Cambrex Reports Second Quarter 2006 Results

EAST RUTHERFORD, N.J., July 27 /PRNewswire-FirstCall/ -- Cambrex Corporation reports second quarter 2006 results for the period ended June 30, 2006.

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To better reflect ongoing operations for the periods presented, Adjusted (non-GAAP) results are used throughout this press release and the accompanying tables. The second quarter 2006 Adjusted financial results exclude costs related to the evaluation of strategic alternatives ($0.05 Diluted Earnings per Share) and a small amount of cost related to the Cutanogen acquisition. The second quarter 2005 financial results exclude the benefit of a favorable Swedish tax court decision ($0.13 Diluted Earnings per Share). In addition to the aforementioned items, certain employee medical benefit expenses in 2005 and 2006 were reclassified from segment Cost of Sales and Operating Expense to Corporate Administrative Expenses to better reflect actual costs incurred within the operating segments and are included in the GAAP/Non-GAAP reconciliation tables. A reconciliation of GAAP results to Adjusted (non-GAAP) results can be found in the unaudited financial tables included in this press release.

Adjusted Diluted Earnings per Share were $0.09 in the second quarter 2006 compared with $0.14 in the second quarter 2005 primarily due to higher income taxes partially offset by higher pre-tax income. Second quarter 2006 GAAP Diluted Earnings per Share were $0.04 compared to $0.27 in the second quarter 2005.

Second quarter 2006 sales revenue increased 6.4% to $123.6 million from $116.2 million in the second quarter 2005 due to strong performance in the Human Health and Bioproducts segments. Foreign currency impact on consolidated sales revenue was negligible in the quarter.

Second quarter 2006 Adjusted Gross Profit increased 3.5% to $42.1 million, or 34.1% of sales, including an unfavorable impact of 0.6% for foreign currency, from $40.7 million, or 35.0% of sales, in the second quarter 2005 primarily due to higher sales volumes partially offset by lower Gross Profit in the Biopharma segment. Second quarter 2006 GAAP Gross Profit was $42.8 million, or 34.6% of sales, including an unfavorable impact of 0.6% for foreign currency, compared to $40.3 million, or 34.7% of sales, in the second quarter 2005.

Second quarter 2006 Adjusted Operating Profit increased 5.7% to $9.6 million, or 7.8% of sales in the second quarter 2006, from $9.1 million, or 7.8% of sales, in the second quarter 2005. Second quarter 2006 GAAP Operating Profit was $8.2 million, or 6.6% of sales in the second quarter 2006, compared to $9.1 million, or 7.8% of sales, in the second quarter 2005.

Second quarter 2006 Adjusted Income before Taxes increased 12.2% to $7.2 million from $6.4 million in the second quarter 2005 due to lower Interest Expense and higher Operating Profit. Second quarter 2006 GAAP Income before Taxes was $5.8 million compared to $6.4 million in the second quarter 2005.

Strategic Alternatives

On February 2, 2006, Cambrex announced that it had retained Bear Stearns as investment bankers to assist the Board of Directors in identifying and assessing strategic alternatives to increase shareholder value. Significant progress was made on this initiative during the second quarter and continues to be a top priority of the Cambrex Board of Directors and executive management team. The Company will issue updates as decisions are reached on this matter.

Business Segment Results Bioproducts

The Bioproducts segment includes products and services for research and therapeutic applications. Bioproducts Sales in the second quarter 2006 increased 8.1% to $41.1 million from $38.0 million in the second quarter 2005 primarily due to higher sales in most product categories partially offset by lower sales of therapeutic cell culture media. Foreign currency had no impact on Bioproducts Sales revenue in the quarter.

Second quarter 2006 Bioproducts Adjusted Gross Margin decreased slightly to 51.1% from 51.4% in the second quarter 2005 due to higher production costs and inventory discards partially offset by favorable sales volume and pricing. Foreign currency favorably impacted Bioproducts gross margin by 0.6 percentage points in the second quarter 2006. Second quarter 2006 Bioproducts GAAP Gross Margin was 51.8% versus 50.9% in the second quarter 2005.

Second quarter 2006 Bioproducts Adjusted Operating Profit Margin increased to 19.0% from 16.1% in the second quarter 2005 primarily due to lower Research and Development (R&D) expenses resulting from the completion of certain projects and subsequent product launches and lower bonus expenses. Foreign currency favorably impacted Bioproducts operating profit margin by 0.6 percentage points in the second quarter 2006. Second quarter 2006 Bioproducts GAAP Operating Profit Margin was 19.9% versus 15.3% in the second quarter 2005.

