CAMBREX CORP (Form: 10-Q, Received: 05/04/2012 09:52:58)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended March 31, 2012

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from to

Commission file number 1-10638

CAMBREX CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE		22-2476135
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073

(Address of principal executive offices)

(201) 804-3000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x . No o .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o . No x .

As of April 30, 2012, there were 29,622,079 shares outstanding of the registrant’s Common Stock, $.10 par value.

CAMBREX CORPORATION AND SUBSIDIARIES

Table of Contents

			Page No.
Part I	Financial Information

	Item 1.	Financial Statements.

		Consolidated Balance Sheets	3

		Consolidated Income Statements	4

		Consolidated Statements of Comprehensive Income	5

		Consolidated Statements of Cash Flows	6

		Notes to Consolidated Financial Statements	7 - 18

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	19- 22

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	23

	Item 4.	Controls and Procedures.	23

Part II	Other Information

	Item 1.	Legal Proceedings.	24

	Item 1A.	Risk Factors.	24

	Item 6.	Exhibits.	24

Signatures			25

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Forward-Looking Statements

This document contains and incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including 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 they use words such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “intend,” “estimate,” “believe” or similar expressions. Any 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. The factors described in Item 1A of Part I contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011, captioned “Risk Factors,” or otherwise described in the Company’s filings with the Securities and Exchange Commission, as well as any cautionary language in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011, provide examples of such risks and uncertainties that may cause the Company’s actual results to differ materially from the expectations the Company describes in its forward-looking statements, including, but not limited to, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and regulations (particularly environmental issues), tax rate, interest rate, technology, manufacturing and legal issues, including the outcome of outstanding litigation disclosed in the Company’s public filings, changes in foreign exchange rates, uncollectable receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, and the Company’s ability to receive regulatory approvals for its products.

The forward-looking statements are based on the beliefs and assumptions of Company management and the information available to Company management at the time these disclosures were prepared. Although the Company believes the expectations reflected in these statements are reasonable, expectations regarding future results, levels of activity, performance, achievements or other forward-looking statements should not be relied upon. The information contained in this Quarterly Report on Form 10-Q is provided by the Company as of the date hereof, and, unless required by law, the Company does not undertake and specifically disclaims any obligation to update these forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of new information, future events or otherwise.

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Part I - FINANCIAL INFORMATION

Item 1.

Financial Statements

CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands, except per share data)

	March 31,			December 31,
	2012			2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,777		$	31,921
Trade receivables, net		39,216			36,510
Inventories, net		67,325			62,095
Prepaid expenses and other current assets		5,348			6,083
Total current assets		132,666			136,609

Property, plant and equipment, net		140,825			139,628
Goodwill		37,680			36,731
Intangible assets, net		4,334			4,261
Investment in partially-owned affiliates		15,563			15,090
Other non-current assets		3,264			3,425
Total assets	$	334,332		$	335,744

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	21,635		$	21,200
Accrued expenses and other current liabilities		37,312			37,933
Total current liabilities		58,947			59,133

Long-term debt		84,000			98,000
Deferred income tax		16,588			16,243
Accrued pension benefits		51,358			52,089
Other non-current liabilities		9,909			9,938
Total liabilities		220,802			235,403

Stockholders' equity:
Common stock, $.10 par value; authorized 100,000,000, issued 31,452,888 and 31,441,138 shares at respective dates		3,145			3,143
Additional paid-in capital		101,818			101,646
Retained earnings		49,998			42,960
Treasury stock, at cost, 1,836,809 and 1,866,258 shares at respective dates		(15,571	)		(15,821	)
Accumulated other comprehensive loss		(25,860	)		(31,587	)

Total stockholders' equity		113,530			100,341
Total liabilities and stockholders' equity	$	334,332		$	335,744

See accompanying notes to unaudited consolidated financial statements.

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CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Income Statements

(unaudited – dollars in thousands, except per share data)

	Three months ended
	March 31,
	2012		2011

Gross sales	$	70,559	$	61,654
Commissions, allowances and rebates		535		291

Net sales		70,024		61,363

Other		204		(778	)

Net revenues		70,228		60,585

Cost of goods sold		47,800		43,130

Gross profit		22,428		17,455

Operating expenses:
Selling, general and administrative expenses		9,960		9,088
Research and development expenses		2,358		3,060
Total operating expenses		12,318		12,148

Operating profit		10,110		5,307

Other expenses/(income):
Interest expense, net		651		573
Other expenses/(income), net		8		(3	)
Equity in losses of partially-owned affiliates		208		364

Income before income taxes		9,243		4,373

Provision for income taxes		2,205		1,518

Income from continuing operations		7,038		2,855

Loss from discontinued operations, net of tax		-		(146	)

Net income	$	7,038	$	2,709

Basic earnings/(loss) per share of common stock:
Income from continuing operations	$	0.24	$	0.10
Loss from discontinued operations, net of tax	$	-	$	(0.01	)
Net income	$	0.24	$	0.09

Diluted earnings/(loss) per share of common stock:
Income from continuing operations	$	0.24	$	0.10
Loss from discontinued operations, net of tax	$	-	$	(0.01	)
Net income	$	0.24	$	0.09

Weighted average shares outstanding:
Basic		29,602		29,448
Effect of dilutive stock based compensation		284		70
Diluted		29,886		29,518

See accompanying notes to unaudited consolidated financial statements.

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CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(unaudited – dollars in thousands)

	Three months ended
	March 31,
	2012			2011

Net income	$	7,038		$	2,709

Other comprehensive income:

Foreign currency translation adjustments		5,973			11,374

Foreign currency forward contracts, net of tax of $73 and $32 at respective dates		(165	)		(66	)

Interest rate swap agreements		(380	)		-

Pension plan amortization to net income of net actuarial loss and prior service cost, net of tax of $13 and $7 at respective dates		299			274

Comprehensive income	$	12,765		$	14,291

See accompanying notes to unaudited consolidated financial statements.

