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UNITED STATES
SECURITIES 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 August 31, 2009

Commission File Number: 1-9852

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

Massachusetts(State or other jurisdiction of incorporation of organization)

11-1797126(I.R.S. Employer Identification No.)


26 Summer Street, Bridgewater, Massachusetts 02324(Address of Principal Executive Offices, Including Zip Code)

(508) 279-1789(Registrant's Telephone Number, Including Area Code)

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

Title of Each Class:

Name of Each Exchange on Which RegisteredCommon Stock
($0.10 Par Value)

NYSE Amex


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 ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. YES o    NO ý

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). YES o    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 best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  ý

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of
"large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer ý

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

Smaller reporting company o


Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). YES o    NO ý

The aggregate market value of the common stock held by non-affiliates of the registrant, as of February 28, 2009 (the last business day of the
registrant's second quarter of fiscal 2009), was approximately $55,403,681.

As
of October 31, 2009, the Company had outstanding 8,795,005 shares of common stock, $.10 par value, which is its only class of common stock.

Documents Incorporated By Reference:

Portions of the registrant's definitive proxy statement for the Annual Meeting of Shareholders, which is expected to be
filed within 120 days after the registrant's fiscal year ended August 31, 2009, are incorporated by reference into Part III hereof.



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CHASE CORPORATION        INDEX TO ANNUAL REPORT ON FORM 10-K    For the Year Ended August 31, 2009



Page No.PART IItem 1

Business


3Item 1A

Risk Factors


7Item 1B

Unresolved Staff Comments


9Item 2

Properties


10Item 3

Legal Proceedings


11Item 4

Submission of Matters to a Vote of Security Holders


11Item 4A

Executive Officers of the Registrant


11PART IIItem 5

Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities


12Item 6

Selected Financial Data


13Item 7

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


14Item 7A

Quantitative and Qualitative Disclosures About Market Risk


25Item 8

Financial Statements and Supplementary Data


26Item 9

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure


60Item 9A

Controls and Procedures


60Item 9B

Other Information


60PART IIIItem 10

Directors, Executive Officers and Corporate Governance


61Item 11

Executive Compensation


61Item 12

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters


61Item 13

Certain Relationships and Related Transactions, and Director
Independence


61Item 14

Principal Accountant Fees and Services


61PART IVItem 15

Exhibits and Financial Statement Schedules


62SIGNATURES


65


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PART I

ITEM 1BUSINESS

Primary Operating Divisions and Facilities and Industry Segment

Chase Corporation (the "Company," "Chase," "we," or "us") is a global manufacturer of tapes, laminates, sealants, and coatings for high
reliability applications, and a provider of contract
assembly services for the electronics industry. Our strategy is to maximize the performance of our core businesses and brands while seeking future opportunities through strategic acquisitions. We are
organized into two operating segments with multiple facilities. All plant locations are part of our Specialized Manufacturing segment with the exception of Chase EMS, which is part of our Electronic
Manufacturing Services segment. A summary of our operating structure as of August 31, 2009 is as follows:

Primary Manufacturing Location

Background/History

Key Products & ServicesSPECIALIZED MANUFACTURING SEGMENTRandolph, MA

This was one of our first operating facilities and has been producing products for the wire and cable industry for more than fifty years.

Electrical cable insulation tapes using the brand name Chase & Sons® and related products such as Chase BLH2OCK®, a water blocking compound sold to the wire and cable industry.
Insulating and conducting materials for the manufacture of electrical and telephone wire and cable, electrical splicing, and terminating and repair tapes, which are marketed to wire and cable manufacturers and public utilities.Webster, MA

We began operating this facility, which manufactures tape and related products, in 1992.
In December 2003, we acquired the assets of PaperTyger, LLC ("PaperTyger"). The PaperTyger product lines are also manufactured at this facility.

Specialty tapes and related products for the electronic and telecommunications industries using the brand name Chase & Sons®.
PaperTyger® is a trademark for laminated durable papers sold to the envelope converting and commercial printing industries.Paterson, NJ

In February 2003, Chase Facile, Inc., our wholly-owned subsidiary, acquired certain assets of Facile, Inc., located in Paterson, New Jersey.

Flexible composites and laminates for the wire & cable, aerospace and industrial laminate markets including Insulfab®, an insulation material used in the aerospace industry.Taylorsville, NC

In January 2004, we purchased certain manufacturing equipment and began operations at this facility.

Flexible packaging for industrial and retail use. Slit film for the building wire market and for telecommunication cable.Evanston, IL

In November 2001, we acquired substantially all of the assets of Tapecoat, a division of T.C. Manufacturing Inc.

Manufacturer of technologically advanced products, including the brand Tapecoat®, for demanding anti-corrosion applications in the gas, oil and marine pipeline market segments, as well as tapes and membranes for
roofing and other construction related applications.


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Primary Manufacturing Location

Background/History

Key Products & ServicesPittsburgh, PA

The HumiSeal business and product lines were acquired in the early 1970's.
The Royston business was acquired in the early 1970's.
In April 2005, we acquired certain assets of E-Poxy Engineered Materials. Additionally, in September 2006, we acquired all of the capital stock of Capital Services Joint Systems. Both of these acquisitions were combined to form the Expansion Joints
product line which is now manufactured in Pittsburgh.

Protective conformal coatings under the brand name HumiSeal®, moisture protective electronic coatings sold to the electronics industry.
Protective pipe coating tapes and other protectants for valves, regulators, casings, joints, metals, concrete, and wood which are sold under the brand name Royston®, to oil companies, gas utilities, and pipeline companies.
Rosphalt50® is a polymer additive that provides long term cost effective solutions in many applications such as waterproofing of approaches and bridges, ramps, race tracks, airports and specialty road applications.
Waterproofing sealants, expansion joints and accessories for the transportation, industrial and architectural markets.Camberley, Surrey, England

In October 2005, we acquired all of the capital stock of Concoat Holdings Ltd. and its subsidiaries. In 2006 Concoat was renamed HumiSeal Europe.
In March 2007, we expanded our international presence with the formation of HumiSeal Europe SARL in France. In conjunction with establishing the new company, certain assets were acquired from Metronelec SARL, a former distributor of HumiSeal
products.

Protective conformal coatings under the brand name HumiSeal®, moisture protective electronic coatings sold to the electronics industry.
HumiSeal Europe SARL operates a sales/technical service office and warehouse near Paris. This business works closely with the HumiSeal operation in Camberley, Surrey, England allowing direct sales and service to the French market.Rye, East Sussex, England

On September 1, 2007, we purchased certain product lines and a related manufacturing facility in Rye, East Sussex, England through our wholly owned subsidiary, Chase Protective Coatings Ltd.

Manufacturer of waterproofing and corrosion protection systems for oil, gas and water pipelines and a supplier to Europe, the Middle East and Southeast Asia. This facility joins Chase's North American based
Tapecoat® and Royston® brands to broaden the protective coatings product line and better address increasing global demand.ELECTRONIC MANUFACTURING SERVICES SEGMENTWinchester, MA

In May 1999, we acquired RWA, Inc. ("RWA"). In fiscal 2005, this division moved to Winchester, MA from Melrose, MA and is doing business as Chase EMS.

Assembly and turnkey contract manufacturing services including printed circuit board and electromechanical assembly services to the electronics industry operating principally in the United States.


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Other Business Developments

C.I.M. Industries Inc.

On September 4, 2009, we acquired all of the outstanding capital stock of C.I.M. Industries Inc. ("C.I.M."), which is
based in Peterborough, NH and has a manufacturing facility in Texas. C.I.M. is a specialized manufacturer of high performance coating and lining systems used worldwide in the liquid storage and
containment industry. With a primary focus on the water and wastewater industry, C.I.M. has the preferred products that complement our product line of high performance tapes and coatings. In its most
recently completed twelve month period ending August 31, 2009, C.I.M. revenues were approximately $9,790,000.

The
total purchase price, net of cash received, was $18,894,000, subject to certain adjustments relating to the closing date working capital. The purchase was funded through a
combination of available cash on hand, a term loan in the amount of $10,000,000 from Bank of America, and a $3,000,000 note payable to C.I.M. shareholders. The net assets acquired by us include cash,
inventories, trade receivables, property, plant & equipment, trade payables and certain other current assets and liabilities. The effective date for this acquisition was September 4,
2009. The results of this acquisition have been included in our financial statements since that date, and consequently are not reflected in our results of operations for the fiscal year ended
August 31, 2009 or any prior period.

Closing of Paterson, NJ Manufacturing Facility

In August 2009, we announced our intention to close our Paterson, NJ manufacturing facility effective December 31, 2009. Since
its acquisition, this operation has been part of our Specialized Manufacturing segment and its key product offerings include flexible composites and laminates for the wire & cable, aerospace
and industrial laminate markets. We will be transitioning production to other Chase manufacturing sites with similar capabilities.

Sale of Northeast Quality Products ("NEQP") Business

In August 2009, we sold our NEQP specialty custom label printing business to Label Tech, Inc. of Somersworth, NH for $185,000.
This business was originally acquired by Chase in 1999 and was part of our Specialized Manufacturing segment. With the challenges of the current economy and increased competition, we determined it was
the right time for us to divest the label printing business while remaining focused on our core product offerings.

Sale of West Bridgewater, MA Property

In June 2009, we sold real property (land and building) to ChaseBay Real Estate Holdings, Inc. for $1,370,000. The building and
land are located in West Bridgewater, MA and are currently being occupied by Sunburst Electronics Manufacturing Solutions, Inc. The sale of the property resulted in an accounting charge of
approximately $262,000 which was recorded in our third quarter ending May 31, 2009 and represents the write down of the book value of the land and building sold to its market value at the time
of the sale, as required by generally accepted accounting principles. This transaction was completed with a related party, see notes to financial statements for additional details.

Products and Markets

Our principal products are specialty tapes, laminates, sealants and coatings that are sold by our salespeople, manufacturers'
representatives and distributors. In our Specialized Manufacturing segment, these products consist of:



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In
addition, our Electronic Manufacturing Services segment provides circuit board assembly and contract manufacturing services to electronic goods manufacturers.

There
is some seasonality with our product offerings sold into the construction market as increased demand is often experienced when temperatures are warmer (April through October) with
less demand occurring when temperatures are colder (typically our second fiscal quarter). We did not introduce any new products or segments requiring an investment of a material amount of our assets
during fiscal year 2009.

Employees

As of October 31, 2009, we employed approximately 365 people (including union employees). We consider our employee relations to
be good. In the U.S., we offer our employees a wide array of company-paid benefits, which we believe are competitive relative to others in our industry. In our operations outside the U.S.,
we offer benefits that may vary from those offered to our U.S. employees due to customary local practices and statutory requirements.

Backlog, Customers and Competition

As of October 31, 2009, the backlog of orders believed to be firm was approximately $12,756,000 of which $7,980,000 was related
to our Electronic Manufacturing Services segment. This compared with a total of $16,369,000 as of October 31, 2008 of which $7,476,000 was associated with our Electronic Manufacturing Services
segment. The backlog of orders in the Specialized Manufacturing segment has some seasonality due to the construction season. During fiscal 2009, 2008 and 2007, no customer accounted for more than 10%
of sales. No material portion of our business is subject to renegotiation or termination of profits or contracts at the election of the United States Federal Government.

There
are other companies that manufacture or sell products and services similar to those made and sold by Chase. Many of those companies are larger and have greater financial resources
than we have. We compete principally on the basis of technical performance, service reliability, quality and price.

Raw Materials

We obtain raw materials from a wide variety of suppliers with alternative sources of most essential materials available within
reasonable lead times.

Patents, Trademarks, Licenses, Franchises and Concessions

We own the following trademarks that we believe are of material importance to our business: Chase Corporation®,
C-Spray (Logo), a trademark used in conjunction with most of the company's business segment and product line marketing material and communications; HumiSeal®, a trademark for
moisture protective coatings sold to the electronics industry; Chase & Sons® and Chase Facile®, trademarks for barrier and insulating tapes sold to the wire and cable
industry; Chase BLH2OCK®, a trademark for a water blocking compound sold to the wire and cable industry; Rosphalt50®, a trademark for an asphalt additive used
predominantly on bridge decks for waterproofing protection; Insulfab®, a trademark for insulation material used in the aerospace industry; PaperTyger®, a trademark for
laminated durable papers sold to the envelope converting and commercial printing industries, Tapecoat®, a trademark for corrosion preventative surface coatings and primers;
Royston®, a trademark for corrosion inhibiting coating composition for use on pipes; and Eva-Pox® and Ceva®, trademarks for epoxy pastes/gels/mortars
and elastomeric concrete used in the construction industry. We do not have any other material trademarks, licenses,

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franchises,
or concessions. While we do hold various patents, at this time, we do not believe that they are material to the success of our business.

Working Capital

We fund our business operations through a combination of available cash and cash equivalents, short-term investments and
cash flows generated from operations. In addition, our revolving credit facility is available for additional working capital needs or investment opportunities.

Research and Development

Approximately $1,632,000, $1,698,000 and $1,965,000 was spent for Company-sponsored research and development during fiscal 2009, 2008
and 2007, respectively. Research and development was relatively flat in 2009 compared to 2008 but decreased by $267,000 in fiscal 2008 compared to 2007 primarily due to diligent cost management
practices and continued efficiency improvements that led to cost savings during fiscal 2008.

Available Information

Chase maintains a website atwww.chasecorp.com. We make available, free of charge on
our website, our Annual Report on Form 10-K, as soon as reasonably practicable after such report is electronically filed with the SEC. Additionally, our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge at the SEC's website atwww.sec.gov.
Information contained on our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K.

Financial Information About Segments and Geographic Areas

Please see Notes 11 and 12 to the Company's Consolidated Financial Statements for financial information about the Company's
industry segments and domestic and foreign operations for each of the last three fiscal years.

ITEM 1ARISK FACTORS

The following risk factors should be read carefully in connection with evaluating our business and the forward-looking information
contained in this Annual Report on Form 10-K. We feel that any of the following risks could materially adversely affect our business, operations, industry, financial position or our
future financial performance. While we believe that we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not
presently known or that are not currently believed to be significant that may adversely affect our business, operations, industry, financial position and financial performance in the future.

We currently operate in mature markets where increases or decreases in market share could be significant.

Our sales and net income are largely dependent on recurring sales from a consistent and established customer base. Organic growth
opportunities are minimal; however, we have and will continue to use strategic acquisitions as a means to build and grow the business. In this business environment, increases or decreases in market
share could have a material effect on our business condition or results of operation. We face intense competition from a diverse range of competitors, including operating divisions of companies much
larger and with far greater resources than we have. If we are unable to maintain our market share, our business could suffer.

Our business strategy includes the pursuit of strategic acquisitions, which may not be successful if they happen at all.

From time to time, we engage in discussions with potential target companies concerning potential acquisitions. In executing our
acquisition strategy, we may be unable to identify suitable acquisition candidates. In addition, we may face competition from other companies for acquisition candidates, making it more difficult to
acquire suitable companies on favorable terms.

Even
if we do identify a suitable acquisition target and are able to negotiate and close a transaction, the integration of an acquired business into our operations involves numerous
risks, including potential difficulties in

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integrating
an acquired company's product line with ours; the diversion of our resources and management's attention from other business concerns; the potential loss of key employees; limitations
imposed by antitrust or merger control laws in the United States or other jurisdictions; risks associated with entering a new geographical or product market; and the day-to-day
management of a larger and more diverse combined company.

We
may not realize the synergies, operating efficiencies, market position or revenue growth we anticipate from acquisitions and our failure to effectively manage the above risks and
other problems associated with acquisitions could have a material adverse effect on our business, growth prospects and financial performance.

General economic factors, domestically and internationally, may adversely affect our financial performance through increased raw material costs or other expenses and by
making access to capital more difficult.

