Adicet Bio, Inc.

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Pharmaceutical • Biopharmaceutical • Specialty Chemicals • Agricultural • Nutraceutical

The Global

Leader in

Sourcing,

Quality
Assurance,

Regulatory

Support,
Marketing &

Distribution

2008 Annual Report

Aceto Corporate Office
One Hollow Lane
Lake Success, New York 11042
(516) 627-6000
www.aceto.com

Operating as a virtual manufacturing
firm, Aceto facilitates the global

sourcing, quality assurance, regulatory
support, marketing and distribution of
chemicals used principally as raw
materials in the pharmaceutical,

agricultural, color, surface coating/ink
and general chemical industries.

Company Profile

A

ceto Corporation, incorporated in 1947,
is a global leader in the sourcing, quality

assurance, regulatory support, marketing and

distribution of chemically derived

pharmaceuticals, biopharmaceuticals, specialty

chemicals and agrochemicals. With a physical
presence in ten countries, we distribute over 1,000
chemicals and pharmaceuticals used principally as raw

materials in the pharmaceutical, agricultural, color,
surface coating/ink and general chemical consuming
industries. Our global operations, including a staff of 26
in Shanghai and 10 in India, are unique in our industry and
enable our worldwide sourcing and regulatory capabilities.
We source approximately two thirds of our products from Asia,

buying from approximately 500 companies in China and

approximately 200 companies in India.

Aceto’s business is organized along product lines into three segments—
Health Sciences (59% of fiscal 2008 sales), Chemicals & Colorants (36% of

fiscal 2008 sales) and Crop Protection (5% of fiscal 2008 sales).

Importantly, beyond “traditional distribution,” we add value for our
customers and suppliers in terms of product development, providing

access to new markets, plant audits, regulatory support, financial planning

and logistics. Our revenue base is diverse, with no customer or product

accounting for more than10% of our overall business.

Corporate Information

Directors

Officers and Executives

ALBERT L. EILENDER
Owner
WaterWays Advisory Services

STANLEY H. FISCHER
Attorney
Fischer and Burstein, P.C.

HANS C. NOETZLI
Industrial Advisor

LEONARD S. SCHWARTZ
Chairman, President and
Chief Executive Officer
Aceto Corporation

ROBERT A. WIESEN
Attorney and Partner
Clifton, Budd & DeMaria

WILLIAM N. BRITTON
Owner
TD AIM, LLC

THEODORE AYVAS
Director of Corporate
Communications and
Investor Relations

RAYMOND BARTONE
Vice President

ULF BENDER
Managing Director
Pharma Waldhof GmbH*

DAVID BERCHER
Assistant Vice President

FRANK DEBENEDITTIS
Senior Vice President

DINA DONNELLY
Director of
International Transportation

MICHAEL FEINMAN
President
Aceto Agricultural
Chemicals Corp.*

MARLENE FELIX
Assistant Vice President

ROY GOODMAN
Group Vice President

SEAN ISACSSON
Group Vice President

EDWARD KELLY
Assistant Vice President and
Controller

TERRY KIPPLEY
Assistant Vice President
Aceto Agricultural
Chemicals Corp.*

JOHN LAROCCA
Vice President

LEONARD LAWTON
Group Vice President

VINCENT MIATA
Senior Vice President

SIMONE MILLER
Corporate Director
Environmental and
Regulatory Affairs

ALBERT MISEJE
Vice President

GARY MO
Managing Director
Aceto (Shanghai) Ltd.*

ANDREAS MUENDS
Managing Director
Aceto Holding GmbH
(Germany)*

PHILIPPE POTELLE
Managing Director
Aceto France S.A.S.*

DAVID RIMMLER
Vice President

AMY ROGERS
Assistant Vice President and
Director of Transportation

DOUGLAS ROTH
Vice President and
Chief Financial Officer

JAMES SAMMER
Assistant Vice President

FRANCES SCALLY
Director of Financial
Reporting and Compliance

LEONARD S. SCHWARTZ
Chairman, President and
Chief Executive Officer

BRIAN SHAPIRO
Vice President

TERRY STEINBERG
Vice President

PRADEEP THAKUR
General Manager
Aceto Pharma India PVT. LTD.

PETER TOMASINO
Assistant Vice President

JAN VAN EIS
Managing Director
Aceto Holding B.V.
(The Netherlands)*

ROGER WEAVING, JR.
Vice President

KEITH WILKINSON
Vice President

JASON YU
Managing Director
Aceto Pte Ltd. (Singapore)*

* A wholly owned subsidiary

Shareholder Information

Corporate Headquarters

Investor Relations

Transfer Agent & Registrar

Aceto Corporation
One Hollow Lane
Lake Success, NY 11042
(516) 627-6000
www.aceto.com

Common Stock

NASDAQ Symbol: ACET

Theodore Ayvas
Director of Corporate
Communications and
Investor Relations
Aceto Corporation
One Hollow Lane
Lake Success, NY 11042
(516) 627-6000
(516) 627-6093 (fax)

Auditors

BDO Seidman, LLP
401 Broadhollow Road
Melville, NY 11747

BNY Mellon Shareowner Services
480 Washington Boulevard
Jersey City, NJ 07310-1900
Telephone Inquiries:
(877) 889-1996
(201) 680-6685
Outside the U.S.:
Hearing Impaired–TDD: (800) 231-5469
E-mail:
shrrelations@bnymellon.com
Website: www.bnymellon.com/shareowner/isd

2 0 0 8 A N N U A L R E P O R T

Financial Highlights

Fiscal Years Ended June 30,

In thousands, except per share data

Net Sales

Net Income

At Year-End

2008

2007

2006

2005

2004(1)

$359,591

13,473

$313,473

10,212

$297,328

9,237

$313,431

10,015

$296,646

13,067

Cash and Short-Term Investments

Working Capital

Long-Term Bank Debt

Shareholders’ Equity

$ 47,063

128,786

—

$ 35,356

112,930

—

$ 37,041

104,707

—

$ 25,018

94,249

—

140,409

124,827

115,053

107,655

Per Common Share (2)

Net Income (diluted)

Shareholders’ Equity

Cash Dividends

$0.54

$5.74

$0.25(3)

$ 0.41

$ 5.13

$0.175

$0.38

$4.74

$0.15

$0.41

$4.43

$0.15

$ 33,218

86,420

—

100,266

$0.53

$4.16

$0.11

(1) Includes the acquisition of Pharma Waldhof on December 31, 2003.
(2) Adjusted for stock splits, effected in the form of dividends, as appropriate.
(3) Includes $0.05 special dividend paid to shareholders on March 7, 2008.

1

A C E T O C O R P O R AT I O N

Dear Fellow Shareholders:

2007. Net income was $13.5 million or
$0.54 per diluted share in fiscal 2008,
compared to $10.2 million or $0.41 per
diluted share in fiscal 2007.

Strategic Initiatives
As we discussed in last year’s Annual Re-
port, we have several current initiatives for
growth which we call Strategic Initiatives.
These Strategic Initiatives represent areas
where we believe there is a potential sig-
nificant business opportunity. Some of our
past Strategic Initiatives were globalizing
our chemicals and colorants business, ex-
panding our organic pigments business,
enhancing our crop protection business
and moving into Eastern Europe. To vary-
ing degrees, each of these Strategic Initia-
tives has been successful and have now
been incorporated into valuable pieces of
our ongoing core businesses. It is with this
history as a backdrop that I would like to
take a look at the status of our current
Strategic Initiatives.

Fiscal 2008 Developments

The Globalization of our
Nutraceutical Business
In fiscal 2007, our nutraceutical business
had total worldwide sales of approxi-
mately $32 million with $22 million of
those sales coming from the United
States. The balance of the sales, approxi-
mately $10 million, came from Europe
and was the result of Aceto being in the
European market since 2004. As a result
of this success, and the growth potential
we saw in this market due to changing
European attitudes towards nutritional
products, we made a decision to global-
ize this important Aceto business and at
the same time make it a focus of the

Company by raising it to the level of
Strategic Initiative. During fiscal 2008, we
created an operating company, Aceto
Health Ingredients GmbH, headed by a
Director, European Nutraceuticals. This
marked Aceto’s first pan-European busi-
ness and with the integration of our Sin-
gapore operation, our sales organization
in Europe was up and running by mid-
year. This initiative has proved to be suc-
cessful and in fiscal 2008, Aceto had
worldwide nutraceutical sales of $38 mil-
lion with $12 million coming from Europe
and $3 million through our Singapore of-
fice. With the globalization of our nu-
traceutical business successful, this
Strategic Initiative will no longer be called
a Strategic Initiative and instead will be-
come a part of our core Health Sciences
business segment going forward.

Vaccines for Companion Animals
In discussing this Strategic Initiative last
year, we described a setback that we had
with respect to our efforts to have a vac-
cine for companion animals approved by
the USDA. As a result of a misunder-
standing with the USDA, it was deter-
mined that animal challenge testing,
which had already been completed,
would need to be redone under a re-
vised testing protocol. I am happy to
report that this retesting has been com-
pleted and the results, which confirm the
results from the first set of challenge test-
ing that our vaccine is efficacious, have
been submitted to the USDA for their re-
view. A protocol for a field safety test,
which we believe is the final major step in
the approval process, has been submit-
ted to the USDA for their review. Once
approved, we will commence the field
safety test. Please be reminded that the

Leonard S. Schwartz
Chairman,
Chief Executive Officer and President

Iam extremely pleased with the record

operating results that we achieved in
fiscal 2008. This marked the second
consecutive fiscal year in which Aceto has
reported record levels of both net sales
and gross profit. I am pleased to share
with you our 2008 fiscal year results and
highlight some of our current Strategic
Initiatives which we believe will be the
drivers for Aceto’s future growth.

Fiscal 2008 Financial Results

For the fiscal year ended June 30, 2008,
net sales grew 14.7% to a record level of
$359.6 million compared to $313.5 mil-
lion in fiscal 2007. Our gross profit in-
creased 23.5% to $67.3 million, a record
level for the Company, compared to
$54.5 million in fiscal 2007 and our gross
margin increased to 18.7% from 17.4% in
the last fiscal year. Operating income in-
creased 41.9% to $21.4 million in fiscal
2008 from $15.1 million in fiscal 2007.
Pre-tax income from continued opera-
tions increased 43.9% to $22.2 million in
fiscal 2008 from $15.4 million in fiscal

2

2 0 0 8 A N N U A L R E P O R T

A S T R O N G F O U N D AT I O N F O R F U T U R E G R O W T H

• Globalizing our Nutraceutical Business

• Vaccines for Companion Animals

• Entering the Japanese Pharmaceutical Market

• Finished Dosage Form Generic Drugs

approval process for this companion ani-
mal vaccine is a regulatory review and
while we continue to do everything that
we can to expedite the process, there can
be no assurance as to when the approval
process will be 100% complete.

Entering the Japanese
Pharmaceutical Market
In fiscal 2007, we made a decision to
enter the Japanese pharmaceutical mar-
ket, the second largest pharmaceutical
market in the world. In fiscal 2008, we
formed Aceto Japan, Inc. and com-
menced development activities for a
number of products for multiple cus-
tomers. To date we have received three
orders for pharmaceutical intermediates
from Japanese pharmaceutical manufac-
turers and are so encouraged by our
early successes and the increasing num-
ber of requests for samples that we have
received from Japanese pharmaceutical
manufacturers that we have enhanced
our resources there to continue to move
forward into this market and take advan-
tage of what we see as a significant
business opportunity.

Finished Dosage Form Generic Drugs
This Strategic Initiative has moved slower
than originally anticipated due to our
need to comply with Medicare, Medicaid
and private insurance reimbursement is-
sues. In fiscal 2008, we created an in-
house capability to deal with these
insurance issues and we believe that we
will work through them in fiscal 2009.
Once we work through these issues, we
believe we will be able to move forward
with our business model of sourcing
products directly from offshore generic
pharmaceutical companies and sell

directly to the large retail pharmacies,
rather than selling to other generic
pharmaceutical companies or distributors.

As we look to expand Aceto’s global
markets and grow our core businesses,
we look to move into marketplaces which
appear to be attractive for our business
model. One such opportunity is Vietnam,
where we have been granted a license to
sell medicines, medical devices and ac-
tive pharmaceutical ingredients to the
pharmaceutical industry. We currently
have two sales representatives in Viet-
nam and are in the process of forming a
representative office there. In fiscal 2008,
we had sales of almost $8 million in Viet-
nam and as we move forward, we will
commit the necessary resources to grow
our business in this vibrant marketplace.

A Look Ahead
We ended fiscal 2008 with working capi-
tal of $128.8 million, no long-term bank
debt and shareholders’ equity of $140.4
million. This level of working capital pro-
vides us with the financial strength to
capitalize on the sourcing opportunities
in highly volatile markets (China and
India) and at the same time continue to
move our strategic initiatives and other
activities forward along with our newly
created R&D work.

Since the globalization of Aceto in
1996, which since its founding in 1947
had been a manufacturers representa-
tive business with virtually all sales in
the United States, the Company has de-
veloped into a globally integrated,
highly technically capable independent
distributor. This globalization was
achieved by the establishment of our

office in Shanghai, the acquisitions of a
U.S. distribution company from Witco,
the Schweizerhall U.S. distribution busi-
ness, the 2001 acquisition of Schweizer-
hall Pharma with business locations in
Germany, France, Holland, Singapore,
India and Hong Kong, the 2004 acquisi-
tion of Pharma Waldhof from Roche, and
most recently, the creation of our Indian
headquarters and the establishment of
Aceto Japan. During this time period,
Aceto has created a highly efficient and
capable global technical/regulatory and
sourcing organization second to none,
while continuing to develop and en-
hance the entrepreneurial culture among
its 225 employees. As such, we remain
optimistic about the Company’s long-
term business prospects, with our core
businesses serving as a solid foundation
for future growth and not forgetting that
we need to continue to focus on strong
cost controls.

We would like to thank our employees,
shareholders, customers, suppliers and
other stakeholders for supporting our past
efforts and for their continued support
as we move forward together, towards
a promising future. We look forward
to updating you on Aceto’s business
initiatives and results in the future.

Sincerely,

Leonard S. Schwartz
Chairman, Chief Executive Officer
and President

3

A C E T O C O R P O R AT I O N

The Business of Aceto

O U R C O R E B U S I N E S S
C O M P E T E N C I E S

• Sourcing

• Distribution

• Quality Assurance

• Regulatory Support

Many of the world’s leading

companies rely on Aceto to
supply the chemicals they use
as raw materials and active ingredients
in their products. The Company was
established in 1947 and with more than
60 years behind us, our experience is
unmatched. In recent years, acquisitions
have made Aceto a truly global
company and one of the largest
independent global distributors of
chemicals for the pharmaceutical,
biopharmaceutical, specialty chemicals
and agrochemical industries.

Aceto’s unparalleled global resources
include strategic relationships with hun-
dreds of manufacturers of specialty,
pharmaceutical and agricultural chemi-
cals, both domestic and international.
As a result, customers in a wide range
of industries rely on Aceto to bring the
world closer to them, providing the vital
chemicals necessary for diverse and
complex product applications.

A key factor that differentiates Aceto
from other companies is its global tech-
nical network. With regional managers
in the United States, Germany, China
and India, this network provides global
quality assurance as well as global regu-
latory support for its customers. Our
global quality assurance network en-
sures that the quality of our product
meets both the specifications and in-
tended use of the product. Our global
regulatory support network performs a
unique service that allows us to source,
and qualify, the lowest cost APIs, phar-
maceutical intermediates, chemicals
and nutraceuticals from manufacturers
worldwide, enabling them to bring
products to market that they would not
otherwise be able to do on their own.

Among Aceto’s greatest strengths are
our experienced worldwide staff and
their ability to meet individual customer
needs. Our marketing, sales and techni-
cal professionals are experts in the indus-
tries they serve, and have an intimate
knowledge of worldwide sources of sup-
ply, product applications and technical
requirements. Many of our professionals
are respected leaders in our industry,
bringing 25 or more years of experience
at Aceto to customer applications. It’s
this longevity with our Company that has
fostered loyalty amongst our customers.

Aceto personnel work as partners with
customers during the product develop-
ment process, creating new applications
for existing products as well as entirely
new product lines. We offer solutions to
production challenges, generate market-
ing programs, assist with quality assur-
ance as well as government approvals
and compliance. All of these value-
added services allow Aceto’s customers
to be more responsive to their cus-
tomers, and ultimately, more competitive
in the global marketplace.

4

2 0 0 8 A N N U A L R E P O R T

Health Sciences

the API first enters the market and there
is less competition. As more competitors
enter the market, margins will generally
decline; therefore it is important to have
a sufficient number of new APIs in the
product pipeline to achieve sustainable
long-term growth. Over the coming years
as patents expire on branded drugs,
Aceto does have a pipeline of APIs
poised to reach commercial levels, both
in the United States and Europe.

As generic drug prices continue to de-
cline in the face of increased competition
in the marketplace, Aceto continues to
develop new opportunities to provide
a second-source option for existing
generic drugs. By leveraging our world-
wide sourcing, quality assurance and reg-
ulatory capabilities, we believe we can be
an alternative low-cost provider of exist-
ing APIs to generic drug companies.

In fiscal 2006, we announced a Strategic
Initiative for Aceto to distribute finished
dosage form generic drugs directly into
distribution channels. This Strategic Ini-
tiative has moved slower than originally
anticipated due to our need to comply
with Medicare, Medicaid and private in-
surance reimbursement issues. In fiscal
2008, we created an in-house capability
to deal with these insurance issues and
believe we will work through them in fis-
cal 2009. Once we have worked through
these issues, we believe we will be able
to move forward with our business model
of sourcing products directly from off-
shore generic pharmaceutical companies
and sell directly to the large retail phar-
macies, in addition to selling to other
generic pharmaceutical companies or
distributors. We believe there are no
other distribution companies attempting
to do what we are doing, attesting to
one of Aceto’s biggest competitive

strengths, the unique marriage of our
global sourcing, quality assurance and
regulatory capabilities. Our business
model provides access to the U.S. generic
pharmaceutical market for mid-size
foreign companies.

Pharmaceutical Intermediates
Aceto is a key supplier of complex chem-
ical building blocks used as pharmaceuti-
cal intermediates. These are critical
components of all drugs whether they
are already on the market or currently un-
dergoing clinical trials. Faced with signifi-
cant economic pressures as well as
ever-increasing regulatory barriers, the
innovative drug companies count on
Aceto to supply these intermediates eco-
nomically while maintaining the highest
levels of quality.

Aceto uses the same second source
strategy for our pharmaceutical interme-
diates business that we use in our API
business. Historically, pharmaceutical
manufacturers have had one single

G R O W T H D R I V E R S

• Drug patent expirations

• Expand second source API business

• Expansion of pharma intermediate

business

• Introduce vaccines for companion
animals to the U.S. market (subject
to regulatory approvals)

• Enter the Japanese pharmaceutical

market

• Introduce Aceto branded finished

dosage form generic drugs directly
into distribution channels

5

Active Pharmaceutical
Ingredients (APIs)

In recent years, as the use of generic

drugs has expanded tremendously,
Aceto’s presence in this area has like-

wise grown dramatically, both domesti-
cally and internationally. We supply APIs
to all the major generic drug companies,
who view Aceto as a valued partner in
their mission to market generic drugs
once patents have expired. We supply APIs
used to treat high cholesterol, diabetes,
depression, glaucoma and asthma, as well
as many other conditions.

The introduction of new APIs from our
pipeline to market is a process that spans
a number of years and begins by partner-
ing with a generic pharmaceutical com-
pany and selecting the API several years
before the API’s patent expires. Next, we
identify the appropriate supplier and uti-
lizing our global technical network, en-
sure they meet the highest standards of
quality to comply with U.S. or European
regulations. The generic pharmaceutical
company will submit the ANDA (Abbrevi-
ated New Drug Application) for FDA or
European equivalent approval. The intro-
duction of the API to market occurs once
the ANDA or European equivalent is
granted and the API patent expires. As a
result, our revenues in the short term can
be volatile due to customer delays, proj-
ect cancellations or delays in receiving
regulatory approval. Additionally, during
the typical life cycle of an API, we benefit
from higher gross margins earned when

A C E T O C O R P O R AT I O N

Health Sciences (continued)

source for the pharmaceutical intermedi-
ates they needed to produce their prod-
ucts. This source has principally been the
higher priced U.S., European and Japan-
ese suppliers. As the margins for the
pharmaceutical manufacturers have de-
clined due to the increased competition
from generic drugs, these manufacturers
have been looking for ways to reduce
their costs. Utilizing our global sourcing,
quality assurance and regulatory support
network, Aceto is currently working with
some of the large, global pharmaceutical
companies sourcing these lower cost
pharmaceutical intermediates for them.

Another business where Aceto has seen
nice growth is providing chemicals for
diagnostic kits used by health care
providers. This business continues to
grow nicely and we see it as a business
with more growth potential in the future
as we bring to light the advantages of
sourcing raw materials from other parts of
the world to the diagnostic companies.
This, in many ways, parallels what we are
doing with pharmaceutical intermediates.

In fiscal 2007, as we continued to look at
opportunities for Aceto to expand glob-
ally, we made a decision to enter the
Japanese pharmaceutical market, the
second largest pharmaceutical market in
the world. In fiscal 2008, we formed Aceto
Japan, Inc. and commenced develop-
ment activities for a number of products
for multiple customers. To date we have
received three orders for pharmaceutical
intermediates from Japanese pharmaceu-
tical manufacturers. We are so encour-
aged by our early successes and the
increasing number of requests for sam-
ples that we have received from Japanese
pharmaceutical manufacturers that we
have enhanced our resources there to

continue to move forward into this market
and take advantage of what we see as a
significant business opportunity.

Biopharmaceuticals
Aceto entered into the biopharmaceuti-
cal market in December 2003 with its ac-
quisition of Pharma Waldhof. We plan to
leverage the acquisition by supplying
biopharma APIs to the generic, innova-
tor, animal health and discovery indus-
tries in regulated markets (US/EU). We
are particularly focused on the biophar-
maceuticals used in the veterinary busi-
ness for companion animals, such as
vaccines and other therapies, where
regulatory pathways currently exist.

In fiscal 2007, we suffered a small set-
back in our efforts to have a 4-way vaccine
for use in the canine market approved
by the USDA. As a result of a misunder-
standing with the USDA, it was deter-
mined that animal challenge testing,
which had already been completed,
would need to be redone under a re-
vised testing protocol. This retesting has
been completed and the results, which
confirm the results from the first set of
challenge testing that our vaccine is effi-
cacious, have been submitted to the
USDA for their review. A protocol for a
field safety test, which we believe is the
final major step in the approval process,
has been submitted to the USDA for
their review. Once approved, we will
commence the field safety test. While
we continue to do everything we can to
expedite the approval process, there can
be no assurance given as to when the
approval process will be 100% com-
pleted. Our application represents the
first time the USDA has been asked to
approve a foreign produced vaccine for
companion animals for use in the United

States. The USDA has therefore been
extremely cautious throughout the
process. Once we receive the USDA
approval, we plan to enter the market
promptly with Aceto branded product.

Nutraceuticals
In fiscal 2007, our nutraceutical business,
supplying the raw materials used in the
production of nutritional supplements,
including vitamins, amino acids, iron
compounds, and biochemicals, had total
worldwide sales of approximately $32
million with $22 million of those sales
coming from the United States. The bal-
ance of the sales, approximately $10 mil-
lion, came from Europe and was the
result of Aceto being in the European
market since 2004. As a result of this suc-
cess, and the growth potential we saw in
this market due to changing European
attitudes towards nutritional products,
we made a decision to globalize this im-
portant Aceto business and at the same
time make it a focus of the Company by
raising it to the level of Strategic Initia-
tive. In July 2008, we created an operat-
ing company, Aceto Health Ingredients
GmbH, headed by a Director, European
Nutraceuticals. This marked Aceto’s first
pan-European business and with the in-
tegration of our Singapore operation,
our sales organization in Europe was up
and running by mid-year. This initiative
has proved to be successful and in fiscal
2008, Aceto had worldwide nutraceutical
sales of $38 million with $12 million com-
ing from Europe and $3 million through
our Singapore office. With the globaliza-
tion of our nutraceutical business suc-
cessful, this Strategic Initiative will no
longer be called a Strategic Initiative
and instead will become a part of our
core Health Sciences business segment
going forward.

6

2 0 0 8 A N N U A L R E P O R T

Chemicals & Colorants

Aceto is a major supplier to the

many different industries that
require outstanding performance

from chemical raw materials and
additives. We provide chemicals used to
make plastics, surface coatings, textiles,
fuels and lubricants. These products
include antioxidants, photo initiators,
catalysts, cross linkers (curatives),
brighteners and adhesion promoters.

G R O W T H D R I V E R S

• Globalizing our Chemicals and

Colorants Business

• Rapid pace of new product

development

• Leveraging our position in chemical
consuming industries by broadening
our product line

• New supplier development

Aceto is at the forefront as a supplier of
chemicals to ecofriendly technologies.
For example, we supply UV photo ini-
tiators that allow inks and coatings to
be cured by ultraviolet light instead of
solvents. We also supply curing agents
and optical brighteners for powder
(non solvent) coatings. These growing
technologies are critical in protecting
the world’s ecology.

We also provide specialty chemicals for
the food, beverage and flavor and fra-
grance industries. Many of Aceto’s raw
materials also find their way into high
tech products like high end electronic
parts (circuit boards and computer chips)
and binders for specialized rocket fuels.

Organic Intermediates and Colorants
The color producing industry manufac-
tures a wide assortment of products and
Aceto is and has been the supplier of
choice to these producers of “color.”
From textiles and plastics to inks and
paints, our specialty colorant intermedi-
ates allow manufacturers to develop an

endless rainbow of colorful possibilities
for fabrics, decorative effects, automo-
biles, and countless other objects the
world uses every day.

Applications for Aceto’s organic
intermediates include:

• Color pigments for vibrant printing

inks used in color newspapers

• Inks for computer ink jet printing

• Automotive, industrial and residential

coatings

• Dyes for colorful textiles for both

natural and synthetic fibers

• Color photography and papers

• Colors for fuels like gasoline

• FDA-approved colorants for foods

and pharmaceuticals.

Aceto continues to respond to the
changing needs of our customers in the
color producing industry by taking our
resources and knowledge of color inter-
mediates downstream as a supplier of
select organic pigments.

Aceto’s organic intermediates are also
crucial building blocks in the produc-
tion of many high quality agrochemicals
utilized by farmers throughout the
world. Agricultural applications for our
organic intermediates include herbi-
cides, insecticides, fungicides and other
functional pesticides.

7

A C E T O C O R P O R AT I O N

Crop Protection

The world is dependent on

agriculture for all kinds of
products—and Aceto has
become a valued partner to the global
agricultural industry by providing
superior quality chemicals. Aceto’s most
widely used crop protection product is a
sprout inhibitor that extends the storage
life of potatoes. The chemicals we supply
include herbicides, fungicides, and
insecticides that control weed growth
and that control the spread of insects
and microorganisms that can severely
damage plant growth.

We secure entry into the marketplace
in several ways. The first of these is by
partnering with a distributor which we
successfully did in fiscal 2007 when we
launched generic Asulam, a herbicide
used on sugar cane. Under a multi-year
contract with a major agricultural
chemical distributor, we began supplying
the product in the United States. This
approval marked an important first in
our history, as it was the first generic

registration that Aceto has received.
Another way that we secure our entry
into the marketplace is by partnering
with a supplier. We have entered into an
agreement with a large agrochemical
company to launch a product which we
believe we will begin selling in the 2009
growing season. A third way we secure
entry into the marketplace is by acting
as a sole principal. We currently have
a product pending EPA registration
approval which we expect to begin
selling with the 2009 growing season. In
addition to these products, we have two
products that we expect to file with the
EPA by the end of calendar 2008. We will
continue to look for additional products
that fit into our marketplace entry model
in the future. We believe that the
combination of our global sourcing and
regulatory capabilities makes Aceto an
attractive partner and has provided us
with several new opportunities which we
are currently working on.

