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,
2009





OR


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 twelve 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 ý.   No
o.





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





Large
accelerated filer o   Accelerated
filer ý   Non-accelerated
filer o   Smaller
reporting company o


(Do not
check if a smaller reporting company)





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




As of
April 28, 2009, there were 29,221,881 shares outstanding of the registrant’s
Common Stock, $.10 par value.







Table of Contents





CAMBREXCORPORATION AND SUBSIDIARIES





Form
10-Q





For The
Quarter Ended March 31, 2009


Table of
Contents





Page No.Part
      I
                          Financial informationItem
      1.
                          Financial StatementsConsolidated Balance Sheets as of March 31, 2009 and December
      31, 2008
                          2Consolidated Statements of Operations for the three months
      ended March 31, 2009 and 2008
                          3Consolidated Statements of Cash Flows for the three months
      ended March 31, 2009 and 2008
                          4Notes to Unaudited Consolidated Financial
      Statements
                          5 -
      17Item
      2.
                          Management's Discussion and Analysis of Financial Condition and
      Results of Operations
                          18
      - 21Item
      3.
                          Quantitative and Qualitative Disclosures about Market
      Risk
                          22Item
      4.
                          Controls and Procedures
                          22Part
      II
                          Other informationItem
      1.
                          Legal Proceedings
                          23Item
      1A.
                          Risk Factors
                          23
      - 30Item
      4.
                          Submission of Matters to a Vote of Security
      Holders
                          31Item
      6.
                          Exhibits
                          31Signatures
                          32


Table of Contents





PartI -
FINANCIAL INFORMATION





Item
1.   Financial Statements





CAMBREX
CORPORATION AND SUBSIDIARIES


Consolidated
Balance Sheets


(in
thousands, except share data)








March
      31,
                
                
                December
      31,2009
                
                
                2008(unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                31,717
                
                
                $
                32,540Trade
      receivables, net
                
                
                37,249
                
                
                
                36,685Inventories,
      net
                
                
                60,508
                
                
                
                61,133Prepaid
      expenses and other current assets
                
                
                9,093
                
                
                
                8,798Total
      current assets
                
                
                138,567
                
                
                
                139,156Property,
      plant and equipment, net
                
                
                153,735
                
                
                
                161,500Goodwill
                
                
                34,145
                
                
                
                35,374Other
      non-current assets
                
                
                4,352
                
                
                
                5,042Total
      assets
                
                $
                330,799
                
                
                $
                341,072LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                
                $
                19,625
                
                
                $
                19,700Accrued
      expense and other current liabilities
                
                
                37,735
                
                
                
                45,080Total
      current liabilities
                
                
                57,360
                
                
                
                64,780Long-term
      debt
                
                
                127,000
                
                
                
                123,800Deferred
      income tax
                
                
                15,414
                
                
                
                16,138Accrued
      pension and postretirement benefits
                
                
                42,727
                
                
                
                44,165Other
      non-current liabilities
                
                
                16,144
                
                
                
                17,403Total
      liabilities
                
                
                258,645
                
                
                
                266,286Stockholders'
      equity:Common
      stock, $.10 par value; authorized 100,000,000, issued 31,406,778 shares at
      respective dates
                
                
                3,140
                
                
                
                3,140Additional
      paid-in capital
                
                
                99,986
                
                
                
                99,881Retained
      earnings
                
                
                16,698
                
                
                
                11,960Treasury
      stock, at cost, 2,193,115 and 2,224,613 shares at respective
      dates
                
                
                (18,721
                )
                
                
                (19,014
                )Accumulated
      other comprehensive loss
                
                
                (28,949
                )
                
                
                (21,181
                )Total
      stockholders' equity
                
                
                72,154
                
                
                
                74,786Total
      liabilities and stockholders' equity
                
                $
                330,799
                
                
                $
                341,072






See
accompanying notes to unaudited consolidated financial statements.





2
 Table of Contents





CAMBREXCORPORATION AND SUBSIDIARIES


Consolidated
Statements of Operations


(unaudited)


(in
thousands, except per-share data)




Three
      months endedMarch
      31,2009
                              
                              
                              2008Gross
      sales
                              
                              $
                              60,000
                              
                              
                              $
                              61,706Allowances
      and rebates
                              
                              
                              333
                              
                              
                              
                              391Net
      sales
                              
                              
                              59,667
                              
                              
                              
                              61,315Other
      revenues
                              
                              
                              1,365
                              
                              
                              
                              (325
                              )Net
      revenues
                              
                              
                              61,032
                              
                              
                              
                              60,990Cost
      of goods sold
                              
                              
                              41,899
                              
                              
                              
                              39,061Gross
      profit
                              
                              
                              19,133
                              
                              
                              
                              21,929Operating
      expenses:Selling,
      general and administrative expenses
                              
                              
                              9,048
                              
                              
                              
                              11,334Research
      and development expenses
                              
                              
                              1,737
                              
                              
                              
                              2,256Restructuring
      expenses
                              
                              
                              -
                              
                              
                              
                              634Strategic
      alternative costs
                              
                              
                              -
                              
                              
                              
                              177Total
      operating expenses
                              
                              
                              10,785
                              
                              
                              
                              14,401Operating
      profit
                              
                              
                              8,348
                              
                              
                              
                              7,528Other
      expenses/(income):Interest
      expense, net
                              
                              
                              1,157
                              
                              
                              
                              706Other
      income, net
                              
                              
                              (67
                              )
                              
                              
                              (125
                              )Income
      before income taxes
                              
                              
                              7,258
                              
                              
                              
                              6,947Provision
      for income taxes
                              
                              
                              2,520
                              
                              
                              
                              2,701Net
      income
                              
                              $
                              4,738
                              
                              
                              $
                              4,246Earnings
      per share of common stock:Basic
                              
                              $
                              0.16
                              
                              
                              $
                              0.15Diluted
                              
                              $
                              0.16
                              
                              
                              $
                              0.15Weighted
      average shares outstanding:Basic
                              
                              
                              29,200
                              
                              
                              
                              29,035Effect
      of dilutive stock based compensation
                              
                              
                              3
                              
                              
                              
                              58Diluted
                              
                              
                              29,203
                              
                              
                              
                              29,093





See
accompanying notes to unaudited consolidated financial statements.





3
 Table of Contents





CAMBREXCORPORATION AND SUBSIDIARIES


Consolidated
Statements of Cash Flows


(unaudited)


(in
thousands)




Three
      months endedMarch
      31,2009
                          
                          
                          2008Cash
      flows from operating activities:Net
      income
                          
                          $
                          4,738
                          
                          
                          $
                          4,246Adjustments
      to reconcile net income to cash flows:Depreciation
      and amortization
                          
                          
                          4,686
                          
                          
                          
                          5,149Increase
      in inventory reserve
                          
                          
                          2,446
                          
                          
                          
                          780Stock
      based compensation included in net income
                          
                          
                          373
                          
                          
                          
                          311Other
                          
                          
                          120
                          
                          
                          
                          560Changes
      in assets and liabilities:Trade
      receivables
                          
                          
                          (1,353
                          )
                          
                          
                          5,204Inventories
                          
                          
                          (3,826
                          )
                          
                          
                          (10,999
                          )Prepaid
      expenses and other current assets
                          
                          
                          (1,145
                          )
                          
                          
                          (2,262
                          )Accounts
      payable and other current liabilities
                          
                          
                          (7,210
                          )
                          
                          
                          (11,921
                          )Other
      non-current assets and liabilities
                          
                          
                          (444
                          )
                          
                          
                          (2,680
                          )Net
      cash used in operating activities
                          
                          
                          (1,615
                          )
                          
                          
                          (11,612
                          )Cash
      flows from investing activities:Capital
      expenditures
                          
                          
                          (1,002
                          )
                          
                          
                          (5,176
                          )Acquisition
      of business, net of cash
                          
                          
                          -
                          
                          
                          
                          (1,216
                          )Other
      investing activities
                          
                          
                          -
                          
                          
                          
                          (14
                          )Net
      cash used in investing activities
                          
                          
                          (1,002
                          )
                          
                          
                          (6,406
                          )Cash
      flows from financing activities:Long-term
      debt activity (including current portion):Borrowings
                          
                          
                          14,300
                          
                          
                          
                          23,200Repayments
                          
                          
                          (11,113
                          )
                          
                          
                          (5,205
                          )Other
      financing activities
                          
                          
                          (25
                          )
                          
                          
                          (44
                          )Net
      cash provided by financing activities
                          
                          
                          3,162
                          
                          
                          
                          17,951Effect
      of exchange rate changes on cash and cash equivalents
                          
                          
                          (1,368
                          )
                          
                          
                          1,580Net
      (decrease)/increase in cash and cash equivalents
                          
                          
                          (823
                          )
                          
                          
                          1,513Cash
      and cash equivalents at beginning of period
                          
                          
                          32,540
                          
                          
                          
                          38,488Cash
      and cash equivalents at end of period
                          
                          $
                          31,717
                          
                          
                          $
                          40,001






See
accompanying notes to unaudited consolidated financial statements.





