UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

for the quarterly period ended September 30, 2005

[ ] 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 (I.R.S. Employer
incorporation or organization) 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 X No
----- -----

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes X No
----- -----

As of October 31, 2005, there were 26,674,828 shares outstanding of the
registrant's Common Stock, $.10 par value.

CAMBREX CORPORATION AND SUBSIDIARIES

FORM 10-Q

For The Quarter Ended September 30, 2005
Table of Contents

Page No.
--------

Part I Financial information

Item 1. Financial Statements (Unaudited)

Consolidated balance sheets as of
September 30, 2005 and December 31, 2004 2

Consolidated income statements for the
three months and nine months ended September 30,
2005 and 2004 3

Consolidated statements of cash flows
for the nine months ended September 30, 2005 and
2004 4

Notes to unaudited consolidated financial
statements 5-20

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 21-29

Item 4. Controls and Procedures 30

Part II Other information

Item 1. Legal Proceedings 31

Item 2. Changes in Securities and Use of Proceeds 31

Item 4. Matters Submitted to a Vote of Securities Holders 31

Item 6. Exhibits 31

Signatures 32

Part 1 - FINANCIAL INFORMATION

CAMBREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)

September 30, December 31,
2005 2004
------------- ------------

ASSETS
Current assets:
Cash and cash equivalents ........................... $ 32,760 $ 91,532
Trade receivables, net .............................. 63,793 68,370
Inventories, net .................................... 101,716 91,039
Deferred tax assets ................................. 4,806 2,605
Prepaid expenses and other current assets ........... 21,896 20,825
-------- --------
Total current assets ............................. 224,971 274,371
Property, plant and equipment, net ..................... 258,446 280,790
Goodwill ............................................... 172,471 176,275
Other intangible assets, net ........................... 52,854 54,381
Other assets ........................................... 5,550 6,168
-------- --------
Total assets ..................................... $714,292 $791,985
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 34,746 $ 38,552
Accrued liabilities ................................. 48,925 51,504
Short-term debt and current portion of long-term
debt ............................................. 2,072 1,400
-------- --------
Total current liabilities .............................. 85,743 91,456

Long-term debt ......................................... 183,257 226,187
Deferred tax liabilities ............................... 20,383 21,686
Other non-current liabilities .......................... 57,863 61,340
-------- --------
Total liabilities ................................ $347,246 $400,669
-------- --------
Stockholders' equity:
Common stock, $.10 par value; authorized 100,000,000,
issued 28,942,241 and 28,825,603 shares at
respective dates ................................. 2,894 2,883
Additional paid-in capital .......................... 216,958 213,120
Retained earnings ................................... 184,550 175,804
Treasury stock, at cost 2,438,253 and 2,593,129
shares at respective dates ....................... (20,725) (21,991)
Deferred compensation ............................... (3,833) (1,982)
Accumulated other comprehensive (loss)/income ....... (12,798) 23,482
-------- --------
Total stockholders' equity ....................... 367,046 391,316
-------- --------
Total liabilities and stockholders' equity ....... $714,292 $791,985
======== ========

See accompanying notes to unaudited consolidated financial statements.

CAMBREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(unaudited)
(in thousands, except per-share data)

Three months ended Nine months ended
September 30, September 30,
------------------- --------------------
2005 2004 2005 2004
-------- -------- -------- ---------

Gross sales ................................... $104,500 $ 99,250 $331,133 $ 321,750
Commissions & allowances ................... 1,031 620 3,696 2,278
-------- -------- -------- ---------
Net sales ..................................... 103,469 98,630 327,437 319,472
Other revenues ............................. 1,116 1,706 5,827 6,545
-------- -------- -------- ---------
NET REVENUES .................................. 104,585 100,336 333,264 326,017
Cost of goods sold ............................ 67,763 61,142 212,910 199,346
-------- -------- -------- ---------
GROSS PROFIT .................................. 36,822 39,194 120,354 126,671
Operating expenses:
Selling, general and
administrative expenses ................. 25,825 25,668 77,640 77,530
Research and development expenses .......... 4,862 4,520 16,601 13,936
Goodwill impairment ........................ -- 48,720 -- 48,720
Other, net ................................. -- -- -- (1,863)
-------- -------- -------- ---------
Total operating expenses ................ 30,687 78,908 94,241 138,323

OPERATING PROFIT/(LOSS) ....................... 6,135 (39,714) 26,113 (11,652)
Other expenses:
Interest expense, net ...................... 2,801 2,854 8,282 8,471
Other (income)/expense ..................... (25) (209) 72 (61)
-------- -------- -------- ---------
Income/(loss) from continuing operations before
income taxes ............................... 3,359 (42,359) 17,759 (20,062)
Provision for income taxes ................. 3,407 2,502 6,637 10,701
-------- -------- -------- ---------
(LOSS)/INCOME FROM CONTINUING OPERATIONS ...... $ (48) $(44,861) $ 11,122 $ (30,763)

DISCONTINUED OPERATIONS
Loss from discontinued operations ............. -- (236) -- (978)
-------- -------- -------- ---------
Net (loss)/income ............................. $ (48) $(45,097) $ 11,122 $ (31,741)
======== ======== ======== =========
Basic earnings per share:
(Loss)/income from continuing operations ... $ (0.00) $ (1.72) $ 0.42 $ (1.18)
Loss from discontinued operations .......... -- (0.01) -- (0.04)
-------- -------- -------- ---------
Net (loss)/income .......................... $ (0.00) $ (1.73) $ 0.42 $ (1.22)
Diluted earnings per share:
(Loss)/income from continuing operations ... $ (0.00) $ (1.72) $ 0.42 $ (1.18)
Loss from discontinued operations .......... -- (0.01) -- (0.04)
-------- -------- -------- ---------
Net (loss)/income .......................... $ (0.00) $ (1.73) $ 0.42 $ (1.22)

Weighted average shares outstanding:
Basic ...................................... 26,418 26,109 26,389 26,074
Effect of dilutive stock options ........... -- -- 161 --
-------- -------- -------- ---------
Diluted .................................... 26,418 26,109 26,550 26,074

Cash Dividends paid per share .............. $ 0.03 $ 0.03 $ 0.09 $ 0.09
======== ======== ======== =========

See accompanying notes to unaudited consolidated financial statements.

CAMBREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

Nine months ended
September 30,
--------------------
2005 2004
--------- --------

Cash flows from operating activities:
Net income/(loss) .................................. $ 11,122 $(31,741)
Depreciation and amortization ...................... 29,312 30,775
Stock based compensation included in net income .... 25 312
Goodwill impairment ................................ -- 48,720
Deferred income tax provision ...................... -- 468
Allowance for doubtful accounts .................... 870 (364)
Inventory reserve .................................. 4,719 2,708
Changes in assets and liabilities:
Receivables ..................................... (1,336) 1,997
Inventories ..................................... (22,733) (10,556)
Prepaid expenses and other current assets ....... (3,789) (3,248)
Accounts payable and accrued liabilities ........ 1,139 4,515
Other non-current assets and liabilities ........ 1,018 (4,175)
Discontinued operations:
Changes in operating assets and liabilities ..... -- (1,073)
--------- --------
Net cash provided by operating activities ............. 20,347 38,338
--------- --------
Cash flows from investing activities:
Capital expenditures ............................... (27,987) (27,749)
Other investing activities ......................... 1,303 (337)
--------- --------
Net cash used in investing activities ................. (26,684) (28,086)
--------- --------
Cash flows from financing activities:
Dividends paid ..................................... (2,376) (2,330)
Net increase in short-term debt .................... 636 126
Long-term debt activity (including current portion):
Borrowings ...................................... 124,129 64,750
Repayments ...................................... (166,958) (56,767)
Proceeds from stock options exercised .............. 1,521 4,005
Purchase of treasury stock ......................... (75) (219)
--------- --------
Net cash (used in)/provided by financing activities ... (43,123) 9,565
--------- --------
Effect of exchange rate changes on cash ............... (9,312) (350)
--------- --------
Net (decrease)/increase in cash and cash equivalents .. (58,772) 19,467
--------- --------
Cash and cash equivalents at beginning of period ...... 91,532 64,294
--------- --------
Cash and cash equivalents at end of period ............ $ 32,760 $ 83,761
========= ========

See accompanying notes to unaudited consolidated financial statements.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per-share data)

(1) BASIS OF PRESENTATION

Unless otherwise indicated by the context, "Cambrex" or the "Company" means
Cambrex Corporation and its 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
presentation of financial position and results of operations in conformity with
generally accepted accounting principles. These interim financial statements
should be read in conjunction with the financial statements for the year ended
December 31, 2004.

The results of operations for the three months and nine months ended
September 30, 2005 are not necessarily indicative of the results to be expected
for the full year.

Certain reclassifications have been made in prior year amounts to conform
to the current year presentation.

(2) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Inventory Costs

In November 2004, the Financial Accounting Standards Board ("FASB")
published SFAS No. 151 "Inventory Costs - an amendment of ARB No. 43, Chapter
4". SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, "Inventory
Pricing" to clarify the accounting for abnormal amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage). This Statement
requires that those items be recognized as current-period charges regardless of
whether they meet the criteria of "so abnormal". In addition, this Statement
requires that allocation of fixed production overheads to the cost of conversion
be based on the normal capacity of the production facility. This Statement will
be effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. The Company is reviewing SFAS No. 151 to determine its impact on
the Company's financial position or results of operations.