The cumulative effect of higher interest rates, energy costs, inflation, levels of unemployment, healthcare costs, unsettled financial
markets, and other economic factors could adversely affect our financial condition by increasing our manufacturing costs and other expenses at the same time that our customers may be scaling back
demand for our products. Prices of certain commodity products, including oil and petroleum-based products are historically volatile and are subject to fluctuations arising from changes in domestic and
international supply and demand, labor costs, competition, weather events, market speculation, government regulations and periodic delays in delivery. Rapid and significant changes in commodity prices
may affect our sales and profit margins. These factors can also increase our merchandise costs and/or selling, general and administrative expenses, and otherwise adversely affect our operations and
results. Recent turmoil in the credit markets may limit our ability to access debt capital for use in acquisitions or other purposes on advantageous terms or at all. If we are unable to manage our
expenses in response to general economic conditions and margin pressures, or if we are unable to obtain capital for strategic acquisitions or other needs, then our results of operations would be
negatively affected.

Fluctuations in the supply and prices of raw materials may negatively impact our financial results.

We obtain raw materials needed to manufacture our products from a number of suppliers. Many of these raw materials are petroleum-based
derivatives. Under normal market conditions, these materials are generally available on the open market and from a variety of producers. From time to time, however, the prices and availability of
these raw materials fluctuate, which could impair our ability to procure necessary materials, or increase the cost of manufacturing our products. If the prices of raw materials increase, and we are
unable to pass these increases on to our customers, we could experience reduced profit margins.

We are dependent on key personnel.

We depend significantly on our executive officers including Chairman and Chief Executive Officer, Peter R. Chase, and on other key
employees. The loss of the services of any of these key employees could have a material impact on our business and results of operations. In addition, our acquisition strategy will require that we
attract, motivate and retain additional skilled and experienced personnel. The inability to satisfy such requirements could have a negative impact on our ability to remain competitive in the future.

If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in expanding our international operations.

Our strategy includes expansion of our operations in existing and new international markets by selective acquisitions and strategic
alliances. Our ability to successfully execute our strategy in international markets is affected by many of the same operational risks we face in expanding our U.S. operations. In addition, our
international expansion may be adversely affected by our ability to identify and gain access to local suppliers as well as by local laws and customs, legal and regulatory constraints, political and
economic conditions and currency regulations of the countries or regions in which we currently operate or intend to operate in the future. Risks inherent in our international operations also include,
among others, the costs and difficulties of managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights. Additionally, foreign currency
exchange rates and fluctuations may have an impact our future costs or on future cash flows from our international operations.

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Our results of operations could be adversely affected by uncertain economic and political conditions and the effects of these conditions on our customers' businesses and
levels of business activity.

Global economic and political conditions can affect the businesses of our customers and the markets they serve. A severe or prolonged
economic downturn or a negative or uncertain political climate could adversely affect the levels of business activity of our customers and the industries they serve, including the automotive, housing,
construction, transportation infrastructure and electronics manufacturing industries. This may reduce demand for our products or depress pricing of those products, either of which may have a material
adverse effect on our results of operations. Changes in global economic conditions could also shift demand to products for which we do not have competitive advantages, and this could negatively affect
the amount of business that we are able to obtain. In addition, if we are unable to successfully anticipate changing economic and political conditions, we may be unable to effectively plan for and
respond to those changes and our business could be negatively affected.

Financial market performance may have a material adverse effect on our pension plan assets and require additional funding requirements.

Significant and sustained declines in the financial markets may have a material adverse effect on the fair market value of our pension
plan assets. While these pension plan assets are considered non-financial assets since they are not carried on our balance sheet, the fair market valuation of these assets could impact our
funding requirements, funded status or net periodic pension cost. Any significant and sustained declines in the fair market value of these pension assets could require us to increase our funding
requirements which would have an impact on our cash flow, and could also lead to additional pension expense.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our
financial results.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with
regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, inventories, pensions valuation and tax matters, are highly complex and involve many
subjective assumptions, estimates and judgments. Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or
expected financial performance or financial condition. In addition, the Financial Accounting Standards Board issued SFAS No. 141R, "Business Combinations", which will have an impact on our
accounting for future business combinations. The effect will be dependent upon acquisitions completed by us after August 31, 2009.

ITEM 1BUNRESOLVED STAFF COMMENTS

None

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ITEM 2PROPERTIES

We own and lease office and manufacturing properties as outlined in the table below.

Location

Square
Feet

Operating Segment

Owned/
Leased

Principal UseBridgewater, MA


5,200

Corporate


Owned

Corporate headquarters and executive officeRandolph, MA


77,500

Specialized Manufacturing


Owned

Manufacture of electrical protective coatings and tape productsWebster, MA


25,000

Specialized Manufacturing


Owned

Manufacture of tape and related products for the electronic and telecommunications industries, as well as laminated durable
papersOxford, MA(a)


73,600

Specialized Manufacturing


Owned

Under renovation to provide capacity for storage needs and future growthPaterson, NJ(b)


40,000

Specialized Manufacturing


Leased

Manufacture of tape and related products for the electronic and telecommunications industriesTaylorsville, NC


50,000

Specialized Manufacturing


Leased

Manufacture of flexible packaging for industrial and retail useTaylorsville, NC


2,500

Specialized Manufacturing


Leased

Storage warehouseCranston, RI


500

Specialized Manufacturing


Leased

Sales officeTaunton, MA


5,200

Specialized Manufacturing


Leased

Research and development, and technical centerPittsburgh, PA


44,000

Specialized Manufacturing


Owned

Manufacture and sale of protective coatings and tape productsO'Hara Township, PA


109,000

Specialized Manufacturing


Owned

Manufacture and sale of protective coatings, expansion joints and accessoriesEvanston, IL(c)


100,000

Specialized Manufacturing


Leased

Manufacture and sale of protective coatings and tape productsAlbany, NY


2,250

Specialized Manufacturing


Leased

Sales officeCamberley, Surrey, England


6,700

Specialized Manufacturing


Leased

Manufacture and sales of protective electronic coatingsRye, East Sussex, England


36,600

Specialized Manufacturing


Owned

Manufacture and sales of protective coatings and tape productsParis, France


1,350

Specialized Manufacturing


Leased

Sales/technical service office and warehouse allowing direct sales and service to the French market.Winchester, MA


25,000

Electronic Manufacturing


Leased

Manufacturing and sales for the Electronic Manufacturing Services segment


(a)In
December 2008, we purchased real property (land and building) in Oxford, MA. We began initial renovations to this property during fiscal 2009 and plan to
use it for storage in order to reduce off-site storage expenses as well as provide capacity for future growth. In FY2010, we will continue to evaluate this property in order to determine
the best long term future use for this land and building.(b)In
August 2009, we announced our intention to close our Paterson, NJ manufacturing facility effective December 31, 2009, and to transition production
to other Chase manufacturing sites with similar capabilities.(c)In
June 2009, we entered into a sale leaseback transaction whereby we sold our real property (land and building) located in Evanston, IL. We have agreed to
provide financing to the purchaser, and the purchaser has agreed to lease the property back to us for a term of 49 months. The term coincides with the period over which the financing will be
repaid to us.


The above facilities range in age from new to about 100 years, are generally in good condition and, in the opinion of management, adequate
and suitable for present operations. We also own equipment and machinery that is in good repair and, in the opinion of management, adequate and suitable for present operations. We could significantly
add to our capacity by increasing shift operations. Availability of machine hours through additional shifts would provide expansion of current product volume without significant additional capital
investment.

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ITEM 3LEGAL PROCEEDINGS

We are one of over 100 defendants in a personal injury lawsuit, pending in Ohio, which alleges personal injury from exposure to
asbestos contained in certain Chase products. The case is captioned Marie Lou Scott, Executrix of the Estate of James T. Scott v. A-Best Products, et al., No. 312901 in the Court of
Common Pleas for Cuyahoga County, Ohio. The plaintiff in the case issued discovery requests to us in August 2005, to which we timely responded in September 2005. The trial had initially been scheduled
to begin on April 30, 2007. However, that date had been postponed and no new trial date has been set. As of October 2009, there have been no new developments as this Ohio lawsuit has been
inactive with respect to us.

We
were named as one of the defendants in a complaint filed on June 25, 2009, in a lawsuit captioned Lois Jansen, Individually and as Special Administrator of the Estate of Thomas
Jansen v. Beazer East, Inc., et al., No: 09-CV-6248 in the Milwaukee County (Wisconsin) Circuit Court. The plaintiff alleges that her husband suffered and died from
malignant mesothelioma resulting from exposure to asbestos in his workplace. The plaintiff has sued seven alleged manufacturers or distributors of asbestos-containing products, including Royston
Laboratories (formerly an independent company and now a division of Chase Corporation). We have filed an answer to the claim denying the material allegations in the complaint. The parties are
currently engaged in discovery.

In
addition to the matters described above, we are involved from time to time in litigation incidental to the conduct of our business. Although we do not expect that the outcome in any
of these matters, individually or collectively, will have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, judgments
could be rendered or settlements entered, that could adversely affect our operating results or cash flows in a particular period. We routinely assess all of our litigation and threatened litigation as
to the probability of ultimately incurring a liability, and record our best estimate of the ultimate loss in situations where we assess the likelihood of loss as probable.

ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of our security holders during the fourth quarter of our fiscal year ended August 31,
2009.

ITEM 4AEXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth information concerning our Executive Officers as of August 31, 2009. Each of our Executive
Officers is selected by our Board of Directors and holds office until his successor is elected and qualified.

Name

Age

Offices Held and Business Experience during the Past Five YearsPeter R. Chase


61

Chairman of the Board of the Company since February 2007, and Chief Executive Officer of the Company since September 1993.Adam P. Chase


37

President of the Company since January 2008, Chief Operating Officer of the Company since February 2007, Vice President Operations February 2006 through February 2007, and Vice President Chase Coating &
Laminating Division March 2003 through February 2007.Kenneth L. Dumas


38

Chief Financial Officer and Treasurer of the Company since February 2007, Director of Finance February 2006 through January 2007, and Corporate Controller January 2004 through January 2007.Terry M. Jones


48

Vice President Corporate Development since December 2008, Chief Marketing Officer February 2007 through December 2008, Vice President Marketing and Business Development February 2006 through February 2007, and Vice
President Specialty Coatings Division August 2002 through February 2007.Gregory A. Pelagio


65

Vice President Engineering since September 2008, and Vice President and General Manager of Pittsburgh operations since January 1993.


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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 NYSE Amex under the symbol CCF. As of October 31, 2009, there were 450 shareholders of record
of our Common Stock and approximately 3,158 beneficial shareholders who held shares in nominee name. On that date, the closing price of our common stock was $12.00 per share as reported by the NYSE
Amex.

The
following table sets forth the high and low daily sales prices for our common stock as reported by the NYSE Amex for each quarter in the fiscal years ended August 31, 2009 and
2008:

Fiscal 2009

Fiscal 2008High

Low

High

LowFirst Quarter

$
17.62

$
9.45

$
22.00

$
16.75Second Quarter


14.81


9.00


29.04


19.00Third Quarter


13.50


7.00


24.95


16.05Fourth Quarter


12.79


10.07


19.77


14.79


Single
annual cash dividend payments were declared and paid subsequent to year end in the amounts of $0.20, $0.35, and $0.25 per common share, for the years ended August 31, 2009,
2008 and 2007, respectively. Certain borrowing facilities of ours contain financial covenants which may have the effect of limiting the amount of dividends that we can pay.

Comparative Stock Performance

The following line graph compares the yearly percentage change in our cumulative total shareholder return on the Common Stock for the
last five fiscal years with the cumulative total return on the Standard & Poor's 500 Stock Index (the "S&P 500 Index"), and a composite peer index that is weighted by market equity
capitalization (the "Peer Group Index"). The companies included in the Peer Group Index are American Biltrite Inc., Material Sciences Corporation, Intertape Polymer Group Inc., Quaker
Chemical Corporation and Flamemaster Corp. Cumulative total returns are calculated assuming that $100 was invested on August 31, 2004 in each of the Common Stock, the S&P 500 Index and
the Peer Group Index, and that all dividends were reinvested.

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100 on August 31, 2004

GRAPHIC

2004

2005

2006

2007

2008

2009Chase Corp

$
100

$
89

$
106

$
222

$
225

$
152S&P 500 Index

$
100

$
113

$
123

$
141

$
125

$
102Peer Group Index

$
100

$
92

$
82

$
70

$
72

$
43


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Table of Contents

ITEM 6SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with "Item 7Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Item 8Financial Statements and Supplementary Data".

Fiscal Years Ended August 31,2009

2008

2007

2006

2005(In thousands, except per share amounts)Statement of Operations DataRevenues

$
107,606

$
132,478

$
127,460

$
108,442

$
91,389Net income


6,385


12,374


10,193


6,114


4,788Net income per common sharebasic

$
0.76

$
1.50

$
1.26

$
0.79

$
0.63Net income per common sharediluted

$
0.73

$
1.43

$
1.22

$
0.77

$
0.61Balance Sheet DataTotal assets

$
91,066

$
90,297

$
83,965

$
78,837

$
63,927Long-term debt and capital leases








3,823


10,288


9,569Total stockholders' equity


70,213


66,186


56,212


46,074


38,840Cash dividends per common share(a)

$
0.20

$
0.35

$
0.25

$
0.20

$
0.175


(a)Single
annual dividend payments declared and paid subsequent to fiscal year end. Note:
Information related to our acquisitions and dispositions can be found in the Recent Developments and Overview sections of "Item 7Management's Discussion and Analysis of
Financial Condition and Results of Operations".


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ITEM 7MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides an analysis of our financial condition and results of operations and should be read in conjunction
with the Consolidated Financial Statements and notes thereto included in Item 8 of this Annual Report on Form 10-K.

Selected Relationships within the Consolidated Statements of Operations

Years Ended August 31,2009

2008

2007(Dollars in thousands)Revenues

$
107,606

$
132,478

$
127,460Net income

$
6,385

$
12,374

$
10,193Increase/(Decrease) in revenue from prior yearAmount

$
(24,872
)
$
5,018

$
19,018Percentage


(19
)%

4
%

18
%Increase/(Decrease) in net income from prior yearAmount

$
(5,989
)
$
2,181

$
4,079Percentage


(48
)%

21
%

67
%Percentage of revenue:Revenues


100
%

100
%

100
%Expenses:Cost of products and services sold


70
%

68
%

69
%Selling, general and administrative expenses


20


18


17Loss on impairment of assets


1


0


1Income before income taxes


9


14


13Income taxes


3


5


5Net income


6
%

9
%

8
%


Recent Developments

On September 4, 2009, we acquired all of the outstanding capital stock of C.I.M. Industries Inc. ("C.I.M."), which is
based in Peterborough, NH and has a manufacturing facility in Texas. C.I.M. is a specialized manufacturer of high performance coating and lining systems used worldwide in the liquid storage and
containment industry. With a primary focus on the water and wastewater industry, C.I.M. has the preferred products that complement our product line of high performance tapes and coatings. In its most
recently completed twelve month period ending August 31, 2009, C.I.M. revenues were approximately $9,790,000.

The
total purchase price, net of cash received, was $18,894,000, subject to certain adjustments relating to the closing date working capital. The purchase was funded through a
combination of available cash on hand, a term loan in the amount of $10,000,000 from Bank of America, and a $3,000,000 note payable to C.I.M. shareholders. The net assets acquired by us include cash,
inventories, trade receivables, property, plant & equipment, trade payables and certain other current assets and liabilities. The effective date for this acquisition was September 4,
2009. The results of this acquisition have been included in our financial statements since that date, and consequently are not reflected in our results of operations for the fiscal year ended
August 31, 2009 or any prior period.