4
 Table of Contents





CAMBREXCORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements


(dollars
in thousands, except share data)





(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, 2008.





The results of operations for the three
months ended March 31, 2009 are not necessarily indicative of the results
expected for the full year.





(2)
            Impact
      of Recently Issued Accounting
Pronouncements





Fair
Value Measurements





The Company adopted Financial
Accounting Standards Board (“FASB”) Statement No. 157 “Fair Value Measurements”
related to nonfinancial assets and nonfinancial liabilities effective January 1,
2009.  This statement defines fair value, establishes a framework for
measuring fair value in GAAP, and expands disclosures about fair value
measurements.  This statement applies whenever another standard
requires (or permits) assets or liabilities to be measured at fair
value.   The standard does not expand the use of fair value to
any new circumstances.  The effect of adopting this pronouncement did
not have a material impact on the Company’s financial position or results of
operations.





Amendment of FAS
133





The Company adopted FASB Statement No.
161 “Disclosures about Derivative Instruments and Hedging Activities—an
amendment of FASB Statement No. 133” (“FAS 161”) effective January 1,
2009.  This statement requires enhanced disclosures about derivative
and hedging activities and thereby improves the transparency of financial
reporting.  FAS 161 encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.  The effect of
adopting this pronouncement did not have an impact on the Company’s financial
position or results of operations.





Employers’ Disclosures about
Postretirement Benefit Plan Assets





In December 2008, the FASB issued FSP
132(R)-1 “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP
132(R)-1”).  This statement provides guidance on additional
disclosures about plan assets of a defined benefit pension or other
postretirement plan.  This statement is effective for fiscal years
ending after December 15, 2009.  Upon initial application, the
provisions of FSP 132(R)-1 are not required for earlier periods that are
presented for comparative purposes. The Company is currently evaluating the
disclosure requirements of this new statement.





5
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(3)
            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, 2009 was
$1.55.  For the three months ended March 31, 2009 and 2008, the
Company recorded $154 and $103, respectively, in selling, general and
administrative expenses for stock options.  The $103 recorded in the
first quarter 2008 includes $27 recorded in strategic alternative costs as a
result of a modification to previous stock option awards related to a special
dividend declared in 2007.  As of March 31, 2009, the total
compensation cost related to unvested stock option awards granted to employees
but not yet recognized was $1,637.  The cost will be amortized on a
straight-line basis over the remaining weighted-average vesting period of 3.3
years.





For the three months ended March 31,
2009 and 2008, the Company recorded $202 and $208, respectively, in selling,
general and administrative expenses for restricted stock awards.  As
of March 31, 2009 the total compensation cost related to unvested restricted
stock granted, but not yet recognized was $757.  The cost will be
amortized on a straight-line basis over the remaining weighted-average vesting
period of 1.1 years.





The following table is a summary of the
Company’s stock option activity issued to employees and related
information:




Options
                  
                  Number
      of Shares
                  
                  
                  Weighted
      Average Exercise PriceOutstanding
      at January 1, 2009
                  
                  
                  1,590,869
                  
                  
                  $
                  14.07Granted
                  
                  
                  20,000
                  
                  
                  $
                  4.17Exercised
                  
                  
                  -
                  
                  
                  
                  -Forfeited
      or expired
                  
                  
                  (2,000
                  )
                  
                  $
                  12.97Outstanding
      at March 31, 2009
                  
                  
                  1,608,869
                  
                  
                  $
                  13.27Exercisable
      at March 31, 2009
                  
                  
                  755,425
                  
                  
                  $
                  22.02





6
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(3)
            Stock
      Based Compensation (continued)





A summary of the Company’s nonvested
stock options and restricted stock as of March 31, 2009 and changes during the
three months ended March 31, 2009, are presented below:





Nonvested
      Stock Options
                    
                    
                    Nonvested
      Restricted StockNumber
      of Shares
                    
                    
                    Weighted-Average
      Grant-Date Fair Value
                    
                    
                    Number
      of Shares
                    
                    
                    Weighted-Average
      Grant-Date Fair ValueNonvested
      at January 1, 2009
                    
                    
                    833,819
                    
                    
                    $
                    5.55
                    
                    
                    
                    143,327
                    
                    
                    $
                    13.38Granted
                    
                    
                    20,000
                    
                    
                    $
                    4.17
                    
                    
                    
                    16,182
                    
                    
                    $
                    2.23Vested
      during period
                    
                    
                    (375
                    )
                    
                    $
                    7.71
                    
                    
                    
                    (31,753
                    )
                    
                    $
                    12.31Forfeited
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Nonvested
      at March 31, 2009
                    
                    
                    853,444
                    
                    
                    $
                    5.51
                    
                    
                    
                    127,756
                    
                    
                    $
                    12.24





(4)
            Goodwill





The changes in the carrying amount of
goodwill for the three months ended March 31, 2009, are as follows:





Balance
      as of January 1, 2009
                    
                    $
                    35,374Translation
      effect
                    
                    
                    (1,229
                    )Balance
      as of March 31, 2009
                    
                    $
                    34,145





(5)
            Income
      Taxes





The
Company recorded tax expense of $2,520 and $2,701 in the three months ended
March 31, 2009 and 2008, respectively.  This change is due to
differences in the geographic mix of pre-tax earnings and the enactment of
reduced tax rates in Sweden.





The Company maintains a full valuation
allowance against its domestic, and certain foreign, net deferred tax assets and
will continue to do so until an appropriate level of profitability is sustained
or tax strategies can be developed that would enable the Company to conclude
that it is more likely than not that a portion of these net deferred assets
would be realized.  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.





As of
January 1, 2009 the Company had approximately $1,697 of unrecognized tax
benefits, excluding gross interest and penalties.  During the three
months ended March 31, 2009, the Company increased its unrecognized tax benefits
by $24 for current year positions, which is offset by a decrease in unrecognized
tax benefits of $12, due to foreign currency translation.  Of the $12,
the current period’s provision includes no benefit.  Of the total
balance of unrecognized tax benefits at March 31, 2009 $1,003, if recognized,
would affect the effective tax rate.





7
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(5)
            Income
      Taxes (continued)





In the
next twelve months the Company may decrease the reserve for unrecognized tax
benefits for intercompany transactions by approximately $250 mainly due to the
expiration of a statute of limitation period.  This item would impact
the income tax provision.





In
September 2008 the Company was selected for a random IRS examination for tax
year 2006.  The examination is in process and no adjustments have been
proposed to date.  Tax years 2005 and 2007 remain open to examination
within the U.S.  The Company is also subject to exams in its
significant non-U.S. jurisdictions for 2004 and 2007 forward.





The
Company is also subject to audits in various states for various years in which
it has filed income tax returns.  In March 2009 New Jersey commenced
an examination of the Company’s open tax years.  Recently finalized
state audits resulted in immaterial adjustments.  Open years for the
majority of states where the Company files are 2005 and forward.





(6)
            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, 2009 and
December 31, 2008 consist of the following:




March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Finished
      goods
                        
                        $
                        21,782
                        
                        
                        $
                        24,657Work
      in process
                        
                        
                        22,130
                        
                        
                        
                        22,372Raw
      materials
                        
                        
                        13,272
                        
                        
                        
                        10,688Supplies
                        
                        
                        3,324
                        
                        
                        
                        3,416Total
                        
                        $
                        60,508
                        
                        
                        $
                        61,133





(7)
            Strategic
      Alternative Costs and Restructuring
Expenses





Strategic Alternative
Costs





Strategic
alternative costs include expenses that the Company has incurred related to the
decision to sell the businesses that comprised the Bioproducts and Biopharma
segments in February 2007 and costs associated with a project to streamline the
Company’s legal structure.  These costs are not considered part of
either the restructuring program or discontinued operations under current
accounting guidance.





Strategic
alternative costs for the three months ended March 31, 2008 were $177, primarily
consisting of costs associated with the project to streamline the Company’s
legal structure, change-in-control benefits, and costs associated with the
modification of employee stock options due to the payment of the special
dividend in connection with the divestiture discussed above.





