Adicet Bio
Annual Report 2013

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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, 2013Commission file number 000-04217 ACETO CORPORATION(Exact name of registrant as specified in its charter) New York 11-1720520 (State or other jurisdiction ofincorporation or organization) (I.R.S. Employer IdentificationNumber) 4 Tri Harbor Court, Port Washington, NY 11050 (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 The NASDAQ Global Select Market (Title of Class) (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 o 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 o 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 duringthe 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 requirementsfor the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).Yes x No o 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 bestof 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 thisForm 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer oAccelerated filer x Non-accelerated filer o (Do not check if a smaller reporting company)Smaller reporting company o Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o 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 onDecember 31, 2012 as reported on the NASDAQ Global Select Market, was approximately $258,297,140. The Registrant has 28,073,040 shares of common stock outstanding as of August 23, 2013. Documents incorporated by reference: The information required in response to Part III of this Annual Report on Form 10-K is hereby incorporated by referenceto the specified portions of the Registrant’s definitive proxy statement for the annual meeting of shareholders.  ACETO CORPORATION AND SUBSIDIARIESFORM 10-KFOR THE FISCAL YEAR ENDED JUNE 30, 2013 TABLE OF CONTENTS PART I. 3 Item 1. Business 3Item 1A. Risk Factors 7Item 1B. Unresolved Staff Comments 16Item 2. Properties 16Item 3. Legal Proceedings 16Item 4. Mine Safety Disclosures 17 PART II. 18 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18Item 6. Selected Financial Data 20Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36Item 8. Financial Statements and Supplementary Data 36Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 36Item 9A. Controls and Procedures 36Item 9B. Other Information 39 PART III. 39 Item 10. Directors, Executive Officers and Corporate Governance 39Item 11. Executive Compensation 39Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 39Item 13. Certain Relationships and Related Transactions and Director Independence 39Item 14. Principal Accountant Fees and Services 39 PART IV. 39 Item 15. Exhibits and Financial Statement SchedulesSignatures 39 792 PART I CAUTIONARY STATEMENT RELATING TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIESLITIGATION REFORM ACT OF 1995 This Annual Report on Form 10-K contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Annual Report on Form 10-K may not occur. Generally, these statements relate to our business plans or strategies,projected or anticipated benefits or other consequences of our plans or strategies, financing plans, projected or anticipated benefits from acquisitions that wemay make, or projections involving anticipated revenues, earnings or other aspects of our operating results or financial position, and the outcome of anycontingencies. Any such forward-looking statements are based on current expectations, estimates and projections of management. We intend for theseforward-looking statements to be covered by the safe-harbor provisions for forward-looking statements. Words such as “may,” “will,” “expect,” “believe,”“anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions are intended to identify forward-lookingstatements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks andother influences, many of which are beyond our control that may influence the accuracy of the statements and the projections upon which the statements arebased. Factors that may affect our results include, but are not limited to, the risks and uncertainties discussed in Item 1A of this Annual Report on Form 10-K. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statementsmade by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in theseforward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, futureevents or otherwise. NOTE REGARDING DOLLAR AMOUNTS In this Annual Report on Form 10-K, all dollar amounts are expressed in thousands, except share prices and per-share amounts. Item 1. Business General Aceto Corporation, together with its consolidated subsidiaries, are referred to herein collectively as “Aceto”, “the Company”, “we”, “us”, and “our”, unlessthe context indicates otherwise. Aceto was incorporated in 1947 in the State of New York. We are a global leader in the marketing, sales and distribution ofpharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products and specialtychemicals. Our business is organized along product lines into three principal segments: Human Health, Pharmaceutical Ingredients and PerformanceChemicals. In fiscal 2012, we reconfigured and renamed our three business segments to more accurately reflect the scope of its business activities. We believe our main business strengths are sourcing, regulatory support, quality assurance and marketing and distribution. We distribute more than 1,100chemical compounds used principally as finished products or raw materials in the pharmaceutical, nutraceutical, agricultural, coatings and industrialchemical industries. With business operations in nine countries, Aceto’s global reach is distinctive in the industry, enabling us to source and supply qualityproducts on a worldwide basis. Leveraging local professionals, we source more than two-thirds of our products from Asia, buying from approximately 500companies in China and 200 in India. No single supplier accounted for as much as 10% of purchases in fiscal 2013 and 2012. Strategic relationships with manufacturers of pharmaceutical, nutraceutical, agricultural and specialty chemical products in the United States andinternationally serve as a valuable resource to Aceto customers, enabling them to procure vital chemical based products necessary for their diverse and complexapplications. A strong global technical network differentiates Aceto from commodity distribution companies. With regional managers in the United States,Europe and Asia, we provide regulatory support and quality assurance for customers and suppliers worldwide. Our regulatory network ensures that theproduct quality is manufactured to applicable required standards and conforms to customer specifications for its intended end use. Our presence in China, Germany, France, the Netherlands, Singapore, India, Hong Kong, the United Kingdom and the United States, along with strategicallylocated warehouses worldwide, enable us to respond quickly to demands from customers worldwide, assuring that a consistent, high-quality supply ofpharmaceutical, nutraceutical, specialty chemicals and agricultural protection products are readily accessible. We are able to offer our customers competitivepricing, continuity of supply, and quality control. Highly experienced staff, many of whom are technically trained, enable Aceto to meet individual customerneeds. Our marketing, sales, regulatory and technical professionals possess an intimate knowledge of worldwide sources of supply and product applications,as well as statutory and technical requirements. Many of our professionals are respected leaders in their industry, bringing 25 or more years of experience tocustomer applications. This longevity has fostered confidence and loyalty among customers and suppliers. 3 Aceto partners with customers during the product development process, creating new applications for existing products, as well as new product sourcingopportunities. We offer solutions for product and production challenges, while assisting with quality assurance, government approvals and compliance. All ofthese value-added services allow Aceto’s customers to be more responsive to their end use customers and more competitive in the global marketplace. We believeour 60 plus years of experience, our reputation for reliability and stability, and our long-term relationships with suppliers have fostered loyalty among ourcustomers. We remain confident about our business prospects. We anticipate organic growth through our plans to introduce new products for finished dosage formgeneric drugs, the further globalization of our nutraceutical business, the continued globalization of our Performance Chemicals business, the expansion of ouragricultural protection products by investing in product lines and intellectual property, the continued enhancement of our sourcing operations in China andIndia, and the steady improvement of our quality assurance and regulatory capabilities. We believe our track record of continuous product introductions demonstrates our commitment to be recognized by the worldwide generic pharmaceuticalindustry as an important, reliable supplier. Our plans involve seeking strategic acquisitions that enhance our earnings and forming alliances with partnersthat add to our capabilities, when possible. Other than product rights and license agreements for certain of our finished dosage form generic products which are part of our Human Health business andU.S. Environmental Protection Agency (EPA) registrations for our Performance Chemicals, we hold no patents, franchises or concessions that we considermaterial to our operations. Information concerning revenue and gross profit attributable to each of our reportable segments and geographic information 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.” Human Health Products that fall within the Human Health segment include finished dosage form generic drugs and nutraceutical products. In December 2010, we acquiredcertain assets of Rising Pharmaceuticals, Inc. (“Rising”), a New Jersey based company that markets and distributes generic prescription and over the counterpharmaceutical products to leading wholesalers, chain drug stores, distributors, mass market merchandisers and others under its own label, throughout theUnited States. This was a natural extension of our successful business model which provides customers and suppliers additional opportunities to penetrate theend user segment of the pharmaceutical market. With the Rising brand label, we have been able to expand our direct involvement in the pharmaceutical spacethrough greater global awareness of our capabilities in the marketing of pharmaceutical intermediates, active ingredients and the ultimate end-products,finished dosage form generics. According to an IMS Health press release on May 9, 2013, “the total cost of medicines declined by 3.5 percent on a real per capita basis to $325.8 billion. Inaddition to lower utilization of branded drugs, the primary drivers were: the increased availability of lower-cost generics, which now account for 84 percent ofall prescriptions; the moderating impact of price increases; and lower spending on recently launched medicines.” Aceto supplies the raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compoundsand biochemicals used in pharmaceutical and nutritional preparations. After we identified a change in the attitudes of Europeans towards nutritional products,we globalized this business, creating an operating company headquartered in Germany, Aceto Health Ingredients GmbH. This globally structured businessthen became the model for all of our business segments, providing international reach and perspective for our customers. Pharmaceutical Ingredients The Pharmaceutical Ingredients segment has two product groups: Active Pharmaceutical Ingredients (APIs) and Pharmaceutical Intermediates. 4 As the use of generic drugs has grown significantly over the years, we believe Aceto’s presence in this market also increased, both domestically andinternationally. We supply APIs to many of the major generic drug companies, who we believe view Aceto as a valued partner in their effort to develop andmarket generic drugs. The process of introducing a new API from pipeline to market spans a number of years and begins with Aceto partnering with a genericpharmaceutical manufacturer and jointly selecting an API, several years before the expiration of a composition of matter patent, for future generisizing. We thenidentify the appropriate supplier, and concurrently utilizing our global technical network, ensure they meet the highest standards of quality to comply withregulations. The generic pharmaceutical company will submit the Abbreviated New Drug Application (ANDA) for U.S. Food and Drug Administration (FDA)approval or European-equivalent approval. The introduction of the API to market occurs after all the development testing has been completed and the ANDA orEuropean-equivalent is approved and the patent expires or is deemed invalid. Aceto has a robust pipeline of APIs poised to reach commercial levels, both in theUnited States and Europe. Aceto has long been a supplier of pharmaceutical intermediates, the complex chemical compounds that are the building blocks used in producing APIs. Theseare the critical components of all drugs, whether they are already on the market or currently undergoing clinical trials. faced with significant economicpressures as well as ever-increasing regulatory barriers, the innovative drug companies look to Aceto as a source for high quality intermediates. Utilizing ourglobal sourcing, regulatory support and quality assurance network, Aceto works with the large, global pharmaceutical companies, sourcing lower cost,quality pharmaceutical intermediates that will meet the same high level standards adhered to by their current commercial products. Performance Chemicals The Performance Chemicals segment includes specialty chemicals and agricultural protection products. Aceto is a major supplier to many different industrial segments that require outstanding performance from chemical raw materials and additives. We providechemicals which make plastics, surface coatings, textiles, fuels and lubricants to perform to their designed capabilities. These additive specialty productsinclude antioxidants, photo initiators, catalysts, curatives, brighteners and adhesion promoters. Aceto is at the forefront as a supplier of chemicals to ecofriendly technologies. For example, we supply ultraviolet photo initiators which allow inks andcoatings to be cured by ultraviolet light instead of solvents, as well as curing agents and optical brighteners for powder (non-solvent) coatings. These growingtechnologies are critical in protecting and enhancing the world’s ecology. We provide specialty chemicals for the food, beverage and fragrance industries. Aceto’s raw materials are also used in sophisticated technology products, suchas high-end electronic parts (circuit boards and computer chips) and binders for specialized rocket fuels. Aceto is also a leader in the supply of diazos andcouplers to the paper and film industries. Specific end uses for these products include microfilm, blueprints and photo tooling of printed circuit boards. We also provide organic intermediates and colorants. The color producing industry manufactures a wide assortment of products and Aceto is the supplier ofchoice to these producers of “color.” From textiles and plastics to inks and paints, our specialty colorant intermediates allow manufacturers to develop anendless rainbow of colorful possibilities. According to a July 16, 2013 Federal Reserve Statistical Release, in the second quarter of calendar year 2013, the index for consumer durables, which impactsthe Specialty Chemicals business of the Performance Chemicals segment, is expected to grow at an annual rate of 5.1%. Aceto’s agricultural protection products include herbicides, fungicides and insecticides which control weed growth as well as the spread of insects andmicroorganisms that can severely damage plant growth. The agricultural world is dependent on a large variety of deterrent products and we believe Aceto hasbecome a valued partner to the global generic agricultural industry by providing superior quality functional products. One of Aceto’s most widely usedagricultural protection products is a sprout inhibitor that extends the storage life of potatoes. We work with the large agrochemical distributors to providealternate sources for key products. Utilizing our global sourcing and regulatory capabilities, we identify and qualify manufacturers either producing theproduct or with knowledge of the chemistry necessary to produce the product and then file an application with the EPA for a product registration. Aceto has anongoing working relationship with manufacturers in China and India to determine which of the non-patented, or generic, agricultural protection products theyproduce can be effectively marketed in the Western world. Over the past several years, we have successfully brought a number of products to market. Inaddition, we have a strong pipeline, which includes future additions to our product portfolio. The combination of our global sourcing and regulatorycapabilities makes the generic agricultural market a niche for us and we will continue to offer new product additions in this market as we move forward. In theNational Agricultural Statistics Services release dated June 28, 2013, the total crop acreage planted in the United States in 2013 remained consistent from 2012at 326 million acres. The number of peanut acres planted in 2013 was down 33% from 2012 levels while sugarcane acreage harvested increased almost 1.0%from 2012. In addition, the potato acreage harvested in 2013 decreased approximately 6.3% from the 2012 level. 5 Long-lived Assets Long-lived assets by geographic region as of June 30, 2013, 2012, and 2011 were as follows: Long-lived assets 2013 2012 2011 United States $80,870 $85,650 $90,955 Europe 2,684 2,388 2,779 Asia-Pacific 2,213 2,413 2,644 Total $85,767 $90,451 $96,378 Suppliers and Customers We purchase products from specifically approved plants and supply products to customers from plants whose products they have approved. We regularlyvisit our suppliers to evaluate them not only on the basis of ability to deliver satisfactory products on a timely and cost efficient basis, but also on theircommitment to operate in a safe and environmentally responsible manner. During the fiscal years ended June 30, 2013 and 2012 approximately 68% and69%, respectively, of our purchases were from Asia and approximately 13% for each year, 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 human health and pharmaceutical industries, and range from small trading companies to Fortune 500 companies. During fiscal years 2013and 2012, sales made to customers in the United States totaled $291,433 and $254,368 respectively. Sales made to customers outside the United Statesduring fiscal years 2013 and 2012 totaled $208,257 and $190,020, respectively, of which, approximately 62% and 59%, respectively, were to customerslocated in Europe. No single product or customer accounted for as much as 10% of net sales in fiscal years 2013, 2012 or 2011. Competition The Company operates in a highly competitive business environment. We compete by offering high-quality products produced around the world by both largeand small manufacturers at attractive prices. Because of our long standing relationships with many suppliers as well as our sourcing operations in bothChina and India, we are able to ensure that any given product is manufactured at a facility that can meet the regulatory requirements for that product. For themost part, we store our inventory of chemical-based products in public warehouses strategically located throughout the United States, Europe, and Asia, andwe can therefore fill our customer orders on a timely basis. We have developed ready access to key purchasing, research, and technical executives of ourcustomers and suppliers. This allows us to ensure that when necessary, sourcing decisions can be made quickly. Environmental and Regulatory We are subject to extensive regulation by federal, state and local agencies in the countries in which we do business. Of particular importance is the FDA in theU.S. It has jurisdiction over testing, safety, effectiveness, manufacturing, labeling, marketing, advertising and post-marketing surveillance of our HumanHealth products. Certain of our products involve the use, storage and transportation of toxic and hazardous materials. The Company’s operations are subject to extensive lawsand regulations relating to the storage, handling, transportation and discharge of materials into the environment and the maintenance of safe workingconditions. We have designed safety procedures to comply with the standards prescribed by federal, state and local regulations. Our global quality assurance network, with regional managers in the U.S., Europe and Asia, ensures that the quality of a product meets both its specificationsand intended use. Our technical network performs a service that allows Aceto to source and qualify APIs, pharmaceutical intermediates, finished dosage formgenerics, agricultural products, specialty chemicals, and nutraceutical products from around the world. It also provides substantial regulatory support andtechnical assistance to manufacturers worldwide, enabling them to meet the stringent regulatory guidelines that govern the pharmaceutical, nutraceutical,specialty chemicals and agricultural protection industries. 6 A subsidiary of the Company markets certain agricultural 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 thatfollow-on registrants of these products compensate the initial registrant for the cost of producing the necessary test data on a basis prescribed in the FIFRAregulations. Follow-on registrants do not themselves generate or contract for the data. However, when FIFRA requirements mandate that new test data begenerated to enable all registrants to continue marketing a pesticide product, often both the initial and follow-on registrants establish a task force to jointlyundertake the testing effort. The Company is presently a member of several such task force groups, which requires payments for such memberships. Employees At June 30, 2013, we had 234 employees, none of whom were covered by a collective bargaining agreement. Available information We file annual, quarterly, and current reports, proxy statements, and other information with the U.S. Securities and Exchange Commission. You may readand 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, andcurrent 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 reportson 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; andany amendments to those reports and forms. We make these filings available as soon as reasonably practicable after they are electronically filed with, orfurnished to, the SEC. The information on our website is not incorporated by reference into this Annual Report on Form 10-K. Item 1A. Risk factors You should carefully consider the following risk factors and other information included in this Annual Report on Form 10-K. The risks and uncertaintiesdescribed below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial could alsoimpair our business operations. If any of the following risk factors occur, our reputation, business, financial condition, operating results and cash flowscould 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 reputation,business, financial condition, operating results and cash flows could be materially adversely affected. Our financial condition and operating results are directly related to our ability to compete in the intensely competitive global chemical and pharmaceuticalmarkets. We face intense competition from global and regional distributors of chemical and pharmaceutical products, many of which are large chemical andpharmaceutical manufacturers as well as distributors. Many of these companies have substantially greater resources than us, including, among other things,greater financial, marketing and distribution resources. We cannot assure you that we will be able to compete successfully with any of these companies. Inaddition, increased competition could result in price reductions, reduced margins and loss of market share for our products, all of which could materiallyadversely affect our reputation, business, financial condition, operating results and cash flows. Our distribution operations of APIs concentrate on generic products and therefore are subject to the risks of the generic pharmaceutical 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 bygeneric manufacturers and the subsequent advent and extent of competition encountered by these products. This competition can result in significant and rapiddeclines in pricing with a corresponding decrease in net sales. Our margins can also be materially adversely affected by the risks inherent to the genericindustry. Our pipeline of products in development may be subject to regulatory delays at the FDA. Delays in key products could have material adverse effects onour reputation, business, financial condition, operating results and cash flows. Our future revenue growth and profitability are partially dependent upon our ability to introduce new products on a timely basis in relation to our competitors’product introductions. Our failure to do so successfully could materially adversely affect our reputation, business, financial condition, operating results andcash flows. Many products require FDA approval or the equivalent regulatory approvals in our overseas markets prior to being marketed. The process ofobtaining FDA/regulatory approval to market new and generic pharmaceutical products is rigorous, time-consuming, costly and largely often unpredictable.We may be unable to obtain requisite FDA approvals on a timely basis for new generic products. 7 If we experience product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected. We may be exposed to product recalls and adverse public relations if our products are alleged to cause injury or illness, or if we are alleged to have violatedgovernmental regulations. A product recall could result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. Inaddition, a product recall may require significant management attention. Product recalls may hurt the value of our brands and lead to decreased demand forour products. Product recalls also may lead to increased scrutiny by federal, state or international regulatory agencies of our operations and increased litigationand could have a material adverse effect on our reputation, business, financial condition, operating results and cash flows. Dependence on a limited number of suppliers of Human Health and Pharmaceutical Ingredients products could lead to delays, lost revenue orincreased costs. Our future operating results may depend substantially on our suppliers’ ability to timely provide Human Health and Pharmaceutical Ingredients products inconnection with ANDAs and such suppliers’ ability to supply us with these ingredients or materials in sufficient volumes to meet our productionrequirements. A number of the ingredients or materials that we use are available from only a single or limited number of qualified suppliers, and may be usedacross multiple product lines. If there is a significant increase in demand for an ingredient or other material resulting in an inability to meet demand, if aningredient or material is otherwise in short supply or becomes wholly unavailable, or if a supplier has a quality issue, we may experience delays or increasedcosts in obtaining that ingredient or material. If we are unable to obtain sufficient quantities of ingredients or other necessary materials, we may experienceproduction delays in our supply. Each of the following could also interrupt the supply of, or increase the cost of, ingredients or other materials: ● an unwillingness of a supplier to supply ingredients or other materials to us;● consolidation of key suppliers;● failure of a key supplier’s business process;● a key supplier’s inability to access credit necessary to operate its business; or●failure of a key supplier to remain in business, to remain an independent supplier, or to adjust to market conditions. Any interruption in the supply of or increase in the cost of ingredients or other materials provided by single or limited source suppliers could have a materialadverse effect on our reputation, business, financial condition, operating results and cash flows. Our success in our Human Health segment is linked to the size and growth rate of the generic pharmaceutical, vitamin, mineral and supplementmarkets and an adverse change in the size or growth rate of these markets could have a material adverse effect on us. An adverse change in size or growth rate of the generic pharmaceutical, vitamin, mineral and supplement markets could have a material adverse effect on us.Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control,including media attention and scientific research, which may be positive or negative. Healthcare reform and a reduction in the reimbursement levels by governmental authorities, HMOs, MCOs or other third-party payors couldmaterially adversely affect our business, financial condition, operating results and cash flows. Third party payors increasingly challenge pricing of pharmaceutical products. The trend toward managed healthcare, the growth of organizations such asHMOs and MCOs and legislative proposals to reform healthcare and government insurance programs could significantly influence the purchase ofpharmaceutical products, resulting in lower prices and a reduction in product demand. Such cost containment measures and healthcare reform could affectour ability to sell our products and could have a material adverse effect on our business, results of operations, financial condition and cash flows. Our future results could be materially affected by a number of public health issues whether occurring in the United States or abroad. Public health issues, whether occurring in the United States or abroad, could disrupt our operations, disrupt the operations of suppliers or customers, or havea broader adverse impact on consumer spending and confidence levels that would negatively affect our suppliers and customers. We may be required tosuspend operations in some or all of our locations, which could have a material adverse effect on our business, results of operations, financial condition andcash flows. 