrex Corporation common
shares are currently traded on the NYSE. Fidelity serves as Trustee,
recordkeeper, and custodian of the Plan and, therefore, is a
party-in-interest.
6. TAX STATUS
The Internal Revenue Service issued its latest determination letter on
April 4, 2003, which stated that the Plan and its underlying trust qualify
under the applicable provisions of the Internal Revenue Code and,
therefore, are exempt from Federal income taxes. Although the Plan has
been amended since receiving the determination letter, the Plan
administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, no provision for income taxes has been included
in the Plan's financial statements.
9
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
7. SALE OF RUTHERFORD CHEMICALS, INC.
Effective November 10, 2003, Cambrex Corporation sold its Rutherford
Chemicals, Inc. business. Upon the sale of the business, those
participants in the Plan who were transferred to the buyer were provided
with normal distribution options in regards to their account balance. This
included the election to retain their balances in the Plan or rollover
their balances into the buyers' qualified plan. Approximately $12,700,000
was distributed from the Plan during the 2003 plan year and is reflected
in the benefit payments line within the Statement of Changes in Net
Assets Available for Benefits. The active participants are not covered by
the Collective Bargaining Agreement. All participants who were part of the
Rutherford Chemicals sale are 100% vested.
In addition, transferred participants with outstanding loan balances were
allowed to transfer the outstanding balance to the buyer by immediately
notifying Cambrex of this election, otherwise the outstanding loan balance
would be deemed a distribution. Approximately $514,000 of outstanding loan
balances were transferred during the 2003 Plan year and are reflected in
the transfer out line within the Statement of Changes in Net Assets
Available for Benefits.
10
CAMBREX CORPORATION SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
--------------------------------------------------------------------------------
DESCRIPTION OF COST
IDENTITY OF ISSUER ASSETS/INVESTMENTS VALUE CURRENT VALUE
------------------ ------------------ ----- -------------
* Cambrex Stock Fund Common Stock ** $ 19,604,634
Founders Growth Fund Mutual Fund ** 2,739,401
* Fidelity Magellan Fund Mutual Fund ** 11,287,052
* Fidelity Investment Grade Bond
Mutual Fund ** 2,784,775
* Fidelity Growth & Income
Portfolio Mutual Fund ** 11,162,705
* Fidelity Asset Manager Mutual Fund ** 5,228,162
* Fidelity Worldwide Fund Mutual Fund ** 260,655
* Fidelity Retirement Government
Money Market Portfolio Mutual Fund ** 6,126,332
Spartan US Equity Index Mutual Fund ** 5,617,835
* Fidelity Short - Intermediate
Government Portfolio Mutual Fund ** 1,594,499
Strong Advisor Small Cap Value
Fund Mutual Fund ** 491,757
* Participant Loans (rates
ranging from 4.5% to 10%) Loans Receivable - 469,340
------------
$ 67,367,147
============
* Party-in-interest
** Cost information not required for participant-directed investments.
11