SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2005
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 number: 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 plan and the address of its principal executive office:
CAMBREX CORPORATION
ONE MEADOWLANDS PLAZA
EAST RUTHERFORD, NEW JERSEY 07073
CAMBREX CORPORATION SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTAL SCHEDULE AND EXHIBITS
DECEMBER 31, 2005
PAGE
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Reports of Independent Registered Public Accounting Firm 2-3
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31,
2005 and 2004 4
Statement of Changes in Net Assets Available for Benefits for the year
ended December 31, 2005 5
Notes to Financial Statements 6-10
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets Held for Investment Purposes
December 31, 2005 11
Signature 12
Exhibits
(23.1) Consent of Independent Registered Public Accounting Firm
(23.2) 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
The Plan Administrator and Participants
Cambrex Corporation Savings Plan
We have audited the accompanying statement of net assets available for benefits
of Cambrex Corporation Savings Plan as of December 31, 2005, and the related
statement of changes in net assets available for benefits for the year then
ended. 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 audit.
We conducted our audit 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Cambrex
Corporation Savings Plan as of December 31, 2005, and the changes in its net
assets available for benefits for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the 2005 basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the 2005 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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audit of the 2005 basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the 2005
basic financial statements taken as a whole.
/s/ J.H. Cohn LLP
Roseland, New Jersey
June 2, 2006
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
Cambrex Corporation Savings Plan:
In our opinion, the accompanying statement of net assets available for benefits
presents fairly, in all material respects, the net assets available for benefits
of the Cambrex Corporation Savings Plan (the "Plan") at 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 statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Florham Park, NJ
June 24, 2005
CAMBREX CORPORATION SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31,
2005 2004
----------- -----------
Assets:
Investments at Fair Value:
Cambrex Stock Fund $13,885,944 $19,913,567
Mutual Funds 51,249,976 49,120,351
Loans to Participants 736,314 680,909
----------- -----------
Total Investments 65,872,234 69,714,827
----------- -----------
Receivables:
Participant Contributions 188,676 173,201
Employer Contributions 92,534 85,356
----------- -----------
Total Contributions Receivable 281,210 258,557
----------- -----------
Net Assets Available for Benefits $66,153,444 $69,973,384
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
CAMBREX CORPORATION SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2005
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income(loss):
Net depreciation in the fair value of investments $(6,521,871)
Interest and dividends 2,932,630
-----------
Total investment loss (3,589,241)
-----------
Contributions
Participants 4,870,149
Rollovers 534,119
Employer 2,167,905
-----------
Total contributions 7,572,173
-----------
Total additions 3,982,932
-----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments (7,740,384)
Administrative expenses (62,488)
-----------
Total deductions (7,802,872)
-----------
Net decrease (3,819,940)
Net assets available for benefits:
Beginning of year 69,973,384
-----------
End of year $66,153,444
===========
The accompanying notes are an integral part of these financial statements.
5
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 a more complete
description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan to provide all eligible employees
of Cambrex Corporation ("Cambrex" or 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 ("Fidelity" or 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.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings,
and charged with an allocation of administrative expenses. Allocations are
based on participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from
the participant's vested account.
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 $14,000 in 2005. Participants who have attained age 50
before the end of the Plan year are eligible to make catch-up
contributions. The catch-up contribution itself is limited to $4,000 in
2005 and will increase to $5,000 in 2006. Participants may also contribute
eligible amounts representing distributions from other qualified defined
benefit or defined contribution plans or certain individual retirement
accounts.
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, which
participants can self-direct in this fund at anytime after the employer
contribution is made.
VESTING
A participant's contributions plus corresponding actual earnings shall
always be fully and immediately vested. Participants shall vest in the
matching employer contributions at 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
6
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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 2005 and 2004 were
$180,086 and $135,607, respectively. Cumulative unused balances in the
forfeiture account amounted to $23,430 and $147,448 at December 31, 2005
and 2004, respectively. Also, in 2005, employer contributions were reduced
by $247,223 from forfeited nonvested accounts.