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CAMBREX CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited – dollars in thousands)

	Three months ended
	March 31,
	2012			2011
Cash flows from operating activities:
Net income	$	7,038		$	2,709
Adjustments to reconcile net income to cash flows:
Depreciation and amortization		5,486			5,725
Increase in inventory reserve		1,219			44
Stock based compensation included in net income		357			325
Deferred income tax provision		(95	)		(404	)
Equity in losses of partially-owned affiliates		208			364
Other		252			74
Changes in assets and liabilities:
Trade receivables		(1,991	)		1,926
Inventories		(4,886	)		(3,339	)
Prepaid expenses and other current assets		625			287
Accounts payable and other current liabilities		(1,000	)		76
Other non-current assets and liabilities		(1,367	)		(3,941	)
Discontinued operations:
Net cash used in discontinued operations		(1,080	)		(75	)
Net cash provided by operating activities		4,766			3,771

Cash flows from investing activities:
Capital expenditures		(2,616	)		(1,690	)
Net cash used in investing activities		(2,616	)		(1,690	)

Cash flows from financing activities:
Long-term debt activity (including current portion):
Borrowings		-			4,900
Repayments		(14,000	)		(2,900	)
Other financing activities		64			(329	)
Net cash (used in)/provided by financing activities		(13,936	)		1,671

Effect of exchange rate changes on cash and cash equivalents		642			1,976

Net (decrease)/increase in cash and cash equivalents		(11,144	)		5,728

Cash and cash equivalents at beginning of period		31,921			29,614

Cash and cash equivalents at end of period	$	20,777		$	35,342

See accompanying notes to unaudited consolidated financial statements.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(dollars in thousands, except share data)

(Unaudited)

(1)	Basis of Presentation

Unless otherwise indicated by the context, "Cambrex" or the "Company" means Cambrex Corporation and subsidiaries.

The accompanying unaudited consolidated financial statements have been prepared from the records of the Company. In the opinion of management, the financial statements include all adjustments, which are of a normal and recurring nature, except as otherwise described herein, and are necessary for a fair statement of financial position and results of operations in conformity with generally accepted accounting principles (“GAAP”). These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2011.

The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results expected for the full year.

For the three months ended March 31, 2011, the Company recorded expense, net of tax, of $146 as discontinued operations, primarily related to expenses for environmental remediation at sites of divested businesses.

(2)	Impact of Recently Issued Accounting Pronouncements

Fair Value Measurement

In May 2011, the FASB issued “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements” that established a framework for how to measure fair value and the disclosures required about fair value measurements. The updated guidance is largely consistent with fair value measurement principles that existed prior to the update and became effective on January 1, 2012. The effect of adopting this update did not have a material impact on the Company’s financial position or results of operations.

Comprehensive Income

In June 2011, the FASB issued “Comprehensive Income – Presentation of Comprehensive Income.” This statement gives companies two options for presenting other comprehensive income (“OCI”), which currently is included as part of the statement of shareholders’ equity. An OCI statement can be included within the income statement, which together will make a statement of total comprehensive income. Alternatively, companies can have an OCI statement separate from an income statement, but the two statements will have to appear consecutively within a financial report. This statement is effective for fiscal quarters and years beginning after December 15, 2011. The effect of adopting this statement did not have an impact on the Company’s financial position or results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued “Intangibles—Goodwill and Other: Testing Goodwill for Impairment” to simplify the goodwill impairment test. The change allows companies to first decide whether they need to do the two-step test by allowing companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A business no longer has to calculate the fair value of a reporting unit unless it believes it is very likely that the unit’s fair value is less than the value carried on the balance sheet. This amendment also includes examples of how the amended test should be carried out. This amendment is effective for annual and interim tests performed for fiscal years beginning after December 15, 2011. The effect of adopting this statement does not have an impact on the Company’s financial position or results of operations.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(3)	Net Inventories

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market.

Net inventories at March 31, 2012 and December 31, 2011 consist of the following:

	March 31,		December 31,
	2012		2011

Finished goods	$	23,405	$	26,885
Work in process		27,025		19,190
Raw materials		11,951		11,261
Supplies		4,944		4,759
Total	$	67,325	$	62,095

(4)	Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2012, is as follows:

Balance as of December 31, 2011	$	36,731
Translation effect		949
Balance as of March 31, 2012	$	37,680

Acquired intangible assets, which are amortized, consist of the following:

		As of March 31, 2012
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount

Technology-based intangibles	20 years	$	4,060	$	(406	)	$	3,654
Customer-related intangibles	10 - 15 years		788		(108	)		680
		$	4,848	$	(514	)	$	4,334

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(4)	Goodwill and Intangible Assets (continued)

		As of December 31, 2011
	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount

Technology-based intangibles	20 years	$	3,933	$	(344	)	$	3,589
Customer-related intangibles	10 - 15 years		763		(91	)		672
		$	4,696	$	(435	)	$	4,261

The change in the gross carrying amount is primarily due to the impact of foreign currency translation.

Amortization expense was $63 and $96 for the three months ended March 31, 2012 and 2011, respectively.

Amortization expense related to current intangible assets is expected to be approximately $253 for 2012 and for each of the next four years.

(5)	Investment in Partially-Owned Affiliates

Investment in partially-owned affiliates consist primarily of the Company’s equity stake in Zenara Pharma for which the Company recorded a loss of $485 and $364 for the three months ended March 31, 2012 and 2011, respectively. These amounts include amortization expense of $256 and $282, for the three months ended March 31, 2012 and 2011, respectively. Equity in losses of partially-owned affiliates also includes income of $277 related to an investment in a European joint venture.

(6)	Income Taxes

The Company recorded tax expense in continuing operations of $2,205 and $1,518 in the three months ended March 31, 2012 and 2011, respectively. The increase for the three months ended March 31, 2012 is due primarily to the geographic mix of income.

The Company expects to maintain a full valuation allowance against its net domestic, and certain foreign, deferred tax assets, subject to the consideration of all prudent and feasible tax planning strategies, until such time as the Company attains an appropriate level of future profitability and the Company is able to conclude that it is more likely than not that its deferred tax assets are realizable.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(6)	Income Taxes (continued)

final date of resolution and outcome of this matter are uncertain at this time. However, within the next twelve months it is possible that factors such as new developments, judgments or settlements may require the Company to increase its reserve for unrecognized tax benefits by up to $8,000 or decrease its reserve by $5,500, including interest and penalties. If the court rules against the Company in subsequent court proceedings, a payment of between $6,000 and $9,000 including interest and penalties will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself. During the first quarter of 2012, the tax authorities completed a general examination of the subsidiary’s 2008 tax return, and issued a small assessment against the subsidiary. The assessment, which had already been provided for in the Company’s reserves, was settled in April 2012.

In the next twelve months, other than as noted above, the Company may increase its reserve for unrecognized tax benefits for intercompany transactions and acquired tax attributes by $450. This would affect the effective tax rate.

Tax years 2007 and forward in the U.S. are open to examination by the IRS. The Company is also subject to examinations in its non-U.S. jurisdictions for 2006 and later years.

The Company is also subject to audits in various states for various years in which it has filed income tax returns. Previous state audits have resulted in immaterial adjustments. In the majority of states where the Company files, the Company is subject to examinations for tax years 2007 and forward.

(7)	Derivatives and Hedging Activities

The Company operates internationally and is exposed to fluctuations in foreign exchange rates and interest rates in the normal course of business. The Company considers the use of derivative financial instruments to reduce exposure to market risks resulting from fluctuations in interest rates and foreign exchange rates.