G R O W T H D R I V E R S

• Partner with distribution companies
to secure entry into the marketplace

• Acquire additional new products

for distribution by the acquisition or
development of intellectual property
leading to an EPA label (official license
to sell)

• Geographic expansion of existing

products

Quality Assurance & Regulatory Affairs

Aceto is proud of its global

technical network that provides
both global quality assurance and

global regulatory support. We believe
that we are unique in this capability
and that this is the KEY differentiator
between Aceto and other companies.

Our global quality assurance network,
with regional managers in the United
States, Germany, China and India, ensures
that the quality of a product meets both
its specifications and its intended use.
Our global technical network consists
of 28 full-time employees, 26 of whom
specialize in pharmaceutical development

8

activities. This network performs a unique
service that allows Aceto to source, and
qualify, the lowest cost APIs,
pharmaceutical intermediates, chemicals
and nutraceuticals from around the world.
It also provides substantial regulatory
support and technical assistance to
manufacturers worldwide, enabling them
to meet the stringent regulatory
guidelines that govern the chemically
derived pharmaceutical,
biopharmaceuticals, specialty chemicals
and agrochemicals industry and bring
products to market that they would not
otherwise be able to do by themselves.

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

FORM 10-K 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) 
OF THE SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended June 30, 2008 
Commission file number 000-04217 

ACETO CORPORATION  
(Exact name of registrant as specified in its charter) 

New York 
(State or other jurisdiction of 
incorporation or organization) 

11-1720520 
(I.R.S. Employer Identification 
Number) 

One Hollow Lane, Lake Success, NY 11042 
(Address of principal executive offices) 

(516) 627-6000 
(Registrant's telephone number, including area code) 

Securities registered pursuant to Section 12 (b) of the Act: 

Common Stock, par value $.01 per share 
(Title of Class) 

The NASDAQ Global Select Market  
(Name of each exchange on which registered) 

Securities registered pursuant to Section 12 (g) of the Act:  None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes [  ]  No [X] 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. 
Yes [  ]  No [X] 

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and 
will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by 
reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [  ] 

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

Large accelerated filer [  ] 

Accelerated filer [X] 

Non-accelerated filer [  ] 

Smaller reporting company [  ] 

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The aggregate market value of the voting stock of the Company held by non-affiliates of the Company based on the closing 
price of the common stock on December 31, 2007 as reported on the NASDAQ Global Select Market, was approximately 
$192,485,400. 

The Registrant has 24,445,572 shares of common stock outstanding as of September 2, 2008. 

Documents incorporated by reference:  The information required in response to Part III of this Annual Report on Form 10-K 
is hereby incorporated by reference to the specified portions of the Registrant’s definitive proxy statement for the annual 
meeting of shareholders to be held on December 4, 2008. 

2 

2

  
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
FORM 10-K 
FOR THE FISCAL YEAR ENDED JUNE 30, 2008 

                 TABLE OF CONTENTS 

Business 
Risk Factors 
Unresolved Staff Comments 
Properties 
Legal Proceedings 
Submission of Matters to a Vote of Security Holders 

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of 
Equity Securities 
Selected Financial Data 
Management’s Discussion and Analysis of Financial Condition and Results of Operations 
Quantitative and Qualitative Disclosures About Market Risk 
Financial Statements and Supplementary Data 
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 
Controls and Procedures 
Other Information 

Directors, Executive Officers and Corporate Governance 
Executive Compensation 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
Certain Relationships and Related Transactions and Director Independence 
Principal Accountant Fees and Services 

Exhibits and Financial Statement Schedules 

PART I. 

Item 1. 
Item 1A. 
Item 1B. 
Item 2. 
Item 3. 
Item 4. 

PART II. 

Item 5. 

Item 6. 
Item 7. 
Item 7A. 
Item 8. 
Item 9. 
Item 9A. 
Item 9B. 

PART III. 

Item 10. 
Item 11. 
Item 12. 
Item 13. 
Item 14. 

PART IV. 

Item 15. 
Signatures 

3

 
 
 
 
 
 
                     
 
 
       
 
 
 
 
 
 
 
 
 
       
 
 
 
 
       
 
 
 
PART I 

CAUTIONARY STATEMENT RELATING TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES 
LITIGATION REFORM ACT OF 1995 

This Annual Report on Form 10-K and the information incorporated by reference includes “forward-looking statements” 
within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  
We intend those forward looking-statements to be covered by the safe harbor provisions for forward-looking statements.  All 
statements regarding our expected financial position and operating results, our business strategy, our financing plans and the 
outcome of any contingencies are forward-looking statements.  Any such forward-looking statements are based on current 
expectations, estimates, and projections about our industry and our business.  Words such as “anticipates,” “expects,” 
“intends,” “plans,” “believes,” “seeks,” “estimates,” or variations of those words and similar expressions are intended to 
identify such forward-looking statements.  Forward-looking statements are subject to risks and uncertainties that could cause 
actual results to differ materially from those stated in or implied by any forward-looking statements.  Factors that could cause 
actual results to differ materially from forward-looking statements include, but are not limited to, unforeseen environmental 
liabilities, international military conflicts, the mix of products sold and their profit margins, order cancellation or a reduction 
in orders from customers, competitive product offerings and pricing actions, the availability and pricing of key raw materials, 
dependence on key members of management, risks of entering into new European markets, and economic and political 
conditions in the United States and abroad. 

In this Annual Report, all dollar amounts are expressed in thousands, except share prices and per-share amounts. 

NOTE REGARDING DOLLAR AMOUNTS 

Item 1.  Business 

General 

Aceto Corporation, together with its consolidated subsidiaries, are referred to herein collectively as “Aceto”, “Company”, 
“we”, “us”, and “our” unless the content indicates otherwise.  Aceto was incorporated in 1947 in the State of New York.  We 
are a global leader in the sourcing, quality assurance, regulatory support, marketing and distribution of chemically derived 
pharmaceuticals, biopharmaceuticals, specialty chemicals and crop protection products.  Our business is organized along 
product lines into three principal segments: Health Sciences, Chemicals & Colorants and Crop Protection. 

The Health Sciences segment is our largest segment in terms of both sales and gross profit. Products that fall within this 
segment include active pharmaceutical ingredients (APIs), pharmaceutical intermediates, nutraceuticals and 
biopharmaceuticals.     

We typically partner with both customers and suppliers years in advance of a drug coming off patent to provide the generic 
equivalent.  We believe we have a pipeline of new APIs poised to reach commercial levels over the coming years as the 
patents on existing drugs expire, both in the United States and Europe. In addition, we continue to explore opportunities to 
provide a second-source option for existing generic drugs with approved abbreviated new drug applications (ANDAs). The 
opportunities that we are looking for are to supply the APIs for the more mature generic drugs where pricing has stabilized 
following the dramatic decreases in price that these drugs experienced after coming off patent.  As is the case in the generic 
industry, the entrance into the market of other generic competition generally has a negative impact on the pricing of the 
affected products.  By leveraging our worldwide sourcing, quality assurance and regulatory capabilities, we believe we can 
be an alternative lower cost, second-source provider of existing APIs to generic drug companies. 

According to IMS Health, the global pharmaceutical market is expected to grow 5-6% in 2008 to approximately $745 billion.  
In the United States, sales growth is expected to range from 4-5% which marks a historic low for the United States.  Key 
factors limiting the growth in this market include a leveling off of growth from the introduction of the Medicare Part D 
prescription drug benefit, patent expirations of branded products and an associated increase in the use of lower cost generic 
drugs, and an increased pressure from governmental authorities and managed care providers to control costs.  

The Chemicals & Colorants segment is a major supplier to the many different industries that require outstanding performance 
from chemical raw materials and additives.  Products that fall within this segment include intermediates for dyes, pigments 
and agrochemicals.  We provide chemicals used to make plastics, surface coatings, textiles, lubricants, flavors and fragrances. 
Many of Aceto’s raw materials are also used in high-tech products like high-end electronic parts (circuit boards and computer 

4  

 
 
 
 
 
 
 
 
chips) and binders for specialized rocket fuels. We are currently responding to the changing needs of our customers in the 
color producing industry by taking our resources and knowledge downstream as a supplier of select organic pigments. We 
expect that continued global Gross Domestic Product growth will drive higher demand for the chemical industry, especially 
in China and other emerging regions of the world. With supply growth limited, we expect that industry supply/demand 
balances will remain favorable. However, continued volatility in energy costs will add uncertainty to our profit outlook. 

According to the American Chemistry Council, leading indicators of global industrial production continue to suggest a 
slowing down of activity.   Overall, on a year-over-year basis, global chemical industry production increased by a modest 
2.5%. 

The Crop Protection segment sells herbicides, fungicides, insecticides, and other agricultural chemicals to customers, 
primarily located in the United States and Western Europe. In fiscal 2007, we entered into a multi-year contract with a major 
agricultural chemical distributor and launched generic Asulam, an herbicide for sugar cane and the first generic registration 
that we have received.  Our plan is to continue to develop our pipeline and bring to market additional products in a similar 
manner. In May 2008, the Company sold an insecticide product to its patent owner in conjunction with litigation settlement 
involving an expired license. 

According to the US Department of Agriculture, total acreage planted in 2008 increased by 1.3% to slightly more than 324 
million acres.  The number of peanut acres planted in 2008 was up approximately 19% from 2007 levels, sugar cane acreage 
was down 0.9% from 2007 and potato acres planted in 2008 were down 10.6% from 2007 levels.  

Our main business strengths are sourcing, quality assurance, regulatory support, marketing and distribution. With a physical 
presence in ten countries, we distribute over 1000 pharmaceuticals and chemicals used principally as raw materials in the 
pharmaceutical, agricultural, color, surface coating/ink and general chemical consuming industries. We believe that we are 
currently the largest buyer of pharmaceutical and specialty chemicals for export from China, purchasing from over 500 
different manufacturers. 

Our presence in China, Germany, France, the Netherlands, Singapore, India, Poland, Hong Kong, Japan, the United Kingdom 
and the United States, along with strategically located warehouses worldwide, enable us to respond quickly to demands from 
customers worldwide, assuring that a consistent, high-quality supply of pharmaceutical, biopharmaceutical, specialty 
chemicals and crop protection products are readily accessible.  We are able to offer our customers competitive pricing, 
continuity of supply, and quality control.  We believe our 60 years of experience, our reputation for reliability and stability, 
and our long-term relationships with suppliers have fostered loyalty among our customers. 

We remain confident about our business prospects.  We anticipate continued organic growth which will be enhanced through 
our plans to enter the market for companion animal vaccines,  the market for finished dosage form generic drugs,  the 
Japanese pharmaceutical market, the continued globalization of our Chemicals & Colorants business, the further 
globalization of our nutraceutical business, the  expansion of our crop protection segment by acquisition of product lines and 
intellectual property, the continued enhancement of our sourcing operations in China and India, and the steady improvement 
of our quality assurance and regulatory capabilities. 

We believe our track record of continuous product introductions demonstrates that Aceto has come to be recognized by the 
worldwide generic pharmaceutical industry as an important, reliable supplier.  Our plans involve seeking strategic 
acquisitions that enhance our earnings and forming alliances with partners that add to our capabilities, when possible.   

Information concerning revenue and gross profit attributable to each of our reportable segments is found in Part II, Item 7, 
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and in Note 19 to the 
Consolidated Financial Statements, Part II, Item 8, “Financial Statements and Supplementary Data.”  

Products and Customers 

During the fiscal years ended June 30, 2008 and 2007, approximately 67% and 65%, respectively, of our purchases were 
from Asia and approximately 19% and 21%, respectively, were from Europe. 

Our customers are primarily located throughout the United States, Europe and Asia.  They include a wide range of companies 
in the industrial chemical, agricultural, and health science industries, and range from small trading companies to Fortune 500 
companies.  During fiscal years 2008 and 2007, sales made to customers in the United States totaled $165,287 and $153,147, 
respectively.  Sales made to customers outside the United States during fiscal years 2008 and 2007 totaled $194,304 and 
$160,326, respectively, of which, approximately 58% were to customers located in Europe. 

5  

 
 
   
 
 
 
 
 
The chemical industry is highly competitive.  We compete by offering high-quality products produced around the world by 
both large and small manufacturers at attractive prices.  Because of our long standing relationships with many suppliers as 
well as our sourcing operations in both China and India, we are able to ensure that any given product is manufactured at a 
facility that is appropriate for that product.  For the most part, we store our inventory of chemicals in public warehouses 
strategically located throughout the United States, Europe, and Asia, and we can therefore fill orders rapidly from inventory.  
We have developed ready access to key purchasing, research, and technical executives of our customers and suppliers.  This 
allows us to ensure that when necessary, sourcing decisions can be made quickly.   

No single product or customer accounted for as much as 10% of net sales in fiscal years 2008, 2007 or 2006.  No single 
supplier accounted for as much as 10% of purchases in fiscal 2008 and 2007.    

We hold no patents, licenses, franchises or concessions that we consider material to our operations.   

Our subsidiary Aceto Agricultural Chemicals Corp. (Aceto Agricultural) markets and contracts for the manufacture of, 
certain crop protection products that are subject to the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).  Under 
FIFRA, companies that wish to market pesticides must provide test data to the Environmental Protection Agency (EPA) to 
register, obtain and maintain approved labels for those pesticides.  The EPA requires that follow-on registrants of these 
products, on a basis prescribed in the FIFRA regulations, compensate the initial registrant for the cost of producing the 
necessary test data.  Follow-on registrants do not themselves generate or contract for the data.  However, when FIFRA 
requirements mandate that new test data be generated to enable all registrants to continue marketing a pesticide product, often 
both the initial and follow-on registrants establish a task force to jointly undertake, and pay for, the testing effort.  We are 
currently a member of three such task force groups and historically, our payments have been in the range of $100 - $250 per 
year.  We may be required to make such additional payments in the future. 

Employees 

At June 30, 2008, we had 227 employees, none of whom were covered by a collective bargaining agreement. 

Item 1A.  Risk factors 

You should carefully consider the following risk factors and other information included in this Annual Report.  The risks and 
uncertainties described below are not the only ones we face.  Additional risks and uncertainties not currently known to us or 
that we currently deem immaterial may also impair our business operations.  If any of the following risk factors occur, our 
business, financial condition, operating results and cash flows could be materially adversely affected. 

If we are unable to compete effectively with our competitors, many of which have greater market presence and resources 
than us, our profitability and financial condition will be adversely affected. 

Our financial condition and operating results are directly related to our ability to compete in the intensely competitive 
worldwide chemical market.  We face intense competition from global and regional distributors of chemical products, many 
of which are large chemical manufacturers as well as distributors.  Many of these companies have substantially greater 
resources than us, including greater financial, marketing and distribution resources. We cannot assure you that we will be 
able to compete successfully with any of these companies. In addition, increased competition could result in price reductions, 
reduced margins and loss of market share for our services, all of which would adversely affect our business, results of 
operations and financial condition.  

Our distribution operations concentrate on generic products and therefore are subject to the risks of the generic industry.  

The ability of our business to provide consistent, sequential quarterly growth is affected, in large part, by our participation in 
the launch of new products by generic manufacturers and the subsequent advent and extent of competition encountered by 
these products. This competition can result in significant and rapid declines in pricing with a corresponding decrease in net 
sales. Our margins can also be affected by the risks inherent to the generic industry. 

Healthcare reform and a reduction in the reimbursement levels by governmental authorities, HMOs, MCOs or other third-
party payors may adversely affect our business.  

Third party payors increasingly challenge pricing of pharmaceutical products. The trend toward managed healthcare, the 
growth of organizations such as HMOs and MCOs and legislative proposals to reform healthcare and government insurance 

6  

 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
programs could significantly influence the purchase of pharmaceutical products, resulting in lower prices and a reduction in 
product demand. Such cost containment measures and healthcare reform could affect our ability to sell our products and 
could have a material adverse effect on our business, results of operations, financial condition and cash flows.  

We may incur significant uninsured environmental and other liabilities inherent in the chemical distribution industry that 
would have a negative effect on our financial condition. 

The business of distributing chemicals is subject to regulation by numerous federal, state, local, and foreign governmental 
authorities.  These regulations impose liability for loss of life, damage to property and equipment, pollution and other 
environmental damage that may occur in our business.  Many of these regulations provide for substantial fines and 
remediation costs in the event of chemical spills, explosions and pollution.  While we believe that we are in substantial 
compliance with all current laws and regulations, we can give no assurance that we will not incur material liabilities that 
exceed our insurance coverage or that such insurance will remain available on terms and at rates acceptable to us. 
Additionally, if existing environmental and other regulations are changed, or additional laws or regulations are passed, the 
cost of complying with those laws may be substantial, thereby adversely affecting our financial performance.   

In fiscal 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially responsible parties 
(PRP Group) who are working with the State of Tennessee (the State) to remediate a contaminated property in Tennessee 
called the Pulvair site. The PRP Group has alleged that Aceto shipped hazardous substances to the site which were released 
into the environment.   The State had begun administrative proceedings against the members of the PRP group and Aceto 
with respect to the cleanup of the Pulvair site and the group has begun to undertake cleanup. The PRP Group is seeking a 
settlement of approximately $2,100 from the Company for its share to remediate the site contamination. Although the 
Company acknowledges that it shipped materials to the site for formulation over twenty years ago, the Company believes that 
the evidence does not show that the hazardous materials sent by Aceto to the site have significantly contributed to the 
contamination of the environment. Accordingly, the Company believes that the settlement offer is unreasonable. 
Alternatively, counsel to the PRP Group has proposed that Aceto join it as a participating member and pay 3.16% of the PRP 
Group's cost.  The Company believes that this percentage is high because it is based on the total volume of materials that 
Aceto sent to the site, most of which were non-hazardous substances and as such, believes that, at most, it is a de minimus 
contributor to the site contamination. The impact of the resolution of this matter on the Company's results of operations in a 
particular reporting period is not known.  However, management believes that the ultimate outcome of this matter will not 
have a material adverse effect on the Company's financial condition or liquidity. 

Our subsidiary, Arsynco, has environmental remediation obligations in connection with its former manufacturing facility in 
Carlstadt, New Jersey. Estimates of how much it would cost to remediate environmental contamination at this site have 
increased since the facility was closed in 1993.  If the actual costs are significantly greater than estimated, it could have a 
material adverse effect on our financial condition, operating results and cash flows. 

In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental 
Response, Compensation and Liability Act (CERCLA) for a site described as the Berry’s Creek Study Area.   Arsynco is one 
of over 150 PRPs which have potential liability for the required investigation and remediation of the site.  The estimate of the 
potential liability is not quantifiable for a number of reasons, including the difficulty in determining the extent of 
contamination and the length of time remediation may require.  In addition, any estimate of liability must also consider the 
number of other PRPs and their financial strength.  Based on prior practice in similar situations, it is possible that the State 
may assert a claim for natural resource damages with respect to the Arsynco site itself, and either the federal government or 
the State (or both) may assert claims against Arsynco for natural resource damages in connection with Berry's Creek; any 
such claim with respect to Berry's Creek could also be asserted against the approximately 150 PRPs which the EPA has 
identified in connection with that site.  Any claim for natural resource damages with respect to the Arsynco site itself may 
also be asserted against BASF, the former owners of the Arsynco property. Since an amount of the liability can not be 
reasonably estimated at this time, no accrual is recorded for these potential future costs.  The impact of the resolution of this 
matter on the Company’s results of operations in a particular reporting period is not known.  However, management believes 
that the ultimate outcome of this matter will not have a material adverse effect on the Company’s financial condition or 
liquidity. 

The distribution and sale of our products are subject to prior governmental approvals and thereafter ongoing governmental 
regulation.  

Our products are subject to laws administered by federal, state and foreign governments, including regulations requiring 
registration and approval of many of our products. More stringent restrictions could make our products less desirable, which 
would adversely affect our revenues and profitability. Some of our products are subject to the EPA registration and re-

7  

 
 
 
 
 
 
 
registration requirements, and are registered in accordance with FIFRA. Such registration requirements are based, among 
other things, on data demonstrating that the product will not cause unreasonable adverse effects on human health or the 
environment when used according to approved label directions. Governmental regulatory authorities have required, and may 
require in the future, that certain scientific data requirements be performed on our products and this may require us on our 
behalf or in joint efforts with other registrants to perform additional testing.  Responding to such requirements may cause 
delays in or the cessation of the sales of one or more of our products which would adversely affect our profitability. We can 
provide no assurance that any testing approvals or registrations will be granted on a timely basis, if at all, or that our 
resources will be adequate to meet the costs of regulatory compliance or that the economic benefit of complying with the 
requirement will exceed our cost. 

Tax legislation and assessments by various tax authorities may be materially different than the amounts we have provided for 
in our consolidated financial statements. 

We are regularly audited by federal, state, and foreign tax authorities. From time to time, these audits may result in proposed 
assessments. While we believe that we have adequately provided for any such assessments, future settlements may be 
materially different than we have provided for and thereby adversely affect our earnings and cash flows.  

We operate in various tax jurisdictions, and although we believe that we have provided for income and other taxes in 
accordance with the relevant regulations, if the applicable regulations were ultimately interpreted differently by a taxing 
authority, we may be exposed to additional tax liabilities. From time to time, various legislative initiatives may be proposed 
that could adversely affect our tax positions. There can be no assurance that our effective tax rate will not be adversely 
affected by these initiatives. 

Our acquisition strategy is subject to a number of inherent risks, including the risk that our acquisitions may not be 
successful. 

We continually seek to expand our business through acquisitions of other companies that complement our own and through 
joint ventures, licensing agreements and other arrangements. Any decision regarding strategic alternatives would be subject 
to inherent risks, and we cannot guarantee that we will be able to identify the appropriate opportunities, successfully 
negotiate economically beneficial terms, successfully integrate any acquired business, retain key employees, or achieve the 
anticipated synergies or benefits of the strategic alternative selected. Acquisitions can require significant capital resources 
and divert our management’s attention from our existing business. Additionally, we may issue additional shares in connection 
with a strategic transaction, thereby diluting the holdings of our existing common shareholders, incur debt or assume 
liabilities, become subject to litigation, or consume cash, thereby reducing the amount of cash available for other purposes.   

 Any acquisition that we make could result in a substantial charge to our earnings. 

We have previously incurred charges to our earnings in connection with acquisitions, and may continue to experience charges 
to our earnings for any acquisitions that we make, including large and immediate write-offs of acquired assets, or impairment 
charges. These costs may also include substantial severance and other closure costs associated with eliminating duplicate or 
discontinued products, employees, operations and facilities. These charges could have a material adverse effect on our results 
of operations for particular quarterly periods and they could possibly have an adverse impact on the market price of our 
common stock.  

Our revenue stream and related gross profit is difficult to predict. 

Our revenue stream is difficult to predict because it is primarily generated as customers place orders and customers can 
change their requirements or cancel orders. Many of our sales orders are short-term and may be cancelled at any time. As a 
result, much of our revenue is not recurring from period to period, which contributes to the variability of our results from 
period to period. In addition, certain of our products carry a higher gross margin than other products, particularly in the 
Health Sciences segment. Reduced sales of these higher margin products could have a significant impact on our operating 
results. We believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future 
performance.  

Our operating results may fluctuate in future quarters, which may adversely affect the trading price of our common stock. 

Our operating results will fluctuate on a quarterly basis as a result of a number of factors, including the timing of contracts, 
the delay or cancellation of a contract, and changes in government regulations. Any one of these factors could have a 

8  

 
 
 
 
 
 
 
 
 
 
 
 
significant impact on our quarterly results. In some quarters, our revenue and operating results may fall below the 
expectations of securities analysts and investors, which would likely cause the trading price of our common stock to decline.  

Failure to obtain products from outside manufacturers could adversely affect our ability to fulfill sales orders to our 
customers.   

We rely on outside manufacturers to supply products for resale to our customers.  Manufacturing problems, including 
manufacturing delays caused by plant shutdowns and issues that may arise due to the restrictions of transporting chemicals 
related to the 2008 Summer Olympics in Beijing, may occur with these and other outside sources. If such problems occur, we 
cannot assure that we will be able to deliver our products to our customers profitably or on time.  

Our potential liability arising from our commitment to indemnify our directors, officers and employees could adversely affect 
our earnings and financial condition. 

We have committed in our bylaws to indemnify our directors, officers and employees against the reasonable expenses 
incurred by these persons in connection with an action brought against him or her in such capacity, except in matters as to 
which he or she is adjudged to have breached a duty to us.  The maximum potential amount of future payments we could be 
required to make under this provision is unlimited. While we have ”directors and officers” insurance policies that covers a 
portion of this potential exposure, we may be adversely affected if we are required to pay damages or incur legal costs in 
connection with a claim above our insurance limits.  

Our business may give rise to product liability claims not covered by insurance or indemnity agreements.  

The marketing, distribution and use of chemical products involves substantial risk of product liability claims. A successful 
product liability claim that we have not insured against, that exceeds our levels of insurance or that we are not indemnified 
for may require us to pay a substantial amount of damages. In the event that we are forced to pay such damages, this payment 
may have a material adverse effect on our financial and operating results. 

Our business may be adversely affected by terrorist activities. 

Our business depends on the free flow of products and services through the channels of commerce.  Instability due to 
military, terrorist, political and economic actions in other countries could materially disrupt our overseas operations and 
export sales.  In fiscal years 2008 and 2007, approximately 54% and 53%, respectively, of our revenues were attributable to 
operations conducted abroad and to sales generated from the United States to foreign countries.  In addition, in fiscal year 
2008, approximately 67% and 19% of our purchases came from Asia and Europe, respectively.  In addition, in certain 
countries where we currently operate or export, intend to operate or export, or intend to expand our operations, we could be 
subject to other political, military and economic uncertainties, including labor unrest, restrictions on transfers of funds and 
unexpected changes in regulatory environments. 

Fluctuations in foreign currency exchange rates may adversely affect our results of operations and financial condition. 

A substantial portion of our revenue is denominated in currencies other than the U.S. dollar because certain of our foreign 
subsidiaries operate in their local currencies.  Our results of operations and financial condition may therefore be adversely 
affected by fluctuations in the exchange rate between foreign currencies and the U.S. dollar.    

We rely heavily on key executives for our financial performance. 

Our financial performance is highly dependent upon the efforts and abilities of our key executives. The loss of the services of 
any of our key executives could therefore have a material adverse effect upon our financial position and operating results. 
None of our key executives has an employment agreement with us and we do not maintain “key-man” insurance on any of 
our key executives. 

Violations of cGMP and other government regulations could have a material adverse affect on our business, financial 
condition and results of operations. 

All facilities and manufacturing techniques used to manufacture products for clinical use or for commercial sale in the United 
States must be operated in conformity with current Good Manufacturing Practices ("cGMP") regulations as required by the 
FDA. Our suppliers’ facilities are subject to scheduled periodic regulatory and customer inspections to ensure compliance 
with cGMP and other requirements applicable to such products. A finding that we had materially violated these requirements 

9  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
could result in one or more regulatory sanctions, loss of a customer contract, disqualification of data for client submissions to 
regulatory authorities and a mandated closing of our suppliers’ facilities, which in turn could have a material adverse effect 
on our business, financial condition and results of operations. 

Litigation may harm our business and our management and financial resources. 

Substantial, complex or extended litigation could cause us to incur large expenditures and could distract our management. 
For example, lawsuits by employees, stockholders, collaborators, distributors, customers, or end-users of our products or 
services could be very costly and substantially disrupt our business. Disputes from time to time with such companies or 
individuals are not uncommon, and we cannot assure you that we will always be able to resolve such disputes out of court or 
on favorable terms. 

The market price of our stock could be volatile. 