8 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 cancelorders. Many of our sales orders are short-term and could 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 Human Health and Pharmaceutical Ingredients segments. Reduced sales of these higher margin products could have a material adverse effecton our operating results. We believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. Changes to the industries and markets that Aceto serves could have a material adverse effect on our business, financial condition, operating resultsand cash flows. The business environment in which we operate remains challenging. Portions of our operations are subject to the same business cycles as those experienced byautomobile, housing, and durable goods manufacturers. Our demand is largely derived from the demand for our customers’ products, which subjects us touncertainties related to downturns in our customers’ business and unanticipated customer production shutdowns or curtailments. A material downturn insales or gross profit due to weak end-user markets and loss of customers could have a material adverse effect on our business, financial condition, operatingresults and cash flows. Our operating results could fluctuate in future quarters, which could adversely affect the trading price of our common stock. Our operating results could fluctuate on a quarterly basis as a result of a number of factors, including, among other things, the timing of contracts, orders, thedelay or cancellation of a contract, and changes in government regulations. Any one of these factors could have a significant impact on our quarterly results. Insome quarters, our revenue and operating results could fall below the expectations of securities analysts and investors, which would likely cause the tradingprice of our common stock to decline. We have significant inventories on hand. The Company maintains significant inventories. Any significant unanticipated changes in future product demand or market conditions, including, amongother things, the current uncertainty in the global market, could materially adversely affect the value of inventory and our business, financial condition,operating results and cash flows. 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, among other things, manufacturingdelays caused by plant shutdowns, regulatory issues, damage or disruption to raw material supplies due to weather, including, among other things, anypotential effects of climate change, natural disaster or fire, could occur. If such problems occur, we cannot assure that we will be able to deliver our products toour customers profitably or on time. Increases in the cost of shipping with our third-party shippers could have a material adverse effect on our business, financial condition, operatingresults and cash flows. Shipping is a significant expense in the operation of our business. Accordingly, any significant increase in shipping rates could have an adverse effect on ouroperating results. Similarly, strikes or other service interruptions by those shippers could cause our operating expenses to rise and adversely affect our abilityto deliver products on a timely basis. We could incur significant uninsured environmental and other liabilities inherent in the chemical /pharmaceutical distribution industry that couldmaterially adversely affect our business, financial condition, operating results and cash flows. The business of distributing chemicals and pharmaceuticals is subject to regulation by numerous federal, state, local, and foreign governmentalauthorities. These regulations impose liability for loss of life, damage to property and equipment, pollution and other environmental damage that could occurin our business. Many of these regulations provide for substantial fines and remediation costs in the event of chemical spills, explosions and pollution. Whilewe 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 thatare not covered by insurance or 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 could besubstantial, thereby materially adversely affecting our business, financial condition, operating results and cash flows. 9 In fiscal years 2011, 2009, 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 allegedthat Aceto shipped hazardous substances to the site which were released into the environment. The State had begun administrative proceedings against themembers of the PRP Group and Aceto with respect to the cleanup of the Pulvair site and the PRP Group has begun to undertake cleanup. The PRP Group isseeking a settlement of approximately $1,700 from the Company for its share to remediate the site contamination. Although the Company acknowledges that itshipped materials to the site for formulation over twenty years ago, the Company believes that the evidence does not show that the hazardous materials sent byAceto to the site have significantly contributed to the contamination of the environment and thus believes that, at most, it is a de minimus contributor to the sitecontamination. Accordingly, the Company believes that the settlement offer is unreasonable. The impact of the resolution of this matter on the Company’sresults of operations in a particular reporting period is not known. Our subsidiary, Arsynco, has environmental remediation obligations in connection with its former manufacturing facility in Carlstadt, New Jersey. Estimatesof 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 aresignificantly 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 LiabilityAct (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 requiredinvestigation and remediation of the site. The estimate of the potential liability is not quantifiable for a number of reasons, including the difficulty indetermining the extent of contamination and the length of time remediation may require. In addition, any estimate of liability must also consider the number ofother PRPs and their financial strength. Based on prior practice in similar situations, it is possible that the State may assert a claim for natural resourcedamages with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claims against Arsynco for natural resourcedamages in connection with Berry’s Creek; any such claim with respect to Berry’s Creek could also be asserted against the approximately 150 PRPs whichthe 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 againstBASF, the former owners of the Arsynco property. Since an amount of the liability cannot be reasonably estimated at this time, no accrual is recorded for thesepotential 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. The distribution and sale of some 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 the Toxic Substances Control Act and as well asregulations requiring registration and approval of many of our products. More stringent restrictions could make our products less desirable, which wouldadversely affect our revenues and profitability. Some of our products are subject to the EPA registration and re-registration requirements, and are registered inaccordance with FIFRA. Such registration requirements are based, among other things, on data demonstrating that the product will not cause unreasonableadverse effects on human health or the environment when used according to approved label directions. Governmental regulatory authorities have required, andmay 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 withother registrants to perform additional testing. Responding to such requirements may cause delays in or the cessation of the sales of one or more of ourproducts which would adversely affect our profitability. We can provide no assurance that any testing approvals or registrations will be granted on a timelybasis, 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 requirementwill exceed our cost. Incidents related to hazardous materials could materially adversely affect our reputation, business, financial condition, operating results and cashflows. Portions of our operations require the controlled use of hazardous materials. Although we are diligent in designing and implementing safety procedures tocomply with the standards prescribed by federal, state, and local regulations, the risk of accidental contamination of property or injury to individuals fromthese materials cannot be completely eliminated. In the event of such an incident, we could be liable for any damages that result, which could materiallyadversely affect our reputation, business, financial condition, operating results and cash flows. 10 We are also continuing to expand our business in China and India, where environmental, health and safety regulations are still early in their development. Asa result, we cannot determine how these laws will be implemented and the impact of such regulation on the Company. Violations of cGMP and other government regulations could have a material adverse effect on our reputation, business, financial condition and resultsof operations. All facilities and manufacturing techniques used to manufacture pharmaceutical products for clinical use or for commercial sale in the United States and otherAceto markets must be operated in conformity with current Good Manufacturing Practices (“cGMP”) regulations as required by the FDA and other regulatorybodies. Our suppliers’ facilities are subject to scheduled periodic regulatory and customer inspections to ensure compliance with cGMP and otherrequirements applicable to such products. A finding that we or one or more of our suppliers had materially violated these requirements could result in one ormore regulatory sanctions, loss of a customer contract, disqualification of data for client submissions to regulatory authorities and a mandated closing of oursuppliers’ facilities, which in turn could have a material adverse effect on our reputation, business, financial condition, operating results and cash flows. Our business could give rise to product liability claims that are not covered by insurance or indemnity agreements or exceed insurance policy orindemnity agreement limitations. The marketing, distribution and use of chemical and pharmaceutical products involves substantial risk of product liability claims. We could be held liable ifany product we or our partners develop or distribute causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale.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 topay a substantial amount of damages. In the event that we are forced to pay such damages, this payment could have a material adverse effect on ourreputation, business, financial condition, operating results and cash flows. We source many of our products in China and changes in the political and economic policies of China’s government could have a significant impactupon the business we may be able to conduct in China and our financial condition, operating results and cash flows. Our business operations could be materially adversely affected by the current and future political environment in China. China has operated as a socialist statesince the mid-1900s and is controlled by the Communist Party of China. The Chinese government exerts substantial influence and control over the manner inwhich companies, such as ours, must conduct business activities in China. China has only permitted provincial and local economic autonomy and privateeconomic activities since 1988. The government of China has exercised and continues to exercise substantial control over virtually every sector of the Chineseeconomy, through regulation and state ownership. Our ability to conduct business in China could be adversely affected by changes in Chinese laws andregulations, including, among others, those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, propertyand other matters. Under its current leadership, the government of China has been pursuing economic reform policies that encourage private economic activityand greater economic decentralization. There is no assurance, however, that the government of China will continue to pursue these policies, or that it will notsignificantly alter these policies from time to time without notice. China’s laws and regulations governing our current business operations in China are sometimes vague and uncertain. Any changes in such laws andregulations could materially adversely affect our business, financial condition, operating results and cash flows. China’s legal system is a civil law system based on written statutes, in which system decided legal cases have little value as precedents unlike the commonlaw system prevalent in the United States. There are substantial uncertainties regarding the interpretation and application of China’s laws and regulations,including among others, the laws and regulations governing the conduct of business in China, or the enforcement and performance of arrangements withcustomers and suppliers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. The Chinese government has beendeveloping a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economicmatters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations arerelatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation andenforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses mayalso be applied retroactively. We cannot predict what effect the interpretation of existing or new laws or regulations may have on our business in China. If therelevant authorities find that we are in violation of China’s laws or regulations, they would have broad discretion in dealing with such a violation, including,among other things: (i) levying fines and (ii) requiring that we discontinue any portion or all of our business in China. 11 The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign businessesconducting business in China. However, the trend of legislation over the last 20 plus years has significantly enhanced the protection of foreign businesses inChina. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting China’s political, economicor social life, will not affect China’s government’s ability to continue to support and pursue these reforms. Such a shift could have a material adverse effecton our business and prospects. Our ability to compete in certain markets we serve is dependent on our ability to continue to expand our capacity in certain offshorelocations. However, as our presence in these locations increases, we are exposed to risks inherent to these locations which could materially adverselyaffect our business, financial condition, operating results and cash flows. A significant portion of our outsourcing has been shifted to India. As such, we are exposed to the risks inherent to operating in India including, among others,(1) a highly competitive labor market for skilled workers which may result in significant increases in labor costs as well as shortages of qualified workers inthe future, (2) the possibility that the U.S. federal government or the European Union may enact legislation which may disincentivize customers fromproducing in their local countries which would reduce the demand for the services we provide in India and could materially adversely affect our business,financial condition, operating results and cash flows. Fluctuations in foreign currency exchange rates could materially adversely affect our business, financial condition, operating results and cash flows. 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 localcurrencies. Our business, financial condition, operating results and cash flows therefore could be materially adversely affected by fluctuations in the exchangerate between foreign currencies and the U.S. dollar. Failure to comply with U.S. or non-U.S. laws regulating trade, such as the U.S. Foreign Corrupt Practices Act, could result in adverse consequences,including fines, criminal sanctions, or loss of access to markets. We are subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which, among other things, prohibits corporations and individuals from paying, offeringto pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party, or political candidate inan attempt to obtain or retain business or to otherwise influence a person working in an official capacity. The FCPA also requires public companies to makeand keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequate system of internal accounting controls.While our employees and agents are required to comply with these laws, we cannot assure you that our internal policies and procedures will always protect usfrom violations of these laws, despite our commitment to legal compliance and corporate ethics. The occurrence or allegation of these types of events couldmaterially adversely affect our reputation, business, financial condition, operating results and cash flows. Tax legislation and assessments by various tax authorities could be materially different than the amounts we have provided for in our consolidatedfinancial statements. We are regularly audited by federal, state, and foreign tax authorities. From time to time, these audits could result in proposed assessments. While we believethat we have adequately provided for any such assessments, future settlements could be materially different than we have provided for and thereby materiallyadversely 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 could be exposed to additional tax liabilities. Our effective tax rateis based on our expected geographic mix of earnings, statutory rates, intercompany transfer pricing, and enacted tax rules. Significant judgment is required indetermining our effective tax rate and in evaluating our tax positions on a worldwide basis. We believe our tax positions, including, among others,intercompany transfer pricing policies, are consistent with the tax laws in the jurisdictions in which we conduct our business. It is possible that these positionsmay be challenged by jurisdictional tax authorities and could have a significant impact on our effective tax rate. In addition, from time to time, variouslegislative initiatives could be proposed that could adversely affect our tax positions. There can be no assurance that our effective tax rate will not be adverselyaffected by these initiatives.12 Changes in tax rules could adversely affect our future reported financial results or the way we conduct our business. Our future reported financial results could be adversely affected if tax or accounting rules regarding unrepatriated earnings change. The Obama administrationannounced several proposals to reform United States tax rules, including, among others, proposals that could result in a reduction or elimination of thedeferral of United States tax on our unrepatriated earnings, potentially requiring those earnings to be taxed at the United States federal income tax rate. Our business is subject to a number of global economic risks. From time to time, financial markets in the United States, Europe and Asia have and could experience extreme disruption, including, among other things,extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations ofothers. Governments have taken unprecedented actions intending to address extreme market conditions that include severely restricted credit and declines invalues of certain assets. An economic downturn in the businesses or geographic areas in which we sell our products could reduce demand for our products and result in a decrease inrevenue that could have a negative impact on our results of operations. Continued volatility and disruption of financial markets in the United States, Europeand Asia could limit our customers’ ability to obtain adequate financing or credit to purchase our products or to pay for outstanding invoices owed to us or tomaintain operations, and result in a decrease in revenue or cash collections that could have a material adverse effect on our business, financial condition,operating results and cash flows. We have a significant amount of debt. We have a $64,500 credit facility of which $28,500 was outstanding at June 30, 2013. This facility expires in December 2015. If we are unable to generatesufficient cash flow or otherwise obtain funds necessary to make required payments on the credit facility, it will be in default. This current debt arrangementrequires us to comply with several financial covenants. Our ability to comply with these covenants may be affected by events beyond our control and couldresult in a default under our credit facility, which could have a material adverse effect on our business, financial condition, operating results and cash flows. Even if we are able to meet our debt service obligations, the amount of debt we have could adversely affect us by limiting our ability to obtain any necessaryfinancing in the future for working capital, dividend payments, capital expenditures, debt service requirements, or other purposes. It also places us at adisadvantage relative to our competitors who have lower levels of debt, while making us more vulnerable to a downturn in our business or the economy ingeneral. It also requires us to use a substantial portion of our cash to pay principal and interest on our debt, instead of investing those funds in the business. Our acquisition strategy is subject to a number of inherent risks, including, among other things, 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, licensingagreements and other arrangements. Any decision regarding strategic alternatives would be subject to inherent risks, and we cannot guarantee that we will beable to identify the appropriate opportunities, successfully negotiate economically beneficial terms, successfully integrate any acquired business, retain keyemployees, or achieve the anticipated synergies or benefits of the strategic alternative selected. Acquisitions can require significant capital resources and divertour management’s attention from our existing business. Additionally, we may issue additional shares in connection with a strategic transaction, therebydiluting the holdings of our existing common shareholders, incur debt or assume liabilities, become subject to litigation, or consume cash, thereby reducing theamount 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 anyacquisitions that we make, including, among other things, contingent consideration and impairment charges. These costs may also include substantialseverance and other closure costs associated with eliminating duplicate or discontinued products, employees, operations and facilities. These charges couldhave a material adverse effect on our results of operations and they could have a material adverse effect on the market price of our common stock.13 The Company could be subject to goodwill impairment charges in the future. Under U.S. generally accepted accounting principles (“GAAP”), we are required to evaluate goodwill for impairment at least annually. If we determine that thefair value is less than the carrying value, an impairment loss will be recorded in our statement of income. The determination of fair value is a highly subjectiveexercise and can produce significantly different results based on the assumptions used and methodologies employed. If our projected long-term sales growthrate, profit margins or terminal rate are considerably lower and/or the assumed weighted average cost of capital is considerably higher, future testing mayindicate impairment and we would have to record a non-cash goodwill impairment loss in our statement of income. Our information technology systems could fail to perform adequately or we may fail to adequately protect such information technology systems againstdata corruption, cyber-based attacks, or network security breaches. We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic information. In particular, wedepend on our information technology infrastructure to effectively manage its business data, supply chain, logistics, accounting, and other business processesand electronic communications between our personnel and our customers and suppliers. If we do not allocate and effectively manage the resources necessary tobuild and sustain an appropriate technology infrastructure, our business, financial condition, operating results and cash flows therefore could be materiallyadversely affected. In addition, security breaches or system failures of this infrastructure can create system disruptions, shutdowns, or unauthorizeddisclosure of confidential information. If we are unable to prevent such breaches or failures, our operations could be disrupted, or we may suffer financialdamage or loss because of lost or misappropriated information. Our potential liability arising from our commitment to indemnify our directors, officers and employees could materially adversely affect our business,financial condition, operating results and cash flows. We have committed in our bylaws to indemnify our directors, officers and employees against the reasonable expenses incurred by these persons in connectionwith any action brought against them in such capacity, except in matters as to which they are adjudged to have breached a duty to us. The maximum potentialamount of future payments we could be required to make under this provision is unlimited. While we have “directors and officers” insurance policies thatshould cover all or some of this potential exposure, we could be adversely affected if we are required to pay damages or incur legal costs in connection with aclaim above our insurance limits. Our business could be materially adversely affected by terrorist activities. Our business depends on the free flow of products and services through the channels of commerce worldwide. Instability due to military, terrorist, politicaland economic actions in other countries could materially disrupt our overseas operations and export sales. In both fiscal years 2013 and 2012, approximately43% of our revenues were attributable to operations conducted abroad and to sales generated from the United States to foreign countries. In addition, in fiscalyear 2013, approximately 68% and 13% of our purchases came from Asia and Europe, respectively. In addition, in certain countries where we currentlyoperate 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, among other things, labor unrest, restrictions on transfers of funds and unexpected changes in regulatory environments. 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 couldtherefore have a material adverse effect upon our financial position and operating results. We do not maintain “key-man” insurance on any of our keyexecutives. Shortage of qualified and technical personnel in a competitive marketplace may prevent us from growing our business. We may be unable to hire or retain qualified and technical employees and there is substantial competition for highly skilled employees. If we fail to attract andretain key employees, our business could be adversely impacted.14 Litigation could 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 suchdisputes 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,among other things: ●quarterly fluctuations in our operating income and earnings per share results ●technological innovations or new product introductions by us or our competitors ●economic conditions ●tariffs, duties and other trade barriers including, among other things, anti-dumping duties ●disputes concerning patents or proprietary rights ●changes in earnings estimates and market growth rate projections by market research analysts ●any future issuances of our common stock, which may include primary offerings for cash, stock splits, issuances in connection with businessacquisitions, restricted stock/units and the grant or exercise of stock options from time to time ●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, evenslightly, could have an adverse effect on the market price of our common stock. In addition, the stock market is subject to extreme price and volumefluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to the operatingperformance of these companies. 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 onour business, financial condition, operating results and cash flows. The consolidated financial statements included in the periodic reports we file with the SEC are prepared in accordance with GAAP. Preparing financialstatements 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 tothe reported amounts. Changes in accounting standards issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies may adverselyaffect our financial statements. Our financial statements are subject to the application of U.S. GAAP, which is periodically revised and/or expanded. Accordingly, from time-to-time we arerequired to adopt new or revised accounting standards issued by recognized authoritative bodies, including the FASB and the SEC. It is possible that futureaccounting standards we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and thatsuch changes could have a material adverse effect on our results of operations and financial condition. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have material adverse effect on ourbusiness 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 eachfiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K .Section 404 also requires our independent registered public accounting firm to report on our internal controls over financial reporting. If we fail to maintain theadequacy 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 financialreporting. If we fail to maintain effective internal controls, we might be subject to sanctions or investigation by regulatory authorities, such as the Securitiesand Exchange Commission or NASDAQ. Any such action could adversely affect our financial results and the market price of our common stock and mayalso result in delayed filings with the Securities and Exchange Commission. 15 Compliance with changing regulation of corporate governance and public disclosure could result in additional expenses. Complying with changing laws, regulations and standards relating to corporate governance and public disclosure, including, among others, 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 standardsof corporate governance and public disclosure. As a result, we may be required to continue to invest necessary resources to comply with evolving laws,regulations and standards, and this investment could result in increased expenses and a diversion of management time and attention from revenue-generatingactivities. Item 1B. Unresolved Staff Comments None. Item 2. Properties In March 2010, we purchased a building in Port Washington, New York, which is now the site of our global headquarters. We moved our corporate officesinto this new building in April 2011. Our global headquarters consists of approximately 48,000 gross square feet and is subject to a mortgage, which at June30, 2013, had an outstanding balance of $3,569. With the Rising acquisition on December 31, 2010, the Company leases approximately 41,000 gross square feet of office space in Allendale, New Jersey. Thislease expires in October 2017. 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. Arsynco’s former manufacturing facility is located on a 12-acre parcel in Carlstadt, New Jersey, that it owns. In November 2004, we purchased approximately 1,300 gross square meters of office space located in Shanghai, China for our sales offices and investmentpurposes. We also lease office space in Hamburg, Germany; Düsseldorf, Germany; Heemskerk, the Netherlands; Paris, France; Lyon, France and Singapore. Theseoffices 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 haveon our results of operations in a particular reporting period. On October 29, 2012, a lawsuit was filed in the United Kingdom (in the High Court of Justice, Queens Bench Division, Commercial Court) by UnitedPhosphorous Limited (“UPL”) against Aceto Agricultural Chemicals Corporation (“AACC”), a wholly-owned subsidiary of the Company. In the lawsuit,UPL alleges, among other things, that AACC breached a 1995 agreement regarding European sales of a potato sprout suppression product, by selling theproduct in Europe. UPL claims damages of approximately £4,500 (approximately US $7,200) plus an unspecified amount of additional damages. While theimpact of the resolution of the matter, including any legal and other associated costs, on the Company’s consolidated results of operations in a particularreporting period is not known at this time, after a detailed review and careful analysis of the allegations, AACC strongly denies the allegations, believes thatUPL’s claims are without merit and intends to vigorously defend the lawsuit. 