Biopharma

The Biopharma segment consists of the Company's contract biopharmaceutical process development and manufacturing business. Biopharma Sales in the second quarter 2006 decreased to $10.0 million from $11.7 million in the second quarter 2005 due to lower suite and material reimbursement revenue partially offset by higher process development revenues.

Second quarter 2006 Biopharma Adjusted Gross Margin decreased to -18.8% from -3.8% in the second quarter 2005 due to lower sales volume and mix. Second quarter 2006 Biopharma GAAP Gross Margin was -16.3% versus -5.2% in the second quarter 2005.

The second quarter 2006 Biopharma Adjusted Operating Loss was $4.2 million versus $3.1 million in the second quarter 2005 primarily due to lower gross profit. Second quarter 2006 Biopharma GAAP Operating Loss was $3.9 million versus $3.3 million in the second quarter 2005. Foreign currency did not impact the Biopharma segment financial results in the quarter.

Human Health

The Human Health segment consists of small molecule active pharmaceutical ingredients (APIs), advanced intermediates and other products derived from organic chemistry. Human Health Sales in the second quarter 2006 increased 9.0% to $72.5 million from $66.5 million in the second quarter 2005. Higher net sales volumes were partially offset by lower pricing. Foreign currency impact to Human Health Sales revenue was negligible in the quarter. Higher sales resulted from strong demand for a recently approved API used to treat Parkinson's disease, an intermediate for a central nervous system (CNS) API, and certain cardiovascular APIs, partially offset by lower demand for a CNS and gastrointestinal API, nicotine polacrilex and a new cardiovascular API for which the client is awaiting regulatory approval.

Second quarter 2006 Human Health Adjusted Gross Margin decreased to 31.7% from 32.5% in the second quarter 2005 primarily due to an unfavorable impact of foreign currency of 1.4 percentage points and lower pricing. Second quarter 2006 Human Health GAAP Gross Margin was 31.9% versus 32.4% in the second quarter 2005.

Second quarter 2006 Human Health Adjusted Operating Profit Margin increased to 17.7% from 16.3% in the second quarter 2005 primarily due to lower sales and marketing expenses partially offset by lower gross margins and an unfavorable impact of foreign currency of 1.4 percentage points. Second quarter 2006 Human Health GAAP Operating Profit Margin was 18.0% versus 16.1% in the second quarter 2005.

Second Quarter 2006 Adjusted Consolidated Operating, Interest and Tax Expenses

Second quarter 2006 Adjusted Operating Expenses increased $0.9 million to $32.5 million, or 26.3% of sales, from $31.6 million, or 27.2% of sales, in the second quarter 2005 primarily due to higher legal fees and bonus expense partially offset by lower sales and marketing and R&D expense. Second quarter 2006 GAAP Operating Expenses were $34.6 million, or 28.0% of sales, versus $31.2 million, or 26.9% of sales, in the second quarter 2005.

Sales and Marketing Expense in the second quarter 2006 decreased to $8.0 million, or 6.5% of sales, from $8.8 million, or 7.5% of sales in the second quarter 2005, primarily due to lower spending in Human Health resulting from a one-time charge recorded in 2005 related to a U.S. sales office and lower bonus and commission expenses in Bioproducts.

Research and Development Expense for the second quarter 2006 decreased to $5.5 million, or 4.5% of sales compared to $5.9 million, or 5.1% of sales, in the second quarter 2005 due to the completion of certain R&D projects for products that have been launched at the end of 2005 and in 2006 in the Bioproducts segment.

Adjusted Administrative Expense in the second quarter 2006 increased to $18.6 million, or 15.0% of sales, from $16.3 million, or 14.1% of sales, in the second quarter 2005 due to higher legal fees and bonus expense. Second quarter 2006 GAAP Administrative Expense was $20.6 million, or 16.6% of sales, versus $15.9 million, or 13.7% of sales, in the second quarter 2005.

Net Interest Expense in the second quarter 2006 decreased to $2.3 million from $2.8 million in the second quarter 2005 due to lower borrowings partially offset with higher interest rates. The average interest rate in the second quarter 2006 was 5.8% versus 5.4% in the same period last year.