8
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(7)
            Strategic
      Alternative Costs and Restructuring Expenses
  (continued)





Restructuring Expenses





Corporate
Office Restructuring





During
2007, the Company announced a plan to eliminate certain employee positions at
the corporate office upon completion of the sale of the businesses that
comprised the Bioproducts and Biopharma segments.  This plan included
certain one-time benefits for terminated employees.  Costs related to
this plan are recorded as restructuring expenses in the income
statement.  For the three months ended March 31, 2008, the Company
recognized expense of $73.





Consolidation
of Domestic Research and Development Activities





In
December 2007, the Company consolidated its United States research and
development (“R&D”) activities and small scale active pharmaceutical
ingredient (“API”) production with its facility in Charles City,
Iowa.  The restructuring reserve at December 31, 2008 consisted of the
remaining lease payments and related costs under the Company’s current operating
lease at the New Jersey R&D facility.  Costs related to this plan
are recorded as restructuring expenses on the income statement.  The
operating lease expires in December 2010.  Costs related to this
consolidation are recorded as restructuring expenses on the income
statement.  For the three months ended March 31, 2008 an additional
charge of $561 was recognized consisting of rent and related costs.





The
following table reflects the activity related to the restructuring reserves
through March 31, 2009:




December
      31, 2008
                              
                              
                              2009
      Activity
                              
                              
                              March
      31, 2009Reserve
                              
                              
                              
                              
                              
                              Cash
                              
                              
                              ReserveBalance
                              
                              
                              Expense
                              
                              
                              Payments
                              
                              
                              BalanceEmployee
      termination costs
                              
                              $
                              462
                              
                              
                              $
                              -
                              
                              
                              $
                              (259
                              )
                              
                              $
                              203Lease
      payments and related costs
                              
                              
                              3,021
                              
                              
                              
                              -
                              
                              
                              
                              (416
                              )
                              
                              
                              2,605$
                              3,483
                              
                              
                              $
                              -
                              
                              
                              $
                              (675
                              )
                              
                              $
                              2,808





9
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(8)
            Derivatives
      and Hedging Activities





In March
of 2008, the FASB issued FAS 161. FAS 161 requires entities to provide enhanced
disclosure about how and why the entity uses derivative instruments, how the
instruments and related hedged items are accounted for under SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” (“FAS 133”) and
how the instruments and related hedged items affect the financial position,
results of operations, and cash flows of the entity. The Company adopted FAS 161
during the quarter ended March 31, 2009.





The
Company operates internationally and, in the normal course of business, is
exposed to fluctuations in foreign exchange rates and interest
rates.  These fluctuations can increase the costs of financing,
investing and operating the business.  The Company uses derivative
financial instruments to reduce these exposures to market risks resulting from
fluctuations in interest rates and foreign exchange rates.





By
nature, all financial instruments involve market and credit
risks.  The Company is exposed to credit losses in the event of
nonperformance 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's policy is to enter into
forward exchange contracts to hedge forecasted cash flows associated with
foreign currency transaction exposures which are accounted for as cash flow
hedges, as deemed appropriate.  This hedging strategy mitigates 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.  As a matter of
policy, the Company does not hedge to protect the translated results of foreign
operations.





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.  The Company
makes net settlements for forward exchange contracts at maturity, based upon
negotiated rates at inception of the contracts.





All forward contracts outstanding at
March 31, 2009 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 (loss)/income
(“AOCI”).  Changes in the fair value of the derivative instruments
reported in AOCI will be reclassified 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.





The notional amounts of foreign
exchange forward contracts were $16,422 and $20,568 at March 31, 2009 and
December 31, 2008, respectively.





10
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(8)
            Derivatives
      and Hedging Activities (continued)





The following table summarizes the fair
value and balance sheet accounts where the Company’s forward exchange contracts
designated as hedging instruments are recorded as of March 31,
2009:





Balance
      Sheet Account
                  
                  Fair
      ValueOther
      current assets
                  
                  $
                  88Other
      current liabilities
                  
                  $
                  1,041





The
Company recognized a pre-tax loss in other comprehensive income from foreign
exchange contracts of $275 for the three months ended March 31,
2009.  The Company reclassified a pre-tax gain of $180 from AOCI into
other revenue related to foreign exchange contracts for the three months ended
March 31, 2009.  Assuming current market conditions continue, the
entire amount recorded in AOCI is expected to be reclassed into other revenue
within the next 12 months to reflect the fixed prices obtained from the forward
contracts.





Interest
Rate Swap Agreements





The
Company enters into interest rate swap agreements to reduce the impact of
changes in interest rates on its floating rate debt.  The swap
agreements are contracts to exchange floating rate for fixed interest payments
periodically over the life of the agreements without the exchange of the
underlying notional debt amounts.





All swap contracts outstanding at March
31, 2009 have been designated as cash flow hedges and, accordingly, changes in
the fair value of derivatives are recorded each period in
AOCI.  Changes in the fair value of the derivative instruments
reported in AOCI will be reclassified into earnings in the period in which
earnings are impacted by the variability of the cash flows of the hedged
item.  The ineffective portion of all hedges is recognized in
current-period earnings and is immaterial to the Company's financial
results.





As of March 31, 2009, the Company had
three interest rate swaps in place with an aggregate notional value of $60,000,
at an average fixed rate of 4.48%, and with maturity dates of October
2010.  The Company’s strategy has been to cover a portion of its
outstanding bank debt with interest rate protection.  At March 31,
2009, the coverage was approximately 47% of the Company’s variable interest rate
debt.  At March 31, 2009 the Company had variable debt of $127,000, of
which $60,000 is fixed by interest rate swaps.  Interest expense
under these agreements, and the respective debt instruments that they hedge, are
recorded at the net effective interest rate of the hedged
transactions.  The fair value of these agreements was based on quoted
market prices and was in a loss position of $3,390 at March 31,
2009.  This loss is reflected in the balance sheet under the caption
“Accrued expenses and other current liabilities.”





The
Company increased other comprehensive income $150 related to interest rate swaps
for the three months ended March 31, 2009.  The Company reclassified a
pre-tax loss of $605 from AOCI into interest expense related to interest rate
swaps for the three months ended March 31, 2009.  Assuming current
market conditions continue, approximately $2,154 is expected to be reclassed out
of AOCI into interest expense within the next 12 months.





11
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(9)
            Comprehensive
      (Loss)/Income





The following table shows the
components of comprehensive (loss)/income for the three months ended March 31,
2009 and 2008:




Three
      months endedMarch
      31,2009
                    
                    
                    2008Net
      income
                    
                    $
                    4,738
                    
                    
                    $
                    4,246Foreign
      currency translation
                    
                    
                    (8,217
                    )
                    
                    
                    13,809Unrealized
      gain/(loss) on hedging contracts, net of tax
                    
                    
                    181
                    
                    
                    
                    (1,768
                    )Pension,
      net of tax
                    
                    
                    268
                    
                    
                    
                    132Total
                    
                    $
                    (3,030
                    )
                    
                    $
                    16,419





(10)
            Retirement
      Plans and Other Postretirement
Benefits





Domestic Pension Plans





The components of net periodic pension
cost for the Company’s domestic plans for the three months ended March 31, 2009
and 2008 are as follows:





Three
      months endedMarch
      31,2009
                      
                      
                      2008Components
      of net periodic benefit costInterest
      cost
                      
                      $
                      857
                      
                      
                      $
                      878Expected
      return on plan assets
                      
                      
                      (731
                      )
                      
                      
                      (1,021
                      )Amortization
      of prior service costs
                      
                      
                      109
                      
                      
                      
                      109Recognized
      actuarial loss
                      
                      
                      136
                      
                      
                      
                      24Net
      periodic benefit cost
                      
                      $
                      371
                      
                      
                      $
                      (10
                      )





The Company has a Supplemental
Executive Retirement Plan for key executives.  This plan is
non-qualified and unfunded.  Net periodic benefit costs for the three
months ended March 31, 2009 and 2008 were $84 and $77,
respectively.





12
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(10)
            Retirement
      Plans and Other Postretirement Benefits
  (continued)





International Pension Plan





The components of net periodic pension
cost for the Company’s international plan for the three months ended March 31,
2009 and 2008 are as follows:




Three
      months endedMarch
      31,2009
                        
                        
                        2008Components
      of net periodic benefit costService
      cost
                        
                        $
                        121
                        
                        
                        $
                        137Interest
      cost
                        
                        
                        170
                        
                        
                        
                        218Recognized
      actuarial loss
                        
                        
                        30
                        
                        
                        
                        33Amortization
      of prior service credit
                        
                        
                        (1
                        )
                        
                        
                        (2
                        )Net
      periodic benefit cost
                        
                        $
                        320
                        
                        
                        $
                        386





Other Postretirement
Benefits





Cambrex provides certain postretirement
health and life insurance benefits to all eligible retired
employees.  Such plans are self-insured and are not
funded.  The net periodic benefit cost for the three months ended
March 31, 2009 and 2008 was $8.