16 In fiscal years 2011, 2009, 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 allegedthat Aceto shipped hazardous substances to the site which were released into the environment. The State had begun administrative proceedings against themembers of the PRP Group and Aceto with respect to the cleanup of the Pulvair site and the PRP Group has begun to undertake cleanup. The PRP Group isseeking a settlement of approximately $1,700 from the Company for its share to remediate the site contamination. Although the Company acknowledges that itshipped materials to the site for formulation over twenty years ago, the Company believes that the evidence does not show that the hazardous materials sent byAceto to the site have significantly contributed to the contamination of the environment and thus believes that, at most, it is a de minimus contributor to the sitecontamination. Accordingly, the Company believes that the settlement offer is unreasonable. The impact of the resolution of this matter on the Company’sresults of operations in a particular reporting period is not known. However, management believes that the ultimate outcome of this matter will not have amaterial 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 LiabilityAct (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 requiredinvestigation and remediation of the site. The estimate of the potential liability is not quantifiable for a number of reasons, including the difficulty indetermining the extent of contamination and the length of time remediation may require. In addition, any estimate of liability must also consider the number ofother PRPs and their financial strength. Based on prior practice in similar situations, it is possible that the State may assert a claim for natural resourcedamages with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claims against Arsynco for natural resourcedamages in connection with Berry’s Creek; any such claim with respect to Berry’s Creek could also be asserted against the approximately 150 PRPs whichthe 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 againstBASF, the former owners of the Arsynco property. In September 2012, Arsynco entered into an agreement with three of the other PRPs that had previously beenimpleaded into New Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al., Docket No. ESX-L-9868-05 (the“NJDEP Litigation”) and were considering impleading Arsynco into same. Arsynco entered into agreement to avoid impleader. Pursuant to agreement, Arsyncoagreed to (1) a tolling period that would not be included when computing the running of any statute of limitations that might provide a defense to the NJDEPLitigation; (2) the waiver of certain issue preclusion defenses in the NJDEP Litigation; and (3) arbitration of certain potential future liability allocation claims ifthe other parties to the agreement are barred by a court of competent jurisdiction from proceeding against Arsynco. Since an amount of the liability cannot bereasonably 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 resultsof operations in a particular reporting period is not known. Item 4. Mine Safety Disclosures Not Applicable.17 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 2013 and 2012high and low sales prices of our common stock as reported by the NASDAQ Global Select Market for the periods indicated. HIGH LOW FISCAL YEAR 2013 First Quarter $9.81 $8.25 Second Quarter 10.20 8.95 Third Quarter 11.49 9.60 Fourth Quarter 14.20 10.00 FISCAL YEAR 2012 First Quarter $6.83 $4.51 Second Quarter 7.14 5.10 Third Quarter 9.63 6.56 Fourth Quarter 9.99 7.90 Cash dividends of $0.055 per common share were paid in September, December, March and June of fiscal year 2013. Cash dividends of $0.10 per commonshare were paid in January and June of fiscal 2012 and fiscal 2011. Our revolving credit facility restricts the payment of cash dividends to $6,600 per fiscalyear. As of August 23, 2013, there were 332 holders of record of our common stock. 26,458,466 shares of our common stock were held by the nominee of the Depository Trust Company, the country’s principal central depository. Forpurposes of determining the number of owners of our common stock, those shares are considered to be owned by one holder. Additional individual holdingsin 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, 2013: Plan category Number of securities tobe issued upon exerciseof outstanding options Weighted-averageexercise price ofoutstanding options Number of securitiesremaining available forfuture issuance underequity compensation plans Equity compensation plans approved by security holders 960,000 $8.36 3,329,000 Equity compensation plans not approved by security holders - - - Total 960,000 $8.36 3,329,000 18 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) thetotal shareholder return on our common stock with (b) the total return on the Standard & Poor’s 500 Index, and (c) the total return of our Peer Group. Our PeerGroup consists of 17 companies selected by us, based on total revenues, nature of business, product offerings, customer base, operational model and overallstrategy. The peer group companies included: American Pacific Corp., American Vanguard Corp., Balchem Corp., Calgon Carbon Corp., Cambrex Corp.,DXP Enterprises Inc., Hawkins Inc., Innophos Holdings, Innospec Inc., KMG Chemical Inc., Lawson Products, Myers Industries Inc., NutraceuticalInternational Corp., Prestige Brand Holdings, Quaker Chemical Corp., Rogers Corp., and Usana Health Sciences Inc. 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 30,2008. The stock price performance included in this graph is not necessarily indicative of future stock price performance. ASSUMES $100 INVESTED ON JUNE 30, 2008ASSUMES DIVIDEND REINVESTMENTFISCAL YEAR ENDING JUNE 30, 2013 Aceto Corporation S&P 500 Index Peer GroupJune 30, 2008 100 100 100 June 30, 2009 90 74 75 June 30, 2010 80 84 91 June 30, 2011 96 110 143 June 30, 2012 132 116 157 June 30, 2013 208 140 203 19 Item 6. Selected Financial Data(In thousands, except per-share amounts) Fiscal years ended June 30, 2013 2012 2011 2010 2009 Net sales $499,690 $444,388 $412,428 $346,631 $322,646 Operating income 34,416 25,366 16,550 9,438 11,893 Net income 22,328 16,981 8,968 6,581 8,629 At year end Working capital $128,393 $118,328 $115,429 $120,924 $124,709 Total assets 323,430 299,280 311,665 231,851 205,464 Long-term liabilities (including long-term debt) 38,883 57,636 67,658 17,578 16,959 Shareholders’ equity 194,640 168,003 160,821 139,644 141,568 Income per common share Basic income per common share from net income $0.83 $0.64 $0.35 $0.26 $0.35 Diluted income per common share from net income $0.81 $0.63 $0.34 $0.26 $0.35 Cash dividends $0.22 $0.20 $0.20 $0.20 $0.20 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 ourfinancial statements with a narrative discussion about our business. The MD&A is provided as a supplement to and should be read in conjunction with ourfinancial statements and the accompanying notes. We are reporting a $55,302 increase in net sales and a $9,050 increase in operating income for fiscal 2013 from fiscal 2012. Our net income increased to$22,328, or $0.81 per diluted share, an increase of $5,347 or 31.5% compared to fiscal year 2012. Our financial position as of June 30, 2013, remains strong, as we had cash, cash equivalents and short-term investments of $35,375, working capital of$128,393 and shareholders’ equity of $194,640. Our business is separated into three principal segments: Human Health, Pharmaceutical Ingredients and Performance Chemicals. Products that fall within the Human Health segment include finished dosage form generic drugs and nutraceutical products. In December 2010, we acquiredcertain assets of Rising Pharmaceuticals, Inc. (“Rising”), a New Jersey based company that markets and distributes generic prescription and over the counterpharmaceutical products to leading wholesalers, chain drug stores, distributors, mass market merchandisers and others under its own label, throughout theUnited States .This is a natural extension of our successful business model which provides customers and suppliers additional opportunities to penetrate theend user segment of the pharmaceutical market. With the Rising brand label, we have been able to expand our direct involvement in the pharmaceutical spacethrough greater global awareness of our capabilities in the marketing of pharmaceutical intermediates, active ingredients and the ultimate end-products,finished dosage form generics. Aceto supplies the raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compoundsand biochemicals used in pharmaceutical and nutritional preparations. After we identified a change in the attitudes of Europeans towards nutritional products,we globalized this business, creating an operating company headquartered in Germany, Aceto Health Ingredients GmbH. This globally structured businessthen became the model for all of our business segments, providing international reach and perspective for our customers. 20 The Pharmaceutical Ingredients segment has two product groups: Active Pharmaceutical Ingredients (APIs) and Pharmaceutical Intermediates. As the use of generic drugs has grown significantly over the years, we believe Aceto’s presence in this market also increased, both domestically andinternationally. We supply APIs to many of the major generic drug companies, who we believe view Aceto as a valued partner in their effort to develop andmarket generic drugs. The process of introducing a new API from pipeline to market spans a number of years and begins with Aceto partnering with a genericpharmaceutical manufacturer and jointly selecting an API, several years before the expiration of a composition of matter patent, for future generisizing. We thenidentify the appropriate supplier, and concurrently utilizing our global technical network, ensure they meet the highest standards of quality to comply withregulations. The generic pharmaceutical company will submit the Abbreviated New Drug Application (ANDA) for U.S. Food and Drug Administration (FDA)approval or European-equivalent approval. The introduction of the API to market occurs after all the development testing has been completed and the ANDA orEuropean-equivalent is approved and the patent expires or is deemed invalid. Aceto has a robust pipeline of APIs poised to reach commercial levels, both in theUnited States and Europe. Aceto has long been a supplier of pharmaceutical intermediates, the complex chemical compounds that are the building blocks used in producing APIs. Theseare the critical components of all drugs, whether they are already on the market or currently undergoing clinical trials. faced with significant economicpressures as well as ever-increasing regulatory barriers, the innovative drug companies look to Aceto as a source for high quality intermediates. Utilizing ourglobal sourcing, regulatory support and quality assurance network, Aceto works with the large, global pharmaceutical companies, sourcing lower cost,quality pharmaceutical intermediates that will meet the same high level standards adhered to by their current commercial products. The Performance Chemicals segment includes specialty chemicals and agricultural protection products. Aceto is a major supplier to many different industrial segments that require outstanding performance from chemical raw materials and additives. We providechemicals which make plastics, surface coatings, textiles, fuels and lubricants to perform to their designed capabilities. These additive specialty productsinclude antioxidants, photo initiators, catalysts, curatives, brighteners and adhesion promoters. Aceto is at the forefront as a supplier of chemicals to ecofriendly technologies. For example, we supply ultraviolet photo initiators which allow inks andcoatings to be cured by ultraviolet light instead of solvents, as well as curing agents and optical brighteners for powder (non-solvent) coatings. These growingtechnologies are critical in protecting and enhancing the world’s ecology. We provide specialty chemicals for the food, beverage and fragrance industries. Aceto’s raw materials are also used in sophisticated technology products, suchas high-end electronic parts (circuit boards and computer chips) and binders for specialized rocket fuels. Aceto is also a leader in the supply of diazos andcouplers to the paper and film industries. Specific end uses for these products include microfilm, blueprints and photo tooling of printed circuit boards. We also provide organic intermediates and colorants. The color producing industry manufactures a wide assortment of products and Aceto is the supplier ofchoice to these producers of “color.” From textiles and plastics to inks and paints, our specialty colorant intermediates allow manufacturers to develop anendless rainbow of colorful possibilities. Aceto’s agricultural protection products include herbicides, fungicides and insecticides which control weed growth as well as the spread of insects andmicroorganisms that can severely damage plant growth. The agricultural world is dependent on a large variety of deterrent products and we believe Aceto hasbecome a valued partner to the global generic agricultural industry by providing superior quality functional products. One of Aceto’s most widely usedagricultural protection products is a sprout inhibitor that extends the storage life of potatoes. We work with the large agrochemical distributors to providealternate sources for key products. Utilizing our global sourcing and regulatory capabilities, we identify and qualify manufacturers either producing theproduct or with knowledge of the chemistry necessary to produce the product and then file an application with the EPA for a product registration. Aceto has anongoing working relationship with manufacturers in China and India to determine which of the non-patented, or generic, agricultural protection products theyproduce can be effectively marketed in the Western world. We believe the Company’s main business strengths are sourcing, regulatory support, quality assurance and marketing and distribution. We distribute morethan 1,100 chemical compounds used principally as finished products or raw materials in the pharmaceutical, nutraceutical, agricultural, coatings andindustrial chemical industries. With business operations in nine countries, Aceto’s global reach is distinctive in the industry, enabling us to source and supplyquality products on a worldwide basis. Leveraging local professionals, we source more than two-thirds of our products from Asia, buying from approximately500 companies in China and 200 in India. 21 In this MD&A, we explain our general financial condition and results of operations, including, among other things, 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 endedJune 30, 2013. 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 preparedin accordance with U.S. generally accepted accounting principles. In preparing these financial statements, we were required to make estimates andassumptions that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We regularlyevaluate our estimates including those related to allowances for bad debts, partnered products, 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, includinghistorical experience, advice from outside subject-matter experts, and various assumptions that we believe to be reasonable under the circumstances, whichtogether form the basis for our making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actualresults may differ from these estimates. We believe the following critical accounting policies affected our more significant judgments and estimates used in preparing these consolidated financialstatements. 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 estimated returns of damaged goods from customers, which historically have been immaterial, and sales incentives offered tocustomers. Sales incentives include volume incentive rebates. We record volume incentive rebates based on the underlying revenue transactions thatresult in progress by the customer in earning the rebate. In addition, upon each sale, estimates of rebates, chargebacks, returns, governmentreimbursed rebates, and other adjustments are made. These estimates are recorded as reductions to gross revenues, with corresponding adjustments toeither liabilities or reserve for price concessions. We have the experience and access to relevant information that we believe are necessary to reasonablyestimate the amounts of such deductions from gross revenues. We regularly review the information related to these estimates and adjust our reservesaccordingly, if and when actual experience differs from previous estimates. Allowance for Doubtful Accounts We maintain allowances for doubtful accounts relating to estimated losses resulting from customers being unable to make required payments. Allowances fordoubtful accounts are based on historical experience and known factors regarding specific customers and the industries in which those customers operate. Ifthe financial condition of our customers were to deteriorate, resulting in their ability to make payments being impaired, additional allowances would berequired.22 Royalty Income We have royalty agreements on certain products where third party pharmaceutical and agricultural protection companies market such products. We earn andcollect royalty income based on percentages of net profits as defined in those agreements. Royalty income is included in net sales in our ConsolidatedStatements of Income. Partnered Products We have various products which we have entered into collaborative arrangements with certain pharmaceutical companies. As a result of these arrangements, weshare profits on sales of these products, which are included in cost of sales. The shared profits are settled on a quarterly basis. 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 forestimated excess and obsolete goods by an amount equal to the difference between the carrying cost of the inventory and the estimated market value based uponassumptions about future demand and market conditions. A significant sudden increase in demand for our products could result in a short-term increase inthe 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 requiredfor excess and obsolete inventory. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significantunanticipated 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 assetsprincipally consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized. In accordance with GAAP, we test goodwill and other indefinite-lived intangible assets for impairment on at least an annual basis. To determine the fair valueof 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 appropriate market participant assumptions that are reviewed and approved by various levels ofmanagement. 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 GAAP, long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Identifiable intangible assets principally consist of customer relationships, product rightsand related intangibles, EPA registrations and related data, patent license, and technology-based intangibles. Recoverability of assets to be held and used ismeasured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability ofassets 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, theimpairment 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 ofare reported at the lower of the carrying amount or fair value less costs to sell. 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 theliability 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 ordecreases, or other assumptions relevant to the development of the estimate were to change, we would recognize an additional expense or benefit in income in theperiod that the determination was made.23 Taxes We account for income taxes in accordance with GAAP. GAAP establishes financial accounting and reporting standards for the effects of income taxes thatresult from an enterprise’s activities during the current and preceding years. It requires an asset-and-liability approach to financial accounting and reporting ofincome taxes. As of June 30, 2013, we had current net deferred tax assets of $701 and non-current net deferred tax assets of $8,049. These net deferred tax assets have beenrecorded 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 atcurrently 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 could result ina reduction of net income at that time. Deferred taxes have not been provided for on the majority of undistributed earnings of foreign subsidiaries since substantially all of these earnings are expectedto be permanently reinvested in our foreign operations. A deferred tax liability is recognized when we expect that we will recover those undistributed earnings ina taxable manner, such as through receipt of dividends or sale of the investments. The Company intends to permanently reinvest any undistributed earningsand has no plan for further repatriation. Determination of the amount of the unrecognized U.S. income tax liability on undistributed earnings is not practicalbecause of the complexities of the hypothetical calculation. In addition, unrecognized foreign tax credit carryforwards would be available to reduce a portion ofsuch U.S. tax liability. Stock-based Compensation In accordance with GAAP, 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, the Company uses the Black-Scholes option-pricing model, including an estimate offorfeiture rates. Inherent in this model are assumptions related to expected stock-price volatility, risk-free interest rate, expected life and dividend yield. TheCompany uses an expected stock-price volatility assumption that is a combination of both historical volatility, calculated based on the daily closing prices ofits common stock over a period equal to the expected life of the option and implied volatility, utilizing market data of actively traded options on Aceto’scommon stock, which are obtained from public data sources. The Company believes that the historical volatility of the price of its common stock over theexpected life of the option is a reasonable indicator of the expected future volatility and that implied volatility takes into consideration market expectations ofhow future volatility might differ from historical volatility. Accordingly, the Company believes a combination of both historical and implied volatility providesthe best estimate of the future volatility of the market price of its common stock. The risk-free interest rate is based on U.S. Treasury issues with a term equalto the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates.24 Results of Operations Fiscal Year Ended June 30, 2013 Compared to Fiscal Year Ended June 30, 2012 Net Sales by SegmentYear ended June 30, Comparison 2013 2013 2012 Over/(Under) 2012 % of % of $ % Segment Net sales Total Net sales Total Change Change Human Health $129,667 25.9% $105,249 23.7% $24,418 23.2%Pharmaceutical Ingredients 184,852 37.0 162,998 36.7 21,854 13.4 Performance Chemicals 185,171 37.1 176,141 39.6 9,030 5.1 Net sales $499,690 100.0% $444,388 100.0% $55,302 12.4% Gross Profit by SegmentYear ended June 30, 2013 2012 Comparison 2013Over/(Under) 2012 Gross % of Gross % of $ % Segment Profit Sales Profit Sales Change Change Human Health $39,306 30.3% $29,932 28.4% $9,374 31.3%Pharmaceutical Ingredients 31,367 17.0 25,472 15.6 5,895 23.1 Performance Chemicals 27,598 14.9 26,628 15.1 970 3.6 Gross profit $98,271 19.7% $82,032 18.5% $16,239 19.8% 25 Net Sales Net sales increased $55,302, or 12.4%, to $499,690 for the year ended June 30, 2013, compared with $444,388 for the prior year. We reported salesincreases in all three of our business segments. Human Health Net sales for the Human Health segment increased by $24,418 for the year ended June 30, 2013, to $129,667, which represents a 23.2% increase over netsales of $105,249 for the prior year, largely driven by an increase in sales of Rising products of $27,284 due to new generic product launches at Rising. Thisincrease is partially offset by a reduction in domestic sales of $4,281 of nutritional products due to lower orders of existing products. Pharmaceutical Ingredients Net sales for the Pharmaceutical Ingredients segment increased by $21,854 for the year ended June 30, 2013, to $184,852, which represents a 13.4% increaseover net sales of $162,998 for the prior year. Overall, the domestic Pharmaceutical Ingredients group had an increase of $8,346, when compared to the priorperiod. The primary reason for the increase is due to the volume of large reorders for existing APIs sold by our United States and German operations, as wellas a launch of a new product, sold domestically. In addition, sales of intermediates, which represent key components used in the manufacture of certain drugproducts, have risen both in the United States and abroad by approximately $5,233 over the prior year. Performance Chemicals Net sales for the Performance Chemicals segment increased to $185,171 for the year ended June 30, 2013, an increase of $9,030 or 5.1%, from net sales of$176,141 for the prior year. Our Performance Chemicals segment experienced an increase in sales of our agricultural protection products, primarily fromsales of a wide-range insecticide used on various crops including cereals, citrus, cotton, grapes, ornamental grasses and vegetables and increased sales of abroad-spectrum herbicide. These increases in agricultural protection product sales are partially offset by a decline in domestic sales of agriculturalintermediates, sold by our Specialty Chemicals business. Gross Profit Gross profit increased $16,239 to $98,271 (19.7% of net sales) for the year ended June 30, 2013, as compared to $82,032 (18.5% of net sales) for the prioryear. Human Health Human Health’s gross profit of $39,306 for the year ended June 30, 2013 increased $9,374, or 31.3%, over the prior year. The gross margin increased to30.3% for the year ended June 30, 2013 compared to 28.4% for the prior year. The increase in gross profit and gross margin in the Human Health segmentprimarily relates to increased sales volume of Rising products. Pharmaceutical Ingredients Gross profit for the year ended June 30, 2013 for the Pharmaceutical Ingredients business increased by $5,895 or 23.1% over the prior year. The grossmargin of 17.0% was also higher than the prior year’s gross margin of 15.6%. The increase in both gross profit and gross margin is predominantly the resultof the increase in the sales volume of reorders of certain API’s, which typically yield a significantly higher gross margin. Performance Chemicals Gross profit for the Performance Chemicals segment increased to $27,598 for the year ended June 30, 2013, versus $26,628 for the prior year, an increase of$970, or 3.6%. The gross margin at 14.9% for the year ended June 30, 2013 was relatively flat compared to the prior year’s gross margin of 15.1%.26 Selling, General and Administrative Expenses Selling, general and administrative expenses (SG&A) increased $7,189, or 12.7%, to $63,855 for the year ended June 30, 2013 compared to $56,666 forthe prior year. As a percentage of sales, SG&A remained constant at 12.8% for the year ended June 30, 2013 versus the prior year. The primary reasons for theincrease in SG&A are $3,244 additional accrued contingent consideration related to the Rising acquisition as well as increased research and developmentexpenses related to certain Rising products and increased information technology maintenance and software related costs. We also experienced additionalaccrued performance award expense and increased fringe benefits and stock-based compensation expense due to increased financial performance. Duringfiscal 2012, the Company recorded approximately $884 of one-time costs associated with the separation of certain executive management employees, as well as$761 additional accrued contingent consideration related to the Rising acquisition. Operating Income Fiscal 2013 operating income was $34,416 compared to $25,366 in the prior year, an increase of $9,050 or 35.7%. This increase was due to the overallincrease in gross profit of $16,239 partially offset by an increase in SG&A of $7,189 from the prior year. Interest Expense Interest expense was $2,122 for the year ended June 30, 2013, a decrease of $505 from the prior year. The decrease is primarily due to lower average loanbalance outstanding during the fiscal year ended June 30, 2013 versus June 30, 2012, as well as a lower Adjusted LIBOR rate during the period. Provision for Income Taxes The effective tax rate for fiscal 2013 increased to 35.4% from 31.4% for fiscal 2012. The increase in the effective tax rate was due to the mix of profits fromhigher tax rate jurisdictions in fiscal 2013. In addition, in fiscal 2011 we repatriated earnings from certain foreign subsidiaries, in connection with ouracquisition of Rising. In fiscal 2012, our effective tax rate was favorably impacted by the reversal of approximately $529 of tax expense related to the final taxpayment associated with the fiscal 2011 repatriation. The Company intends to permanently reinvest its undistributed earnings and has no plan for furtherrepatriation. 