The market price of our common stock has been subject to volatility and may continue to be volatile in the future, due to a 
variety of factors, including: 

• 
• 
• 
• 
• 
• 
• 
• 

quarterly fluctuations in our operating income and earnings per share results 
technological innovations or new product introductions by us or our competitors 
economic conditions 
disputes concerning patents or proprietary rights 
changes in earnings estimates and market growth rate projections by market research analysts 
sales of common stock by existing security holders 
loss of key personnel 
securities class actions or other litigation 

The market price for our common stock may also be affected by our ability to meet analysts' expectations. Any failure to 
meet such expectations, even slightly, could have an adverse effect on the market price of our common stock.  In addition, the 
stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market 
prices of securities issued by many companies for reasons unrelated to the operating performance of these companies. 

Incidents related to hazardous materials could adversely affect our business. 

Portions of our operations require the controlled use of hazardous materials.  Although we are diligent in designing and 
implementing safety procedures to comply with the standards prescribed by federal, state, and local regulations, the risk of 
accidental contamination of property or injury to individuals from these materials cannot be completely eliminated. In the 
event of such an incident, we could be liable for any damages that result, which could adversely affect our business. 

There are inherent uncertainties involved in estimates, judgments and assumptions used in preparing financial statements in 
accordance with U.S. generally accepted accounting principles.  Any changes in the estimates, judgments and assumptions 
we use could have a material adverse effect on our financial position and results of operations. 

The consolidated financial statements included in the periodic reports we file with the SEC are prepared in accordance with 
U.S. generally accepted accounting principles (“GAAP”).  Preparing financial statements in accordance with GAAP involves 
making estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues, expenses and 
income. Estimates, judgments and assumptions are inherently subject to change, and any such changes could result in 
corresponding changes to the reported amounts.   

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have an 
adverse effect on our business and stock price. 

Section 404 of the Sarbanes-Oxley Act requires us to evaluate annually the effectiveness of our internal controls over 
financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our 
internal controls over financial reporting in our annual report. Section 404 also requires our independent registered public 
accounting firm to report on our internal controls over financial reporting. If we fail to maintain the adequacy of our internal 
controls, we cannot assure you that we will be able to conclude in the future that we have effective internal controls over 
financial reporting. If we fail to maintain effective internal controls, we might be subject to sanctions or investigation by 
regulatory authorities, such as the Securities and Exchange Commission or NASDAQ.  Any such action could adversely 

10  

 
 
 
 
 
 
 
 
 
 
 
 
affect our financial results and the market price of our common stock and may also result in delayed filings with the 
Securities and Exchange Commission. 

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.  

Complying with changing laws, regulations and standards relating to corporate governance and public disclosure, including 
the Sarbanes-Oxley Act of 2002 and new SEC regulations will require the Company to expend additional resources. We are 
committed to maintaining the highest standards of corporate governance and public disclosure. As a result, we will continue 
to invest necessary resources to comply with evolving laws, regulations and standards, and this investment may result in 
increased expenses and a diversion of management time and attention from revenue-generating activities. 

Available information 

We file annual, quarterly, and current reports, proxy statements, and other information with the U.S. Securities and Exchange 
Commission.  You may read and copy any document we file at the SEC’s public reference room at 100 F Street, NE, 
Washington, D.C. 20549. 

You may call the SEC at 1-800-SEC-0330 for information on the public reference room.  The SEC maintains a website that 
contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including Aceto) file 
electronically with the SEC.  The SEC’s website is www.sec.gov. 

Our website is www.aceto.com.  We make available free of charge through our Internet site, via a link to the SEC’s website 
at www.sec.gov, our annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; Forms 3, 4 
and 5 filed on behalf of our directors and executive officers; and any amendments to those reports and forms.  We make these 
filings available as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The 
information on our website is not incorporated by reference into this Annual Report. 

Item 1B.  Unresolved Staff Comments 

None. 

Item 2.  Properties 

Our general headquarters and main sales office occupy approximately 26,000 gross square feet of leased space in an office 
building in Lake Success, New York.  The lease expires in April 2011. 

In November 2007, we purchased approximately 2,300 gross square meters of land along with 12,000 gross square feet of 
office space in Mumbai, India to develop our infrastructure in order to capitalize on the Indian pharmaceutical market. 

Arsynco’s former manufacturing facility is located on a 12-acre parcel in Carlstadt, New Jersey, that it owns.  This parcel 
contains one building with approximately 5,000 gross square feet of office space.  

In November 2004, we purchased approximately 1,300 gross square meters of office space located in Shanghai, China for our 
sales offices and investment purposes. 

We also lease office space in Hamburg, Germany; Düsseldorf, Germany; Heemskerk, the Netherlands; Paris, France; Lyon, 
France; Singapore; and Warsaw, Poland.  These offices are used for sales and administrative purposes.   

We believe that our properties are generally well maintained, in good condition and adequate for our present needs.  

Item 3.  Legal Proceedings. 

We are subject to various claims that have arisen in the normal course of business.  We do not know what impact the final 
resolution of these matters will have on our results of operations in a particular reporting period.  We believe, however, that 
the ultimate outcome of such matters will not have a material adverse effect on our financial condition or liquidity. 

In fiscal 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially responsible parties 
(PRP Group) who are working with the State of Tennessee (the State) to remediate a contaminated property in Tennessee 
called the Pulvair site. The PRP Group has alleged that Aceto shipped hazardous substances to the site which were released 

11  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
into the environment.   The State had begun administrative proceedings against the members of the PRP group and Aceto 
with respect to the cleanup of the Pulvair site and the group has begun to undertake cleanup. The PRP Group is seeking a 
settlement of approximately $2,100 from the Company for its share to remediate the site contamination. Although the 
Company acknowledges that it shipped materials to the site for formulation over twenty years ago, the Company believes that 
the evidence does not show that the hazardous materials sent by Aceto to the site have significantly contributed to the 
contamination of the environment. Accordingly, the Company believes that the settlement offer is unreasonable. 
Alternatively, counsel to the PRP Group has proposed that Aceto join it as a participating member and pay 3.16% of the PRP 
Group's cost.  The Company believes that this percentage is high because it is based on the total volume of materials that 
Aceto sent to the site, most of which were non-hazardous substances and as such, believes that, at most, it is a de minimus 
contributor to the site contamination. The impact of the resolution of this matter on the Company's results of operations in a 
particular reporting period is not known.  However, management believes that the ultimate outcome of this matter will not 
have a material adverse effect on the Company's financial condition or liquidity. 

In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental 
Response, Compensation and Liability Act (CERCLA) for a site described as the Berry’s Creek Study Area.   Arsynco is one 
of over 150 PRPs which have potential liability for the required investigation and remediation of the site.  The estimate of the 
potential liability is not quantifiable for a number of reasons, including the difficulty in determining the extent of 
contamination and the length of time remediation may require.  In addition, any estimate of liability must also consider the 
number of other PRPs and their financial strength.  Based on prior practice in similar situations, it is possible that the State 
may assert a claim for natural resource damages with respect to the Arsynco site itself, and either the federal government or 
the State (or both) may assert claims against Arsynco for natural resource damages in connection with Berry's Creek; any 
such claim with respect to Berry's Creek could also be asserted against the approximately 150 PRPs which the EPA has 
identified in connection with that site.  Any claim for natural resource damages with respect to the Arsynco site itself may 
also be asserted against BASF, the former owners of the Arsynco property. Since an amount of the liability can not be 
reasonably estimated at this time, no accrual is recorded for these potential future costs.  The impact of the resolution of this 
matter on the Company’s results of operations in a particular reporting period is not known.  However, management believes 
that the ultimate outcome of this matter will not have a material adverse effect on the Company’s financial condition or 
liquidity. 

Item 4. Submission of Matters to a Vote of Security Holders. 

No matter was submitted to a vote of our security holders during the fourth quarter of the fiscal year covered by this Annual 
Report. 

12  

 
 
 
 
PART II 

Item 5.  Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 

Securities. 

Our common stock is traded on the NASDAQ Global Select Market using the symbol “ACET.”  The following table states 
the fiscal year 2008 and 2007 high and low sales prices of our common stock as reported by the NASDAQ Global Select 
Market for the periods indicated. 

HIGH 

LOW 

FISCAL YEAR 2008 
First Quarter 
Second Quarter 
Third Quarter 
Fourth Quarter 

FISCAL YEAR 2007 
First Quarter 
Second Quarter 
Third Quarter 
Fourth Quarter 

$ 9.82 
9.39 
8.43 
8.52 

$ 7.63 
9.25 
9.98 
9.48 

$ 8.28 
7.51 
5.79 
6.60 

$ 6.54 
6.82 
7.22 
7.60 

Cash dividends of $0.10 per common share were paid in January 2008, cash dividends of $0.05 per common share were paid 
in March 2008 and cash dividends of $0.10 per common share were paid in June of 2008.  Cash dividends of $0.075 per 
common share were paid in January 2007 and cash dividends of $0.10 per common share were paid in June of 2007.  Cash 
dividends of $0.075 per common share were paid in January and June of fiscal year 2006.   

As of September 2, 2008, there were 509 holders of record of our common stock. 

22,363 shares of our common stock were held by the nominee of the Depository Trust Company, the country's principal 
central depository.  For purposes of determining the number of owners of our common stock, those shares are considered to 
be owned by one holder.  Additional individual holdings in street name result in a sizable number of beneficial owners being 
represented on our records as owned by various banks and stockbrokers. 

The following table states certain information with respect to our equity compensation plans at June 30, 2008: 

Number of securities to 
be issued upon exercise 
of outstanding options 

Weighted-average 
exercise price of 
outstanding options 

Number of securities 
remaining available for 
future issuance under 
equity compensation plans 

2,879 

- 
2,879 

$7.59 

- 
$7.59 

524 

- 
524 

Plan category 

Equity compensation plans 
approved by security holders 

Equity compensation plans not 
approved by security holders 
Total 

Performance Graph 

The following graph compares on a cumulative basis the yearly percentage change, assuming dividend reinvestment, over the 
last five fiscal years in (a) the total shareholder return on our common stock with (b) the total return on the Standard & Poor’s 
500 Index and (c) the total return on a published line-of-business index – the Dow Jones U.S. Chemicals Index (the “Peer 
Group”). 

The following graph assumes that $100 had been invested in each of the Company, the Standard & Poor’s 500 Index and the 
Peer Group on June 30, 2003.  The stock price performance included in this graph is not necessarily indicative of future stock 
price performance. 

13  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Aceto Corporation, The S&P 500 Index
And The Dow Jones US Chemicals Index

$250

$200

$150

$100

$50

$0

6/03

6/04

6/05

6/06

6/07

6/08

Aceto Corporation

S&P 500

Dow Jones US Chemicals

  ASSUMES $100 INVESTED ON JUNE 30, 2003 
ASSUMES DIVIDEND REINVESTMENT 
FISCAL YEAR ENDING JUNE 30, 2008 

Aceto Corporation 

         S&P 500 Index 

Dow Jones U.S. 
Chemicals 

June 30, 2003 
June 30, 2004 
June 30, 2005 
June 30, 2006 
June 30, 2007 
June 30, 2008 

100 
144 
  93 
  88 
120 
102 

100 
119 
127 
138 
166 
144 

100 
126 
138 
146 
194 
225 

14  

 
 
 
 
 
 
 
 
Item 6.  Selected Financial Data 
(In thousands, except per-share amounts) 

Fiscal years ended June 30, 

2008

2007

2006

2005 

2004(1)

Net sales  
Operating income     
Income from continuing operations 
Net income 

$359,591
21,377
13,473
13,473

$313,473
15,064
10,212
10,212

$297,328
12,429
9,264
9,237

$313,431 
11,590 
10,625 
10,015 

$296,646
16,405
13,111
13,067

At year end 

Working capital 
Total assets 
Long-term liabilities 
Shareholders’ equity 

Income per common share(2) 

Basic income per common share    
from continuing operations 
Basic income per common share 
from net income 
Diluted income per common share 
from continuing operations 
Diluted income per common share 
from net income 
Cash dividends 

$128,786
222,243
16,836
140,409

$112,930
188,478
15,548
124,827

$104,707
166,592
15,140
115,053

$  94,249 
149,028 
3,982 
107,655 

$  86,420
149,697
2,877
100,266

$0.55

$0.55

$0.54

$0.54

$0.25

$0.42

$0.42

$0.41

$0.41

$0.175

$0.38

$0.38

$0.38

$0.38

$0.15

$0.44 

$0.41 

$0.43 

$0.41 

$0.15 

$0.55

$0.55

$0.53

$0.53

$0.11

(1)  Includes the acquisition of Pharma Waldhof on December 31, 2003.   
(2) Adjusted for stock splits, effected in the form of dividends, as appropriate. 

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Executive Summary 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is 
intended to provide the readers of our financial statements with a narrative discussion about our business. The MD&A is 
provided as a supplement to and should be read in conjunction with our financial statements and the accompanying notes. 

We are reporting a $6,313 increase in operating income to $21,377 for the year ended June 30, 2008 as compared to $15,064 
for the prior year.  This increase in operating income was achieved, despite a highly competitive environment, primarily 
through a significant increase in sales, improving our profit margin and our management of selling, general and 
administrative costs.  Net sales for fiscal 2008 were $359,591, an increase of $46,118 from fiscal 2007.  This increase in net 
sales also impacted our gross profit, which increased $12,812 to $67,305 for fiscal 2008.  Our net income increased to 
$13,473, or $0.54 per diluted share, an increase of $3,261 or 31.9% compared to fiscal year 2007.   

Our financial position as of June 30, 2008, remains strong, as we had cash and short-term investments of $47,063, working 
capital of $128,786, no long-term debt and shareholders’ equity of $140,409. 

Our business is separated into three principal segments:  Health Sciences, Chemicals & Colorants and Crop Protection.  The 
Health Sciences segment is our largest segment in terms of both sales and gross profits. Products that fall within this segment 
include APIs, pharmaceutical intermediates, nutraceuticals and biopharmaceuticals.    

We typically partner with both customers and suppliers years in advance of a drug coming off patent to provide the generic 
equivalent.  We believe we have a pipeline of new APIs poised to reach commercial levels over the coming years as the 

15  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
patents on existing drugs expire, both in the United States and Europe. In addition, we continue to explore opportunities to 
provide a second-source option for existing generic drugs with ANDAs. The opportunities that we are looking for are to 
supply the APIs for the more mature generic drugs where pricing has stabilized following the dramatic decreases in price that 
these drugs experienced after coming off patent.  As is the case in the generic industry, the entrance into the market of other 
generic competition generally has a negative impact on the pricing of the affected products.  By leveraging our worldwide 
sourcing, quality assurance and regulatory capabilities, we believe we can be an alternative lower cost, second-source 
provider of existing APIs to generic drug companies. 

The Chemicals & Colorants segment is a major supplier to the many different industries that require outstanding performance 
from chemical raw materials and additives.  Products that fall within this segment include intermediates for dyes, pigments 
and agrochemicals.  We provide chemicals used to make plastics, surface coatings, textiles, lubricants, flavors and fragrances. 
Many of our raw materials are also used in high-tech products like high-end electronic parts (circuit boards and computer 
chips) and binders for specialized rocket fuels. We are currently responding to the changing needs of our customers in the 
color producing industry by taking our resources and knowledge downstream as a supplier of select organic pigments. We 
expect that continued global Gross Domestic Product growth will drive higher demand for the chemical industry, especially 
in China and other emerging regions of the world. With supply growth limited, we expect that industry supply/demand 
balances will remain favorable. However, continued volatility in energy costs will add uncertainty to our profit outlook. 

The Crop Protection segment sells herbicides, fungicides, insecticides, and other agricultural chemicals to customers, 
primarily located in the United States and Western Europe. In fiscal 2007, we entered into a multi-year contract with a major 
agricultural chemical distributor and launched generic Asulam, an herbicide for sugar cane and the first generic registration 
that we have received.  Our plan is to continue to develop our pipeline and bring to market additional products in a similar 
manner. In May 2008, the Company sold an insecticide product to its patent owner in conjunction with litigation settlement 
involving an expired license. 

We formerly also reported under the Institutional Sanitary Supplies segment, which included cleaning solutions, fragrances 
and deodorants for commercial and industrial customers.  This former segment was successfully divested from our ongoing 
business during fiscal 2006.   

Our main business strengths are sourcing, quality assurance, regulatory support, marketing and distribution. With a physical 
presence in ten countries, we distribute over 1000 pharmaceuticals and chemicals used principally as raw materials in the 
pharmaceutical, agricultural, color, surface coating/ink and general chemical consuming industries. We believe that we are 
currently the largest buyer of pharmaceutical and specialty chemicals for export from China, purchasing from over 500 
different manufacturers. 

In this MD&A, we explain our general financial condition and results of operations, including the following: 

• 
• 
• 
• 
• 

factors that affect our business 
our earnings and costs in the periods presented 
changes in earnings and costs between periods 
sources of earnings 
the impact of these factors on our overall financial condition 

As you read this MD&A, refer to the accompanying consolidated statements of income, which present the results of our 
operations for the three years ended June 30, 2008.  We analyze and explain the differences between periods in the specific 
line items of the consolidated statements of income. 

Critical Accounting Estimates and Policies 

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial 
statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  In preparing these 
financial statements, we were required to make estimates and assumptions that affect the amounts of assets, liabilities, 
revenues and expenses, and related disclosure of contingent assets and liabilities.  We regularly evaluate our estimates 
including those related to allowances for bad debts, inventories, goodwill and indefinite-life intangible assets, long-lived 
assets, environmental and other contingencies, income taxes and stock-based compensation.  We base our estimates on 
various factors, including historical experience, advice from outside subject-matter experts, and various assumptions that we 
believe to be reasonable under the circumstances, which together form the basis for our making judgments about the carrying 
values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these 
estimates. 

16  

 
  
 
 
 
 
 
We believe the following critical accounting policies affected our more significant judgments and estimates used in preparing 
these consolidated financial statements. 

Revenue Recognition 

We recognize revenue from sales of any product when it is shipped and title and risk of loss pass to the customer.  We have 
no acceptance or other post-shipment obligations and we do not offer product warranties or services to our customers.    

Sales are recorded net of returns of damaged goods from customers, which historically have been immaterial, and 
sales incentives offered to customers.  Sales incentives consist primarily of volume incentive rebates.  We record 
volume incentive rebates as the underlying revenue transactions that result in progress by the customer in earning the 
rebate are recorded, in accordance with Emerging Issues Task Force (EITF) 01-09, “Accounting for Consideration 
Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products).”   

Allowance for Doubtful Accounts 

We maintain allowances for doubtful accounts relating to estimated losses resulting from customers being unable to make 
required payments.  Allowances for doubtful accounts are based on historical experience and known factors regarding 
specific customers and the industries in which those customers operate.  If the financial condition of our customers were to 
deteriorate, resulting in their ability to make payments being impaired, additional allowances would be required. 

Inventories 

Inventories, which consist principally of finished goods, are stated at the lower of cost (first-in first-out method) or market.  
We write down our inventories for estimated excess and obsolete goods by an amount equal to the difference between the 
carrying cost of the inventory and the estimated market value based upon assumptions about future demand and market 
conditions.  A significant sudden increase in demand for our products could result in a short-term increase in the cost of 
inventory purchases, while a significant decrease in demand could result in an increase in the excess inventory quantities on-
hand.  Additionally, we may overestimate or underestimate the demand for our products which would result in our 
understating or overstating, respectively, the write-down required for excess and obsolete inventory.  Although we make 
every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in 
demand could have a significant impact on the value of our inventory and reported operating results. 

Goodwill and Other Indefinite-Lived  Intangible Assets 

Goodwill is calculated as the excess of the cost of purchased businesses over the value of their underlying net assets.  Other 
indefinite-lived intangible assets principally consist of trademarks.  Goodwill and other indefinite-lived intangible assets are 
not amortized. 

In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” 
we test goodwill and other indefinite-lived intangible assets for impairment on at least an annual basis.  To determine the fair 
value of these intangible assets, we use many assumptions and estimates that directly impact the results of the testing.  In 
making these assumptions and estimates, we use industry-accepted valuation models and set criteria that are reviewed and 
approved by various levels of management.  If our estimates or our related assumptions change in the future, we may be 
required to record impairment charges for these assets. 

Long-Lived Assets  

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets and 
certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the 
carrying amount of an asset may not be recoverable. Identifiable intangible assets principally consist of customer 
relationships, product rights and related intangibles, EPA registrations and related data, patent license and covenants not to 
compete.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to 
future undiscounted net cash flows expected to be generated by the asset. Recoverability of assets held for sale is measured 
by comparing the carrying amount of the assets to their estimated fair value.  If such assets are considered to be impaired, the 
impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of 
the assets.  Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. 

17  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Environmental and Other Contingencies 

We establish accrued liabilities for environmental matters and other contingencies when it is probable that a liability has been 
incurred and the amount of the liability can reasonably be estimated.  If the contingency is resolved for an amount greater or 
less than the accrual, or our share of the contingency increases or decreases, or other assumptions relevant to the development 
of the estimate were to change, we would recognize an additional expense or benefit in income in the period that the 
determination was made. 

Taxes 

We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.”  SFAS No. 109 establishes 
financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during 
the current and preceding years.  It requires an asset-and-liability approach to financial accounting and reporting of income 
taxes.   

As of June 30, 2008, we had current net deferred tax assets of $686 and non-current net deferred tax assets of $2,347.  These 
net deferred tax assets have been recorded based on our projecting that we will have sufficient future earnings to realize these 
assets, and the net deferred tax assets have been provided for at currently enacted income tax rates.  If we determine that we 
will not be able to realize a deferred tax asset, an adjustment to the deferred tax asset will result in a reduction of net income 
at that time. 

Deferred taxes have not been provided on undistributed earnings of foreign subsidiaries since substantially all of these 
earnings are expected to be permanently reinvested in our foreign operations.  A deferred tax liability will be recognized 
when we expect that we will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or 
sale of the investments.  Determination of the amount of the unrecognized U.S. income tax liability is not practical because of 
the complexities of the hypothetical calculation.  In addition, unrecognized foreign tax credit carryforwards would be 
available to reduce a portion of such U.S. tax liability.    

German tax reform was enacted in August 2007 that reduces the corporate headline tax rate for businesses from 40% to 30%, 
as well as implementing a cap on interest deductions and tightening the tax basis for trade tax income. This tax rate reduction 
became effective for tax years ending after January 1, 2008. Due to the reduction in the overall German tax rate, the deferred 
income tax asset was revalued during the month of enactment of the tax reform, which was in the first quarter of fiscal 2008, 
and therefore was reduced by approximately $1,429, which is reflected in the consolidated financial statements for the year 
ended June 30, 2008. 

In June 2006, the FASB issued FASB Interpretation (FIN) No. 48 “Accounting for Uncertainty in Income Taxes – an 
interpretation of FASB Statement 109”. FIN No. 48 prescribes a comprehensive model for recognizing, measuring, 
presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. FIN No. 48 is 
effective for fiscal years beginning after December 15, 2006. The Company adopted FIN No. 48 on July 1, 2007 and 
determined that the adoption of FIN No. 48 did not have a material impact on its consolidated financial statements. 

Stock-based Compensation 

With the adoption of SFAS No. 123(R) on July 1, 2005, we are required to record the fair value of stock-based compensation 
awards as an expense.  In order to determine the fair value of stock options on the date of grant, we apply the Black-Scholes 
option-pricing model, including an estimate of forfeitures.  Inherent in this model are assumptions related to expected stock-
price volatility, risk-free interest rate, expected life and dividend yield.  Expected stock-price volatility is based on the 
historical daily price changes of the underlying stock which are obtained from public data sources. The risk-free interest rate 
is based on U.S. Treasury issues with a term equal to the expected life of the option. We use historical data to estimate 
expected dividend yield, expected life and forfeiture rates. In fiscal 2007, we utilized the “simplified” method prescribed in 
SEC Staff Accounting Bulletin No. 107 to estimate the expected life. For stock option grants issued during fiscal 2008, we 
used an expected stock-price volatility of 46.0% and an expected life of 5.6 years.   

18  

 
 
 
 
 
 
 
 
  
 
Results of Operations 

Fiscal Year Ended June 30, 2008 Compared to Fiscal Year Ended June 30, 2007 

Net Sales by Segment 
Year ended June 30, 

Segment 

2008 

2007 

Net sales 

% of 
total 

Net sales 

% of 
Total 

Comparison 2008 
Over/(Under) 2007 
% 
change 

$ 
change 

Health Sciences 
Chemicals & Colorants 
Crop Protection 

$211,481 
129,662 
18,448 

  58.8% 
  36.1 
    5.1 

  $170,691 
123,299 
19,483 

  54.5% 
  39.3 
    6.2 

 $  40,790 
       6,363 
     (1,035) 

     23.9% 
       5.2 
     (5.3) 

Net sales 

$359,591  100.0% 

$313,473 

100.0% 

 $46,118 

     14.7% 

Gross Profit by Segment 
Year ended June 30, 

Segment 

2008 

Gross  % of 
Sales 
Profit 

2007  

Gross 
Profit 

% of 
sales 

Comparison 2008 
Over/(Under) 2007 
% 
change 

$ 
Change 

Health Sciences  
Chemicals & Colorants 
Crop Protection 

    $44,612 
18,782 
3,911 

  21.1% 
  14.5 
  21.2 

    $33,007 
16,556 
4,930 

  19.3% 
  13.4 
  25.3 

    $11,605 
        2,226 
      (1,019) 

   35.2% 
   13.4  
 (20.7) 

Gross profit 

$67,305 

  18.7% 

$54,493 

  17.4% 

  $12,812 

  23.5% 

19  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales  

Net sales increased $46,118, or 14.7%, to $359,591 for the year ended June 30, 2008, compared with $313,473 for the prior 
year.  We reported sales increases in our Health Sciences and Chemicals & Colorants segments, which were partially offset 
by a slight sales decrease in our Crop Protection segment. 

Health Sciences 

Net sales for the Health Sciences segment increased by $40,790 for the year ended June 30, 2008, to $211,481, which 
represents a 23.9% increase over net sales of $170,691 for the prior year.  This increase is due to various factors including 
increased sales from our foreign operations of $23,475, specifically our European operations and a $4,679 rise in sales of our 
pharmaceutical intermediates. In addition, our domestic generics product group experienced an increase in sales of $12,004. 
The domestic sales increase for the year ended June 30, 2008 was due to the volume of re-orders for existing products as well 
as realization of new products from our pipeline. We expect the volume of re-orders for existing products to continue at a 
similar rate through the next fiscal year. 

Chemicals & Colorants 

Net sales for the Chemicals & Colorants segment were $129,662 for the year ended June 30, 2008, compared to $123,299 for 
the prior year.  Our chemical business is diverse in terms of products, customers and consuming markets.  The increase in 
sales from this segment is partially attributable to an increase of $5,049 in sales for chemicals used in aroma products, $5,723 
in sales of pigment and dye intermediates, and a $1,032 rise in sales of chemicals used to make surface coatings.  In addition, 
the increase in sales is due to a rise in prices in the chemical industry due to increased demand for chemical products in 
China. This increase is offset in part by a $4,967 decline in sales of our products sold to the food, beverage and cosmetics 
industries as a result of the slowdown in the economy.  

Crop Protection  

Net sales for the Crop Protection segment decreased to $18,448 for the year ended June 30, 2008, a decrease of $1,035, or 
5.3%, over net sales of $19,483 for the prior year.  The overall decrease in net sales was mainly attributable to decreased 
sales of an herbicide used for sugar cane as well as decreased sales related to an insecticide in which we were  involved in an 
antitrust case related to certain licensed technology.   These decreases were partially offset by an increase in sales of an 
herbicide which is primarily used on peanuts as the peanut acreage has increased from 2007. 

Gross Profit 

Gross profit by segment increased $12,812 to $67,305 (18.7% of net sales) for the year ended June 30, 2008, as compared to 
$54,493 (17.4% of net sales) for the prior year.   