All financial instruments involve market and credit risks. The Company is exposed to credit losses in the event of non-performance by the counterparties to the contracts. While there can be no assurance, the Company does not anticipate non-performance by these counterparties.

Foreign Currency Forward Contracts

The Company enters into forward exchange contracts to hedge forecasted cash flows associated with foreign currency transaction exposures, as deemed appropriate. This hedging strategy mitigates some of the impact of short-term foreign exchange rate movements on the Company's operating results primarily in Sweden and Italy. The Company's primary market risk relates to exposures to foreign currency exchange rate fluctuations on transactions entered into by these international operations that are denominated primarily in U.S. dollars, Swedish krona and euros.

The Company’s forward exchange contracts substantially offset gains and losses on the transactions being hedged. The forward exchange contracts have varying maturities with none exceeding twelve months.

All forward contracts outstanding at March 31, 2012 have been designated as cash flow hedges and, accordingly, changes in the fair value of these derivatives are not included in earnings but are included in accumulated other comprehensive income/(loss) (“AOCI”). Changes in the fair value of the derivative instruments reported in AOCI will be recorded into earnings as a component of product revenue or expense, as applicable, when the forecasted transaction occurs. The ineffective portion of all hedges is recognized in current-period earnings and is immaterial to the Company's financial results.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(7)	Derivatives and Hedging Activities (continued)

The notional amounts of foreign exchange forward contracts were $4,169 and $11,005 at March 31, 2012 and December 31, 2011, respectively.

Included in AOCI is the fair value of the Company’s forward exchange contracts which is a gain of $142 and $380 as of March 31, 2012 and December 31, 2011, respectively. These gains are located under the caption “Prepaid expenses and other current assets” on the balance sheet as of March 31, 2012 and December 31, 2011. Assuming current market conditions continue, the entire amount recorded in AOCI related to foreign exchange forward contracts is expected to be recorded into other revenue within the next 12 months to reflect the fixed prices obtained from the forward contracts.

The Company recorded a pre-tax unrealized loss in OCI from foreign exchange contracts of $189 for the three months ended March 31, 2012. The Company also reclassified a pre-tax gain for the settlement of forward contracts of $49 into other revenue for the three months ended March 31, 2012.

Interest Rate Swap Agreement

The Company entered into an interest rate swap agreement in March 2012 to reduce the impact of changes in interest rates on its floating rate debt. The swap agreement is a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without the exchange of the underlying notional debt amount.

The swap contract outstanding at March 31, 2012 has been designated a cash flow hedge and, accordingly, changes in the fair value of this derivative are not recorded in earnings but are recorded each period in AOCI and reclassified into earnings as interest expense in the same period during which the hedged transaction affects earnings. The ineffective portion of all hedges will be recognized in current-period earnings and has been immaterial to the Company's financial results.

As of March 31, 2012, the Company had an interest rate swap in place with a notional value of $60,000, at a fixed rate of 0.92%, maturing in September 2015. The Company’s strategy has been to cover a portion of its outstanding floating rate debt with fixed interest rate protection. At March 31, 2012 the Company had floating rate debt of $84,000, of which $60,000 is fixed by an interest rate swap. Interest expense under this agreement, and the respective debt instrument that it hedges, is recorded at the net effective interest rate of the hedged transaction. The fair value of this agreement is based on quoted market prices and was in a loss position of $380 at March 31, 2012. This loss is reflected in the Company’s balance sheet under the caption “Accrued expenses and other current liabilities.” The Company did not have any interest rate swaps outstanding at December 31, 2011.

The Company recorded a loss in OCI of $380 related to the interest rate swap for the three months ended March 31, 2012. Assuming current market conditions continue, $373 is expected to be reclassed out of AOCI within the next 12 months.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(8)	Fair Value Measurements

U.S. GAAP establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from, or corroborated by, observable market data through correlation; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value, measured on a recurring basis, as of March 31, 2012 and December 31, 2011:

				Fair Value Measurements at March 31, 2012 using:
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Foreign currency forwards, assets	$	142		$	-	$	142		$	-
Interest rate swap		(380	)		-		(380	)		-
Total	$	(238	)	$	-	$	(238	)	$	-

			Fair Value Measurements at December 31, 2011 using:
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Foreign currency forwards, assets	$	380	$	-	$	380	$	-
Total	$	380	$	-	$	380	$	-

The Company’s derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, the Company’s credit risk and its counterparties’ credit risks. Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy. Based on the Company’s continued ability to enter into forward contracts, the Company considers the markets for its fair value instruments to be active.

The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rate and the expected cash flows at current market interest rates using observable benchmarks for London Interbank Offered Rate forward rates at the end of the period.

As of March 31, 2012, there had not been any significant impact to the fair value of the Company’s derivative liabilities due to its own credit risk. Similarly, there had not been any significant adverse impact to the Company’s derivative assets based on the Company’s evaluation of its counterparties’ credit risks.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(8)	Fair Value Measurements (continued)

The Company’s financial instruments also include cash and cash equivalents, accounts receivables, accounts payables and accrued liabilities. The carrying amount of these instruments approximates fair value because of their short-term nature. The carrying amount of the Credit Facility approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar maturities.

(9)	Stock Based Compensation

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted-average fair value per share for stock options granted to employees during the three months ended March 31, 2011 was $2.91. No stock options were granted during the three months ended March 31, 2012.

For the three months ended March 31, 2012 and 2011, the Company recorded $316 and $245, respectively, in selling, general and administrative expenses for stock options. As of March 31, 2012, the total compensation cost related to unvested stock options not yet recognized was $2,610. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 2.4 years.

For the three months ended March 31, 2012 and 2011, the Company recorded $41 and $54, respectively, in selling, general and administrative expenses for restricted stock awards. As of March 31, 2012 the total compensation cost related to unvested restricted stock not yet recognized was $136. The cost will be amortized on a straight-line basis over the remaining weighted-average vesting period of 0.8 years.