27 Results of Operations Fiscal Year Ended June 30, 2012 Compared to Fiscal Year Ended June 30, 2011 Net Sales by SegmentYear ended June 30, Comparison 2012 2012 2011 Over/(Under) 2011 % of % of $ % Segment Net sales Total Net sales Total Change Change Human Health $105,249 23.7% $69,856 16.9% $35,393 50.7%Pharmaceutical Ingredients 162,998 36.7 149,340 36.2 13,658 9.1 Performance Chemicals 176,141 39.6 193,232 46.9 (17,091) (8.8) Net sales $444,388 100.0% $412,428 100.0% $31,960 7.7% Gross Profit by SegmentYear ended June 30, 2012 2011 Comparison 2012Over/(Under) 2011 Gross % of Gross % of $ % Segment Profit Sales Profit Sales Change Change Human Health $29,932 28.4% $15,534 22.2% $14,398 92.7%Pharmaceutical Ingredients 25,472 15.6 23,897 16.0 1,575 6.6 Performance Chemicals 26,628 15.1 26,407 13.7 221 0.8 Gross profit $82,032 18.5% $65,838 16.0% $16,194 24.6% 28 Net Sales Net sales increased $31,960, or 7.7%, to $444,388 for the year ended June 30, 2012, compared with $412,428 for the prior year. We reported sales increasesin our Human Health and Pharmaceutical Ingredients business segments and a decrease in our Performance Chemicals segment. Human Health Net sales for the Human Health segment increased by $35,393 for the year ended June 30, 2012, to $105,249, which represents a 50.7% increase over netsales of $69,856 for the prior year due to $27,703 increase in sales of Rising products, where there was only six months of sales in the prior year, due to theacquisition of this subsidiary in December 2010. This increase in Human Health sales also relates to an increase in sales of domestic nutritional supplementsof $4,869, due to new business development from existing customers and new projects from our pipeline. Pharmaceutical Ingredients Net sales for the Pharmaceutical Ingredients segment increased by $13,658 for the year ended June 30, 2012, to $162,998, which represents a 9.1% increaseover net sales of $149,340 for the prior year. Overall, the domestic Pharmaceutical Ingredient group had an increase of $7,695, when compared to the priorperiod. This increase in domestic Pharmaceutical Ingredients sales is primarily related to an increase in sales of APIs due to the reorders of existingproducts. In addition, the Pharmaceutical Ingredients segment saw an increase in sales from our international operations of $5,963 over the prior year,particularly increases in sales of APIs and pharmaceutical intermediates sold abroad, which represent key components used in the manufacture of certaindrug products. Performance Chemicals Net sales for the Performance Chemicals segment were $176,141 for the year ended June 30, 2012, compared to $193,232 for the prior year, representing a$17,091 or 8.8% decrease. Sales of our domestic specialty chemicals increased $9,160 over the prior year, due primarily to a rise in sales of agriculturalintermediates. Our specialty chemicals business consists of a variety of products, customers and consuming markets, most of which is affected by currenteconomic conditions. As previously mentioned, the index for consumer durables, which impacts the specialty chemicals business grew at an annual rate of4.7%. This increase is offset by a decline of $5,768 in sales of specialty chemicals sold abroad, as well as a decline in agricultural protection products salesof $20,482, primarily due to glyphosate. Our entry into this market had proven to be much more challenging than had been expected. As previouslyindicated, our future participation in the glyphosate market will likely only be on an opportunistic basis when our customers and Asian sourcing offers us anopportunity to be profitable and competitive in the U.S. domestic market. The decrease in agricultural protection products sales is offset in part by an increasein a wide-range insecticide that is used on various crops including cereals, citrus, cotton, grapes, ornamental grasses and vegetables. Gross Profit Gross profit increased $16,194 to $82,032 (18.5% of net sales) for the year ended June 30, 2012, as compared to $65,838 (16.0% of net sales) for the prioryear. Human Health Human Health’s gross profit of $29,932 for the year ended June 30, 2012 increased $14,398, or 92.7%, over the prior year. The gross margin increased to28.4% for the year ended June 30, 2012 compared to 22.2% for the prior year. The increase in gross profit and gross margin in the Human Health segmentprimarily relates to Rising, certain assets of which we acquired on December 31, 2010. In addition, increase in gross margin was related to a rise in grossmargin on our nutraceutical products due to product mix and increased prices in China on nutritional supplements which we were successful in passingthrough to our customers. Pharmaceutical Ingredients Gross profit for the year ended June 30, 2012 for the Pharmaceutical Ingredients business increased by $1,575 or 6.6% over the prior year. Gross margin of15.6% was relatively consistent to gross margin of 16.0% for the prior year. The increase in gross profit is due to increased sales volume of our domesticproducts. 29 Performance Chemicals Gross profit for the year ended June 30, 2012 increased by $221, or 0.8%, over the prior year. Gross margin was 15.1% for the year ended June 30, 2012compared to 13.7% for the prior year. The increase in gross margin is attributable to our previous discussion on glyphosate, of which gross margin in theprior year was lower than expected due to the difficult and crowded market conditions surrounding this commodity type product. We also incurred decreasedamortization expense related to product registrations and related data filed with the United States Environmental Protection Agency as well as payments tovarious task force groups. Selling, General and Administrative Expenses Selling, general and administrative expenses (SG&A) increased $7,378, or 15.0%, to $56,666 for the year ended June 30, 2012 compared to $49,288 forthe prior year. As a percentage of sales, SG&A increased to 12.8% for the year ended June 30, 2012 versus 12.0% for the prior year. On December 31, 2010,we acquired certain assets of Rising, thus we now have a full year of SG&A for this subsidiary, including amortization expense related to acquired intangibleassets, compared to six months in the prior year. In addition, we recorded during fiscal 2012 approximately $884 of one-time costs associated with theseparation of certain executive management employees, as well as $761 additional accrued contingent consideration related to the Rising acquisition. Weexperienced additional accrued performance award expense and increased fringe benefits and stock-based compensation expense due to increased financialperformance. These increases in SG&A are offset in part by $1,060 of transaction costs related to the Rising acquisition, which was recorded in fiscal 2011. Operating Income Fiscal 2012 operating income was $25,366 compared to $16,550 in the prior year, an increase of $8,816 or 53.3%. This increase was due to the overallincrease in gross profit of $16,194 partially offset by an increase in SG&A of $7,378 from the prior year. Interest Expense Interest expense was $2,627 for the year ended June 30, 2012, an increase of $1,057 from the prior year. The increase is primarily due to interest expense onthe bank loans that were incurred to partially finance the acquisition of certain assets of Rising. In the prior year, we had six months of interest expense relatedto this financing versus a full year in fiscal 2012. Provision for Income Taxes The effective tax rate for fiscal 2012 decreased to 31.4% from 47.1% for fiscal 2011. The decrease in the effective tax rate was primarily due to an approximate$2,600 tax charge recorded in fiscal 2011 related to the repatriation of earnings from certain foreign subsidiaries, in connection with our acquisition of Rising.The Company intends to permanently reinvest its undistributed earnings and has no plan for further repatriation. In fiscal 2012, our effective tax rate wasfavorably impacted by the reversal of approximately $529 of tax expense related to the final tax payment associated with the fiscal 2011 repatriation. Withoutthese adjustments, the effective tax rate would be 33.5% and 31.8%, respectively, in fiscal years 2012 and 2011. Liquidity and Capital Resources Cash Flows At June 30, 2013, we had $33,231 in cash, of which $18,689 was outside the United States, $2,144 in short-term investments, all of which is held outsidethe United States and $32,069 in long-term debt (including the current portion), all of which is in the United States. Working capital was $128,393 at June30, 2013 versus $118,328 at June 30, 2012. The $18,689 of cash held outside of the United States is fully accessible to meet any liquidity needs of thecountries in which Aceto operates. The majority of the cash located outside of the United States is held by our European operations and can be transferred intothe United States. Although these amounts are fully accessible, transferring these amounts into the United States or any other countries could have certain taxconsequences. A deferred tax liability will be recognized when we expect that we will recover undistributed earnings of our foreign subsidiaries in a taxablemanner, such as through receipt of dividends or sale of the investments. The Company intends to permanently reinvest these undistributed earnings and hasno plan for further repatriation. A portion of our cash is held in operating accounts that are with third party financial institutions. While we monitor daily thecash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financialinstitutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in ouroperating accounts. 30 Our cash position at June 30, 2013 increased $8,369 from the amount at June 30, 2012. Operating activities for the year ended June 30, 2013 provided cashof $23,731 as compared to cash provided of $13,269 for the comparable 2012 period. The $23,731 was comprised of $22,328 in net income, $7,946derived from adjustments for non-cash items and a net $6,543 decrease from changes in operating assets and liabilities. The non-cash items included $6,944in depreciation and amortization expense, $3,244 of accrued contingent consideration related to the Rising acquisition, $2,649 for the deferred income taxesprovision, $1,790 of earnings on an equity investment in a joint venture and $1,788 in non-cash stock compensation expense. Trade accounts receivableincreased $14,985 during the year ended June 30, 2013 due predominantly to an increase in sales in this fourth quarter as compared to the fourth quarter offiscal 2012, as well as an increase in days sales outstanding, from June 30, 2012. Other receivables increased $2,685 due to royalties related to nutritionalproducts as well as an increase in value added taxes receivables in our German subsidiaries. Accounts payable decreased by $3,228 due to timing ofpayments processed at the end of the quarter related to the sales volume increase. Accrued expenses and other liabilities increased $12,807 due primarily to anincrease in price concessions and partnered products liabilities related to increased sales from Rising, as well as an increase in accrued compensation related toincreased accrued performance awards, which are anticipated to be paid in the first quarter of fiscal 2014, and a rise in income tax payables related to theincreased profitability. Our cash position at June 30, 2012 decreased $3,802 from the amount at June 30, 2011. Operating activities for the year ended June 30, 2012 provided cashof $13,269 as compared to cash provided of $14,038 for the comparable 2011 period. The $13,269 was comprised of $16,981 in net income, $5,707derived from adjustments for non-cash items and a net $9,419 decrease from changes in operating assets and liabilities. The non-cash items included $6,942in depreciation and amortization expense, $1,598 of earnings on an equity investment in a joint venture and $1,168 in non-cash stock compensation expense.Trade accounts receivable decreased $5,711 during the year ended June 30, 2012 due to an improvement in days sales outstanding. Inventories increased byapproximately $9,926 due primarily to an increase in inventories on hand for Rising as this subsidiary had launched several new products and as such, hadbuilt up stock for fiscal 2013 sales. In addition, our Netherlands subsidiary as well as our German subsidiaries for both nutritional and pharmaceuticalingredients, had increased inventory on-hand due to anticipated first quarter sales. This rise in inventories was also due to purchases of domestic specialtychemicals, as a result of a ramp-up in orders for products that were shipped in fiscal 2013. Other receivables decreased $1,446 due to payments received onroyalties related to agricultural protection products as well as a decrease in value added taxes receivables in our German subsidiaries. Accrued expenses andother liabilities decreased $5,834 due to a decline in advance payments from customers. Our cash position at June 30, 2011 decreased $2,186 from theamount at June 30, 2010. Operating activities for the year ended June 30, 2011 provided cash of $14,038 as compared to a use of cash of $15,499 for thecomparable 2010 period. The $14,038 was comprised of $8,968 in net income, $4,089 derived from adjustments for non-cash items and a net $981increase from changes in operating assets and liabilities. Investing activities for the year ended June 30, 2013 used cash of $1,451, primarily related to the purchases of investments of $2,698 and payments forintangible assets and property and equipment of $2,527, offset by proceeds received upon sale of investments of $2,029 and distributions of $1,745 from ajoint venture. Investing activities for the year ended June 30, 2012 used cash of $42 primarily related to purchases of investments, property and equipmentand intangible assets offset by sales of investments and distributions from a joint venture. Investing activities for the year ended June 30, 2011 used cash of$69,200 primarily related to $64,211 payment for the net assets of Rising. In addition, $5,425 related to purchases of property and equipment and $2,053for intangible assets. Financing activities for the year ended June 30, 2013 used cash of $14,306 primarily from $23,696 of repayment of bank borrowings and $6,016 ofpayment of cash dividends. In addition, the Company paid $1,470 of deferred consideration to the sellers of Rising. This use of cash was offset by bankborrowings of $10,000 and $6,257 proceeds received from exercise of stock options. Financing activities for the year ended June 30, 2012 used cash of$15,295, primarily from $9,232 of bank loan repayments and the payment of dividends of $5,331. In addition, the Company paid $1,500 of deferredconsideration to the sellers of Rising. Financing activities for the year ended June 30, 2011 provided cash of $49,974 primarily from $50,500 of bank loansand $3,947 of proceeds from a mortgage, offset by the payment of dividends of $5,206. Credit Facilities We have available credit facilities with certain foreign financial institutions. At June 30, 2013, the Company had available lines of credit with foreign financialinstitutions totaling $8,665, all of which is available for borrowing by the respective foreign territories. We are not subject to any financial covenants underthese arrangements. On December 31, 2010, the Company entered into a Credit Agreement (the “Credit Agreement”) with two U.S. financial institutions. Aceto may borrow, repayand reborrow during the period ending December 31, 2015, up to but not exceeding at any one time outstanding $40,000 (the “Revolving Loans”). TheRevolving Loans may be (i) Adjusted LIBOR Loans (as defined in the Credit Agreement), (ii) Alternate Base Rate Loans (as defined in the Credit Agreement) or(iii) a combination thereof. As of June 30, 2013, the Company borrowed Revolving Loans aggregating $4,000, which loans are Adjusted LIBOR Loans at aninterest rate of 2.06% at June 30, 2013. The Credit Agreement also allows for the borrowing of up to $40,000 (the “Term Loan”). The Company borrowed aTerm Loan of $40,000 on December 31, 2010. The Term Loan interest may be payable as an (i) Adjusted LIBOR Loan, (ii) Alternate Base Rate Loan, or (iii) acombination thereof. As of June 30, 2013, the remaining amount outstanding under the original amortizing Term Loan is $24,500 and is payable as anAdjusted LIBOR Loan at an interest rate of 2.06% at June 30, 2013. 31 The Credit Agreement also provides that commercial letters of credit shall be issued to provide the primary payment mechanism in connection with thepurchase of any materials, goods or services by us in the ordinary course of business. At June 30, 2013, we had utilized $28,578 in bank loans and letters ofcredit, leaving $35,922 of this facility unused. The terms of these letters of credit are all less than one year. No material loss is anticipated due to non-performance by the counterparties to these agreements. The Credit Agreement provides for a security interest in all of our personal property. The Credit Agreement contains several financial covenants including,among other things, maintaining a minimum level of debt service. We are also subject to certain restrictive covenants, including, among other things,covenants governing liens, limitations on indebtedness, limitations on cash dividends, guarantees, sale of assets, sales of receivables, and loans andinvestments. We were in compliance with all covenants at June 30, 2013. Pursuant to the requirements of the Credit Agreement, we are required to deliver Hedging Agreements (as defined in the Credit Agreement) fixing the interest rateon not less than $20,000 of the Term Loan. Accordingly, in March 2011, we entered into an interest rate swap for a notional amount of $20,000, which hasbeen designated as a cash flow hedge. The expiration date of this interest rate swap is December 31, 2015. Working Capital Outlook Working capital was $128,393 at June 30, 2013, versus $118,328 at June 30, 2012. In March 2010, we purchased a building in Port Washington, NewYork, which is now the site of our global headquarters. We moved our corporate offices into this new building in April 2011. On June 30, 2011, we enteredinto a mortgage payable for $3,947 on this new corporate headquarters. This mortgage payable is secured by the land and building and is being amortizedover a period of 20 years. The mortgage payable bears interest at 5.92% and matures on June 30, 2021. We continually evaluate possible acquisitions of or investments in businesses that are complementary to our own, and such transactions may require the useof cash. In connection with our agricultural protection business, we plan to continue to acquire product registrations and related data filed with the UnitedStates Environmental Protection Agency as well as payments to various task force groups, which could approximate $4,561 over the next fiscal year. In accordance with the purchase agreement, as amended, related to the Rising acquisition, $7,970 of deferred consideration was to be paid by Aceto over afour year period with $1,500 paid in February 2012, $1,470 paid in December 2012, $1,500 to be paid not later than fifty-six days following the thirdanniversary of the closing date of the purchase and $3,500 to be paid not later than fifty-six days following the fourth anniversary of the closing date of thepurchase. The purchase agreement also provides for the payment of additional contingent consideration equal to one-half of the three year cumulative Risingearnings before interest, taxes, depreciation and amortization in excess of $32,100, up to a maximum of $6,000. As of June 30, 2013, the Company hasaccrued $5,346 related to this contingent consideration, with $1,500 anticipated to be paid in the fourth quarter of fiscal 2014. We believe that our cash, other liquid assets, operating cash flows, borrowing capacity and access to the equity capital markets, taken together, provideadequate resources to fund ongoing operating expenditures, the repayment of our bank loans and the anticipated continuation of cash dividends for the nexttwelve months. Off-Balance Sheet Arrangements and Commitments and Contingencies We have no material financial commitments other than those under bank borrowings, operating lease agreements, letters of credit and unconditional purchaseobligations. We have certain contractual cash obligations and other commercial commitments that will affect our short and long-term liquidity. At June 30,2013, we had no significant obligations for capital expenditures. 32 At June 30, 2013, contractual cash obligations and other commercial commitments were as follows: Payments Due and/orAmount of Commitment(Expiration per Period) Less than 1-3 3-5 After Total 1 year Years Years 5 years Long-term debt obligations (a) $32,069 $11,714 $17,394 $394 $2,567 Operating leases 4,440 1,465 1,774 1,024 177 Commercial letters of credit 78 78 - - - Standby letters of credit 1,013 1,013 - - - Unconditional purchase obligations 73,770 73,738 32 - - Total $111,370 $88,008 $19,200 $1,418 $2,744 (a) Long-term debt obligations are comprised of various loans. Interest is not included in the above table as the majority of the debt is variable in nature.As of June 30, 2013, interest on these variable loans was 2.06%. Other significant commitments and contingencies include the following: 1.A subsidiary of the Company markets certain agricultural protection products which are subject to the Federal Insecticide, Fungicide and RodenticideAct (FIFRA). FIFRA requires that test data be provided to the EPA to register, obtain and maintain approved labels for pesticide products. The EPArequires that follow-on registrants of these products compensate the initial registrant for the cost of producing the necessary test data on a basisprescribed in the FIFRA regulations. Follow-on registrants do not themselves generate or contract for the data. However, when FIFRA requirementsmandate that new test data be generated to enable all registrants to continue marketing a pesticide product, often both the initial and follow-onregistrants establish a task force to jointly undertake the testing effort. The Company is presently a member of several such task force groups, whichrequires payments for such memberships. In addition, in connection with our agricultural protection business, the Company plans to acquireproduct registrations and related data filed with the United States Environmental Protection Agency to support such registrations and other supportingdata for several products. The acquisition of these product registrations and related data filed with the United States Environmental Protection Agencyas well as payments to various task force groups could approximate $4,561 through fiscal 2014, of which $0 and $242 has been accrued as of June30, 2013 and June 30, 2012. 2.We, together with our subsidiaries, are subject to pending and threatened legal proceedings that have arisen in the normal course of business. We donot know how the final resolution of these matters will affect our results of operations in a particular reporting period. Our management is of theopinion, 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 inmanufacturing chemicals located in Carlstadt, New Jersey, which was closed in 1993 and is currently held for sale. Based on continued monitoringof the contamination at the site and the approved plan of remediation, the Company received an estimate from an environmental consultant statingthat the costs of remediation could be between $9,000 and $10,800. Remediation commenced in fiscal 2010, and as of June 30, 2013 and June 30,2012, a liability of $7,166 and $7,566, respectively, is included in the accompanying consolidated balance sheets for this matter. In accordancewith GAAP, management believes that the majority of costs incurred to remediate the site will be capitalized in preparing the property which iscurrently classified as held for sale. An appraisal of the fair value of the property by a third-party appraiser supports the assumption that theexpected fair value after the remediation is in excess of the amount required to be capitalized. However, these matters, if resolved in a manner differentfrom those assumed in current estimates, could have a material adverse effect on the Company’s financial condition, operating results and cashflows when resolved in a future reporting period. 33 In connection with the environmental remediation obligation for Arsynco, in July 2009, the Company entered into a settlement agreement with BASFCorporation (BASF), the former owners of the Arsynco property. In accordance with the settlement agreement, BASF paid for a portion of the priorremediation costs and going forward, will co-remediate the property with the Company. In accordance with the contract, BASF paid $550 related topast response costs and will pay a proportionate share of the future remediation costs. Accordingly, the Company had recorded a gain of $550 infiscal 2009. This $550 gain relates to the partial reimbursement of costs of approximately $1,200 that the Company had previously expensed. TheCompany also recorded an additional receivable from BASF, with an offset against property held for sale, representing its estimated portion of thefuture remediation costs. The balance of this receivable for future remediation costs as of June 30, 2013 and June 30, 2012 is $3,225 and $3,405,respectively, which is included in the accompanying consolidated balance sheets. 4.In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental Response, Compensation andLiability Act (CERCLA) for a site described as the Berry’s Creek Study Area. Arsynco is one of over 150 PRPs which have potential liability forthe required investigation and remediation of the site. The estimate of the potential liability is not quantifiable for a number of reasons, including thedifficulty in determining the extent of contamination and the length of time remediation may require. In addition, any estimate of liability must alsoconsider the number of other PRPs and their financial strength. Based on prior practice in similar situations, it is possible that the State may assert aclaim for natural resource damages with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claimsagainst Arsynco for natural resource damages in connection with Berry’s Creek; any such claim with respect to Berry’s Creek could also be assertedagainst the approximately 150 PRPs which the EPA has identified in connection with that site. Any claim for natural resource damages with respectto the Arsynco site itself may also be asserted against BASF, the former owners of the Arsynco property. In September 2012, Arsynco entered into anagreement with three of the other PRPs that had previously been impleaded into New Jersey Department of Environmental Protection, et al. v.Occidental Chemical Corporation, et al., Docket No. ESX-L-9868-05 (the “NJDEP Litigation”) and were considering impleading Arsynco into same.Arsynco entered into agreement to avoid impleader. Pursuant to agreement, Arsynco agreed to (1) a tolling period that would not be included whencomputing the running of any statute of limitations that might provide a defense to the NJDEP Litigation; (2) the waiver of certain issue preclusiondefenses in the NJDEP Litigation; and (3) arbitration of certain potential future liability allocation claims if the other parties to the agreement arebarred by a court of competent jurisdiction from proceeding against Arsynco. Since an amount of the liability cannot be reasonably estimated at thistime, 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 aparticular reporting period is not known. 5.In fiscal years 2011, 2009, 2008 and 2007, the Company received letters from the Pulvair Site Group, a group of potentially responsible parties (PRPGroup) who are working with the State of Tennessee (the State) to remediate a contaminated property in Tennessee called the Pulvair site. The PRPGroup has alleged that Aceto shipped hazardous substances to the site which were released into the environment. The State had begun administrativeproceedings against the members of the PRP Group and Aceto with respect to the cleanup of the Pulvair site and the PRP Group has begun toundertake cleanup. The PRP Group is seeking a settlement of approximately $1,700 from the Company for its share to remediate the sitecontamination. Although the Company acknowledges that it shipped materials to the site for formulation over twenty years ago, the Companybelieves that the evidence does not show that the hazardous materials sent by Aceto to the site have significantly contributed to the contamination ofthe environment and thus believes that, at most, it is a de minimus contributor to the site contamination. Accordingly, the Company believes that thesettlement offer is unreasonable. The impact of the resolution of this matter on the Company’s results of operations in a particular reporting period isnot known. However, management believes that the ultimate outcome of this matter will not have a material adverse effect on the Company’sfinancial condition or liquidity. 6.On October 29, 2012, a lawsuit was filed in the United Kingdom (in the High Court of Justice, Queens Bench Division, Commercial Court) byUnited Phosphorous Limited (“UPL”) against Aceto Agricultural Chemicals Corporation (“AACC”), a wholly-owned subsidiary of the Company. Inthe lawsuit, UPL alleges, among other things, that AACC breached a 1995 agreement regarding European sales of a potato sprout suppressionproduct, by selling the product in Europe. UPL claims damages of approximately £4,500 (approximately US $7,200) plus an unspecified amount ofadditional damages. While the impact of the resolution of the matter, including any legal and other associated costs, on the Company’s consolidatedresults of operations in a particular reporting period is not known at this time, after a detailed review and careful analysis of the allegations, AACCstrongly denies the allegations, believes that UPL’s claims are without merit and intends to vigorously defend the lawsuit. 34 7.In accordance with the purchase agreement, as amended, related to the Rising acquisition, $7,970 of deferred consideration was to be paid by Acetoover a four year period with $1,500 paid in February 2012, $1,470 paid in December 2012, $1,500 to be paid not later than fifty-six days followingthe third anniversary of the closing date of the purchase and $3,500 to be paid not later than fifty-six days following the fourth anniversary of theclosing date of the purchase. 8.In connection with the Rising acquisition, the purchase agreement provides for the payment of additional contingent consideration equal to one-half ofthe three year cumulative Rising earnings before interest, taxes, depreciation and amortization in excess of $32,100, up to a maximum of $6,000. Asof June 30, 2013, the Company has accrued $5,346 related to this contingent consideration. In the third and fourth quarters of fiscal 2013, theCompany recorded additional contingent consideration of $2,840 and $404, respectively, which is included in selling, general and administrativeexpenses in the accompanying Consolidated Statement of Income for the year ended June 30, 2013. Any necessary future adjustments to this amountwill be recorded as an income statement charge at that time. Impact of New Accounting Pronouncements In June 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2011-05, “Presentation ofComprehensive Income”, which eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive incomeeither in a single continuous statement or in two separate but consecutive statements. This pronouncement is effective for fiscal years, and interim periodswithin those years, beginning after December 15, 2011. In December 2011, the FASB issued ASU 2011-12 “Comprehensive Income (Topic 220): Deferral ofthe Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting StandardsUpdate No. 2011-05” . ASU 2011-12 deferred certain aspects of ASU 2011-05. The new guidance is effective for fiscal years, and interim periods withinthose years, beginning after December 15, 2011. The Company adopted this guidance in this first quarter of fiscal 2013. As this guidance only amends thepresentation of the components of comprehensive income, the adoption did not have an impact on the Company’s consolidated financial statements. In September 2011, the FASB issued ASU 2011-08, “Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment”, to allow entities to use aqualitative approach to test goodwill for impairment. ASU 2011-08 permits an entity to first perform a qualitative assessment to determine whether it is morelikely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, it is necessary to perform thecurrently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. ASU 2011-08 is effective for theCompany in fiscal 2013 and earlier adoption is permitted. The Company adopted ASU 2011-08 in fiscal 2013. This adoption did not have a material impacton the Company’s consolidated financial statements. In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment (the revised standard)” , which allows companiesthe option to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary. Under thisguidance, an entity is required to perform a quantitative impairment test if qualitative factors indicate that it is more likely than not that indefinite-livedintangible assets are impaired. The qualitative factors are consistent with the guidance established for goodwill impairment testing and include identifying andassessing events and circumstances that would most significantly impact, individually or in the aggregate, the carrying value of the indefinite-lived intangibleassets. The revised standard is effective for the Company in fiscal 2014 and early adoption is permitted. The adoption of ASU 2012 -02 is not expected tohave a material impact on the Company’s consolidated financial statements. In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements.” ASU 2012-04 contains certain technical corrections andconforming fair value amendments to the FASB Accounting Standards Codification. The amendments that do not have transition guidance were effective uponissuance. The amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption ofASU 2012-04 will not have a material impact on the Company’s consolidated financial statements. 