Health Sciences 

Health Sciences’ gross profit of $44,612 for the year ended June 30, 2008, was $11,605 or 35.2 % higher than the prior year. 
This increase in gross profit was attributable to an $8,084 increase in gross profit primarily from our European operations as 
well as the overall increase in sales volume.  Gross margin increased to 21.1% in fiscal 2008 compared to a gross margin of 
19.3% for the prior fiscal year due primarily to favorable product mix in our domestic nutraceutical products, as well as 
products sold by our European operations, which were more profitable than other products. 

Chemicals & Colorants 

Gross profit for the year ended June 30, 2008, increased by $2,226, or 13.4%, over the prior year.  Gross margin was 14.5% 
for the year ended June 30, 2008 compared to 13.4% for the prior period.   The increase in the gross profit and gross margin 
percentage primarily relates to the increase in sales volume and positive product mix on aroma chemicals. In addition, there 
was a $330 settlement of an anti-dumping claim included in the prior year cost of sales. 

Crop Protection 

Gross profit for the Crop Protection segment decreased to $3,911 for the year ended June 30, 2008, versus $4,930 for the 
prior year, a decrease of $1,019 or 20.7%.  Gross margin for the year ended June 30, 2008 was 21.2% compared to the prior 
period gross margin of 25.3%.The primary reason for the decrease in the gross profit and gross margin percentage primarily 

20  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
relates to a decline in sales volume of a particular herbicide and insecticide as described above in the Crop Protection net 
sales section.  

Selling, General and Administrative Expenses 

Selling, general and administrative expenses (SG&A) increased $6,004, or 15.2%, to $45,422 for the year ended June 30, 
2008 compared to $39,418 for the prior year.  As a percentage of sales, SG&A remained consistent at 12.6% for fiscal 2008.  
The increase in SG&A is partially attributed to an increase of $1,300 in legal expenses, the majority of which was incurred 
relating to an antitrust case that the Company previously commenced against the owner of certain licensed technology used 
with one of our crop protection products, which was settled in May 2008. SG&A also increased due to a $3,590 rise in 
personnel related costs, of which $1,849 relates to our foreign operations and $1,741 relates to various factors including 
annual salary increases, stock-based compensation and increased bonus expense as a result of increased profitability.   In 
addition, commission expense increased by $505 due to increased sales. Additionally, the prior year amount was reduced by 
$243 of proceeds received from credit insurance, of which there was no comparable amount received during the year ended 
June 30, 2008. 

Research and Development Expenses 

Research and development expenses (R&D) increased $495 over the prior year to $506 for the year ended June 30, 2008. 
R&D relates to the development of two finished dosage form generic pharmaceutical products to be distributed in Europe. 

Operating Income 

Fiscal 2008 operating income was $21,377 compared to $15,064 in the prior year, an increase of $6,313 or 41.9%.  This 
increase was due to the overall increase in gross profit of $12,812 offset in part by the $6,499 increase in SG&A and R&D 
expenses. 

Interest and Other Income, Net 

Interest and other income, net was $957 for fiscal 2008 versus $532 for fiscal 2007. The primary reason for this fluctuation is 
due to changing the functional currency of our Chinese subsidiaries from the Chinese Renminbi to the U.S. Dollar, since 
these subsidiaries primarily generate and expend cash in the U.S. Dollar.  As a result, we recorded a correction of an error in 
the third quarter of 2008, which resulted in additional interest and other income, net of approximately $559, which 
represented approximately $389 after tax profit. We did not deem this adjustment to be material to any prior quarters in fiscal 
2008 based upon both quantitative and qualitative factors.  In addition, this adjustment does not impact the 2008 year-to-date 
reported results. This matter was not corrected for periods prior to June 30, 2007 due to the immateriality of the effects of this 
in earlier years.  Beginning in 2006, the Chinese government began to revalue the Chinese Renminbi against other currencies, 
including the U.S. Dollar. The decision by the Chinese government to no longer peg the Renminbi to the U.S. Dollar has 
caused a reduction in value of dollar denominated assets held in China, which was particularly experienced in fiscal 2008. 
The increase in interest and other income, net was partially offset by a $115 decrease in other income related to a government 
subsidy paid annually for doing business in a free trade zone in Shanghai, China and a $186 increase in unrealized loss on 
trading securities. 

Provision for Income Taxes 

The effective tax rate for fiscal 2008 increased to 39.3% from 33.8% for fiscal 2007.  The increase in the effective tax rate 
was primarily due to German tax reform, which was enacted in August 2007, that reduced the corporate headline tax rate for 
businesses from 40% to 30%, as well as implementing a cap on interest deductions and tightening the tax basis for trade tax 
income. This tax rate reduction became effective for tax years ending after January 1, 2008. Due to the future reduction in the 
overall German tax rate, the deferred income tax asset was revalued during the month of enactment of the tax reform, which 
was in the first quarter of fiscal 2008, and therefore was reduced by approximately $1,429, which is reflected in the 
consolidated financial statements for the year ended June 30, 2008.  Without this adjustment, the fiscal 2008 effective tax rate 
would have been 32.8%. Additionally, tax reform has taken place in China and effective January 1, 2008, the corporate 
headline tax rate was increased to 25% from 15%. 

21  

 
 
  
 
 
 
 
 
 
 
 
   
  
 
 
 
Results of Operations 

Fiscal Year Ended June 30, 2007 Compared to Fiscal Year Ended June 30, 2006 

Net Sales by Segment 
Year ended June 30, 

Segment 

2007 

2006 

Net sales 

% of 
total 

Net sales 

% of 
total 

Comparison 2007 
Over/(Under) 2006 
% 
change 

$ 
change 

Health Sciences 
Chemicals & Colorants 
Crop Protection 

$170,691 
123,299 
19,483 

  54.5% 
  39.3 
    6.2 

$166,725 
110,869 
19,734 

  56.1% 
  37.3 
    6.6 

 $   3,966 
    12,430 
       (251) 

       2.4 % 
     11.2 
     (1.3) 

Net sales 

$313,473  100.0% 

$297,328 

100.0% 

 $16,145 

      5.4% 

Gross Profit by Segment 
Year ended June 30, 

Segment 

2007 

Gross  % of 
sales 
profit 

2006  

Gross 
Profit 

% of 
sales 

Comparison 2007 
Over/(Under) 2006 
% 
change 

$ 
change 

Health Sciences  
Chemicals & Colorants 
Crop Protection 

    $33,007 
16,556 
4,930 

  19.3% 
  13.4 
  25.3 

    $32,313 
17,144 
4,760 

  19.4% 
  15.5 
  24.1 

      $ 694 
        (588) 
         170 

   2.1% 
  (3.4) 
   3.6 

Segment gross profit 

54,493 

  17.4 

54,217 

  18.2 

        276 

     0.5 

Freight and storage costs (1) 

          - 

       - 

    (3,259) 

   (1.1) 

      3,259 

  100.0 

Gross profit 

$54,493 

  17.4% 

$50,958 

  17.1% 

  $ 3,535 

   6.9% 

(1) Prior to July 2006, certain freight and storage costs were not able to be allocated to the segments.  Effective July 2006, as 
a result of certain system improvements, all freight and storage costs are allocated to a particular segment.  Therefore, the 
unallocated portion of certain freight and storage costs for the year ended June 30, 2007 have now been identified to the 
segments as presented above.  Total Company gross profit and margin were not affected by this change in allocation of costs.  
However, the comparison of gross profit by segment will be affected by the change in allocation of these costs. 

22  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Sales  

Net sales increased $16,145, or 5.4%, to $313,473 for the year ended June 30, 2007, compared with $297,328 for the prior 
year.  We reported sales increases in our Health Sciences and Chemicals & Colorants segments, which were partially offset 
by a slight sales decrease in our Crop Protection segment. 

Health Sciences 

Net sales for the Health Sciences segment increased by $3,966 for the year ended June 30, 2007, to $170,691, which 
represents a 2.4% increase over net sales of $166,725 for the prior year.  The sales increase from the prior period is primarily 
related to increased sales from our foreign operations of $9,229, specifically our Germany and Singapore operations, and 
increased sales from the pharmaceutical intermediates and diagnostics products of $4,365.   These increases were partially 
offset by a decrease from one specific generic product of $9,906 due to its normal selling pattern.       

Chemicals & Colorants 

Net sales for the Chemicals & Colorants segment were $123,299 for the year ended June 30, 2007, compared to $110,869 for 
the prior year.  This increase of $12,430 or 11.2%, over the prior period is attributable to an increase in the number of 
products being offered by our foreign subsidiaries, namely Germany and Singapore. Sales of Chemicals & Colorants by our 
foreign subsidiaries for the year ended June 30, 2007 increased by $6,920 over the comparable prior year period.    The 
increase in sales for this segment also resulted from the increase in sales in the coatings product group of $7,350. The 
increase in Chemicals and Colorant sales is partially offset by one customer within our color-pigment and pigment-
intermediate business, whose contract expired in fiscal 2006 and purchased $3,118 during 2006 as compared to zero in 2007.   
Our chemical business is diverse in terms of products, customers and consuming markets.     

Crop Protection  

Net sales for the Crop Protection segment decreased to $19,483 for the year ended June 30, 2007, a decrease of $251, or 
1.3%, over net sales of $19,734 for the prior year.  The overall decrease in net sales was mainly attributable to decreases in 
three products of $2,955 due to the unseasonable dry weather conditions, particularly in the southern U.S. region and the 10-
20% reduction of peanut acreage in favor of corn due to the increased demand for ethanol.  These decreases were partially 
offset by the launch of our Asulam product in the first quarter of 2007 which resulted in sales of $2,802. 

Gross Profit 

Gross profit by segment increased $3,535 to $54,493 (17.4% of net sales) for the year ended June 30, 2007, as compared to 
$50,958 (17.1% of net sales) for the prior year.  The gross profit of each segment was negatively affected by the direct 
allocation of certain freight and storage costs in 2007 that had been reported as unallocated in prior years.  The Company’s 
overall gross profit and margin were not affected but the segmental comparisons to last year have been affected.  

Health Sciences 

Health Sciences’ gross profit of $33,007 for the year ended June 30, 2007, was $694 or 2.1% higher than the prior year. This 
increase in gross profit was directly attributable to the increase in the sales volume. The gross margin declined to 19.3% in 
fiscal 2007 compared to a gross margin of 19.4% for the prior fiscal year which is directly attributed to the direct allocation 
of certain freight and storage charges that are not included in last year’s comparable period.     

Chemicals & Colorants 

Gross profit for the year ended June 30, 2007, decreased by $588, or 3.4%, over the prior year due to the direct allocation of 
certain freight and storage charges not included in last year’s comparable period as well as settlement of an anti-dumping 
claim of $330.  Gross margin decreased from 15.5% in fiscal 2006 to 13.7% in fiscal 2007.  The foreign subsidiaries, 
primarily Germany and Singapore, contributed $625 or 19% more gross profit in 2007 as compared to 2006.  Additionally, 
the coatings product group reported an increase of $723 due to the sales increase previously mentioned above over the prior 
year.     

Crop Protection 

Gross profit for the Crop Protection segment increased to $4,930 for the year ended June 30, 2007, versus $4,760 for the 
prior year, an increase of $170 or 3.6%. The primary reason for the increase in gross profit was due to the launch of the 

23  

 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Asulam product.    The gross profit was negatively affected by $1,028 related to the sales decline in the three products 
discussed earlier, which was partially offset by lower costs to maintain our EPA registered products of $338. 

Unallocated freight and storage costs 

Unallocated cost of sales was $0 for fiscal 2007 compared to $3,259 in 2006.  As a result of certain system improvements, 
certain freight and storage costs which were not able to be identified to a particular segment in the prior fiscal years, have 
now been included within the segments.  Therefore, there are no unallocated freight and storage costs in the current year.  
Total Company gross profit and margin were not affected by this allocation.  This revision will affect the comparison of the 
segments’ gross profits, however. 

Selling, General and Administrative Expenses 

SG&A increased $909, or 2.4%, to $39,418 for the year ended June 30, 2007 compared to $38,509 for the prior year.  As a 
percentage of sales, SG&A decreased to 12.6% for fiscal 2007 versus 13.0% for fiscal 2006.  The increase in SG&A is 
primarily attributable to the increase of $1,244 in personnel costs including increased bonus expenses and additional 
employees, $415 increase in sales and marketing expenses, and $259 increased legal costs, partially offset by lower operating 
expenses of $952 resulting from the sale of one of our subsidiaries in August 2005 and a $537 charge for settlement of legal 
claims against one of our subsidiaries in 2006. 

Operating Income 

Fiscal 2007 operating income was $15,064 compared to $12,429 in the prior year, an increase of $2,635 or 21.2%.  This 
increase was due to the $3,535 increase in gross profit, which was partially offset by the overall increase in SG&A expenses 
and R&D expenses of $900. 

Interest and Other Income, Net 

Interest and other income was $532 for fiscal 2007, which represents a 44.4% decrease from $956 in fiscal 2006.  The 
decrease is primarily attributable to a decrease of $409 in a government subsidy paid annually for doing business in a free 
trade zone in Shanghai, China and net loss on foreign currency of $770, partially offset by an increase in interest income of 
$455 due to increased investments during the year and increased interest rates. 

Provision for Income Taxes 

The effective tax rate for fiscal 2007 increased to 33.8% from 30.1% for fiscal 2006.  The increase in the effective tax rate 
relates primarily to increased earnings in foreign tax jurisdictions with higher tax rates, primarily Germany. 

Liquidity and Capital Resources 

Cash Flows 

At June 30, 2008, we had $46,515 in cash, of which $33,222 was outside the United States, $548 in short-term investments 
and no outstanding bank loans.   

Our cash position at June 30, 2008 increased $14,195 from the amount at June 30, 2007.  Operating activities for the year 
ended June 30, 2008 provided cash of $15,418 as compared to cash provided by operations of $4,163 for the comparable 
2007 period. The $15,418 was comprised of $13,473 in net income and $5,602 derived from adjustments for non-cash items, 
offset by a net $3,657 decrease from changes in operating assets and liabilities. The non-cash items included $2,378 in 
depreciation and amortization expense, $1,285 in stock compensation and $1,835 for the deferred income taxes provision.  
Accounts receivable increased $7,326 during the year ended June 30, 2008, due to increased sales during the fourth quarter of 
2008 as compared to the fourth quarter of 2007. Inventories increased by approximately $7,989 and accounts payable 
increased by $9,615 due to the increase in the Health Sciences segment for inventory on-hand related to our European 
operations as a result of a ramp-up in orders for products to be shipped in the first and second quarters of 2009.  In addition, 
the Company is carrying more stock for certain products of both the Chemicals and Colorants and Health Sciences segments 
that are purchased from China, due to a supplier interruption related to the Olympics to be held in China in the summer of 
2008. Accrued expenses and other liabilities increased $4,853 during the year ended June 30, 2008, due primarily to an 
increase in accrued expenses for our foreign subsidiaries related to timing of income tax payments and an increase in accrued 
compensation related to increased performance payments, which are anticipated to be paid in the first quarter of 2009. Other 
receivables increased $1,647 due to an increase in VAT (value added tax) receivables in our European subsidiaries due to 

24  

 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
increased sales.  Other assets increased $1,832 due primarily to increases in retirement-related assets and an increase in long-
term receivables related to the sale of intangible assets.  Our cash position at June 30, 2007 decreased $1,412 from the 
amount at June 30, 2006.  Operating activities for the year ended June 30, 2007 provided cash of $4,163 as compared to cash 
provided by operations of $16,028 for the comparable 2006 period. The $4,163 was comprised of $10,212 in net income and 
$3,878 derived from adjustments for non-cash items, offset by a net $9,927 decrease from changes in operating assets and 
liabilities. The non-cash items included $1,791 in depreciation and amortization expense and $1,692 for the deferred income 
taxes provision. Accounts receivable increased $6,973 during the year ended June 30, 2007, due to increased sales during the 
fourth quarter of 2007 as compared to the fourth quarter of 2006.  Inventories increased by approximately $12,565 and 
accounts payable increased by $7,884 as a result of a ramp-up in orders for products to be shipped in the first quarter of 2008 
and an increase in products in which we have decided to carry stock. Accrued expenses and other liabilities increased $4,185 
during the year ended June 30, 2007, due primarily to an increase in accrued expenses related to a joint venture, an increase 
in accrued expenses for our foreign subsidiaries related to increased sales and profitability overseas, as well as increase in 
accrued compensation related to increased performance payments, which are anticipated to be paid in the first quarter of 
2008. Other receivables increased $1,726 due to an increase in VAT taxes receivables in our European subsidiaries, related to 
increased sales in that region.  Our cash position at June 30, 2006, increased $13,782 from the amount at June 30, 2005.  
Operating activities provided cash of $16,028, primarily from net income of $9,237 and a decrease in inventory of $4,909. 

Investing activities for the year ended June 30, 2008 provided cash of $1,404 primarily related to maturities and sales of 
available for sale investments of $2,200 and proceeds from sale of intangible assets of $400. Cash provided by investing 
activities is offset in part by the purchases of property and equipment of $1,197. We expect capital expenditures will be 
between $750 and $1,000 during fiscal 2009.  Investing activities for the year ended June 30, 2007 used cash of $2,591 
primarily related to purchases of investments of $6,274 and purchases of property and equipment and intangibles of $704 and 
$2,468, respectively, including $2,000 for the Asulam product registration and related data filed with the United States 
Environmental Protection Agency and state regulatory agencies to support such registrations and other supporting data. The 
amount of cash used for investing activities is offset in part by $6,779 of maturities of available for sale investments. 
Investing activities for the year ended June 30, 2006 provided cash of $1,387, primarily as a result of proceeds from the sale 
of investments of $1,799.  This was partially offset by $485 of expenditures for property and equipment.   

Financing activities for the year ended June 30, 2008 used cash of $6,030 primarily from the payments of dividends of 
$6,110. Financing activities for the year ended June 30, 2007 used cash of $3,991 primarily from the payments of dividends 
of $4,257. Financing activities for the year ended June 30, 2006 used cash of $4,009 primarily as a result of payments of cash 
dividends of $3,637 and payments for purchases of treasury stock of $581. 

Credit Facilities 

We have available credit facilities with certain foreign financial institutions.  These facilities provide us with a line of credit 
of $22,844, as of June 30, 2008.  We are not subject to any financial covenants under these arrangements.   

In June 2007, we amended our revolving credit agreement with a financial institution that expires June 30, 2010, and 
provides for available credit of $10,000.  At June 30, 2008, we had utilized $663 in letters of credit, leaving $9,337 of this 
facility unused.  Under the credit agreement, we may obtain credit through direct borrowings and letters of credit.  Our 
obligations under the credit agreement are guaranteed by certain of our subsidiaries and are secured by 65% of the capital of 
certain of our non-domestic subsidiaries.  There is no borrowing base on the credit agreement.  Interest under the credit 
agreement is at LIBOR plus 1.50%.  The credit agreement contains several covenants requiring, among other things, 
minimum levels of debt service and tangible net worth.  We are also subject to certain restrictive debt covenants, including 
covenants governing liens, limitations on indebtedness, guarantees, sale of assets, sales of receivables, and loans and 
investments.  We were in compliance with all covenants at June 30, 2008. 

Working Capital Outlook 

Working capital was $128,786 at June 30, 2008, versus $112,930 at June 30, 2007.  The increase in working capital was 
primarily attributable to net income during the year.  We continually evaluate possible acquisitions of or investments in 
businesses that are complementary to our own, and such transactions may require the use of cash.  In connection with our 
crop protection business, we plan to acquire product registration costs and related data filed with the United States 
Environmental Protection Agency as well as payments to various task force groups, which could approximate $11,200 in 
fiscal 2009.  We believe that our cash, other liquid assets, operating cash flows, borrowing capacity and access to the equity 
capital markets, taken together, provide adequate resources to fund ongoing operating expenditures and the anticipated 
continuation of semi-annual cash dividends for the next twelve months.  We may obtain additional credit facilities to enhance 
our liquidity. 

25  

 
  
 
 
 
 
 
 
 
Off-Balance Sheet Arrangements and Commitments and Contingencies 

We have no material financial commitments other than those under operating lease agreements, letters of credit and 
unconditional purchase obligations.  We have certain contractual cash obligations and other commercial commitments that 
will affect our short and long-term liquidity.  At June 30, 2008, we had no significant obligations for capital expenditures.  At 
June 30, 2008, contractual cash obligations and other commercial commitments were as follows: 

Payments Due and/or 
Amount of Commitment 
(Expiration per Period) 

Total 

Less than 
1 year 

1-3 
Years 

4-5 
Years 

After 
5 years 

Operating leases 

$   5,213 

$   2,131 

 $     2,746 

  $      171 

  $    165 

Commercial letters of 
credit 

        663 

        663 

Standby letters of credit 

        169 

        169 

- 

- 

Unconditional purchase 
obligations  

   79,168 

   79,168 

   -  

- 

- 

 - 

- 

- 

 - 

Total  

$ 85,213 

$ 82,131 

 $    2,746 

  $     171 

  $   165 

Other significant commitments and contingencies include the following: 

1.  One of our subsidiaries markets certain crop protection products which are subject to the Federal Insecticide, 

Fungicide and Rodenticide Act (FIFRA). FIFRA requires that test data be provided to the EPA to register, obtain 
and maintain approved labels for pesticide products. The EPA requires that follow-on registrants of these products 
compensate the initial registrant for the cost of producing the necessary test data on a basis prescribed in the FIFRA 
regulations. Follow-on registrants do not themselves generate or contract for the data. However, when FIFRA 
requirements mandate that new test data be generated to enable all registrants to continue marketing a pesticide 
product, often both the initial and follow-on registrants establish a task force to jointly undertake the testing effort. 
We are presently a member of three such task force groups and historically, our payments have been in the range of 
$100 - $250 per year.  We may be required to make additional payments in the future.    

2.  We, together with our subsidiaries, are subject to pending and threatened legal proceedings that have arisen in the 
normal course of business.  We do not know how the final resolution of these matters will affect our results of 
operations in a particular reporting period. Our management is of the opinion, however, that the ultimate outcome of 
such matters will not have a material adverse effect upon our financial condition or liquidity. 

3.  The Company has environmental remediation obligations in connection with Arsynco, Inc. (Arsynco), a subsidiary 

formerly involved in manufacturing chemicals located in Carlstadt, New Jersey, which was closed in 1993 and is 
currently held for sale.  During fiscal 2008, based on continued monitoring of the contamination at the site and the 
current proposed plan of remediation, the Company received an estimate from an environmental consultant stating 
that the costs of remediation could be between $7,846 and $9,574.  As of June 30, 2008 and 2007 a liability of 
$7,846 and $6,136, respectively, is included in the accompanying consolidated balance sheet.  In accordance with 
EITF Issue 90-8, “Capitalization of Costs to Treat Environmental Contamination” management believes that the 
majority of costs incurred to remediate the site will be capitalized in preparing the property which is currently 
classified as held for sale.  An appraisal of the fair value of the property by a third-party appraiser supports this 
assumption.  However, these matters, if resolved in a manner different from those assumed in current estimates, 
could have a material adverse effect on the Company’s financial condition, operating results and cash flows when 
resolved in a future reporting period.   

4. 

In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive  
Environmental Response, Compensation and Liability Act (CERCLA) for a site described as the Berry’s Creek  
Study Area.   Arsynco is one of over 150 PRPs which have potential liability for the required investigation and  
remediation of the site.  The estimate of the potential liability is not quantifiable for a number of reasons, including  

26  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
the difficulty in determining the extent of contamination and the length of time remediation may require.  In 
addition, any estimate of liability must also consider the number of other PRPs and their financial strength.  Based 
on prior practice in similar situations, it is possible that the State may assert a claim for natural resource damages 
with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claims 
against Arsynco for natural resource damages in connection with Berry's Creek; any such claim with respect to 
Berry's Creek could also be asserted against the approximately 150 PRPs which the EPA has identified in 
connection with that site.  Any claim for natural resource damages with respect to the Arsynco site itself may also be 
asserted against BASF, the former owners of the Arsynco property. Since an amount of the liability can not be 
reasonably estimated at this time, no accrual is recorded for these potential future costs.  The impact of the 
resolution of this matter on the Company’s results of operations in a particular reporting period is not known.  
However, management believes that the ultimate outcome of this matter will not have a material adverse effect on 
the Company’s financial condition or liquidity. 

5. 

In fiscal 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially 
responsible parties (PRP Group) who are working with the State of Tennessee (the State) to remediate a 
contaminated property in Tennessee called the Pulvair site. The PRP Group has alleged that Aceto shipped 
hazardous substances to the site which were released into the environment.   The State had begun administrative 
proceedings against the members of the PRP group and Aceto with respect to the cleanup of the Pulvair site and the 
group has begun to undertake cleanup. The PRP Group is seeking a settlement of approximately $2,100 from the 
Company for its share to remediate the site contamination. Although the Company acknowledges that it shipped 
materials to the site for formulation over twenty years ago, the Company believes that the evidence does not show 
that the hazardous materials sent by Aceto to the site have significantly contributed to the contamination of the 
environment. Accordingly, the Company believes that the settlement offer is unreasonable. Alternatively, counsel to 
the PRP Group has proposed that Aceto join it as a participating member and pay 3.16% of the PRP Group's cost.  
The Company believes that this percentage is high because it is based on the total volume of materials that Aceto 
sent to the site, most of which were non-hazardous substances and as such, believes that, at most, it is a de minimus 
contributor to the site contamination. The impact of the resolution of this matter on the Company's results of 
operations in a particular reporting period is not known.  However, management believes that the ultimate outcome 
of this matter will not have a material adverse effect on the Company's financial condition or liquidity. 

Related Party Transactions 

Certain of our directors are affiliated with law firms that serve as our legal counsel on various corporate matters.  During 
fiscal years 2008, 2007 and 2006, we incurred legal fees of $342, $329 and $315, respectively, for services rendered to the 
Company by those law firms.  We believe that the fees charged by those firms were at rates comparable to rates obtainable 
from other firms for similar services. 

Impact of New Accounting Pronouncements 

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 establishes 
a common definition for fair value to be applied to US GAAP guidance requiring use of fair value, establishes a framework 
for measuring fair value, and expands disclosure about such fair value measurements. SFAS No. 157 is effective for fiscal 
years beginning after November 15, 2007.  In February 2008, the FASB provided a one-year deferral for the implementation 
of SFAS No. 157 for nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements on a 
nonrecurring basis.  Management believes the adoption of this statement is not expected to have a material impact on the 
consolidated financial position or results of operations and that the impact in 2009 will only be on  Aceto’s disclosures.  

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—
Including an Amendment of FASB Statement No. 115" (SFAS No. 159). SFAS No. 159 allows companies the choice to 
measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the 
fair value option has been elected will be recognized in earnings at each subsequent reporting date. The provisions of SFAS 
No. 159 will be effective for fiscal years beginning after November 15, 2007.  The Company does not believe adopting the 
provisions of SFAS No. 159 will have a significant impact on its consolidated financial statements. 

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 06-11, “Accounting for Income Tax 
Benefits of Dividends on Share-Based Payment Awards” (EITF No. 06-11). EITF No. 06-11 provides guidance regarding 
how an entity should recognize the tax benefit received as a result of dividends paid to holders of share-based compensation 
awards and charged to retained earnings according to SFAS No. 123(R), and will become effective in the first quarter of 

27  

 
 
 
   
 
 
 
 
 
 
2009. Management does not expect EITF No. 06-11 to have a material impact on the Company’s consolidated financial 
statements. 

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an 
amendment of Accounting Research Bulletin No 51” (SFAS No. 160). SFAS No. 160 establishes accounting and reporting 
standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a 
noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the 
noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and 
fair value measurement of any retained noncontrolling equity investment. SFAS No. 160 is effective for financial statements 
issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is 
prohibited. The Company must adopt these new requirements in its first quarter of fiscal 2010.  The adoption of this 
statement will impact the manner in which the Company presents noncontrolling interests, but will not impact its 
consolidated financial position or results of operations.  