Share-Based Payment

In December 2004, the FASB published SFAS No. 123R (revised 2004)
"Share-Based Payment". SFAS No. 123R supersedes APB Opinion No. 25 "Accounting
for Stock Issued to Employees" and its related implementation guidance. This
Statement eliminates the alternative to use APB Opinion No. 25's intrinsic value
method of accounting that was provided in Statement No. 123 as originally
issued. This Statement requires entities to recognize the cost of employee
services received in exchange for awards of equity instruments based on the
grant-date fair value of those awards (with limited exceptions). This Statement
applies to all awards granted after the required effective date and to awards
modified, repurchased, or cancelled after that date. The cumulative effect of
initially applying this Statement, if any, is recognized as of the required
effective date and is based on the transition methodology applied. The Company
will adopt SFAS 123R effective January 1, 2006 and is in the process of
reviewing the implementation and determining its transition methodology. As
discussed in Note 4, during the second quarter 2005 the Company accelerated the
vesting of options with an exercise price greater than or equal to $18.675 which
will eliminate approximately $9,211 of expense which would have been recognized
in 2006 and beyond under SFAS No 123R.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except per-share data)

(2) IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Conditional Asset Retirement Obligations

In March 2005, the FASB issued Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN 47"). This Statement clarifies
the meaning of the term "conditional asset retirement" as used in Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" and clarifies when an entity has sufficient information to
reasonably estimate the fair value of an asset retirement obligation. FIN 47
requires the accelerated recognition of certain asset retirement obligations
when the fair value of such obligation can be estimated. FIN 47 becomes
effective for the Company in the fourth quarter of 2005. The Company is
currently evaluating the effect of adoption of this Statement.

(3) WEIGHTED AVERAGE SHARES OUTSTANDING

Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
------ ------ ------ ------

Weighted average shares outstanding:
Basic ................................. 26,418 26,109 26,389 26,074
Effect of dilutive stock options ...... -- -- 161 --
------ ------ ------ ------
Diluted ............................... 26,418 26,109 26,550 26,074

In the three months ended September 30, 2005 and 2004, 131 and 243 shares,
respectively, were excluded from the computation of diluted earnings per share
due to their anti-dilutive effect. In the nine months ended September 30, 2004,
357 shares were excluded from the computation of diluted earnings per share due
to their anti-dilutive effect.

(4) STOCK BASED COMPENSATION

At September 30, 2005, the Company has seven active stock-based employee
compensation plans in effect. The Company applies the provisions of APB Opinion
No. 25 and related Interpretations in accounting for its stock-based
compensation plans. Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" (SFAS 123) amended by FAS 148
establishes financial accounting and reporting standards for stock-based
employee compensation plans. The Company has adopted the disclosure only
provisions available under SFAS 123. Accordingly, no compensation has been
recognized for stock option plans under SFAS 123.

On June 1, 2005, the Company accelerated the vesting of stock options held
by all current employees and all executive officers having an exercise price of
$18.675 or greater granted under The 1996 Performance Stock Option Plan, The
1998 Stock Option Plan, The 2000 Non-Executive Stock Option Plan, The 2001
Performance Stock Option Plan, The 2003 Performance Stock Option Plan and The
2004 Omnibus Incentive Plan. Except for the 2000 Non-Executive Stock Option Plan
(for which shareholder approval was not required), the Plans identified above
were approved by the Company's shareholders.

Options to purchase approximately 2,000,000 shares of the Company's common
stock were subject to the acceleration. The Company has imposed a holding period
that will require all employees and executive officers to refrain from selling
shares acquired upon the exercise of these options until the date on which the
exercise would have been permitted under the option's original vesting terms or,
if earlier, the expiration date due to retirement.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except per-share data)

(4) STOCK BASED COMPENSATION (CONTINUED)

The acceleration eliminates future compensation expense the Company would
otherwise recognize in its consolidated statement of operations with respect to
these options once the Statement of Financial Accounting Standards No. 123(R)
"Share-Based Payment", issued by the FASB is implemented for reporting periods
beginning January 1, 2006.

Cambrex senior executives participate in a long-term incentive plan which
rewards achievement of long-term strategic goals with restricted stock units.
Awards are made annually to key executives and vest in one-third increments on
the first, second and third anniversaries of the grant. On the third anniversary
of the grant, restrictions on sale or transfer are removed and shares are issued
to executives. In the event of termination of employment, the participant is
entitled to the vested portion of the restricted stock units and forfeits the
remaining amount; the three-year restriction remains in place. For the three and
nine months ended September 30, 2005, the Company recorded $320 and $1,195
respectively, in compensation expense for this plan. For the three and nine
months ended September 30, 2004 the Company recorded $395 and $810 respectively,
in compensation expense for this plan. Shares are held in trust for the
restricted stock grants.

In May 2003, the former Chief Executive Officer ("CEO") was granted 150,000
incentive stock appreciation rights. In the fourth quarter 2003 these rights
vested and, as such, the former CEO is entitled to a cash settlement
representing the difference in value between the closing price of Cambrex stock
on the day of the grant, which was $19.30, and the closing price of Cambrex
stock on the day the rights are exercised. The former CEO retired on April 27,
2005. These rights terminate one year from this retirement date. These rights
will be marked to market until the rights are exercised or expire with the
amount being recorded as compensation expense or benefit in the applicable
period. In the three and nine months ended September 30, 2005, the Company
recorded $0 and $1,170, respectively, in compensation benefit. In the three and
nine months ended September 30, 2004, the Company recorded $492 and $498,
respectively in compensation benefit.

The following table illustrates the effect on net (loss)/income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS 123 to stock-based employee compensation, including the pro
forma expense recognized in conjunction with the acceleration of options on June
1, 2005.

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2005 2004 2005 2004
------- -------- ------- --------

Net (loss)/income, as reported ................. $ (48) $(45,097) $11,122 $(31,741)
Add: stock based compensation expense/
(benefit) included in reported net (loss)/
income ...................................... 320 (97) 25 312
Deduct: stock-based compensation
expenses determined using fair value
method ...................................... 853 1,594 16,859 3,801
------- -------- ------- --------
Proforma net loss .............................. $ (581) $(46,788) $(5,712) $(35,230)

Proforma weighted average shares outstanding:
Basic ....................................... 26,418 26,109 26,389 26,074
Diluted ..................................... 26,418 26,109 26,389 26,074

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(4) STOCK BASED COMPENSATION (CONTINUED)

Earnings per share:
Basic - as reported..... $(0.00) $(1.73) $ 0.42 $(1.22)
Basic - proforma........ $(0.02) $(1.79) $(0.22) $(1.35)
Diluted - as reported... $(0.00) $(1.73) $ 0.42 $(1.22)
Diluted - proforma...... $(0.02) $(1.79) $(0.22) $(1.35)

The effect of stock options would be anti-dilutive under the FAS 123
calculation and is therefore excluded.

(5) GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended
September 30, 2005, are as follows:

Human
Bioproducts Biopharma Health
Segment Segment Segment Total
----------- --------- ------- --------

Balance as of January 1, 2005 ..... $55,306 $76,618 $44,351 $176,275
Translation effect ................ (857) -- (4,413) (5,270)
Purchase price adjustment for
Genolife ....................... 1,466 -- -- 1,466
------- ------- ------- --------
Balance as of September 30, 2005 .. $55,915 $76,618 $39,938 $172,471
======= ======= ======= ========

Other intangible assets that are not subject to amortization, consist of
the following:

As of As of
September 30, December 31,
2005 2004
------------- ------------

Proprietary Process .. $ 2,052 $ 1,675
Trademarks ........... 33,898 33,898
------- -------
Total ............. $35,950 $35,573
======= =======

Other intangible assets, which continue to be amortized, consist of the
following:

AS OF SEPTEMBER 30, 2005
--------------------------------------------
Gross Carrying Accumulated Net Carrying
Amount Amortization Amount
-------------- ------------ ------------

Product Technology .. $12,486 $(3,436) $ 9,050
Patents ............. 5,605 (1,585) 4,020
Supply Agreements ... 2,110 (1,097) 1,013
License Agreement ... 2,005 (288) 1,717
Other ............... 1,981 (877) 1,104
------- ------- -------
Total ............ $24,187 $(7,283) $16,904
======= ======= =======

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(5) GOODWILL AND INTANGIBLE ASSETS (CONTINUED)

AS OF DECEMBER 31, 2004
--------------------------------------------
Gross Carrying Accumulated Net Carrying
Amount Amortization Amount
-------------- ------------ ------------

Product Technology .. $13,230 $(2,574) $10,656
Patents ............. 5,433 (1,199) 4,234
Supply Agreements ... 2,110 (936) 1,174
License Agreement ... 836 (65) 771
Trademarks .......... 785 (236) 549
Other ............... 2,057 (633) 1,424
------- ------- -------
Total ............ $24,451 $(5,643) $18,808
======= ======= =======

Amortization expense for the three months and nine months ended September
30, 2005 was $511 and $1,718, respectively.