The following table is a summary of the Company’s stock options:

Options	Number of Shares			Weighted Average Exercise Price

Outstanding at December 31, 2011		2,289,873		$	6.67
Exercised		(13,750	)	$	4.84
Forfeited or expired		(16,850	)	$	10.08
Outstanding at March 31, 2012		2,259,273		$	6.65
Exercisable at March 31, 2012		1,122,273		$	7.94

The aggregate intrinsic value for all stock options exercised for the three months ended March 31, 2012 was $33. The aggregate intrinsic values for all stock options outstanding and exercisable as of March 31, 2012 were $3,310 and $1,483, respectively.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(9)	Stock Based Compensation (continued)

The following table is a summary of the Company’s nonvested stock options and restricted stock:

	Nonvested Stock Options					Nonvested Restricted Stock
	Number of Shares			Weighted- Average Grant-Date Fair Value		Number of Shares			Weighted- Average Grant-Date Fair Value

Nonvested at December 31, 2011		1,167,751		$	2.89		58,899		$	5.54
Vested during period		(25,001	)	$	2.69		(29,449	)	$	5.54
Forfeited		(5,750	)	$	2.96		-		$	-
Nonvested at March 31, 2012		1,137,000		$	2.89		29,450		$	5.54

(10)	Retirement Plans

Domestic Pension Plan

The components of net periodic benefit cost for the Company’s domestic plan (which was frozen in 2007) for the three months ended March 31, 2012 and 2011 were as follows:

	Three months ended
	March 31,
	2012			2011

Components of net periodic benefit cost
Interest cost	$	821		$	865
Expected return on plan assets		(918	)		(914	)
Amortization of prior service costs		15			109
Recognized actuarial loss		216			115
Net periodic benefit cost	$	134		$	175

The Company’s Supplemental Executive Retirement Plan is non-qualified and unfunded. Net periodic benefit costs for the three months ended March 31, 2012 and 2011 were $55 and $66, respectively.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(10)	Retirement Plans (continued)

International Pension Plan

The components of net periodic benefit cost for the Company’s international plan for the three months ended March 31, 2012 and 2011 were as follows:

	Three months ended
	March 31,
	2012			2011

Components of net periodic benefit cost
Service cost	$	165		$	160
Interest cost		200			237
Recognized actuarial loss		50			28
Amortization of prior service credit		(2	)		(2	)
Net periodic benefit cost	$	413		$	423

(11)	Contingencies

The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. The Company continually assesses all known facts and circumstances as they pertain to all legal and environmental matters and evaluates the need for reserves and disclosures as deemed necessary based on these facts and circumstances. These matters, either individually or in the aggregate, could result in actual costs that are significantly higher than the Company’s current assessment and could have a material adverse effect on the Company's operating results and cash flows in future reporting periods. While these matters, specifically environmental matters, could have a material adverse effect on the Company’s financial condition, based upon past experience, it is likely that payments significantly in excess of current reserves would be made over an extended number of years.

Environmental

In connection with laws and regulations pertaining to the protection of the environment, the Company and its subsidiaries are a party to several environmental proceedings and remediation investigations and cleanups and, along with other companies, have been named a potentially responsible party (“PRP”) for certain waste disposal sites ("Superfund sites"). Additionally, the Company has retained the liability for certain environmental proceedings associated with discontinued operations.

It is the Company’s policy to record appropriate liabilities for environmental matters where remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are based on the Company’s best estimate of the undiscounted future costs required to complete the remedial work. Each of these matters is subject to various uncertainties, and it is possible that some of these matters will be decided unfavorably against the Company. The resolution of such matters often spans several years and frequently involves regulatory oversight or adjudication. Additionally, many remediation requirements are fluid and are likely to be affected by future technological, site and regulatory developments. Consequently, the ultimate liability with respect to such matters, as well as the timing of cash disbursements cannot be determined with certainty.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(11)	Contingencies (continued)

In matters where the Company has been able to reasonably estimate its liability, the Company has accrued for the estimated costs associated with the study and remediation of applicable sites. These reserves were $6,790 and $7,786 at March 31, 2012 and December 31, 2011, respectively. The decrease in the reserve includes payments of $1,130 partially offset by adjustments to reserves of $68 and the impact of currency translation of $66. The reserves are adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information become available. Based upon available information and analysis, the Company's current reserve represents management's best estimate of the probable and estimable costs associated with environmental proceedings including amounts for current investigation fees where full investigation and remediation costs may not be estimable at the reporting date. Given the uncertainties regarding the outcome of investigative and study activities, the status of laws, regulations, enforcement, policies, the impact of other PRPs, technology and information related to individual sites, the Company does not believe it is possible to currently develop an estimate of the range of reasonably possible environmental loss in excess of its reserves.

CasChem

As a result of the sale of the Bayonne, New Jersey facility, the Company became obligated to investigate site conditions and conduct required remediation under the New Jersey Industrial Site Recovery Act. The Company intends to continue implementing a sampling plan at the property in 2012 pursuant to the New Jersey Department of Environmental Protection’s (“NJDEP”) private oversight program. The results of the completed sampling, and any additional sampling deemed necessary, will be used to develop an estimate of the Company's future liability for remediation costs, if any.

Cosan

In response to the NJDEP, the Company completed its initial investigation and submitted the results of the investigation and a proposed remediation plan to the NJDEP for its Cosan Clifton, New Jersey site. The NJDEP subsequently rejected the remediation plan and requested additional investigative work at the site and that work is on-going. The reserve was $967 at March 31, 2012, which was based on the initial remedial action plan. The results of the additional investigative work may impact the remediation plan and costs.

Additionally, the Company has a reserve of $848 for the Cosan Carlstadt, New Jersey site based on the investigations completed to date and the proposed remediation plan submitted to the NJDEP for its approval. The NJDEP has subsequently required the Company to perform additional investigative work prior to approval of the remediation plan. The results of this additional investigative work may impact the remediation plan and costs. The NJDEP has advised the Company that the site will be placed in the NJDEP’s private oversight program. Under the program, the Company will be required to continue with the investigative plan in 2012.

Berry’s Creek

The Company received a notice from the United States Environmental Protection Agency (“USEPA”) that two former subsidiaries of the Company are considered PRPs at the Berry’s Creek Study Area in New Jersey. These subsidiaries are among many other PRPs that were listed in the notice. Pursuant to the notice, the PRPs have been asked to perform a remedial investigation and feasibility study of the Berry’s Creek site. The Company has joined the group of PRPs and entered into an Administrative Settlement Agreement and Order on Consent with the USEPA agreeing to jointly conduct or fund an appropriate remedial investigation and feasibility study of the Berry’s Creek site with other PRP signatories to the Agreement. The PRPs have engaged consultants to perform the work specified in the Agreement and develop a method to allocate related costs among the PRPs. As of March 31, 2012, the Company’s reserve was $288 to cover the current phase of investigation based on a tentative agreement on the allocation of the site investigation costs among the PRPs. The investigation is ongoing and at this time it is too early to predict the extent of any additional liabilities.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(11)	Contingencies (continued)

Maybrook and Harriman Sites

The Company’s Nepera, Inc. subsidiary (“Nepera”) is named a PRP of the Maybrook site in Hamptonburgh, New York by the USEPA in connection with the discharge, under appropriate permits, of wastewater at that site prior to Cambrex's acquisition of Nepera in 1986. The USEPA also issued the Company a Notice of Potential Liability and the Company signed a consent decree to complete the Record of Decision (“ROD”) and has provided the USEPA with appropriate financial assurance to guarantee the obligation under the consent decree. The PRPs began to implement remedial action at this site in the third quarter of 2011 and is expected to be completed by the end of 2012. The Company’s reserve for completing this project is $1,750.