35 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 marketprices, foreign currency exchange-rates and interest rates. Investment Market Price Risk We had short-term investments of $2,144 at June 30, 2013. Those short-term investments consisted of time deposits. Time deposits are short-term in natureand are accordingly valued at cost plus accrued interest, which approximates fair value. 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 thefunctional currencies applicable to each of our various entities. The instruments used for hedging are short-term foreign currency contracts (futures). Thechanges in market value of such contracts have a high correlation to price changes in the currency of the related hedged transactions. At June 30, 2013, we hadforeign currency contracts outstanding that had a notional amount of $59,316. The difference between the fair market value of the foreign currency contractsand the related commitments at inception and the fair market value of the contracts and the related commitments at June 30, 2013, was not material. 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 translatedinto U.S. dollars. These changes result in cumulative translation adjustments, which are included in accumulated other comprehensive income (loss). OnJune 30, 2013, we had translation exposure to various foreign currencies, with the most significant being the Euro. The potential loss as of June 30, 2013,resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates amounted to $7,017. 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 balancedmix of debt maturities along with both fixed-rate and variable-rate debt to manage our exposure to changes in interest rates. Our financial instrument holdingsat 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 allmaturities. 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 ourfinancial instruments would be immaterial. However, there can be no assurances that interest rates will not significantly affect our results of operations. Pursuant to the requirements of the Credit Agreement, the Company is required to deliver Hedging Agreements (as defined in the Credit Agreement) fixing theinterest rate on not less than $20,000 of the Term Loan. Accordingly, in March 2011, the Company entered into an interest rate swap for a notional amount of$20,000, which has been designated as a cash flow hedge. The expiration date of this interest rate swap is December 31, 2015. The unrealized loss to dateassociated with this derivative, which is recorded in accumulated other comprehensive income in the consolidated balance sheet at June 30, 2013, is$258. Aceto’s interest rate swap is classified within Level 2 as the fair value of this hedge is primarily based on observable interest rates. 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. Not applicable. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and ProceduresOur 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 “ExchangeAct”)) are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act isrecorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Ourdisclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the ExchangeAct is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisionsregarding required disclosure. Our chief executive officer and chief financial officer, with assistance from other members of our management, have reviewedthe effectiveness of our disclosure controls and procedures as of June 30, 2013 and, based on their evaluation, have concluded that the disclosure controls andprocedures were effective as of such date. 36 Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurredduring the three months ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financialreporting. 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 financialofficers, we assessed, as of June 30, 2013, the effectiveness of our internal control over financial reporting. This assessment was based on criteria establishedin the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based onour assessment using those criteria, management concluded that our internal control over financial reporting as of June 30, 2013, was effective. Our internal control over financial reporting as of June 30, 2013, has been audited by BDO USA, LLP, an independent registered public accounting firm, asstated 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 financialofficers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies andprocedures 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 ourmanagement and directors; and ●provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial 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 controlsystem are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all controlissues, if any, within a company have been detected. 37 Report of Independent Registered Public Accounting Firm The Board of Directors and ShareholdersAceto Corporation: We have audited Aceto Corporation’s internal control over financial reporting as of June 30, 2013, based on criteria established in Internal Control - IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Aceto Corporation’s management isresponsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financialreporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on theCompany’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 thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such otherprocedures 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 andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith 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, 2013, based on theCOSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheetsof Aceto Corporation as of June 30, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cashflows for each of the three years in the period ended June 30, 2013 and our report dated August 29, 2013, expressed an unqualified opinion thereon. /s/ BDO USA, LLP Melville, New YorkAugust 29, 2013 38 Item 9B. Other Information None. PART III Item 10. Directors, Executive Officers and Corporate Governance Incorporated herein by reference to our definitive proxy statement to be filed with the Securities and Exchange Commission with respect to our annual meetingof shareholders. 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 meetingof shareholders. 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 meetingof shareholders. 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 meetingof shareholders. 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 meetingof shareholders. PART IV Item 15. Exhibits and Financial Statement Schedules The following documents are filed as part of this Report: (a)The financial statements listed in the Index to Consolidated Financial Statements are filed as part of this Annual Report on Form 10-K. All financialstatement schedules have been included in the Consolidated Financial Statements or Notes thereto. (b)Exhibits ExhibitNumber Description 2.1 Asset Purchase Agreement by and among Aceto Corporation, Sun Acquisition Corp., Rising Pharmaceuticals, Inc., Ronald Gold, andDavid B. Rosen, dated as of December 15, 2010 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K datedDecember 20, 2010). 3.1 Restated Certificate of Incorporation, dated November 18, 1976 (incorporated by reference to Exhibit 3.1 to the Company’s quarterly reporton Form 10-Q for the quarter ended December 31, 2009). 39 3.2 Certificate of Amendment of Certificate of Incorporation, dated February 18, 1983 (incorporated by reference to Exhibit 3.2 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.3 Certificate of Amendment of Certificate of Incorporation, dated February 7, 1984 (incorporated by reference to Exhibit 3.3 to the Company’squarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.4 Certificate of Amendment of Certificate of Incorporation, dated December 17, 1984 (incorporated by reference to Exhibit 3.4 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.5 Certificate of Amendment of Certificate of Incorporation, dated November 21, 1985 (incorporated by reference to Exhibit 3.5 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.6 Certificate of Amendment of Certificate of Incorporation, dated December 11, 1985 (incorporated by reference to Exhibit 3.6 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.7 Certificate of Amendment of Certificate of Incorporation, dated December 11, 1986 (incorporated by reference to Exhibit 3.7 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.8 Certificate of Amendment of Certificate of Incorporation, dated December 10, 1987 (incorporated by reference to Exhibit 3.8 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.9 Certificate of Amendment of Certificate of Incorporation, dated February 4, 1988 (incorporated by reference to Exhibit 3.9 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.10 Certificate of Amendment of Certificate of Incorporation, dated March 1, 1988 (incorporated by reference to Exhibit 3.10 to the Company’squarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.11 Certificate of Amendment of Certificate of Incorporation, dated January 5, 1989 (incorporated by reference to Exhibit 3.11 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.12 Certificate of Amendment of Certificate of Incorporation, dated February 15, 1990 (incorporated by reference to Exhibit 3.12 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.13 Certificate of Change of Certificate of Incorporation, dated December 18, 1990 (incorporated by reference to Exhibit 3.13 to the Company’squarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.14 Certificate of Amendment of Certificate of Incorporation, dated January 4, 1991 (incorporated by reference to Exhibit 3.14 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.15 Certificate of Amendment of Certificate of Incorporation, dated December 15, 1998 (incorporated by reference to Exhibit 3.15 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.16 Certificate of Amendment of Certificate of Incorporation, dated December 3, 2003 (incorporated by reference to Exhibit 3.16 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 40 3.17 Aceto Corporation By-Laws, adopted December 1, 2011 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K datedDecember 5, 2011). 10.1 Aceto Corporation 401(k) Retirement Plan, as amended and restated as of July 1, 2002 (incorporated by reference to Exhibit 10.1 to theCompany’s annual report on Form 10-K for the fiscal year ended June 30, 2004 (File Number: 000-04217, Film Number: 041025874)). 10.2 Supplemental Executive Retirement Plan, as amended and restated effective June 30, 2004 and frozen as of December 31, 2004 (incorporatedby reference to Exhibit 10.2 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2004 (File Number: 000-04217,Film Number: 041025874)). 10.3 Aceto Corporation Stock Option Plan (as Amended and Restated effective as of September 19, 1990) (incorporated by reference to Exhibit10.3 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010). 10.4 1998 Omnibus Equity Award Plan (incorporated by reference to Exhibit 10(v) (c) to the Company’s annual report on Form 10-K for thefiscal year ended June 30, 1999 (File Number: 000-04217, Film Number: 99718824)). 10.5 2002 Stock Option Plan (incorporated by reference to Exhibit 4(i) to Registration Statement No. 333-110653 on Form S-8). 10.6 Supplemental Executive Deferred Compensation Plan, effective March 14, 2005 (incorporated by reference to Exhibit 10.1 to theCompany’s current report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2005 (File Number: 000-04217,Film Number: 05688328)). 10.7 2007 Long-Term Performance Incentive Plan (incorporated by reference to Exhibit 4(i) to Registration Statement No. 333-149586 on Form S-8). 10.8 Supplemental Executive Deferred Compensation Plan, amended and restated effective December 8, 2008 (incorporated by reference toExhibit 10.22 to the Company’s annual report on Form 10-K for the year ended June 30, 2009). 10.9 Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc., dated April 28, 2000 (incorporated by reference to Exhibit10(vi)(a) to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2000 (File Number: 000-04217, Film Number:730518)). 10.10 Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc., dated April 28, 2000 (incorporated by reference to Exhibit10(vi)(b) to the Company’s annual report on Form 10-K for the year ended June 30, 2000 (File Number: 000-04217, Film Number:730518)). 10.11 Purchase and Sale Agreement among Schweizerhall Holding AG, Chemische Fabrik Schweizerhall, Schweizerhall, Inc., Aceto Corporationand Aceto Holding B.V., I.O., dated as of January 28, 2001 (incorporated by reference to Exhibit 2.1 to the Company’s current report onForm 8-K filed with the Securities and Exchange Commission on April 4, 2001 (File Number: 000-04217, Film Number: 1595350)). 10.12 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 endedDecember 31, 2004 (File Number: 000-04217, Film Number: 05588472)). 41 10.13 Guarantee by Aceto Corporation and subsidiaries in favor of Deutsche Bank, AG, dated March 22, 2001 (incorporated by reference toExhibit 10.13 to the Company’s annual report on Form 10-K for the year ended June 30, 2001 (File Number: 000-04217, Film Number:1748270)). 10.14 Amended and Restated Credit Agreement among Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation,Aceto Pharma Corp., Aceto Realty LLC, Acci Realty Corp., Arsynco Inc. and JPMorgan Chase Bank, N.A., dated as of April 23, 2010(incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commissionon April 28, 2010). 10.15 Amended and Restated Revolving Credit Note made payable by Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDCProducts Corporation, Aceto Pharma Corp., Aceto Realty LLC, Acci Realty Corp. and Arsynco Inc. to the order of JPMorgan Chase Bank,N.A., dated April 23, 2010 (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the Securitiesand Exchange Commission on April 28, 2010). 10.16 Reaffirmation Agreement by Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, Aceto PharmaCorp., Aceto Realty LLC, Acci Realty Corp. and Arsynco Inc., dated as of April 23, 2010 (incorporated by reference to Exhibit 10.3 to theCompany’s current report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2010). 10.17 Severance Agreement between Leonard S. Schwartz and Aceto Corporation, dated as of December 9, 2009 (incorporated by reference toExhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 10.18 Aceto Corporation, et al $40,000,000 Senior Secured Revolving Credit Facility, $40,000,000 Senior Secured Term Loan FacilityCommitment Letter (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated December 20, 2010). 10.19 Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDCProducts Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., Aceto Realty LLC, Sun Acquisition Corp. and JPMorganChase Bank, N.A. as Administrative Agent and the Lenders (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-Kdated January 5, 2011). 10.20 First Amendment to Asset Purchase Agreement, dated as of December 31, 2010, by and among Aceto Corporation, Sun Acquisition Corp.,Rising Pharmaceuticals, Inc., Ronald Gold and David B. Rosen (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K dated January 5, 2011). 10.21 Employment Agreement, dated as of October 12, 2010, between Aceto Corporation and Albert L. Eilender (incorporated by reference toExhibit 10.1 to our Current Report on Form 8-K, dated October 18, 2010). 10.22 Employment Agreement, dated as of December 31, 2010, by and between Ronald Gold and Sun Acquisition Corp. (incorporated byreference to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2010). 10.23 Employment Agreement, dated as of December 31, 2010, by and between David B. Rosen and Sun Acquisition Corp. (incorporated byreference to Exhibit 10.6 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2010). 10.24 Aceto Corporation 2010 Equity Participation Plan (incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule14A filed on October 13, 2010). 42 10.25 Separation Agreement by and between Aceto Corporation and Vincent G. Miata (incorporated by reference to Exhibit 10.1 to our CurrentReport on Form 8-K dated November 17, 2011). 10.26 Employment Agreement, dated as of the 29th day of February, 2012, by and between Aceto Corporation and Salvatore Guccione(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated March 1, 2012). 10.27 Aceto Corporation Severance Policy (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K dated January 17, 2012). 10.28 Amendment, dated as of February 18, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation,Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., AcetoRealty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporated by referenceto Exhibit 10.37 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.29 Amendment No. 2, dated as of March 15, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., ArsyncoInc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporatedby reference to Exhibit 10.38 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.30 Amendment No. 3, dated as of May 3, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation,Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., AcetoRealty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporated by referenceto Exhibit 10.39 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.31 Amendment No. 4, dated as of June 29, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation,Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., AcetoRealty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporated by referenceto Exhibit 10.40 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.32 Amendment No. 5, dated as of June 28, 2012 to the Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation,Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., AcetoRealty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporated by referenceto Exhibit 10.41 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.33 Change in Control Agreement by and between Aceto Corporation and Albert L. Eilender (incorporated by reference to Exhibit 10.1 to ourCurrent Report on Form 8-K dated July 3, 2012). 10.34 Change in Control Agreement by and between Aceto Corporation and Salvatore Guccione (incorporated by reference to Exhibit 10.2 to ourCurrent Report on Form 8-K dated July 3, 2012). 10.35 Change in Control Agreement by and between Aceto Corporation and Douglas Roth (incorporated by reference to Exhibit 10.3 to our CurrentReport on Form 8-K dated July 3, 2012). 10.36 Change in Control Agreement by and between Aceto Corporation and Frank DeBenedittis (incorporated by reference to Exhibit 10.4 to ourCurrent Report on Form 8-K dated July 3, 2012). 43 10.37 Consulting Agreement by and between Aceto Corporation and Michael Feinman (incorporated by reference to Exhibit 10.5 to our CurrentReport on Form 8-K dated July 3, 2012). 10.38 Change in Control Agreement by and between Aceto Corporation and Charles Alaimo, dated as of July 2, 2012 (incorporated by reference toExhibit 10.47 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.39 Change in Control Agreement by and between Aceto Corporation and Raymond Bartone, dated as of July 2, 2012 (incorporated by referenceto Exhibit 10.48 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.40 Change in Control Agreement by and between Aceto Corporation and Steven Rogers dated as of July 2, 2012 (incorporated by reference toExhibit 10.49 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.41 Change in Control Agreement by and between Aceto Corporation and Nicholas Shackley, dated as of July 2, 2012 (incorporated byreference to Exhibit 10.50 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.42 Change in Control Agreement by and between Aceto Corporation and Roger G. Weaving, Jr., dated as of July 2, 2012 (incorporated byreference to Exhibit 10.51 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.43 Aceto Corporation Executive Performance Award Plan (incorporated by reference to Appendix A to our Definitive Proxy Statement onSchedule 14A filed on October 18, 2012). 10.44 Amended and Restated Aceto Corporation 2010 Equity Participation Plan (incorporated by reference to Appendix B to our Definitive ProxyStatement on Schedule 14A filed on October 18, 2012). 10.45 Second Amendment, dated as of December 21, 2012, to Asset Purchase Agreement, dated as of December 15, 2010, by and among AcetoCorporation, Rising Pharmaceuticals, Inc., Pearl Ventures Inc., Ronald Gold and David B. Rosen (incorporated by reference to Exhibit 10.3to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2012). 10.46 Amendment No. 6, dated as of December 31, 2012 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, Aceto Pharma Corp., ACCI Realty Corp., ArsyncoInc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent for Lenders (incorporated byreference to Exhibit 10.4 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2012). 10.47 Seventh Amendment, dated as of March 14, 2013 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, Aceto Pharma Corp., ACCI Realty Corp., ArsyncoInc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent for Lenders (incorporated byreference to Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2013). 10.48 Enhanced Severance Protection Letter Agreement, dated April 3, 2013 between Aceto Corporation and Douglas Roth (incorporated byreference to Exhibit 10.1 to our Current Report on Form 8-K dated April 5, 2013). 21* Subsidiaries of the Company. 23* Consent of BDO USA, LLP. 44 31.1* Certifications of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certifications of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002. 32.2* Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-OxleyAct of 2002.101.INS** XBRL Instance Document 101.SCH** XBRL Taxonomy Extension Schema Document 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB** XBRL Taxonomy Extension Label Linkbase Document 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document *Filed herewith ** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes ofSections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. 45 ACETO CORPORATION AND SUBSIDIARIESINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting FirmConsolidated financial statements:Consolidated balance sheets as of June 30, 2013 and 2012Consolidated statements of income for the years ended June 30, 2013, 2012 and 2011Consolidated statements of comprehensive income for the years ended June 30, 2013, 2012 and 2011Consolidated statements of cash flows for the years ended June 30, 2013, 2012 and 2011Consolidated statements of shareholders’ equity for the years ended June 30, 2013, 2012 and 2011Notes to consolidated financial statementsSchedules: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 notesthereto.46 Report of Independent Registered Public Accounting Firm The Board of Directors and ShareholdersAceto CorporationPort Washington, NYWe have audited the accompanying consolidated balance sheets of Aceto Corporation and subsidiaries as of June 30, 2013 and 2012 and the relatedconsolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended June 30,2013. In connection with our audits of the consolidated financial statements, we have also audited the schedule as listed in the accompanying index. Theseconsolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated 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 thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule, assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. Webelieve 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 andsubsidiaries at June 30, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2013, inconformity 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, presentfairly, 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), Aceto Corporation and subsidiaries’internal control over financial reporting as of June 30, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) and our report dated August 29, 2013 expressed an unqualified opinion thereon. /s/ BDO USA, LLPMelville, New YorkAugust 29, 2013  ACETO CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF JUNE 30, 2013 AND 2012(in thousands, except per-share amounts) 2013 2012 ASSETS Current assets: Cash and cash equivalents $33,231 $24,862 Investments 2,144 1,518 Trade receivables: less allowance for doubtful accounts (2013, $1,294; 2012; $887) 90,108 74,744 Other receivables 5,283 2,979 Inventory 83,849 84,687 Prepaid expenses and other current assets 2,984 2,231 Deferred income tax asset, net 701 948 Total current assets 218,300 191,969 Property and equipment, net 11,410 11,705 Property held for sale 4,058 3,752 Goodwill 33,526 33,495 Intangible assets, net 40,831 45,251 Deferred income tax asset, net 8,055 4,719 Other assets 7,250 8,389 TOTAL ASSETS $323,430 $299,280 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt $11,714 $6,713 Accounts payable 39,222 42,007 Accrued expenses 38,971 24,921 Total current liabilities 89,907 73,641 Long-term debt 20,355 39,052 Long-term liabilities 13,413 12,943 Environmental remediation liability 5,109 5,633 Deferred income tax liability 6 8 Total liabilities 128,790 131,277 Commitments and contingencies (Note 16) Shareholders’ equity: Common stock, $.01 par value, 40,000 shares authorized; 27,831 and 26,937 shares issued and outstanding at June 30, 2013 and 2012, respectively 278 269 Capital in excess of par value 72,845 64,071 Retained earnings 118,615 102,344 Accumulated other comprehensive income 2,902 1,319 Total shareholders’ equity 194,640 168,003 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $323,430 $299,280 See accompanying notes to consolidated financial statements. 48 ACETO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) 2013 2012 2011 Net sales $499,690 $444,388 $412,428 Cost of sales 401,419 362,356 346,590 Gross profit 98,271 82,032 65,838 Selling, general and administrative expenses 63,855 56,666 49,288 Operating income 34,416 25,366 16,550 Other income (expense): Interest expense (2,122) (2,627) (1,570) Interest and other income, net 2,256 2,001 1,982 134 (626) 412 Income before income taxes 34,550 24,740 16,962 Provision for income taxes 12,222 7,759 7,994 Net income $22,328 $16,981 $8,968 Basic income per common share $0.83 $0.64 $0.35 Diluted income per common share $0.81 $0.63 $0.34 Weighted average shares outstanding: Basic 27,050 26,587 25,906 Diluted 27,450 26,812 26,098 See accompanying notes to consolidated financial statements. 49 ACETO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands) 2013 2012 2011 Net income $22,328 $16,981 $8,968 Other comprehensive income: Foreign currency translation adjustments 1,447 (6,164) 7,120 Change in fair value of interest rate swaps 169 (94) (333) Defined benefit plans (33) (166) 3 Comprehensive income $23,911 $10,557 $15,758 See accompanying notes to consolidated financial statements. 50 ACETO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands) 2013 2012 2011 Operating activities: Net income $22,328 $16,981 $8,968 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,944 6,942 5,502 Provision for doubtful accounts 409 211 172 Non-cash stock compensation 1,788 1,168 854 Unrealized gain on trading securities - - (140)Deferred income taxes (2,649) (1,777) (675)Earnings on equity investment in joint venture (1,790) (1,598) (1,624)Contingent consideration 3,244 761 - Changes in assets and liabilities: Trade receivables (14,985) 5,711 1,915 Other receivables (2,685) 1,446 7,659 Inventory 1,632 (9,926) 2,224 Prepaid expenses and other current assets (694) (594) 500 Other assets 610 756 (325)Accounts payable (3,228) (978) 2,473 Accrued expenses and other liabilities 12,807 (5,834) (13,465)Net cash provided by operating activities 23,731 13,269 14,038 Investing activities: Payment for net assets of business acquired - - (64,211)Purchases of investments (2,698) (1,155) (468)Sales of investments 2,029 475 - Distributions from joint venture 1,745 1,712 1,807 Payments received on notes receivable - 350 750 Proceeds from sale of intangible assets - 400 400 Payments for intangible assets (1,505) (726) (2,053)Purchases of property and equipment, net (1,022) (1,098) (5,425)Net cash used in investing activities (1,451) (42) (69,200) Financing activities: Proceeds from exercise of stock options 6,257 620 616 Excess income tax benefit on stock option exercises and restricted stock 619 148 117 Payment of cash dividends (6,016) (5,331) (5,206)Payment of deferred consideration (1,470) (1,500) - Proceeds from mortgage - - 3,947 Borrowings of bank loans 10,000 - 65,050 Repayment of bank loans (23,696) (9,232) (14,550)Net cash (used in) provided by financing activities (14,306) (15,295) 49,974 Effect of foreign exchange rate changes on cash 395 (1,734) 3,002 Net increase (decrease) in cash and cash equivalents 8,369 (3,802) (2,186)Cash and cash equivalents at beginning of period 24,862 28,664 30,850 Cash and cash equivalents at end of period $33,231 $24,862 $28,664 See accompanying notes to consolidated financial statements. 51 ACETO CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Accumulated Capital in Other Common Stock Excess of Retained Treasury Stock Comprehensive Shares Amount Par Value Earnings Shares Amount Income Total Balance at June 30, 2010 25,644 $256 $53,686 $86,958 (229) ($2,209) $953 $139,644 Net income - - - 8,968 - - - 8,968 Foreign currency translationadjustments - - - - - - 7,120 7,120 Defined benefit plans, net oftax of $2 - - - - - - 3 3 Change in fair value ofinterest rate swaps - - - - - - (333) (333)Stock issued pursuant toemployee stock incentiveplans - - (33) - 11 99 - 66 Issuance of restricted stock,including dividends andnet of forfeitures - - (919) - 96 931 - 12 Dividends declared ($0.20per share) - - (5,213) - - - (5,213)Stock issued in connectionwith the Rising acquisition 1,000 10 8,990 - - - - 9,000 Share-based compensation - - 821 - - - - 821 Exercise of stock options - - (333) - 98 949 - 616 Tax benefit from employeestock incentive plans - - 117 - - - - 117 Balance at June 30, 2011 26,644 $266 $62,329 $90,713 (24) ($230) $7,743 $160,821 Net income - - - 16,981 - - - 16,981 Foreign currency translationadjustment - - - - - - (6,164) (6,164)Defined benefit plans, net oftax of $78 - - - - - - (166) (166)Change in fair value ofinterest rate swaps - - - - - - (94) (94)Stock issued pursuant toemployee stock incentiveplans 8 - 49 - - - - 49 Issuance of restricted stock,including dividends andnet of forfeitures 118 1 (220) - 23 220 - 1 Dividends declared ($0.20per share) - - - (5,350) - - - (5,350)Share-based compensation - - 1,157 - - - - 1,157 Exercise of stock options 167 2 608 - 1 10 - 620 Tax benefit from employeestock incentive plans - - 148 - - - - 148 Balance at June 30, 2012 26,937 $269 $64,071 $102,344 - - $1,319 $168,003 Net income - - - 22,328 - - - 22,328 Foreign currency translationadjustment - - - - - - 1,447 1,447 Defined benefit plans, net oftax of $16 - - - - - - (33) (33)Change in fair value ofinterest rate swaps - - - - - - 169 169 Stock issued pursuant toemployee stock incentiveplans 9 - 82 - - - - 82 Issuance of restricted stock,including dividends andnet of forfeitures 145 2 (2) - - - - - Dividends declared ($0.22per share) - - - (6,057) - - - (6,057)Share-based compensation - - 1,777 - - - - 1,777 Exercise of stock options 740 7 6,298 - - - - 6,305 Tax benefit from employeestock incentive plans - - 619 - - - - 619 Balance at June 30, 2013 27,831 $278 $72,845 $118,615 - - $2,902 $194,640 See accompanying notes to consolidated financial statements. 