The expected amortization expense related to intangible assets is as
follows:

For the year ended December 31, 2005 ............... $2,125
For the year ended December 31, 2006 ............... $2,046
For the year ended December 31, 2007 ............... $1,994
For the year ended December 31, 2008 ............... $1,734
For the year ended December 31, 2009 ............... $1,552

The company experienced a decline in profitability during 2005 within the
Biopharma segment and at two reporting units within the Human Health segment,
with approximately $76 million and $10 million of goodwill, respectively. In
November 2005, a customer in the Biopharma segment announced that its drug, of
which the Company expected to be a primary supplier in the future, failed to
meet its primary endpoint in its confirmatory Phase III clinical trial. The
Company's goodwill impairment analysis, to be performed during the fourth
quarter, will include the declines in profitability during 2005 and the
uncertainty of the future impact of the Biopharma customer announcement and
increase the potential for future tangible and intangible asset impairment
charges.

(6) INCOME TAXES

The tax provision in the third quarter 2005 increased to 101.4% compared to
- -5.9% in the third quarter of 2004. The tax provision in the nine months ended
September 30, 2005 increased to 37.4% compared to -53.3% in the nine months
ended September 30, 2004, primarily due to the geographic mix of income.

The Company's domestic net deferred tax assets at September 30, 2005 were
primarily associated with net operating loss carryforwards, foreign tax credits,
research and experimentation tax credits and alternative minimum tax credits,
which are evaluated quarterly to assess the likelihood of realization. The
realization of these assets is ultimately dependent upon generating future
taxable income or implementing tax planning strategies prior to expiration of
those assets. Since September 30, 2003 the Company has maintained a full
valuation allowance against its domestic net deferred tax assets and will
continue to do so until an appropriate level of domestic 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 the domestic net
deferred assets would be realized. If the Company continues to report pre-tax
losses in the United States, income tax benefits associated with those losses
will not be recognized and, therefore, those losses would not be reduced by such
income tax benefits. Additionally, should domestic losses continue, it is
possible that tax planning strategies preserving certain

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(6) INCOME TAXES (CONTINUED)

domestic tax assets could be deemed inadequate, resulting in additional
valuation allowances in the future. The carryforward periods for foreign tax
credits, research and experimentation tax credits, net operating losses, and the
federal alternative minimum tax credits are 10 years, 20 years, 20 years and an
indefinite period, respectively. As such, improvements in domestic pre-tax
income in the future may result in these tax benefits ultimately being realized.
However, there is no assurance that such improvements will be achieved.

Within discontinued operations, the Company has also not recorded any
benefit related to the domestic loss generated by the operation or sale of
Rutherford Chemicals for the same reasons as those identified above.

On June 2, 2005, the Company adopted a Domestic Reinvestment Plan ("DRP")
as described under Section 965 of the Internal Revenue Code introduced by the
American Jobs Creation Act of 2004. The DRP states that the Company may
repatriate up to $209,000 and invest in permitted investments. For the three and
nine months ended September 30, 2005, the Company partially executed its DRP by
repatriating $4,687 and $54,687, respectively, in the form of dividends from its
foreign subsidiaries. Accordingly, an additional tax expense of $58 and $291 was
recorded through the three and nine months ended September 30, 2005. By virtue
of the dividend, the Company reduced its domestic deferred tax asset related to
net operating loss carryforwards by $36,466, and its alternative minimum tax
asset by $554 with corresponding adjustments to the full valuation allowances
previously recorded against these assets. The Company also utilized $1,351 of
currently generated Foreign Tax Credits as allowed under Section 965 of the
Internal Revenue Code.

The Company continues to evaluate repatriating further dividends and will
take into consideration additional guidance forthcoming from the Internal
Revenue Service. If the Company repatriates remaining available earnings and
profits of its foreign subsidiaries of approximately $37,000, it would record an
additional tax expense of approximately $196.

(7) INVENTORIES

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

Inventories at September 30, 2005 and December 31, 2004 consist of the
following:

September 30, December 31,
2005 2004
------------- ------------

Finished goods ......... $ 47,109 $45,002
Work in process .. .. .. 30,491 23,658
Raw materials .......... 19,241 17,222
Supplies ............... 4,875 5,157
-------- -------
Total ............... $101,716 $91,039
======== =======

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(8) LONG-TERM DEBT

Long-term debt at September 30, 2005 and December 31, 2004 consists of the
following:

September 30, December 31,
2005 2004
------------- ------------

Bank credit facilities .... $ 78,000 $120,000
Senior notes .............. 100,000 100,000
Capitalized leases ........ 6,411 7,280
Notes payable ............. 312 307
-------- --------
Subtotal ............... 184,723 227,587
Less: current portion ..... (1,466) (1,400)
-------- --------
Total .................. $183,257 $226,187
======== ========

The Company met all bank covenants for the first nine months of 2005 and
2004.

(9) COMPREHENSIVE INCOME

The following table shows the components of comprehensive loss for the
three and nine months ended September 30, 2005 and 2004:

For the three months For the nine months
ended September 30, ended September 30,
-------------------- -------------------
2005 2004 2005 2004
----- -------- -------- --------

Net (loss)/income .......................................... $ (48) $(45,097) $ 11,122 $(31,741)
Foreign currency translation ............................ 82 6,256 (34,815) (5,550)
Unrealized (loss)/gain on hedging contracts ............. (628) 352 (1,368) 922
Unrealized gain/(loss) on available for sale securities.. 38 16 (97) --
Minimum pension liability ............................... -- (15) -- (2,851)
----- -------- -------- --------
Total ................................................ $(556) $(38,488) $(25,158) $(39,220)
====== ========= ========= =========

(10) RETIREMENT PLANS

Domestic Pension Plans

The Company maintains two U.S. defined-benefit pension plans which cover
substantially all eligible employees: (1) the Nepera Hourly Pension Plan (the
"Nepera Plan") which covers the union employees at the formerly owned Harriman,
New York plant, and (2) the Cambrex Pension Plan (the "Cambrex Plan") which
covers all other eligible employees.

Generally, all employees hired after December 31, 2002 are not eligible for
these benefits.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(10) RETIREMENT PLANS (CONTINUED)

The components of net periodic pension cost for the Company's domestic
plans for the three and nine months ended September 30, 2005 and 2004 are as
follows:

Three Three Nine Nine
months months months months
ended ended ended Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------- ------------- ------------- -------------

COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost .......................... $ 688 $ 581 $ 2,064 $ 1,743
Interest cost ......................... 791 731 2,373 2,193
Expected return on plan assets ........ (735) (650) (2,205) (1,949)
Amortization of prior service cost .... 11 11 33 33
Recognized actuarial loss ............. 113 129 339 387
----- ----- ------- -------
Net periodic benefit cost ............. $ 868 $ 802 $ 2,604 $ 2,407
===== ===== ======= =======

The Company contributed $900 in cash to its two U.S. defined-benefit
pension plans in 2005.

The Company has two Supplemental Executive Retirement Plans (SERP) for key
executives. These plans are non-qualified and unfunded.

The components of net periodic pension cost for the Company's SERP Plans
for the three and nine months ended September 30, 2005 and 2004 are as follows:

COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost .......................... $ 56 $ 52 $168 $156
Interest cost ......................... 108 107 324 321
Amortization of unrecognized
transition obligation .............. 25 25 75 75
Amortization of prior service cost .... 1 1 3 3
Recognized actuarial loss ............. 10 12 30 36
---- ---- ---- ----
Net periodic benefit cost ............. $200 $197 $600 $591
==== ==== ==== ====

International Pension Plans

Certain foreign subsidiaries of the Company maintain pension plans for
their employees that conform to the common practice in their respective
countries. Based on local laws and customs, some of those plans are not funded.
For those plans that are funded, the amount in the trust supporting the plan is
actuarially determined and in compliance with local statutes, where applicable.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(10) RETIREMENT PLANS (CONTINUED)

The components of net periodic pension cost for the Company's international
plans for the three and nine months ended September 30, 2005 and 2004 are as
follows:

COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost .......................... $302 $217 $ 906 $ 651
Interest cost ......................... 282 222 846 732
Expected return on plan assets ........ (92) (71) (276) (213)
Amortization of unrecognized transition
benefit ............................ (13) (10) (39) (30)
Recognized actuarial loss ............. 59 19 177 57
Amortization of prior service cost .... (2) 7 (6) 71
---- ---- ------ ------
Net periodic benefit cost ............. $536 $384 $1,608 $1,268
==== ==== ====== ======

The Company expects to contribute approximately $669 in cash to its
international pension plans in 2005.

(11) OTHER POSTRETIREMENT BENEFITS

Cambrex provides postretirement health and life insurance benefits
("postretirement benefits") to certain eligible retired employees. Employees who
retire at or after age 55 with ten years of service are eligible to participate
in the postretirement benefit plans. The Company's responsibility for such
premiums for each plan participant is based upon years of service subject to an
annual maximum of one thousand dollars. Such plans are self-insured and are not
funded. Certain subsidiaries and all employees hired after December 31, 2002 are
not eligible for these benefits.

The components of net periodic benefit cost for the three and nine months
ended September 30, 2005 and 2004 are as follows:

COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost of benefits earned ....... $ 15 $ 13 $ 45 $ 39
Interest cost ......................... 38 37 114 111
Actuarial loss recognized ............. 29 29 87 87
Amortization of unrecognized prior
service cost ....................... (38) (38) (114) (114)
---- ---- ----- -----
Total periodic postretirement benefit
cost ............................... $ 44 $ 41 $ 132 $ 123
==== ==== ===== =====

(12) SEGMENT INFORMATION

The Company classifies its business units into three reportable segments:
Bioproducts, consisting of research products and therapeutic application
products, Biopharma, consisting of contract biopharmaceutical process
development and manufacturing services and Human Health, consisting of active
pharmaceutical

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(12) SEGMENT INFORMATION (CONTINUED)

ingredients and pharmaceutical intermediates produced under U.S. Food and Drug
Administration current Good Manufacturing Practices (cGMP) for use in the
production of prescription and over-the-counter drug products and other fine
custom chemicals derived from organic chemistry.