Nepera is also named a responsible party of its former Harriman, New York production facility by the New York State Department of Environmental Conservation (“NYSDEC”). A final ROD was issued that describes the remediation plan for the site. Implementation of the ROD is on-going. In December 2010, the NYSDEC notified the PRPs and the current owners of the property that they intended to combine the investigation and remediation being conducted by various parties pursuant to different regulatory programs under one regulatory plan. This development could potentially lead to increased liabilities for the Company. There are on-going discussions between the NYSDEC and all parties to try to resolve this matter. As of March 31, 2012, the reserve recorded by the Company for the Nepera Harriman site was $300, which represents the Company’s best estimate to complete the existing ROD.

Scientific Chemical Processing (“SCP”) Superfund Site

Nepera was named a PRP of the SCP Superfund site, located in Carlstadt, New Jersey, in the early 1980’s along with approximately 130 other PRPs. The site is a former waste processing facility that accepted various waste for recovery and disposal including processing wastewater from Nepera. The PRPs are in the process of implementing a final remedy for soil and groundwater contamination at the site. The SCP Superfund site has also been identified as a PRP in the Berry’s Creek Superfund site (see previous discussion). For over a decade, the remediation has been funded by de minimus settlements and by the insurers of the SCP Superfund site’s owners and operators. However, due to an unexpected increase in remediation costs at the site and costs to contribute to the Berry’s Creek investigation, the PRP group has recently approved the assessment of an additional cash contribution by the PRP group. While the Company continues to dispute the methodology used by the PRP group to arrive at its allocation for the cash contribution, the Company has paid the initial funding requests.

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CAMBREX CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(dollars in thousands, except share data)

(Unaudited)

(11)	Contingencies (continued)

Newark Bay Complex Litigation

CasChem and Cosan have been named as two of several hundred third-party defendants in a third-party complaint filed in February 2009, by Maxus Energy Corporation (“Maxus”) and Tierra Solutions, Inc. (“Tierra”). The original plaintiffs include the NJDEP, the Commissioner of the NJDEP and the Administrator of the New Jersey Spill Compensation Fund, which originally filed suit in 2005 against Maxus, Tierra and other defendants seeking recovery of cleanup and removal costs for alleged discharges of dioxin and other hazardous substances into the Passaic River, Newark Bay, Hackensack River, Arthur Kill, Kill Van Kull and adjacent waters (the “Newark Bay Complex”). Maxus and Tierra are now seeking contributions from third-party defendants, including subsidiaries of the Company, for cleanup and removal costs for which each may be held liable in the primary lawsuit. Maxus and Tierra also seek recovery for cleanup and removal costs that each has incurred or will incur relating to the Newark Bay Complex. The Company expects to vigorously defend against the lawsuit. At this time it is too early to predict whether the Company will have any liability in this matter.

The Company is involved in other environmental matters where the range of liability is not reasonably estimable at this time and it is not foreseeable when information will become available to provide a basis for adjusting or recording a reserve, should a reserve ultimately be required.

Litigation and Other Matters

Lorazepam and Clorazepate

In 1998, the Company and a subsidiary were named as defendants along with Mylan Laboratories, Inc. (“Mylan”) and Gyma Laboratories, Inc. (“Gyma”) in a proceeding instituted by the Federal Trade Commission in the United States District Court for the District of Columbia (the “District Court”). Suits were also commenced by several State Attorneys General and class action complaints by private plaintiffs in various state courts. The suits alleged violations of the Federal Trade Commission Act arising from exclusive license agreements between the Company and Mylan covering two APIs (Lorazepam and Clorazepate).

All cases have been resolved except for one brought by four health care insurers. In the remaining case, the District Court entered judgment after trial in 2008 against Mylan, Gyma and Cambrex in the total amount of $19,200, payable jointly and severally, and also a punitive damage award against each defendant in the amount of $16,709. In addition, the District Court ruled that the defendants were subject to a total of approximately $7,500 in prejudgment interest. Several motions are currently pending in connection with the defendant’s appeal of the judgment.

In 2003, Cambrex paid $12,415 to Mylan in exchange for a release and full indemnity against future costs or liabilities in related litigation brought by the purchasers of Lorazepam and Clorazepate, as well as potential future claims related to the ongoing matter. Mylan has submitted a surety bond underwritten by a third-party insurance company in the amount of $74,500. In the event of a final settlement or final judgment, Cambrex expects any payment required by the Company to be made by Mylan under the indemnity described above.

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CAMBREX CORPORATION AND SUBSIDIARIES

(dollars in thousands, except share data)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The following significant events occurred during the first quarter of 2012:

Sales increased 14.4% on a reported basis compared to the first quarter of 2011. Sales, excluding currency impact, increased 16.7%.

Gross margins increased on a reported basis to 31.8% from 28.3% in the first quarter of 2011. Gross margin, excluding currency impact, increased to 30.7% in the first quarter of 2012.

Debt, net of cash, decreased $2,856 during the first quarter of 2012.

The Company entered into a $60,000 interest rate swap agreement.

Results of Operations

Comparison of First Quarter 2012 versus First Quarter 2011

Gross sales in the first quarter of 2012 of $70,559 were $8,905 or 14.4% higher than the first quarter of 2011. Excluding a 2.3% unfavorable impact of foreign exchange reflecting a stronger U.S. dollar, compared to the first quarter of 2011, sales increased 16.7%. The increase is primarily due to higher volumes of controlled substances and generic APIs.

The following table reflects sales by geographic area for the three months ended March 31, 2012 and 2011:

	Three months ended March 31,
	2012		2011

Europe	$	37,541	$	35,560
North America		29,948		20,604
Asia		1,818		3,618
Other		1,252		1,872
Total gross sales	$	70,559	$	61,654

Gross margins in the first quarter of 2012 increased to 31.8% from 28.3% in the first quarter of 2011. Excluding a favorable impact from foreign currency, first quarter of 2012 margins increased to 30.7%. Excluding the foreign currency impact, gross margins were positively impacted by higher production volumes, leading to increased plant efficiencies. Gross profit in the first quarter of 2012 was $22,428 compared to $17,455 in the same period last year.

Selling, general and administrative (“SG&A”) expenses of $9,960 in the first quarter of 2012 increased compared to $9,088 in the first quarter of 2011. The increase is primarily the result of increased sales and marketing expenses, higher medical expenses and higher personnel related expenses. SG&A, as a percentage of gross sales, was 14.1% and 14.7% in the first quarters of 2012 and 2011, respectively.

Research and development (“R&D”) expenses of $2,358 were 3.3% of gross sales in the first quarter of 2012, compared to $3,060 or 5.0% of gross sales in the first quarter of 2011.