The Adjusted effective tax rate in the second quarter 2006 increased to 66.6% of pre-tax income versus 41.5% in the second quarter 2005 due to the geographic mix of income and losses in the quarter. The GAAP effective tax rate in the second quarter 2006 is 83.1% of pre-tax income versus -10.4% in the second quarter 2005.

Capital expenditures and depreciation for the second quarter 2006 were $9.1 million and $8.3 million, respectively, compared to $9.0 million and $9.3 million in the second quarter 2005, respectively.

Guidance

The Company is providing full year 2006 guidance for sales growth to be within the range of 4% to 8% and Adjusted (non-GAAP) Net Earnings to be in the range of $0.75 to $0.95 per Fully Diluted Shares. The full year 2006 earnings guidance excludes the costs associated with the previously announced pre- payment of a portion of the Company's long-term debt ($0.20 per diluted share), costs related to the recent acquisition of Cutanogen ($0.15 per diluted share) and costs related to the evaluation of strategic alternatives to enhance shareholder value.

For the year 2006, guidance for capital expenditures, depreciation and amortization for continuing operations is currently expected to be approximately $45 million, $36 million, and $2.0 million, respectively. The Company expects the full year 2006 effective tax rate, consistent with the earnings guidance above, to be approximately 40 - 45%. The full year and quarterly effective tax rates will continue to be highly sensitive to the geographic mix of income or losses.

The financial information contained in this press release is unaudited, subject to revision and should not be considered final until the second quarter 2006 Form 10-Q is filed with the U.S. Securities and Exchange Commission.

Cambrex Declares Quarterly Dividend

The Cambrex Board of Directors declared the Company's regular quarterly cash dividend on its common stock of $0.03 per share for its shareholders of record as of August 4, 2006. The dividend is payable on August 18, 2006.

Conference Call and Webcast

The Conference Call to discuss second quarter 2006 earnings will begin at 8:30 a.m. Eastern Time on Friday, July 28, 2006 and last approximately 45 minutes. Those wishing to participate should call 1-888-634-4003 for domestic and +1-706-634-6653 for international. Please use the pass code 1951509 and call approximately 10 minutes prior to start time. A webcast is available from the Investor Relations section on the Cambrex website located at http://www.cambrex.com/ and can be accessed for approximately a month following the call. A telephone replay of the conference call will be available through Friday, August 4, 2006 by calling 1-800-642-1687 for domestic and +1-706-645-9291 for international. Please use the pass code 1951509 to access the replay.

Forward Looking Statements

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under The Securities Exchange Act of 1934, including, without limitation, statements regarding expected performance, especially expectations with respect to sales, research and development expenditures, earnings per share, capital expenditures, acquisitions, divestitures, collaborations, or other expansion opportunities. These statements may be identified by the fact that words such as "expects", "anticipates", "intends", "estimates", "believes" or similar expressions are used in connection with any discussion of future financial and operating performance. The forward-looking statements contained herein are based on current plans and expectations and involve risks and uncertainties that could cause actual outcomes and results to differ materially from current expectations including but not limited to, global economic trends, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and/or regulations (particularly environmental issues), tax rate, interest rate, technology, manufacturing and legal issues, changes in foreign exchange rates, performance of minority investments, uncollectible receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, and lack of suitable raw materials or packaging materials, the possibility that the value of the acquisition of PermaDerm(TM) cultured skin may not be realized or that our plans to obtain a Humanitarian Device Exemption, completion of clinical trials and commercialization of PermaDerm cultured skin in the United States may not be successful, the Company may not receive regulatory approval for its products, and the outcome of the evaluation of strategic alternatives.

For further details and a discussion of these and other risks and uncertainties, investors are cautioned to review the Cambrex 2005 Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

About Cambrex

Cambrex is a global, diversified life sciences company dedicated to providing products and services to accelerate and improve the discovery and commercialization of human therapeutics. The Company employs approximately 2,000 worldwide. For more information, please visit http://www.cambrex.com/.