Information as to the operations of the Company in each of its business
segments is set forth below based on the nature of the products and services
offered. Cambrex evaluates performance based on gross profit and operating
profit. Intersegment sales are not material. The Company allocates certain
corporate expenses to each of the segments.

One customer accounted for 11.3% of consolidated gross sales in the third
quarter 2005. No customer accounted for greater than 10% of consolidated sales
in the third quarter 2004. No customer accounted for greater than 10% of
consolidated sales in the first nine months of 2005. One customer, a distributor
representing multiple customers, accounted for 10.9% of consolidated gross sales
for the nine months 2004.

Following is a summary of business segment information for the following
dates:

Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------

Gross sales:
Bioproducts .................... $ 35,729 $ 33,958 $113,638 $102,190
Biopharma ...................... 8,385 11,375 27,747 31,739
Human Health ................... 60,386 53,917 189,748 187,821
-------- -------- -------- --------
$104,500 $ 99,250 $331,133 $321,750
======== ======== ======== ========

Gross profit:
Bioproducts .................... $ 18,481 $ 18,632 $ 59,952 $ 55,676
Biopharma ...................... (2,137) 1,892 (4,800) 3,303
Human Health ................... 20,478 18,670 65,202 67,692
-------- -------- -------- --------
$ 36,822 $ 39,194 $120,354 $126,671
======== ======== ======== ========

Operating profit/(loss):
Bioproducts .................... $ 5,024 $ 6,379 $ 20,499 $ 21,872
Biopharma ...................... (4,368) (49,247) (12,545) (53,065)
Human Health ................... 11,343 9,146 34,373 37,503
Corporate ...................... (5,864) (5,992) (16,214) (17,962)
-------- -------- -------- --------
Total operating profit/(loss) .. $ 6,135 $(39,714) $ 26,113 $(11,652)
======== ======== ======== ========

Capital spending:
Bioproducts .................... $ 2,365 $ 2,592 $ 7,946 $ 6,809
Biopharma ...................... 1,531 2,015 3,721 7,749
Human Health ................... 5,977 4,813 15,228 12,595
Corporate ...................... 37 191 1,092 596
-------- -------- -------- --------
$ 9,910 $ 9,611 $ 27,987 $ 27,749
======== ======== ======== ========

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(12) SEGMENT INFORMATION (CONTINUED)

Depreciation:
Bioproducts .................... $1,467 $1,300 $ 4,448 $ 4,022
Biopharma ...................... 1,250 899 3,419 3,338
Human Health ................... 6,114 6,960 18,836 21,015
Corporate ...................... 84 340 891 1,020
------ ------ ------- -------
$8,915 $9,499 $27,594 $29,395
====== ====== ======= =======

Amortization:
Bioproducts .................... $ 413 $ 342 $ 875 $ 1,030
Biopharma ...................... 88 108 813 324
Human Health ................... 10 8 30 26
------ ------ ------- -------
$ 511 $ 458 $ 1,718 $ 1,380
====== ====== ======= =======

September 30, December 31,
2005 2004
------------- ------------

Total assets:
Bioproducts .................... $227,824 $220,791
Biopharma ...................... 134,195 134,591
Human Health ................... 324,989 399,538
Corporate ...................... 27,284 37,065
-------- --------
$714,292 $791,985
======== ========

(13) 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/or disclosures as deemed necessary based on
these facts and circumstances and as such facts and circumstances develop.

Environmental

In connection with laws and regulations pertaining to the protection of the
environment, the Company and/or its subsidiaries is a party to several
environmental proceedings and remediation investigations and cleanups and, along
with other companies, has been named a "potentially responsible party" for
certain waste disposal sites ("Superfund sites"). Additionally, as discussed in
the "Sale of Rutherford Chemicals" section of this Note, the Company has
retained the liability for certain environmental proceedings, associated with
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 and/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 extent of liabilities with respect to such matters,
as well as the timing of cash disbursements cannot be determined with certainty.

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 $6,604 and
$6,247 at September 30, 2005 and December 31, 2004, respectively. The increase
in the accrual is due to estimated remediation

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(13) CONTINGENCIES (CONTINUED)

costs at the Clifton site (see below) based on information developed during the
third quarter of 2005 of $1,300 offset by a decrease in a reserve at an
international site of $207, currency fluctuation of $507 and payments of $299.
Based upon currently available information and analysis, the Company's current
accrual represents management's best estimate of what it believes are the
probable and estimable costs associated with environmental proceedings including
amounts for legal and investigation fees where remediation costs may not be
estimable at the reporting date.

As described below, the Company has recently received or expects to receive
information in the near future on two matters that have and could further impact
the Company's current assessment of its probable and estimable costs and as such
may require an adjustment to the reserves.

As a result of the sale of the Bayonne, New Jersey facility (see "Sale of
Rutherford Chemicals" section of this Note), an obligation to investigate site
conditions and conduct required remediation under the New Jersey Industrial Site
Recovery Act was triggered and the Company has retained the responsibility for
such obligation. The Company completed a Preliminary Assessment of the Site and
submitted the preliminary assessment to the New Jersey Department of
Environmental Protection ("NJDEP"). The preliminary assessment identified
potential areas of concern based on historical operations and proposed certain
sampling at the Site. The Company completed the sampling and determined that
another phase of sampling was necessary to determine the extent of contamination
and any necessary remediation. The results of this phase of sampling, and any
additional sampling deemed necessary, will be used to develop an estimate of the
Company's future liability for remediation costs, if required. The Company will
submit its plan for the next phase of sampling to the NJDEP later this year.

In March 2000, the Company completed the acquisition of the Cambrex
Profarmaco Landen facility in Belgium. At the time of acquisition, Cambrex was
aware of certain site contamination and recorded a reserve for the estimated
costs of remediation. This property has been the subject of an extensive
on-going environmental investigation. The investigation has been completed with
no change to the reserve warranted based on the information developed through
the investigation. The health risk assessment related to the site contamination
is on-going and is expected to be completed in the near future.

During the third quarter of 2005, information was developed in the
following matter which caused the Company to increase its related reserves by
$1,300.

The Company's Cosan subsidiary conducted manufacturing operations in
Clifton, New Jersey from 1968 until 1979. This operating site was moved to
another location prior to Cambrex purchasing the business and was never operated
by Cambrex. In 1997, Cosan entered into an Administrative Consent Order with the
NJDEP. Under the Administrative Consent Order, Cosan is required to complete an
investigation of the Clifton site conditions and conduct remediation as may be
necessary. The investigation of site conditions was completed during the third
quarter of 2005. The Company submitted the results of the investigation and a
proposed remedial action plan to the NJDEP. The increase in the reserves is
based on the proposed remedial action plan. In February 2005, the New Jersey
Federal District Court ruled that a lawsuit against Cosan by the owners of
property adjacent to the Clifton location could be placed on the active
calendar. The outcome of this matter could also affect the reserves.

The Company is involved in other 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 recording an accrual,
should an accrual be required. If any of the Company's environmental matters are
resolved in a more

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(in thousands, except share and per-share data)

(13) CONTINGENCIES (CONTINUED)

unfavorable manner than presently estimated, 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 when resolved in a future
reporting period.

Litigation and Other Matters

Mylan Laboratories

In 1998 the Company and its subsidiary Profarmaco S.r.l. (currently known
as Cambrex Profarmaco Milano S.r.l.") ("Profarmaco") were named as defendants
(along with Mylan Laboratories, Inc. ("Mylan") and Gyma Laboratories of America,
Inc., Profarmaco's distributor in the United States) 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. The suits alleged violations of the Federal
Trade Commission Act arising from exclusive license agreements between
Profarmaco and Mylan covering two active pharmaceutical ingredients ("APIs").
The FTC and Attorneys General's suits were settled in February 2001, with Mylan
(on its own behalf and on behalf of Profarmaco and Cambrex) agreeing to pay over
$140,000 and with Mylan, Profarmaco and Cambrex agreeing to monitor certain
future conduct.

The same parties including the Company and Profarmaco have also been named
in purported class action complaints brought by private plaintiffs in various
state courts on behalf of purchasers of the APIs in generic form, making
allegations similar to those raised in the FTC's complaint and seeking various
forms of relief including treble damages.

In April 2003, Cambrex reached an agreement with Mylan under which Cambrex
would contribute $12,415 to the settlement of litigation brought by a class of
direct purchasers. In exchange, Cambrex and Profarmaco received from Mylan a
release and full indemnity against future costs or liabilities in related
litigation brought by purchasers, as well as potential future claims related to
this matter. In accordance with the agreement approximately $7,615 has been paid
through September 30, 2005, with the remaining $4,800 to be paid over the next
three years. Cambrex recorded an $11,342 charge (discounted to the present value
due to the five year pay-out) in the first quarter of 2003 as a result of this
settlement. As of September 30, 2005 the outstanding balance for this liability
was $4,465.