Overview

Following a record year in 2008 for both sales and profits, we were faced with numerous challenges during the 2009 fiscal year as the
global recession negatively impacted most of our core product offerings and led to sales and profits in the current fiscal year well below the levels observed in the prior year. The continued declines
in two of the larger industries we service, the housing market and worldwide automotive sector, have caused us to reset our expectations and refocus our priorities. We emphasized our efforts to review
and consolidate costs where possible, achieved production efficiencies via continuous improvement plans, and identify new business opportunities through sales, marketing and product development teams.
Additionally, we are focused on continuing

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to
support our long term consolidation plans, facility and process improvements and R&D for new and improved product offerings.

Revenues
from our Specialized Manufacturing segment were below those of the prior year primarily due to lower demand for pipeline and wire and cable products. Additionally, as previously
mentioned, the downturn in the automotive and housing market has negatively impacted sales of our HumiSeal conformal coatings which is used to protect electronic circuitry in automobiles and home
appliances. The financial results of our European operations were negatively impacted in fiscal 2009 by the weakened pound sterling whose value against the dollar decreased 11% from August 2008 to
August 2009. While fiscal 2009 results were disappointing for this segment, some new business opportunities have been achieved to offset some of the automotive and housing loss, and we experienced
increased activity in some sectors during the later stages of the fiscal year.

The
Chase Electronic Manufacturing Services segment also faced softness in some key market segments which led to decreased customer demand during fiscal 2009. Lower sales and profits in
fiscal 2009 compared to the prior year period reflect the reduced order backlog experienced by this segment as many of our key customers continue to assess their inventory levels and their own
customer demand. We continue to have strong relationships with our customers in this segment, even though overall volume is down from what was experienced in fiscal 2008.

In
the upcoming fiscal year, our key strategies will include continuous improvement, long term consolidation, product and market development and a targeted acquisition effort. We
maintained strong positive cash flows throughout fiscal 2009 and ended the fiscal year with our healthiest balance sheet ever. Despite the uncertainty of the current economic climate, we will continue
to focus on our long terms strategic goals. This was evidenced by our acquisition
of C.I.M. in the first quarter of fiscal 2010. Additionally, we have recently announced the planned December 2009 closing of the Paterson, NJ plant whose manufacturing will be redistributed to other
Chase facilities, and we will be starting up a new coatings plant in Pittsburgh during the same timeframe.

The
Company has two reportable segments summarized below:

Segment

Product Lines

Manufacturing Focus and ProductsSpecialized Manufacturing


Wire and Cable Electronic Coatings Pipeline & ConstructionSpecialty Products

Produces protective coatings and tape products including insulating and conducting materials for wire and cable manufacturers, protective coatings for pipeline applications, moisture protective coatings for electronics,
high performance polymeric asphalt additives, and expansion and control joint systems for use in the transportation and architectural markets.Electronic Manufacturing Services


Contract Electronic Manufacturing Services

Provides assembly and turnkey contract manufacturing services including printed circuit board and electromechanical assembly
services to the electronics industry operating principally in the United States.


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Table of Contents

Results of Operations

Revenues and Operating Profit by Segment are as follows

Revenues

Income Before
Income Taxes

% of Revenues(Dollars in thousands)Fiscal 2009Specialized Manufacturing

$
91,236

$
13,899
(a)

15
%Electronic Manufacturing Services


16,370


1,718


10$
107,606


15,617


15Less corporate and common costs





(5,796
)(b)Income before income taxes




$
9,821Fiscal 2008Specialized Manufacturing

$
113,177

$
22,434


20
%Electronic Manufacturing Services


19,301


2,138


11$
132,478


24,572


19Less corporate and common costs





(5,288
)Income before income taxes




$
19,284Fiscal 2007Specialized Manufacturing

$
109,195

$
20,094
(a)

18
%Electronic Manufacturing Services


18,265


2,040


11$
127,460


22,134


17Less corporate and common costs





(5,955
)Income before income taxes




$
16,179


(a)Includes
loss on impairment of goodwill of $237 in 2009 and $311 in 2007(b)Includes
loss on impairment of assets of $262


Total Revenues

Total revenues for fiscal 2009 decreased $24,872,000 or 19% to $107,606,000 from $132,478,000 in the prior year. Revenues in our
Specialized Manufacturing segment decreased $21,941,000 or 19% to $91,236,000 for the year ended August 31, 2009 compared to $113,177,000 in fiscal 2008. The decrease in revenues from our
Specialized Manufacturing segment in fiscal 2009 was primarily due to the following: (a) decreased sales of $6,263,000 in the Electronic Coatings product lines due to reduced demand in the
electronic and automotive markets; (b) decreased sales of $7,546,000 in the Wire & Cable market primarily due to less demand in the energy and communications markets;
(c) decreased sales of $2,392,000 in the Pipeline and Construction product lines; and (d) decreased sales of $5,014,000 in Specialty products.

Revenues
from our Electronic Manufacturing Services segment decreased $2,931,000 or 15% to $16,370,000 for the year ended August 31, 2009 compared to $19,301,000 for fiscal 2008.
The reduced sales in fiscal 2009 is primarily a result of decreased customer orders and projects as many of our key customers continue to assess their inventory levels and closely monitor their own
customers' demand during this economic downturn. The backlog for this segment as of August 31, 2009 was $6,500,000 compared to $8,500,000 at August 31, 2008.

Royalties
and commissions in the Specialized Manufacturing segment were $1,077,000, $1,775,000 and $1,792,000 for the years ended August 31, 2009, 2008 and 2007, respectively. The
decrease in royalties and commissions in fiscal 2009 from the prior two fiscal years was due to decreased sales of conformal coatings from our licensed manufacturer in Asia.

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Export
sales from domestic operations to unaffiliated third parties were $14,611,000, $15,818,000 and $14,126,000 for the years ended August 31, 2009, 2008 and 2007, respectively.
We anticipate future growth in our export sales due to the C.I.M. acquisition that was recently completed in September 2009.

Total
revenues for fiscal 2008 increased $5,018,000 or 4% to $132,478,000 from $127,460,000 in fiscal 2007. Revenues in our Specialized Manufacturing segment increased $3,982,000 or 4%
to $113,177,000 for the year ended August 31, 2008 compared to $109,195,000 in fiscal 2007. The increase in revenues from this segment in fiscal 2008 was primarily due to increased sales
related to the following: (a) the operations acquired by HumiSeal Europe SARL in March 2007 and Chase Protective Coatings Ltd. in September 2007 which combined accounted for
the majority of the $5,546,000 increased revenue from European operations; (b) increased sales of $1,578,000 from the Pipeline product line; (c) increased sales of $1,616,000 from the
Electronic Coatings product line; and (d) increased sales of $926,000 from a large, nonrecurring construction project that was completed in fiscal 2008 year. These increases were
partially offset by the following: (a) decreased sales of $2,477,000 in the Wire & Cable market primarily due to decreased demand for building wire, insulation and identification tapes
during fiscal 2008; (b) decreased sales of $1,549,000 in the Transportation and Packaging & Industrial product lines; and (c) decreased sales of $945,000 in the Construction
product line primarily due to the reduction in Rosphalt 50® project sales which had experienced record levels in fiscal 2007.

The
Electronic Manufacturing Services segment achieved record revenues in fiscal 2008 which increased $1,036,000 or 6% to $19,301,000 compared to $18,265,000 in fiscal 2007. This was
primarily due to increased order activity from existing customers as well as several new customers added during fiscal year 2008.

Cost of Products and Services Sold

Cost of products and services sold decreased $13,938,000 or 16% to $75,742,000 for the fiscal year ended August 31, 2009
compared to $89,680,000 in fiscal 2008. As a percentage of revenues, cost of products and services sold increased to 70% in fiscal 2009 compared to 68% for fiscal 2008.

The
following table summarizes the relative percentages of costs of products and services sold to revenues for both of the Company's reporting segments:

Fiscal Years Ended
August 31,Cost of products and services sold

2009

2008

2007Specialized Manufacturing


68
%

65
%

67
%Electronic Manufacturing Services


82
%

82
%

82
%Total


70
%

68
%

69
%


Cost
of products and services sold in our Specialized Manufacturing segment were $62,261,000 for the fiscal year ended August 31, 2009 compared to $73,768,000 in fiscal 2008. As a
percentage of revenues, cost of products and services sold in the Specialized Manufacturing segment increased due to decreased sales of our higher margin products and the resulting larger share of
total sales that were made up of lower margin products, coupled with the impact of fixed manufacturing overhead costs on a lower revenue base. These increases were partially offset by the favorable
impact of ongoing cost reduction efforts and continued focus on raw material costs through supply chain management. We continue to face challenges with margin pressures across many of our key product
lines.

Cost
of products and services sold in our Electronic Manufacturing Services segment were $13,481,000 for the fiscal year ended August 31, 2009 compared to $15,912,000 in fiscal
2008. As a percentage of revenues, cost of products and services sold in the Electronic Manufacturing Services segment remained relatively flat as cost savings initiatives were able to offset our
fixed costs on a lower revenue base and some increased costs related to facility and production improvements that were incurred earlier in the current fiscal year as a result of this segment's focus
on generating new customer orders.

In
fiscal 2008, cost of products and services sold increased $1,790,000 or 2% to $89,680,000 compared to $87,890,000 in the prior fiscal year. As a percentage of revenues, cost of
products and services sold decreased to 68% in fiscal 2008 compared to 69% for fiscal 2007. Cost of products and services sold in our Specialized Manufacturing segment were $73,768,000 for the fiscal
year ended August 31, 2008 compared to $72,896,000 in fiscal 2007. The dollar value increase in cost of products and services sold in this segment during fiscal 2008 was primarily attributable
to increased revenues offset by our emphasis on leveraging fixed costs and improving

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manufacturing
efficiencies. The decrease in cost of products and services sold as a percentage of revenues in this segment during fiscal 2008 was a direct result of a favorable product mix coupled
with continued focus and scrutiny on material purchases that helped stabilize margins on many of our key product lines.

Cost
of products and services sold in our Electronic Manufacturing Services segment were $15,912,000 for the fiscal year ended August 31, 2008 compared to $14,994,000 in fiscal
2007. As a percentage of revenues, cost of products and services sold in this segment remained flat in fiscal 2008 compared to 2007. This reflects increased manufacturing costs and competitive pricing
pressures placed on this segment by many of its key customers in fiscal 2008, offset by our ability to leverage fixed overhead costs on a higher revenue base.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $1,966,000 or 8% to $21,985,000 during fiscal 2009 compared to $23,951,000 in
fiscal 2008. As a percentage of revenues, selling, general and administrative expenses increased to 20% in fiscal 2009 compared to 18% for fiscal 2008. The dollar decrease in fiscal 2009 relates
primarily to our continued emphasis on controlling costs, including reduced annual incentive compensation, travel and external consulting costs. Additionally, lower revenues in fiscal 2009 compared to
the prior year have led to decreased sales commissions and other selling related expenses.

Selling,
general and administrative expenses increased $1,530,000 or 7% to $23,951,000 during fiscal 2008 compared to $22,421,000 in fiscal 2007. As a percentage of revenues, selling,
general and administrative expenses remained flat at 18% for the years ended August 31, 2008 and 2007. The dollar increase in fiscal 2008 related primarily to increased employee head count due
to acquisitions along with rising employee-related benefits, including health care costs, and increased stock based compensation costs of approximately $778,000 related to our long term incentive
plan. The increases in fiscal 2008 were partially offset by a decrease of approximately $300,000 in costs related to professional services required for compliance with the internal control reporting
requirements of Section 404 of the Sarbanes-Oxley Act compared to fiscal 2007, which was our initial year of compliance.

In
fiscal 2009, we had recoveries of previously identified bad debt that exceeded additions to bad debt expense for the year, resulting in a net gain of $41,000. This gain of $41,000 in
fiscal 2009 compared to bad debt expense of $53,000 and $268,000 in fiscal 2008 and 2007, respectively. The improvements in both fiscal 2009 and 2008 as compared to fiscal 2007 were the direct result
of management's strict adherence to its established credit policies as well as closely monitoring the accounts receivable function and taking a proactive approach to the collections process.

Loss on Impairment of Goodwill

In fiscal 2009, based on the decrease in sales activity in the current year and the completion of the fiscal 2010 budget, we determined
that the carrying value of goodwill associated with our Northeast Quality Products ("NEQP") division may not be recoverable. Accordingly, we performed a goodwill impairment analysis. Based on the
present value of future cash flows utilizing projected results for the balance of fiscal year 2009 and projections for future years based on the fiscal year 2010 budgeting process, the goodwill
impairment analysis yielded results that would not support the current book value of the goodwill associated with this division. As a result, we concluded that the carrying amount of goodwill for the
NEQP division was not fully recoverable and an impairment charge of $237,000 was recorded as of May 31, 2009. Goodwill related to NEQP, having a pre-impairment book value of
$349,000, was written down to its fair value of $112,000 in accordance with generally accepted accounting principles. The NEQP division was sold on August 14, 2009, and the adjusted fair value
of $112,000 was realized upon the sale.

Loss on Impairment of Fixed Assets

In fiscal 2009, we recorded a $262,000 charge related to the impairment of real property (land and building) located in West
Bridgewater, MA which was being leased to Sunburst Electronics Manufacturing Solutions, Inc. The real property, having a pre-impairment book value of $1,632,000, was written down to
its fair value of $1,370,000, which was realized upon the June 24, 2009 sale of the property.

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Interest Expense

Interest expense was $17,000 in fiscal 2009 compared to $40,000 and $900,000 in fiscal 2008 and 2007, respectively. The decrease in
interest expense during the past two fiscal years is a direct result of a reduction in our overall debt balances through principal payments from operating cash flow. We anticipate an increase to
interest expense in fiscal 2010 due to our $10 million term loan agreement and $3 million promissory notes related to the acquisition of C.I.M. in September 2009.

Other Income

Other income decreased $19,000 to $458,000 in fiscal 2009 compared to $477,000 and $241,000 in fiscal 2008 and 2007, respectively.
Other income includes bank interest and foreign exchange gains in Europe earned by our Humiseal Europe division and rental income of $149,000 on real property (building and land) that we owned and
leased to Sunburst Electronic Manufacturing Solutions, Inc. (and subsequently sold in June 2009 as discussed previously). The increase in fiscal 2008 compared to 2007 consists primarily of bank
interest and exchange gains earned by our HumiSeal Europe division.

Income Taxes

The effective tax rate for fiscal 2009 was 34.9% compared to 35.8% and 37.0% in fiscal 2008 and 2007, respectively. In all three years,
we have received the benefit of the domestic production deduction and foreign rate differential. The decrease in the effective tax rate in fiscal 2009 as compared to fiscal 2008 is primarily due to a
more favorable effective state income tax rate in 2009. The effective tax rate of 35.8% for fiscal 2008 compares favorably to 2007 due to an increase in the applicable domestic production deduction
for the year.

Net Income

Net income in fiscal 2009 decreased $5,989,000 or 48% to $6,385,000 compared to $12,374,000 in fiscal 2008. The decrease in net income
in the current year is a direct result of decreased revenue across all of our core product lines as discussed previously. Additionally, net income was negatively impacted in the current year by the
impairment of our West Bridgewater, MA real property and the impairment of goodwill from NEQP.

Net
income in fiscal 2008 increased $2,181,000 or 21% to $12,374,000 compared to $10,193,000 in fiscal 2007. The increase in net income in 2008 was primarily due to increased revenue
growth in our core product lines coupled with favorable product mix and our ability to leverage our fixed costs and properly manage increasing raw material costs. In fiscal 2007, net income was
negatively impacted by higher expenses incurred related to our first year of compliance with Section 404 of the Sarbanes-Oxley Act and the loss on impairment of goodwill from NEQP.