(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 have a material adverse effect on the Company's financial
condition, operating results and cash flows in a future reporting
period.





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
potentially responsible parties (“PRP”) for certain waste disposal sites
("Superfund sites").  Additionally, the Company has retained the
liability for certain environmental proceedings, associated with the sale of the
Rutherford Chemicals business.





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 not
fixed 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.





13
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(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 Superfund sites not
owned by the Company and the Company's current and former operating
sites.  These accruals were $5,995 and $6,226 at March 31, 2009 and
December 31, 2008, respectively.  The decrease in the accrual includes
payments of $161 and the impact of currency of $70.  Based upon
available information and analysis, the Company's current accrual represents
management's best estimate of the probable and estimable costs associated with
environmental proceedings including amounts for investigation fees where full
remediation costs may not be estimable at the reporting date.





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 submitted a sampling plan to the New Jersey
Department of Environmental Protection (“NJDEP”) and is awaiting
approval.  The results of the completed and proposed 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 proposed remedial action plan to the NJDEP for its Cosan
Clifton, New Jersey site.  The NJDEP requested additional
investigative work at the site and that work is on-going.  Based on
the proposed remedial action plan, as of March 31, 2009, the reserve was
$1,237.  The results of the additional investigation may impact the
remediation plan and costs.





Additionally, the Company has recorded
a liability of $928 for the Cosan Carlstadt, New Jersey site based on the
investigations completed to date and the proposed Remedial Action Work Plan
(“RAW”) submitted to the NJDEP for their approval.  The NJDEP
subsequently rejected the RAW and required the Company to perform additional
investigative work prior to approval of a new RAW.  The results of
this additional investigative work may impact the RAW and increase the
liability.





Berry’s
Creek





The Company received a notice from the
United States Environmental Protection Agency (“USEPA”) that two former
operating subsidiaries of the Company are considered PRPs at the Berry’s Creek
Superfund Site in New Jersey.  The operating companies 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 filed a response to the USEPA agreeing to jointly negotiate to conduct
or fund an appropriate remedial investigation and feasibility study of the
Berry’s Creek Site.  The PRPs have engaged consultants to evaluate
investigation and remedial alternatives and develop a method to allocate related
costs among the PRPs.  As of March 31, 2009 the Company’s reserve was
$366 to cover the initial phase of investigation based on a tentative agreement
on the allocation of the site investigation costs among the PRPs.  The
investigation is expected to take several years and at this time it is too early
to predict the extent of any additional liabilities.





14
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(11)
            Contingencies
      (continued)





Nepera,
Inc. – Maybrook and Harriman Sites





Nepera,
Inc. (“Nepera”) is named a PRP of the Maybrook Site in Hamptonburgh, New York by
the USEPA in connection with the disposition, 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, including a letter of credit to guarantee the obligation under the
Consent Decree.





Nepera is
also named a responsible party of the Harriman, New York production facility by
the New York State Department of Environmental Conservation.  A final
ROD was issued which describes the remediation plan for the
site.  Implementation of the ROD is on-going.





As of
March 31, 2009, the reserve recorded on the books was $1,200 and represents the
Company’s best estimate to complete both RODs.





Solvent
Recoveries Superfund Site





A subsidiary of the Company is one of
approximately 1,300 PRPs at a Superfund site (“the Site”) in Southington,
Connecticut, once operated by Solvent Recoveries, Inc.  The PRP group
has completed a Remedial Investigation/Feasibility Study and the USEPA has
proposed remediation of the Site.  In 2008, the Company agreed to
enter into a consent decree and settlement with the other PRPs and the USEPA
whereby the Company agreed to pay a settlement amount of $353 with an initial
payment of $106 and the remaining $247 to be paid in installments over time as
the remediation proceeds.  The Company has reserved for the unpaid
portion of the settlement and has entered into a letter of credit to guarantee
the payment obligation under the settlement.




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
contribution from third-party defendants, including subsidiaries of the Company,
for cleanup and removal costs for which each may be held liable in the 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 determinable when information will become available
to provide a basis for adjusting or recording an accrual, should an accrual
ultimately be required.





15
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(11)
            Contingencies
      (continued)





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 of America, Inc. (“Gyma”)) in
a proceeding instituted by the Federal Trade Commission (“FTC”) 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).  The FTC and Attorneys’
General suits were settled in February 2001.





All cases
have been resolved except for one brought by four health care insurers. In 2008
the District Court, in this remaining case, entered judgment after trial against
Mylan, Gyma and Cambrex in the amount of $8,355, 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 also subject to a total of approximately $7,000 in prejudgment
interest.  The parties will appeal the awards.





Cambrex
paid $12,415 in exchange for a release from Mylan and full indemnity in 2003
against future costs or liabilities in related litigation brought by purchasers,
as well as potential future claims related to this matter.  Cambrex
expects any payment of the judgment against it to be made by Mylan under the
indemnity described above.





Baltimore
Litigation





In 2001,
the Company acquired a biopharmaceutical manufacturing business in Baltimore
(the “Baltimore Business”).  The sellers of the Baltimore Business
(“Sellers”) filed suit against the Company alleging that the Company made false
representations during the negotiations on which the sellers relied in deciding
to sell the business and that the Company breached its obligation to pay
additional consideration as provided in the purchase agreement which was
contingent on the performance of the Baltimore Business.





In 2007 the United States District
Court, Southern District of New York, granted the Company’s pending Motion for
Summary Judgment in the Baltimore Litigation.  The Sellers filed a
notice of appeal and in March 2009 the United States Court of Appeals affirmed
the lower court's grant of summary judgment dismissing all of the Seller’s
claims.





Other





In
addition to the matters identified above, the Company is a plaintiff in a
lawsuit alleging certain breaches by a counterparty to an asset purchase
agreement. The suit may result in a settlement or award by the court in favor of
the Company. At this time, however, no estimate can be made as to the time or
the amount, if any, of ultimate recovery.





The
Company has commitments incident to the ordinary course of business including
corporate guarantees of certain subsidiary obligations to the Company’s lenders
related to financial assurance obligations under certain environmental laws for
remediation; closure and third party liability requirements of certain of its
subsidiaries and a former operating location; contract provisions for
indemnification protecting its customers and suppliers against third party
liability for manufacture and sale of Company products
that fail to meet product warranties and contract provisions for indemnification
protecting licensees against intellectual property infringement related to
licensed Company technology or processes.





16
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


Notes
to Unaudited Consolidated Financial Statements (Continued)


(dollars
in thousands, except share data)





(11)
            Contingencies
      (continued)




Additionally, as permitted under
Delaware law, the Company indemnifies its officers and directors for certain
events or occurrences while the officer or director is, or was, serving at the
Company’s request in such capacity. The term of the indemnification period is
for the officer's or director's lifetime. The maximum potential amount of future
payments the Company could be required to make under these indemnification
agreements is unlimited; however, the Company has a Director and Officer
insurance policy that covers a portion of any potential exposure.  The
Company currently believes the estimated fair value of its indemnification
agreements is not significant based on currently available information, and as
such, the Company has no liabilities recorded for these agreements as of March
31, 2009.





Cambrex's subsidiaries are party to a
number of other proceedings that are not considered material at this
time.





17
 Table of Contents





CAMBREX
CORPORATION AND SUBSIDIARIES


(dollars
in thousands, except share data)





Item2.    Management's Discussion and Analysis
of Financial Condition and Results of Operations





Executive
Overview





The following significant events
occurred during the first quarter of 2009:




·
            Sales
      decreased 2.8% on a reported basis compared to first quarter
      2008.  Sales, excluding currency impact, increased 8.7%, or $5.3
      million.


·
            Gross
      margins decreased on a reported basis to 31.9% from 35.5% in the first
      quarter of 2008.  Gross margin, excluding currency impact,
      decreased to 25.9% versus 35.5% in the first quarter
  2008.


·
            Selling,
      general and administrative expenses decreased to 15.1% of sales from 18.4%
      of sales in the first quarter 2008.




Results of
Operations




Comparison
of First Quarter 2009 versus First Quarter 2008





Gross
sales in the first quarter 2009 of $60,000 were $1,706 or 2.8% below the first
quarter 2008.  Gross sales were unfavorably impacted 11.5% due to
exchange rates reflecting a stronger U.S. dollar.  Excluding the
currency impact, sales increased 8.7%.  The increase is primarily due
to higher volumes of a gastro-intestinal and a neurological active
pharmaceutical ingredient (“API”), higher volumes of controlled substances and
slightly higher custom development revenues partially offset by lower sales of
generic APIs.