In December 2007, the FASB approved the issuance of SFAS No. 141 (revised 2007) “Business Combinations” (SFAS No. 
141R). SFAS No. 141R establishes principles and requirements for how the acquirer in a business combination recognizes 
and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; 
recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 
determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects 
of the business combination.  The provisions for SFAS No. 141R are effective for fiscal years beginning after December 15, 
2008 and are applied prospectively to business combinations completed on or after that date.  Early adoption is not permitted. 
SFAS No. 141R is effective for the Company beginning in the first quarter of fiscal 2010.  The Company is evaluating the 
impact of SFAS No. 141R on its results of operations and financial condition. 

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities— An 
Amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 requires enhanced qualitative disclosures about 
objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on 
derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 
is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The 
Company is currently evaluating the impact of SFAS No. 161 on its consolidated financial statements. 

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk 

Market Risk Sensitive Instruments 

The market risk inherent in our market-risk-sensitive instruments and positions is the potential loss arising from adverse 
changes in investment market prices, foreign currency exchange-rates and interest rates. 

Investment Market Price Risk 

We had short-term investments of $548 at June 30, 2008.  Those short-term investments consisted of corporate equity 
securities, and were recorded at fair value and had exposure to price risk.  If this risk is estimated as the potential loss in fair 
value resulting from a hypothetical 10% adverse change in prices quoted by stock exchanges, the effect of that risk would be 
$55 as of June 30, 2008.  Actual results may differ. 

Foreign Currency Exchange Risk 

In order to reduce the risk of foreign currency exchange rate fluctuations, we hedge some of our transactions denominated in 
a currency other than the functional currencies applicable to each of our various entities.  The instruments used for hedging 
are short-term foreign currency contracts (futures).  The changes in market value of such contracts have a high correlation to 
price changes in the currency of the related hedged transactions.  At June 30, 2008, we had foreign currency contracts 
outstanding that had a notional amount of $20,768.  The difference between the fair market value of the foreign currency 
contracts and the related commitments at inception and the fair market value of the contracts and the related commitments at 
June 30, 2008, was not material. 

In addition, we enter into cross currency interest rate swaps to reduce foreign currency exposure on inter-company 
transactions.  In May 2003 we entered into a five-year cross currency interest rate swap transaction,  for the purpose of 
hedging fixed-interest-rate, foreign-currency-denominated cash flows under inter-company loans.  This transaction expired in 

28  

 
 
 
 
 
 
 
 
 
 
 
 
 
May 2008 when the underlying inter-company loan was repaid. Since our interest rate swap qualified as hedging activity, the 
change in its fair value, amounting to $161 in fiscal 2007 is recorded in accumulated other comprehensive income included in 
the accompanying consolidated balance sheet as of June 30, 2007.  

We are subject to risk from changes in foreign exchange rates for our subsidiaries that use a foreign currency as their 
functional currency and are translated into U.S. dollars.  These changes result in cumulative translation adjustments, which 
are included in accumulated other comprehensive income (loss).  On June 30, 2008, we had translation exposure to various 
foreign currencies, with the most significant being the Euro.  The potential loss as of June 30, 2008, resulting from a 
hypothetical 10% adverse change in quoted foreign currency exchange rates amounted to $7,600.  Actual results may differ. 

Interest rate risk 

Due to our financing, investing and cash-management activities, we are subject to market risk from exposure to changes in 
interest rates.  We utilize a balanced mix of debt maturities along with both fixed-rate and variable-rate debt to manage our 
exposure to changes in interest rates.  Our financial instrument holdings at year-end were analyzed to determine their 
sensitivity to interest rate changes.  In this sensitivity analysis, we used the same change in interest rate for all maturities.  All 
other factors were held constant.  If there were an adverse change in interest rates of 10%, the expected effect on net income 
related to our financial instruments would be immaterial.  However, there can be no assurances that interest rates will not 
significantly affect our results of operations. 

Item 8.  Financial Statements and Supplementary Data. 

The financial statements and supplementary data required by this Item 8 are set forth later in this report.   

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 

None. 

Item 9A. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 
1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in the reports that 
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified 
in the rules and forms of the Securities and Exchange Commission. Our disclosure controls and procedures are also designed 
to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is 
accumulated and communicated to our management, including our principal executive and principal financial officer, to 
allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer, with assistance 
from other members of our management, have reviewed the effectiveness of our disclosure controls and procedures as of 
June 30, 2008 and, based on their evaluation, have concluded that the disclosure controls and procedures were effective.  

Changes in Internal Control over Financial Reporting  

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the 
Exchange Act) during the three months ended June 30, 2008 that materially affected, or are reasonably likely to materially 
affect, our internal control over financial reporting. 

Management’s Report on Internal Control over Financial Reporting 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that 
term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our 
management, including our principal executive and principal financial officers, we assessed, as of June 30, 2008, the 
effectiveness of our internal control over financial reporting. This assessment was based on criteria established in the 
framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 
Commission.  Based on our assessment using those criteria, management concluded that our internal control over financial 
reporting as of June 30, 2008, was effective. 

29  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our internal control over financial reporting as of June 30, 2008, has been audited by BDO Seidman LLP, an independent 
registered public accounting firm, as stated in their report, which is included herein.  

Internal control over financial reporting is defined as a process designed by, or under the supervision of, our principal 
executive and principal financial officers and effected by our board of directors, management and other personnel to provide 
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 
purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: 

• 

• 

• 

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of our assets; 

provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial 
statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures 
are being made only in accordance with authorization of our management and directors; and 

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 
disposition of our assets that could have a material effect on the financial statements. 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the 
objectives of the internal control system are met.  Because of the inherent limitations of any internal control system, no 
evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. 

30  

 
 
 
 
 
 
 
 
 
Report of Independent Registered Public Accounting Firm 

The Board of Directors and Shareholders 
Aceto Corporation: 

We have audited Aceto Corporation's internal control over financial reporting as of June 30, 2008, based on criteria 
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the 
Treadway Commission (the COSO criteria). Aceto Corporation's management is responsible for maintaining effective 
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, 
included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to 
express an opinion on the Company's internal control over financial reporting based on our audit.  

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United 
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective 
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an 
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and 
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included 
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a 
reasonable basis for our opinion.  

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures 
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company's assets that could have a material effect on the financial statements.  

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  

In our opinion, Aceto Corporation maintained, in all material respects, effective internal control over financial reporting as of 
June 30, 2008, based on the COSO criteria.  

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), 
the consolidated balance sheets of Aceto Corporation as of June 30, 2008 and 2007, and the related consolidated statements 
of income and comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended 
June 30, 2008 and our report dated September 4, 2008, expressed an unqualified opinion thereon. 

/s/ BDO Seidman, LLP  

Melville, New York 
September 4, 2008 

31  

 
 
 
 
 
  
 
 
 
 
 
 
 
Item 9B.  Other Information 

None. 

Item 10.  Directors, Executive Officers and Corporate Governance 

PART III 

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission 
with respect to our annual meeting of shareholders scheduled to be held on December 4, 2008. 

Item 11.  Executive Compensation 

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission 
with respect to our annual meeting of shareholders scheduled to be held on December 4, 2008. 

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission 
with respect to our annual meeting of shareholders scheduled to be held on December 4, 2008. 

Item 13.  Certain Relationships and Related Transactions, and Director Independence 

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission 
with respect to our annual meeting of shareholders scheduled to be held on December 4, 2008. 

Item 14.  Principal Accountant Fees and Services 

Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission 
with respect to our annual meeting of shareholders scheduled to be held on December 4, 2008. 

Item 15.  Exhibits and Financial Statement Schedules  

The following documents are filed as part of this Report: 

PART IV 

(a)  The financial statements listed in the Index to Consolidated Financial Statements are filed as part of this Annual Report. All 

financial statement schedules have been included in the Consolidated Financial Statements or Notes thereto. 

(b)  Exhibits 

Exhibit   
Number                 Description 

3.1 

3.2 

3.3 

3.4 

Restated Certificate of Incorporation (incorporated by reference to Exhibit 4(a)(iii) to Registration  
Statement No. 2-70623 on Form S-8 (S-8 2-70623)). 

Certificate  of  Amendment  dated  November  21,  1985  to  Restated  Certificate  of  Incorporation  (incorporated  by 
reference to Exhibit 3(ii) to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1986). 

Amended and restated by-laws of Aceto Corporation, effective as of February 2, 2005 (incorporated by reference to 
Exhibit 3.1 to the Company’s current report on Form 8-K dated February 2, 2005). 

Amended and restated by-laws of Aceto Corporation, effective as of December 6, 2007 (incorporated by reference 
to Exhibit 3.1 to the Company’s current report on Form 8-K dated December 6, 2007). 

32  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.1 

10.2 

10.3 

10.4 

10.5 

10.6 

10.7 

10.8 

10.9 

10.10 

10.11 

10.12 

10.13 

10.14 

10.15 

Aceto Corporation 401(k) Retirement Plan, effective August 1, 1997, as amended and restated as of July 1, 2002 
(incorporated by reference to Exhibit 10.1 to the Company’s annual report on Form 10-K for the fiscal year ended 
June 30, 2004). 

Supplemental  Executive  Retirement  Plan,  as  amended  and  restated,  effective  June  30,  2004  and  frozen  as  of 
December 31, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s annual report on Form   10-K for 
the fiscal year ended June 30, 2004).  

Aceto  Corporation  Stock  Option  Plan  (as  Amended  and  Restated  effective  as  of  September  19,  1990)  (and  as 
further Amended effective June 9, 1992) (incorporated by reference to Exhibit 10(v)(b) to the Company's  
annual report on Form 10-K for the fiscal year ended June 30, 1992). 

1998 Aceto Corporation Omnibus Equity Award Plan (incorporated by reference to Exhibit 10(v) to the Company’s 
annual report on Form 10-K for the fiscal year ended June 30, 1999). 

Aceto Corporation 2002 Stock Option Plan (incorporated by reference to Exhibit 4(i) to Registration Statement No. 
333-110653 on Form S-8).  

Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc. for office space at One Hollow Lane, 
Lake  Success,  NY  dated  April  28,  2000  (incorporated  by  reference  to  Exhibit  10(vi)  to  the  Company’s  annual 
report on Form 10-K for the fiscal year ended June 30, 2000).  

Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc. for office space at One Hollow Lane, 
Lake Success, NY dated April 28, 2000 (incorporated by reference to Exhibit 10(vi)(b) to the Company’s annual 
report on Form 10-K for the year ended June 30, 2000).  

Lease  between  CDC  Products  Corp.  and  Seaboard  Estates  for  manufacturing  and  office  space  at  1801  Falmouth 
Avenue,  New  Hyde  Park,  NY  dated  October  31,  1999  (incorporated  by  reference  to  Exhibit  10(vi)(c)  to  the 
Company’s annual report on Form 10-K for the year ended June 30, 2000).  

Stock Purchase Agreement among Windham Family Limited Partnership, Peter H. Kliegman, CDC Products Corp. 
and Aceto Corporation (incorporated by reference to Exhibit 10(vii) to the Company’s annual report on Form 10-K 
for the year ended June 30, 1999). 

Asset  Purchase  Agreement  among  Magnum  Research  Corporation,  CDC  Products  Corp.,  Roy  Gross  and  Aceto 
Corporation (incorporated by reference to Exhibit 10 (viii) to the Company’s annual report on Form 10-K for the 
year ended June 30, 2000).  

Asset  Purchase  Agreement  between  Schweizerhall,  Inc.  and  Aceto  Corporation  (incorporated  by  reference  to 
Exhibit 10(ix) to the Company’s annual report on Form 10-K for the year ended June 30, 2000).  

Purchase and Sale Agreement among Schweizerhall Holding AG, Chemische Fabrik Schweizerhall, Schweizerhall, 
Inc., Aceto Corporation and Aceto Holding B.V., I.O. (incorporated by reference to Exhibit 2.1 to the Company’s 
current report on Form 8-K dated April 4, 2001). 

Loan  Guarantee  between  Aceto  Corporation  and  subsidiaries  and  Deutsche  Bank  AG  dated  March  22,  2001 
(incorporated by reference to Exhibit 10.13 to the Company’s annual report on Form 10-K for the year ended June 
30, 2001).  

Credit  Agreement  between  Aceto  Corporation  and  subsidiaries  and  JPMorgan  Chase  Bank  dated  May  10,  2002 
(incorporated by reference to Exhibit 10.13 to the Company’s annual report on Form 10-K for the year ended June 
30, 2002).  

Amendment  and  Waiver  to  Credit  Agreement  between  Aceto  Corporation  and  subsidiaries  and  JPMorgan  Chase 
Bank dated June 29, 2004 (incorporated by reference to Exhibit 10.15 to the Company’s annual report on Form 10-
K for the year ended June 30, 2004).   

33  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.16  Waiver to Credit Agreement between Aceto Corporation and subsidiaries and JPMorgan Chase Bank dated August 
31, 2004 (incorporated by reference to Exhibit 10.16 to the Company’s annual report on Form 10-K for the year 
ended June 30, 2004).   

10.17 

10.18 

10.19 

10.20 

10.21 

Share  Purchase  Agreement  dated  as  of  December  12,  2003  between  Aceto  Holding  GmbH  and  Corange 
Deutschland Holding GmbH (incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-
K dated December 31, 2003).   

Aceto Corporation Supplemental Executive Deferred Compensation Plan, effective March 14, 2005 (incorporated 
by reference to Exhibit 10.1 to the Company’s current report on Form 8-K dated March 14, 2005).  

Form of purchase agreement between Shanghai Zhongjin Real Estate Development Company Limited and Aceto 
(Hong  Kong)  Limited  dated  November  10,  2004  (incorporated  by  reference  to  Exhibit  10.1  to  the  Company’s 
quarterly report on Form 10-Q for the quarter ended December 31, 2004). 

Amendment  and  Waiver  to  Credit  Agreement  between  Aceto  Corporation  and  subsidiaries  and  JPMorgan  Chase 
Bank dated June 26, 2007. 

Aceto  Corporation  2007  Long-Term  Performance  Incentive  Plan  (incorporated  by  reference  to  Exhibit  4(i)  to 
Registration Statement No. 333-149586 on Form S-8). 

21.1* 

Subsidiaries of the Company. 

23.1* 

Consent of BDO Seidman, LLP.   

31.1* 

31.2* 

32.1* 

Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as adopted 
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as adopted 
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 
2002 

32.2* 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 
2002 

__________ 
*Filed herewith 

34  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

Report of Independent Registered Public Accounting Firm 

Consolidated financial statements: 

Consolidated balance sheets as of June 30, 2008 and 2007 

Consolidated statements of income for the years ended June 30, 2008, 2007 and 2006 

Consolidated statements of cash flows for the years ended June 30, 2008, 2007 and 2006 

Consolidated statements of shareholders’ equity and comprehensive income for the years ended June 30, 2008, 2007 
and 2006 

Notes to consolidated financial statements 

Schedules: 

II - Valuation and qualifying accounts 

All other schedules are omitted because they are not required or the information required is given in the consolidated 
financial statements or notes thereto. 

 35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Report of Independent Registered Public Accounting Firm 

The Board of Directors and Shareholders 
Aceto Corporation: 

We have audited the accompanying consolidated balance sheets of Aceto Corporation and subsidiaries as of June 30, 2008 
and 2007 and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows 
for each of the three years in the period ended June 30, 2008.  In connection with our audits of the consolidated financial 
statements, we have also audited the schedule as listed in the accompanying index.  These consolidated financial statements 
and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these 
consolidated financial statements and schedule based on our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United 
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 
statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements and schedule, assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We 
believe that our audits provide a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial 
position of Aceto Corporation and subsidiaries at June 30, 2008 and 2007, and the results of their operations and their cash 
flows for each of the three years in the period ended June 30, 2008, in conformity with accounting principles generally 
accepted in the United States of America.  

Also, in our opinion, the financial statement schedule when considered in relation to the basic consolidated financial 
statements taken as a whole, present fairly, in all material respects, the information set forth therein.  

We also have audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the 
effectiveness of Aceto Corporation and subsidiaries’ internal control over financial reporting as of June 30, 2008, based on 
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the 
Treadway Commission (COSO) and our report dated September 4, 2008 expressed an unqualified opinion thereon.  

/s/ BDO Seidman, LLP 

Melville, New York 
September 4, 2008 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
AS OF JUNE 30, 2008 AND 2007 
(in thousands, except per-share amounts) 

ASSETS 
Current assets: 

  Cash and cash equivalents 
  Investments 
  Trade receivables:  less allowance for doubtful accounts (2008, $477; 

       2007, $491) 
      Other receivables 
      Inventory 
      Prepaid expenses and other current assets 
      Deferred income tax asset, net 

       Total current assets 

Long-term notes receivable 

Property and equipment, net 
Property held for sale 
Goodwill 
Intangible assets, net 
Deferred income tax asset, net 
Other assets 

TOTAL ASSETS 

LIABILITIES AND SHAREHOLDERS’ EQUITY 
Current liabilities: 

Accounts payable 
Short term bank loans 
Note payable – related party 
Accrued expenses 

    Deferred income tax liability 

Total current liabilities 

Long-term liabilities 
Environmental remediation liability 
Deferred income tax liability 
Minority interest 

Total liabilities 

Commitments and contingencies (Note 16) 

Shareholders’ equity: 

Common stock, $.01 par value, 40,000 shares authorized; 25,644 shares issued; 

24,446 and 24,330 shares outstanding at June 30, 2008 and 2007, respectively      

Capital in excess of par value 
Retained earnings 
Treasury stock, at cost, 1,198 and 1,314 shares at June 30, 2008 and 2007,  

respectively  

Accumulated other comprehensive income 
Total shareholders’ equity   

2008 

   2007 

$  46,515 
  548 

68,220 
4,819 
71,109 
  817 
1,756 
193,784 

347 

4,307 
6,978 
1,987 
5,421 
4,098 
5,321 

$  32,320 
3,036 

58,206 
3,123 
60,679 
1,128 
2,541 
161,033 

449 

4,406 
5,268 
1,820 
5,817 
5,958 
3,727 

$ 222,243 

$ 188,478 

$   43,480 
 - 
500 
19,948 
   1,070 
64,998 

7,034 
7,578 
    1,751 
      473 
81,834 

256 
56,832 
81,778 

(11,571) 
  13,114  
140,409 

$   32,539 
25 
500 
14,154 
      885 
48,103 

6,684 
5,816 
2,746 
      302 
63,651 

256 
56,854 
74,419 

(12,693) 
    5,991 
124,827 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 

$222,243 

$188,478 

See accompanying notes to consolidated financial statements. 

 37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF INCOME 
FOR THE YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

Net sales 
Cost of sales 

Gross profit 

Selling, general and administrative expenses 

Research and development expenses 
Operating income 

Other income (expense): 

Interest expense 
Interest and other income, net 

Income from continuing operations before income taxes  
Provision for income taxes 
Income from continuing operations 
Loss from discontinued operations, net of income taxes (Note 3) 
Net income  

Basic income per common share:  

Income from continuing operations 
Loss from discontinued operations 

    Net income 

Diluted income per common share: 

Income from continuing operations 
Loss from discontinued operations 

    Net income 

Weighted average shares outstanding: 

Basic 
Diluted 

See accompanying notes to consolidated financial statements. 

     2008 

     2007 

     2006 

$359,591 
  292,286 
    67,305 

    45,422 
         506 
    21,377 

       (145) 
         957 
         812 

    22,189 
      8,716 
    13,473 
             - 
  $13,473   

$313,473 
  258,980 
    54,493 

    39,418 
           11 
    15,064 

       (173) 
         532 
         359 

    15,423 
      5,211 
    10,212 
             - 
  $10,212   

$297,328 
  246,370 
    50,958 

    38,509 
           20 
    12,429 

       (127) 
         956 
         829 

    13,258 
      3,994 
      9,264 
         (27) 
  $  9,237   

  $     0.55 
              - 
  $     0.55 

  $     0.42 
              - 
  $     0.42 

  $     0.38 
              - 
  $     0.38 

$       0.54 
              - 
$       0.54 

$       0.41 
              - 
$       0.41 

$       0.38 
              - 
$       0.38 

    24,346 
    24,800 

    24,305 
    24,711 

    24,267 
    24,590 

 38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands) 

Operating activities: 

Net income  
Adjustments to reconcile net income to net cash provided by (used in) 
operating activities: 

2008 

2007 

2006 

  $13,473 

  $10,212 

  $  9,237 

                Depreciation and amortization 
Gain on sale of assets 
Provision for doubtful accounts 
Non-cash stock compensation 
Unrealized loss (gain) on trading securities 
Deferred income taxes 
Changes in assets and liabilities: 

Investments – trading securities 
Trade accounts receivable 
Other receivables 
Inventory 
Prepaid expenses and other current assets 
Other assets 
Accounts payable 
Accrued expenses and other liabilities 

Net cash provided by operating activities 

Investing activities: 

Purchases of investments 
Proceeds from sale of investments 
Maturities of investments 
Payments received on notes receivable 
Issuance of notes receivable 
Proceeds from sale of intangible assets 
Purchase of intangible assets 
Purchases of property and equipment, net 
Net cash provided by (used in) investing activities 

Financing activities: 

Proceeds from exercise of stock options 

        Excess income tax benefit on exercise of stock options 

Payment of cash dividends 
Payments for purchases of treasury stock 
(Repayments) borrowings of short-term bank loans 

Net cash used in financing activities 

      2,378 
            - 
           98 
      1,285 
             6 
      1,835 

         324 
    (7,326)  
    (1,647) 
    (7,989) 
        345 
    (1,832) 
     9,615 
     4,853 
   15,418 

           -  
     1,000 
     1,200 
          98 
           - 
        400 
        (97) 
   (1,197) 
     1,404 

          87 
          18 
   (6,110) 
          - 
        (25) 
   (6,030) 

      1,791 
            - 
         132 
         443 
       (180) 
     1,692 

- 

     (6,973)  
     (1,726) 
   (12,565) 
         (96) 
       (636) 
      7,884 
      4,185 
      4,163 

   (6,274) 
           - 
     6,779 
        151 
        (75) 
           - 
   (2,468) 
      (704) 
   (2,591) 

        217 
          24 
   (4,257) 
          - 
          25 
   (3,991) 

     1,558 
        (66) 
          38 
        278 
        (40) 
     1,134 

            - 
      (227)  
        129 
     4,909 
      (182) 
      (719) 
    (3,962) 
     3,941 
   16,028 

 - 
      1,799 
            - 
          73 
            - 
            - 
            - 
       (485) 
      1,387  

        250 
          85 
   (3,637) 
      (581) 
      (126) 
   (4,009) 

Effect of foreign exchange rate changes on cash 

    3,403 

    1,007 

       376 

Net increase (decrease) in cash and cash equivalents 
Cash and cash equivalents at beginning of period 
Cash and cash equivalents at end of period 

  14,195   
  32,320 
$46,515 

  (1,412) 
  33,732 
$32,320 

  13,782 
  19,950 
$33,732 

See accompanying notes to consolidated financial statements. 

 39 

 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME 
FOR THE YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

 5002 ,03 enuJ ta ecnalaB
 emocni teN
 :emocni evisneherpmoc rehtO   
      Change  in  fair  value  of  cross    currency 

interest rate swaps 
      Foreign currency translation 
            adjustments 
      Unrealized loss on available for sale    
          investments 
      Additional minimum pension liability 
 :emocni evisneherpmoC
Stock  issued  pursuant  to  employee  stock 

incentive plans 

Dividends declared ($0.15 per share) 
 noitasnepmoc desab-erahS
 kcots yrusaert fo sesahcruP
 snoitpo kcots fo esicrexE
Tax benefit from exercise of stock options 
 6002 ,03 enuJ ta ecnalaB
 emocni teN
 :emocni evisneherpmoc rehtO   
      Change  in  fair  value  of  cross    currency 

interest rate swap 
      Foreign currency translation 
            adjustments 
      Unrealized  gain  on  available  for  sale 

investments 
 :emocni evisneherpmoC
Adjustment  to  adopt  SFAS  No.  158,  net  of 

tax of $25 

Stock  issued  pursuant  to  employee  stock 

incentive plans 

Dividends declared ($0.175 per share) 
 noitasnepmoc desab-erahS
 snoitpo kcots fo esicrexE
Tax benefit from exercise of stock options     
 7002 ,03 enuJ ta ecnalaB
 emocni teN
 :emocni evisneherpmoc rehtO   
      Change  in  fair  value  of  cross    currency 

interest rate swap 
      Foreign currency translation 
            adjustments 
      Unrealized  gain  on  available  for  sale 

investments 

      Defined benefit plans, net of tax of $29 
 :emocni evisneherpmoC
Stock  issued  pursuant  to  employee  stock 

incentive plans 

Issuance of restricted stock, net of forfeitures 
Dividends declared ($0.25 per share) 
 noitasnepmoc desab-erahS
 snoitpo kcots fo esicrexE
Tax benefit from exercise of stock options         
 8002 ,03 enuJ ta ecnalaB

Common Stock 

 serahS

 tnuomA

Capital in 
Excess of 
Par Value 

Retained 
Earnings 

Treasury Stock 

Shares 

Amount 

Accumulated 
Other 
Comprehensive 
Income 

Total 

 446,52
 -

 652$
 -

 309,65$
 -

 468,26$
 732,9     

 )263,1(
 -

 )505,31$(
 -

 731,1$
 -

 556,701$
 732,9 

- 

- 

- 
- 

- 
- 
 -   
 -
 -
- 
 446,52
 -

- 

- 

- 

- 

- 
- 
 -   
 -
- 
446,52
 -

- 

- 

- 
- 

- 
- 
- 
 -
 -
- 
 446,52

- 

- 

- 
- 

- 
- 
 -
 -
 -
- 
 652
 -

- 

- 

- 

- 

- 

- 

- 
- 

(66) 
- 
 881
 -
 )914(
85 
 196,65
 -

- 

- 

- 

- 

- 

- 

- 
- 

- 

- 

- 
- 

- 

- 

- 
- 

- 
(3,637) 
 -
 -
 -
- 
 464,86
 212,01

20 
- 
 -
 )69(
 27 
- 
 )663,1(
 -

219 
- 
 -
 )185(
 966  
- 
 )891,31(
 -

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 
- 
 -
 -
- 
256
 -

  (44) 
- 
 923               
 )641(
24 
56,854 
 -

- 
(4,257) 
 -
 -
- 
74,419 
 374,31

15 
- 
 -
 73
- 
(1,314) 
 -

142 
- 
 -
 363
- 
(12,693) 
 -

- 

- 

- 
- 

- 

- 

- 
- 

- 

- 

- 
- 

- 

- 

- 
- 

- 

- 

- 
- 

- 
- 
- 
 -
 -
- 
 652$

  (20) 
(821) 
- 
 568               
 )46(
18 
 238,65$

- 
- 
(6,114) 
 -
 -
- 
 877,18 $

15 
85 
- 
 -
 61
- 
 )891,1(

150 
821 
- 
 -
 151
- 
 )175,11$(

42 

                42 

1,682 

          1,682 

(42) 
21 

              (42) 
                 21 
049,01

- 
- 
 -
 -
 -
- 
 048,2
 -

             153 
         (3,637) 
 881            
 )185(            
 052           
             85 
 350,511    
 212,01     

161 

           161 

2,900 

       2,900 

 52 

             52 
523,31        

38 

            38 

- 
- 
 -
 -
- 
5,991 
 -

         98 
   (4,257) 
 923          
 712          
         24 
124,827 
 374,31 

75 

        75 

6,944 

        6,944 

 42 
62 

- 
- 
- 
 -
 -
- 
 411,31 $

            42 
        62 
695,02 

           130 
     - 
      (6,114) 
 568
 78
18 
 904,041$  

See accompanying notes to consolidated financial statements. 