Liquidity and Sources of Capital

Our overall cash balance increased $7,726,000 to $11,643,000 at August 31, 2009 from $3,917,000 at August 31, 2008. The
increased cash balance at August 31, 2009 was a result of cash flow generated from operations during the year as well as the sale of the West Bridgewater property. We continue to review our
current cash balances denominated in foreign currency in light of current tax guidelines and potential acquisitions. The higher cash balance of $3,917,000 at August 31, 2008 compared to
$2,444,000 at August 31, 2007 was primarily the result of cash flow generated during the year, after a portion was used to repay all outstanding balances on our existing debt.

Cash
flow provided by operations was $16,907,000 for the year ended August 31, 2009 compared to $15,562,000 in fiscal 2008 and $14,498,000 in fiscal 2007. Cash provided by
operations during fiscal 2009 was primarily due to operating income and decreased accounts receivable and inventory balances, offset by reduced accounts payable balances. Cash provided by operations
during fiscal 2008 was primarily due to operating income and increased accounts payable and accrued expenses, offset by purchases of raw materials. Cash provided by operations during fiscal 2007 was
primarily due to operating income and decreased inventory balances offset by increased accounts receivable balances.

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The ratio of current assets to current liabilities was 3.2 as of August 31, 2009 compared to 2.3 as of August 31, 2008. The increase in our current
ratio at August 31, 2009 was primarily attributable to increased cash and a decrease in accounts payable and accrued liabilities partially offset by decreases in accounts receivable and
inventory.

Cash
flow used in investing activities was $5,234,000 for the year ended August 31, 2009 compared to $5,796,000 in fiscal 2008 and $7,542,000 in fiscal 2007. During fiscal 2009,
cash flow used in investing activities was primarily due to $2,509,000 used to pay for the purchase of real property in Oxford, MA, $1,280,000 paid for purchases related to the build out of our
manufacturing facility in Pittsburgh, PA, and purchases of machinery and equipment at our other manufacturing locations. During fiscal 2008, cash flow used in investing activities was primarily due to
$1,490,000 paid for the assets acquired by Chase Protective Coatings Ltd., purchases related to the build out of our manufacturing facility in Pittsburgh of $934,000, contingent payments
related to previous acquisitions of $1,041,000, and cash paid for purchases of machinery and equipment at our other manufacturing locations. During fiscal 2007, cash flow used in investing activities
was primarily due to the acquisition of Capital Services, the acquisition of certain assets from Metronelec SARL, and cash paid for purchases of property, plant and equipment.

Cash
flow used in financing activities was $3,856,000 for the year ended August 31, 2009 compared to $7,909,000 in fiscal 2008 and $7,049,000 in fiscal 2007. During fiscal 2009,
cash flow used in financing activities reflects the payment of the annual dividend and payments of statutory minimum taxes on restricted stock. During fiscal 2008, cash flow used in financing
activities reflected the annual dividend payment and our ability to use excess cash generated from operating results to pay off existing long-term debt, including $4,033,000 to pay the
total outstanding balances of the term notes used to finance our acquisitions of Concoat
Holdings Limited (acquired in October 2005) and Capital Services of New York, Inc. (acquired in September 2006). During fiscal 2007, cash flow used in financing activities was primarily due to
our ability to use excess cash generated from operating results to pay off existing long-term debt and the annual dividend payment, partially offset by the excess tax benefit from the
exercise of employee stock options.

On
October 14, 2008, we announced a cash dividend of $0.35 per share (totaling $2,986,000) to shareholders of record on October 31, 2008 and payable on December 3,
2008.

On
October 15, 2009, we announced a cash dividend of $0.20 per share (totaling $1,759,000) to shareholders of record on October 31, 2009 and payable on December 3,
2009.

We
continue to have long-term unsecured credit available with Bank of America up to a maximum amount of $10 million at the bank's base lending rate or, at the option
of the Company, at the effective 30-Day London Interbank Offered Rate (LIBOR) plus 1.25 percent. As of August 31, 2009 and October 31, 2009, the entire amount of
$10 million was available for use under this credit facility. We plan to use this availability to help finance our cash needs, including acquisitions, in fiscal 2010 and future periods.

Under
the terms of our credit facility, we must comply with certain debt covenants related to (a) the ratio of total liabilities to tangible net worth and (b) the ratio of
operating cash flow to debt service on a rolling twelve month basis. We were in compliance with our debt covenants as of August 31, 2009. The credit facility currently has a maturity date of
March 31, 2011.

We
borrowed $10 million from Bank of America in September 2009 in order to fund our acquisition of C.I.M. This borrowing involved an unsecured, three year term note with interest
and principal payments due monthly. Interest is calculated at the applicable LIBOR rate plus a margin of 1.75% per annum, with interest payments due on the last day of each month. At
October 31, 2009, the applicable interest rate was 2.0% per annum. In addition to monthly interest payments, Chase Corporation will repay the principal in equal installments of $167,000 per
month, beginning on September 30, 2009, and on the last day of each month thereafter, ending on August 31, 2012. In any event, on the last day of the Repayment Period, Chase will repay
the remaining principal balance plus any interest then due. The loan is subject to the same debt covenants as our primary credit facility discussed above. Prepayment of the note is allowed at any time
during the term of the loan.

As
part of the C.I.M. acquisition in September 2009, we delivered $3,000,000 in non-negotiable promissory notes (the "Notes") payable to five C.I.M. shareholders, who were
the holders of all of the issued and outstanding shares of capital stock of C.I.M. as of the acquisition date. The principal of the Notes will be paid in three consecutive annual installments of
$1,000,000 each, with the initial payment due on September 4, 2010. Interest on the unpaid principal balance of the Notes will accrue at a rate per annum equal to the applicable Federal rate,

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and
will be paid annually with each principal payment. At October 31, 2009, the applicable interest rate was 0.75% per annum.

In
December 2008, we acquired real property (land and building) in Oxford, MA in order to reduce off-site storage expenses and provide capacity for future growth. Machinery
and equipment will be added as needed to increase capacity or enhance operating efficiencies in our other manufacturing plants. Furthermore, we may consider the acquisition of companies or other
assets in fiscal 2010 or future periods which are complementary to our business. We believe that our existing resources, including our primary credit facility, together with cash generated from
operations and additional bank borrowings, will be sufficient to fund our cash flow requirements through at least the next twelve months. However, there can be no assurances that additional financing
will be available at favorable terms, if at all.

To
the extent that interest rates increase in future periods, we will assess the impact of these higher interest rates on the financial and cash flow projections of our potential
acquisitions.

We
have no significant off balance sheet arrangements.

Contractual Obligations

The following table summarizes our contractual cash obligations at August 31, 2009 and the effect such obligations are expected
to have on our liquidity and cash flow in future periods.

Contractual Obligations

Total

Payments Due
Less than 1 Year

Payments Due
1 - 3 Years

Payments Due
4 - 5 Years

Payments
After 5 Years(Dollars in thousands)Operating leases

$
1,210

$
374

$
317

$
140

$
379Purchase Obligations


2,181


2,181








Other Long-Term Liabilities(1)


11,077


932


1,590


6,194


2,361Total(2)

$
14,468

$
3,487

$
1,907

$
6,334

$
2,740


(1)Other
Long-Term Liabilities represent the expected payments for our obligations for pension and other post-retirement benefits. See
Note 9 "Benefits and Pension Plans" to the Consolidated Financial Statements for further information.(2)We
may be required to make payments related to our unrecognized tax benefits. However, due to the uncertainty of the timing of future cash flows associated
with these unrecognized tax benefits, we are unable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized
tax benefits of $747,000 as of August 31, 2009 have been excluded from the contractual obligations table above. See Note 7 "Income Taxes" to the Consolidated Financial Statements for
further information.


The
table above does not include payment obligations under the $10 million borrowing from Bank of America that we used to finance the C.I.M. acquisition, or the related
$3 million in promissory notes we issued in the same acquisition, because they were incurred after our fiscal year end. The payment terms of each of those obligations are described above under
"Liquidity and Sources of Capital." We have no other outstanding long term indebtedness.

Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("FAS 141R"), which replaces
FAS 141. FAS 141R establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; expenses
acquisition related costs as incurred; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
We adopted FAS 141R as of September 4, 2009, with our acquisition of C.I.M. which will be accounted for under this standard.

In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"). FAS 159 permits companies to
choose to measure many financial instruments and certain

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other
items at fair value. If the fair value option is elected, unrealized gains and losses will be recognized in earnings at each subsequent reporting date. We adopted FAS 159 as of
September 1, 2008, and elected to not apply the provisions of FAS 159 to any of our eligible assets and liabilities. As such, the adoption of FAS 159 did not impact
our consolidated financial position or results of operation. Any future transacted financial asset or liability will be evaluated for the fair value election as prescribed by FAS 159.

In
February 2008, the FASB issued SFAS 157-2, "Effective Date of FASB Statement No. 157" ("FAS 157-2"), which provides a one-year
deferral of the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least
annually. The implementation of FAS 157 for financial assets and financial liabilities, effective September 1, 2008, did not have a material impact on our consolidated financial position
and results of operations. We are currently assessing the impact of FAS 157-2 for nonfinancial assets and nonfinancial liabilities on our consolidated financial position and results
of operations.

In
December 2008, the FASB issued Financial Staff Position ("FSP") SFAS No. 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets" ("FSP
132R-1"). FSP 132R-1 provides guidance on an employer's disclosures about plan assets of a defined benefit plan or other post-retirement plan enabling users of the
financial statements to assess the inputs and valuation techniques used to develop fair value measurements of plan assets at the annual reporting date. Disclosures shall provide users an understanding
of significant concentrations of risk in plan assets. FSP 132R-1 shall be applied prospectively for fiscal years ending after December 15, 2009, with early application permitted. We
are currently assessing the impact FSP 132R-1 will have on our consolidated financial position and results of operations.

In
May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("FAS 165"), which provides guidance to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FAS 165 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent
events after that date in the set of financial statements being presented. FAS 165 is effective for interim and annual periods ending after June 15, 2009 and is effective for us
beginning with this reporting period. Accordingly, we have adopted this pronouncement, which did not have a material impact on our results of operations or financial condition. The disclosures
required by FAS 165 have been made in Note 22 to the Consolidated Financial Statements included in this Report.

In
June 2009, the FASB approved the "FASB Accounting Standards Codification" (the "Codification") as the single source of authoritative nongovernmental U.S. GAAP to be launched on
July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative
literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be
considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for us in the interim period ending
November 30, 2009 and it will not have a material impact on our consolidated financial position, results of operations or cash flows.

Critical Accounting Policies, Judgments, and Estimates

The U.S. Securities and Exchange Commission ("SEC") requires companies to provide additional disclosure and commentary on their most
critical accounting policies. The SEC has defined the
most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and requires management to make its most significant
estimates and judgments in the preparation of its consolidated financial statements. Our critical accounting policies are described below.

Accounts Receivable

We evaluate the collectability of accounts receivable balances based on a combination of factors. In cases where we are aware of
circumstances that may impair a specific customer's ability to meet its financial obligations to us, a specific allowance against amounts due to us is recorded, and thereby reduces the net recognized
receivable to the amount we reasonably believe will be collected. For all other customers, we recognize allowances for doubtful accounts based on the length of time the receivables are past due,
industry and geographic concentrations, the current business environment and our historical experience. If the financial condition of our

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customers
deteriorates or if economic conditions worsen, additional allowances may be required in the future, which could have an adverse impact on our future operating results.

Inventories

We value inventory at the lower of cost or market using the first-in, first-out (FIFO) method. Management
assesses the recoverability of inventory based on types and levels of inventory held, forecasted demand and changes in technology. These assessments require management judgments and estimates, and
valuation adjustments for excess and obsolete inventory may be recorded based on these assessments. We estimate excess and obsolescence exposures based upon assumptions about future demand, product
transitions, and market conditions and record reserves to reduce inventories to their estimated net realizable value. The failure to accurately forecast demand may lead to additional excess and
obsolete inventory and future charges.

Goodwill, Intangible Assets, and Other Long-Lived Assets

Long-lived assets consist of goodwill, identifiable intangible assets, trademarks, patents and agreements and property,
plant, and equipment. Intangible assets and property, plant, and equipment, excluding goodwill, are amortized using the straight-line method over their estimated useful life. We review
long-lived assets and all intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Goodwill is also
reviewed at least annually for impairment. Factors which we consider important and that could trigger an impairment review include significant underperformance relative to expected historical or
projected future operating results and
significant negative industry or economic trends. We determine whether an impairment has occurred based on gross expected future cash flows and measure the amount of the impairment based on the
related future discounted cash flows. The cash flow estimates used to determine impairment, if any, contain management's best estimates, using appropriate and customary assumptions and projections at
the time. (See notes to consolidated financial statements.)

The
estimates of expected cash flows require us to make significant judgments regarding future periods that are subject to some factors outside of our control. Changes in these estimates
can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, performance of our obligation is complete, our price to the
buyer is fixed or determinable, and we are reasonably assured of collecting. This is typically at the time of shipment. If a loss is anticipated on any contract, a provision for the entire loss is
made immediately. Revenue recognition involves judgments and assessments of expected returns, and the likelihood of nonpayment due to insolvent customers. We analyze various factors, including a
review of specific customer contracts and shipment terms, historical experience, creditworthiness of customers and current market and economic conditions in determining when to recognize revenue.
Changes in judgments on these factors could impact the timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income. Commissions are recognized when
earned and payments are received from the manufacturers represented. Royalty revenue is recognized based on licensee production statements received from the authorized manufacturers. Billed shipping
and handling fees are recorded as sales revenue with the associated costs recorded as costs of products and services sold.

Contingent Income Tax Liabilities

We are subject to routine income tax audits that occur periodically in the normal course of business. Our contingent income tax
liabilities are estimated based on the methodology prescribed in FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), which was adopted as of the
beginning of fiscal 2008. FIN 48 prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Our liabilities related to
uncertain tax positions require an assessment of the probability of the income-tax-related exposures and settlements and are influenced by our historical audit experiences with
various state and federal taxing authorities as well as by current income tax trends. If circumstances change, we may be required to record adjustments that could be material to our reported financial
condition and results of operations. See Note 7 to the Consolidated Financial Statements included in this Report for more information on FIN 48.

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Deferred Income Taxes

We evaluate the need for a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be
realized. We have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. Should we determine that we would not be
able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

Pension Benefits

We sponsor a non-contributory defined benefit pension plan covering substantially all employees of certain divisions of the
Company. In calculating our retirement plan obligations and related expense, we make various assumptions and estimates. These assumptions include discount rates, benefits earned, expected return on
plan assets, mortality rates, and other factors. While we believe that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect our pension
obligations and future expense.

Effective
December 1, 2008, the defined benefit pension plan was amended to include a soft freeze whereby any employee hired after the effective date of December 1, 2008
will not be admitted to the plan. The only exception relates to employees of the International Association of Machinists and Aerospace Workers Union. All participants who were previously admitted to
the plan prior to the December 1, 2008 soft freeze will continue to accrue benefits as detailed in the plan agreements.

We
account for our pension plan following the requirements of SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" ("FAS 158").
FAS 158 requires an employer to: (a) recognize in its statement of financial position the funded status of a benefit plan; (b) measure defined benefit plan assets and obligations
as of the end of the employer's fiscal year (with limited exceptions); and (c) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or
credits that arise but are not recognized as components of net periodic benefit costs pursuant to prior existing guidance.

Impact of Inflation

Inflation has not had a significant long-term impact on our earnings. In the event of significant inflation, our efforts to
recover cost increases would be hampered as a result of the competitive nature of the industries in which we operate.