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Results of Operations (continued)

Comparison of First Quarter 2012 versus First Quarter 2011 (continued)

Operating profit in the first quarter of 2012 was $10,110 compared to $5,307 in the first quarter of 2011. As described above, increased profits, primarily driven by higher sales volumes, were partially offset by lower pricing and slightly higher operating expenses.

Net interest expense was $651 in the first quarter of 2012 compared to $573 in the first quarter of 2011. Higher interest expense was driven by higher interest rates partially offset by lower average debt. The average interest rate on debt was 2.0% in the first quarter of 2012 versus 1.6% in the first quarter of 2011.

Equity in losses of partially-owned affiliates of $208 and $364 in the first quarters of 2012 and 2011, respectively, primarily represents the Company’s portion of Zenara’s net loss of $485 and $364 in the first quarters of 2012 and 2011, respectively. These amounts include amortization expense of $256 and $282, for the first quarters of 2012 and 2011, respectively. The first quarter of 2012 also includes income of $277 related to an investment in a European joint venture.

The tax provision from continuing operations in the first quarter of 2012 was $2,205 compared to $1,518 in the first quarter of 2011. The increase is due primarily to the geographic mix of income. The Company expects to maintain a full valuation allowance against its net domestic, and certain foreign, deferred tax assets, subject to the consideration of all prudent and feasible tax planning strategies, until such time as the Company attains an appropriate level of future profitability and the Company is able to conclude that it is more likely than not that its deferred tax assets are realizable. If the Company continues to report pre-tax losses in the United States and certain foreign jurisdictions, income tax benefits associated with those losses will not be recognized and, therefore, those losses would not be reduced by such income tax benefits. As such, improvements in pre-tax income in the future within these jurisdictions where the Company maintains a valuation allowance may result in these tax benefits ultimately being realized. However, there is no assurance that such improvements will be achieved.

In 2009, a subsidiary of the Company was examined by a European tax authority, who challenged the business purpose of the deductibility of certain intercompany transactions from 2003, and issued two formal assessments against the subsidiary. In 2010, the Company filed an appeal to litigate the matter. The first court date related to this matter was held in 2011, after which the court issued its ruling in favor of the Company. However, this ruling has been appealed by the tax authorities and only applies to the smaller of the two assessments made by the authorities related to this matter. The first court date for the larger of the two assessments is scheduled for September 2012. The Company still believes this dispute to be in the early stages of the judicial process since any ruling reached by any of the courts may be appealed, and as such the final date of resolution and outcome of this matter are uncertain at this time. However, within the next twelve months it is possible that factors such as new developments, judgments or settlements may require the Company to increase its reserve for unrecognized tax benefits by up to $8,000 or decrease its reserve by $5,500, including interest and penalties. If the court rules against the Company in subsequent court proceedings, a payment of between $6,000 and $9,000 including interest and penalties will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself. During the first quarter of 2012 the tax authorities completed a general examination of the subsidiary’s 2008 tax return, and issued a small assessment against the subsidiary. The assessment, which had already been provided for in the Company’s reserves, was settled in April 2012.

Income from continuing operations in the first quarter of 2012 was $7,038, or $0.24 per diluted share, versus $2,855, or $0.10 per diluted share in the same period a year ago.

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Liquidity and Capital Resources

During the first three months of 2012, cash provided by operations was $4,766 versus $3,771 in the same period a year ago. The increase in cash flows provided by operations in the first three months of 2012 compared to the first three months of 2011 were largely due to higher net income and lower pension contributions in the first three months of 2012 partially offset by increased inventory production and higher environmental remediation payments related to discontinued operations.

Cash flows in the first three months of 2012 related to capital expenditures were $2,616 compared to $1,690 in 2011. The majority of the funds in 2012 and 2011 were used for capital improvements to existing facilities.

Cash flows used in financing activities in the first three months of 2012 were $13,936 compared to cash flows provided by financing activities of $1,671 in the same period a year ago.

As a result of the items described above, cash and cash equivalents decreased $11,144 in the first three months of 2012.

In November 2011, the Company entered into a $250,000 five-year Syndicated Senior Revolving Credit Facility (“Credit Facility”), which expires in November 2016. The Company pays interest on this Credit Facility at LIBOR plus 1.75% - 2.50% based upon certain financial measurements. The Credit Facility also includes financial covenants regarding interest coverage and leverage ratios.

In March 2012, the Company entered into an interest rate swap with a notional value of $60,000, at a fixed rate of 0.92%, maturing in September 2015. The Company’s strategy has been to cover a portion of its outstanding floating rate debt with fixed interest rate protection. At March 31, 2012 the Company had floating rate debt of $84,000, of which $60,000 is fixed by an interest rate swap.

The Company believes that cash flows from operations along with funds available from the revolving line of credit will be adequate to meet the operational and debt servicing needs of the Company, but no assurances can be given that this will continue to be the case.

The Company’s forecasted cash flow from future operations may be adversely affected by various factors including, but not limited to, declines in customer demand, increased competition, the deterioration in general economic and business conditions, returns on assets within the Company’s domestic pension plans that are significantly below expected performance, as well as other factors. See the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the period ended December 31, 2011 for further explanation of factors that may negatively impact the Company’s cash flows. Any change in the current status of these factors could adversely impact the Company’s ability to fund operating cash flow requirements.

The Company was in compliance with all financial covenants at March 31, 2012.

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Impact of Recent Accounting Pronouncements

Fair Value Measurement

Comprehensive Income

In June 2011, the FASB issued “Comprehensive Income – Presentation of Comprehensive Income.” This statement gives companies two options for presenting other comprehensive income (“OCI”), which currently is included as part of the statement of shareholders’ equity. An OCI statement can be included with the income statement, which together will make a statement of total comprehensive income. Alternatively, companies can have an OCI statement separate from an income statement, but the two statements will have to appear consecutively within a financial report. This statement is effective for fiscal quarters and years beginning after December 15, 2011. The effect of adopting this statement did not have an impact on the Company’s financial position or results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued “Intangibles—Goodwill and Other: Testing Goodwill for Impairment” to simplify the goodwill impairment test. The change allows companies to first decide whether they need to do the two-step test by allowing companies to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A business no longer has to calculate the fair value of a reporting unit unless it believes it is very likely that the unit’s fair value is less than the value carried on the balance sheet. This amendment also includes examples of how the amended test should be carried out. This amendment is effective for annual and interim tests performed for fiscal years beginning after December 15, 2011, although early adoption is permitted. The effect of adopting this statement does not have an impact on the Company’s financial position or results of operations.

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Item 3.