 40  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

(1) Description of Business 

Aceto Corporation and subsidiaries (“Aceto” or the “Company”) is primarily engaged in the sourcing, quality assurance, 
regulatory support, marketing and distribution of chemically derived pharmaceuticals, biopharmaceuticals, specialty 
chemicals and crop protection products used principally as raw materials in the agricultural, color, pharmaceutical, surface 
coating/ink and general chemical consuming industries. Most of the chemicals distributed by the Company are purchased 
from companies located outside the United States.  The Company’s customers are primarily located throughout the United 
States, Europe and Asia.  

(2) Summary of Significant Accounting Policies 

Principles of Consolidation 

The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. In 
addition, the financial statements of S.R.F.A. LLC, a joint-venture entity which is 50% owned by the Company and 
commenced operations in April 2004, are included in the consolidated financial statements in accordance with FASB 
Interpretation 46R, “Consolidation of Variable Interest Entities” (FIN 46R).  All significant inter-company balances and 
transactions are eliminated in consolidation. 

Use of Estimates 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires 
management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses 
reported in those financial statements and the disclosure of contingent assets and liabilities at the date of the financial 
statements. These judgments can be subjective and complex, and consequently actual results could differ from those 
estimates and assumptions.  The Company’s most critical accounting policies relate to revenue recognition; allowance for 
doubtful accounts; inventory; goodwill and other indefinite-life intangible assets; long-lived assets; environmental matters 
and other contingencies; income taxes; and stock-based compensation. 

Cash Equivalents 

The Company considers all highly liquid debt instruments with original maturities at the time of purchase of three months or 
less to be cash equivalents.  

Investments 

The Company classifies investments in marketable securities as trading, available-for-sale or held-to-maturity at the time of 
purchase and periodically re-evaluates such classifications.  Trading securities are carried at fair value, with unrealized 
holding gains and losses included in earnings.  Held-to-maturity securities are recorded at cost and are adjusted for the 
amortization or accretion of premiums or discounts over the life of the related security. Unrealized holding gains and losses 
on available-for-sale securities are excluded from earnings and are reported as a separate component of accumulated other 
comprehensive income (loss) until realized.  In determining realized gains and losses, the cost of securities sold is based on 
the specific identification method. Interest and dividends on the investments are accrued at the balance sheet date.   

Inventories 

Inventories, which consist principally of finished goods, are stated at the lower of cost (first-in first-out method) or market.  
The Company writes down its inventories for estimated excess and obsolete goods by an amount equal to the difference 
between the carrying cost of the inventory and the estimated market value based upon assumptions about future demand and 
market conditions.  

Environmental and Other Contingencies 

The Company establishes accrued liabilities for environmental matters and other contingencies when it is probable that a 
liability has been incurred and the amount of the liability is reasonably estimable.  If the contingency is resolved for an 
amount greater or less than the accrual, or the Company’s share of the contingency increases or decreases, or other 

 41 

 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

assumptions relevant to the development of the estimate were to change, the Company would recognize an additional 
expense or benefit in the consolidated statements of income in the period such determination was made. 

Pension Benefits 

In connection with certain historical acquisitions in Germany, the Company assumed defined benefit pension plans covering 
certain employees who meet certain eligibility requirements.  The net pension benefit obligations recorded and the related 
periodic costs are based on, among other things, assumptions of the discount rate, estimated return on plan assets, salary 
increases and the mortality of participants.  The obligation for these claims and the related periodic costs are measured using 
actuarial techniques and assumptions.  Actuarial gains and losses are deferred and amortized over future periods.  The 
Company’s plans are funded in conformity with the funding requirements of applicable government regulations. 

Accumulated Other Comprehensive Income 

The components of accumulated other comprehensive income as of June 30, 2008 and 2007 are as follows: 

Fair value of cross currency interest rate swaps 
Cumulative foreign currency translation adjustments 
Unrealized loss on available for sale investments 
Defined benefit plans                  
Total 

2008 

  $    -  
 13,014 
      -   
       100 
 $13,114 

    2007 
$  (75) 
    6,070 
       (42) 
         38 
  $5,991 

The foreign currency translation adjustments for the year ended June 30, 2008 primarily relates to the fluctuation of the 
conversion rate of the Euro. The currency translation adjustments are not adjusted for income taxes as they relate to indefinite 
investments in non-US subsidiaries.   

Common Stock  

On May 4, 2005, the Board of Directors of the Company authorized the extension of the Company’s stock repurchase 
program for an additional three years, which expired in May 2008.  On September 4, 2008, the Board of Directors of the 
Company authorized the continuation of the Company’s stock repurchase program, expiring in May 2011.  Under the stock 
repurchase program, the Company is authorized to purchase up to an additional 4,051 shares of common stock in open 
market or private transactions, at prices not to exceed the market value of the common stock at the time of such purchase. 

Stock Options 

Effective July 1, 2005, the Company adopted SFAS No. 123(R), “Share-Based Payment.”  SFAS 123(R) requires that all 
stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair 
value of the award.  This statement was adopted using the modified prospective method, which requires the Company to 
recognize compensation expense on a prospective basis.  SFAS 123(R) also requires that excess tax benefits related to stock 
option exercises be reflected as financing cash inflows.   Prior to the adoption of SFAS 123(R), the Company presented all 
tax benefits related to stock-based compensation as an operating cash inflow.  The Company’s policy is to satisfy stock-based 
compensation awards with treasury shares.  

In order to determine the fair value of stock options on the date of grant, the Company uses the Black-Scholes option-pricing 
model, including an estimate of forfeiture rates. Inherent in this model are assumptions related to expected stock-price 
volatility, risk-free interest rate, expected life and dividend yield.  Expected stock-price volatility is based on the historical 
daily price changes of the underlying stock which are obtained from public data sources. The risk-free interest rate is based 
on U.S. Treasury issues with a term equal to the expected life of the option. The Company uses historical data to estimate 
expected dividend yield, expected life and forfeiture rates. In fiscal 2007, the Company utilized the “simplified” method 
prescribed in SEC Staff Accounting Bulletin No. 107 to estimate the expected life. 

 42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

Revenue Recognition 

The Company recognizes revenue from product sales at the time of shipment and passage of title and risk of loss to the 
customer.  The Company has no acceptance or other post-shipment obligations and does not offer product warranties or 
services to its customers. 

Sales are recorded net of returns of damaged goods from customers, which historically have been immaterial, and sales 
incentives offered to customers.  The Company’s sales incentives consist primarily of volume incentive rebates.  The 
Company records such volume incentive rebates as the underlying revenue transactions that result in progress by the 
customer in earning the rebate are recorded, in accordance with EITF 01-09, “Accounting for Consideration Given by a 
Vendor to a Customer (Including a Reseller of the Vendor's Products).” 

Shipping and Handling Fees and Costs 

All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are 
included in net sales.  The costs incurred by the Company for shipping and handling are reported as a component of cost of 
sales.  Cost of sales also includes inbound freight, receiving, inspection, warehousing, distribution network, and customs and 
duty costs. 

Net Income Per Common Share  

Basic income per common share is based on the weighted average number of common shares outstanding during the period.  
Diluted income per common share includes the dilutive effect of potential common shares outstanding.  The following table 
sets forth the reconciliation of weighted average shares outstanding and diluted weighted average shares outstanding for the 
fiscal years ended June 30, 2008, 2007 and 2006: 

2008 

2007 

2006 

Weighted average shares outstanding 

    24,346 

  24,305 

  24,267 

Dilutive effect of stock options and 
restricted stock awards and units 

         454 

       406 

       323 

Diluted weighted average shares 

outstanding 

    24,800 

  24,711 

  24,590 

There were 1,534, 1,443 and 1,638 common equivalent shares outstanding as of June 30, 2008, 2007 and 2006, respectively 
that were not included in the calculation of diluted income per common share because their effect would have been anti-
dilutive. 

Income Taxes 

Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the 
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and 
liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to 
apply to taxable income in the years in which those differences are expected to be recovered or settled.  The effect on 
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment 
date. 

 43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

Property and Equipment 

Property and equipment are stated at cost and are depreciated using the straight line method over the estimated useful lives of 
the related asset.  Expenditures for improvements that extend the useful life of an asset are capitalized.  Ordinary repairs and 
maintenance are expensed as incurred.  When assets are retired or otherwise disposed of, the cost and related accumulated 
depreciation are removed from the accounts and any related gains or losses are included in income.   

The components of property and equipment were as follows: 

Machinery and equipment 

Leasehold improvements 
Computer equipment and software 
Furniture and fixtures 
Automobiles 
Building  
Land 

Accumulated depreciation and amortization 

June 30, 2008 
$ 1,140 

June 30, 2007 
$   964 

378 
3,772 
1,138 
411 
3,221 

330 
3,763 
1,100 
497 
3,015 
 280                           - 
$ 9,669 
5,263 
$ 4,406 

$10,340 
6,033 
$ 4,307 

Estimated useful 
life (years) 
3-7 
Shorter of asset life 
or lease term 
3-5 
5-10 
3 
20 
                - 

Property held for sale represents land and land improvements of $6,978 and $5,268 at June 30, 2008 and 2007, respectively.  
During fiscal 2008 the Company recorded an additional $1,710 to partially recognize the capitalized environmental costs up 
to the fair value of the land and land improvements to the extent of additional environmental remediation cost estimates in 
accordance with EITF 90-8 “Capitalization of Costs to Treat Environmental Contamination”.  

Depreciation and amortization of property and equipment amounted to $1,174, $1,067 and $943 for the years ended June 30, 
2008, 2007, and 2006, respectively. 

Goodwill and Other Intangibles 

Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets.  
Other intangible assets principally consist of customer relationships, patent license, EPA registrations and related data, 
trademarks, product rights and related intangibles and covenants not to compete.  Goodwill and other intangible assets that 
have an indefinite life are not amortized. 

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company tests goodwill and other intangible 
assets for impairment on at least an annual basis.  Goodwill impairment exists if the net book value of a reporting unit 
exceeds its estimated fair value.  The impairment testing is performed in two steps: (i) the Company determines impairment 
by comparing the fair value of a reporting unit with its carrying value, and (ii) if there is an impairment, the Company 
measures the amount of impairment loss by comparing the implied fair value of goodwill with the carrying amount of that 
goodwill.  To determine the fair value of these intangible assets, the Company uses many assumptions and estimates that 
directly impact the results of the testing.  In making these assumptions and estimates, the Company uses industry accepted 
valuation models and set criteria that are reviewed and approved by various levels of management.   

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of 

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets and 
certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the 
carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a 
comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. 
Recoverability of assets held for sale is measured by comparing the carrying amount of the assets to their estimated fair 
value.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the 

 44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

carrying amount of the assets exceed the fair value of the assets.  Assets to be disposed of are reported at the lower of the 
carrying amount or fair value less costs to sell.  

Accounting for Derivatives and Hedging Activities 

The Company accounts for derivatives and hedging activities under the provisions of SFAS No. 133, “Accounting for 
Derivative Instruments and Hedging Activities”, as amended, which establishes accounting and reporting guidelines for 
derivative instruments and hedging activities.  SFAS No. 133 requires the recognition of all derivative financial instruments 
as either assets or liabilities in the statement of financial condition and measurement of those instruments at fair value.  
Changes in the fair values of those derivatives are reported in earnings or other comprehensive income depending on the 
designation of the derivative and whether it qualifies for hedge accounting.  The accounting for gains and losses associated 
with changes in the fair value of a derivative and the effect on the consolidated financial statements depends on its hedge 
designation and whether the hedge is highly effective in achieving offsetting changes in the fair value or cash flows of the 
asset or liability hedged.  Under the provisions of SFAS No. 133, the method that is used for assessing the effectiveness of a 
hedging derivative, as well as the measurement approach for determining the ineffective aspects of the hedge, is established 
at the inception of the hedged instrument. 

For derivatives designated as fair value hedges, changes in fair value are recognized in earnings.  If the fair value hedge is 
fully effective, the change in fair value of the hedged item attributable to the hedged risk is adjusted to fair value and is also 
recognized in earnings.  Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as 
a cash flow hedge are recorded in other comprehensive income to the extent that the derivative is effective as a hedge, until 
earnings are affected by the variability in cash flows of the designated hedged item. 

The Company entered into cross currency interest rate swaps to reduce foreign currency exposure on inter-company 
transactions.  The gains or losses on the inter-company loans due to changes in foreign currency rates are offset by the gains 
or losses on the swap in the statements of income.  Since the Company’s interest rate swaps qualified as cash flow hedging 
activities, the change in their fair value was recorded in accumulated other comprehensive income.    

The Company operates internationally, therefore its earnings, cash flows and financial positions are exposed to foreign 
currency risk from foreign-currency-denominated receivables and payables, which, in the U.S., have been denominated in 
various foreign currencies, including Euros, British Pounds, Japanese Yen, Singapore Dollars and Chinese Renminbi and at 
certain foreign subsidiaries in U.S. dollars and other non-local currencies.   

Management believes it is prudent to minimize the risk caused by foreign currency fluctuation.  Management minimizes the 
currency risk on its foreign currency receivables and payables by purchasing future foreign currency contracts (futures) with 
one of its financial institutions.  Futures are traded on regulated U.S. and international exchanges and represent commitments 
to purchase or sell a particular foreign currency at a future date and at a specific price.   Since futures are purchased for the 
amount of the foreign currency receivable or for the amount of foreign currency needed to pay for specific purchase orders, 
and the futures mature on the due date of the related foreign currency vendor invoices or customer receivables, the Company 
believes that it eliminates risks relating to foreign currency fluctuation.  The Company takes delivery of all futures to pay 
suppliers in the appropriate currency.  The gains or losses for the changes in the fair value of the foreign currency contracts 
are recorded in cost of sales (sales) and offset the gains or losses associated with the impact of changes in foreign exchange 
rates on trade payables (receivables) denominated in foreign currencies.  Senior management and members of the financial 
department continually monitor foreign currency risks and the use of this derivative instrument.  

Foreign Currency 

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars in accordance with SFAS No. 
52, "Foreign Currency Translation." Where the functional currency of a foreign subsidiary is its local currency, balance sheet 
accounts are translated at the current exchange rate and income statement items are translated at the average exchange rate for 
the period.   Exchange gains or losses resulting from the translation of financial statements of foreign operations are 
accumulated in other comprehensive income.  Where the local currency of a foreign subsidiary is not its functional currency, 
financial statements are translated at either current or historical exchange rates, as appropriate.    

 45 

 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

In the third quarter of 2008, the Company changed the functional currency of its Chinese subsidiaries from the Chinese 
Renminbi to the U.S. Dollar, since these subsidiaries primarily generate and expend cash in the U.S. Dollar.  As a result, the 
Company recorded a correction of an error in the third quarter of 2008, which resulted in additional interest and other 
income, net of approximately $559, which represented approximately $389 after tax profit. The Company did not deem this 
adjustment to be material to any prior quarters in fiscal 2008 based upon both quantitative and qualitative factors.  In 
addition, this adjustment does not impact the 2008 year-to-date reported results. This matter was not corrected for periods 
prior to June 30, 2007 due to the immateriality of the effects of this in earlier years.   

Reclassifications 

Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current year 
presentation.   

(3)  Sale of Institutional Sanitary Supplies Segment      

During June 2005, the Company entered into an agreement to sell the majority of the product lines formulated and marketed 
by CDC Products Corp. (“CDC”), which is one of the two reporting units forming part of the former Institutional Sanitary 
Supplies reportable segment.  The sale of certain product lines of CDC was completed on August 24, 2005 for $75 and a note 
receivable of $44 due in April 2006, which resulted in a pre-tax gain of $66, included in other income in the statement of 
income for the year ended June 30, 2006.  Excluded from the sale of CDC’s product lines was Anti-Clog, an EPA-registered 
biocide that has a unique delivery system and is used in commercial air-conditioning systems.  Beginning in July 2005, the 
operating results of the Anti-Clog product, which are not material, are included in the Chemicals & Colorants reportable 
segment.     

On September 6, 2005, the Company completed the sale of certain assets of Magnum Research Corp. for $81, the remaining 
reporting unit of the former Institutional Sanitary Supplies reportable segment, the operating results of which are included in 
discontinued operations in the consolidated statements of income.  In December 2005, the Company exited the leased space 
previously occupied by CDC and Magnum Research Corp.  In June 2006, the Company negotiated a lease termination with 
its landlord which resulted in a pre-tax charge of $378 included in selling, general and administrative expenses for the year 
ended June 30, 2006. 

Operating results of discontinued operations for the fiscal year ended June 30, 2006 were as follows: 

Net sales 

Loss from operations of 
discontinued business 
Benefit for income taxes 

2006 
  $   154 

       (44)      
        17 

Non-cash impairment charge 
Benefit for income taxes 

           - 
           - 

Loss from discontinued operations 

  $   (27) 

 46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

 (4) Investments 

A summary of short-term investments was as follows: 

Trading securities 
Corporate equity securities 

Available for sale securities 
Corporate bonds 
Government and agency securities 

    June 30, 2008 

    June 30, 2007 

Fair Value 

Cost Basis 

Fair Value 

Cost Basis 

            $   548 

            $      14 

$    877 

$    152 

             $       -   
             $       - 
            $    548 

             $     - 
             $     - 

$ 1,187 
$    972 
$ 3,036 

$ 1,203 
$ 1,000 

The Company has classified all investments with maturity dates of greater than three months as current since it has the ability 
to redeem them within the year and is available for current operations. 

Unrealized (losses) gains on trading securities were $(6), $180 and $40 for fiscal 2008, 2007 and 2006, respectively.   

(5) Notes Receivable 

The Company has four notes receivable with outstanding balances aggregating $450 and $548 at June 30, 2008 and June 30, 
2007, respectively, which have arisen from sales of property.  The notes are either secured by a first mortgage on the real 
property sold or collateralized by a security interest in the asset sold.  The notes range in length from seven to ten years and 
earn interest at a fixed rate.  The range of fixed rates on the notes is 5.5% to 7.0%.  Included in current assets are the current 
portions of the notes receivable due within one year totaling $103 and $99 at June 30, 2008 and 2007, respectively. 

(6)  Goodwill and Other Intangible Assets  

Goodwill of $1,987 and $1,820 as of June 30, 2008 and June 30, 2007, respectively, relates to the Health Sciences segment 
and reporting unit.   

Intangible assets subject to amortization as of June 30, 2008 and 2007 were as follows: 

June 30, 2008 

Customer relationships 
Product rights and related intangibles 
Patent license 
EPA registrations and related data 
Non-compete agreements 

June 30, 2007 

Customer relationships 
Patent license 
EPA registrations and related data 
Non-compete agreements 

Gross 
Carrying 
Value 

Accumulated 
Amortization 

Net Book 
Value 

      $ 3,468 
              96     
            838  
         2,733  
            290  
      $ 7,425 

    $ 2,229    
              4 
          209  
          384 
          261  
    $ 3,087 

    $ 1,239 
            92 
          629   
       2,349   
            29 
    $ 4,338 

Gross 
Carrying 
Value 

      $ 2,958 
            838  
         2,733  
            247  
      $ 6,776 

 47 

Accumulated 
Amortization 

Net Book 
Value 

    $ 1,479    
          133  
            98 
          173  
    $ 1,883 

    $ 1,479 
          705   
       2,635   
            74 
    $ 4,893 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

The estimated useful lives of customer relationships, product rights and related intangibles, patent license, EPA registrations 
and related data and non-compete agreements are 7 years, 3-5 years, 11 years, 10 years and 3-5 years, respectively. 

As of June 30, 2008 and June 30, 2007, the Company also had $1,083 and $924, respectively, of intangible assets pertaining 
to trademarks which have indefinite lives and are not subject to amortization.   

In fiscal 2008 and 2007, changes in goodwill and trademarks are attributable to foreign currency exchange rates used to 
translate the financial statements of foreign subsidiaries. 

Amortization expense for intangible assets subject to amortization amounted to $1,204, $724 and $615 for the years ended 
June 30, 2008, 2007 and 2006, respectively.  The estimated aggregate amortization expense for intangible assets subject to 
amortization for each of the succeeding years ended June 30, 2009 through June 30, 2014 are as follows:  2009: $871; 2010: 
$860; 2011: $709; 2012: $383; 2013: $366 and 2014 and thereafter: $1,149. 

(7) Accrued Expenses  

The components of accrued expenses as of June 30, 2008 and 2007 were as follows: 

Accrued compensation 
Accrued environmental remediation costs 
Accrued income taxes payable 
Other accrued expenses 

                2008 
            $ 4,399 
                  268 
               5,248 
            10,033   
           $19,948 

               2007 
            $ 3,749 
                  321 
               1,504 
               8,580 
           $14,154 

(8) Environmental Remediation  

In fiscal 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially responsible parties 
(PRP Group) who are working with the State of Tennessee (the State) to remediate a contaminated property in Tennessee 
called the Pulvair site. The PRP Group has alleged that Aceto shipped hazardous substances to the site which were released 
into the environment.   The State had begun administrative proceedings against the members of the PRP group and Aceto 
with respect to the cleanup of the Pulvair site and the group has begun to undertake cleanup. The PRP Group is seeking a 
settlement of approximately $2,100 from the Company for its share to remediate the site contamination. Although the 
Company acknowledges that it shipped materials to the site for formulation over twenty years ago, the Company believes that 
the evidence does not show that the hazardous materials sent by Aceto to the site have significantly contributed to the 
contamination of the environment. Accordingly, the Company believes that the settlement offer is unreasonable. 
Alternatively, counsel to the PRP Group has proposed that Aceto join it as a participating member and pay 3.16% of the PRP 
Group's cost.  The Company believes that this percentage is high because it is based on the total volume of materials that 
Aceto sent to the site, most of which were non-hazardous substances and as such, believes that, at most, it is a de minimus 
contributor to the site contamination. The impact of the resolution of this matter on the Company's results of operations in a 
particular reporting period is not known.  However, management believes that the ultimate outcome of this matter will not 
have a material adverse effect on the Company's financial condition or liquidity. 

The Company has environmental remediation obligations in connection with Arsynco, Inc. (Arsynco), a subsidiary formerly 
involved in manufacturing chemicals located in Carlstadt, New Jersey, which was closed in 1993 and is currently held for 
sale.  During fiscal 2008, based on continued monitoring of the contamination at the site and the current proposed plan of 
remediation, the Company received an estimate from an environmental consultant stating that the costs of remediation could 
be between $7,846 and $9,574.  As of June 30, 2008 and 2007 a liability of $7,846 and $6,136, respectively, is included in 
the accompanying consolidated balance sheet.  In accordance with EITF Issue 90-8, “Capitalization of Costs to Treat 
Environmental Contamination” management believes that the majority of costs incurred to remediate the site will be 
capitalized in preparing the property which is currently classified as held for sale.  An appraisal of the fair value of the 
property by a third-party appraiser supports this assumption.  However, these matters, if resolved in a manner different from 

 48 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

those assumed in current estimates, could have a material adverse effect on the Company’s financial condition, operating 
results and cash flows when resolved in a future reporting period.   

In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental 
Response, Compensation and Liability Act (CERCLA) for a site described as the Berry’s Creek Study Area.   Arsynco is one 
of over 150 PRPs which have potential liability for the required investigation and remediation of the site.  The estimate of the 
potential liability is not quantifiable for a number of reasons, including the difficulty in determining the extent of 
contamination and the length of time remediation may require.  In addition, any estimate of liability must also consider the 
number of other PRPs and their financial strength.  Based on prior practice in similar situations, it is possible that the State 
may assert a claim for natural resource damages with respect to the Arsynco site itself, and either the federal government or 
the State (or both) may assert claims against Arsynco for natural resource damages in connection with Berry's Creek; any 
such claim with respect to Berry's Creek could also be asserted against the approximately 150 PRPs which the EPA has 
identified in connection with that site.  Any claim for natural resource damages with respect to the Arsynco site itself may 
also be asserted against BASF, the former owners of the Arsynco property. Since an amount of the liability can not be 
reasonably estimated at this time, no accrual is recorded for these potential future costs.  The impact of the resolution of this 
matter on the Company’s results of operations in a particular reporting period is not known.  However, management believes 
that the ultimate outcome of this matter will not have a material adverse effect on the Company’s financial condition or 
liquidity. 

(9) Financing Arrangements  

The Company has a revolving credit agreement with a financial institution that expires June 30, 2010 and provides for 
available credit of $10,000.  Under the credit agreement, the Company may obtain credit through direct borrowings and 
letters of credit.  The obligations of the Company under the credit agreement are guaranteed by certain of the Company’s 
subsidiaries and are secured by 65% of the capital of certain non-domestic subsidiaries which the Company owns.  There is 
no borrowing base on the credit agreement.  Interest under the credit agreement is at LIBOR plus 1.50%, which was 3.96%, 
6.82% and 7.19% at June 30, 2008, 2007 and 2006, respectively.  The credit agreement contains several financial covenants 
requiring, among other things, minimum levels of debt service and tangible net worth.  The Company is also subject to 
certain restrictive debt covenants including liens, limitations on indebtedness, guarantees, sale of assets, sales of receivables, 
and loans and investments.  The Company was in compliance with all covenants at June 30, 2008.   

At June 30, 2008 and 2007, the Company had available lines of credit with foreign financial institutions totaling $22,844 and 
$19,472, respectively.  The Company has issued a cross corporate guarantee to the foreign banks.  Short term loans under 
these agreements bear interest at LIBOR plus 0.75%, which was 3.21%, 6.07% and 6.44% at June 30, 2008, 2007 and 2006, 
respectively.  The Company is not subject to any financial covenants under these arrangements. 

Under the above financing arrangements, the Company had $663 in letters of credit leaving an unused facility of $32,181 at 
June 30, 2008.  At June 30, 2007 the Company had $25 in short-term bank loans outstanding and $702 in letters of credit 
leaving an unused facility of $28,770.   

(10)  Stock Based Compensation Plans 

At the annual meeting of shareholders of the Company held December 6, 2007, the shareholders approved the Aceto 
Corporation 2007 Long-Term Performance Incentive Plan (2007 Plan). The Company has reserved 700 shares of common 
stock for issuance under the 2007 Plan to the Company’s employees and non-employee directors. There are five types of 
awards that may be granted under the 2007 Plan-options to purchase common stock, stock appreciation rights, restricted 
stock, restricted stock units and performance incentive units.   

In September 2002, the Company adopted the Aceto Corporation 2002 Stock Option Plan (2002 Plan), which was ratified by 
the Company’s shareholders in December 2002.  Under the 2002 Plan, restricted stock or options to purchase up to 1,688 
shares of the Company’s common stock may be granted by the Company to officers, directors, employees and agents of the 
Company.  The exercise price per share shall not be less than the market value of Aceto common stock on the date of grant 
and each option may not become exercisable less than six months from the date it is granted.  Restricted stock may be 
granted to an eligible participant in lieu of a portion of any annual cash bonus earned by such participant.  Such award may 
include additional shares of restricted stock (premium shares) greater than the portion of bonus paid in restricted stock.  The 
restricted stock award is vested at issuance and the restrictions lapse ratably over a period of years as determined by the 

 49 

 
 
 
 
 
 
  
 
  
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

Board of Directors, generally three years.  The premium shares vest when all the restrictions lapse, provided that the 
participant remains employed by the Company at that time.    

In December 2007, the Company granted 239 options to non-employee directors and employees at an exercise price of $8.05 
per share.  These options vest on the first anniversary of the date of grant and expire ten years from the date of grant.

During the year ended June 30, 2007, the Company granted 65 options to certain employees and directors at a weighted 
average exercise price of $8.25 per share. The options vest on the first anniversary of the date of grant and expire ten years 
from the date of grant.

In January 2006, the Company granted 131 options to certain employees and directors at an exercise price of 6.82 per share.  
The options vest on the first anniversary of the date of grant and expire ten years from the date of grant. 

All options granted were at exercise prices equal to the market value of the common stock on the date of grant.  As of June 
30, 2008, there were 431 and 91 shares of common stock available for grant under the 2007 and 2002 Plans, respectively.   