Vitamin B-3

On May 14, 1998, the Company's subsidiary, Nepera, which formerly operated
the Harriman facility and manufactured and sold niacinamide (Vitamin B-3),
received a Federal Grand Jury subpoena for the production of documents relating
to the pricing and possible customer allocation with regard to that product. In
2000, Nepera reached agreement with the Government as to its alleged role in
Vitamin B-3 violations from 1992 to 1995. The Canadian government claimed
similar violations. All government suits in the U.S. and Canada have now been
concluded.

Nepera has been named as a defendant, along with several other companies,
in a number of private civil actions brought on behalf of alleged purchasers of
Vitamin B-3. The actions seek injunctive relief and unspecified but substantial
damages. Several actions have been concluded during 2003, 2004 and 2005 with all
amounts paid from reserves established in this matter. The balance of the
reserves recorded within accrued liabilities related to this matter was $1,725
as of September 30, 2005. We believe that current reserves are sufficient to
complete the settlements.

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands, except share data)

(13) CONTINGENCIES (CONTINUED)

Litigation in the United States under the U.S. antitrust laws was commenced
some years ago by a group of European purchasers. On motion by the Vitamin B-3
defendants, the District Court dismissed the litigation under the long-standing
rule that foreign purchasers cannot sue in U.S. courts under U.S. antitrust
statutes. Thereafter, the Federal Circuit Court for the District of Columbia
reversed the District Court's decision. The Vitamin B-3 defendants, supported by
the U.S. Department of Justice, appealed to the United States Supreme Court and
oral arguments were heard on April 29, 2004. In June 2004, the United States
Supreme Court ruled that foreign purchasers could not sue in U.S. courts under
U.S. antitrust statutes if the conduct at issue resulted in purely foreign harm.
However, the Court left open potential claims where foreign injuries suffered by
foreign plaintiffs were dependent upon domestic harm resulting from conduct that
violates the U.S. antitrust laws and remanded the matter to the Circuit Court
for further proceedings. In June 2005, the District Court's finding against the
plaintiffs was affirmed and the matter dismissed. We believe this matter is
concluded, however, the plaintiffs have the right to request that the Supreme
Court review the decision.

Sale of Rutherford Chemicals

The Company completed the sale of its Rutherford Chemicals business on
November 10, 2003. Under the agreement for the sale, the Company provided
standard representations and warranties and included various covenants
concerning the business, operations, liabilities and financial condition of the
Rutherford Chemicals business. Most of such representations and warranties
survived for a period of thirty days after the Purchasers of the Rutherford
Chemicals ("Purchasers") business preparation of its audited financial
statements for year-end 2004. Therefore, claims for breaches of such
representations would have to be brought during that time frame. Certain
specified representations, warranties and covenants, such as those relating to
employee benefit matters and certain environmental matters, survive for longer
periods and claims under such representations, warranties and covenants could be
brought during such longer periods. Under the sale agreement, the Company has
indemnified the Buyer for breaches of representations, warranties and covenants.
Indemnifications for certain but not all representations and warranties are
subject to a deductible of $750 and a cap at 25 percent of the purchase price.
On March 31, 2005, the Company received a claim by the Purchasers claiming
breach of certain representations, warranties and covenants contained in the
October 2003 Purchase Agreement. In April 2005 the Company responded rejecting
the claim. Thereafter, the purchasers submitted an amended claim. The amended
claim alleges breaches of representations, warranties and covenants covering
each of the five operating sites sold pursuant to the October 2003 Purchase
Agreement and are related primarily to facility structures, utilities and
equipment and alleges damages of $26,407. To the extent the alleged damages
arise from breaches of representations and warranties, the claim would be
subject to a cap of between approximately $14,000 and $16,250, depending on
whether certain contingent payments are made, and is subject to the deductible
of $750 which is the responsibility of the purchasers. In May 2005, the
Company responded to the Purchasers and rejected the claim entirely. Management
currently believes that the claim is without merit and will vigorously defend
against the claim. As such, the Company has no reserves related to this matter.

Additionally, in September 2005, the Company received a request for
indemnity (September Notice) from the Purchasers related to an arbitration claim
filed by a Rutherford customer ("Customer"). The arbitration claim arises from a
claimed breach of a Supply Agreement that was assigned to and assumed by the
Purchasers pursuant to the Rutherford Chemicals Purchase Agreement. Thereafter,
we were also served with an arbitration claim by the Customer related to the
same matter. In the arbitration claim, Rutherford's customer claims $30,000 in
damages arising from Rutherford's breach of the Supply Agreement. The Purchasers
claim that the September notice amends the earlier claims that they filed in
March and April 2005 and that the Customer's claimed breach of the Supply
Agreement should be treated as part of a breach of a representation, warranty or
covenant set forth in the earlier notices. Since the Supply Agreement was
assigned to and assumed by the Purchasers, we believe we are not a proper party
to this matter and are working with the Customer to be

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands, except share data)

(13) CONTINGENCIES (CONTINUED)

dismissed from the Customer's arbitration claim. On October 3, 2005, the Company
rejected Rutherford's claim for indemnity under the September Notice in its
entirety. Management currently believes that the claim is without merit and will
vigorously defend against the claim. As such, the Company has no reserves
related to this matter.

On October 25, 2005, the Company received a notice from the Purchasers;
which summarized the claims previously received in March and April 2005 (see
above), provided the Purchaser's response to the Company's April and May
rejection of the earlier notices, and set forth additional claims for
environmental matters related to the Rutherford Chemicals Business, most of
which relate to the former Harriman location. Management is in the process of
evaluating this Notice, but currently believes the claims are without merit, and
as such the Company has established no reserves for this matter.

Under the agreement for sale, the Company has retained the liabilities
associated with existing general litigation matters related to Rutherford
Chemicals, including Vitamin B-3 as stated above. With respect to certain
pre-closing environmental matters, the Company retains the responsibility for:
(i) certain existing matters including violations, environmental testing for the
New York facility incinerator and off-site liabilities; and (ii) completing the
on-going remediation at the New York facility. Further, as a result of the sale
of the Bayonne, New Jersey facility, and as discussed in the Environmental
Section above, the obligation to investigate site conditions and conduct
required remediation under the provisions of the New Jersey Industrial Site
Recovery Act was triggered; and the Company has retained the responsibility for
completion of any such investigation and remediation. With respect to all other
pre-closing environmental liabilities, whether known or unknown, the Buyer is
responsible for the management of potential future matters; however, the Buyer
and the Company may share the costs of associated remediation with respect to
such potential future matters, subject to certain limitations defined in the
agreement for sale. The Company has accrued for exposures which are deemed
probable and estimable.

Class Action Matter

In October 2003, the Company was notified of a securities class action
lawsuit filed against Cambrex and five former and current Company officers. Five
class action suits were filed with the New Jersey Federal District Court. In
January 2004, the Court consolidated the cases, designated the lead plaintiff
and selected counsel to represent the class. An amended complaint was filed on
March 30, 2004. The lawsuit has been brought as a class action in the names of
purchasers of the Company's common stock from October 21, 1998 through July 25,
2003. The complaint alleges that the Company failed to disclose in timely
fashion the January 2003 accounting restatement and subsequent SEC
investigation, as well as the loss of a significant contract at the Baltimore
facility.

The Company filed a motion to dismiss in May 2004. Thereafter the plaintiff
filed a reply brief. On October 27, 2005, the Court denied the Company's Motion
to Dismiss. The Company continues to believe that the complaints are without
merit and will vigorously defend against them. As such, the Company has recorded
no reserves related to this matter.

Securities and Exchange Commission

The Securities and Exchange Commission ("SEC") is currently conducting an
investigation into the Company's inter-company accounting procedures from the
period 1997-2001. The investigation began in the first half of 2003 after the
Company voluntarily disclosed certain matters related to inter-company accounts
for the five-year period ending December 31, 2001 that resulted in the
restatement of the Company's financial

CAMBREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(dollars in thousands, except share data)

(13) CONTINGENCIES (CONTINUED)

statements for those years. To Cambrex's knowledge, the investigation is limited
to this inter-company accounting matter, and the Company does not expect further
revisions to its historical financial statements relating to these issues. The
Company is fully cooperating with the SEC.

Baltimore Litigation

In 2001, the Company acquired the biopharmaceutical manufacturing business
in Baltimore. 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 Cambrex breached its obligation to pay
additional consideration as provided in the Purchase Agreement which was
contingent on the performance of the purchased Business. Management believes the
matter to be without merit and has been vigourously defending the suit.

Other

The Company has commitments incident to the ordinary course of business
including corporate guarantees of financial assurance obligations under certain
environmental laws for remediation, closure and/or 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.

Additionally, as permitted under Delaware law, the Company has agreements
whereby we indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was serving, at our 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 we could be
required to make under these indemnification agreements is unlimited; however,
we have 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 September 30, 2005.

In addition to the matters identified above, Cambrex's subsidiaries are
party to a number of other proceedings. While it is not possible to predict with
certainty the outcome of the Company's litigation matters and various other
lawsuits and contingencies, it is the opinion of management based on information
currently available that the ultimate resolution of these matters should not
have a material adverse effect on the Company's results of operations, cash
flows and financial position. These matters, if resolved in an unfavorable
manner, could have a material effect on the operating results and cash flows
when resolved in a future reporting period.