Quantitative and Qualitative Disclosures about Market Risk

There has been no significant change in the Company’s exposure to market risk during the first three months of 2012. For a discussion of the Company’s exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter covered by this report that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

CAMBREX CORPORATION AND SUBSIDIARIES

Item 1.

Legal Proceedings

See the discussion under Part I, Item 1, Note 11 to the Company’s Consolidated Financial Statements.

Item 1A.

Risk Factors

There have been no material changes to the Company’s risk factors and uncertainties during the first three months of 2012. For a discussion of the Risk Factors, refer to Part I, Item 1A, “Risk Factors,” contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011.

Item 6.

Exhibits

Exhibit 10.33**	Executive Cash Incentive Plan

Exhibit 10.34**	2012 Equity Incentive Plan for Non-Employee Directors

Exhibit 31.1*	Section 302 Certification Statement of the Chief Executive Officer.

Exhibit 31.2*	Section 302 Certification Statement of the Chief Financial Officer.

Exhibit 32**	Section 906 Certification Statements of the Chief Executive Officer and Chief Financial Officer.

Exhibit 101.INS***	XBRL Instance Document

Exhibit 101.SCH***	XBRL Taxonomy Extension Schema

Exhibit 101.CAL***	XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.LAB***	XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE***	XBRL Taxonomy Extension Presentation Linkbase

Filed herein

Furnished herewith

***

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise not subject to liability.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		CAMBREX CORPORATION

	By	/s/Gregory P. Sargen
		Gregory P. Sargen
		Executive Vice President and
		Chief Financial Officer
		(On behalf of the Registrant and as the
		Registrant's Principal Financial Officer)

Dated: May 4, 2012

Exhibit 10.34

CAMBREX CORPORATION

2012 EQUITY INCENTIVE PLAN

FOR NON-EMPLOYEE DIRECTORS

1.	DEFINED TERMS

Exhibit A , which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.

PURPOSE

The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based incentive Awards.

3.	ADMINISTRATION

The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures relating to the Plan; and otherwise do all things necessary to carry out the purposes of the Plan. Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

4.	LIMITS ON AWARDS UNDER THE PLAN

(a) Number of Shares . The maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan is 400,000. For purposes of the preceding sentence, only shares of Stock actually delivered under an Award (and not cash or other property delivered in lieu of shares of Stock) will be taken into account; provided , that the full number of shares subject to any portion of an SAR that is exercised for Stock shall, for purposes of the preceding sentence, be treated as having been delivered.

(b) Type of Shares . Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan.

5.	ELIGIBILITY AND PARTICIPATION

All non-employee directors of the Company will be eligible to participate in the Plan.

6.	RULES APPLICABLE TO AWARDS

(a)

All Awards .

(1) Award Provisions . The Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant will be deemed to have agreed to the terms of the Award and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

(2) Term of Plan . No Awards may be made after ten years from the Date of Adoption, but previously granted Awards may continue beyond that date in accordance with their terms.

(3) Transferability . Awards may not be transferred other than by will or by the laws of descent and distribution. During a Participant’s lifetime, Stock Options and SARs may be exercised only by the Participant.

(4) Vesting, etc . The Administrator will determine the time or times at which an Award will vest or become exercisable and the terms on which a Stock Option or SAR will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax or other consequences resulting from such acceleration. Unless the Administrator expressly provides otherwise, however, each Award (other than an Award of Unrestricted Stock or an Award of Restricted Stock that has fully vested) that is held by a Participant or by the Participant’s permitted transferees, if any, when the Participant ceases for any reason to be a member of the Board shall be treated as having terminated immediately prior to such cessation of service.

(5) Additional Restrictions . The Administrator may cancel, rescind, withhold or otherwise limit or restrict any Award at any time if the Participant is not in compliance with all applicable provisions of the Award agreement and the Plan. Without limiting the generality of the foregoing, the Administrator may recover Awards made under the Plan and payments under or gain in respect of any Award to the extent required to law or any stock exchange or similar rule.

(6) Taxes . The Participant will be solely responsible for the satisfaction of any tax liability to the Participant arising as a result of the grant, vesting, exercise or settlement of an Award.

(7) Dividend Equivalents, Etc . The Administrator may provide for the payment of amounts (on terms and subject to conditions established by the Administrator) in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award whether or not the holder of such Award is otherwise entitled to share in the actual dividend or distribution in respect of such Award. Any entitlement to dividend equivalents or similar entitlements will be established and administered either consistent with an exemption from, or in compliance with, the requirements of Section 409A. Dividends or dividend equivalent amounts payable in respect of Awards that are subject to restrictions may be subject to such limits or restrictions as the Administrator may impose.

(8) Rights Limited . Nothing in the Plan will be construed as giving any person the right to continued service with the Company or its affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of a Participant’s service relationship with the Company or any affiliate, regardless of the reason or reasons, if any, for such termination.

(9) Coordination with Other Plans . Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company. For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered will be treated as awarded under the Plan (and will reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).

(10) Section 409A . Each Award will contain such terms as the Administrator determines, and will be construed and administered, such that the Award either qualifies for an exemption from the requirements of Section 409A or satisfies such requirements.

(b)

Stock Options and SARs .

(1) Time And Manner Of Exercise . Unless the Administrator expressly provides otherwise, no Stock Option or SAR will be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator), which may be an electronic notice, signed (including electronic signature in form acceptable to the Administrator) by the appropriate person and accompanied by any payment required under the Award. A Stock Option or SAR exercised by any person other than the Participant will not be deemed to have been exercised until the Administrator has received such evidence as it may require that the person exercising the Award has the right to do so.

(2) Exercise Price . The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise will be no less than 100% of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, split-off, combination or exchange of shares) no such Award, once granted, may be repriced or cancelled in exchange for cash or other property, other than with stockholder approval. Fair market value will be determined by the Administrator consistent with the applicable requirements of Section 409A.

(3) Payment Of Exercise Price . Where exercise of an Award is to be accompanied by payment, payment of the exercise price will be by cash or check acceptable to the Administrator or by such other legally permissible means, if any, as may be acceptable to the Administrator.

(4) Maximum Term . Stock Options and SARs will have a maximum term not to exceed ten (10) years from the date of grant; provided, however, that, if a Participant still holding an outstanding but unexercised Stock Option or SAR ten (10) years from the date of grant (or, in the case of a Stock Option or SAR with a maximum term of less than ten (10) years, such maximum term) is prohibited by applicable law or a written policy of the Company applicable to similarly situated service providers from engaging in any open-market sales of Stock, the maximum term of such Award will instead be deemed to expire on the thirtieth (30 th ) day following the date the Participant is no longer prohibited from engaging in such open market sales.