In December 1998, the Company adopted the Aceto Corporation 1998 Omnibus Equity Award Plan (1998 Plan).  In 
accordance with the 1998 Plan the Company’s Board of Directors (Board) may grant up to 1,688 shares of common stock in 
the form of stock options or restricted stock to eligible participants.  The exercise price per share, determined by the Board,
for options granted cannot be less than the market value of the stock on the date of grant.  The options vest as determined by 
the Board and expire no later than ten years from the date of grant.  Restricted stock may be granted to an eligible participant
in lieu of a portion of any annual cash bonus earned by such participant.  Such restricted stock award may include premium 
shares greater than the portion of bonus paid in restricted stock.  The restricted stock award is vested at issuance and the 
restrictions lapse ratably over a period of years as determined by the Board.  The premium shares vest when the restrictions 
lapse, provided that the participant remains employed by the Company at that time.  Under the 1998 Plan, there were 2 shares 
of common stock available for grant as either options or restricted stock at June 30, 2008.  The 1998 Plan expires in 
December 2008. 

Under the terms of the Company’s 1980 Stock Option Plan, as amended (1980 Plan), options may be issued to officers and 
key employees. The exercise price per share can be greater or less than the market value of the stock on the date of grant. The
options vest either immediately or over a period of years as determined by the Board of Directors and expire no later than 
five or ten years from the original date they are fully vested.  The 1980 Plan expired September 2005.  Outstanding options 
survive the expiration of the 1980 Plan. 

The following summarizes the shares of common stock under options for all plans at June 30, 2008, 2007 and 2006, and the 
activity with respect to options for the respective years then ended:  

Shares subject to 
option 

Weighted average 
exercise price per 
share

Aggregate
Intrinsic 
Value

 5002 ,03 enuJ ta ecnalaB
  detnarG
 desicrexE

 6002 ,03 enuJ ta ecnalaB
  detnarG
 desicrexE

 7002 ,03 enuJ ta ecnalaB
  detnarG
 desicrexE

 8002 ,03 enuJ ta ecnalaB

The total intrinsic value of stock options exercised during the years ended June 30, 2008, 2007 and 2006 was approximately  

50

ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

$48, $106 and $234, respectively.   At June 30, 2008, outstanding options had expiration dates ranging from December 10, 
2008 to December 6, 2017. 

Under the 2002 Plan and the 1998 Plan, compensation expense is recorded for the market value of the restricted stock awards 
in the year the related bonus is earned and over the vesting period for the market value at the date of grant of the premium 
shares granted.  In fiscal 2008, 2007 and 2006, restricted stock awarded and premium shares vested of 15, 15 and 20 common 
shares, respectively, were issued from treasury stock under employee incentive plans, which increased stockholders’ equity 
by $130, $98 and $153, respectively.  The related non-cash compensation expense related to the restricted stock granted and  
the vesting of premium shares during the year, which are issuable only when fully vested, was $92, $114 and $90 in fiscal 
2008, 2007 and 2006, respectively.  Additionally, non-cash compensation expense of $540, $329 and $188 was recorded in 
fiscal 2008, 2007 and 2006, respectively, relating to stock option grants, which is included in selling, general and 
administrative expenses. As of June 30, 2008, the total unrecognized compensation cost related to option awards is $310, and 
the related weighted average period over which it is expected that such unrecognized compensation cost will be recognized is 
approximately five months. 

The following summarizes the non-vested stock options at June 30, 2008 and the activity with respect to non-vested options 
for the year ended June 30, 2008: 

 serahS
subject to 
option 

Weighted 
average grant 
date fair value 

Vested 

The per-share weighted-average fair value of stock options granted during 2008, 2007 and 2006 was $3.01, $3.96 and $2.87, 
respectively, on the date of the grant using the Black-Scholes option-pricing model with the following weighted average 
assumptions: 

 efil detcepxE
 ytilitalov detcepxE
 etar tseretni eerf-ksiR
 dleiy dnediviD

8002       

2007 

2006 

raey 6.5

s 
 %0.64
 %55.3
 %05.2

5.5 years 
 %0.75
 %34.4
 %68.1

5.5 years 
 %0.05
 %63.4
 %22.2

In December 2007, the Company granted 86 shares of restricted common stock and 20 restricted stock units. These shares of 
restricted common stock and restricted stock units vest over three years, will result in remaining stock-based compensation 
expense of approximately $517, and the related weighted average period over which it is expected that such unrecognized 
compensation cost will be recognized is approximately 2.4 years. In accordance with SFAS No. 123(R), compensation 
expense is recognized on a straight-line basis over the employee's vesting period or to the employee's retirement eligibility 
date, if earlier, for restricted stock awards.   For the year ended June 30, 2008, the Company recorded non-cash stock-based 
compensation expense of approximately $325, which is included in selling, general and administrative expenses, for these 
shares of restricted common stock and restricted stock units, of which $186 of compensation expense related to retiree 
eligibility.   In addition, in accordance with SFAS No. 123(R), the Company recorded additional compensation expense of 
$328 during the year ended June 30, 2008, related to grants of restricted common stock, whereby the service inception date 
preceded the grant date. Since these shares of restricted common stock will be issued in fiscal 2009, the Company has 
recorded a liability as of June 30, 2008 for such awards. 

 51  

 
 
  
 
 
    
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

A summary of restricted stock awards including restricted stock units as of June 30, 2008, is presented below: 

Weighted 
average grant 
date fair value 
        $  - 

   8.05 
- 
   8.05 
 $8.05 

     Shares 

- 
   106 
- 
     (1) 
           105 

Non-vested at beginning of year 
Granted  
Vested 
Forfeited  
Non-vested at June 30, 2008 

(11)  Interest and Other Income 

Interest and other income during fiscal 2008, 2007 and 2006 was comprised of the following: 

Dividends 
Interest 
Net (loss) gain on investments 
Foreign government subsidies received 
Minority interest 
Foreign currency losses 
Miscellaneous 

2008 
    $      58 
       1,124 
            ( 8) 
            37 
        (125) 
          (42) 
          (87) 
    $    957 

2007 
    $      64 
       1,045 
          174 
          152 
          (70) 
        (770) 
          (63) 
    $    532 

2006 
    $    133 
          590 
            29 
          561 
          (61) 
        (354) 
            58 
    $    956 

(12) Income Taxes 

The components of income from continuing operations before the provision for income taxes are as follows: 

Domestic operations     
Foreign operations         

2008 
 $   3,882 
    18,307 
 $ 22,189 

2007 
 $   2,988 
    12,435 
 $ 15,423 

2006 
 $   1,981 
    11,277 
 $ 13,258 

The components of the provision for income taxes are as follows: 

Federal: 
     Current 
     Deferred 
State and local: 
     Current 
     Deferred 
Foreign: 
     Current 
     Deferred 

    2008 

2007 

2006 

$   1,167 
       128 

$      788 
        208 

$      105 
        335 

       201 
         19 

       270 
           6 

       187 
      126 

   5,216 
   1,985 
$ 8,716 

   2,461 
   1,478  
$ 5,211 

   2,568 
       673   
$ 3,994 

Income taxes payable, which is included in accrued expenses, was $5,248 and $1,504 at June 30, 2008 and 2007, 
respectively. 

 52 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at June 30, 2008 and 2007 are 
presented below: 

2008 

2007 

Deferred tax assets: 
   Accrued  environmental  remediation  liabilities  not 

currently deductible 

   Accrued deferred compensation 
   Additional inventoried costs for tax purposes 
   Allowance for doubtful accounts receivable 
   Depreciation and amortization 
   Impairment charges 
   Foreign tax credit carryforward 
   Domestic net operating loss carryforwards 
   Foreign net operating loss carryforwards 

Total gross deferred tax assets 
Valuation allowances 

Deferred tax liabilities: 
   Foreign deferred tax liabilities  
   Unrealized gain on investments 
   Goodwill 
  Depreciation and amortization 
  Installment gain on sale of assets 
  Other 

Total gross deferred tax liabilities 

$     482 
    1,984 
       204 
       143 
        15 
       - 
      478 
      245 
   4,924 
   8,475 
   (1,534) 
   6,941 

   (2,821) 
      (250) 
      (168) 
     - 
      (608) 
      (61) 
   (3,908) 

$     461 
    1,493 
       168 
       132 
       - 
      196 
     - 
      333 
   8,738 
 11,521 
   (2,502) 
   9,019 

   (3,631) 
      (313) 
      (143) 
      (11) 
     - 
      (53) 
   (4,151) 

Net deferred tax assets 

  $ 3,033 

  $ 4,868 

The following table shows the current and non current deferred tax assets (liabilities) at June 30, 2008 and 2007: 

Current deferred tax assets, net 
Non-current deferred tax assets, net 
Current deferred tax liabilities 
Non current deferred tax liabilities 
     Net deferred tax assets 

 2008 
$ 1,756 
   4,098 
 (1,070) 
 (1,751) 
$ 3,033 

  2007 
$ 2,541 
   5,958 
    (885) 
 (2,746) 
$ 4,868 

The change in net deferred tax assets for the year ended June 30, 2008 was a decrease of $1,835. This decrease is related 
primarily to German tax reform which was enacted in August 2007 that reduced the corporate headline tax rate for businesses 
from 40% to 30%, as well as implementing a cap on interest deductions and tightening the tax basis for trade tax income. 
This tax rate reduction became effective for tax years ending after January 1, 2008. Due to the reduction in the overall 
German tax rate, the deferred income tax asset was revalued during the month of enactment of the tax reform, which was in 
the first quarter of fiscal 2008, and therefore was reduced by approximately $1,429, which is reflected in the consolidated 
financial statements for the year ended June 30, 2008.  

The net change in the total valuation allowance for the year ended June 30, 2008 was a decrease of $968, which was 
primarily due to the disallowance of a tax deduction in Aceto France that had been fully reserved at June 30, 2007. The net 
change in the total valuation allowance for the year ended June 30, 2007 was an increase of $52.  This increase was primarily 
attributable to an additional valuation allowance recorded for net operating loss carryforwards generated in certain foreign 
jurisdictions.  A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax 
assets will not be realized.  The Company has established valuation allowances primarily for net operating loss carryforwards 
in certain foreign countries.  In assessing the realizability of deferred tax assets, management considers whether it is more 

 53 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

likely than not that some portion or all of the deferred tax assets are not expected to be realized. The ultimate realization of 
deferred tax assets is dependent upon the generation of future taxable income during the periods in which net operating loss 
carryforwards are utilizable and temporary differences become deductible.  Management considers the scheduled reversal of 
deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to 
fully realize the net deferred tax assets recognized at June 30, 2008, the Company will need to generate future taxable income 
of approximately $9,500.   

Based upon the level of historical taxable income and projections for taxable income over the periods which the deferred tax 
assets are deductible, management believes it is more likely than not the Company will realize the benefits of these 
deductible differences.  There can be no assurance, however, that the Company will generate any earnings or any specific 
level of continuing earnings in the future.  The amount of the deferred tax asset considered realizable, however, could be 
reduced in the near term if estimates of future taxable income during the carryforward period are reduced. 

Deferred taxes have not been provided on undistributed earnings of foreign subsidiaries amounting to approximately $69,700 
at June 30, 2008 since substantially all of these earnings are expected to be permanently reinvested in foreign operations.  A 
deferred tax liability will be recognized when the Company expects that it will recover these undistributed earnings in a 
taxable manner, such as through the receipt of dividends or sale of the investments.  Determination of the amount of 
unrecognized deferred U.S. income tax liabilities is not practical to calculate because of the complexity of this hypothetical 
calculation.  In addition, unrecognized foreign tax credit carryforwards would be available to reduce a portion of such U.S. 
tax liability. 

We operate in various tax jurisdictions, and although we believe that we have provided for income and other taxes in 
accordance with the relevant regulations, if the applicable regulations were ultimately interpreted differently by a taxing 
authority, we may be exposed to additional tax liabilities. 

A reconciliation of the statutory federal income tax rate and the effective tax rate for continuing operations for the fiscal years 
ended June 30, 2008, 2007 and 2006 follows: 

Federal statutory tax rate 
State and local taxes, net of federal income tax 

benefit 

Increase in valuation allowance 
Foreign tax rate differential 
Change in foreign tax rate effect 
Other 
Effective tax rate 

2008 
34.0% 

2007 
34.0% 

2006 
34.0% 

0.6 
0.0 
(2.2) 
6.4 
0.5 

1.1 
0.4 
(2.1) 
- 
0.4 

     39.3% 

     33.8% 

1.0 
5.3 
(9.1) 
- 
(1.1) 
     30.1% 

At June 30, 2008, the Company had foreign net operating loss carryforwards of approximately $15,200 which are available to 
offset future foreign taxable income and which have no expiration date. 

In June 2006, the FASB issued FASB Interpretation (FIN) No. 48 “Accounting for Uncertainty in Income Taxes – an 
interpretation of FASB Statement 109”. FIN No. 48 prescribes a comprehensive model for recognizing, measuring, 
presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. FIN No.  48 
is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN No. 48 on July 1, 2007 and 
determined that the adoption of FIN No. 48 did not have a material impact on its consolidated financial statements. In 
addition, there are no material unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, 
have a material effect on the Company’s effective tax rate. The Company is continuing its practice of recognizing interest and 
penalties related to income tax matters in income tax expense. The total accrual for interest and penalties related to uncertain 
tax positions was approximately $122 as of June 30, 2008. The Company recognized interest and penalties of $53 related to 
income taxes during the year ended June 30, 2008. The Company files U.S. federal, U.S. state, and foreign tax returns, and is 
generally no longer subject to tax examinations for fiscal years prior to 2005 (in the case of certain foreign tax returns, fiscal 
year 2002). 

 54 

 
 
 
 
 
 
 
 
 
 
 
  
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

 (13) Supplemental Cash Flow Information 

Cash paid for interest and income taxes during fiscal 2008, 2007 and 2006 was as follows: 

Interest 
Income taxes, net of refunds 

2008 
   $   115 
   $3,127 

2007 
   $   167 
   $3,822 

2006 
   $   129 
   $   797 

The Company had a non-cash item excluded from the Consolidated Statements of Cash Flows during the years ended June 
30, 2008 , 2007, and 2006 of $1,710, $737 and $4,205, respectively, related to capitalized environmental remediation costs. 

(14) Retirement Plans 

Defined Contribution Plans 

The Company has defined contribution retirement plans in which certain employees are eligible to participate, including 
deferred compensation plans (see below). The Company's annual contribution per employee, which is at management's 
discretion, is based on a percentage of the employee’s compensation. The Company's provision for these defined contribution 
plans amounted to $1,237, $1,209 and $1,148 in fiscal 2008, 2007 and 2006, respectively. 

Defined Benefit Plans 

The Company sponsors certain defined benefit pension plans covering certain employees of its German subsidiaries who 
meet the plan’s eligibility requirements.  In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for 
Defined Benefit Pension and Other Postretirement Plans” (SFAS No. 158).  SFAS No. 158 requires that employers recognize 
on a prospective basis the funded status of their defined benefit pension and other postretirement plans on their consolidated 
balance sheet and recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service 
costs or credits that arise during the period but are not recognized as components of net periodic benefit cost.  The Company 
adopted the recognition and disclosure provisions of this statement for the year ended June 30, 2007. The incremental effect 
of applying SFAS No. 158 on individual line items in the consolidated balance sheet at June 30, 2007 is as follows: 

Accrued pension liability 

Deferred income tax liability 

Total liabilities 

Accumulated other comprehensive income 

Total shareholders’ equity 

Prior to SFAS 
No. 158 
adoption 

SFAS No. 158 
adoption 
adjustments   

After SFAS 
No. 158 
adoption 

    874 

 2,721 

63,689 

  5,953 

   124,789 

(63) 

25 

(38) 

38 

38 

       811 

    2,746 

   63,651 

    5,991 

124,827 

The accrued pension liability as of June 30, 2008 was $933.  The accrued pension liability recorded as of June 30, 2007 
amounted to $811.  Net periodic pension costs, which consists principally of interest cost and service cost was $80 in fiscal 
2008, $73 in fiscal 2007 and $87 in fiscal 2006.  The Company’s plans are funded in conformity with the funding 

 55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

requirements of the applicable government regulations.  An assumed weighted average discount rate of 6.0%, 5.1% and 4.2% 
and a compensation increase rate of 4.0%, 3.2% and 3.3% were used in determining the actuarial present value of benefit 
obligations as of June 30, 2008, 2007 and 2006, respectively.  

Deferred Compensation Plans 

To comply with the requirements of the American Jobs Creation Act of 2004, as of December 2004, the Company froze its 
non-qualified Supplemental Executive Retirement Plan (the Frozen Plan) and has not allowed any further deferrals or 
contributions to the Frozen Plan after December 31, 2004.  All of the earned benefits of the participants in the Frozen Plan as 
of December 31, 2004, will be preserved under the existing plan provisions.   

On March 14, 2005, the Company’s Board of Directors adopted the Aceto Corporation Supplemental Executive Deferred 
Compensation Plan (the Plan).  The Plan is a non-qualified deferred compensation plan intended to provide certain qualified 
executives with supplemental benefits beyond the Company’s 401(k) plan, as well as to permit additional deferrals of a 
portion of their compensation.  The Plan is intended to comply with the provisions of section 409A of the Internal Revenue 
Code of 1986, as amended, and is designed to provide comparable benefits to those under the Frozen Plan.  Substantially all 
compensation deferred under the Plan, as well as Company contributions, is held by the Company in a grantor trust, which is 
considered an asset of the Company.  The assets held by the grantor trust are in life insurance policies.   

As of June 30, 2008 and 2007, the Company recorded a liability under the Plans of $3,909 and $3,523 respectively, (included 
in long-term liabilities) and an asset (included in other assets) of $3,284 and $3,008, respectively, primarily representing the 
cash surrender value of policies owned by the Company.   

(15) Financial Instruments 

Derivative Financial Instruments 

At June 30, 2008 and 2007 the Company had future foreign currency contracts that have a notional amount of $20,768 and 
$13,793, respectively.  Unrealized gains (losses) on hedging activities at the end of fiscal 2008 and 2007 amounted to $5 and 
($20), respectively and are included in the consolidated statements of income.  The contracts have varying maturities of less 
than one year.  

The Company is exposed to credit losses in the event of non-performance by the financial institutions, who are the counter 
parties, on its future foreign currency contracts.  The Company anticipates, however, that the financial institutions will be 
able to fully satisfy their obligations under the contracts.  The Company does not obtain collateral to support financial 
instruments, but monitors the credit standing of the financial institutions. 

 In addition, the Company entered into cross currency interest rate swaps to reduce foreign currency exposure on inter-
company transactions.  In May 2003 Aceto entered into a five-year cross currency interest rate swap transaction,  for the 
purpose of hedging fixed-interest-rate, foreign-currency-denominated cash flows under inter-company loans.  This 
transaction expired in May 2008 when the underlying inter-company loan was repaid. Since this interest rate swap qualified 
as hedging activity, the change in its fair value, amounting to $161 in fiscal 2007 is recorded in accumulated other 
comprehensive income included in the accompanying consolidated balance sheet as of June 30, 2007.  

Off-Balance Sheet Risk 

Commercial letters of credit are issued by the Company during the ordinary course of business through major banks as 
requested by certain suppliers.  The Company had open letters of credit of approximately $663 and $702 as of June 30, 2008 
and 2007, respectively.  The terms of these letters of credit are all less than one year.  No material loss is anticipated due to 
non-performance by the counter parties to these agreements. 

Fair Value of Financial Instruments 

The carrying values of all financial instruments classified as a current asset or current liability are deemed to approximate fair 
value because of the short maturity of these instruments.  The difference between the fair value of long-term notes receivable 

 56 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

and their carrying value at both June 30, 2008 and 2007 was not material.  The fair value of the Company’s notes receivable 
was based upon current rates offered for similar financial instruments to the Company. 

Business and Credit Concentration 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade 
receivables. The Company’s customers are dispersed across many industries and are located throughout the United States as 
well as in Mexico, Brazil, Malaysia, France, Canada, Germany, Vietnam, Greece, Australia, the United Kingdom, the 
Netherlands and other countries. The Company estimates an allowance for doubtful accounts based upon the credit 
worthiness of its customers as well as general economic conditions. Consequently, an adverse change in those factors could 
affect the Company’s estimate of this allowance. The Company as a policy does not require collateral from its customers.  At 
June 30, 2008 and 2007, no single customer accounted for as much as 10% of net trade accounts receivable.   

No single product or customer accounted for as much as 10% of net sales in fiscal 2008, 2007 or 2006.  

During the fiscal years ended June 30, 2008, 2007 and 2006, approximately 67%, 65% and 67%, respectively, of the 
Company’s purchases came from Asia and approximately 19%, 21% and 21%, respectively, came from Europe. 

The Company maintains operations located outside of the United States.  Net assets located in Europe and Asia approximated 
$45,919 and $34,307, respectively at June 30, 2008.  Net assets located in Europe and Asia approximated $31,559 and 
$32,560, respectively at June 30, 2007. 

(16) Commitments and Contingencies 

As of June 30, 2008, the Company has outstanding purchase obligations totaling $79,168 with suppliers to the Company’s 
domestic and foreign operations to acquire certain products for resale to third party customers.   

The Company and its subsidiaries are subject to various claims which have arisen in the normal course of business. The 
impact of the final resolution of these matters on the Company’s results of operations in a particular reporting period is not 
known. Management is of the opinion, however, that the ultimate outcome of such matters will not have a material adverse 
effect upon the Company's financial condition or liquidity. 

Packaging used for one of the Company's crop protection products was covered by a patent, for which the Company had a 
license that expired in August 2007. The Company had commenced a lawsuit against the current owner of the patent bringing 
claims based on antitrust and related claims.   In December 2007, the Company's motion for a preliminary injunction was 
denied. In May 2008, the patent owner filed a lawsuit against the Company for patent infringement, among other claims 
seeking unspecified monetary damages and a permanent injunction. The court then granted the patent owner's motion for a 
temporary restraining order, which temporarily restrained Aceto from using or selling product in packaging covered by the 
patent.  On May 16, 2008, the Company announced that it had settled the litigation and sold the crop protection product to the 
patent owner.  The sale included registrations, data, know-how and certain inventories.  The settlement of the litigation and 
sale of the crop protection product did not have a material impact on the Company’s financial condition or liquidity. 

In fiscal 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially responsible parties 
(PRP Group) who are working with the State of Tennessee (the State) to remediate a contaminated property in Tennessee 
called the Pulvair site. The PRP Group has alleged that Aceto shipped hazardous substances to the site which were released 
into the environment.   The State had begun administrative proceedings against the members of the PRP group and Aceto 
with respect to the cleanup of the Pulvair site and the group has begun to undertake cleanup. The PRP Group is seeking a 
settlement of approximately $2,100 from the Company for its share to remediate the site contamination. Although the 
Company acknowledges that it shipped materials to the site for formulation over twenty years ago, the Company believes that 
the evidence does not show that the hazardous materials sent by Aceto to the site have significantly contributed to the 
contamination of the environment. Accordingly, the Company believes that the settlement offer is unreasonable. 
Alternatively, counsel to the PRP Group has proposed that Aceto join it as a participating member and pay 3.16% of the PRP 
Group's cost.  The Company believes that this percentage is high because it is based on the total volume of materials that 
Aceto sent to the site, most of which were non-hazardous substances and as such, believes that, at most, it is a de minimus 
contributor to the site contamination. The impact of the resolution of this matter on the Company's results of operations in a 

 57 

 
 
 
 
  
 
 
 
 
 
  
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

particular reporting period is not known.  However, management believes that the ultimate outcome of this matter will not 
have a material adverse effect on the Company's financial condition or liquidity. 

The Company has environmental remediation obligations in connection with Arsynco’s former manufacturing facility located 
in Carlstadt, New Jersey, which was closed in 1993 and is currently held for sale.  During fiscal 2008, based on continued  
monitoring of the contamination at the site and the current proposed plan of remediation, the Company received an estimate 
from an environmental consultant stating that the costs of remediation could be between $7,846 and $9,574.  As of June 30, 
2008 a liability of $7,846 is included in the accompanying consolidated balance sheet.   However, these matters, if resolved 
in a manner different from those assumed in current estimates, could have a material adverse effect on the Company’s 
financial condition, operating results and cash flows when resolved in a future reporting period.    

In connection with the environmental remediation obligation for Arsynco, the Company has filed a claim against BASF 
Corporation (BASF), the former owners of the Arsynco property. The Company alleges that BASF is liable for a portion of 
the cost to remediate, however, since collection is uncertain at this time, no asset has been recorded. 

In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental 
Response, Compensation and Liability Act (CERCLA) for a site described as the Berry’s Creek Study Area.   Arsynco is one 
of over 150 PRPs which have potential liability for the required investigation and remediation of the site.  The estimate of the 
potential liability is not quantifiable for a number of reasons, including the difficulty in determining the extent of 
contamination and the length of time remediation may require.  In addition, any estimate of liability must also consider the 
number of other PRPs and their financial strength.  Based on prior practice in similar situations, it is possible that the State 
may assert a claim for natural resource damages with respect to the Arsynco site itself, and either the federal government or 
the State (or both) may assert claims against Arsynco for natural resource damages in connection with Berry's Creek; any 
such claim with respect to Berry's Creek could also be asserted against the approximately 150 PRPs which the EPA has 
identified in connection with that site.  Any claim for natural resource damages with respect to the Arsynco site itself may 
also be asserted against BASF, the former owners of the Arsynco property. Since an amount of the liability can not be 
reasonably estimated at this time, no accrual is recorded for these potential future costs.  The impact of the resolution of this 
matter on the Company’s results of operations in a particular reporting period is not known.  However, management believes 
that the ultimate outcome of this matter will not have a material adverse effect on the Company’s financial condition or 
liquidity. 

One of the Company’s subsidiaries was a defendant in a legal action alleging patent infringement.  The patent in question 
covered a particular method of applying one of the products in the Company’s Crop Protection segment.  In September 2005, 
shortly before a trial was expected to begin, the parties agreed to a settlement.  Under the terms of the settlement agreement, 
the Company was obligated to pay $1,375, of which $625 was paid in December 2005 and the remaining $750 will be paid in 
equal installments over the next five years.  As of June 30, 2008, the balance is $450.  As a result of the settlement, the 
Company recorded an intangible asset of $838 for the patent license, which is being amortized over its remaining life of 11 
years, and a charge of $537, included in SG&A expense, for the fiscal year ended June 30, 2006.  

A subsidiary of the Company markets certain agricultural chemicals which are subject to the Federal Insecticide, Fungicide 
and Rodenticide Act (FIFRA).  FIFRA requires that test data be provided to the Environmental Protection Agency (EPA) to 
register, obtain and maintain approved labels for pesticide products. The EPA requires that follow-on registrants of these 
products compensate the initial registrant for the cost of producing the necessary test data on a basis prescribed in the FIFRA 
regulations. Follow-on registrants do not themselves generate or contract for the data. However, when FIFRA requirements 
mandate that new test data be generated to enable all registrants to continue marketing a pesticide product, often both the 
initial and follow-on registrants establish a task force to jointly undertake the testing effort. The Company is presently a 
member of three such task force groups and historically, our payments have been in the range of $100 - $250 per year.  The 
Company may be required to make additional payments in the future.  

The Company leases office facilities in the United States, the Netherlands, Germany, France, China and Singapore expiring 
at various dates between December 2008 and April 2011.  In addition, a domestic subsidiary leases a manufacturing facility 
under an operating lease expiring December 2009.  

 58 

 
 
 
 
  
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

At June 30, 2008, the future minimum lease payments for office facilities and equipment for each of the five succeeding 
years and in the aggregate are as follows:  

Fiscal year 
2009 
2010 
2011 
2012 
2013 
Thereafter 

Amount 
$2,131 
 1,687 
 1,059 
      89 
      82 
    165  
$5,213 

Total rental expense amounted to $1,868, $1,672 and $1,651 for fiscal 2008, 2007 and 2006, respectively. 