CAMBREX CORPORATION AND SUBSIDIARIES
(in thousands, except per-share data)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

COMPARISON OF THIRD QUARTER 2005 VERSUS THIRD QUARTER 2004

The following table shows the gross sales of the Company's three segments, in
dollars and as a percentage of the Company's total gross sales for the quarters
ended September 30, 2005 and 2004.

Quarter Ended September 30,
----------------------------------
2005 2004
---------------- ---------------
$ % $ %
-------- ----- ------- -----

Bioproducts ... $ 35,729 34.2% $33,958 34.2%
Biopharma ..... 8,385 8.0 11,375 11.5
Human Health .. 60,386 57.8 53,917 54.3
-------- ----- ------- -----
Total ...... $104,500 100.0% $99,250 100.0%
======== ===== ======= =====

The following table shows the gross profit of the Company's three product
segments for the third quarter 2005 and 2004.

Quarter Ended September 30,
-----------------------------------------
2005 2004
------------------- -------------------
Gross Gross Gross Gross
Profit $ Profit % Profit $ Profit %
-------- -------- -------- --------

Bioproducts ... $18,481 51.7% $18,632 54.9%
Biopharma ..... (2,137) (25.5) 1,892 16.6
Human Health .. 20,478 33.9 18,670 34.6
------- -------
Total ...... $36,822 35.2% $39,194 39.5%
======= =======

Gross sales in the third quarter 2005 increased 5.3% to $104,500 from $99,250 in
the third quarter 2004 due to stronger sales in the Bioproducts and Human Health
segments partially offset by lower sales in the Biopharma segment. Gross sales
were unfavorably impacted 0.6% due to exchange rates reflecting a stronger U.S.
dollar compared to the Euro and Swedish Krona in the third quarter of 2005
versus the third quarter 2004.

Gross profit in the third quarter of 2005 was $36,822 compared to $39,194 in
2004. Gross margin percentage decreased to 35.2% in the third quarter of 2005
from 39.5% in the third quarter of 2004. The reduced gross margin percentage
reflects lower margins in all business segments.

The following table shows sales by geographic area for the three months ended
September 30, 2005 and 2004:

Three Months Ended September 30,
--------------------------------
2005 2004
-------- -------

North America .. $ 46,157 $54,667
Europe ......... 50,738 36,892
Asia ........... 5,419 4,675
Other .......... 2,186 3,016
-------- -------
Total ....... $104,500 $99,250
======== =======

RESULTS OF OPERATIONS (CONTINUED)

COMPARISON OF THIRD QUARTER 2005 VERSUS THIRD QUARTER 2004 (CONTINUED)

The Bioproducts Segment gross sales in the third quarter 2005 of $35,729 were
$1,771 or 5.2% above the third quarter 2004. The Bioproducts segment sales were
unfavorably impacted 0.2% due to exchange rates reflecting a stronger U.S.
dollar in the third quarter 2005 versus 2004. The sales increase, excluding
currency, reflects higher sales in both the research products and therapeutic
applications categories. The opening of an Australian sales office, the
expansion of sales workforce in Europe, the 2004 acquisition of a rapid
microbial detection (RMD) business in Europe and stronger demand in North
America resulted in higher therapeutic applications sales, particularly for
testing, process development and fill and finish services. New customers drove
the higher revenues from testing services partially offset by lower sales of
cell therapy services mainly due to client project timing. Increased research
products sales primarily reflects higher sales of cell biology products, due to
increased sales and marketing efforts and higher pricing.

Bioproducts gross margins decreased to 51.7% in the third quarter 2005 from
54.9% in the third quarter 2004 primarily due to higher production costs, higher
allowances for doubtful accounts in 2005 versus favorable collection experience
in 2004 and the unfavorable impact of foreign currency, partially offset by
favorable sales volume and pricing.

The Biopharma Segment gross sales in the third quarter 2005 of $8,385 were
$2,990 or 26.3% below the third quarter 2004 reflecting lower suite and labor
revenues partially offset by higher process development revenue and reimbursed
materials. Foreign currency had no impact on the Biopharma segment.

Biopharma gross margins decreased to (25.5%) in the third quarter of 2005 from
16.6% in the third quarter of 2004. This decline is mainly driven by lower
revenues and higher production costs related to a new 2800 liter suite placed
into service in the first quarter 2005.

The Human Health Segment gross sales in the third quarter 2005 of $60,386 were
$6,469 or 12.0% above the third quarter 2004. Human Health sales were
unfavorably impacted 1.0% due to exchange rates reflecting a stronger U.S.
dollar in the third quarter 2005 versus 2004. Stronger demand for a
gastro-intestinal API, an end-stage kidney treatment API, nicotine polacrilex
resin (used in smoking cessation products), feed additives and fentanyl were
partially offset by lower shipments of central nervous system APIs, the
unfavorable impact of foreign currency and lower amphetamine sales.

Human Health gross margins decreased to 33.9% in the third quarter of 2005 from
34.6% in the third quarter of 2004 while gross profit, in dollars, increased
$1,808 to $20,478. Additionally, foreign currency unfavorably impacted gross
margins by 1.4 percentage points and gross profit by approximately $1,000. The
increase in gross profit dollars is due to higher sales volume while the
decrease in the gross margin percentage was driven by higher manufacturing
costs, offset by favorable product mix.

Selling, general and administrative expenses of $25,825 or 24.7% of gross sales
in the third quarter 2005 increased from $25,668, or 25.9% in the third quarter
2004. The increase in expense is due primarily to a charge related to an
environmental remediation reserve associated with an idle facility, additional
sales and marketing personnel and higher spending for advertising and promotions
partially offset by lower professional fees and other cost reductions.

Research and development expenses of $4,862 were 4.7% of gross sales in the
third quarter 2005, compared to $4,520 or 4.5% of gross sales in the third
quarter 2004. The increase in expense primarily reflects investments in new
product technologies within the Bioproducts segment.

In the third quarter of 2004, the Company recorded a non-cash impairment charge
of $48,720 to reduce the carrying value of goodwill in the Biopharma segment to
its estimated fair value.

RESULTS OF OPERATIONS (CONTINUED)

COMPARISON OF THIRD QUARTER 2005 VERSUS THIRD QUARTER 2004 (CONTINUED)

Operating profit in the third quarter of 2005 was $6,135 compared to an
operating loss of $39,714 in the third quarter of 2004.

Net interest expense of $2,801 in the third quarter 2005 was relatively flat
compared to $2,854 in the third quarter of 2004 primarily reflecting higher
interest rates offset by lower average debt. The average interest rate was 5.8%
in the third quarter of 2005 versus 5.5% in the third quarter 2004.

The tax provision in the third quarter 2005 increased to 101.4% compared to
- -5.9% in the third quarter of 2004 primarily due to the geographic mix of
income.

Beginning September 30, 2003 the Company has maintained a full valuation
allowance on its domestic net deferred tax assets. Accordingly, for the nine
months ended September 30, 2005 a full valuation allowance of the Company's
domestic net deferred tax assets generated during the nine months of 2005 was
recorded. The Company will continue to record a full valuation allowance on its
domestic net deferred tax assets until an appropriate level of domestic
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 the
domestic net deferred assets would be realized. If the Company continues to
report pre-tax losses in the United States, income tax benefits associated with
those losses will not be recognized and, therefore, those losses would not be
reduced by such income tax benefits. Additionally, should domestic losses
continue, it is possible that certain tax planning strategies preserving certain
domestic tax assets could be deemed inadequate, resulting in additional
valuation allowances in the future. The carryforward periods for foreign tax
credits, research and experimentation tax credits, net operating losses, and the
federal alternative minimum tax credits are 10 years, 20 years, 20 years and an
indefinite period, respectively. As such, improvements in domestic pre-tax
income in the future may result in these tax benefits ultimately being realized.
However, there is no assurance that such improvements will be achieved.

Net loss from continuing operations in the third quarter of 2005 was $48, or
$0.00 per diluted share, versus $44,861, or $1.72 per diluted share in the same
period a year ago.

In the fourth quarter 2003, the Company completed the sale of the Rutherford
Chemicals business and as a result the business is classified as a discontinued
operation for all periods presented. In the third quarter of 2004, the Company
recorded an additional $236 charge to discontinued operations due primarily to
revised estimates of environmental liabilities related to Rutherford Chemicals.

COMPARISON OF FIRST NINE MONTHS 2005 VERSUS FIRST NINE MONTHS 2004

The following table shows the gross sales of the Company's three segments, in
dollars and as a percentage of the Company's total gross sales for the nine
months ended September 30, 2005 and 2004.

Nine Months Ended September 30,
-----------------------------------
2005 2004
---------------- ----------------
$ % $ %
-------- ----- -------- -----

Bioproducts ........ $113,638 34.3% $102,190 31.7%
Biopharma .......... 27,747 8.4 31,739 9.9
Human Health ....... 189,748 57.3 187,821 58.4
-------- ----- -------- -----
Total ........... $331,133 100.0% $321,750 100.0%
======== ===== ======== =====

RESULTS OF OPERATIONS (CONTINUED)

COMPARISON OF FIRST NINE MONTHS 2005 VERSUS FIRST NINE MONTHS 2004 (CONTINUED)

The following table shows the gross profit of the Company's three product
segments for the nine months ended September 30, 2005 and 2004.