7.	EFFECT OF CERTAIN TRANSACTIONS

(a) Termination of Awards Upon Consummation of Covered Transaction . Except as otherwise provided in an Award agreement, in the event of a Covered Transaction, each Award will terminate upon consummation of the Covered Transaction, other than the following: (i) Awards assumed pursuant to Section 7(c) below; and (ii) outstanding shares of Restricted Stock (which will be treated in the same manner as other shares of Stock). In the case of Restricted Stock that does not vest in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan. The provisions of this Section 7(a) are to be applied after the application of Section 7(b), in the case of a Covered Transaction that is also a Change in Control.

(b) Change in Control . In the event of a Change in Control and except as otherwise provided in the related merger, acquisition or similar agreement, Section 7(b)(1) will apply to each outstanding Award unless, as to any such Award or portion thereof, the Administrator determines that Section 7(b)(2) is instead to apply.

(1) Acceleration of Certain Awards . At or prior to the Change in Control, as the Administrator determines, each Award or portion thereof to which this Section 7(b)(1) applies will become fully vested and (in the case of a Stock Option or SAR) fully exercisable immediately prior to the Change in Control, and the delivery of any shares of Stock remaining deliverable under each outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated, in each case on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Change in Control.

(2) Cash-Out of Awards . Each Award or portion thereof to which this Section 7(b)(2) applies, whether or not otherwise vested or exercisable, will be exchanged for a payment equal to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines.

(c) Assumption or Substitution . If the Covered Transaction is one in which there is an acquiring or surviving entity and is not a Change in Control, the Administrator will provide (i) for the assumption or continuation of some or all outstanding Awards or any portion thereof or (ii) for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

(d) Changes in and Distributions With Respect to Stock .

(1) Basic Adjustment Provisions . In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718, the Administrator will make appropriate adjustments to the maximum number of shares specified in Section 4(a) that may be delivered under the Plan, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.

(2) Certain Other Adjustments . The Administrator may also make adjustments of the type described in Section 7(d)(1) above to take into account distributions to stockholders other than those provided for in Section 7(d)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan, having due regard for the requirements of Section 409A, where applicable.

(3) Continuing Application of Plan Terms . References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7(d).

8.	LEGAL CONDITIONS ON DELIVERY OF STOCK

The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived. The Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of the Securities Act of 1933 or any applicable state or non-U.S. securities law. Any Stock required to be issued to Participants under the Plan will be evidenced in such manner as the Administrator may deem appropriate, including book-entry registration or delivery of stock certificates. In the event that the Administrator determines that Stock certificates will be issued to Participants under the Plan, the Administrator may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

9.	AMENDMENT AND TERMINATION

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided, that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless the Administrator expressly reserved the right to do so at the time the Award was granted. Any amendments to the Plan will be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code and applicable stock exchange requirements), as determined by the Administrator.

10.	OTHER COMPENSATION ARRANGEMENTS

The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person other compensation in addition to Awards under the Plan.

11.	MISCELLANEOUS

(a) Waiver of Jury Trial . By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim will be tried before a court and not before a jury. By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers. Notwithstanding anything to the contrary in the Plan, nothing herein is to be construed as limiting the ability of the Company and a Participant to agree to submit disputes arising under the terms of the Plan or any Award made hereunder to binding arbitration or as limiting the ability of the Company to require any eligible individual to agree to submit such disputes to binding arbitration as a condition of receiving an Award hereunder.

(b) Limitation of Liability . Notwithstanding anything to the contrary in the Plan, neither the Company, nor any affiliate, nor the Administrator, nor any person acting on behalf of the Company, any affiliate, or the Administrator, will be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted by reason of the failure of an Award to satisfy the requirements of Section 409A or by reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided, that nothing in this Section 11(b) will limit the ability of the Administrator or the Company, in its discretion, to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such acceleration of income or additional tax.

12.	ESTABLISHMENT OF SUB-PLANS

The Administrator may from time to time establish one or more sub-plans under the Plan for purposes of satisfying local law (including tax law). The Administrator will establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on the Administrator’s discretion under the Plan as it deems necessary or desirable and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as it deems necessary or desirable. All supplements so established will be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction (as determined by the Administrator).

13.	GOVERNING LAW

(a) Certain Requirements of Corporate Law . Awards will be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.

(b) Other Matters . Except as otherwise provided by the express terms of an Award agreement, under a sub-plan described in Section 12 or as provided in Section 13(a) above, the provisions of the Plan and of Awards under the Plan and all claims or disputes arising out of or based upon the Plan or any Award under the Plan or relating to the subject matter hereof or thereof will be governed by and construed in accordance with the domestic substantive laws of the State of New Jersey without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

(c) Jurisdiction . By accepting an Award, each Participant will be deemed to (a) have submitted irrevocably and unconditionally to the jurisdiction of the federal and state courts located within the geographic boundaries of the United States District Court for the District of New Jersey for the purpose of any suit, action or other proceeding arising out of or based upon the Plan or any Award; (b) agree not to commence any suit, action or other proceeding arising out of or based upon the Plan or an Award, except in the federal and state courts located within the geographic boundaries of the United States District Court for the District of New Jersey; and (c) waive, and agree not to assert, by way of motion as a defense or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that the Plan or an Award or the subject matter thereof may not be enforced in or by such court.

EXHIBIT A

Definition of Terms

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

“Administrator”: The Compensation Committee of the Board, except that the Compensation Committee may delegate (i) to one or more of its members (or one or more other members of the Board (including the full Board)) such of its duties, powers and responsibilities as it may determine; and (ii) to such employees or other persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, the term “Administrator” will include the person or persons so delegated to the extent of such delegation.

“Award”: Any or a combination of the following:

(i) Stock Options.

(ii) SARs.

(iii) Restricted Stock.

(iv) Unrestricted Stock.

(v) Stock Units, including Restricted Stock Units.

(vi) Awards (other than Awards described in (i) through (v) above) that are convertible into or otherwise based on Stock.

“Board”: The Board of Directors of the Company.

“Change in Control”: A “change in control event” as defined in Treasury Regulation § 1.409A-3(i)(5)(i).

“Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.

“Company”: Cambrex Corporation, a Delaware corporation.

“Covered Transaction”: Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction will be deemed to have occurred upon consummation of the tender offer.

“Date of Adoption”: The earlier of the date the Plan was approved by the Company’s stockholders or adopted by the Board, as determined by the Committee.

“Participant”: A person who is granted an Award under the Plan.

“Plan”: The Cambrex Corporation 2012 Equity Incentive Plan for Non-Employee Directors from time to time amended and in effect.

“Restricted Stock”: Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.

“Restricted Stock Unit”: A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.

“SAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.

“Section 409A”: Section 409A of the Code.

“Stock”: Common Stock of the Company, par value $.10 per share.

“Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the exercise price that is not intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

“Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.

“Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award.

	/s/Steven M. Klosk
	Steven M. Klosk
	President and Chief Executive Officer