The following table reflects sales by
geographic area for the three months ended March 31, 2009 and 2008:





Three
      months ended March 31,2009
                    
                    
                    2008North
      America
                    
                    $
                    22,017
                    
                    
                    $
                    21,286Europe
                    
                    
                    33,491
                    
                    
                    
                    34,736Asia
                    
                    
                    2,521
                    
                    
                    
                    3,571Other
                    
                    
                    1,971
                    
                    
                    
                    2,113Total
      Gross Sales
                    
                    $
                    60,000
                    
                    
                    $
                    61,706





Gross
margins decreased to 31.9% in the first quarter 2009 from 35.5% in the first
quarter 2008.  Lower production levels and the accompanying lower
absorption compared to the prior year’s first quarter, along with slightly
higher production costs were the main drivers of the lower
margins.  Gross margins were favorably impacted 6.0% due to foreign
currency exchange.





Selling,
general and administrative expenses of $9,048 or 15.1% of gross sales in the
first quarter 2009 decreased from $11,334, or 18.4% in the first quarter 2008.
The decrease in expense is due mainly to lower costs as a result of the
restructuring of the corporate office, cost savings at the operating sites and a
favorable impact from foreign currency.





Research
and development (“R&D”) expenses of $1,737 were 2.9% of gross sales in the
first quarter 2009, compared to $2,256 or 3.7% of gross sales in the first
quarter 2008.  The decrease is primarily due to the increased
utilization of certain R&D personnel on revenue-generating custom
development projects resulting in these costs being classified as either
inventory or cost of goods sold.  The Company’s consolidation of its
New Jersey technical center with its R&D operations in Iowa also contributed
to lower costs.





18
 Table of Contents





Results of Operations
(continued)




Comparison
of First Quarter 2009 versus First Quarter 2008 (continued)





Restructuring
expenses for the first quarter 2008 were $634, consisting of rent and related
costs at the New Jersey R&D facility and costs associated with the
restructuring of the Corporate office.





Strategic
alternative costs for the first quarter 2008 were $177, consisting of costs
associated with a project to streamline the Company’s legal structure,
change-in-control benefits and costs associated with the modification of
employee stock options due to the payment of the special dividend in connection
with the 2007 divestiture of the businesses that comprised the Bioproducts and
Biopharma segments.





Operating
profit in the first quarter of 2009 was $8,348 compared to $7,528 in the first
quarter 2008.  The results reflect a favorable impact due to foreign
currency and lower operating expenses at the corporate office and operating
sites partially offset by lower gross margins as discussed above.





Net
interest expense was $1,157 in the first quarter 2009 compared to $706 in the
first quarter 2008.  The change is due primarily to capitalized
interest of $234 versus $604 in the first quarters of 2009 and 2008,
respectively.  First quarter 2009 results reflect lower interest rates
partially offset by higher average debt compared to the first quarter
2008.  Interest income was $236 lower in the first quarter 2009
compared to the same period last year as a result of higher cash balances during
the first quarter 2008.  The average interest rate on debt was 4.1% in
the first quarter 2009 versus 5.3% in the first quarter 2008.





The
effective tax rate for the first quarter 2009 was 34.7% compared to 38.9% in the
first quarter 2008. The tax provision in the first quarter 2009 was $2,520
compared to $2,701 in the first quarter 2008.  The decline is due to
changes in the geographic mix of pre-tax earnings and the enactment of reduced
tax rates in Sweden.  The Company maintains a full valuation allowance
against its domestic, and certain foreign, net deferred tax assets and will
continue to do so until an appropriate level of profitability is sustained or
tax strategies can be developed that would enable the Company to conclude that
it is more likely than not that a portion of these net deferred assets would be
realized.  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.





Net income in the first quarter 2009
was $4,738, or $0.16 per diluted share, versus $4,246, or $0.15, per diluted
share in the same period a year ago.





Liquidity
and Capital Resources





Cash and cash equivalents decreased
$823 in the first three months of 2009.   During the first three
months of 2009, cash used in operations was $1,615 versus $11,612 in the same
period a year ago.  The reduction in cash outflows in the first three
months of 2009 versus the first three months of 2008 is due primarily to the pay
down of several year end 2007 accruals in the first quarter 2008, including
higher change in control payments and a legal settlement.  Higher
production levels in the first three months of 2008 compared to the first three
months of 2009 also reduced cash outflows comparatively.





Cash flows in the first three months of
2009 related to capital expenditures were $1,002 compared to $5,176 in
2008.  The majority of the funds in 2009 were used for a new mid-scale
Pharma manufacturing facility in Karlskoga, Sweden which was substantially
completed as of March 31, 2009, and capital improvements to existing
facilities.  The majority of the funds in 2008 were used for the new
mid-scale Pharma manufacturing facility in Karlskoga, Sweden, an API
purification facility in Milan, Italy and capital improvements to existing
facilities.





19
 Table of Contents





Results of Operations
(continued)




Liquidity
and Capital Resources (continued)




Cash flows provided by financing
activities in the first three months of 2009 and 2008 of $3,162 and $17,951,
respectively, primarily represent net borrowings used for domestic operations,
capital expenditures and payments related to certain accruals.





Many of Cambrex’s contracts are
short-term in duration.  As a result, the Company must continually
replace its contracts with new contracts to sustain its revenue.  In
addition, certain of the Company’s long-term contracts may be cancelled or
delayed by clients for any reason upon notice.  The Company currently
has a long-term sales contract that accounts for approximately 10% of annual
sales that is scheduled to expire at the end of 2013.  There is no
guarantee that this contract will be renewed.  The Company also has a
contract for certain drug delivery products that accounted for nearly 4% of
annual sales in 2008 that expires in September of 2009.  The Company
has recently received notification that its customer has filed an objection to
the Company’s patent in the European Union related to the products sold under
this contract. The customer is also seeking a patent for a competing product in
certain jurisdictions including the European Union. The Company currently
believes it has enforceable intellectual property rights and it intends to
enforce these rights. While the outcome of these actions is uncertain, should
the customer’s objection or patent application be successful, it would
unfavorably impact contract renewal negotiations including, among other things,
terms related to sales volumes and pricing compared to the existing
contract.





The
Company believes that cash flows from operations along with funds available from
a 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, especially in light of the recent unprecedented
volatility in worldwide credit markets.  The Company was in compliance
with all financial covenants at March 31, 2009.





Impact of Recent Accounting
Pronouncements





Fair
Value Measurements





The
Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 157
“Fair Value Measurements” related to nonfinancial assets and nonfinancial
liabilities effective January 1, 2009.  This statement defines fair
value, establishes a framework for measuring fair value in GAAP, and expands
disclosures about fair value measurements.  This statement applies
whenever another standard requires (or permits) assets or liabilities to be
measured at fair value.   The standard does not expand the use of
fair value to any new circumstances.  The effect of adopting this
pronouncement did not have a material impact on the Company’s financial position
or results of operations.





Amendment of FAS
133





The
Company adopted FASB Statement No. 161 “Disclosures about Derivative Instruments
and Hedging Activities—an amendment of FASB Statement No. 133” (“FAS 161”)
effective January 1, 2009.  This statement requires enhanced
disclosures about derivative and hedging activities and thereby improves the
transparency of financial reporting.  FAS 161 encourages, but does not
require, comparative disclosures for earlier periods at initial
adoption.  The effect of adopting this pronouncement did not have an
impact on the Company’s financial position or results of
operations.





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Impact of Recent Accounting
Pronouncements (continued)





Employers’
Disclosures about Postretirement Benefit Plan Assets





In December 2008, the FASB issued FSP
132(R)-1 “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP
132(R)-1”).  This statement provides guidance on additional
disclosures about plan assets of a defined benefit pension or other
postretirement plan.  This statement is effective for fiscal years
ending after December 15, 2009.  Upon initial application, the
provisions of FSP 132(R)-1 are not required for earlier periods that are
presented for comparative purposes. The Company is currently evaluating the
disclosure requirements of this new statement.