CAMBREX CORPORATION Adjusted Statement of Profit and Loss - Non-GAAP* For the Quarters Ended June 30, 2006 and 2005 (in thousands) 2006 2005 % of % of Amount Sales Amount Sales Gross Sales $123,577 100.0% $116,171 100.0% Commissions and Allowances 274 0.2% 1,676 1.4% Net Sales 123,303 99.8% 114,495 98.6% Other Revenues 1,065 0.8% 2,251 1.9% Net Revenue 124,368 100.6% 116,746 100.5% Cost of Sales 82,252 66.5% 76,056 65.5% Gross Profit 42,116 34.1% 40,690 35.0% Operating Expenses Sales and Marketing Expense 8,008 6.5% 8,747 7.5% Research and Development Expense 5,439 4.4% 5,865 5.0% Administrative Expense 18,598 15.0% 16,339 14.1% Amortization 486 0.4% 668 0.6% Total Operating Expenses 32,531 26.3% 31,619 27.2% Operating Profit 9,585 7.8% 9,071 7.8% Other Expenses Interest - Other 2,295 1.8% 2,751 2.4% Other Expense, net 94 0.1% (93) -0.1% Total Other Expenses 2,389 1.9% 2,658 2.3% Income Before Taxes 7,196 5.9% 6,413 5.5% Income Tax Provision 4,791 3.9% 2,662 2.3% Net Income $2,405 2.0% $3,751 3.2% Basic Earnings per Share Net Income $0.09 $0.14 Diluted Earnings per Share Net Income $0.09 $0.14 Weighted Average Shares Outstanding Basic 26,741 26,402 Diluted 26,791 26,510 * Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation. CAMBREX CORPORATION Statement of Profit and Loss - GAAP For the Quarters Ended June 30, 2006 and 2005 (in thousands) 2006 2005 % of % of Amount Sales Amount Sales Gross Sales $123,577 100.0% $116,171 100.0% Commissions and Allowances 274 0.2% 1,676 1.4% Net Sales 123,303 99.8% 114,495 98.6% Other Revenues 1,065 0.8% 2,251 1.9% Net Revenue 124,368 100.6% 116,746 100.5% Cost of Sales 81,595 66.0% 76,476 65.8% Gross Profit 42,773 34.6% 40,270 34.7% Operating Expenses Sales and Marketing Expense 7,993 6.5% 8,757 7.5% Research and Development Expense 5,505 4.5% 5,881 5.1% Administrative Expense 20,633 16.6% 15,893 13.7% Amortization 486 0.4% 668 0.6% Total Operating Expenses 34,617 28.0% 31,199 26.9% Operating Profit 8,156 6.6% 9,071 7.8% Other Expenses Interest - Other 2,295 1.8% 2,751 2.4% Other Expense, net 94 0.1% (93) -0.1% Total Other Expenses 2,389 1.9% 2,658 2.3% Income Before Taxes 5,767 4.7% 6,413 5.5% Income Tax Provision/(Benefit) 4,791 3.9% (667) -0.6% Net Income $976 0.8% $7,080 6.1% Basic Earnings per Share Net Income $0.04 $0.27 Diluted Earnings per Share Net Income $0.04 $0.27 Weighted Average Shares Outstanding Basic 26,741 26,402 Diluted 26,791 26,510 CAMBREX CORPORATION Adjusted Statement of Profit and Loss - Non-GAAP* For the Six Months Ended June 30, 2006 and 2005 (in thousands) 2006 2005 % of % of Amount Sales Amount Sales Gross Sales $243,184 100.0% $226,633 100.0% Commissions and Allowances 1,173 0.5% 2,665 1.2% Net Sales 242,011 99.5% 223,968 98.8% Other Revenues 2,145 0.9% 4,711 2.1% Net Revenue 244,156 100.4% 228,679 100.9% Cost of Sales 156,463 64.3% 144,313 63.7% Gross Profit 87,693 36.1% 84,366 37.2% Operating Expenses Sales and Marketing Expense 17,165 7.1% 16,746 7.4% Research and Development Expense 9,956 4.1% 11,707 5.2% Administrative Expense 36,809 15.1% 34,728 15.3% Amortization 974 0.4% 1,207 0.5% Total Operating Expenses 64,904 26.7% 64,388 28.4% Operating Profit 22,789 9.4% 19,978 8.8% Other Expenses Interest - Other 4,376 1.8% 5,481 2.4% Other Expense, net 116 0.0% 97 0.0% Total Other Expenses 4,492 1.8% 5,578 2.4% Income Before Taxes 18,297 7.6% 14,400 6.4% Income Tax Provision 9,332 3.9% 6,559 2.9% Net Income $8,965 3.7% $7,841 3.5% Basic Earnings per Share Net Income $0.34 $0.30 Diluted Earnings per Share Net