Forward-Looking Information

From time to time, we may publish, verbally or in written form, forward-looking statements relating to such matters as anticipated
financial performance, business prospects, technological developments, new products, acquisition or consolidation strategies, anticipated sources of capital, research and development activities and
similar matters. In fact, this Form 10-K (or any other periodic reporting documents required by the 1934 Act) may contain forward-looking statements reflecting our current views
concerning potential or anticipated future events or developments, including our strategic goals for future fiscal periods. The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements. We caution investors that any forward-looking statements made by us are not guarantees of future performance and that a variety of factors could cause our
actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. The risks and uncertainties which may affect the
operations, performance, development and results of our business include, but are not limited to, the following: uncertainties relating to economic conditions; uncertainties relating to customer plans
and commitments; the pricing and availability of equipment, materials and inventories; the impact of acquisitions on our business and results of operations; technological developments; performance
issues with suppliers and subcontractors; our ability to renew existing credit facilities or to obtain new or additional financing as needed; economic growth; delays in testing of new products; rapid
technology changes and the highly competitive environment in which we operate. These risks and uncertainties also include those risks outlined under Item 1A (Risk Factors) of this Annual Report
on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

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ITEM 7AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We limit the amount of credit exposure to any one issuer. At August 31, 2009, other than our restricted investments (which are
restricted for use in a non-qualified retirement savings plan for certain key employees and members of the Board of Directors), all of our funds were either in demand deposit accounts or
investment instruments that meet high credit quality standards such as money market funds, government securities, or commercial paper.

Our
domestic operations have limited currency exposure since substantially all transactions are denominated in U.S. dollars. However, our European operations are subject to currency
exchange fluctuations. We continue to review our policies and procedures to reduce this exposure while maintaining the benefit from these operations and sales to other European customers. As of
August 31, 2009, we had cash balances in the United Kingdom for our HumiSeal Europe Ltd and Chase Protective Coatings Ltd. divisions denominated primarily in pounds sterling and
equal to US $2,984,000 and cash balances in France for our HumiSeal Europe SARL division denominated primarily in euros and equal to US $486,000. We will continue to review our current cash balances
denominated in foreign currency in light of current tax guidelines and potential acquisitions.

We
incurred a foreign currency translation loss, net of tax for the year ended August 31, 2009 in the amount of $948,000 related to our European operations which is recorded in
other comprehensive income (loss) within our Statement of Stockholders' Equity. We do not have or utilize any derivative financial instruments.

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ITEM 8FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following Consolidated Financial Statements of Chase Corporation are filed as part of this Annual Report on
Form 10-K:

Index
to Consolidated Financial Statements:



Page No.Report of Independent Registered Public Accounting
FirmPricewaterhouseCoopers LLP


27Consolidated Balance Sheets as of August 31, 2009 and 2008


28Consolidated Statements of Operations for each of the three fiscal years in the period ended August 31,
2009


29Consolidated Statements of Stockholders' Equity for each of the three fiscal years in the period ended
August 31, 2009


30Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended August 31,
 2009


31Notes to Consolidated Financial Statements


32


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Report of Independent Registered Public Accounting Firm

To
the Board of Directors and Shareholders of Chase Corporation:

In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholders' equity and cash flows present fairly, in all material
respects, the financial position of Chase Corporation and its subsidiaries at August 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in
the period ended August 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of August 31, 2009, based on criteria established inInternal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 9A, "Management's
Report on Internal Control over Financial Reporting." Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on
our audits (which were integrated audits in 2009 and 2008). We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether
effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.

As
discussed in Note 7 to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions effective September 1,
2007.

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

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

/s/
PricewaterhouseCoopers

PricewaterhouseCoopers LLP
Boston, MA
November 13, 2009

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CHASE CORPORATION        CONSOLIDATED BALANCE SHEETSIn thousands, except share and per share amounts

August 31,2009

2008ASSETSCurrent Assets:Cash & cash equivalents

$
11,643

$
3,917Accounts receivable, less allowance for doubtful accounts of $350 and $447


14,536


18,969Inventories


13,941


16,461Prepaid expenses and other current assets


607


767Deferred income taxes


471


1,310Total current assets


41,198


41,424Property, plant and equipment, net


23,219


21,905Other AssetsGoodwill


14,606


15,131Intangible assets, less accumulated amortization of $4,869 and $4,112


4,497


5,875Cash surrender value of life insurance


5,684


5,111Restricted investments


573


825Deferred income taxes


1,264


Other assets


25


26$
91,066

$
90,297LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable

$
6,319

$
7,695Accrued payroll and other compensation


2,561


3,649Accrued stock based compensation


302


1,676Accrued expenses


2,555


3,744Accrued income taxes


1,346


1,100Total current liabilities


13,083


17,864Deferred compensation


1,525


2,260Accumulated pension obligation


5,690


3,351Other liabilities (Notes 8 and 15)


555


Deferred income taxes





636Commitments and Contingencies (Notes 6, 8 and 19)Stockholders' EquityFirst Serial Preferred Stock, $1.00 par value: Authorized 100,000 shares; none issued Common stock, $.10 par value: Authorized 20,000,000 shares; 8,714,431
shares at August 31, 2009 and 8,396,162 shares at August 31, 2008 issued and outstanding


871


839Additional paid-in capital


7,489


4,277Accumulated other comprehensive loss


(3,563
)

(1,132
)Retained earnings


65,416


62,202Total stockholders' equity


70,213


66,186Total liabilities and stockholders' equity

$
91,066

$
90,297


See
accompanying notes to the consolidated financial statements.

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CHASE CORPORATION        CONSOLIDATED STATEMENTS OF OPERATIONSIn thousands, except share and per share amounts

Years Ended August 31,2009

2008

2007RevenuesSales

$
106,529

$
130,703

$
125,668Royalties and commissions


1,077


1,775


1,792107,606


132,478


127,460Costs and ExpensesCost of products and services sold


75,742


89,680


87,890Selling, general and administrative expenses


21,985


23,951


22,421Loss on impairment of fixed assets


262





Loss on impairment of goodwill


237





311Operating income


9,380


18,847


16,838Interest expense


(17
)

(40
)

(900
)Other income


458


477


241Income before income taxes


9,821


19,284


16,179Income taxes


3,436


6,910


5,986Net income

$
6,385

$
12,374

$
10,193Net income per common and common equivalent sharesBasic

$
0.76

$
1.50

$
1.26Diluted

$
0.73

$
1.43

$
1.22Weighted average shares outstandingBasic


8,408,614


8,248,296


8,080,770Diluted


8,754,436


8,646,545


8,354,375


See
accompanying notes to the consolidated financial statements.

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Table of Contents

CHASE CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

In thousands, except share and per share amounts

Common Stock



Accumulated
Other
Comprehensive
Income (loss)Additional
Paid-In
Capital

Retained
Earnings

Total
Stockholders'
Equity

Comprehensive
IncomeShares

AmountBalance at August 31, 2006


7,798,846

$
780

$
878

$
894

$
43,522

$
46,074Exercise of stock options


732,640


73


3,939








4,012Common stock received for payment of stock option exercises


(234,984
)

(23
)

(3,056
)







(3,079
)Common stock retained to pay statutory minimum withholding taxes on common stock


(92,132
)

(9
)

(1,436
)







(1,445
)Excess tax benefit from stock based compensation








2,242








2,242Common stock grant pursuant to fully vested restricted stock units


14,980


1


113








114Cash dividend paid, $0.20 per share














(1,589
)

(1,589
)FAS 158 pension adjustment, net of tax of $633











(994
)




(994
)
$
(994
)Foreign currency translation adjustment











716





716


716Net unrealized loss on marketable securities, net of tax of $21











(32
)




(32
)

(32
)Net income














10,193


10,193


10,193Comprehensive income



















$
9,883Balance at August 31, 2007


8,219,350

$
822

$
2,680

$
584

$
52,126

$
56,212Change in accounting for income tax uncertainties pursuant to adoption of FIN 48














(230
)

(230
)Restricted stock grants


53,227


5


(5
)







Amortization of restricted stock grants








341








341Stock grants


400





8








8Exercise of stock options


41,500


4


220








224Common stock received for payment of stock option exercises


(1,091
)




(21
)







(21
)Excess tax benefit from stock based compensation








815








815Common stock issuance pursuant to fully vested restricted stock units


130,603


13


1,062








1,075Common stock retained to pay statutory minimum withholding taxes on common stock


(47,827
)

(5
)

(823
)







(828
)Cash dividend paid, $0.25 per share














(2,068
)

(2,068
)FAS 158 pension adjustment, net of tax of $171











(269
)




(269
)
$
(269
)Foreign currency translation adjustment, net of tax of $164











(1,357
)




(1,357
)

(1,357
)Net unrealized loss on marketable securities, net of tax of $57











(90
)




(90
)

(90
)Net income














12,374


12,374


12,374Comprehensive income



















$
10,658Balance at August 31, 2008


8,396,162

$
839

$
4,277

$
(1,132
)
$
62,202

$
66,186Change in accounting for split dollar life insurance arrangement pursuant to adoption of EITF 06-04 and 06-10 (Note 15)














(185
)

(185
)Reclass of previously accrued stock based compensation related to restricted stock and stock options from accrued liabilities to equity








443








443Restricted stock grants


145,210


15


(15
)







Amortization of restricted stock grants








1,133








1,133Amortization of stock option grants








249








249Exercise of stock options


3,000





16








16Excess tax benefit from stock based compensation








265








265Common stock issuance pursuant to fully vested restricted stock units


273,327


27


2,262








2,289Common stock retained to pay statutory minimum withholding taxes on common stock


(103,268
)

(10
)

(1,141
)







(1,151
)Cash dividend paid, $0.35 per share














(2,986
)

(2,986
)FAS 158 pension adjustment, net of tax of $920











(1,506
)




(1,506
)
$
(1,506
)Foreign currency translation adjustment, net of tax of $414











(948
)




(948
)

(948
)Net unrealized loss on marketable securities, net of tax of $14











23





23


23Net income














6,385


6,385


6,385Comprehensive income



















$
3,954Balance at August 31, 2009


8,714,431

$
871

$
7,489

$
(3,563
)
$
65,416

$
70,213


See accompanying notes to the consolidated financial statements.

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CHASE CORPORATION        CONSOLIDATED STATEMENTS OF CASH FLOWDollars in thousands

Years Ended August 31,2009

2008

2007CASH FLOWS FROM OPERATING ACTIVITIESNet income

$
6,385

$
12,374

$
10,193Adjustments to reconcile net income to net cash provided by operating activitiesLoss on disposal/sale of assets


1


4


Loss on impairment of fixed assets


262





Loss on impairment of goodwill


237





311Depreciation


2,739


2,668


2,530Amortization


921


1,145


971Provision for losses on trade receivables


(41
)

53


268Stock based compensation


2,210


2,078


1,301Realized loss (gain) on restricted investments


211


(41
)

(227
)Excess tax benefit from stock based compensation


(265
)

(815
)

(2,243
)Deferred taxes


(853
)

(345
)

(1,502
)Increase (decrease) from changes in assets and liabilitiesAccounts receivable


4,201


(1,445
)

(1,876
)Inventories


2,334


(1,075
)

1,857Prepaid expenses & other assets


143


(28
)

(95
)Accounts payable


(1,534
)

192


(977
)Accrued expenses


(561
)

1,661


1,873Accrued income taxes


809


555


2,136Deferred compensation


(292
)

(1,419
)

(22
)Net cash provided by operating activities


16,907


15,562


14,498CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property, plant and equipment


(5,641
)

(3,063
)

(3,698
)Purchases of intangible assets








(6
)Contingent purchase price for acquisition


(327
)

(1,041
)

(366
)Payments for acquisitions, net of cash acquired


(335
)

(1,490
)

(3,308
)Proceeds from sale of fixed assets


1,378


17


3Proceeds from sale of NEQP business


185





Withdrawals from restricted investments, net of contributions


78


255


342Distributions from cost based investment


1


48


5Payments for cash surrender value life insurance, including valuation (increase)/decrease


(573
)

(522
)

(514
)Net cash used in investing activities


(5,234
)

(5,796
)

(7,542
)CASH FLOWS FROM FINANCING ACTIVITIESBorrowings on long-term debt


13,284


25,040


34,594Payments of principal on debt


(13,284
)

(31,072
)

(41,785
)Dividend paid


(2,986
)

(2,068
)

(1,589
)Proceeds from exercise of common stock options


16


203


933Payments of statutory minimum taxes on stock options and restricted stock


(1,151
)

(827
)

(1,445
)Excess tax benefit from stock based compensation


265


815


2,243Net cash used in financing activities


(3,856
)

(7,909
)

(7,049
)INCREASE (DECREASE) IN CASH


7,817


1,857


(93
)Effect of foreign exchange rates on cash


(91
)

(384
)

121CASH, BEGINNING OF PERIOD


3,917


2,444


2,416CASH, END OF PERIOD

$
11,643

$
3,917

$
2,444


See
accompanying notes to the consolidated financial statements.

31

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Table of Contents

CHASE CORPORATION        NOTES TO CONSOLIDATED FINANCIAL STATEMENTSIn thousands, except share and per share amounts

Note 1Summary of Significant Accounting Policies

The principal accounting policies of Chase Corporation (the "Company") and its subsidiaries are as follows:

Products and Markets

The Company's principal products are specialty tapes, laminates, sealants and coatings that are sold by Company salespeople,
manufacturers' representatives and distributors. In the Company's Specialized Manufacturing segment, these products consist of:



In
addition, the Company's Electronic Manufacturing Services segment provides circuit board assembly and contract manufacturing services to electronic goods manufacturers.

Basis of Presentation

The financial statements include the accounts of the Company and its wholly-owned subsidiaries. Investments in unconsolidated companies
which are at least 20% owned are carried under the equity method since acquisition or investment. All intercompany transactions and balances have been eliminated in consolidation. The Company uses the
U.S. dollar as the functional currency for financial reporting.

Certain
amounts reported in prior fiscal years have been reclassified to conform with the presentation adopted in the current fiscal year. During fiscal 2009, the Company reclassified
$443,263 of stock based compensation awards from accrued liabilities to stockholders' equity. The Company determined that this stock based compensation previously recorded in fiscal 2008 as a
liability should be recorded in stockholder's equity due to the fact that these awards were going to be settled in equity shares. This reclassification entry had no impact on the statement of
operations or cash flows.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

32

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of demand deposits accounts or investment instruments that meet high credit quality
standards such as money market funds, government securities, or commercial paper. The Company considers all highly liquid debt instruments purchased with a maturity of three months or less from date
of purchase to be cash equivalents. As of August 31, 2009, the Company had cash balances in the United Kingdom for its UK operations denominated primarily in pounds sterling and equal to US
$2,984 and cash balances in France for its HumiSeal Europe SARL division denominated primarily in euros and equal to US $486.

Accounts Receivable

The Company evaluates the collectibility of accounts receivable balances based on a combination of factors. In cases where the Company
is aware of circumstances that may impair a specific customer's ability to meet its financial obligations to it, a specific allowance against amounts due to the Company is recorded, and thereby
reduces the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on the
length of time the receivables are past due, industry and geographic concentrations, the current business environment and its historical experience. Receivables are written off against these reserves
in the period they are determined to be uncollectible.

Inventories

The Company values inventory at the lower of cost or market using the first-in, first-out (FIFO) method.
Management assesses the recoverability of inventory based on types and levels of inventory held, forecasted demand and changes in technology. These assessments require management judgments and
estimates, and valuation adjustments for excess and obsolete inventory may be recorded based on these assessments. The Company estimates excess and obsolescence exposures based upon assumptions about
future demand, product transitions, and market conditions and records reserves to reduce inventories to their estimated net realizable value. The failure to accurately forecast demand may lead to
additional excess and obsolete inventory and future charges.

Goodwill

The Company accounts for goodwill in accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets." The Company evaluates the possible impairment of goodwill annually each fourth quarter, and whenever events or circumstances indicate the carrying value of the goodwill may not be
recoverable. The Company evaluates the potential impairment of goodwill by comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value is less than the
carrying value, the Company measures the amount of such impairment by comparing the implied fair value of the goodwill to its carrying value.