Nine Months Ended September 30,
-----------------------------------------
2005 2004
------------------- -------------------
Gross Gross Gross Gross
Profit $ Profit % Profit $ Profit %
-------- -------- -------- --------

Bioproducts ........ $ 59,952 52.8% $ 55,676 54.5%
Biopharma .......... (4,800) (17.3) 3,303 10.4
Human Health ....... 65,202 34.4 67,692 36.0
-------- --------
Total ........... $120,354 36.3% $126,671 39.4%
======== ========

Gross sales for the first nine months of 2005 increased 2.9% to $331,133 from
$321,750 in the first nine months of 2004. Increased sales in the Bioproducts
and Human Health segments were partly offset by lower sales in the Biopharma
segment. Gross sales were favorably impacted 1.3% due to exchange rates
reflecting a weaker U.S. dollar in the first nine months of 2005 versus the
first nine months of 2004.

Gross profit in the first nine months of 2005 was $120,354 compared to $126,671
in the first nine months of 2004. Gross margin percentage decreased to 36.3% in
the first nine months of 2005 from 39.4% in the first nine months of 2004. The
reduced gross margin percentage reflects lower margins in all business segments.

The following table shows sales by geographic area for the nine months ended
September 30, 2005 and 2004:

Nine Months Ended September 30,
-------------------------------
2005 2004
-------- --------

North America ...... $150,587 $165,307
Europe ............. 158,731 134,745
Asia ............... 14,879 12,573
Other .............. 6,936 9,125
-------- --------
Total ........... $331,133 $321,750
======== ========

The Bioproducts Segment gross sales in the first nine months of 2005 of $113,638
were $11,448 or 11.2% above the first nine months of 2004. The Bioproducts
segment sales were favorably impacted 1.2% due to exchange rates reflecting a
weaker U.S. dollar in the first nine months of 2005 versus 2004. The sales
increase, excluding currency, primarily reflects higher sales in both the
research products and therapeutic applications categories including cell
therapy, cell biology, rapid microbial detection, testing services, serum, media
and assays due to stronger demand, higher pricing and the addition of new
customers.

Bioproducts gross margins decreased to 52.8% in the first nine months of 2005
from 54.5% in the first nine months of 2004 primarily due to higher bad debt
expenses and higher manufacturing costs, partially offset by increased sales
volume and pricing across most product categories in addition to favorable
impact of foreign currency.

The Biopharma Segment gross sales in the first nine months of 2005 of $27,747
were $3,992 or 12.6% below the first nine months of 2004 reflecting lower suite
revenue partially offset by higher labor fees, reimbursed materials and process
development. Foreign currency had no impact on the Biopharma segment.

RESULTS OF OPERATIONS (CONTINUED)

COMPARISON OF FIRST NINE MONTHS 2005 VERSUS FIRST NINE MONTHS 2004 (CONTINUED)

Biopharma gross margins decreased to (17.3%) in the first nine months of 2005
from 10.4% in the first nine months of 2004 primarily due to lower revenues, a
higher percentage of revenues from reimbursed materials which have virtually no
profit margin and higher production costs.

The Human Health Segment gross sales for the first nine months of 2005 of
$189,748 were $1,927 or 1.0% above the first nine months of 2004. Human Health
sales were favorably impacted 1.6% due to exchange rates reflecting a weaker
U.S. dollar in the first nine months 2005 versus 2004. Excluding currency, the
decrease resulted from lower sales of a gastrointestinal API and crop additive,
both due to loss of business, lower shipments of an API to treat Alzheimer's
disease due to the launch of the product in 2004 which required higher inventory
levels, lower sales of certain cardiovascular APIs due to reduced volumes
resulting from increased competition and lower sales of certain other central
nervous system APIs due to reduced volumes. These lower sales were partially
offset by stronger demand for nicotine polacrilex resin (used in smoking
cessation products), higher sales of a gastrointestinal API and higher sales of
an API used to treat end stage kidney disease due to increased volume.

Human Health gross margins decreased to 34.4% in the first nine months of 2005
from 36.0% in the first nine months of 2004 due to pricing pressures on certain
APIs, unfavorable overhead absorption, higher production costs and unfavorable
impact of foreign currency.

Selling, general and administrative expenses of $77,640 or 23.4% of gross sales
in the first nine months of 2005 is relatively flat compared to $77,530, or
24.1% in the first nine months of 2004. Administration expenses slightly
increased driven by higher sales and marketing expenses within the Bioproducts
segment and higher environmental costs related to an inactive company partially
offset by lower valuation of stock appreciation rights and lower legal costs.

Research and development expenses of $16,601 were 5.0% of gross sales in the
first nine months of 2005, compared to $13,936 or 4.3% of gross sales in the
first nine months of 2004. The increase in expense primarily reflects
investments in new product technologies within the Bioproducts segment.

In the third quarter of 2004, the Company recorded a non-cash impairment charge
of $48,720 to reduce the carrying value of goodwill in the Biopharma segment, to
its estimated fair value.

Operating profit in the first nine months of 2005 was $26,113 compared to an
operating loss of $11,652 in the first nine months of 2004. The first nine
months of 2005 results include a $1,300 charge for an environmental remediation
reserve at an inactive facility. The first nine months of 2004 results include
$2,863 of income due to the early termination of a Bioproducts customer contract
and an unrelated $1,000 charge associated with the reorganization and related
workforce reductions at a European facility. These 2004 items are recorded as
other, net operating expenses.

Net interest expense of $8,282 in the first nine months of 2005 decreased $189
from the first nine months of 2004 primarily reflecting lower interest rates
partially offset by higher average debt. The average interest rate was 5.5% in
the first nine months of 2005 versus 5.6% in the first nine months of 2004.

The tax provision for the first nine months of 2005 increased to 37.4% compared
to -53.3% in the first nine months of 2004 primarily due to a $3,151 ($0.12/per
diluted share) reduction in tax reserves primarily related to a Swedish tax
matter that was decided favorably during the second quarter 2005. Excluding the
impact of the Swedish tax matter, the tax provision would have been $9,788 in
the first nine months of 2005.

RESULTS OF OPERATIONS (CONTINUED)

COMPARISON OF FIRST NINE MONTHS 2005 VERSUS FIRST NINE MONTHS 2004 (CONTINUED)

Income from continuing operations in the first nine months of 2005 was $11,122,
or $0.42 per diluted share, versus a loss from continuing operations of $30,763,
or $1.18 per diluted share in the same period a year ago.

In the fourth quarter 2003, the Company completed the sale of the Rutherford
Chemicals business and as a result the business is classified as a discontinued
operation for all periods presented. In the first quarter of 2004, the Company
concluded its negotiations of the post-closing working capital adjustment and
recorded a $742 charge to discontinued operations to reflect the change in the
adjustment, along with legal and other expenses related to the sale of
Rutherford Chemicals. In the third quarter of 2004, the Company recorded an
additional $236 charge to discontinued operations due primarily to revised
estimates of environmental liabilities related to Rutherford Chemicals.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents decreased $58,772 in the first nine months of 2005.
The stronger U.S. dollar negatively impacted the translated cash balances by
$9,312 in the first nine months of 2005. During the nine months ended September
30, 2005, the Company generated cash flows from operations totaling $20,347, a
decrease of $17,991 versus the same period a year ago. The decrease in cash
flows generated from operations in the first nine months of 2005 versus the
first nine months of 2004 is due primarily to a decrease in net income,
excluding the goodwill impairment, an increase in inventories resulting from
increased production based on forecasted requirements and an increase in
prepaids mainly due to prepayments of insurance. These decreases were partially
offset by the timing of foreign tax payments and of payments made to Rutherford
Chemicals in 2004.

Capital expenditures from continuing operations were $27,987 in the first nine
months of 2005 as compared to $27,749 in 2004. Part of the funds in 2005 were
used for suite expansions at Biopharma manufacturing plants, cell therapy
manufacturing capabilities at a Bioproducts facility, a new warehouse at a Human
Health facility and capital improvements to existing facilities. In 2004, the
funds were primarily used for a suite expansion at a Biopharma manufacturing
plant, cell therapy manufacturing capabilities at a Bioproducts facility and new
research and development labs at a Human Health facility.

RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

During the first nine months of 2005, the Company repatriated $54,687 as a
dividend from its foreign subsidiaries pursuant to the American Jobs Creation
Act of 2004. The Company used the repatriated cash to pay down domestic debt.
The Company continues to evaluate further repatriation of dividends.

Cash flows used in financing activities in the first nine months of 2005 of
$43,123 include net pay down of debt of $42,193 and dividends paid of $2,376
partially offset by proceeds from stock options exercised of $1,521. In the
first nine months of 2004 the Company borrowed $8,109 of debt, generated
proceeds from the exercise of stock options of $4,005 and paid dividends of
$2,330.

During the first nine months of 2005 and 2004, the Company paid cash dividends
of $0.09 per share.

Management believes that existing sources of capital, together with cash flows
from operations, will be sufficient to meet foreseeable cash flow requirements.