Forward-Looking
Statements





This document may contain
“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, as amended, 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
they use words such as “expects,” “anticipates,” “intends,” “estimates,”
“believes” or similar expressions in connection with any discussion of future
financial and operating performance.  Any forward-looking statements
are qualified in their entirety by reference to the factors discussed throughout
this Form 10-Q.  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 including, but not limited to, global economic trends,
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, the
Company’s ability to satisfy the continued listing standards of the New York
Stock Exchange, changes in foreign exchange rates,  uncollectible
receivables, loss on disposition of assets, cancellation or delays in renewal of
contracts, lack of suitable raw materials or packaging materials, the Company’s
ability to receive regulatory approvals for its products and other factors
described in Item 1A “Risk Factors” within this Form 10-Q.  Any
forward-looking statement speaks only as of the date on which it is made, and
the Company undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise.  New factors emerge from time to time and it is not
possible for the Company to predict which will arise.  In addition,
the Company cannot assess the impact of each factor on its business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.





For further details and a discussion of
these and other risks and uncertainties, investors are cautioned to review the
Cambrex 2008 Annual Report on Form 10-K, including the Forward-Looking Statement
section therein, and other filings with the U.S. 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.





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Item3.    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
2009.  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, 2008.





Item4.    Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





The
Company maintains a system of disclosure controls and procedures designed to
provide reasonable assurance that information required to be disclosed by the
Company in reports that it files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms.  Disclosure controls are also
designed to reasonably assure that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.  Disclosure controls include components of internal
control over financial reporting, which consists of control processes designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements in accordance with generally
accepted accounting principles in the United States.





We have carried out an evaluation under
the supervision of, and with the participation of, our management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of March 31,
2009.  The Company’s management has concluded that the financial
statements included in this Form 10-Q are a fair presentation in all material
respects the Company’s financial position, results of operations and cash flows
for the periods presented in conformity with generally accepted accounting
principles.





There are inherent limitations to the
effectiveness of any system of disclosure controls and procedures, including the
possibility of human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls and procedures
can only provide reasonable assurance of achieving their control
objectives.





Changes
in Internal Control Over Financial Reporting





There were no significant changes in
the Company’s internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting during the quarter ended March 31,
2009.





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PART II - OTHER
INFORMATION





CAMBREX
CORPORATION AND SUBSIDIARIES





Item1.
            Legal
      Proceedings





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





Item1A.
            Risk
      Factors





Factors That May Affect Future
Results





The following risk factors and other
information included in this Quarterly Report on Form 10-Q should be carefully
considered.  If any of the following risks occur, the Company’s
business, financial condition, operating results and cash flows could be
materially adversely affected.  The risks and uncertainties described
below are not the only ones the Company faces.  Additionally, risks
and uncertainties not presently known to the Company or that it currently deems
immaterial also may impair its business, financial condition, operating results
and cash flows in the future.





Risks Relating to Cambrex’s
Business




Companies
may discontinue or decrease their usage of Cambrex’s services.





The Company has observed increasing
pressure on the part of its customers to reduce spending, including the use of
its services and products, as a result of negative macro-economic trends and
various market dynamics specifically affecting the pharmaceutical
industry.  These customers could discontinue or decrease their usage
of Cambrex’s services and products, including as a result of the global economic
slowdown.





New technologies, competition or a
reduction in demand for Cambrex’s products could reduce sales.





The
markets for the Company’s products are competitive and price
sensitive.  The Company’s competitors may lower prices on products in
the future and the Company may, in certain cases, respond by lowering its
prices.  Conversely, failure to anticipate and respond to price
competition may hurt Cambrex’s market share. Some of the Company’s competitors
also have significant financial, operational, sales and marketing resources, and
experience in research and development (“R&D”) which may reduce the
Company’s level of business.  Companies may develop new technologies
that would compete with the Company’s products or render its products
obsolete.  Several of Cambrex’s customers, especially those that buy
its generic active pharmaceutical ingredients, have internal capabilities
similar to Cambrex’s.  In addition, demand for the Company’s products
may weaken due to a reduction in R&D budgets, loss of distributors or other
factors.





The
Company believes that customers in its markets display loyalty to their initial
supplier of a particular product.  Therefore, it may be difficult to
generate sales to potential customers who have purchased products from
competitors.  To the extent the Company is unable to be the first to
develop and supply new products, its competitive position may
suffer.





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The
Company’s failure to obtain new contracts or renew existing contracts may
adversely affect its business.





Many of Cambrex’s contracts are
short-term in duration.  As a result, the Company must continually
replace its contracts with new contracts to sustain its revenue.  In
addition, certain of the Company’s long-term contracts may be cancelled or
delayed by clients for any reason upon notice.  The Company currently
has a long-term sales contract that accounts for approximately 10% of annual
sales that is scheduled to expire at the end of 2013.  There is no
guarantee that this contract will be renewed.  The Company also has a
contract for certain drug delivery products that accounted for nearly 4% of
annual sales in 2008 that expires in September of 2009.  The Company
has recently received notification that its customer has filed an objection to
the Company’s patent in the European Union related to the products sold under
this contract. The customer is also seeking a patent for a competing product in
certain jurisdictions including the European Union. The Company currently
believes it has enforceable intellectual property rights and it intends to
enforce these rights. While the outcome of these actions is uncertain, should
the customer’s objection or patent application be successful, it would
unfavorably impact contract renewal negotiations including, among other things,
terms related to sales volumes and pricing compared to the existing
contract.





Failure
to obtain products and raw materials from third-party manufacturers could affect
Cambrex’s ability to manufacture and deliver its products.





The
Company relies on third-party manufacturers to supply many of its raw materials
and intermediates.  In addition, the Company has a single source for
supplies of some raw materials to its products.  Manufacturing
problems may occur with these and other outside sources.  If such
problems occur, the Company cannot ensure that it will be able to manufacture
its products profitably or on time.





Disruptions
to the Company’s manufacturing operations could adversely affect its
results.





Due to
heavy reliance on manufacturing and related operations to produce and distribute
the products the Company sells, the Company could be adversely affected by
disruptions of these operations.  Any significant disruption of those
operations for any reason, such as labor unrest, power interruptions, fire, or
other events beyond the Company’s control could adversely affect its sales and
customer relationships and therefore adversely affect its business. While
insurance coverage may reimburse the Company, in part, for profits lost from
such disruptions, any sustained reduction in the Company’s ability to provide
these products would negatively impact its sales growth expectations, cash flows
and profitability.





Failure
to win early stage business opportunities can cause difficulty in winning future
opportunities with that customer.




Certain
products the Company sells are incorporated into its customers’ drug
manufacturing processes. In some cases, once a customer chooses a particular
product for use in a drug manufacturing process, it is unlikely that the
customer will later switch to a competing alternative. In many cases, the
regulatory approvals related to a drug product will specify the products
qualified for use in its making. Obtaining the regulatory approvals needed for a
change in the manufacturing process is time consuming, expensive and uncertain.
Accordingly, if a customer does not select the Company’s products or services
early in its manufacturing design phase for any number of reasons, the Company
may lose the opportunity to participate in the customer’s manufacturing of such
product. Because the Company faces competition in this market from other
companies, it is at risk that its competitors could win significant early
business with customers making it difficult for the Company to recover
late-stage opportunities with higher volumes.




Litigation
may harm the Company or otherwise negatively impact its management and financial
resources.





Complex
or extended litigation could cause the Company to incur large expenditures and
distract its management.  For example, lawsuits by employees,
stockholders, counterparties to acquisition and divestiture contracts,
collaborators, distributors, customers, or end-users of the Company’s products
or services could be very costly and substantially disrupt its
business.  Disputes from time to time with such companies or
individuals are not uncommon, and the Company cannot be assured that it will
always be able to resolve such disputes out of court or on terms favorable to
the Company.





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Refer to
Note 11 for a discussion of the Company’s environmental and legal
matters.





Incidents
related to hazardous materials could adversely affect the Company.





Portions
of the Company’s operations require the controlled use of hazardous
materials.  Although the Company is diligent in designing and
implementing safety procedures to comply with the standards prescribed by
federal, state, local and foreign regulations, including the European
Commission’s Registration, Evaluation and Authorization of Chemicals (“REACH”)
regulation, the risk of accidental contamination of property or injury to
individuals from these materials cannot be completely eliminated.  In
the event of such an incident, the Company could be liable for any damages which
could adversely affect its business.  Additionally, any incident could
shut down the Company’s research and manufacturing facilities and
operations.





The
Company generates waste that must be transported to approved storage, treatment
and disposal facilities.  The transportation and disposal of such
waste are required to meet applicable state and federal statutes and
regulations.  The storage, treatment and disposal of such waste
potentially exposes the Company to environmental liability if, in the future,
such transportation and disposal are deemed to have violated such statues or
regulations or if the storage, treatment and disposal facilities are inadequate
and are proved to have damaged the environment.





The
Company is also party to several environmental remediation investigations and
cleanups and, along with other companies, has been named a potentially
responsible party for certain waste disposal sites.