Income $0.33 $0.30 Weighted Average Shares Outstanding Basic 26,701 26,373 Diluted 26,791 26,549 * Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation. CAMBREX CORPORATION Statement of Profit and Loss - GAAP For the Six Months Ended June 30, 2006 and 2005 (in thousands) 2006 2005 % of % of Amount Sales Amount Sales Gross Sales $243,184 100.0% $226,633 100.0% Commissions and Allowances 1,173 0.5% 2,665 1.2% Net Sales 242,011 99.5% 223,968 98.8% Other Revenues 2,145 0.9% 4,711 2.1% Net Revenue 244,156 100.4% 228,679 100.9% Cost of Sales 156,463 64.3% 145,147 64.0% Gross Profit 87,693 36.1% 83,532 36.9% Operating Expenses Sales and Marketing Expense 17,165 7.1% 16,765 7.4% Research and Development Expense 11,493 4.7% 11,739 5.2% Administrative Expense 39,166 16.1% 33,843 15.0% Amortization 974 0.4% 1,207 0.5% Total Operating Expenses 68,798 28.3% 63,554 28.1% Operating Profit 18,895 7.8% 19,978 8.8% Other Expenses Interest - Other 9,648 4.0% 5,481 2.4% Other Expense, net 116 0.0% 97 0.0% Total Other Expenses 9,764 4.0% 5,578 2.4% Income Before Taxes 9,131 3.8% 14,400 6.4% Income Tax Provision 9,332 3.9% 3,230 1.5% (Loss)/Earnings before Cumulative Effect of a Change in Accounting Principle $(201) -0.1% $11,170 4.9% Cumulative Effect of a Change in Accounting Principle (228) -0.1% - 0.0% Net (Loss)/Income $(429) -0.2% $11,170 4.9% Basic Earnings per Share (Loss)/Earnings before Cumulative Effect of a Change in Accounting Principle $(0.01) $0.42 Cumulative Effect of a Change in Accounting Principle $(0.01) $ - Net (Loss)/Income $(0.02) $0.42 Diluted Earnings per Share (Loss)/Earnings before Cumulative Effect of a Change in Accounting Principle $(0.01) $0.42 Cumulative Effect of a Change in Accounting Principle $(0.01) $ - Net (Loss)/Income $(0.02) $0.42 Weighted Average Shares Outstanding Basic 26,701 26,373 Diluted 26,701 26,549 CAMBREX CORPORATION Gross Sales, Gross Profit & Operating Profit by Segment For the Quarters Ended June 30, 2006 and 2005 (in thousands) Second Quarter 2006 Adjusted Gross Gross Gross Profit - Sales Profit GP% Non-GAAP* Bioproducts $41,073 $21,261 51.8% $20,985 Biopharma 10,010 (1,631) -16.3% (1,878) Human Health 72,494 23,143 31.9% 23,009 Corporate - - - Total $123,577 $42,773 34.6% $42,116 Adjusted Operating Adjusted Operating Profit Adjusted GP%- Profit/ (loss) OP%- Non- (loss) OP% Non- Non- GAAP* GAAP GAAP GAAP* GAAP* Bioproducts 51.1% $8,166 19.9% $7,819 19.0% Biopharma -18.8% (3,898) -38.9% (4,169) -41.6% Human Health 31.7% 13,016 18.0% 12,814 17.7% Corporate (9,128) (6,879) Total 34.1% $8,156 6.6% $9,585 7.8% Second Quarter 2005 Adjusted Gross Gross Gross Profit - Sales Profit GP% Non-GAAP* Bioproducts $37,990 $19,336 50.9% $19,512 Biopharma 11,655 (606) -5.2% (443) Human Health 66,526 21,540 32.4% 21,621 Corporate - - Total $116,171 $40,270 34.7% $40,690 Adjusted Operating Adjusted Operating Profit Adjusted GP%- Profit/ (loss)- OP%- Non- (loss)- OP% Non- Non- GAAP* GAAP GAAP GAAP* GAAP* Bioproducts 51.4% $5,829 15.3% $6,109 16.1% Biopharma -3.8% (3,265) -28.0% (3,086) -26.5% Human Health 32.5% 10,721 16.1% 10,846 16.3% Corporate (4,214) (4,798) Total 35.0% $9,071 7.8% $9,071 7.8% Gross Sales Comparison 2Q06 2Q05 Gross Gross Change Change Sales Sales $ % Bioproducts $41,073 $37,990 $3,083 8.1% Biopharma 10,010 11,655 (1,645) -14.1% Human Health 72,494 66,526 5,968 9.0% Total $123,577 $116,171 $7,406 6.4% * Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation. CAMBREX CORPORATION Gross Sales, Gross Profit & Operating Profit by Segment