On October 7, 2005, the Company entered into a five-year $277.5 million Senior
Revolving Credit Facility. The Company borrowed $78.4 million under the facility
and used the funds to pay down all outstanding borrowings under the previously
existing facility which would have expired in November of 2006. The previously
existing credit facility was terminated upon origination of the new facility.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are those which we believe require the most
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain. The Company bases its
estimates on historical experience and on other various assumptions that are
deemed reasonable by management under each applicable circumstance. Actual
results or amounts could differ from estimates and the differences could have a
material impact on the consolidated financial statements. A discussion of our
critical accounting policies, the underlying judgments and uncertainties
affecting their application and the likelihood that materially different amounts
would be reported under different conditions or using different assumptions, is
as follows:

Revenue Recognition

Revenues in our Bioproducts and Human Health segments are generally recognized
when title to products and risk of loss are transferred to customers. Additional
conditions for recognition of revenue are that collection of sales proceeds is
reasonably assured and the Company has no further performance obligations.

Sales terms to certain customers include remittance of discounts if certain
conditions are met. Additionally, sales are generally made with a limited right
of return under certain conditions. The Company estimates these rebates and
estimated returns at the time of sale based on the terms of agreements with
customers and historical experience and recognizes revenue net of these
estimated costs which are classified as allowances and rebates.

Some contracts in our Bioproducts and Biopharma segments are based on time and
materials and revenue for those are recognized as services are performed. The
Biopharma segment also utilizes contracts that contain milestone based payments.
The Company utilizes the EITF-91-6 "Revenue Recognition of Long-term Power Sales
Contracts" model for recording revenue from these contracts. Under this method,
revenue is based on the cost of efforts (since contract commencement) up to the
reporting date, divided by the total estimated contractual cost (from the
contract commencement to the end of the development arrangement), multiplied by
the total expected contractual payments under the arrangement. However, revenue
is limited to the amount of nonrefundable cash payments received or
contractually receivable at the reporting date.

RESULTS OF OPERATIONS (CONTINUED)

CRITICAL ACCOUNTING POLICIES (CONTINUED)

In each of our segments we have certain contracts that contain multiple
deliverables. These deliverables often include process development services and
commercial production. The Company follows the guidance contained in EITF 00-21
"Accounting for Revenue Arrangements with Multiple Deliverables". Revenue for
each element is recognized when delivered to the customer based on the fair
value of the element as determined based on sales price when sold separately.

Amounts billed in advance are recorded as deferred revenue on the balance sheet.

Asset Valuations and Review for Potential Impairments

In accordance with FAS 144, our review of long-lived assets, principally fixed
assets and other amortizable intangibles requires us to estimate the
undiscounted future cash flows generated from these assets, whenever events or
changes in circumstances indicate that the carrying value may not be fully
recoverable. If undiscounted cash flows are less than carrying value, the
long-lived assets are written down to fair value which equals the discounted
cash flows.

Our review of the carrying value of goodwill and indefinite lived intangibles is
done annually or whenever events or changes in circumstances indicate that the
carrying value may not be fully recoverable in accordance with FAS 142 utilizing
a two-step process. In the first step, the fair value of the reporting units is
determined using a discounted cash flow model and compared to the carrying
value. If such analysis indicates that impairment may exist, we then estimate
the fair value of the other assets and liabilities utilizing appraisals and
discounted cash flow analyses to calculate an impairment charge.

The determination of fair value for both FAS 144 and FAS 142 is judgmental in
nature and involves the use of significant estimates and assumptions, including
projected future cash flows, discount rates, determination of appropriate market
comparables and perpetual growth rates. These estimates and assumptions could
have a significant impact on whether or not an impairment charge is recognized
and the magnitude of any such charge.

Environmental and Litigation Contingencies

The Company periodically assesses the potential liabilities related to any
lawsuits or claims brought against us. See Note 13 in the accompanying financial
statements for a discussion of our current environmental and litigation matters,
reserves recorded and our position with respect to any related uncertainties.
While it is typically very difficult to determine the timing and ultimate
outcome of these actions, the Company uses its best judgment to determine if it
is probable that the Company will incur an expense related to a settlement for
such matters and whether a reasonable estimation of such probable loss, if any,
can be made. If probable and estimable, the Company accrues for the costs of
clean-up, settlements and legal fees. If the aggregate amount of the liability
and the timing of the payment are fixed or reasonably determinable, the Company
discounts the amount to reflect the time value of money. Given the inherent
uncertainty related to the eventual outcome of litigation and environmental
matters, it is possible that all or some of these matters may be resolved for
amounts materially different from any provisions that the Company may have made
with respect to their resolution.

RESULTS OF OPERATIONS (CONTINUED)

CRITICAL ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company applies an asset and liability approach to accounting for income
taxes. Deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial statement
and tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. The recoverability of
deferred tax assets is dependent upon the Company's assessment that it is more
likely than not that sufficient future taxable income will be generated in the
relevant tax jurisdiction to utilize the deferred tax asset. In the event the
Company determines that future taxable income will not be sufficient to utilize
the deferred tax asset, a valuation allowance is recorded. When assessing the
valuation allowance, the Company takes into account certain tax planning
strategies. The Company's valuation allowances primarily relate to net operating
loss carryforwards, foreign tax credits, and alternative minimum tax credits in
the U.S., where profitability is uncertain and net operating loss carryforwards
in certain state and foreign jurisdictions with little or no history of
generating taxable income.

Employee Benefit Plans

The Company provides a range of benefits to employees and retired employees,
including pensions, post-retirement, post employment and health care benefits.
The Company records annual amounts relating to these plans based on
calculations, which include various actuarial assumptions, including discount
rates, assumed rates of return, compensation increases, turnover rates, and
health care cost trend rates. The Company reviews its actuarial assumptions on
an annual basis and makes modifications to the assumptions based on current
rates and trends when it is deemed appropriate to do so. The effect of the
modifications is generally recorded and amortized over future periods. The
Company believes that the assumptions utilized for recording obligations under
its plans are reasonable.

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, 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, cash repatriation pursuant to the
American Jobs Creation Act of 2004, 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. The forward-looking statements
contained herein are based on current plans and expectations and involve risks
and uncertainties that could cause actual outcomes and results to differ
materially from current expectations including, but not limited to, global
economic trends, pharmaceutical outsourcing trends, competitive pricing or
product developments, government legislation and/or regulations (particularly
environmental issues), tax rate, interest rate, technology, manufacturing and
legal issues, changes in foreign exchange rates, performance of minority
investments, uncollectable receivables, loss on disposition of assets,
cancellation or delays in renewal of contracts, lack of suitable raw materials
or packaging materials and the risks and other factors described under the
caption "Risk Factors That May Affect Future Results" included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2004. 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 us to predict
which will arise. In addition, we cannot assess the impact of each factor on our
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.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

With the participation of the Company's Chief Executive Officer and Chief
Financial Officer, management has evaluated the effectiveness of the Company's
'disclosure controls and procedures' (as defined in the Rules 13a-15(e) under
the Securities Exchange Act of 1934 (the 'Exchange Act')) as of the end of the
period covered by this quarterly report. Disclosure controls and procedures are
designed to provide reasonable assurance that the Company is able to meet the
objective of filing reports under the Exchange Act that contain disclosure which
is recorded, processed, summarized and reported pursuant to the disclosure
requirements and within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based on such evaluation, including
consideration of the matter discussed below, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures were effective at the reasonable assurance level at September 30,
2005.

CHANGES IN CONTROLS AND PROCEDURES

There were no significant changes in the Company's internal controls, or in
other factors that could significantly affect these internal controls, during
the current quarter.

PART II - OTHER INFORMATION

CAMBREX CORPORATION AND SUBSIDIARIES

ITEM 1 LEGAL PROCEEDINGS

In mid-2004 the United States Environmental Protection Agency conducted a
hazardous waste inspection of the Company's Charles City facility.
Thereafter the Agency, notified the facility of several alleged violations
of the hazardous waste laws related to management of hazardous waste and
requested additional information related to the alleged violations. The
company responded and provided information which questioned the conclusion
that the violations occurred. Nevertheless, the Agency concluded that
several violations existed at the time of the inspection, and on October 3,
2005 issued the facility an order and penalty assessment in the amount of
$189,000. On October 31, 2005, the Company filed a request for a hearing
and an informal conference.

See the Contingency Footnote above for other Legal Proceedings.

ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS.

Purchases of equity securities by the issuer and affiliated purchasers.

(d) Maximum Number
(c) Total Number of (or Approximate Dollar
Shares (or Units) Value of Shares (or Unit)
(a) Total Number (b) Average Price Purchased as Part of that May Yet Be
of Shares (or Paid per Share Publicly Announced Purchased Under the
Period Units) Purchased (or Units) Plans or Programs Plans or Programs
- ------ ---------------- ----------------- -------------------- -------------------------

July 1-31, 2005 -- -- -- 580,700
August 1-31, 2005 -- -- -- 580,700
September 1-30, 2005 -- -- -- 580,700
--- --- ---
Total -- -- --

ITEM 4. MATTERS SUBMITTED TO A VOTE OF SECURITIES HOLDERS.

Refer to Form 10Q for quarterly period ended March 31, 2005.

ITEM 6. EXHIBITS

1. Exhibit 31.1 - CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

2. Exhibit 31.2 - CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

3. Exhibit 32.1 - CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

4. Exhibit 32.2 - CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

SIGNATURES

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

CAMBREX CORPORATION

By /s/ Luke M. Beshar
-------------------------------------
Luke M. Beshar
Executive Vice President and
Chief Financial Officer
(On behalf of the Registrant and
as the Registrant's Principal
Financial Officer)

Dated: November 4, 2005