Intangible Assets

Intangible assets consist of patents, agreements, formulas, trade names, customer relationships and trademarks. The Company capitalizes
costs related to patent applications and technology agreements. The costs of these assets are amortized using the straight-line method over the lesser of the useful life of the asset or
its statutory life. Capitalized costs are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the assets' estimated
useful lives. Expenditures for maintenance repairs and minor renewals are charged to expense as incurred. Betterments and major renewals are capitalized. Upon retirement or other disposition of
assets, related allowances for depreciation and amortization are eliminated from the accounts and any resulting gain or loss is

33

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

included
in the determination of income or loss. The estimated useful lives of property, plant and equipment are as follows:

Buildings

20 to 40 yearsMachinery and equipment

3 to 10 years


Leasehold
improvements are depreciated over the lesser of the useful life or the term of the lease.

Restricted Investments and Deferred Compensation

The Company has a non-qualified deferred savings plan which covers its Board of Directors and selected employees.
Participants may elect to defer a portion of their compensation for payment in a future tax year. The plan is funded by trusteed assets that are restricted to the payment of deferred compensation or
satisfaction of the Company's general creditors. The Company's restricted investments and corresponding deferred compensation liability under the plan were $573 and $825 at August 31, 2009 and
2008, respectively. The Company accounts for the restricted investments as available for sale by recording unrealized gains or losses in other comprehensive income as a component of stockholders'
equity.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, performance of its obligation is complete, its price
to the buyer is fixed or determinable, and the Company is reasonably assured of collecting. This is typically at the time of shipment. If a loss is anticipated on any contract, a provision for the
entire loss is made immediately. Revenue recognition involves judgments and assessments of expected returns, and the likelihood of nonpayment due to insolvent customers. The Company analyzes various
factors, including a review of specific customer contracts and shipment terms, historical experience, creditworthiness of customers and current market and economic conditions in determining when to
recognize revenue. Changes in judgments on these factors could impact the timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income.

Commissions
are recognized when earned and payments are received from the manufacturers represented. Royalty revenue is recognized based on licensee production statements received from
the authorized manufacturers. Billed shipping and handling fees are recorded as sales revenue with the associated costs recorded as costs of products and services sold.

The
Company's warranty policy provides that the products (or materials) delivered will meet its standard specifications for the products or any other specifications as may be expressly
agreed to at time of purchase. All warranty claims must be received within 90 days from the date of delivery, unless some other period has been expressly agreed to within the terms of the sales
agreement. The Company's warranty costs have historically been insignificant. The Company records a current liability for estimated warranty claims with a corresponding debit to cost of products and
services sold based upon current and historical experience and upon specific claims issues as they arise.

Research and Product Development Costs

Research and product development costs are expensed as incurred and include primarily engineering salaries, overhead and materials used
in connection with research and development projects. Research and development expense amounted to $1,632, $1,698 and $1,965 for the years ended August 31, 2009, 2008 and 2007, respectively.

Pension Plan

The Company accounts for its pension plan following the requirements of SFAS No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans" ("SFAS No. 158"). SFAS No. 158 requires an employer to: (a) recognize in its statement of financial position the funded status of a benefit
plan; (b) measure

34

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

defined
benefit plan assets and obligations as of the end of the employer's fiscal year (with limited exceptions); and (c) recognize as a component of other comprehensive income, net of tax,
the gains or losses and prior service costs or credits that arise but are not recognized as components of net periodic benefit costs pursuant to prior existing guidance.

Stock Based Compensation

On September 1, 2005 the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based
Payment," ("SFAS 123(R)") which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock
options and employee stock purchases related to the Employee Stock Purchase Plan ("employee stock purchases") based on estimated fair values. In March 2005, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 107 ("SAB 107") relating to SFAS 123(R). In December 2007, the SEC issued SAB 110 which allows the continued use of the
simplified method as described in SAB 107, as the Company has concluded that its historical share option exercise experience does not provide a reasonable basis for estimating expected term.
The Company has applied the provisions of SAB 107 and SAB 110 since its adoption of SFAS 123(R). The Company has calculated the historical windfall tax pool using the short cut
method as described in SFAS 123(R).

Stock-based
compensation expense recognized under SFAS 123(R) for the fiscal years 2009, 2008 and 2007 was $2,210, $2,078 and $1,301 respectively.

The
fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for the years ending
August 31, 2009 and 2008. There were no options granted during the fiscal year ended August 31, 2007.

2009

2008Expected Dividend yield


2.0
%

2.0
%Expected life


6.5 years


7.5 yearsExpected volatility


34.0
%

28.0
%Risk-free interest rate


3.4
%

3.9
%


Expected
volatility is determined by looking at a combination of historical volatility over the past seven years as well as implied volatility going forward.

Translation of Foreign Currency

The financial position and results of operations of the Company's HumiSeal Europe Ltd and Chase Protective Coatings divisions
are measured using the UK pound sterling as the functional currency and the financial position and results of operations of the Company's HumiSeal Europe SARL division in France are measured using
euros as the functional currency. Revenues and expenses of these divisions have been translated at average exchange rates. Assets and liabilities have been translated at the year-end
exchange rates. Translation gains and losses are being deferred as a separate component of shareholders' equity.

Income Taxes

The Company accounts for income taxes under the asset and liability method. Under this method, a deferred tax asset or liability is
determined based upon the differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences
reverse. Tax credits are recorded as a reduction in income taxes. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.

The
Company estimates contingent income tax liabilities based on the methodology prescribed in Financial Accounting Standards Board Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"). See Note 7 for more information on the Company's income taxes and FIN 48.

35

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Net Income Per Share

Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net
income per share is computed using the weighted average number of common and diluted common equivalent shares outstanding during the period. Dilutive common equivalent shares consist of stock options
and restricted stock units.

Employee
equity share options, nonvested shares, and similar equity instruments granted by the Company are treated as potential common shares outstanding in computing diluted earnings
per share. Diluted shares outstanding include the dilutive effect of in-the-money options which is calculated based on the average share price for each fiscal period using the
treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet
recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources, including foreign currency translation adjustments, unrealized gains and losses on marketable securities and adjustments related to the FAS 158
pension liability.

Segments

The Company operates in two business segments, a Specialized Manufacturing segment consisting of specialty tapes, laminates, sealants
and coatings, and an Electronic Manufacturing Services segment. Specialized Manufacturing products include insulating and conducting materials for wire and cable manufacturers, protective coatings for
pipeline applications, moisture protective coatings for electronics, high performance polymeric asphalt additives, and custom pressure sensitive labels. Electronic Manufacturing Services include
printed circuit board and electromechanical assembly services for the electronics industry.

Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("FAS 141R"), which replaces
FAS 141. FAS 141R establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; expenses
acquisition related costs as incurred; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
The Company adopted FAS 141R as of September 4, 2009, with its acquisition of C.I.M. which will be accounted for under this standard.

In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"). FAS 159 permits companies to
choose to measure many financial instruments and certain other items at fair value. If the fair value option is elected, unrealized gains and losses will be recognized in earnings at each subsequent
reporting date. Upon adoption of FAS 159 as of September 1, 2008, the Company elected to not apply the provisions of FAS 159 to its eligible assets and liabilities. As such, the
adoption of FAS 159 did not impact the Company's consolidated financial statements or results of operation. Any future transacted financial asset or liability will be evaluated for the fair
value election as prescribed by FAS 159.

In
February 2008, the FASB issued SFAS 157-2, "Effective Date of FASB Statement No. 157" ("FAS 157-2"), which provides a one-year
deferral of the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least
annually. The implementation of FAS 157 for financial assets and financial liabilities, effective September 1, 2008, did not have a material impact on the Company's consolidated
financial position and results of operations. The Company is

36

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

currently
assessing the impact of FAS 157-2 for nonfinancial assets and nonfinancial liabilities on its consolidated financial position and results of operations.

In
December 2008, the FASB issued Financial Staff Position ("FSP") SFAS No. 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets" ("FSP
132R-1"). FSP 132R-1 provides guidance on an employer's disclosures about plan assets of a defined benefit plan or other post-retirement plan enabling users of the
financial statements to assess the inputs and valuation techniques used to develop fair value measurements of plan assets at the annual reporting date. Disclosures shall provide users an understanding
of significant concentrations of risk in plan assets. FSP 132R-1 shall be applied prospectively for fiscal years ending after December 15, 2009, with early application permitted.
The Company is currently assessing the impact FSP 132R-1 will have on its consolidated financial position and results of operations.

In
May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("FAS 165"), which provides guidance to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FAS 165 also requires entities to disclose the date through which
subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent
events after that date in the set of financial statements being presented. FAS 165 is effective for interim and annual periods ending after June 15, 2009 and is effective for the Company
beginning with this reporting period. Accordingly, the Company has adopted this pronouncement, which did not have a material impact on its results of operations or financial condition. See
Note 22 for more information on the additional disclosures required for the Company's adoption of FAS 165.

In
June 2009, the FASB approved the "FASB Accounting Standards Codification" (the "Codification") as the single source of authoritative nongovernmental U.S. GAAP to be launched on
July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative
literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be
considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for the Company in the interim period
ending November 30, 2009 and the adoption will not have a material impact on its consolidated financial position, results of operations or cash flows.

Note 2Inventories

Inventories consist of the following as of August 31, 2009 and 2008:

2009

2008Raw materials

$
7,973

$
8,985Finished and in process


5,968


7,476Total Inventories

$
13,941

$
16,461


37

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 3Property, Plant and Equipment

Property, plant and equipment consist of the following as of August 31, 2009 and 2008:

2009

2008Property, Plant and EquipmentLand and improvements

$
2,898

$
2,575Buildings


8,815


8,063Machinery and equipment


30,950


31,000Leasehold improvements


1,779


1,857Construction in progress


4,957


3,49149,399


46,986Accumulated depreciation


(26,180
)

(25,081
)Property, plant and equipment, net

$
23,219

$
21,905


The
majority of construction in progress relates to the following on-going projects: (1) continued renovation of the facility in O'Hara Township, PA in order to
increase production capacity and improve efficiencies for existing product lines as well as provide space to integrate future acquisitions, and (2) the building in Oxford, MA purchased in
December 2008 that is currently being renovated to provide capacity for storage needs and future growth.

Note 4Goodwill and Intangible Assets

The changes in the carrying value of goodwill, by reportable segment, are as follows:

Specialized Manufacturing

Electronic Manufacturing Services

ConsolidatedBalance at August 31, 2007

$
8,577

$
5,999

$
14,576Acquisition of E-poxy Engineered Materialsadditional earnout


383





383Acquisition of Paper Tygeradditional earnout


480





480Acquisition of Metronelec assetsadditional earnout


184





184FX translation adjustment


(492
)




(492
)Balance at August 31, 2008

$
9,132

$
5,999

$
15,131Acquisition of Capital Servicesworking capital adjustment


32





32Acquisition of Paper Tygeradditional earnout


65





65Acquisition of Metronelec assetsadditional earnout


112





112Acquisition of E-poxy Engineered Materialsadditional earnout


150





150Loss on impairment of NEQP


(237
)




(237
)Sale of NEQP businessremaining goodwill


(112
)




(112
)FX translation adjustment


(535
)




(535
)Balance at August 31, 2009

$
8,607

$
5,999

$
14,606


The
Company evaluates the possible impairment of goodwill annually each fourth quarter and whenever events or circumstances indicate the carrying value of goodwill may not be
recoverable.

38

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

In
the quarter ended May 31, 2009, based on the decrease in sales activity in the current year and the completion of the fiscal 2010 budget, management determined that the
carrying value of goodwill associated with the Company's Northeast Quality Products (NEQP) division may not be recoverable. Accordingly, the Company performed a goodwill impairment analysis. Based on
the present value of future cash flows utilizing projected results for the balance of fiscal year 2009 and projections for future years based on the fiscal 2010 budgeting process, the goodwill
impairment analysis yielded results that would not support the current book value of the goodwill associated with this division. As a result, the Company concluded the carrying amount of goodwill for
the NEQP division was not fully recoverable and an impairment charge of $237 was recorded as of May 31, 2009. Goodwill related to NEQP, having a pre-impairment book value of $349,
was written down to its fair value of $112 in accordance with generally accepted accounting principles. The NEQP division was sold on August 14, 2009, and the adjusted fair value of $112 was
realized upon the sale.

As
of August 31, 2009, the Company had a total goodwill balance of $14,606 related to its acquisitions, of which $8,671 is deductible for income taxes.

Intangible
assets subject to amortization consist of the following as of August 31, 2009 and 2008:

Weighted-Average
Amortization Period

Gross Carrying
Value

Accumulated
Amortization

Net Carrying
ValueAugust 31, 2009Patents and agreements

12.6 years

$
2,258

$
2,059

$
199Formulas

9.3 years


1,191


552


639Trade names

3.8 years


277


255


22Customer lists and relationships

10.4 years


5,640


2,003


3,637$
9,366

$
4,869

$
4,497August 31, 2008Patents and agreements

12.5 years

$
2,293

$
1,894

$
399Formulas

9.2 years


1,261


431


830Trade names

3.8 years


281


204


77Customer lists and relationships

10.4 years


6,152


1,583


4,569$
9,987

$
4,112

$
5,875


Aggregate
amortization expense related to intangible assets for the years ended August 31, 2009, 2008 and 2007 was $921, $1,145 and $971, respectively. As of August 31,
2009 estimated amortization expense for each of the five succeeding fiscal years is as follows:

Years ending August 31,2010

$
9152011


7762012


7552013


6382014


582$
3,666


Note 5Cash Surrender Value of Life Insurance

Life insurance is provided under split dollar life insurance agreements whereby the Company will recover the premiums paid from the
proceeds of the policies. The Company recognizes an offset to expense for the growth in the cash surrender value of the policies.

39

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The
Company recognizes cash surrender value of life insurance policies, net of loans of $5 at August 31, 2009 and 2008, secured by the policies, with the following carriers as of
August 31, 2009 and 2008.

2009

2008John Hancock

$
3,053

$
2,612Manufacturers' Life Insurance Company


872


817Metropolitan Life Insurance


1,679


1,602Other life insurance carriers


80


80$
5,684

$
5,111


Subject
to periodic review, the Company intends to maintain these policies through the lives or retirement of the insureds.

Note 6Long-Term Debt and Notes Payable to Bank

The Company has a long-term unsecured revolving credit facility available up to a maximum amount of $10 million at
the bank's base lending rate or, at the option of the Company, at the effective 30-Day London Interbank Offered Rate (LIBOR) plus 1.25 percent. This facility has a maturity date of
March 31, 2011. As of August 31, 2009 and 2008, the entire amount of $10 million was available for use. Any future outstanding balance on this long-term unsecured
credit facility will be included in scheduled principal payments at its maturity.

Under
the terms of the Company's credit facility agreement, the Company must comply with certain debt covenants related to (a) the ratio of total liabilities to tangible net worth
and (b) the ratio of operating cash flow to debt service on a rolling twelve month basis. The Company was in compliance with its debt covenants as of August 31, 2009 and 2008.