52 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (1) Description of Business Aceto Corporation and subsidiaries (“Aceto” or the “Company”) is primarily engaged in the sourcing, regulatory support, quality assurance, marketing, salesand distribution of pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protectionproducts and specialty chemicals used principally as finished products or raw materials in the pharmaceutical, nutraceutical, agricultural, coatings andindustrial chemical consuming industries. (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. All significant inter-companybalances and transactions are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in those financial statements and the disclosure of contingentassets and liabilities at the date of the financial statements. These judgments can be subjective and complex, and consequently actual results could differ fromthose 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-basedcompensation. 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.Included in cash equivalents as of June 30, 2013 and June 30, 2012 is $115 and $91, respectively, of restricted cash. 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-maturitysecurities are recorded at cost and are adjusted for the amortization or accretion of premiums or discounts over the life of the related security. Unrealizedholding gains and losses on available-for-sale securities are excluded from earnings and are reported as a separate component of accumulated othercomprehensive 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 itsinventories for estimated excess and obsolete goods by an amount equal to the difference between the carrying cost of the inventory and the estimated marketvalue 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 theamount 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 thecontingency increases or decreases, or other assumptions relevant to the development of the estimate were to change, the Company would recognize anadditional expense or benefit in the consolidated statements of income in the period such determination was made. 53 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Pension Benefits In connection with certain historical acquisitions in Germany, the Company assumed defined benefit pension plans covering certain employees who meetcertain eligibility requirements. The net pension benefit obligations recorded and the related periodic costs are based on, among other things, assumptions ofthe discount rate, estimated return on plan assets, salary increases and the mortality of participants. The obligation for these claims and the related periodiccosts are measured using actuarial techniques and assumptions. Actuarial gains and losses are deferred and amortized over future periods. The Company’splans 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, 2013 and 2012 are as follows: 2013 2012 Cumulative foreign currency translation adjustments $3,257 $1,810 Fair value of interest rate swaps (258) (427)Defined benefit plans, net of tax (97) (64)Total $ 2,902 $1,319 The foreign currency translation adjustments for the year ended June 30, 2013 primarily relates to the fluctuation of the conversion rate of the Euro. Thecurrency translation adjustments are not adjusted for income taxes as they relate to indefinite investments in non-US subsidiaries. Common Stock On September 8, 2011, the Board of Directors of the Company authorized the continuation of the Company’s stock repurchase program, expiring in May2014. Under the stock repurchase program, the Company is authorized to purchase up to an additional 4,051 shares of common stock in open market orprivate transactions, at prices not to exceed the market value of the common stock at the time of such purchase. On August 28, 2013, the Company’s board of directors declared a regular quarterly dividend of $0.06 per share to be distributed on September 27, 2013 toshareholders of record as of September 16, 2013. Stock Options GAAP 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 ofthe award. GAAP also requires that excess tax benefits related to stock option exercises be reflected as financing cash inflows. 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 offorfeiture rates. Inherent in this model are assumptions related to expected stock-price volatility, risk-free interest rate, expected life and dividend yield. TheCompany uses an expected stock-price volatility assumption that is a combination of both historical volatility, calculated based on the daily closing prices ofits common stock over a period equal to the expected life of the option and implied volatility, utilizing market data of actively traded options on Aceto’scommon stock, which are obtained from public data sources. The Company believes that the historical volatility of the price of its common stock over theexpected life of the option is a reasonable indicator of the expected future volatility and that implied volatility takes into consideration market expectations ofhow future volatility might differ from historical volatility. Accordingly, the Company believes a combination of both historical and implied volatility providesthe best estimate of the future volatility of the market price of its common stock. The risk-free interest rate is based on U.S. Treasury issues with a term equalto the expected life of the option. The Company uses historical data to estimate expected dividend yield, expected life and forfeiture rates. 54 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(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 noacceptance or other post-shipment obligations and does not offer product warranties or services to its customers. Sales are recorded net of estimated returns of damaged goods from customers, which historically have been immaterial, and sales incentives offered tocustomers. Sales incentives include volume incentive rebates. The Company records volume incentive rebates based on the underlying revenuetransactions that result in progress by the customer in earning the rebate. In addition, upon each sale, estimates of rebates, chargebacks, returns,government reimbursed rebates, and other adjustments are made. These estimates are recorded as reductions to gross revenues, with correspondingadjustments to either liabilities or reserve for price concessions. Management has the experience and access to relevant information that they believe arenecessary to reasonably estimate the amounts of such deductions from gross revenues. The Company regularly reviews the information related to theseestimates and adjust its reserves accordingly, if and when actual experience differs from previous estimates. 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 costsincurred 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 commonshare includes the dilutive effect of potential common shares outstanding. The following table sets forth the reconciliation of weighted average sharesoutstanding and diluted weighted average shares outstanding for the fiscal years ended June 30, 2013, 2012 and 2011: 2013 2012 2011 Weighted average shares outstanding 27,050 26,587 25,906 Dilutive effect of stock options and restricted stockawards and units 400 225 192 Diluted weighted average shares outstanding 27,450 26,812 26,098 There were 424, 1,340 and 1,475 common equivalent shares outstanding as of June 30, 2013, 2012 and 2011, respectively that were not included in thecalculation of diluted income per common share because their effect would have been anti-dilutive. 55 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assetsand 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 orsettled. 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. 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. The Companyallocates depreciation and amortization to cost of sales. Expenditures for improvements that extend the useful life of an asset are capitalized. Ordinary repairsand maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed fromthe accounts and any related gains or losses are included in income. The components of property and equipment were as follows: June 30, 2013 June 30, 2012 Estimated usefullife (years) Machinery and equipment $865 $933 3-7 Leasehold improvements 686 586 Shorter of asset lifeor lease term Computer equipment and software 4,067 3,555 3-5 Furniture and fixtures 2,144 1,993 5-10 Automobiles 196 198 3 Building 8,692 8,512 20 Land 1,983 1,995 - 18,633 17,772 Accumulated depreciation and amortization 7,223 6,067 $11,410 $11,705 Property held for sale represents land and land improvements of $4,058 and $3,752 at June 30, 2013 and 2012, respectively. See Note 8, “EnvironmentalRemediation” for further discussion on property held for sale. Depreciation and amortization of property and equipment amounted to $1,315, $1,317 and $1,034 for the years ended June 30, 2013, 2012, and 2011respectively. 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 principallyconsist of customer relationships, license agreements, technology-based intangibles, EPA registrations and related data, trademarks and product rights andrelated intangibles. Goodwill and other intangible assets that have an indefinite life are not amortized. In accordance with GAAP, the Company tests goodwill and other intangible assets for impairment on at least an annual basis. Goodwill impairment exists ifthe net book value of a reporting unit exceeds its estimated fair value. The impairment testing is performed in two steps: (i) the Company determinesimpairment 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 ofimpairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. To determine the fair value of these intangibleassets, the Company uses many assumptions and estimates using a market participant approach that directly impact the results of the testing. In makingthese assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels ofmanagement. 56 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) In September 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2011-08, “Intangibles-Goodwilland Other (Topic 350): Testing Goodwill for Impairment”, to allow entities to use a qualitative approach to test goodwill for impairment. ASU 2011-08 permitsan entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carryingvalue. If it is concluded that this is the case, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-stepgoodwill impairment test is not required. The Company adopted ASU 2011-08 in fiscal 2013 and thus performed a qualitative assessment. This adoption didnot have a material impact on the Company’s consolidated financial statements. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carryingamount 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 tofuture undiscounted net cash flows expected to be generated by the asset. Recoverability of assets held for sale is measured by comparing the carrying amountof 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 whichthe 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 lesscosts to sell. Accounting for Derivatives and Hedging Activities The Company accounts for derivatives and hedging activities under the provisions of GAAP which establishes accounting and reporting guidelines forderivative instruments and hedging activities. GAAP requires the recognition of all derivative financial instruments as either assets or liabilities in thestatement of financial condition and measurement of those instruments at fair value. Changes in the fair values of those derivatives are reported in earnings orother comprehensive income depending on the designation of the derivative and whether it qualifies for hedge accounting. The accounting for gains and lossesassociated with changes in the fair value of a derivative and the effect on the consolidated financial statements depends on its hedge designation and whetherthe hedge is highly effective in achieving offsetting changes in the fair value or cash flows of the asset or liability hedged. The method that is used forassessing the effectiveness of a hedging derivative, as well as the measurement approach for determining the ineffective aspects of the hedge, is established atthe inception of the hedged instrument. 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, among others, Euros, BritishPounds, 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 foreigncurrency receivables and payables by purchasing future foreign currency contracts (futures) with one of its financial institutions. Futures are traded onregulated U.S. and international exchanges and represent commitments to purchase or sell a particular foreign currency at a future date and at a specificprice. Since futures are purchased for the amount of the foreign currency receivable or for the amount of foreign currency needed to pay for specific purchaseorders, and the futures mature on the due date of the related foreign currency vendor invoices or customer receivables, the Company believes that it eliminatesrisks relating to foreign currency fluctuation. The Company takes delivery of all futures to pay suppliers in the appropriate currency. The gains or losses forthe 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 ofchanges in foreign exchange rates on trade payables (receivables) denominated in foreign currencies. Senior management and members of the financialdepartment continually monitor foreign currency risks and the use of this derivative instrument. Pursuant to the requirements of the Credit Agreement, the Company is required to deliver Hedging Agreements (as defined in the Credit Agreement) fixing theinterest rate on not less than $20,000 of the Term Loan. Accordingly, in March 2011, the Company entered into an interest rate swap for a notional amount of$20,000, which has been designated as a cash flow hedge. The expiration date of this interest rate swap is December 31, 2015. 57 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Foreign Currency The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars in accordance with GAAP. Where the functional currency of aforeign subsidiary is its local currency, balance sheet accounts are translated at the current exchange rate and income statement items are translated at theaverage exchange rate for the period. Exchange gains or losses resulting from the translation of financial statements of foreign operations are accumulated inother comprehensive income. Where the local currency of a foreign subsidiary is not its functional currency, financial statements are translated at eithercurrent or historical exchange rates, as appropriate. (3) Business Combinations On December 31, 2010, the Company acquired certain assets of Rising Pharmaceuticals, Inc. (“Rising”), a New Jersey based company that markets anddistributes generic prescription and over the counter pharmaceutical products to leading wholesalers, chain drug stores, distributors, mass marketmerchandisers and others under its own label, throughout the United States. The purchase was approximately $73,317 which was comprised of the issuanceof 1,000 shares of Aceto common stock, valued at $9,000, cash payment of approximately $58,817 and approximately $5,500 liability, subsequently paidto Rising, to satisfy bulk sales tax obligation. In accordance with the purchase agreement, as amended, related to the Rising acquisition, $7,970 of deferredconsideration was to be paid by Aceto over a four year period with $1,500 paid in February 2012, $1,470 paid in December 2012, $1,500 to be paid not laterthan fifty-six days following the third anniversary of the closing date of the purchase and $3,500 to be paid not later than fifty-six days following the fourthanniversary of the closing date of the purchase. The purchase agreement also provides for the payment of additional contingent consideration equal to one-half of the three year cumulative Rising earningsbefore interest, taxes, depreciation and amortization in excess of $32,100, up to a maximum of $6,000. As of June 30, 2013, the Company has accrued$5,346 related to this contingent consideration. In the third and fourth quarters of fiscal 2013, the Company recorded additional contingent consideration of$2,840 and $404, respectively, which is included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income forthe fiscal year ended June 30, 2013. Any necessary future adjustments to this amount will be recorded as an income statement charge at that time. (4) Investments A summary of short-term investments was as follows: June 30, 2013 June 30, 2012 Fair Value Cost Basis Fair Value Cost Basis Held to Maturity Investments Time deposits $2,144 $2,016 $1,518 $1,518 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 yearand is available for current operations. Unrealized gains on trading securities were $0, $0, and $140 for fiscal 2013, 2012 and 2011, respectively. (5) Fair Value Measurements GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly fashion between market participants atthe measurement date. GAAP establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based onmarket data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels: 58 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Level 1 – Quoted market prices in active markets for identical assets or liabilities; Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 – Unobservable inputs that are not corroborated by market data. On a recurring basis, Aceto measures at fair value certain financial assets and liabilities, which consist of cash equivalents, investments and foreign currencycontracts. The Company classifies cash equivalents and investments within Level 1 if quoted prices are available in active markets. Level 1 assets includeinstruments valued based on quoted market prices in active markets which generally include corporate equity securities publicly traded on majorexchanges. Time deposits are very short-term in nature and are accordingly valued at cost plus accrued interest, which approximates fair value, and areclassified within Level 2 of the valuation hierarchy. The Company uses foreign currency forward contracts (futures) to minimize the risk caused by foreigncurrency fluctuation on its foreign currency receivables and payables by purchasing futures with one of its financial institutions. Futures are traded onregulated U.S. and international exchanges and represent commitments to purchase or sell a particular foreign currency at a future date and at a specificprice. Aceto’s foreign currency derivative contracts are classified within Level 2 as the fair value of these hedges is primarily based on observable forwardforeign exchange rates. At June 30, 2013 the Company had foreign currency contracts outstanding that had a notional amount of $59,316. Unrealized (losses)gains on hedging activities for the years ended June 30, 2013, 2012, and 2011, amounted to ($160), ($560) and $160, respectively, and are included ininterest and other income, net, in the consolidated statements of income. The contracts have varying maturities of less than one year. Pursuant to the requirements of the Credit Agreement, the Company is required to deliver Hedging Agreements (as defined in the Credit Agreement) fixing theinterest rate on not less than $20,000 of the Term Loan. Accordingly, in March 2011, the Company entered into an interest rate swap for a notional amount of$20,000, which has been designated as a cash flow hedge. The expiration date of this interest rate swap is December 31, 2015. The unrealized loss to dateassociated with this derivative, which is recorded in accumulated other comprehensive income in the consolidated balance sheet at June 30, 2013, is$258. The remaining balance of this derivative as of June 30, 2013 is $12,125. Aceto’s interest rate swap is classified within Level 2 as the fair value of thishedge is primarily based on observable interest rates. As of June 30, 2013 and 2012 the Company had $5,346 and $1,779, respectively, of contingent consideration that was recorded at fair value in the Level 3category, which related to the acquisition of Rising, which was completed during fiscal 2011. The contingent consideration was calculated using the presentvalue of a probability weighted income approach. The changes in contingent consideration relates to accrued interest expense of $323 and additional contingentconsideration of $3,244 for the Rising acquisition, recorded in the third and fourth quarters of 2013. During the fourth quarter of each year, the Company evaluates goodwill and indefinite-lived intangibles for impairment at the reporting unit level using anundiscounted cash flow model using Level 3 inputs. Additionally, on a nonrecurring basis, the Company uses fair value measures when analyzing assetimpairment. Long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate thatthe carrying amount of an asset may not be recoverable. If it is determined such indicators are present and the review indicates that the assets will not be fullyrecoverable, based on undiscounted estimated cash flows over the remaining amortization periods, their carrying values are reduced to estimated fairvalue. Measurements based on undiscounted cash flows are considered to be Level 3 inputs. 59 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) The following tables summarize the valuation of the Company’s financial assets and liabilities which were determined by using the following inputs at June30, 2013 and 2012: Fair Value Measurements at June 30, 2013 Using Quoted Pricesin ActiveMarkets(Level 1) SignificantOtherObservableInputs (Level 2) SignificantUnobservableInputs (Level 3) Total Cash equivalents: Time deposits - $856 - $856 Investments: Time deposits - 2,144 - 2,144 Foreign currency contracts-assets (1) - 14 - 14 Foreign currency contracts-liabilities (2) - 173 - 173 Derivative liability for interest rate swap (3) - 258 - 258 Contingent consideration (4) - - $5,346 5,346 (1)Included in “Other receivables” in the accompanying Consolidated Balance Sheet as of June 30, 2013.(2)Included in “Accrued expenses” in the accompanying Consolidated Balance Sheet as of June 30, 2013.(3)Included in “Long-term liabilities” in the accompanying Consolidated Balance Sheet as of June 30, 2013.(4)$1,500 included in “Accrued expenses” and $3,846 included in “Long-term liabilities” in the accompanying Consolidated Balance Sheet as of June30, 2013. Fair Value Measurements at June 30, 2012 Using Quoted Pricesin ActiveMarkets(Level 1) SignificantOtherObservableInputs (Level 2) SignificantUnobservableInputs (Level 3) Total Cash equivalents: Time deposits - $814 - $814 Investments: Time deposits - 1,518 - 1,518 Foreign currency contracts-assets (5) - 138 - 138 Foreign currency contracts-liabilities (6) - 661 - 661 Derivative liability for interest rate swap (7) - 427 - 427 Contingent consideration (7) - - $1,779 1,779 (5)Included in “Other receivables” in the accompanying Consolidated Balance Sheet as of June 30, 2012.(6)Included in “Accrued expenses” in the accompanying Consolidated Balance Sheet as of June 30, 2012.(7)Included in “Long-term liabilities” in the accompanying Consolidated Balance Sheet as of June 30, 2012. 60 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (6) Goodwill and Other Intangible Assets As of June 30, 2013 and June 30, 2012, there was goodwill of $33,526 and $33,495, respectively, of which $31,739 relates to the Rising acquisition, whichis part of the Human Health reportable segment and the remainder relates to the Pharmaceutical Ingredients reportable segment. In fiscal 2013, the change ingoodwill is attributable to foreign currency exchange rates used to translate the financial statements of foreign subsidiaries. Intangible assets subject to amortization as of June 30, 2013 and 2012 were as follows: GrossCarryingValue AccumulatedAmortization Net BookValue June 30, 2013 Customer relationships $7,320 $3,946 $3,374 Trademarks 1,700 1,215 485 Product rights and related intangibles 34,346 6,767 27,579 License agreements 5,938 2,715 3,223 EPA registrations and related data 11,523 6,325 5,198 Technology-based intangibles 155 74 81 $60,982 $21,042 $39,940 GrossCarryingValue AccumulatedAmortization Net BookValue June 30, 2012 Customer relationships $7,226 $3,435 $3,791 Trademarks 1,700 729 971 Product rights and related intangibles 33,221 4,105 29,116 License agreements 5,938 1,789 4,149 EPA registrations and related data 11,535 5,285 6,250 Technology-based intangibles 155 52 103 $59,775 $15,395 $44,380 Intangible assets with definitive useful lives are amortized using the straight-line method over their estimated useful lives. The straight-line method is utilized asit best reflects the use of the asset. The estimated useful lives of customer relationships, trademarks, product rights and related intangibles, license agreements,EPA registrations and related data and technology-based intangibles are 7-11 years, 4 years, 3-14 years, 6-11 years, 10 years, and 7 years, respectively. As of June 30, 2013 and June 30, 2012, the Company also had $891 and $871, respectively, of intangible assets pertaining to trademarks which haveindefinite lives and are not subject to amortization. The changes in trademarks with indefinite lives and the change in the gross carrying value of customerrelationships 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 $5,629, $5,625 and $4,468 for the years ended June 30, 2013, 2012 and2011, respectively. The estimated aggregate amortization expense for intangible assets subject to amortization for each of the succeeding years ended June 30,2014 through June 30, 2019 are as follows: 2014: $5,766; 2015: $5,252; 2016: $5,195; 2017: $4,446; 2018: $3,682 and 2019 and thereafter:$15,599. 61 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (7) Accrued Expenses The components of accrued expenses as of June 30, 2013 and 2012 were as follows: 2013 2012 Accrued compensation $7,351 $6,043 Accrued environmental remediation costs-current portion 2,058 1,933 Reserve for price concessions 10,139 5,633 Other accrued expenses 19,423 11,312 $38,971 $24,921 (8) Environmental Remediation In fiscal years 2011, 2009, 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 allegedthat Aceto shipped hazardous substances to the site which were released into the environment. The State had begun administrative proceedings against themembers of the PRP Group and Aceto with respect to the cleanup of the Pulvair site and the PRP Group has begun to undertake cleanup. The PRP Group isseeking a settlement of approximately $1,700 from the Company for its share to remediate the site contamination. Although the Company acknowledges that itshipped materials to the site for formulation over twenty years ago, the Company believes that the evidence does not show that the hazardous materials sent byAceto to the site have significantly contributed to the contamination of the environment and thus believes that, at most, it is a de minimus contributor to the sitecontamination. Accordingly, the Company believes that the settlement offer is unreasonable. The impact of the resolution of this matter on the Company’sresults of operations in a particular reporting period is not known. However, management believes that the ultimate outcome of this matter will not have amaterial 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 manufacturingchemicals located in Carlstadt, New Jersey, which was closed in 1993 and is currently held for sale. Based on continued monitoring of the contamination atthe site and the approved plan of remediation, the Company received an estimate from an environmental consultant stating that the costs of remediation couldbe between $9,000 and $10,800. Remediation has commenced in fiscal 2010, and as of June 30, 2013 and June 30, 2012, a liability of $7,166 and $7,566,respectively, is included in the accompanying consolidated balance sheets for this matter. In accordance with GAAP, management believes that the majority ofcosts 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 ofthe property by a third-party appraiser supports the assumption that the expected fair value after the remediation is in excess of the amount required to becapitalized. However, these matters, if resolved in a manner different from those assumed in current estimates, could have a material adverse effect on theCompany’s financial condition, operating results and cash flows when resolved in a future reporting period. In connection with the environmental remediation obligation for Arsynco, in July 2009, the Company entered into a settlement agreement with BASFCorporation (BASF), the former owners of the Arsynco property. In accordance with the settlement agreement, BASF paid for a portion of the prior remediationcosts and going forward, will co-remediate the property with the Company. The contract states that BASF pay $550 related to past response costs and pay aproportionate share of the future remediation costs. Accordingly, the Company had recorded a gain of $550 in fiscal 2009. This $550 gain relates to thepartial reimbursement of costs of approximately $1,200 that the Company had previously expensed. The Company also recorded an additional receivablefrom BASF, with an offset against property held for sale, representing its estimated portion of the future remediation costs. The balance of this receivable forfuture remediation costs as of June 30, 2013 and June 30, 2012 is $3,225 and $3,405, respectively, which is included in the accompanying consolidatedbalance sheets. 