PAYMENT OF BENEFITS
On termination of service due to death, disability, or retirement, a
participant may elect to receive a lump-sum amount equal to the value of
the participant's vested interest in his or her account. For termination of
service for other reasons, a participant may receive the value of the
vested interest in his or her account as a lump-sum distribution. Effective
March 28, 2005, all vested amounts less than $1,000 will be immediately
distributed.
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. The loans are secured by the balance in the participant's account
and bear interest at rates which are commensurate with local prevailing
rates. In 2005, interest rates ranged from 4.5 percent to 10 percent.
Principal and interest is paid ratably through payroll deductions.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting.
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.
7
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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 common 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 their outstanding balance, 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, 2005 and 2004:
2005 2004
----------- -----------
Cambrex Stock Fund $13,885,944 $19,913,567
Fidelity Asset Manager 5,104,071 4,682,981
Fidelity Growth & Income Portfolio 10,229,946 11,112,996
Fidelity Magellan Fund 11,184,492 12,104,113
Fidelity Retirement Government Money Market
Portfolio 4,819,256 4,822,803
Spartan US Equity Index 7,217,892 6,812,756
During 2005, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $6,521,871 as follows:
Cambrex Stock Fund $(5,950,829)
Mutual Funds (571,042)
-----------
Total $(6,521,871)
===========
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.
8
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
4. RELATED PARTY TRANSACTIONS
The Cambrex Stock Fund invests primarily in Cambrex 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 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 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. Fidelity serves as Trustee, recordkeeper, and custodian of the
Plan and, therefore, is a party-in-interest. Fees paid by the Plan for the
investment management services amount to $62,488 for the year ended
December 31, 2005.
5. 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 Plan.
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.
9
CAMBREX CORPORATION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
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,
-------------------------
2005 2004
----------- -----------
Net assets available for benefits
per the financial statements $66,153,444 $69,973,384
Participant contributions receivable (188,676) (173,201)
Employer contributions receivable (92,534) (85,356)
----------- -----------
Net assets available for benefits per Form 5500 $65,872,234 $69,714,827
=========== ===========
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, 2005
------------------
Contributions received by the Plan
per the financial statements $7,572,173
Less: Current year contributions receivable (281,210)
Add: Prior year contributions receivable 258,557
----------
Contributions received by the Plan per Form 5500 $7,549,520
==========
10
CAMBREX CORPORATION SAVINGS PLAN
EI# 22-2476135
PLAN# 003
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES
DECEMBER 31, 2005
DESCRIPTION OF COST
IDENTITY OF ISSUER ASSETS/INVESTMENTS VALUE CURRENT VALUE
------------------ ------------------ ----- -------------
* Cambrex Stock Fund Common Stock ** $13,885,944
Dreyfus Founders Growth Fund Mutual Fund ** 3,137,814
* Fidelity Asset Manager Mutual Fund ** 5,104,071
* Fidelity Growth & Income Portfolio Mutual Fund ** 10,229,946
* Fidelity Investment Grade Bond Mutual Fund ** 3,124,303
* Fidelity Magellan Fund Mutual Fund ** 11,184,492
* Fidelity Retirement
Government Money Market Portfolio Mutual Fund ** 4,819,256
* Fidelity Short - Intermediate
Government Portfolio Mutual Fund ** 1,942,700
* Fidelity Worldwide Fund Mutual Fund ** 1,378,261
Spartan US Equity Index Mutual Fund ** 7,217,892
Wells Fargo Advantage Small
Cap Value Fund Mutual Fund ** 3,111,241
* Loans to Participants (rates ranging
from 4.5% to 10%) Loans Receivable -- 736,314
-----------
$65,872,234
===========
* Party-in-interest
** Cost information not required for participant-directed investments.
11
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 16, 2006 /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)
12