Note 7Income Taxes

The provision (benefit) for income taxes differs from the amount computed by applying the federal statutory income tax rate to income
before income taxes. The Company's combined federal, state and foreign effective tax rates for fiscal 2009, 2008 and 2007, net of offsets generated by federal, state and foreign tax benefits, were
approximately 34.9%, 35.8% and 37.0%, respectively. A rate reconciliation displaying the sources and tax effects of the differences, for the years ended August 31, 2009, 2008 and 2007 is as
follows:

Year Ended August 31,2009

2008

2007Federal statutory rates


35.0
%

35.0
%

35.0
%Adjustment resulting from the tax effect of:State and local taxes, net of federal benefit


2.6
%

3.2
%

3.2
%Domestic production deduction


(1.1
)%

(1.5
)%

(0.6
)%Foreign tax rate differential


(1.4
)%

(0.9
)%

(0.8
)%Adjustment to tax reserve


(0.1
)%

0.6
%

Change in foreign tax rate





(0.5%
)

Research credit generated


(0.5
)%

(0.1
)%

(0.3
)%Other


0.4
%




0.5
%Effective income tax rate


34.9
%

35.8
%

37.0
%


40

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The
following table summarizes the tax effect of temporary differences on the Company's income tax provision:

Year Ended August 31,2009

2008

2007Current income tax provision

$
3,046

$
7,280

$
6,738Deferred provision (benefit):Allowance for doubtful accounts


35


59


(18
)Inventories


28


50


41Pension expense


33


(9
)

(18
)Deferred compensation


78


177


34Accruals


34


(13
)

(141
)Warranty reserve


68


(12
)

(96
)Depreciation and amortization


(546
)

102


(9
)Restricted stock grant


32


(371
)

(403
)Capital loss carryforwards


651





Unrepatriated earnings


902


1,629


273Foreign tax credits


(742
)

(1,683
)

(266
)Foreign intangibles


(131
)

(167
)

(176
)Other


(52
)

(132
)

27Total deferred income tax provision (benefit)


390


(370
)

(752
)Total income tax provision

$
3,436

$
6,910

$
5,986


41

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The following table summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities:

As of August 31,2009

2008Current:Deferred tax assets:Allowance for doubtful accounts

$
120

$
159Inventories


294


330Accruals


92


238Warranty reserve


37


Capital loss carryforwards





651Current deferred tax assets


543


1,378Deferred tax liabilities:Prepaid liabilities


(72
)

(68
)Current deferred tax liabilities


(72
)

(68
)Current deferred tax assets, net


471


1,310Noncurrent:Deferred tax assets:Pension accrual


2,159


1,304Deferred compensation


635


731Unrealized gain/loss on restricted investments


43


59Restricted stock grants


782


857Non qualified stock options


16


16Foreign tax credits


3,268


2,526Foreign other


173


153Noncurrent deferred tax assets


7,076


5,646Deferred tax liabilities:Unrepatriated earnings


(2,905
)

(2,515
)Foreign intangibles


(776
)

(1,021
)Depreciation and amortization


(2,131
)

(2,746
)Noncurrent deferred tax liabilities


(5,812
)

(6,282
)Noncurrent deferred tax assets (liabilities), net


1,264


(636
)Net deferred tax assets

$
1,735

$
674


The
Company entered into a sales-leaseback transaction with certain appreciated property located in Evanston, Illinois, triggering a capital gain for tax purposes in fiscal 2009. All of
the capital loss carryovers generated in prior years were utilized as a result of this transaction.

Effective
September 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in
Income Taxesan interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the financial
statements by prescribing a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return.

42

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

A
summary of the Company's adjustments to its uncertain tax positions in fiscal years ended August 31, 2009 and 2008 are as follows:

2009

2008Balance, at beginning of year

$
752

$
639Increase for tax positions related to the current year


91


73Increase / (decrease) for tax positions related to prior years


(96
)

40Decreases for settlements with applicable taxing authorities





Decreases for lapses of statute of limitations





Balance, at end of year

$
747

$
752


The
unrecognized tax benefits mentioned above include an aggregate of $319 of accrued interest and penalty balances related to uncertain tax positions. The Company recognizes interest
and penalties related to uncertain tax positions in income tax expense. Total interest and penalty charges of approximately $66 were recorded to income during the current fiscal year. The Company
anticipates that its reserve for uncertain tax positions may be reduced over the next twelve month period, to the extent it settles any potential disputed items with the appropriate taxing
authorities.

The
Company is subject to U.S. federal income tax as well as to income tax of multiple state and foreign tax jurisdictions. The statute of limitations for all material federal, state,
and local tax filings remains open for fiscal years subsequent to 2005. All fiscal years in foreign jurisdictions currently remain open, as the company's international operations did not commence
until fiscal 2006.

Note 8Operating Leases

The following is a schedule for the next five years of future minimum rental payments required under operating leases that have initial
or remaining noncancellable lease terms in excess of one year as of August 31, 2009:

Year ending August 31,

Future Minimum
Lease Payments2010

$
3742011


1662012


1512013


882014


522015 and thereafter


379Total future minimum lease payments

$
1,210


Total
rental expense for all operating leases amounted to $889, $943 and $965 for the years ended August 31, 2009, 2008 and 2007, respectively.

In
June 2009, the Company entered into a sale leaseback transaction pursuant to the sale of its real property (land and building) located in Evanston, IL. As part of this transaction,
the Company has agreed to provide financing to the purchaser, whereby the interest due on the financing is equal to the rental payments over the life of the lease. The Company received a $400 deposit
at the closing and the remainder of the $4,250 sales price will be due at various dates over the term of the 49 month lease, of which $3,400 is due at the end of the lease term in July 2013.
Accordingly, future rental payments on this property are not included in the schedule above. The Company is deferring the gain on this transaction until the end of the lease term and has recorded the
$400k deposit as a non current liability as of August 31, 2009.

43

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 9Benefits and Pension Plans

401(k) Plan

The Company has a defined contribution plan adopted pursuant to Section 401(k) of the Internal Revenue Code of 1986. Any
qualified employee who has attained age 21 and has been employed by the Company for at least six months may contribute a portion of his or her salary to the plan and the Company will match 100% of the
first percent of salary and 50% of the 2nd6th percent of such contribution up to an amount equal to three and one half percent of such employee's annual
salary. The Company's contribution expense was $304, $264 and $256 for the years ended August 31, 2009, 2008 and 2007, respectively.

Non-Qualified Deferred Savings Plan

The Company has a non-qualified deferred savings plan covering the Board of Directors and a separate plan covering selected
employees. Participants may elect to defer a portion of their compensation for future payment. The plans are funded by trusteed assets that are restricted to the payment of deferred compensation or
satisfaction of the Company's general creditors. The Company's liability under the plan was $573 and $825 at August 31, 2009 and 2008, respectively.

Pension Plans

The Company has non-contributory defined benefit pension plans covering employees of certain divisions of the Company. The
Company has a funded, qualified plan and an unfunded supplemental plan designed to maintain benefits for certain employees at the plan formula level. The plans provide for pension benefits determined
by a participant's years of service and final average compensation. The qualified plan assets consist of separate pooled investment accounts with a trust company. The measurement date for the plans is
August 31, 2009.

Effective
December 1, 2008, there was a soft freeze in the plans whereby no new employees hired will be admitted to the plans, with the exception of the International Association
of Machinists and Aerospace Workers Union. All participants admitted to the plans prior to the December 1, 2008 freeze will continue to accrue benefits as detailed in the plan agreements.

The
following tables reflect the status of the Company's pension plans for the years ended August 31, 2009, 2008 and 2007:

Year Ended August 31,2009

2008

2007Change in benefit obligationProjected benefit obligation at beginning of year

$
8,800

$
8,172

$
8,466Service cost


432


416


417Interest cost


547


512


474Amendments





85


Actuarial (gain) loss


1,434


(323
)

173Settlements








(1,352
)Benefits paid


(28
)

(62
)

(6
)Projected benefit obligation at end of year

$
11,185

$
8,800

$
8,172


44

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Year Ended August 31,2009

2008

2007Change in plan assetsFair value of plan assets at beginning of year

$
5,449

$
4,900

$
5,324Actual return on plan assets


(706
)

(389
)

484Employer contribution


780


1,000


450Settlements








(1,352
)Benefits paid


(28
)

(62
)

(6
)Fair value of plan assets at end of year

$
5,495

$
5,449

$
4,900Funded status at end of year

$
(5,690
)
$
(3,351
)
$
(3,272
)Amounts recognized in consolidated balance sheetsNon-current assets

$


$


$
Current liabilities








Non-current liabilities


(5,690
)

(3,351
)

(3,272
)Net amount recognized in Consolidated Balance Sheets

$
(5,690
)
$
(3,351
)
$
(3,272
)Actuarial present value of benefit obligation and funded statusAccumulated benefit obligations

$
9,646

$
7,603

$
6,712Projected benefit obligations

$
11,185

$
8,800

$
8,172Plan assets at fair value

$
5,495

$
5,449

$
4,900Amounts recognized in accumulated other comprehensive IncomePrior service cost

$
315

$
407

$
410Net actuarial loss


4,177


1,659


1,216Adjustment to pre-tax accumulated other comprehensive income

$
4,492

$
2,066

$
1,626Other changes in plan assets and benefit obligations recognized in other comprehensive incomeNet (gain) or loss

$
2,572

$
484


N/A
(1)Amortization of loss


(54
)

(41
)

N/A
(1)Prior service cost





85


N/A
(1)Amortization of prior service cost


(92
)

(88
)

N/A
(1)Total recognized in other comprehensive income


2,426


440


N/A
(1)Net periodic pension cost


693


639


N/A
(1)Total recognized in net periodic pension cost and other comprehensive income

$
3,119

$
1,079


N/A
(1)Estimated amounts that will be amortized from accumulated comprehensive income over the next fiscal yearPrior service cost

$
86

$
92

$
88Net actuarial loss or (gain)


212


54


41


(1)These
disclosures are required by and the underlying amounts have been measured in accordance with SFAS No. 158, which the Company adopted on
August 31, 2007. The disclosures after adoption are not applicable for periods preceding the adoption of this pronouncement.


Prior
service cost arose from the amendment of the plan's benefit schedules to comply with the Tax Reform Act of 1986 (TRA) and adoption of the unfunded supplemental pension plan.

45

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Components
of net periodic pension cost for the fiscal years ended August 31, 2009, 2008, and 2007 included the following:

Year Ended August 31,2009

2008

2007Components of net periodic benefit costService cost

$
432

$
416

$
417Interest cost


547


512


474Expected return on plan assets


(432
)

(418
)

(409
)Amortization of prior service cost


92


88


88Recognized net (gain)/loss


54


41


49Settlement (gain)/loss








264Net periodic benefit cost

$
693

$
639

$
883


Weighted-average
assumptions used to determine benefit obligations as of August 31, 2009 and 2008 are as follows:

2009

2008Discount rateQualified plan


5.29
%

6.66
%Supplemental plan


3.38
%

5.72
%Rate of compensation increaseQualified and supplemental plan


3.50
%

3.50
%


Weighted-average
assumptions used to determine net periodic benefit cost for the years ended August 31, 2009, 2008 and 2007 are as follows:

2009

2008

2007Discount rateQualified plan


6.66
%

6.25
%

6.00
%Supplemental plan


5.72
%

6.25
%

6.00
%Expected long-term return on plan assetsQualified plan


8.00
%

8.50
%

8.50
%Supplemental plan


0.00
%

0.00
%

0.00
%Rate of compensation increaseQualified and supplemental plan


3.50
%

3.50
%

3.50
%


It
is the Company's policy to evaluate, on an annual basis, the discount rate used to determine the projected benefit obligation to approximate rates on high-quality,
long-term obligations. The Moody's Corporate Aa Bond index has generally been used as a benchmark for this purpose, with adjustments made if the duration of the index differed from that of
the plan. Commencing with the August 31, 2008 disclosure, the discount rate was determined by matching the expected payouts from the respective plans to the spot rates inherent in the Citigroup
Pension Discount Curve. A single rate was developed, that when applied to the expected cash flows, results in the same present value as determined using the various spot rates. The Company believes
that this approach will produce a better approximation of the plan liability.

The
Company estimates that each 100 basis point reduction in the discount rate would result in additional net periodic pension cost, the Company's primary pension obligation, of
approximately $18 for the qualified plan and $10 for the supplemental plan. The expected return on plan assets is derived from a periodic study of long-term historical rates of return on
the various asset classes included in the Company's targeted pension plan asset allocation. The Company estimates that each 100 basis point reduction in the expected return on plan assets would result
in additional net periodic pension cost of approximately $54 for the qualified plan. No rate of return is

46

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

assumed
for the nonqualified plan since that plan is currently not funded. The rate of compensation increase is also evaluated and is adjusted by the Company, if necessary, periodically.

Plan Assets

The qualified plan maintained for the employees of Chase Corporation has the following target allocation and weighted-average asset
allocations as of August 31, 2009, 2008 and 2007:

Percentage of Plan Assets as of August 31,Target AllocationAsset Category

2009

2008

2007Equity securities


60
%

56
%

57
%

57
%Debt securities


30
%

34
%

29
%

30
%Real estate


10
%

6
%

9
%

9
%Other


0
%

4
%

5
%

4
%Total


100
%

100
%

100
%

100
%


The
investment policy for the Pension Plan for Employees of Chase Corporation is based on ERISA standards for prudent investing. The goal is to maximize returns while limiting
volatility. The Plan assets are invested in a diversified mix of United States equity and fixed income securities. Asset manager performance is reviewed at least annually and benchmarked against the
peer universe for the given investment style. The Company's expected return for the Pension Plan is 8.0%. To determine the expected long-term rate of return on the assets for the Pension
Plan, the Company considered the historical and expected return on the plan assets, as well as the current and expected allocation of the plan assets.

Estimated Future Benefit Payments

The following pension benefit payments (which include expected future service) are expected to be paid in each of the following fiscal
years:

Year ending August 31,

Pension
Benefits2010

$
9322011


5922012


9982013


5,9142014


2802015-2019

$
2,361


The
Company contributed $780, $1,000 and $450 to fund its obligations under the pension plan for the years ended August 31, 2009, 2008 and 2007, respectively. The Company plans to
make any necessary contributions during the upcoming fiscal 2010 year to ensure the qualified plan continues to be adequately funded given the current market conditions.

Note 10Stockholders' Equity

At the Company's annual meeting of shareholders held in January 2008, an amendment to the Articles of Organization was approved to
increase the number of authorized shares of common stock, $0.10 par value, from 10,000,000 to 20,000,000.

47

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

2005 Incentive Plan

In November 2005, the Company adopted and the stockholders subsequently approved, the 2005 Incentive Plan (the "2005 Plan"). The 2005
Plan permits the grant of restricted stock, stock options, deferred stock, stock payments or other awards to employees, participating officers, directors, consultants and advisors that are linked
directly to increases in shareholder value. The aggregate number of shares available under the 2005 Plan is 1,000,000. Additional shares may become available in connection with share splits, share
dividends or similar transactions.

2001 Senior Management Stock Plan and 2001 Non-Employee Director Stock Option Plan

In October 2002, the Company adopted, and the stockholders subsequently approved, the 2001 Senior Management Stock Plan and the 2001
Non-Employee Director Stock
Option Plan (the "2001 Plans"). The 2001 Plans reserved 1,500,000 and 180,000 shares of the Company's common stock for grants related to the Senior Management Stock Plan and Non-Employee
Director Stock Option Plan, respectively.

Under
the terms of the Senior Management Stock Plan, equity awards may be granted in the form of incentive stock options, non-qualified stock options and restricted stock.
Options granted under the Non-Employee Director Stock Option Plan will be issued as non-qualified stock options. Options granted under the 2001 Plans generally vest over a
period ranging from three to five years and expire after ten years.

Restricted Stock & Restricted Stock Units

Employees
and Executive Management

In
February 2006, the Board of Directors of Chase Corporation approved a performance and service based restricted stock unit grant of 82,634 shares to key
members of management subject to the fiscal year 2006 results. Based on the fiscal year 2006 financial results, 41,318 additional restricted stock units (for a total of 123,952 restricted stock units)
were earned and granted subsequent to the end of fiscal year 2006 in accordance with the performance measurement criteria. These restricted stock units vested and were issued in the form of common
stock on August 31, 2008. Compensation expense was recognized over the vesting period on a ratable basis.