Refer to
Note 11 for a discussion of the Company’s environmental and legal
matters.





Potential
product liability claims, errors and omissions claims in connection with
services the Company performs and potential liability under indemnification
agreements between the Company and its officers and directors could adversely
affect the Company.





The
Company manufactures products intended for use by the public.  These
activities could expose the Company to risk of liability for personal injury or
death to persons using such products, even though the Company does not presently
market or sell the products to end users.  The Company seeks to reduce
its potential liability through measures such as contractual indemnification
provisions with clients (the scope of which may vary from client-to-client, and
the performances of which are not secured), exclusion of services requiring
diagnostic or other medical services, and insurance maintained by
clients.  The Company could be materially and adversely affected if it
were required to pay damages or incur defense costs in connection with a claim
that is outside the scope of the indemnification agreements, if the indemnity,
although applicable, is not performed in accordance with its terms or if the
Company’s liability exceeds the amount of applicable insurance or
indemnity.  In addition, the Company could be held liable for errors
and omissions in connection with the services it performs.  The
Company currently maintains product liability and errors and omissions insurance
with respect to these risks.  There can be no assurance, however, that
the Company’s insurance coverage will be adequate or that insurance coverage
will continue to be available on terms acceptable to the Company.





The
Company also indemnifies its officers and directors for certain events or
occurrences while the officer or director is, or was, serving at the Company’s
request in such capacity.  The maximum potential amount of future
payments the Company could be required to make under these indemnification
agreements is unlimited; however, the Company has a Director and Officer
insurance policy that covers a portion of any potential exposure.  The
Company could be materially and adversely affected if it were required to pay
damages or incur legal costs in connection with a claim above its insurance
limits.





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While
the Company has what it believes to be adequate insurance coverage, any claims
beyond its insurance coverage may result in substantial costs and a reduction in
its available capital resources.




The
Company maintains property insurance policies covering physical damage to its
equipment, facilities, buildings and inventory; employer’s liability insurance
generally covering death or work injury of employees; product liability
insurance covering product liability claims arising from the use, consumption or
operation of its products; public liability insurance covering certain incidents
to third parties that occur on or in the premises of the company; business
interruption insurance and directors and officers liability insurance, among
others.  The Company does not maintain key man life insurance on any
of its senior management or key personnel.  The Company’s insurance
coverage, however, may not be sufficient to cover any claim for product
liability, damage to its fixed assets or injury to its employees.




Loss
of key personnel could hurt the Company.





The
Company depends on its ability to attract and retain qualified scientific and
technical employees as well as a number of key executives.  There can
be no assurance the Company will be able to retain key personnel, or to attract
and retain additional qualified employees.  The Company’s inability to
attract and retain key personnel would have a material adverse effect on the
Company’s business.





The
Company has made significant capital investments to its facilities to meet its
potential future needs and, as a result, the Company depends on the success of
attracting new and retaining existing customers’ projects and their continued
business.




The
Company has recently made substantial investments in all of its manufacturing
facilities.  With the completion of these new facilities, the
Company’s fixed costs have increased.  If the Company is not able to
utilize the facilities to capacity, its margins could be adversely
affected.




Global
growth is subject to a number of economic risks.




The
current global economy affects businesses such as Cambrex’s in a number of
ways.  The current equity market and tightening of credit in financial
markets adversely affects the ability of the Company’s customers to obtain
financing for significant purchases and operations and could result in a
decrease in or cancellation of orders for its products and services as well as
impact the ability of the Company’s customers to make payments. The Company
believes that cash flows from operations, along with funds available from a
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.  Given the current state of the worldwide
credit markets, there is a risk that the funds available to be drawn under the
Company’s revolving line of credit may not be available in the event of the
failure of one or more participant banks.  Strengthening of the rate
of exchange for the U.S. dollar against certain major currencies such as the
Euro, Swedish krona and other currencies also adversely affects the Company’s
results.




The
Company has a significant amount of debt.





The
Company has a $200,000 revolving credit facility of which $127,000 was
outstanding at March 31, 2009.  This facility expires in April of
2012.  If the Company is unable to generate sufficient cash flow or
otherwise obtain funds necessary to make required payments on the credit
facility, it will be in default.  This current debt arrangement
requires the Company to comply with specified financial ratios. The Company’s
ability to comply with these ratios may be affected by events beyond its
control.





Even if the Company is able to meet its
debt service obligations, the amount of debt it has could adversely affect the
Company by limiting its ability to obtain any necessary financing in the future
for working capital, capital expenditures, debt service requirements, or other
purposes.  It also places the Company at a disadvantage relative to
its competitors who have lower levels of debt, while making it more vulnerable
to a downturn in its business or the economy in general.  It also
requires the Company to use a substantial portion of its cash to pay principal
and interest on its debt, instead of investing those funds in the
business.





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The
Company’s liquidity, business, financial condition, results of operations and
cash flows could be materially and adversely affected if the financial
institutions which hold its funds fail.




The
Company has significant funds held in bank deposits, money market funds and
other accounts at certain financial institutions.  A significant
portion of the funds held in these accounts exceed insurable
limits.  If any of the financial institutions where the Company has
deposited funds were to fail, the Company may lose some or all of its deposited
funds that exceed the insurance coverage limit. Such a loss would have a
material and adverse effect on the Company’s liquidity, business, financial
condition, results of operations and cash flows.




A
payment failure by any large customer or multiple smaller customers could
adversely affect the Company’s cash flows and profitability.




Historically,
the Company has not experienced any significant bad debt or collection problems,
but such problems may arise in the future. The failure of any of the Company’s
customers to make timely payments could require the Company to write off
accounts receivable or increase provisions made against its accounts receivable,
either of which could adversely affect the Company’s cash flows and
profitability.




The
Company has significant inventories on hand.




The
Company maintains significant inventories and has an allowance for slow-moving
and obsolete inventory. Any significant unanticipated changes in future product
demand or market conditions, including the current uncertainty in the global
market, could also have an impact on the value of inventory and adversely impact
the Company’s results of operations.




International
unrest or foreign currency fluctuations could adversely affect the Company’s
results.





The
Company’s international revenues, which include revenues from its non-U.S.
subsidiaries and export sales from the U.S., represent the majority of its
product revenues.





There are
a number of risks arising from the Company’s international business,
including:





·
            the
      possibility that unfriendly nations or groups could boycott its
      products;




·
            general
      economic and political conditions in the markets in which it
      operate;




·
            potential
      increased costs associated with overlapping tax
  structures;




·
            more
      limited protection for intellectual property rights in some
      countries;




·
            unexpected
      changes in regulatory requirements;




·
            the
      difficulties of compliance with a wide variety of foreign laws and
      regulations;




·
            longer
      accounts receivable cycles in certain foreign countries;
    and




·
            import
      and export licensing requirements.





In
addition, a significant portion of the Company’s business is conducted in
currencies other than the U.S. dollar, which is its reporting
currency.  The Company recognizes foreign currency gains or losses
arising from its operations in the period incurred.  As a result,
currency fluctuations between the U.S. dollar and the currencies in which the
Company does business have caused, and will continue to cause, foreign currency
transaction gains and losses.  The Company cannot predict the effects
of exchange rate fluctuations upon its future operating results because of the
number of currencies involved, the variability of currency exposures, and the
potential volatility of currency exchange rates.  The Company engages
in limited foreign exchange hedging transactions to mitigate the impact of this
volatility on its operations, but its strategies are short-term in nature and
may not adequately protect its operating results from the full effects of
exchange rate fluctuations.





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Cambrex’s operating results may
unexpectedly fluctuate in future periods.





The
Company’s revenue and operating results have fluctuated, and could continue to
fluctuate, on a quarterly basis.  The operating results for a
particular quarter may be lower than expected as a result of a number of
factors, including, but not limited to, the timing of contracts; the delay or
cancellation of a contract; the mix of services provided; seasonal slowdowns in
different parts of the world; the timing of start-up expenses for new services
and facilities; changes in government regulations; and unfavorable exchange
rates with the U.S. dollar.  Because a high percentage of the
Company’s costs are relatively fixed in the short term, such as the cost of
maintaining facilities and compensating employees, any one of these factors
could have a significant impact on the Company’s quarterly
results.  In some quarters, the Company’s revenue and operating
results may fall below the expectations of securities analysts and investors due
to any of the factors described above.  If such event occurred, sales
of common stock by existing holders would cause the trading price of the
Company’s common stock to decline, even if the decline in revenue did not have
any long-term adverse implications for the Company’s business.





The
possibility the Company will be unable to protect its technologies could affect
its ability to compete.