In June 2006, the Company negotiated a lease termination with its landlord for the facility previously occupied by CDC and 
Magnum.  In connection with the lease termination, the landlord and a third party entered into a long-term lease for which the 
Company guaranteed the rental payments by the third party through September 30, 2009.  As of June 30, 2008, the aggregate 
future rental payments of the third party that are guaranteed by the Company are $382 and the fair value of this guarantee is 
deemed to be insignificant. 

(17) Related Party Transactions 

Certain directors of the Company are affiliated with law firms that serve as legal counsel to the Company on various 
corporate matters.  During fiscal 2008, 2007 and 2006, the Company incurred legal fees of $342, $329 and $315, 
respectively, for services rendered to the Company by those law firms.  The Company believes that the fees charged by those 
firms were at rates comparable to rates obtainable from other firms for similar services. 

In November 2003, the Company formed a joint venture with Nufarm Americas, Inc. (Nufarm), a subsidiary of Australia-
based Nufarm Limited.  Each company owns 50% of the joint venture, named S.R.F.A., LLC. In June 2004, Nufarm and the 
Company each loaned $1,000 to S.R.F.A., with those loans being evidenced by demand notes that bear interest at 3.0% per 
annum.  During fiscal 2005, S.R.F.A. repaid $500 of principal to each of Nufarm and the Company.  The amounts due 
Nufarm at June 30, 2008 and 2007 are included as a note payable in the accompanying consolidated balance sheets.  

(18) Other Recent Accounting Pronouncements 

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 establishes 
a common definition for fair value to be applied to US GAAP guidance requiring use of fair value, establishes a framework 
for measuring fair value, and expands disclosure about such fair value measurements. SFAS No. 157 is effective for fiscal 
years beginning after November 15, 2007.  In February 2008, the FASB provided a one-year deferral for the implementation 
of SFAS No. 157 for nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements on a 
nonrecurring basis.  Management believes the adoption of this statement is not expected to have a material impact on the 
consolidated financial position or results of operations and that the impact in 2009 will only be on Aceto’s disclosures.  

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—
Including an Amendment of FASB Statement No. 115" (SFAS No. 159). SFAS No. 159 allows companies the choice to 
measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the 
fair value option has been elected will be recognized in earnings at each subsequent reporting date. The provisions of SFAS 
No. 159 will be effective for fiscal years beginning after November 15, 2007.  The Company does not believe adopting the 
provisions of SFAS No. 159 will have a significant impact on its consolidated financial statements. 

 59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 06-11, “Accounting for Income Tax 
Benefits of Dividends on Share-Based Payment Awards” (EITF No. 06-11). EITF No. 06-11 provides guidance regarding 
how an entity should recognize the tax benefit received as a result of dividends paid to holders of share-based compensation 
awards and charged to retained earnings according to SFAS No. 123(R), and will become effective in the first quarter of 
2009. Management does not expect EITF No. 06-11 to have a material impact on the Company’s consolidated financial 
statements. 

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an 
amendment of Accounting Research Bulletin No 51” (SFAS No. 160). SFAS No. 160 establishes accounting and reporting 
standards for ownership interests in subsidiaries held by parties other than the parent, changes in a parent’s ownership of a 
noncontrolling interest, calculation and disclosure of the consolidated net income attributable to the parent and the 
noncontrolling interest, changes in a parent’s ownership interest while the parent retains its controlling financial interest and 
fair value measurement of any retained noncontrolling equity investment. SFAS No. 160 is effective for financial statements 
issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is 
prohibited. The Company must adopt these new requirements in its first quarter of fiscal 2010.  The adoption of this 
statement will impact the manner in which the Company presents noncontrolling interests, but will not impact its 
consolidated financial position or results of operations.  

In December 2007, the FASB approved the issuance of SFAS No. 141 (revised 2007) “Business Combinations” (SFAS No. 
141R). SFAS No. 141R establishes principles and requirements for how the acquirer in a business combination recognizes 
and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; 
recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and 
determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects 
of the business combination.  The provisions for SFAS No. 141R are effective for fiscal years beginning after December 15, 
2008 and are applied prospectively to business combinations completed on or after that date.  Early adoption is not permitted. 
SFAS No. 141R is effective for the Company beginning in the first quarter of fiscal 2010.  The Company is evaluating the 
impact of SFAS No. 141R on its results of operations and financial condition. 

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities— An 
Amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 requires enhanced qualitative disclosures about 
objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on 
derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 
is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The 
Company is currently evaluating the impact of SFAS No. 161 on its consolidated financial statements. 

(19) Segment Information 

The Company's business is organized along product lines into three principal segments: Health Sciences, Chemicals & 
Colorants and Crop Protection. 

Health Sciences - includes the active ingredients for generic pharmaceuticals, vitamins, and nutritional supplements, as well 
as products used in preparing pharmaceuticals, primarily by major innovative drug companies, and biopharmaceuticals.  

Chemicals & Colorants - includes a variety of specialty chemicals used in plastics, resins, adhesives, coatings, food, flavor 
additives, fragrances, cosmetics, metal finishing, electronics, air-conditioning systems and many other areas. Dye and 
pigment intermediates are used in the color-producing industries such as textiles, inks, paper, and coatings. Organic 
intermediates are used in the production of agrochemicals. 

Crop Protection - includes herbicides, fungicides and insecticides that control weed growth as well as control the spread of 
insects and other microorganisms that can severely damage plant growth. The Crop Protection segment also includes a sprout 
inhibitor for potatoes and an herbicide for sugar cane. The Company changed the name of this segment from Agrochemicals 
to Crop Protection in 2007 to more accurately portray the markets in which it does business. 

 60 

 
 
 
 
 
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

The Company's chief operating decision maker evaluates performance of the segments based on net sales and gross profit. 
The Company does not allocate assets by segment because the chief operating decision maker does not review the assets by 
segment to assess the segments' performance, as the assets are managed on an entity-wide basis. 

2008 
Net sales 
Net gross profit 

2007 
Net sales 
Net gross profit 

Health 
Sciences 

Chemicals & 
Colorants 

Crop 
Protection 

Consolidated 
Totals 

$211,481 
    44,612 

$129,662 
    18,782 

$  18,448 
      3,911 

$359,591 
    67,305 

$170,691 
    33,007 

$123,299 
    16,556 

$  19,483 
      4,930 

$313,473 
    54,493 

2006 
Net sales 
Gross profit 
Unallocated cost of sales (1) 
Net gross profit 

$166,725 
    32,313 

$110,869 
    17,144 

$  19,734 
      4,760 

$297,328 
    54,217 
     (3,259) 
$  50,958 

(1) Prior to July 2006, certain freight and storage costs were not able to be allocated to the segments.  Effective July 2006, as 
a result of certain system improvements, all freight and storage costs are allocated to a particular segment.  Total Company 
gross profit and margin were not affected by this change in allocation of costs.  However, the comparison of gross profit by 
segment will be affected by the change in allocation of these costs. 

Net sales and gross profit by source country for the years ended June 30, 2008, 2007 and 2006 were as follows: 

United States 
Germany 
Netherlands 
France 
Asia-Pacific 
Total 

   2008 
$ 207,839 
     72,077 
     12,215 
     26,286 
     41,174 
$ 359,591 

Net Sales  
   2007 
$ 184,391 
     68,484 
       8,579 
     16,812 
     35,207 
$ 313,473 

 2006 
 $ 184,395 
      56,464 
      10,095 
      15,543 
      30,831 
 $ 297,328 

   2008 
 $  33,785 
     24,296 
       1,826 
       2,919 
       4,479 
 $  67,305 

  Gross Profit 
   2007 
 $  29,779 
     17,371 
       1,594 
       1,973 
       3,776 
 $  54,493 

    2006 
 $  30,348 
     14,311 
       1,791 
       1,808 
       2,700 
  $ 50,958 

Sales generated from the United States to foreign countries amounted to $44,844, $35,540 and $29,152 for the fiscal years 
ended June 30, 2008, 2007 and 2006, respectively.  

Long-lived assets by geographic region as of June 30, 2008 and June 30, 2007 were as follows were as follows: 

United States 
Europe 
Asia-Pacific 
Total 

Long-lived assets 
2007 
2008 
$  5,229 
$  4,729 
    3,967 
    3,734 
    3,252 
    2,847 
$12,043 
$11,715 

 61 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
ACETO CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
YEARS ENDED JUNE 30, 2008, 2007 AND 2006 
(in thousands, except per-share amounts) 

(20)  Unaudited Quarterly Financial Data 

The following is a summary of the unaudited quarterly results of operations for the years ended June 30, 2008 and 2007. 

Fiscal year ended June 30, 2008 
Net sales 
Gross profit 
Net income 

September 30, 
2007 

$79,528 
14,563 
1,294 

For the quarter ended 

December 31, 
2007 
$77,105 
 12,479 
      908 

March 31, 
2008 
     $98,255 
 16,043 
   3,294 

June 30, 
2008 
 $104,703 
 24,220 
   7,977 

Net income per diluted share 

$   0.05  

$  0.04 

$  0.13 

$   0.32 

Fiscal year ended June 30, 2007 
Net sales 
Gross profit 
Net income  

September 30, 
2006 

$74,725 
12,561 
2,462 

For the quarter ended 

December 31, 
2006 
$75,686 
 12,562 
   1,744 

March 31, 
2007 
     $75,879 
 12,876 
   1,800 

June 30, 
2007 
   $87,183 
 16,494 
   4,206 

Net income per diluted share  

$   0.10  

$  0.07 

$  0.07 

$  0.17 

The net income per common share calculation for each of the quarters is based on the weighted average number of shares 
outstanding in each period.  Therefore, the sum of the quarters in a year does not necessarily equal the year’s net income per 
common share. 

 62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                           Schedule II 

ACETO CORPORATION AND SUBSIDIARIES 

Valuation and Qualifying Accounts 

For the years ended June 30, 2008, 2007 and 2006 
(dollars in thousands) 

Description 

Year ended June 30, 2008 
     Allowance for doubtful accounts 
Year ended June 30, 2007 
     Allowance for doubtful accounts 
Year ended June 30, 2006 
     Allowance for doubtful accounts 

Balance at 
beginning of 
year 

Charged to 
costs and 
expenses 

Charged to 
other 
accounts 

Deductions 

Balance at 
end of year 

$    491 

$     98 

$    416 

$    132 

$    427 

$     38 

- 

- 

- 

 $ $112(a) 

$  477 

 $    57(a) 

$  491 

 $    49(a) 

$  416 

(a)  Specific accounts written off as uncollectible. 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SIGNATURES 

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused 
this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

ACETO CORPORATION                        

By   /s/Leonard S. Schwartz   
Leonard S. Schwartz 
Chairman, President and                
Chief Executive Officer 

Date:   September 4, 2008 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following 
persons on behalf of the Company and in the capacities and on the dates indicated. 

Signatures 

Title 

/s/Leonard S. Schwartz  
Leonard S. Schwartz 

  Chairman, President and 
  Chief Executive Officer 
  (Principal Executive Officer) 

/s/Douglas Roth            
Douglas Roth 

   Secretary/Treasurer and 
  Chief Financial Officer  
  (Principal Financial and  
   Accounting Officer) 

/s/Stanley Fischer    
Stanley Fischer 

/s/Robert Wiesen 
Robert Wiesen 

/s/Albert L. Eilender 
Albert L. Eilender 

/s/Hans C. Noetzli   
Hans C. Noetzli   

/s/William Britton 
William Britton 

  Director 

  Director 

  Director 

  Director 

  Director 

Date 

09-04-08 

09-04-08    

09-04-08 

09-04-08 

09-04-08 

09-04-08 

09-04-08 

64 

 
 
 
 
 
 
 
 
       
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                               
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit Number 

     Description 

EXHIBIT INDEX 

3.1  Restated Certificate of Incorporation (incorporated by reference to Exhibit 4(a)(iii) to Registration  

Statement No. 2-70623 on Form S-8 (S-8 2-70623)). 

3.2  Certificate of Amendment dated November 21, 1985 to Restated Certificate of Incorporation (incorporated 
by reference to Exhibit 3(ii) to the Company's annual report on Form 10-K for the fiscal year ended June 30, 
1986). 

3.3  Amended  and  restated  by-laws  of  Aceto  Corporation,  effective  as  of  February  2,  2005  (incorporated  by 

reference to Exhibit 3.1 to the Company’s current report on Form 8-K dated February 2, 2005). 

3.4  Amended  and  restated  by-laws  of  Aceto  Corporation,  effective  as  of  December  6,  2007  (incorporated  by 

reference to Exhibit 3.1 to the Company’s current report on Form 8-K dated December 6, 2007). 

10.1  Aceto Corporation 401(k) Retirement Plan, effective August 1, 1997, as amended and restated as of July 1, 
2002 (incorporated by reference to Exhibit 10.1 to the Company’s annual report on Form 10-K for the fiscal 
year ended June 30, 2004). 

10.2  Supplemental Executive Retirement Plan, as amended and restated, effective June 30, 2004 and frozen as of 

December  31,  2004  (incorporated  by  reference  to  Exhibit  10.2  to  the  Company’s  annual  report  on  Form   
10-K for the fiscal year ended June 30, 2004).  

10.3  Aceto Corporation Stock Option Plan (as Amended and Restated effective as of September 19, 1990) (and 
as further Amended effective June 9, 1992) (incorporated by reference to Exhibit 10(v)(b) to the Company's  
annual report on Form 10-K for the fiscal year ended June 30, 1992). 

10.4  1998  Aceto  Corporation  Omnibus  Equity  Award  Plan  (incorporated  by  reference  to  Exhibit  10(v)  to  the 

Company’s annual report on Form 10-K for the fiscal year ended June 30, 1999). 

10.5  Aceto  Corporation  2002  Stock  Option  Plan  (incorporated  by  reference  to  Exhibit  4(i)  to  Registration 

Statement No. 333-110653 on Form S-8).  

10.6  Lease  between  Aceto  Corporation  and  M.  Parisi  &  Son  Construction  Co.,  Inc.  for  office  space  at  One 
Hollow  Lane, Lake  Success, NY dated  April  28, 2000  (incorporated  by reference  to  Exhibit  10(vi)  to  the 
Company’s annual report on Form 10-K for the fiscal year ended June 30, 2000).  

10.7  Lease  between  Aceto  Corporation  and  M.  Parisi  &  Son  Construction  Co.,  Inc.  for  office  space  at  One 
Hollow Lane, Lake Success, NY dated April 28, 2000 (incorporated by reference to Exhibit 10(vi)(b) to the 
Company’s annual report on Form 10-K for the year ended June 30, 2000).  

10.8  Lease  between  CDC  Products  Corp.  and  Seaboard  Estates  for  manufacturing  and  office  space  at  1801 
Falmouth  Avenue,  New  Hyde  Park,  NY  dated  October  31,  1999  (incorporated  by  reference  to  Exhibit 
10(vi)(c) to the Company’s annual report on Form 10-K for the year ended June 30, 2000).  

10.9  Stock  Purchase  Agreement  among  Windham  Family  Limited  Partnership,  Peter  H.  Kliegman,  CDC 
Products  Corp.  and  Aceto  Corporation  (incorporated  by  reference  to  Exhibit  10(vii)  to  the  Company’s 
annual report on Form 10-K for the year ended June 30, 1999). 

10.10  Asset  Purchase  Agreement  among  Magnum  Research  Corporation,  CDC  Products  Corp.,  Roy  Gross  and 
Aceto Corporation (incorporated by reference to Exhibit 10 (viii) to the Company’s annual report on Form 
10-K for the year ended June 30, 2000).  

10.11  Asset Purchase Agreement between Schweizerhall, Inc. and Aceto Corporation (incorporated by reference 
to Exhibit 10(ix) to the Company’s annual report on Form 10-K for the year ended June 30, 2000).  

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.12  Purchase  and  Sale  Agreement  among  Schweizerhall  Holding  AG,  Chemische  Fabrik  Schweizerhall, 
Schweizerhall, Inc., Aceto Corporation and Aceto Holding B.V., I.O. (incorporated by reference to Exhibit 
2.1 to the Company’s current report on Form 8-K dated April 4, 2001). 

10.13  Loan Guarantee between Aceto Corporation and subsidiaries and Deutsche Bank AG dated March 22, 2001 
(incorporated  by  reference  to  Exhibit  10.13  to  the  Company’s  annual  report  on  Form  10-K  for  the  year 
ended June 30, 2001).  

10.14  Credit Agreement between Aceto Corporation and subsidiaries and JPMorgan Chase Bank dated May 10, 
2002 (incorporated by reference to Exhibit 10.13 to the Company’s annual report on Form 10-K for the year 
ended June 30, 2002).  

10.15  Amendment  and Waiver  to Credit  Agreement  between Aceto  Corporation and  subsidiaries  and  JPMorgan 
Chase Bank dated June 29, 2004 (incorporated by reference to Exhibit 10.15 to the Company’s annual report 
on Form 10-K for the year ended June 30, 2004).   

10.16  Waiver to Credit Agreement between Aceto Corporation and subsidiaries and JPMorgan Chase Bank dated 
August 31, 2004 (incorporated by reference to Exhibit 10.16 to the Company’s annual report on Form 10-K 
for the year ended June 30, 2004).   

10.17  Share  Purchase  Agreement  dated  as  of  December  12,  2003  between  Aceto  Holding  GmbH  and  Corange 
Deutschland Holding GmbH (incorporated by reference to Exhibit 2.1 to the Company’s current report on 
Form 8-K dated December 31, 2003).   

10.18  Aceto  Corporation  Supplemental  Executive  Deferred  Compensation  Plan,  effective  March  14,  2005 
(incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K dated March 14, 
2005).  

10.19  Form of purchase agreement between Shanghai Zhongjin Real Estate Development Company Limited and 
Aceto  (Hong  Kong)  Limited  dated  November  10,  2004  (incorporated  by  reference  to  Exhibit  10.1  to  the 
Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2004). 

10.20  Amendment  and Waiver  to Credit  Agreement  between Aceto  Corporation and  subsidiaries  and  JPMorgan 

Chase Bank dated June 26, 2007. 

10.21  Aceto Corporation 2007 Long-Term Performance Incentive Plan (incorporated by reference to Exhibit 4(i) 

to Registration Statement No. 333-149586 on Form S-8). 

21.1*  Subsidiaries of the Company. 

23.1*  Consent of BDO Seidman, LLP.   

31.1*  Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as 

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

31.2*  Certification pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as 

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 

32.1*  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley 

Act of 2002 

32.2*  Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley 

Act of 2002 

*Filed herewith 

66 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I, Leonard S. Schwartz, certify that:  

CERTIFICATION  

Exhibit 31.1 

    1.   I have reviewed this annual report on Form 10-K of Aceto Corporation (the “Registrant”);  

    2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not 
misleading with respect to the period covered by this report;  

    3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present 
in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the 
periods presented in this report;  

    4.   The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and 
       procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting   
       (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: 

  a)      designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be    
           designed under our supervision, to ensure that material information relating to the Registrant, including its    
           consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in  
           which this report is being prepared;  

b)     designed such internal control over financial reporting, or caused such internal control over financial reporting    
         to  be designed under our supervision, to provide reasonable assurance regarding the reliability of financial       
         reporting and the preparation of financial statements for external purposes in accordance with U.S. generally  

                 accepted accounting principles; and 

         c)     evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report    

         our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period  

                 covered by this report based on such evaluation; and 

             d)     disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred     
                     during the Registrant’s most recent quarter (the registrant’s fourth fiscal quarter in the case of an annual report)  
                     that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over  
                     financial reporting; and 

    5.   The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or 
persons performing the equivalent functions):  

a) 

  all significant deficiencies and material weaknesses in the design or operation of internal control over financial 
reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize 
and report financial information; and  

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in 

the Registrant’s internal control over financial reporting. 

    Dated: September 4, 2008 

    /s/   Leonard S. Schwartz  

    Chairman, President and Chief Executive Officer  

(Principal Executive Officer)  

 
 
 
 
      
      
      
      
 
      
   
 
 
 
           
 
 
      
      
   
       
 
   
      
 
      
 
I, Douglas Roth, certify that:  

CERTIFICATION  

Exhibit 31.2 

    1.   I have reviewed this annual report on Form 10-K of Aceto Corporation (the “Registrant”);  

    2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not 
misleading with respect to the period covered by this report;  

    3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present 
in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the 
periods presented in this report;  

    4.   The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and 
       procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting  
       (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: 

           a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be  
               designed under our supervision, to ensure that material information relating to the Registrant, including its   
               consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in  
               which this report is being prepared;   

   b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to 
            be designed under our supervision, to provide reasonable assurance regarding the reliability of financial       
            reporting and the preparation of financial statements for external purposes in accordance with U.S. generally  
           accepted accounting principles; and 

            c)     evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report    

           our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period  
           covered by this report based on such evaluation; and  

            d)     disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred  
                   during the Registrant’s most recent quarter (the registrant’s fourth fiscal quarter in the case of an annual report)  
                   that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over  
                   financial reporting; and 

    5.   The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control 
over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or 
persons performing the equivalent functions):  

a) 

all significant deficiencies and material weaknesses in the design or operation of internal control over financial 
reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize 
and report financial information; and  

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in 

the Registrant’s internal control over financial reporting. 

    Dated: September 4, 2008 

    /s/   Douglas Roth 

    Chief Financial Officer  

(Principal Financial and Accounting Officer)  

 
 
 
 
 
 
 
      
      
      
      
  
      
 
 
   
  
 
      
      
   
       
 
   
      
 
      
 
CERTIFICATION  

Exhibit 32.1 

In connection with the Annual Report of Aceto Corporation, a New York corporation (the “Company”), on 
Form 10-K for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on 
the date hereof (the “Report”), I, Leonard S. Schwartz, Chairman, President and Chief Executive Officer of 
the Company, certify, pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002, that to my knowledge: 

(1) 

(2) 

The Report fully complies with the requirements of Section 13(a) and 15(d) of the 
Securities Exchange Act of 1934; and 

The information contained in the Report fairly presents, in all material respects, the 
financial condition and results of operations of the Company. 

/s/ Leonard S. Schwartz 
    Chairman, President and Chief Executive Officer 
    (Principal Executive Officer) 
    September 4, 2008 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
32.2 

CERTIFICATION 

In connection with the Annual Report of Aceto Corporation, a New York corporation (the “Company”), on 
Form 10-K for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on 
the date hereof (the “Report”), I, Douglas Roth, Chief Financial Officer of the Company, certify, pursuant 
to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to 
my knowledge: 

(1) 

(2) 

The Report fully complies with the requirements of Section 13(a) and 15(d) of the 
Securities Exchange Act of 1934; and 

The information contained in the Report fairly presents, in all material respects, the 
financial condition and results of operations of the Company. 

/s/ Douglas Roth         
    Chief Financial Officer 
   (Principal Financial and Accounting Officer) 
    September 4, 2008 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
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Operating as a virtual manufacturing
firm, Aceto facilitates the global

sourcing, quality assurance, regulatory
support, marketing and distribution of
chemicals used principally as raw
materials in the pharmaceutical,

agricultural, color, surface coating/ink
and general chemical industries.

Company Profile

A

ceto Corporation, incorporated in 1947,
is a global leader in the sourcing, quality

assurance, regulatory support, marketing and

distribution of chemically derived

pharmaceuticals, biopharmaceuticals, specialty

chemicals and agrochemicals. With a physical
presence in ten countries, we distribute over 1,000
chemicals and pharmaceuticals used principally as raw

materials in the pharmaceutical, agricultural, color,
surface coating/ink and general chemical consuming
industries. Our global operations, including a staff of 26
in Shanghai and 10 in India, are unique in our industry and
enable our worldwide sourcing and regulatory capabilities.
We source approximately two thirds of our products from Asia,

buying from approximately 500 companies in China and

approximately 200 companies in India.

Aceto’s business is organized along product lines into three segments—
Health Sciences (59% of fiscal 2008 sales), Chemicals & Colorants (36% of

fiscal 2008 sales) and Crop Protection (5% of fiscal 2008 sales).

Importantly, beyond “traditional distribution,” we add value for our
customers and suppliers in terms of product development, providing

access to new markets, plant audits, regulatory support, financial planning

and logistics. Our revenue base is diverse, with no customer or product

accounting for more than10% of our overall business.

Corporate Information

Directors

Officers and Executives

ALBERT L. EILENDER
Owner
WaterWays Advisory Services

STANLEY H. FISCHER
Attorney
Fischer and Burstein, P.C.

HANS C. NOETZLI
Industrial Advisor

LEONARD S. SCHWARTZ
Chairman, President and
Chief Executive Officer
Aceto Corporation

ROBERT A. WIESEN
Attorney and Partner
Clifton, Budd & DeMaria

WILLIAM N. BRITTON
Owner
TD AIM, LLC

THEODORE AYVAS
Director of Corporate
Communications and
Investor Relations

RAYMOND BARTONE
Vice President

ULF BENDER
Managing Director
Pharma Waldhof GmbH*

DAVID BERCHER
Assistant Vice President

FRANK DEBENEDITTIS
Senior Vice President

DINA DONNELLY
Director of
International Transportation

MICHAEL FEINMAN
President
Aceto Agricultural
Chemicals Corp.*

MARLENE FELIX
Assistant Vice President

ROY GOODMAN
Group Vice President

SEAN ISACSSON
Group Vice President

EDWARD KELLY
Assistant Vice President and
Controller

TERRY KIPPLEY
Assistant Vice President
Aceto Agricultural
Chemicals Corp.*

JOHN LAROCCA
Vice President

LEONARD LAWTON
Group Vice President

VINCENT MIATA
Senior Vice President

SIMONE MILLER
Corporate Director
Environmental and
Regulatory Affairs

ALBERT MISEJE
Vice President

GARY MO
Managing Director
Aceto (Shanghai) Ltd.*

ANDREAS MUENDS
Managing Director
Aceto Holding GmbH
(Germany)*

PHILIPPE POTELLE
Managing Director
Aceto France S.A.S.*

DAVID RIMMLER
Vice President

AMY ROGERS
Assistant Vice President and
Director of Transportation

DOUGLAS ROTH
Vice President and
Chief Financial Officer

JAMES SAMMER
Assistant Vice President

FRANCES SCALLY
Director of Financial
Reporting and Compliance

LEONARD S. SCHWARTZ
Chairman, President and
Chief Executive Officer

BRIAN SHAPIRO
Vice President

TERRY STEINBERG
Vice President

PRADEEP THAKUR
General Manager
Aceto Pharma India PVT. LTD.

PETER TOMASINO
Assistant Vice President

JAN VAN EIS
Managing Director
Aceto Holding B.V.
(The Netherlands)*

ROGER WEAVING, JR.
Vice President

KEITH WILKINSON
Vice President

JASON YU
Managing Director
Aceto Pte Ltd. (Singapore)*

* A wholly owned subsidiary

Shareholder Information

Corporate Headquarters

Investor Relations

Transfer Agent & Registrar

Aceto Corporation
One Hollow Lane
Lake Success, NY 11042
(516) 627-6000
www.aceto.com

Common Stock

NASDAQ Symbol: ACET

Theodore Ayvas
Director of Corporate
Communications and
Investor Relations
Aceto Corporation
One Hollow Lane
Lake Success, NY 11042
(516) 627-6000
(516) 627-6093 (fax)

Auditors

BDO Seidman, LLP
401 Broadhollow Road
Melville, NY 11747

BNY Mellon Shareowner Services
480 Washington Boulevard
Jersey City, NJ 07310-1900
Telephone Inquiries:
(877) 889-1996
(201) 680-6685
Outside the U.S.:
Hearing Impaired–TDD: (800) 231-5469
E-mail:
shrrelations@bnymellon.com
Website: www.bnymellon.com/shareowner/isd

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Pharmaceutical • Biopharmaceutical • Specialty Chemicals • Agricultural • Nutraceutical

The Global

Leader in

Sourcing,

Quality
Assurance,

Regulatory

Support,
Marketing &

Distribution

2008 Annual Report

Aceto Corporate Office
One Hollow Lane
Lake Success, New York 11042
(516) 627-6000
www.aceto.com