62 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental Response, Compensation and LiabilityAct (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 requiredinvestigation and remediation of the site. The estimate of the potential liability is not quantifiable for a number of reasons, including the difficulty indetermining the extent of contamination and the length of time remediation may require. In addition, any estimate of liability must also consider the number ofother PRPs and their financial strength. Based on prior practice in similar situations, it is possible that the State may assert a claim for natural resourcedamages with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claims against Arsynco for natural resourcedamages in connection with Berry’s Creek; any such claim with respect to Berry’s Creek could also be asserted against the approximately 150 PRPs whichthe 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 againstBASF, the former owners of the Arsynco property. In September 2012, Arsynco entered into an agreement with three of the other PRPs that had previously beenimpleaded into New Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al., Docket No. ESX-L-9868-05 (the“NJDEP Litigation”) and were considering impleading Arsynco into same. Arsynco entered into agreement to avoid impleader. Pursuant to agreement, Arsyncoagreed to (1) a tolling period that would not be included when computing the running of any statute of limitations that might provide a defense to the NJDEPLitigation; (2) the waiver of certain issue preclusion defenses in the NJDEP Litigation; and (3) arbitration of certain potential future liability allocation claims ifthe other parties to the agreement are barred by a court of competent jurisdiction from proceeding against Arsynco. Since an amount of the liability cannot bereasonably 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 resultsof operations in a particular reporting period is not known. (9) Debt Long-term debt June 30, 2013 2012 Revolving bank loans $4,000 $11,000 Term bank loans 24,500 31,000 Mortgage 3,569 3,765 32,069 45,765 Less current portion 11,714 6,713 $20,355 $39,052 Credit Facilities On December 31, 2010, the Company entered into a new Credit Agreement (the “Credit Agreement”) with two domestic financial institutions. The CreditAgreement terminated the Amended and Restated Credit Agreement, dated April 23, 2010. Aceto may borrow, repay and reborrow during the period endingDecember 31, 2015, up to but not exceeding at any one time outstanding $40,000 (the “Revolving Loans”). The Revolving Loans may be (i) Adjusted LIBORLoans (as defined in the Credit Agreement), (ii) Alternate Base Rate Loans (as defined in the Credit Agreement) or (iii) a combination thereof. As of June 30,2013, the Company borrowed Revolving Loans aggregating $4,000, which loans are Adjusted LIBOR Loans at an interest rate of 2.06% at June 30, 2013. TheCredit Agreement also allows for the borrowing up to $40,000 (the “Term Loan”). The Company borrowed a Term Loan of $40,000 on December 31, 2010.The Term Loan interest may be payable as an (i) Adjusted LIBOR Loan, (ii) Alternate Base Rate Loan, or (iii) a combination thereof. As of June 30, 2013, theremaining amount outstanding under the original amortizing Term Loan is $24,500 and is payable as an Adjusted LIBOR Loan at an interest rate of 2.06% atJune 30, 2013. The Term Loan is payable as to principal in twenty (20) consecutive quarterly installments, which commenced on March 31, 2011 and willcontinue on each June 30, September 30 and December 31st thereafter, each in the amount set forth below opposite the applicable installment, provided that thefinal payment on the Term Loan Maturity Date (as defined in the Credit Agreement) shall be in an amount equal to the then outstanding unpaid principalamount of the Term Loan: Installment Amount 1 through 8 $1,500 9 through 12 $1,750 13 through 16 $2,000 17 through 20 $3,250 63 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) As such, the Company has classified $7,500 of the Term Loan as short-term in the consolidated balance sheet at June 30, 2013. The Credit Agreement alsoprovides that commercial letters of credit shall be issued to provide the primary payment mechanism in connection with the purchase of any materials, goodsor services by the Company in the ordinary course of business. The Company had open letters of credit of approximately $78 and $199 as of June 30, 2013and June 30, 2012, respectively. The terms of these letters of credit are all less than one year. No material loss is anticipated due to non-performance by thecounterparties to these agreements. The Credit Agreement provides for a security interest in all personal property of the Company. The Credit Agreement contains several financial covenantsincluding, among other things, maintaining a minimum level of debt service. The Company is also subject to certain restrictive covenants, including, amongother things, covenants governing liens, limitations on indebtedness, limitations on cash dividends, guarantees, sale of assets, sales of receivables, and loansand investments. The Company was in compliance with all covenants at June 30, 2013. The Company has available lines of credit with foreign financial institutions. At June 30, 2013, the Company had available lines of credit with foreignfinancial institutions totaling $8,665. At June 30, 2012, the Company had available lines of credit with foreign financial institutions totaling $8,378. TheCompany has issued a cross corporate guarantee to the foreign banks. Short term loans under these agreements bear interest at a fixed rate of 5.0% at June 30,2013, 5.5% at June 30, 2012 and LIBOR plus 0.75% in prior years, which was 0.94% at June 30, 2011. The Company is not subject to any financialcovenants under these arrangements. Under the above financing arrangements, the Company had $28,500 in bank loans and $78 in letters of credit leaving an unused facility of $44,587 at June30, 2013. At June 30, 2012 the Company had $42,000 in bank loans and $199 in letters of credit leaving an unused facility of $37,179. Mortgage On June 30, 2011, the Company entered into a mortgage payable for $3,947 on its new corporate headquarters, in Port Washington, New York. This mortgagepayable is secured by the land and building and is being amortized over a period of 20 years. The mortgage payable bears interest at 5.92% and matures onJune 30, 2021. Maturity of Long-term Debt Long-term debt matures by fiscal year as follows: 2014 $11,714 2015 10,697 2016 6,697 2017 197 2018 197 Thereafter 2,567 $32,069 64 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (10) Stock Based Compensation Plans At the annual meeting of shareholders of the Company, held on December 6, 2012, the Company’s shareholders approved the amended and restated AcetoCorporation 2010 Equity Participation Plan (2010 Plan). Under the 2010 Plan, grants of stock options, restricted stock, restricted stock units, stockappreciation rights, and stock bonuses (collectively, “Stock Awards”) may be made to employees, non-employee directors and consultants of the Company,including the chief executive officer, chief financial officer and other named executive officers. The maximum number of shares of common stock of theCompany that may be issued pursuant to Stock Awards granted under the 2010 Plan will not exceed, in the aggregate, 5,250 shares. In addition, restrictedstock 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 additionalshares of restricted stock (premium shares) greater than the portion of bonus paid in restricted stock. The restricted stock award is vested at issuance and therestrictions lapse ratably over a period of years as determined by the Board of Directors, generally three years. The premium shares vest when all therestrictions lapse, provided that the participant remains employed by the Company at that time. At the annual meeting of shareholders of the Company held December 6, 2007, the shareholders approved the Aceto Corporation 2007 Long-Term PerformanceIncentive 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 fiscal years 2012 and 2011, the Company granted 217 and 240, stock options, respectively, to employees at an exercise price equal to the market value ofthe common stock on the date of grant, determined in accordance with the 2010 Plan. These options vest over three years and have a term of ten years from thedate of grant. There were no stock options granted in fiscal year 2013. As of June 30, 2013, there were 3,315 and 14 shares of common stock available for grant under the 2010 and 2007 Plans, respectively. In September 2002, the Company adopted the Aceto Corporation 2002 Stock Option Plan (2002 Plan), which was ratified by the Company’s shareholders inDecember 2002. The 2002 Plan expired in December 2012. Outstanding options survive the expiration of the 2012 Plan. In December 1998, the Company adopted the Aceto Corporation 1998 Omnibus Equity Award Plan (1998 Plan). The 1998 Plan expired in December2008. Outstanding options survive the expiration of the 1998 Plan. 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 exerciseprice per share can be greater or less than the market value of the stock on the date of grant. The 1980 Plan expired in September 2005. Outstanding optionssurvive the expiration of the 1980 Plan. 65 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) The following summarizes the shares of common stock under options for all plans at June 30, 2013, 2012 and 2011, and the activity with respect to optionsfor the respective years then ended: Shares subject to option Weighted averageexercise price pershare AggregateIntrinsicValueBalance at June 30, 2010 1,913 $8.51 Granted 240 7.76 Exercised (98) 6.28 Forfeited (including cancelled options) (96) 9.82 Balance at June 30, 2011 1,959 $8.46 Granted 217 6.10 Exercised (168) 4.33 Forfeited (including cancelled options) (193) 9.68 Balance at June 30, 2012 1,815 $8.47 Granted - - Exercised (740) 8.43 Forfeited (including cancelled options) (115) 9.55 Balance at June 30, 2013 960 $8.36 $5,347Options exercisable at June 30, 2013 762 $8.82 $3,897 The total intrinsic value of stock options exercised during the years ended June 30, 2013, 2012 and 2011 was approximately $2,047, $690 and $178,respectively. At June 30, 2013, outstanding options had expiration dates ranging from August 2013 to December 2021. 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 isearned and over the vesting period for the market value at the date of grant of the premium shares granted. In fiscal 2013, 2012 and 2011, restricted stockawarded and premium shares vested of 9, 8 and 11 common shares, respectively, were issued under employee incentive plans, which increased stockholders’equity by $82, $49 and $66, respectively. The related non-cash compensation expense related to the vesting of premium shares during the year was $11,$11 and $33 in fiscal 2013, 2012 and 2011, respectively. Additionally, non-cash compensation expense of $324, $333 and $186 was recorded in fiscal2013, 2012 and 2011, respectively, relating to stock option grants, which is included in selling, general and administrative expenses. Included in the yearended June 30, 2012 stock-based compensation expense for stock options was approximately $11, related to the modification of certain stock options. As ofJune 30, 2013, the total unrecognized compensation cost related to option awards is $241. The following summarizes the non-vested stock options at June 30, 2013 and the activity with respect to non-vested options for the year ended June 30, 2013: Sharessubject tooption Weightedaverage grantdate fair value Non-vested at June 30, 2012 343 $2.38 Granted - - Vested (135) 2.45 Forfeited (10) 2.53 Non-vested at June 30, 2013 198 $2.32 66 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) There were no stock options granted during fiscal 2013. The per-share weighted-average fair value of stock options granted during 2012 and 2011 was $2.07and $2.88, respectively, on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2012 2011 Expected life 5.7 years 5.7 years Expected volatility 48.1% 48.8%Risk-free interest rate 1.59% 1.95%Dividend yield 3.24% 2.58% During the year ended June 30, 2013, the Company granted 120 shares of restricted common stock to its employees that vest over three years and 25 shares ofrestricted common stock to its non-employee directors, which vest over one year. In addition, the Company also issued a target grant of 84 performance-vestedrestricted stock units, which grant could be as much as 126 if certain performance criteria and market conditions are met. Performance-vested restricted stockunits will cliff vest 100% at the end of the third year following grant in accordance with the performance metrics set forth in the applicable employeeperformance-vested restricted stock unit grant. During the year ended June 30, 2012, the Company granted 103 shares of restricted common stock to its employees that vest over three years and 38 shares ofrestricted common stock to its non-employee directors, which vest over one year. In addition, the Company also issued a target grant of 49 performance-vestedrestricted stock units, which grant could be as much as 73 if certain performance criteria and market conditions are met. Performance-vested restricted stockunits will cliff vest 100% at the end of the third year following grant in accordance with the performance metrics set forth in the applicable employeeperformance-vested restricted stock unit grant. In December 2010, the Company granted 62 shares of restricted common stock to its employees that vest over three years. In addition, the Company alsoissued a target grant of 62 performance-vested restricted stock units, which grant could be as much as 93 if certain performance criteria are met. Performance-vested restricted stock units will cliff vest 100% at the end of the third year following grant in accordance with the performance metrics set forth in theapplicable employee performance-vested restricted stock unit grant. For the years ended June 30, 2013, 2012 and 2011, the Company recorded non-cash stock-based compensation expense of approximately $1,453, $824, and$635, respectively, which is included in selling, general and administrative expenses, for shares of restricted common stock and restricted stock units. The remaining stock-based compensation expense for restricted stock awards and units is approximately $1,841 at June 30, 2013 and the related weightedaverage period over which it is expected that such unrecognized compensation cost will be recognized is approximately 1.4 years. A summary of restricted stock awards including restricted stock units as of June 30, 2013, is presented below: Shares Weightedaverage grantdate fair value Non-vested at beginning of year 276 $6.76 Granted 233 9.13 Vested (93) 6.63 Forfeited (5) 6.95 Non-vested at June 30, 2013 411 $8.13 67 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (11) Interest and Other Income Interest and other income during fiscal 2013, 2012 and 2011 was comprised of the following: 2013 2012 2011 Dividends $228 $139 $208 Interest 185 184 154 Net gain on investments - - 140 Foreign government subsidies received 17 41 41 Joint venture equity earnings 1,790 1,598 1,624 Foreign currency losses (105) (74) (215)Rental income 82 - - Miscellaneous income 59 113 30 $2,256 $2,001 $1,982 The Company’s joint venture earnings represent the Company’s investment in a corporate joint venture established for the purpose of selling a particularagricultural protection product. The Company’s initial investment was $6 in fiscal 2009, representing a 30% ownership and accounts for this joint ventureusing the equity method of accounting. (12) Income Taxes The components of income before the provision for income taxes are as follows: 2013 2012 2011 Domestic operations $21,181 $16,418 $7,039 Foreign operations 13,369 8,322 9,923 $34,550 $24,740 $16,962 The components of the provision for income taxes are as follows: 2013 2012 2011 Federal: Current $9,428 $6,533 $5,342 Deferred (2,011) (1,476) (561)State and local: Current 1,568 716 634 Deferred (628) (277) (162)Foreign: Current 3,875 2,287 2,693 Deferred (10) (24) 48 $12,222 $7,759 $7,994 Income taxes payable, which is included in accrued expenses, was $3,956 and $800 at June 30, 2013 and 2012, respectively. 68 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(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, 2013 and 2012 are presented below: 2013 2012 Deferred tax assets: Accrued environmental remediation liabilities not currently deductible $102 $302 Accrued deferred compensation 2,791 2,429 Accrual for acquisition costs not currently deductible - 337 Accrual for sales deductions not currently deductible 2,989 1,528 Additional inventoried costs for tax purposes 206 255 Allowance for doubtful accounts receivable 139 134 Depreciation and amortization 2,690 1,438 Accrual for payments to former senior management and other personnel related costs 57 159 Contingent consideration 1,949 489 Foreign deferred tax assets 246 - Domestic net operating loss carryforwards 200 200 Foreign net operating loss carryforwards 758 965 Total gross deferred tax assets 12,127 8,236 Valuation allowances (958) (946) 11,169 7,290 Deferred tax liabilities: Foreign deferred tax liabilities (6) (8) Goodwill (2,306) (1,457) Other (107) (166)Total gross deferred tax liabilities (2,419) (1,631) Net deferred tax assets $8,750 $5,659 The following table shows the current and non current deferred tax assets (liabilities) at June 30, 2013 and 2012: 2013 2012 Current deferred tax assets, net $701 $948 Non-current deferred tax assets, net 8,055 4,719 Current deferred tax liabilities - - Non current deferred tax liabilities (6) (8)Net deferred tax assets $8,750 $5,659 The net change in the total valuation allowance for the year ended June 30, 2013 was an increase of $12. The net change in the total valuation allowance for theyear ended June 30, 2012 was a decrease of $73. A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred taxassets will not be realized. The Company has established valuation allowances primarily for net operating loss carryforwards in certain foreign countries. Inassessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets arenot expected to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in whichnet operating loss carryforwards are utilizable and temporary differences become deductible. Management considers the scheduled reversal of deferred taxliabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the net deferred tax assets recognizedat June 30, 2013, the Company will need to generate future taxable income of approximately $23,200. 69 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Based upon the level of historical taxable income and projections for taxable income over the periods which the deferred tax assets are deductible, managementbelieves it is more likely than not the Company will realize the benefits of these deductible differences. There can be no assurance, however, that the Companywill generate any earnings or any specific level of continuing earnings in the future. The amount of the deferred tax asset considered realizable, however, couldbe reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Deferred taxes have not been provided for undistributed earnings of foreign subsidiaries amounting to approximately $85,300 at June 30, 2013 sincesubstantially all of these earnings are expected to be permanently reinvested in foreign operations. A deferred tax liability will be recognized when the Companyexpects that it will recover these undistributed earnings in a taxable manner, such as through the receipt of dividends or sale of the investments. In connectionwith the Rising acquisition, the Company repatriated approximately $15,000 of cash from certain foreign subsidiaries, resulting in a tax charge ofapproximately $2,600 recorded during the year ended June 30, 2011. The Company intends to permanently reinvest the remaining undistributed earningsand has no plan for further repatriation. Determination of the amount of unrecognized deferred U.S. income tax liabilities, net of unrecognized foreign taxcredits, is not practical to calculate because of the complexity of this hypothetical calculation. A reconciliation of the statutory federal income tax rate and the effective tax rate for continuing operations for the fiscal years ended June 30, 2013, 2012 and2011 follows: 2013 2012 2011 Federal statutory tax rate 35.0% 35.0% 35.0%State and local taxes, net of federal income tax benefit 3.0 3.0 2.4 Decrease (increase) in valuation allowance - 0.2 (0.4)Foreign tax rate differential (2.1) (3.0) (4.4)Impact of repatriation of non-US earnings - (2.1) 15.3 Other (0.5) (1.7) (0.8)Effective tax rate 35.4% 31.4% 47.1% 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. There are no material unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, have a material effect on the Company’seffective tax rate. The Company is continuing its practice of recognizing interest and penalties related to income tax matters in income tax expense. TheCompany did not recognize interest and penalties during the years ended June 30, 2013 and June 30, 2012. The Company files U.S. federal, U.S. state, andforeign tax returns, and is generally no longer subject to tax examinations for fiscal years prior to 2009 (in the case of certain foreign tax returns, fiscal year2008). 70 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (13) Supplemental Cash Flow Information Cash paid for interest and income taxes during fiscal 2013, 2012 and 2011 was as follows: 2013 2012 2011 Interest $2,122 $2,628 $1,570 Income taxes, net of refunds $11,054 $9,402 $8,307 In connection with the acquisition of Rising, the Company issued shares of Aceto common stock with a fair market value of $9,000, which is a non-cash itemand is excluded from the Consolidated Statement of Cash Flows during the year ended June 30, 2011. The Company also had non-cash items excluded fromthe Consolidated Statement of Cash Flows during the year ended June 30, 2011 of $400, related to data filed with the United States Environmental ProtectionAgency. (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 (seebelow). 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 $1,725, $1,698 and $1,168 in fiscal 2013, 2012 and 2011, respectively. Defined Benefit Plans The Company sponsors certain defined benefit pension plans covering certain employees of its German subsidiaries who meet the plan’s eligibilityrequirements. The accrued pension liability as of June 30, 2013 was $1,232. The accrued pension liability as of June 30, 2012 was $1,138. Net periodicpension costs, which consists principally of interest cost and service cost was $73 in fiscal 2013, $51 in fiscal 2012 and $54 in fiscal 2011. TheCompany’s plans are funded in conformity with the funding requirements of the applicable government regulations. An assumed weighted average discountrate of 3.4%, 4.1% and 5.3% and a compensation increase rate of 1.7%, 1.5% and 1.3% were used in determining the actuarial present value of benefitobligations as of June 30, 2013, 2012 and 2011, 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 SupplementalExecutive Retirement Plan (the Frozen Plan) and has not allowed any further deferrals or contributions to the Frozen Plan after December 31, 2004. All of theearned 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). ThePlan 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 theInternal Revenue Code of 1986, as amended, and is designed to provide comparable benefits to those under the Frozen Plan. Substantially all compensationdeferred 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. Theassets held by the grantor trust are in life insurance policies. As of June 30, 2013, the Company recorded a liability under the Plans of $3,410 (of which $2,654 is included in long-term liabilities and $756 is includedin accrued expenses) and an asset (included in other assets) of $2,880, primarily representing the cash surrender value of policies owned by the Company. Asof June 30, 2012, the Company recorded a liability under the Plans of $3,437 (of which $2,494 is included in long-term liabilities and $943 is included inaccrued expenses) and an asset (included in other assets) of $3,086, primarily representing the cash surrender value of policies owned by the Company. 71 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) (15) Financial Instruments Derivative Financial Instruments The Company is exposed to credit losses in the event of non-performance by the financial institutions, who are the counterparties, on its future foreigncurrency contracts. The Company anticipates, however, that the financial institutions will be able to fully satisfy their obligations under the contracts. TheCompany does not obtain collateral to support financial instruments, but monitors the credit standing of the financial institutions. 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. TheCompany had open letters of credit of approximately $78 and $199 as of June 30, 2013 and 2012, respectively. The terms of these letters of credit are all lessthan one year. No material loss is anticipated due to non-performance by the counterparties 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 shortmaturity of these instruments. The fair value of the Company’s notes receivable and accrued expenses was based upon current rates offered for similarfinancial instruments to the Company. The Company believes that borrowings outstanding under its long-term bank loans and mortgage approximate fairvalue because such borrowings bear interest at current variable market rates. Business and Credit Concentration Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables. The Company’scustomers are dispersed across many industries and are located throughout the United States as well as in Canada, France, Germany, Malaysia, theNetherlands, Switzerland, the United Kingdom, and other countries. The Company estimates an allowance for doubtful accounts based upon thecreditworthiness of its customers as well as general economic conditions. Consequently, an adverse change in those factors could affect the Company’sestimate of this allowance. At June 30, 2013, one customer approximated 10% of net trade accounts receivable. At June 30, 2012, no single customeraccounted 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 2013, 2012 or 2011. During the fiscal years ended June 30, 2013, 2012 and 2011, approximately 68%, 69% and 70%, respectively, of the Company’s purchases came from Asiaand approximately 13%, 13% and 18%, respectively, came from Europe. The Company maintains operations located outside of the United States. Net assets located in Europe and Asia approximated $57,883 and $44,072,respectively at June 30, 2013. Net assets located in Europe and Asia approximated $48,606 and $42,369, respectively at June 30, 2012. (16) Commitments, Contingencies and Other Matters As of June 30, 2013, the Company has outstanding purchase obligations totaling $73,770 with suppliers to the Company’s domestic and foreign operations toacquire 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 ofthese matters on the Company’s results of operations in a particular reporting period is not known. 72 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) On October 29, 2012, a lawsuit was filed in the United Kingdom (in the High Court of Justice, Queens Bench Division, Commercial Court) by UnitedPhosphorous Limited (“UPL”) against Aceto Agricultural Chemicals Corporation (“AACC”), a wholly-owned subsidiary of the Company. In the lawsuit,UPL alleges, among other things, that AACC breached a 1995 agreement regarding European sales of a potato sprout suppression product, by selling theproduct in Europe. UPL claims damages of approximately £4,500 (approximately US $7,200) plus an unspecified amount of additional damages. While theimpact of the resolution of the matter, including any legal and other associated costs, on the Company’s consolidated results of operations in a particularreporting period is not known at this time, after a detailed review and careful analysis of the allegations, AACC strongly denies the allegations, believes thatUPL’s claims are without merit and intends to vigorously defend the lawsuit. In fiscal years 2011, 2009, 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 allegedthat Aceto shipped hazardous substances to the site which were released into the environment. The State had begun administrative proceedings against themembers of the PRP Group and Aceto with respect to the cleanup of the Pulvair site and the PRP Group has begun to undertake cleanup. The PRP Group isseeking a settlement of approximately $1,700 from the Company for its share to remediate the site contamination. Although the Company acknowledges that itshipped materials to the site for formulation over twenty years ago, the Company believes that the evidence does not show that the hazardous materials sent byAceto to the site have significantly contributed to the contamination of the environment and thus believes that, at most, it is a de minimus contributor to the sitecontamination. Accordingly, the Company believes that the settlement offer is unreasonable. The impact of the resolution of this matter on the Company’sresults of operations in a particular reporting period is not known. However, management believes that the ultimate outcome of this matter will not have amaterial 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 manufacturingchemicals located in Carlstadt, New Jersey, which was closed in 1993 and is currently held for sale. Based on continued monitoring of the contamination atthe site and the approved plan of remediation, the Company received an estimate from an environmental consultant stating that the costs of remediation couldbe between $9,000 and $10,800. Remediation has commenced in fiscal 2010, and as of June 30, 2013 and June 30, 2012, a liability of $7,166 and $7,566,respectively, is included in the accompanying consolidated balance sheets for this matter. In accordance with GAAP, management believes that the majority ofcosts 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 ofthe property by a third-party appraiser supports the assumption that the expected fair value after the remediation is in excess of the amount required to becapitalized. However, these matters, if resolved in a manner different from those assumed in current estimates, could have a material adverse effect on theCompany’s financial condition, operating results and cash flows when resolved in a future reporting period. In connection with the environmental remediation obligation for Arsynco, in July 2009, the Company entered into a settlement agreement with BASFCorporation (BASF), the former owners of the Arsynco property. In accordance with the settlement agreement, BASF paid for a portion of the prior remediationcosts and going forward, will co-remediate the property with the Company. The contract states that BASF pay $550 related to past response costs and pay aproportionate share of the future remediation costs. Accordingly, the Company had recorded a gain of $550 in fiscal 2009. This $550 gain relates to thepartial reimbursement of costs of approximately $1,200 that the Company had previously expensed. The Company also recorded an additional receivablefrom BASF, with an offset against property held for sale, representing its estimated portion of the future remediation costs. The balance of this receivable forfuture remediation costs as of June 30, 2013 and June 30, 2012 is $3,225 and $3,405, respectively, which is included in the accompanying consolidatedbalance sheets. 