For the Six Months Ended June 30, 2006 and 2005 (in thousands) Six Months 2006 Adjusted Adjusted Gross GP%- Gross Gross Profit - Non- Sales Profit GP% Non-GAAP* GAAP* Bioproducts $82,414 $44,128 53.5% $44,128 53.5% Biopharma 23,814 (618) -2.6% (618) -2.6% Human Health 136,956 44,183 32.3% 44,183 32.3% Corporate - - - Total $243,184 $87,693 36.1% $87,693 36.1% Adjusted Adjusted Operating Operating OP%- Profit/(loss)- OP% Profit/(loss)- Non- GAAP GAAP Non-GAAP* GAAP* Bioproducts $15,034 18.2% $16,571 20.1% Biopharma (5,360) -22.5% (5,360) -22.5% Human Health 24,609 18.0% 24,609 18.0% Corporate (15,388) (13,031) Total $18,895 7.8% $22,789 9.4% Six Months 2005 Adjusted Adjusted Gross GP%- Gross Gross Profit - Non- Sales Profit GP% Non-GAAP* GAAP* Bioproducts $77,909 $41,471 53.2% $41,818 53.7% Biopharma 19,362 (2,663) -13.8% (2,339) -12.1% Human Health 129,362 44,724 34.6% 44,887 34.7% Corporate - - - Total $226,633 $83,532 36.9% $84,366 37.2% Adjusted Adjusted Operating Operating OP%- Profit/(loss)- OP% Profit/(loss)- Non- GAAP GAAP Non-GAAP* GAAP* Bioproducts $15,475 19.9% $16,033 20.6% Biopharma (8,177) -42.2% (7,818) -40.4% Human Health 23,030 17.8% 23,271 18.0% Corporate (10,350) (11,508) Total $19,978 8.8% $19,978 8.8% Gross Sales Comparison 2006 2005 Gross Gross Change Change Sales Sales $ % Bioproducts $82,414 $77,909 $4,505 5.8% Biopharma 23,814 19,362 4,452 23.0% Human Health 136,956 129,362 7,594 5.9% Total $243,184 $226,633 $16,551 7.3% * Refer to the GAAP to Adjusted (Non-GAAP) Reconciliation. CAMBREX CORPORATION GAAP to Adjusted (Non-GAAP) Reconciliation - Net Income For the Quarters and Six Months Ended June 30, 2006 and 2005 Second Quarter Second Quarter 2006 2005 Net Diluted Net Diluted Income EPS Income EPS Net Income - GAAP $976 $0.04 $7,080 $0.27 Evaluation of strategic alternatives (Admin. Expense) 1,337 0.05 - - Cutanogen related costs (recorded in R&D Expense) 92 0.00 - - Benefit from Swedish Tax Item (Tax Provision) - - (3,329) (0.13) Adjusted Net Income - Non-GAAP $2,405 $0.09 $3,751 $0.14 Six Months 2006 Six Months 2005 Net Diluted Net Diluted (Loss)/Income EPS Income EPS (Loss)/Earnings before Cumulative Effect of a change in Accounting Principle $(201) $(0.01) $11,170 $0.42 Evaluation of strategic alternatives (Admin. Expense) 2,357 0.09 - - Cutanogen milestone and related costs (R&D Expense) 1,537 0.06 - - Senior note prepayment expenses (Interest Expense) 5,272 0.20 - - Benefit from Swedish Tax Item (Tax Provision) - - (3,329) (0.13) Adjusted Net Income - Non-GAAP $8,965 $0.33 $7,841 $0.30 Note: The cumulative effect of a change in accounting principle reflects the implementation of FAS 123(R). Under FAS 123(R), the Company is now required to measure stock appreciation rights (SAR's) at fair market value. CAMBREX CORPORATION GAAP to Adjusted (Non-GAAP) Reconciliation - Operating Profit by Segment For the Quarters and Six Months Ended June 30, 2006 and 2005 Second Quarter 2006 Human Bioproducts Biopharma Health Corporate Total Operating Profit - As Reported $8,166 $(3,898) $13,016 $(9,128) $8,156 Evaluation of strategic alternatives - - - 1,337 1,337 Cutanogen related costs 92 - - - 92 Change in allocation methodology (439) (271) (202) 912 - Adjusted Operating Profit - Non-GAAP $7,819 $(4,169) $12,814 $(6,879) $9,585 Second Quarter 2005 Human Bioproducts Biopharma Health Corporate Total Operating Profit - As Reported $5,829 $(3,265) $10,721 $(4,214) $9,071 Change in allocation methodology 280 179 125 (584) - Adjusted Operating Profit - Non-GAAP $6,109 $(3,086) $10,846 $(4,798) $9,071 Six Months 2006 Human Bioproducts Biopharma Health Corporate Total Operating Profit - As Reported $15,034 $(5,360) $24,609 $(15,388) $18,895 Evaluation of strategic alternatives - - - 2,357 2,357 Cutanogen milestone and related costs 1,537 - - - 1,537 Adjusted Operating Profit - Non-GAAP $16,571 $(5,360) $24,609 $(13,031) $22,789 Six Months 2005 Human Bioproducts Biopharma Health Corporate Total Operating Profit - As Reported $15,475 $(8,177) $23,030 $(10,350) $19,978 Change in allocation methodology 558 359 241 (1,158) - Adjusted Operating Profit - Non-GAAP $16,033 $(7,818) $23,271 $(11,508) $19,978 Note: The change in allocation methodology reflects certain medical benefit expenses in second quarter 2006 Non-GAAP, six months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments. CAMBREX CORPORATION GAAP to Adjusted (Non-GAAP) Reconciliation - Operating Expenses For the Quarters and Six Months Ended June 30, 2006 and 2005 Second Quarter 2006 2005 Operating Expenses - GAAP $34,617 $31,199 Evaluation of strategic alternatives (1,337) - Cutanogen related costs (92) - Change in allocation methodology (657) 420 Adjusted Operating Expenses - Non- GAAP $32,531 $31,619 Six Months 2006 2005 Operating Expenses - GAAP $68,798 $63,554 Evaluation of strategic alternatives (2,357) - Cutanogen milestone and related costs (1,537) - Change in allocation methodology - 834 Adjusted Operating Expenses - Non- GAAP $64,904 $64,388 Note: The change in allocation methodology reflects certain medical benefit expenses in second quarter 2006 Non-GAAP, six months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments. CAMBREX CORPORATION GAAP to Adjusted (Non-GAAP) Reconciliation - Administrative Expense For the Quarters and Six Months Ended June 30, 2006 and 2005 Second Quarter 2006 2005 Administrative Expense - GAAP $20,633 $15,893 Evaluation of strategic alternatives (1,337) - Change in allocation methodology (698) 446 Adjusted Administrative Expense - Non-GAAP $18,598 $16,339 Six Months 2006 2005 Administrative Expense - GAAP $39,166 $33,843 Evaluation of strategic alternatives (2,357) - Change in allocation methodology - 885 Adjusted Administrative Expense - Non-GAAP $36,809 $34,728 Note: The change in allocation methodology reflects certain medical benefit expenses in second quarter 2006 Non-GAAP, six months 2006 GAAP and 2005 Non-GAAP results that were reclassified from operating segments to Corporate Administrative Expense to better reflect costs reported in the operating segments. CAMBREX CORPORATION Consolidated Balance Sheet As of June 30, 2006 and December 31, 2005 (in thousands) June 30, December 31, Assets 2006 2005 Cash and Cash Equivalents $30,283 $45,932 Trade Receivables, net 74,314 74,425 Inventories, net 110,452 93,617 Other Current Assets 15,746 15,552 Total Current Assets 230,795 229,526 Property, Plant and Equipment, Net 240,052 229,410 Goodwill and Other Intangibles 149,763 147,551 Other Non-Current Assets 5,469 5,985 Total Assets $626,079 $612,472 Liabilities and Stockholders' Equity Trade Accounts Payable $37,790 $38,813 Accrued Expenses and Other Current Liabilities 49,567 51,819 Short-term Debt and Current Portion of Long-term Debt 1,782 1,514 Total Current Liabilities 89,139 92,146 Long-term Debt 186,020 186,819 Deferred Tax Liabilities 29,160 28,543 Other Non-Current Liabilities 63,537 61,713 Total Liabilities $367,856 $369,221 Stockholders' Equity $258,223 $243,251 Total Liabilities and Stockholders' Equity $626,079 $612,472