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, 2004
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 24, 2005 /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, 2004 AND 2003
PAGE
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 31, 2004 and 2003 2
Statement of Changes in Net Assets Available for Benefits
for the year ended December 31, 2004 3
Notes to Financial Statements 4-9
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at End of Year) 10
* 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
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") at December 31, 2004 and
2003, and the changes in net assets available for benefits for the year ended
December 31, 2004 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 24, 2005
CAMBREX CORPORATION SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31,
2004 2003
Investments at Fair Value:
Cambrex Stock Fund $ 19,913,567 $ 19,604,634
Mutual Funds 49,120,351 47,293,173
Loans to Participants: 680,909 469,340
------------ -------------
Total Investments 69,714,827 67,367,147
Receivables:
Participant Contributions 173,201 -
Employer Contributions 85,356 -
------------ -------------
Total Contribution Receivable 258,557 -
------------ -------------
Net Assets Available for Benefits $ 69,973,384 $ 67,367,147
============ =============
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, 2004
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in the fair value of
investments $ 3,790,974
Interest and dividends 1,115,929
Contributions
Participants 4,512,430
Rollovers 152,620
Employer 2,154,570
------------
Total contributions 6,819,620
------------
Total additions 11,726,523
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments (9,092,174)
Transfer out (6,744)
Administrative expenses (21,368)
------------
Total deductions (9,120,286)
------------
Net increase 2,606,237
Net assets available for benefits:
Beginning of year 67,367,147
------------
End of year $ 69,973,384
============
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 $13,000 in 2004. 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 $3,000 in 2004 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.
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.
4
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
Dreyfus 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.
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 the forfeiture account and are available to reduce
subsequent Company contributions. Forfeitures for 2004 and 2003 were
$135,607 and $103,941, respectively. Cumulative unused balances in the
forfeiture account amounted to $147,448 and $94,475 at December 31, 2004
and 2003, respectively.
5
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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 a participant's termination of employment is 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.
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
6
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
gains or losses recognized from the disposition of investments and the
unrealized appreciation (depreciation) on those investments.
PLAN EXPENSES
All costs of administering the Plan are paid by the participants, to the
extent not paid by the Company.
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.
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 approximates fair value.
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, 2004 and 2003:
2004 2003
Cambrex Stock Fund $ 19,913,567 $19,604,634
Fidelity Magellan Fund 12,104,113 11,287,052
Fidelity Growth & Income Portfolio 11,112,996 11,162,705
Fidelity Asset Manager 4,682,981 5,228,162
Fidelity Retirement Government Money
Market Portfolio 4,822,803 6,126,332
Spartan US Equity Index 6,812,756 5,617,835
7
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
During 2004, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) increased in
value by $3,790,974 as follows:
Cambrex Stock Fund $ 1,394,041
Mutual Funds 2,396,933
-----------
Total $ 3,790,974
===========
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, 2004 and 2003, Plan investments
are allocated as follows:
2004 2003
Cambrex Stock Fund 29% 29%
Dreyfus Founders Growth Fund 4 4
Fidelity Magellan Fund 17 17
Fidelity Investment Grade Bond 4 4
Fidelity Growth & Income Portfolio 16 17
Fidelity Asset Manager 7 8
Fidelity Worldwide Fund 1 1
Fidelity Retirement Government Money Market Portfolio 7 9
Spartan US Equity Index 10 8
Fidelity Short - Intermediate Government Portfolio 3 2
Strong Advisor Small Cap Value Fund 2 1
--- ---
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
8
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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.
7. RECONCILIATIONS OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of the net assets available for benefits
per the financial statements to Form 5500:
DECEMBER 31,
2004 2003
Net assets available for benefits
per the financial statements $ 69,973,384 $ 67,367,147
Participant contributions receivable (173,201) -
Employer contributions receivable (85,356) -
------------ ------------
Net assets available for benefits per Form 5500 $ 69,714,827 $ 67,367,147
============ ============
The following is a reconciliation of the contributions received by the
Plan per the financial statements to Form 5500:
FOR THE YEAR ENDED
DECEMBER 31, 2004
Contributions received by the Plan
per the financial statements $ 6,819,620
Less: Current year contributions receivable (258,557)
-----------
Contributions received by the Plan per Form 5500 $ 6,561,063
===========
9
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 ** $ 19,913,567
Dreyfus Founders Growth Fund Mutual Fund ** 2,993,036
* Fidelity Magellan Fund Mutual Fund ** 12,104,113
* Fidelity Investment Grade Bond Mutual Fund ** 2,727,795
* Fidelity Growth & Income Portfolio Mutual Fund ** 11,112,996
* Fidelity Asset Manager Mutual Fund ** 4,682,981
* Fidelity Worldwide Fund Mutual Fund ** 608,716
* Fidelity Retirement Government Money
Market Portfolio Mutual Fund ** 4,822,803
Spartan US Equity Index Mutual Fund ** 6,812,756
* Fidelity Short - Intermediate
Government Portfolio Mutual Fund ** 1,754,160
Strong Advisor Small Cap Value Fund Mutual Fund ** 1,500,995
* Participant Loans (rates ranging from
4.5% to 10%) Loans Receivable - 680,909
-------------
$ 69,714,827
=============
* Party-in-interest
** Cost information not required for participant-directed investments.
10