The
Company’s success depends to a significant degree upon its ability to develop
proprietary products and technologies.  However, the Company cannot be
assured that patents will be granted on any of its patent
applications.  The Company also cannot be assured that the scope of
any of its issued patents will be sufficiently broad to offer meaningful
protection.  The Company has patents issued in selected countries,
therefore, third parties can make, use, and sell products covered by its patents
in any country in which the Company does not have patent
protection.  In addition, issued patents or patents the Company
licenses could be successfully challenged, invalidated or circumvented so that
its patent rights would not create an effective competitive
barrier.  The Company provides its customers the right to use its
products under label licenses that are for research purposes
only.  These licenses could be contested, and the Company cannot be
assured that it would either be aware of an unauthorized use or be able to
enforce the restrictions in a cost-effective manner.





If a
third party claimed an intellectual property right to technology the Company
uses, it may need to discontinue an important product or product line, alter its
products and processes, defend its right to use such technology in court or pay
license fees.  Although the Company may, under these circumstances,
attempt to obtain a license to such intellectual property, it may not be able to
do so on favorable terms, or at all.  Additionally, if Cambrex’s
products are found to infringe on a third party’s intellectual property, the
Company may be required to pay damages for past infringement, and lose the
ability to sell certain products or receive licensing revenues.





The
Company could be subject to goodwill impairment charges in the
future.





Under
Statement of Financial Accounting Standard No. 142 “Goodwill and Other
Intangible Assets”, the Company is required to evaluate goodwill for impairment
at least annually.  If the Company
determines that the fair value is less than the carrying value, an impairment
loss will be recorded in the Company’s
statement of operations.  The determination of fair value is a highly
subjective exercise and can produce significantly different results based on the
assumptions used and methodologies employed.  If the Company’s
projected long-term sales growth rate, profit margins or terminal rate are
considerably lower and/or the assumed weighted average cost of capital is
considerably higher, future testing may indicate impairment and the Company
would have to record a non-cash goodwill impairment loss in its statement of
operations.





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Assessments
by various tax authorities may be materially different than the Company has
provided for and it may experience significant volatility in its annual and
quarterly effective tax rate.





As a
matter of course, the Company is regularly audited by federal, state, and
foreign tax authorities.  From time to time, these audits result in
proposed assessments.  In recent years, the Company utilized
significant tax attributes in the form of foreign tax credits and U.S. net
operating loss carryforwards to reduce or eliminate potential tax expense
related to the repatriation of funds into the U.S. resulting from the 2005 Jobs
Creation Act and from the sale of the businesses that comprised the Bioproducts
and Biopharma segments in 2007.  While the Company believes that it
has adequately provided for any taxes related to these items, and taxes related
to all other aspects of its business, any such assessments or future settlements
may be materially different than it has provided.





The
Company may pursue transactions that may cause it to experience significant
charges to earnings that may adversely affect its stock price and financial
condition.





The Company regularly reviews potential
transactions related to technologies, products, product rights and businesses
complementary to its business.  These transactions could include
mergers, acquisitions, divestitures, strategic alliances or licensing
agreements.  In the future, the Company may choose to enter into these
transactions at any time.  As a result of acquiring businesses or
entering into other significant transactions, the Company may experience
significant charges to earnings for merger and related expenses.  If
the Company is not able to successfully integrate the acquired business to
create the advantages the acquisition was intended to create, it may affect the
Company’s results of operations and the market price of its common
stock.  Furthermore, if the Company is unable to improve the operating
margins of acquired businesses or operate them profitably, it may be unable to
achieve its growth strategy.





If
the Company does not meet the New York Stock Exchange’s continued listing
requirement, its common stock may be de-listed.





The New
York Stock Exchange’s (“NYSE”) continued listing standards require the Company
to maintain an average market capitalization over a consecutive 30 day trading
period of $75,000 or shareholders’ equity of $75,000, among other
requirements.  In April 2009, the NYSE notified the Company that it
was not in compliance with the continued listing requirements.  If the
Company does not submit an acceptable plan, within 45 days of the notice of
noncompliance, to regain compliance, or does not comply with the requirement
regarding market capitalization or shareholders’ equity within 18 months of the
NYSE’s notice, the NYSE will commence suspension and de-listing
procedures.





Delisting
is likely to have an adverse effect on the liquidity of the Company’s common
stock, and as a result the market price for the Company’s common stock might
become lower.  Although the Company intends to take actions designed
to bring its market capitalization and shareholders’ equity to the required
levels within the NYSE’s specified timeframe, the Company cannot assure that its
plan will be successful within the timeframe or at all.





The
Company has the option to explore alternative exchanges on which to list its
stock, but there are no assurances that such listing privileges would be granted
in a timely manner.





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Risks Related to Cambrex’s
Industry




Any
significant change in government regulation of the drug development process
could have a material adverse effect on the Company.




The
manufacturing of pharmaceutical products is subject to extensive regulation by
governmental authorities, including the Food and Drug Administration (“FDA”) and
comparable regulatory authorities in other countries.  The Company’s
business, as well as its customer’s business depends in part on strict
government regulation of the drug development process.  Legislation
may be introduced and enacted from time to time to modify regulations
administered by the FDA and governing the drug approval process.  Any
significant reduction in the scope of regulatory requirements or the
introduction of simplified drug approval procedures could have a material
adverse effect on the Company’s business.





Violations of cGMP and other government
regulations could have a material adverse effect on the Company.





All
facilities and manufacturing techniques used for manufacturing products for
clinical use or for commercial sale in the United States must be operated in
conformity with current Good Manufacturing Practices (“cGMP”) regulations as
required by the FDA and other comparable regulatory authorities in other
countries and for certain products, the Drug Enforcement Agency.  The
Company’s facilities are subject to scheduled periodic regulatory and customer
inspections to ensure compliance with cGMP and other requirements applicable to
such products.  A finding that the Company had materially violated
these requirements could result in regulatory sanctions, the loss of a customer
contract, the disqualification of data for client submissions to regulatory
authorities and a mandated closing of the Company’s facilities.  Any
such violations would have a material adverse effect on the Company’s
business.  Cambrex’s customers are typically subject to  the
same, or similar, regulations and any such violations or other actions by
regulatory agencies, including, but not limited to, plant shutdowns or product
recalls, that eliminate or reduce the Company’s sale of it’s products or
services could negatively impact the Company’s business.




The
outsourcing trend in the preclinical and clinical stages of drug research and
development may decrease, which could slow the Company’s growth.




The
success of the Company’s business depends to a certain extent on the number of
contracts and the size of the contracts that it may obtain from pharmaceutical
companies. Over the past several years, the Company has benefited from increased
levels of outsourcing by pharmaceutical companies of their drug R&D
activities. A slowing of the outsourcing trend could result in a diminished
growth rate in the Company’s sales and adversely affect its business, financial
condition and results of operations.




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Item4     Submission of Matters to a Vote
of Security Holders





1.
            At
      the Annual Meeting of Stockholders held on April 23, 2010, six Directors
      in Class I and III were elected to hold office as Directors of the Company
      until the 2010 Annual Meeting of
  Stockholders.





Nominees
                
                Votes For
                
                Votes WithheldDavid
      R. Bethune
                
                26,970,860
                
                936,638Kathryn
      Rudie Harrigan
                
                27,406,023
                
                501,475Steven
      M. Klosk
                
                27,430,233
                
                477,265William
      B. Korb
                
                27,463,981
                
                443,517John
      R. Miller
                
                27,296,248
                
                611,250Peter
      Tombros
                
                27,125,384
                
                782,114





2.
            The
      Stockholders voted for the approval of the 2009 Long Term Incentive
      Plan.





Votes For
                    Votes Against
                    Votes Abstained22,812,542
                    1,791,807
                    9,872
 
 3.
              Also,
      the Stockholders voted for the appointment of BDO Seidman, LLP as the
      Company’s Registered Independent Public Accounting Firm for
      2009.
 
 Votes For
                    Votes Against
                    Votes Abstained27,789,712
                    39,778
                    78,008


Item6.    Exhibits





Exhibits





1.
            Exhibit 31.1 – Section 302 Certification Statement
      of the Chief Executive Officer.


2.
            Exhibit 31.2 – Section 302 Certification Statement
      of the Chief Financial Officer.


3.
            Exhibit 32 – Section 906 Certification Statements of
      the Chief Executive Officer and Chief Financial
  Officer.





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 Table of Contents





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
      CORPORATIONBy
                            /s/ Gregory P. SargenGregory
      P. SargenVice
      President and Chief Financial Officer(On
      behalf of the Registrant and as the Registrant's
      Principal Financial
Officer)








Dated:  May
6, 2009






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