73 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) In March 2006, Arsynco received notice from the EPA of its status as a PRP under the Comprehensive Environmental Response, Compensation and LiabilityAct (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 requiredinvestigation and remediation of the site. The estimate of the potential liability is not quantifiable for a number of reasons, including the difficulty indetermining the extent of contamination and the length of time remediation may require. In addition, any estimate of liability must also consider the number ofother PRPs and their financial strength. Based on prior practice in similar situations, it is possible that the State may assert a claim for natural resourcedamages with respect to the Arsynco site itself, and either the federal government or the State (or both) may assert claims against Arsynco for natural resourcedamages in connection with Berry’s Creek; any such claim with respect to Berry’s Creek could also be asserted against the approximately 150 PRPs whichthe 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 againstBASF, the former owners of the Arsynco property. In September 2012, Arsynco entered into an agreement with three of the other PRPs that had previouslybeen impleaded into New Jersey Department of Environmental Protection, et al. v. Occidental Chemical Corporation, et al., Docket No. ESX-L-9868-05 (the“NJDEP Litigation”) and were considering impleading Arsynco into same. Arsynco entered into agreement to avoid impleader. Pursuant to agreement, Arsyncoagreed to (1) a tolling period that would not be included when computing the running of any statute of limitations that might provide a defense to the NJDEPLitigation; (2) the waiver of certain issue preclusion defenses in the NJDEP Litigation; and (3) arbitration of certain potential future liability allocation claims ifthe other parties to the agreement are barred by a court of competent jurisdiction from proceeding against Arsynco. Since an amount of the liability cannot bereasonably 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 resultsof operations in a particular reporting period is not known. A subsidiary of the Company markets certain agricultural 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 thatfollow-on registrants of these products compensate the initial registrant for the cost of producing the necessary test data on a basis prescribed in the FIFRAregulations. Follow-on registrants do not themselves generate or contract for the data. However, when FIFRA requirements mandate that new test data begenerated to enable all registrants to continue marketing a pesticide product, often both the initial and follow-on registrants establish a task force to jointlyundertake the testing effort. The Company is presently a member of several such task force groups, which requires payments for such memberships. Inaddition, in connection with our agricultural protection business, the Company plans to acquire product registrations and related data filed with the UnitedStates Environmental Protection Agency to support such registrations and other supporting data for several products. The acquisition of these productregistrations and related data filed with the United States Environmental Protection Agency as well as payments to various task force groups couldapproximate $4,561 through fiscal 2014, of which $0 and $242 has been accrued as of June 30, 2013 and June 30, 2012, respectively. The Company leases office facilities in the United States, the Netherlands, Germany, France and Singapore expiring at various dates between December 2013and December 2017. At June 30, 2013, the future minimum lease payments for office facilities and equipment for each of the five succeeding years and in the aggregate are asfollows: Fiscal year Amount 2014 $1,465 2015 1,041 2016 733 2017 692 2018 332 Thereafter 177 $4,440 Total rental expense amounted to $1,169, $992 and $1,562 for fiscal 2013, 2012 and 2011, respectively. (17) Related Party Transactions The Company has purchased inventory and incurred product development costs from a company that is partially owned by two of its executive officers. Inaddition, Aceto purchases product development costs from an affiliate of this company that is partially owned by the two executive officers. Payments to thesetwo related companies approximated $3,839, $3,082 and $1,326 in fiscals 2013, 2012 and 2011, respectively. 74 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) One director of the Company is affiliated with a law firm that served as legal counsel to the Company on various corporate matters. During fiscal 2012 and2011, the Company incurred legal fees of $3 and $195, respectively, for services rendered to the Company by this law firm. In addition, a former directorunder his capacity as a board member was affiliated with a law firm that served as legal counsel to the Company on various corporate matters. During fiscal2011, the Company incurred legal fees of $32, for services rendered to the Company by this law firm. The Company believes that the fees charged by both ofthese firms were at rates comparable to rates obtainable from other firms for similar services. The Company did not utilize the services of these law firms infiscal 2013. During fiscal 2013, 2012 and 2011, the Company purchased inventory from its joint venture in the amount of $2,635, $2,554 and $2,332, respectively. (18) Other Recent Accounting Pronouncements In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income”, which eliminates the option to report other comprehensive incomeand its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components ofnet income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Thispronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In December 2011, the FASB issuedASU 2011-12 “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out ofAccumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” . ASU 2011-12 deferred certain aspects of ASU 2011-05. Thenew guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted this guidance inthis first quarter of fiscal 2013. As this guidance only amends the presentation of the components of comprehensive income, the adoption did not have animpact on the Company’s consolidated financial statements. In July 2012, the FASB issued ASU 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment (the revised standard)” , which allows companiesthe option to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary. Under thisguidance, an entity is required to perform a quantitative impairment test if qualitative factors indicate that it is more likely than not that indefinite-livedintangible assets are impaired. The qualitative factors are consistent with the guidance established for goodwill impairment testing and include identifying andassessing events and circumstances that would most significantly impact, individually or in the aggregate, the carrying value of the indefinite-lived intangibleassets. The revised standard is effective for the Company in fiscal 2014 and early adoption is permitted. The adoption of ASU 2012 -02 is not expected tohave a material impact on the Company’s consolidated financial statements. In October 2012, the FASB issued ASU 2012-04, “Technical Corrections and Improvements.” ASU 2012-04 contains certain technical corrections andconforming fair value amendments to the FASB Accounting Standards Codification. The amendments that do not have transition guidance were effective uponissuance. The amendments that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption ofASU 2012-04 will not have a material impact on the Company’s consolidated financial statements. (19) Segment Information The Company’s business is organized along product lines into three principal segments: Human Health, Pharmaceutical Ingredients and PerformanceChemicals. In fiscal 2012, the Company reconfigured and renamed its three business segments to more accurately reflect the scope of its business activities. Human Health - includes finished dosage form generic drugs and nutraceutical products. Pharmaceutical Ingredients – includes pharmaceutical intermediates and active pharmaceutical ingredients (APIs). Performance Chemicals - The Performance Chemicals segment is made up of two product groups: Specialty Chemicals and Agriculture Protection Products.Specialty chemicals includes a variety of chemicals which make plastics, surface coatings, textiles, fuels and lubricants perform to their designed capabilities.Dye and pigment intermediates are used in the color-producing industries such as textiles, inks, paper, and coatings. Organic intermediates are used in theproduction of agrochemicals. In addition, Aceto is a supplier of diazos and couplers to the paper, film and electronics industries. 75 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(in thousands, except per-share amounts) Agricultural Protection Products includes herbicides, fungicides and insecticides that control weed growth as well as control the spread of insects and othermicroorganisms that can severely damage plant growth. The Agricultural Protection Products segment also includes a sprout inhibitor for potatoes and anherbicide for sugar cane. The Company’s chief operating decision maker evaluates performance of the segments based on net sales, gross profit and income before income taxes.Unallocated corporate amounts are deemed by the Company as administrative, oversight costs, not managed by the segment managers. The Company doesnot allocate assets by segment because the chief operating decision maker does not review the assets by segment to assess the segments’ performance, as theassets are managed on an entity-wide basis. Human Health PharmaceuticalIngredients Performance Chemicals Unallocated Corporate ConsolidatedTotals 2013 Net sales $129,667 $184,852 $185,171 $- $499,690 Gross profit 39,306 31,367 27,598 - 98,271 Income before income taxes 17,276 13,294 10,400 (6,420) 34,550 2012 Net sales $105,249 $162,998 $176,141 $- $444,388 Gross profit 29,932 25,472 26,628 - 82,032 Income before income taxes 11,683 8,066 10,570 (5,579) 24,740 2011 Net sales $69,856 $149,340 $193,232 $- $412,428 Gross profit 15,534 23,897 26,407 - 65,838 Income before income taxes 2,898 7,294 10,198 (3,428) 16,962 Net sales and gross profit by source country for the years ended June 30, 2013, 2012 and 2011 were as follows: Net Sales Gross Profit 2013 2012 2011 2013 2012 2011 United States $326,247 $289,630 $260,686 $68,964 $58,733 $42,472 Germany 92,053 82,600 78,044 19,688 14,303 14,353 Netherlands 14,513 13,738 15,451 1,693 1,706 1,712 France 38,475 33,143 32,718 4,608 3,885 3,560 Asia-Pacific 28,402 25,277 25,529 3,318 3,405 3,741 Total $499,690 $444,388 $412,428 $98,271 $82,032 $65,838 Sales generated from the United States to foreign countries amounted to $36,976, $37,892 and $26,775 for the fiscal years ended June 30, 2013, 2012 and2011, respectively. Long-lived assets by geographic region as of June 30, 2013 and June 30, 2012 were as follows: Long-lived assets 2013 2012 United States $80,870 $85,650 Europe 2,684 2,388 Asia-Pacific 2,213 2,413 Total $85,767 $90,451 76 ACETO CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED JUNE 30, 2013, 2012 AND 2011(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, 2013 and 2012. For the quarter ended Fiscal year ended June 30, 2013 September 30, 2012 December 31, 2012 March 31, 2013 June 30, 2013 Net sales $111,748 $113,956 $150,871 $123,115 Gross profit 21,505 20,708 31,527 24,531 Net income 4,820 4,513 7,593 5,402 Net income per diluted share $0.18 $0.17 $0.28 $0.19 For the quarter ended Fiscal year ended June 30, 2012 September 30, 2011 December 31, 2011 March 31, 2012 June 30, 2012 Net sales $101,317 $110,707 $121,415 $110,949 Gross profit 18,519 20,644 22,155 20,714 Net income 3,033 4,588 5,379 3,981 Net income per diluted share $0.11 $0.17 $0.20 $0.15 The net income per common share calculation for each of the quarters is based on the weighted average number of shares outstanding in eachperiod. Therefore, the sum of the quarters in a year does not necessarily equal the year’s net income per common share. 77 Schedule II ACETO CORPORATION AND SUBSIDIARIES Valuation and Qualifying Accounts For the years ended June 30, 2013, 2012 and 2011(dollars in thousands) Description Balance at beginning of year Charged to costs and expenses Charged to other accounts Deductions Balance at end of year Year ended June 30, 2013 Allowance for doubtful accounts $887 $409 - $2(a) $1,294 Year ended June 30, 2012 Allowance for doubtful accounts $682 $211 - $6(a) $887 Year ended June 30, 2011 Allowance for doubtful accounts $1,098 $172 - $588(a) $682 (a) Specific accounts written off as uncollectible. 78 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. ACETO CORPORATION By/s/ Salvatore Guccione Salvatore Guccione, President and Chief Executive Officer (Principal Executive Officer) Date: August 29, 2013 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 andin the capacities and on the dates indicated. Signatures Title Date /s/Salvatore Guccione President and Chief Executive Officer 08-29-13Salvatore Guccione (Principal Executive Officer) /s/Douglas Roth Assistant Secretary/Treasurer and 08-29-13Douglas Roth Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Albert L. Eilender Chairman 08-29-13Albert L. Eilender /s/Robert Wiesen Director 08-29-13Robert Wiesen /s/Hans C. Noetzli Director 08-29-13Hans C. Noetzli /s/William N. Britton Director 08-29-13William Britton /s/ Richard P. Randall Director 08-29-13Richard P. Randall /s/ Natasha Giordano Director 08-29-13Natasha Giordano 79 EXHIBIT INDEX Exhibit Number Description 2.1 Asset Purchase Agreement by and among Aceto Corporation, Sun Acquisition Corp., Rising Pharmaceuticals, Inc., Ronald Gold,and David B. Rosen, dated as of December 15, 2010 (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-Kdated December 20, 2010). 3.1 Restated Certificate of Incorporation, dated November 18, 1976 (incorporated by reference to Exhibit 3.1 to the Company’s quarterlyreport on Form 10-Q for the quarter ended December 31, 2009). 3.2 Certificate of Amendment of Certificate of Incorporation, dated February 18, 1983 (incorporated by reference to Exhibit 3.2 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.3 Certificate of Amendment of Certificate of Incorporation, dated February 7, 1984 (incorporated by reference to Exhibit 3.3 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.4 Certificate of Amendment of Certificate of Incorporation, dated December 17, 1984 (incorporated by reference to Exhibit 3.4 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.5 Certificate of Amendment of Certificate of Incorporation, dated November 21, 1985 (incorporated by reference to Exhibit 3.5 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.6 Certificate of Amendment of Certificate of Incorporation, dated December 11, 1985 (incorporated by reference to Exhibit 3.6 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.7 Certificate of Amendment of Certificate of Incorporation, dated December 11, 1986 (incorporated by reference to Exhibit 3.7 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.8 Certificate of Amendment of Certificate of Incorporation, dated December 10, 1987 (incorporated by reference to Exhibit 3.8 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.9 Certificate of Amendment of Certificate of Incorporation, dated February 4, 1988 (incorporated by reference to Exhibit 3.9 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.10 Certificate of Amendment of Certificate of Incorporation, dated March 1, 1988 (incorporated by reference to Exhibit 3.10 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.11 Certificate of Amendment of Certificate of Incorporation, dated January 5, 1989 (incorporated by reference to Exhibit 3.11 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.12 Certificate of Amendment of Certificate of Incorporation, dated February 15, 1990 (incorporated by reference to Exhibit 3.12 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 80 3.13 Certificate of Change of Certificate of Incorporation, dated December 18, 1990 (incorporated by reference to Exhibit 3.13 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.14 Certificate of Amendment of Certificate of Incorporation, dated January 4, 1991 (incorporated by reference to Exhibit 3.14 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.15 Certificate of Amendment of Certificate of Incorporation, dated December 15, 1998 (incorporated by reference to Exhibit 3.15 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.16 Certificate of Amendment of Certificate of Incorporation, dated December 3, 2003 (incorporated by reference to Exhibit 3.16 to theCompany’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 3.17 Aceto Corporation By-Laws, adopted December 1, 2011 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-Kdated December 5, 2011). 10.1 Aceto Corporation 401(k) Retirement Plan, as amended and restated as of July 1, 2002 (incorporated by reference to Exhibit 10.1 tothe Company’s annual report on Form 10-K for the fiscal year ended June 30, 2004 (File Number: 000-04217, Film Number:041025874)). 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 (FileNumber: 000-04217, Film Number: 041025874)). 10.3 Aceto Corporation Stock Option Plan (as Amended and Restated effective as of September 19, 1990) (incorporated by reference toExhibit 10.3 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2010). 10.4 1998 Omnibus Equity Award Plan (incorporated by reference to Exhibit 10(v) (c) to the Company’s annual report on Form 10-K forthe fiscal year ended June 30, 1999 (File Number: 000-04217, Film Number: 99718824)). 10.5 2002 Stock Option Plan (incorporated by reference to Exhibit 4(i) to Registration Statement No. 333-110653 on Form S-8). 10.6 Supplemental Executive Deferred Compensation Plan, effective March 14, 2005 (incorporated by reference to Exhibit 10.1 to theCompany’s current report on Form 8-K filed with the Securities and Exchange Commission on March 17, 2005 (File Number: 000-04217, Film Number: 05688328)). 10.7 2007 Long-Term Performance Incentive Plan (incorporated by reference to Exhibit 4(i) to Registration Statement No. 333-149586 onForm S-8). 10.8 Supplemental Executive Deferred Compensation Plan, amended and restated effective December 8, 2008 (incorporated by reference toExhibit 10.22 to the Company’s annual report on Form 10-K for the year ended June 30, 2009). 10.9 Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc., dated April 28, 2000 (incorporated by reference toExhibit 10(vi)(a) to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2000 (File Number: 000-04217,Film Number: 730518)). 81 10.10 Lease between Aceto Corporation and M. Parisi & Son Construction Co., Inc., dated April 28, 2000 (incorporated by reference toExhibit 10(vi)(b) to the Company’s annual report on Form 10-K for the year ended June 30, 2000 (File Number: 000-04217, FilmNumber: 730518)). 10.11 Purchase and Sale Agreement among Schweizerhall Holding AG, Chemische Fabrik Schweizerhall, Schweizerhall, Inc., AcetoCorporation and Aceto Holding B.V., I.O., dated as of January 28, 2001 (incorporated by reference to Exhibit 2.1 to the Company’scurrent report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2001 (File Number: 000-04217, FilmNumber: 1595350)). 10.12 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 thequarter ended December 31, 2004 (File Number: 000-04217, Film Number: 05588472)). 10.13 Guarantee by Aceto Corporation and subsidiaries in favor of Deutsche Bank, AG, dated March 22, 2001 (incorporated by referenceto Exhibit 10.13 to the Company’s annual report on Form 10-K for the year ended June 30, 2001 (File Number: 000-04217, FilmNumber: 1748270)). 10.14 Amended and Restated Credit Agreement among Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDC ProductsCorporation, Aceto Pharma Corp., Aceto Realty LLC, Acci Realty Corp., Arsynco Inc. and JPMorgan Chase Bank, N.A., dated asof April 23, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the Securitiesand Exchange Commission on April 28, 2010). 10.15 Amended and Restated Revolving Credit Note made payable by Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDCProducts Corporation, Aceto Pharma Corp., Aceto Realty LLC, Acci Realty Corp. and Arsynco Inc. to the order of JPMorgan ChaseBank, N.A., dated April 23, 2010 (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed withthe Securities and Exchange Commission on April 28, 2010). 10.16 Reaffirmation Agreement by Aceto Corporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, AcetoPharma Corp., Aceto Realty LLC, Acci Realty Corp. and Arsynco Inc., dated as of April 23, 2010 (incorporated by reference toExhibit 10.3 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on April 28, 2010). 10.17 Severance Agreement between Leonard S. Schwartz and Aceto Corporation, dated as of December 9, 2009 (incorporated by referenceto Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2009). 10.18 Aceto Corporation, et al $40,000,000 Senior Secured Revolving Credit Facility, $40,000,000 Senior Secured Term Loan FacilityCommitment Letter (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated December 20, 2010). 10.19 Credit Agreement, dated as of December 31, 2010, by and among Aceto Corporation, Aceto Agricultural Chemicals Corporation,CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp., Arsynco Inc., Aceto Realty LLC, Sun Acquisition Corp. andJPMorgan Chase Bank, N.A. as Administrative Agent and the Lenders (incorporated by reference to Exhibit 10.1 to our CurrentReport on Form 8-K dated January 5, 2011). 82 10.20 First Amendment to Asset Purchase Agreement, dated as of December 31, 2010, by and among Aceto Corporation, Sun AcquisitionCorp., Rising Pharmaceuticals, Inc., Ronald Gold and David B. Rosen (incorporated by reference to Exhibit 10.2 to our CurrentReport on Form 8-K dated January 5, 2011). 10.21 Employment Agreement, dated as of October 12, 2010, between Aceto Corporation and Albert L. Eilender (incorporated by referenceto Exhibit 10.1 to our Current Report on Form 8-K, dated October 18, 2010). 10.22 Employment Agreement, dated as of December 31, 2010, by and between Ronald Gold and Sun Acquisition Corp. (incorporated byreference to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2010). 10.23 Employment Agreement, dated as of December 31, 2010, by and between David B. Rosen and Sun Acquisition Corp. (incorporatedby reference to Exhibit 10.6 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2010). 10.24 Aceto Corporation 2010 Equity Participation Plan (incorporated by reference to Appendix A to our Definitive Proxy Statement onSchedule 14A filed on October 13, 2010). 10.25 Separation Agreement by and between Aceto Corporation and Vincent G. Miata (incorporated by reference to Exhibit 10.1 to ourCurrent Report on Form 8-K dated November 17, 2011). 10.26 Employment Agreement, dated as of the 29th day of February, 2012, by and between Aceto Corporation and Salvatore Guccione(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated March 1, 2012). 10.27 Aceto Corporation Severance Policy (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K dated January 17,2012). 10.28 Amendment, dated as of February 18, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and theLenders (incorporated by reference to Exhibit 10.37 to the Company’s annual report on Form 10-K for the fiscal year ended June 30,2012). 10.29 Amendment No. 2, dated as of March 15, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and theLenders (incorporated by reference to Exhibit 10.38 to the Company’s annual report on Form 10-K for the fiscal year ended June 30,2012). 10.30 Amendment No. 3, dated as of May 3, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and theLenders (incorporated by reference to Exhibit 10.39 to the Company’s annual report on Form 10-K for the fiscal year ended June 30,2012). 10.31 Amendment No. 4, dated as of June 29, 2011 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and theLenders (incorporated by reference to Exhibit 10.40 to the Company’s annual report on Form 10-K for the fiscal year ended June 30,2012). 83 10.32 Amendment No. 5, dated as of June 28, 2012 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, ACCI Realty Corp., Aceto Pharma Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent and theLenders (incorporated by reference to Exhibit 10.41 to the Company’s annual report on Form 10-K for the fiscal year ended June 30,2012). 10.33 Change in Control Agreement by and between Aceto Corporation and Albert L. Eilender (incorporated by reference to Exhibit 10.1 toour Current Report on Form 8-K dated July 3, 2012). 10.34 Change in Control Agreement by and between Aceto Corporation and Salvatore Guccione (incorporated by reference to Exhibit 10.2 toour Current Report on Form 8-K dated July 3, 2012). 10.35 Change in Control Agreement by and between Aceto Corporation and Douglas Roth (incorporated by reference to Exhibit 10.3 to ourCurrent Report on Form 8-K dated July 3, 2012). 10.36 Change in Control Agreement by and between Aceto Corporation and Frank DeBenedittis (incorporated by reference to Exhibit 10.4 toour Current Report on Form 8-K dated July 3, 2012). 10.37 Consulting Agreement by and between Aceto Corporation and Michael Feinman (incorporated by reference to Exhibit 10.5 to ourCurrent Report on Form 8-K dated July 3, 2012). 10.38 Change in Control Agreement by and between Aceto Corporation and Charles Alaimo, dated as of July 2, 2012 (incorporated byreference to Exhibit 10.47 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.39 Change in Control Agreement by and between Aceto Corporation and Raymond Bartone, dated as of July 2, 2012 (incorporated byreference to Exhibit 10.48 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.40 Change in Control Agreement by and between Aceto Corporation and Steven Rogers dated as of July 2, 2012 (incorporated byreference to Exhibit 10.49 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.41 Change in Control Agreement by and between Aceto Corporation and Nicholas Shackley, dated as of July 2, 2012 (incorporated byreference to Exhibit 10.50 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.42 Change in Control Agreement by and between Aceto Corporation and Roger G. Weaving, Jr., dated as of July 2, 2012 (incorporatedby reference to Exhibit 10.51 to the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2012). 10.43 Aceto Corporation Executive Performance Award Plan (incorporated by reference to Appendix A to our Definitive Proxy Statement onSchedule 14A filed on October 18, 2012). 10.44 Amended and Restated Aceto Corporation 2010 Equity Participation Plan (incorporated by reference to Appendix B to our DefinitiveProxy Statement on Schedule 14A filed on October 18, 2012). 10.45 Second Amendment, dated as of December 21, 2012, to Asset Purchase Agreement, dated as of December 15, 2010, by and amongAceto Corporation, Rising Pharmaceuticals, Inc., Pearl Ventures Inc., Ronald Gold and David B. Rosen (incorporated by reference toExhibit 10.3 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2012). 84 10.46 Amendment No. 6, dated as of December 31, 2012 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, Aceto Pharma Corp., ACCI Realty Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent for Lenders(incorporated by reference to Exhibit 10.4 to the Company’s quarterly report on Form 10-Q for the quarter ended December 31, 2012). 10.47 Seventh Amendment, dated as of March 14, 2013 to the Credit Agreement, dated as of December 31, 2010, by and among AcetoCorporation, Aceto Agricultural Chemicals Corporation, CDC Products Corporation, Aceto Pharma Corp., ACCI Realty Corp.,Arsynco Inc., Aceto Realty LLC, Rising Pharmaceuticals and JPMorgan Chase Bank, N.A. as Administrative Agent for Lenders(incorporated by reference to Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2013). 10.48 Enhanced Severance Protection Letter Agreement, dated April 3, 2013 between Aceto Corporation and Douglas Roth (incorporated byreference to Exhibit 10.1 to our Current Report on Form 8-K dated April 5, 2013). 21* Subsidiaries of the Company. 23* Consent of BDO USA, LLP. 31.1* Certifications of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002. 31.2* Certifications of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002. 32.1* Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS** XBRL Instance Document 101.SCH** XBRL Taxonomy Extension Schema Document 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB** XBRL Taxonomy Extension Label Linkbase Document 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document *Filed herewith ** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes ofSections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. 85 Exhibit 21 SUBSIDIARIES OF ACETO CORPORATION Subsidiary State or other jurisdiction of corporation or organization Acci Realty Corp. New YorkAceto (Holding) B.V. The NetherlandsAceto (Hong Kong) Ltd. Hong KongAceto Agricultural Chemical Corporation Limited United KingdomAceto Agricultural Chemicals Corp. New YorkAceto B.V. The NetherlandsAceto FineChem GmbH GermanyAceto France S.A.S. FranceAceto Health Ingredients GmbH GermanyAceto Holding GmbH GermanyAceto Ltd. BermudaAceto Luxembourg S.a.r.L. LuxembourgAceto Agricultural Chemicals Corp. Mx, S De R. L. DE C.V MexicoAceto Pharma Corp. DelawareAceto Pharma India Pvt. Ltd. IndiaAceto (Shanghai) Ltd. ChinaAceto Pharma GmbH GermanyAceto Pte Ltd. SingaporeAceto Realty LLC New YorkArsynco, Inc. New JerseyCanegrass, LLC DelawarePharma Waldhof GmbH GermanyPlexvest Ltd. CyprusRising Pharmaceuticals, Inc. Delaware  Exhibit 23 Consent of Independent Registered Public Accounting Firm Aceto Corporation We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-187353, No. 333-174834, 333-149586, 33-38679,333-90929 and 333-110653) of Aceto Corporation of our reports dated August 29, 2013, relating to the consolidated financial statements and financialstatement schedule, and the effectiveness of Aceto Corporation’s internal control over financial reporting, which are incorporated by reference in this AnnualReport on Form 10-K. BDO USA, LLP Melville, New YorkAugust 29, 2013  Exhibit 31.1 CERTIFICATION I, Salvatore Guccione, certify that: 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 theRegistrant’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 reasonablylikely 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 controlover financial reporting. Dated: August 29, 2013 /s/ Salvatore Guccione President and Chief Executive Officer(Principal Executive Officer)  Exhibit 31.2 CERTIFICATION I, Douglas Roth, certify that: 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness 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 recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 theRegistrant’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 reasonablylikely 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 controlover financial reporting.Dated: August 29, 2013 /s/ Douglas Roth Chief Financial Officer(Principal Financial and Accounting Officer)  Exhibit 32.1 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, 2013 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Salvatore Guccione, President and Chief Executive Officer of theCompany, 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)The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Salvatore Guccione President and Chief Executive Officer(Principal Executive Officer)August 29, 2013  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, 2013 asfiled 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)The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Douglas Roth Chief Financial Officer(Principal Financial and Accounting Officer)August 29, 2013 

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