In
February 2006, the Board of Directors of Chase Corporation also approved a plan for issuing a performance and service based restricted stock unit grant of approximately 88,630 shares
to key members of management with an issue date of September 1, 2006 and a vesting date of August 31, 2009. Based on the fiscal year 2007 financial results, 184,697 additional restricted
stock units (total of 273,327 restricted stock units) were earned and granted subsequent to the end of fiscal year 2007 in accordance with the performance measurement criteria. These restricted stock
units vested and were issued in the form of common stock on August 31, 2009. Compensation expense was recognized over the vesting period on a ratable basis.

In
May 2007, pursuant to authorization by the Board of Directors, the Company's Chief Executive Officer granted a total of 17,600 restricted stock units to approximately 40 non executive
officer employees of the Company for service for the period May 2007 through May 2010. The Company is amortizing this expense ratably over this three year service period. Subject to the terms of the
restricted stock unit agreements, these restricted stock units will be issued in the form of common stock at the conclusion of this service period.

In
August 2007, the Board of Directors of Chase Corporation approved a plan for issuing a performance and service based restricted stock grant of 48,600 shares to key members of
management with an issue date of September 1, 2007 and a vesting date of August 31, 2010. Based on the fiscal year 2008 financial results, 82,214 additional
shares of restricted stock (total of 130,814 shares) were earned and granted subsequent to the end of fiscal year 2008 in accordance with the performance measurement criteria. No further
performance-based measurements apply to this award. Compensation expense is being recognized on a ratable basis over the vesting period.

48

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

In
August 2008, the Board of Directors of Chase Corporation approved a plan for issuing a performance and service based restricted stock grant of 50,657 shares to key members of
management with an issue date of September 1, 2008 and a vesting date of August 31, 2011. These shares are subject to a performance measurement based upon the results of fiscal year 2009
which will determine the final calculation of the number of shares that will be issued (which may be greater than or less than 50,657 shares), subject to final approval from the Compensation
Committee. Compensation expense is being recognized on a ratable basis over the vesting period based on quarterly probability assessments.

Non-Employee
Board of Directors

As
part of their annual retainer, non-employee members of the Board of Directors received $15 of Chase Corporation common stock, in the form of
Restricted Stock or Restricted Stock Units valued at the closing price of the day preceding the first day of the new year of Board service which generally coincides with the Company's annual
shareholder meeting. The stock awards vest one year from the date of grant

In
February 2007, the Compensation and Management Development Committee approved a grant of 6,648 restricted stock units to members of the Board of Directors for service for the period
February 2007 through January 2008. These restricted stock units were issued in the form of common stock at the conclusion of this service period. Compensation was recognized on a ratable basis over
the twelve month vesting period.

In
January 2008, non-employee members of the Board received a total grant of 4,569 shares of restricted stock for service for the period from February 1, 2008 through
February 1, 2009. The shares of restricted stock vested at the conclusion of the service period. Compensation was recognized on a ratable basis over the twelve month vesting period.

In
April 2008, William H. Dykstra retired from the Company's Board of Directors. In accordance with the vesting provisions of his restricted stock agreement, he forfeited 634 of the
restricted shares granted to him in January 2008. In April 2008, a total of 692 shares of restricted stock were issued to existing members of the Board for committee reassignments, as well as the
appointment of new Board member Thomas Wroe, Jr., following Mr. Dykstra's retirement. These shares were for service on the Company's Board from April 1, 2008 through February 1,
2009 and vested at the conclusion of the service period.

In
January 2009, non-employee members of the Board of Directors received a total grant of 12,339 shares of restricted stock for service for the period from February 1,
2009 through February 1, 2010. This represented an increase in the Board of Directors annual stock compensation to $20 (previously $15). The shares of restricted stock will vest at the
conclusion of this service period. Compensation is being recognized on a ratable basis over the twelve month vesting period.

Stock Options

On July 8, 2008, the Company's Board of Directors authorized a grant of stock options to its President and its Chief Financial
Officer to purchase 150,000 and 100,000 shares of common stock, respectively. Each of these options has an exercise price of $16.53 per share, will vest in full on the fifth anniversary of the grant
date, and will expire on the tenth anniversary of the grant date.

On
August 31, 2009, the Company's Board of Directors authorized a grant of stock options to its Chief Executive Officer, its President and its Chief Financial Officer to purchase
75,000, 50,000 and 25,000 shares of common stock, respectively. Each of these options has an exercise price of $11.15 per share, and will vest in four equal annual allotments beginning on
August 31, 2010 and ending on August 31, 2013. All of these options will expire on the tenth anniversary of the grant date.

49

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The
following table summarizes information about stock options outstanding as of August 31, 2009:

Options Outstanding

Options ExercisableExercise Prices

Number
Outstanding

Weighted
Avg.
Remaining
Contractual
Life

Weighted
Average
Exercise Price

Aggregate
Intrinsic
Value

Number
Exercisable

Weighted
Average
Exercise Price

Aggregate
Intrinsic
Value$5.250


93,500


3.0 years

$
5.250

$
575


93,500

$
5.250

$
575$5.575


25,000


2.7 years


5.575


146


25,000


5.575


146$16.530


250,000


8.9 years


16.530











$11.150


150,000


10.0 years


11.150


38








518,500


7.8 years

$
12.410

$
759


118,500

$
5.320

$
721


The total fair value of options vested at year end based upon the closing price of $11.40 per share on August 31, 2009 is $1,351.

A
summary of the transactions of the Company's stock option plans for the years ended August 31, 2009, 2008 and 2007 is presented below:

Non Employee
Directors

Weighted
Average
Exercise Price

Officers
and
Employees

Weighted
Average
Exercise PriceOutstanding as of August 31, 2006


85,640

$
5.89


810,000

$
5.41Granted











Exercised


(57,640
)

6.19


(675,000
)

5.42Forfeited or cancelled











Outstanding as of August 31, 2007


28,000

$
5.25


135,000

$
5.36Granted








250,000


16.53Exercised


(12,500
)

5.25


(29,000
)

5.47Forfeited or cancelled











Outstanding as of August 31, 2008


15,500

$
5.25


356,000

$
13.20Granted








150,000


11.15Exercised


(3,000
)

5.25


Forfeited or cancelled








Options outstanding as of August 31, 2009


12,500

$
5.25


506,000

$
12.59Options exercisable as of August 31, 2009


12,500

$
5.25


106,000

$
5.32


The
weighted average grant date fair value of options granted in the years ended August 31, 2009 and 2008 was $3.58 and $4.98 per share, respectively. There were no options
granted in the year ended August 31, 2007. All stock option plans have been approved by the Company's stockholders.

The
total pretax intrinsic value of stock options exercised was $16, $956, and $5,876 for the years ended August 31, 2009, 2008 and 2007, respectively.

Excluding
the common stock currently reserved for issuance upon exercise of the 518,500 outstanding options and 17,600 for restricted stock units, there are 502,630 shares of common
stock available for future issuance under the Company's equity compensation plans.

The
tax benefit realized from stock options exercised and issuance of stock pursuant to grants of restricted stock units was $265, $815, and $2,243 for the years ended August 31,
2009, 2008 and 2007, respectively.

As
of August 31, 2009, unrecognized expense related to all stock based compensation described above, is $2,717.

50

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 11Segment Data

The Company operates in two business segments, a Specialized Manufacturing segment and an Electronic Manufacturing Services segment.
Specialized Manufacturing products include insulating and conducting materials for wire and cable manufacturers, protective coatings for pipeline applications and moisture protective coatings for
electronics and printing services. Electronic Manufacturing Services include printed circuit board and electro-mechanical assembly services for the electronics industry. The Company evaluates segment
performance based upon income before income taxes.

The
following tables summarize information about the Company's segments:

Years Ended August 31,2009

2008

2007Revenues from external customersSpecialized Manufacturing

$
91,236

$
113,177

$
109,195Electronic Manufacturing Services


16,370


19,301


18,265Total

$
107,606

$
132,478

$
127,460Income before income taxesSpecialized Manufacturing

$
13,899
(a)
$
22,434

$
20,094
(a)Electronic Manufacturing Services


1,718


2,138


2,040Total for reportable segments


15,617


24,572


22,134Corporate and Common Costs


(5,796
)(b)

(5,288
)

(5,955
)Total

$
9,821

$
19,284

$
16,179


(a)Includes
loss on impairment of goodwill of $237 in 2009 and $311 in 2007(b)Includes
loss on impairment of fixed assets of $262


As of August 31,2009

2008Total assetsSpecialized Manufacturing

$
60,713

$
63,242Electronic Manufacturing Services


12,666


13,819Total for reportable segments


73,379


77,061Corporate and Common Assets


17,687


13,236Total

$
91,066

$
90,297


Note 12Export Sales and Foreign Operations

Export sales from continuing domestic operations to unaffiliated third parties were $14,611, $15,818 and $14,126 for the years ended
August 31, 2009, 2008 and 2007, respectively. The Company's products are sold world-wide with no foreign geographic area accounting for more than 10% of revenues from continuing
operations.

As
of August 31, 2009 and 2008, the Company had long-lived assets (defined as providing the Company with a future economic benefit beyond the current year or operating
period, including buildings, equipment, goodwill and other intangibles) of $8,969 and $10,793, respectively, located in the United Kingdom. No other foreign geographic area accounted for more than 10%
of the Company's total assets as of August 31, 2009 and 2008. The decrease in gross carrying value of these long-lived assets for the year ended August 31, 2009 is primarily
due to foreign currency translation loss and the amortization of the intangible assets.

51

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 13Supplemental Cash Flow Data

Supplemental cash flow information for the years ended August 31, 2009, 2008 and 2007 is as follows:

2009

2008

2007Income taxes paid

$
2,481

$
6,605

$
4,815Interest paid

$
30

$
243

$
891Non-cash Investing and Financing ActivitiesIssuance of stock based compensation previously accrued for

$
1,526

$
1,075

$
114Common stock received for payment of stock option exercises

$


$
21

$
3,080Accrued contingent payments related to acquisitions

$
327

$


$
110Acquisition holdback payments, previously accrued for

$
303

$


$
Property, plant & equipment additions included in accounts payable

$
280

$
152

$
18Acquisition of certain assets for Chase Protective CoatingsCurrent assets (net of cash acquired)




$
374Property and equipment





1,842Intangible assets





297Deferred tax assets





169Accounts payable and accrued liabilities





(950
)Acquisition costs





(242
)Cash provided through operating cash




$
(1,490
)Acquisition of certain assets of MetronelecCurrent assets (net of cash acquired)







$
41Property and equipment








13Intangible assets








932Goodwill








440Accounts payable and accrued liabilities








(41
)Cash provided through operating cash







$
(1,385
)Acquisition of Capital ServicesCurrent assets (net of cash acquired)







$
704Property and equipment








90Intangible assets








709Goodwill








789Accounts payable and accrued liabilities








(216
)Deferred tax liability








(276
)Cash provided through operating cash and increase in debt







$
(1,800
)


Note 14Acquisitions

Capital Services of New York, Inc.

In September 2006, Chase Corporation acquired all of the capital stock of Capital Services of New York, Inc. based in
Schenectady, New York ("Capital Services") for approximately $1,800 subject to adjustments and holdbacks including balance sheet retentions, and retentions for warranty and indemnifications and tax
retentions. In fiscal 2009, the Company made a payment of approximately $142 related to these holdbacks and retentions (of which $110 was previously accrued). The assets acquired by the Company
include inventories, trade receivables, cash, and other current assets. The purchase agreement for this acquisition requires additional contingent payments to be made by the Company if certain revenue
targets are met with respect to the Capital Services and E-Poxy

52

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

products
over the four years ending August 31, 2010. The additional payments related to these revenue targets are not contingent upon employment of the former shareholders and will be included
as part of the contingent purchase price when and if paid.

Capital
Services is a leading manufacturer of waterproofing sealants, expansion joints and accessories for the transportation, industrial and architectural markets. This acquisition
joined Chase's Royston and E-Poxy Engineered Materials brands to form the Construction Products group.

The
effective date for this acquisition was September 1, 2006 and the results of the Capital Services operations have been included in the Company's financial statements since
then. The purchase price was funded through a loan from Bank of America which was fully paid off as of August 31, 2008.

The
allocation of the purchase price, including direct costs of the acquisition, was based on the fair values of the acquired assets and liabilities assumed as follows:

Assets & Liabilities

AmountsCurrent Assets (net of cash acquired)

$
704Property & Equipment


90Intangible Assets


709Goodwill


789Accounts payable and accrued expenses


(216
)Deferred tax liability


(276
)Total purchase price

$
1,800


All
assets, including goodwill, acquired as part of Capital Services are included in the Specialized Manufacturing segment. Identifiable intangible assets purchased with this transaction
are as follows:

Intangible Asset

Amount

Useful lifePatents and agreements

$
63


2 yearsFormulas

$
168


10 yearsTrade names

$
93


3 yearsCustomer lists and relationships

$
385


10 yearsTotal intangible assets

$
709


HumiSeal Europe SARL

In March 2007, Chase Corporation expanded its international presence with the formation of HumiSeal Europe SARL in France. HumiSeal
Europe SARL operates a sales/technical service office and warehouse near Paris, France. In conjunction with establishing the new company certain assets were acquired from Metronelec SARL, a former
distributor of HumiSeal products.

The
purchase price for this acquisition was €885 (approximately US $1,150 at the time of acquisition) plus acquisition related costs and additional contingent payments to
be made by the Company if certain revenue targets are met during the five year period ending February 29, 2012. The effective date for this acquisition for accounting purposes was
March 12, 2007 and the results of HumiSeal Europe SARL have been included in the Company's financial results since then. The purchase price was financed out of cash flow from the Company's
European operations.

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The allocation of the purchase price, including direct costs of the acquisition, was based on the fair values of the acquired assets and liabilities assumed as
follows:

Assets & Liabilities

AmountsProperty and equipment

$
13Intangible Assets


932Goodwill


440Total purchase price

$
1,385


All
assets, including goodwill, acquired as part of HumiSeal Europe SARL are included in the Specialized Manufacturing segment. Identifiable intangible assets purchased with this
transaction are as follows:

Intangible Asset

Amount

Useful lifePatents and agreements

$
142


5 yearsCustomer lists and relationships


790


10 yearsTotal intangible assets

$
932


Not
included in the acquisition were the equipment and other materials of Metronelec. That business, which is unrelated to the HumiSeal business, continues to operate independently under
the Metronelec name.

Chase Protective Coatings Limited

On September 1, 2007, Chase Corporation purchased certain product lines and a related manufacturing facility in Rye, East
Sussex, England through its wholly owned subsidiary, Chase Protective Coatings Ltd. For over 35 years, this business has been a leading manufacturer of waterproofing and corrosion
protection systems for oil, gas and water pipelines and has been a major supplier to Europe, the Middle East and Southeast Asia.

The
purchase price for this acquisition was £739 (US $1,490 at the time of the acquisition) and was financed out of cash flow from the Company's operations. The effective
date for this acquisition was September 1, 2007 and the results of this acquisition have been included in the Company's financial statements since then.

The
allocation of the purchase price, including direct costs of the acquisition, was based on the fair values of the acquired assets and liabilities assumed as follows:

Assets & Liabilities

AmountsInventory

$
374Fixed Assets


1,842Intangible assets


297Deferred tax asset


169Accrued expenses


(1,192
)Total purchase price

$
1,490


All
assets, including goodwill, acquired as part of this acquisition are included in the Specialized Manufacturing segment. Identifiable intangible assets purchased with this transaction
are as follows:

Intangible Asset

Amount

Useful lifeCustomer lists and relationships

$
260


3 yearsTrademarks/Trade Names


37


2 yearsTotal intangible assets

$
297


54

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

All
acquisitions have been accounted for as purchase transactions and the operations of the acquired entity or assets are included in consolidated operations from the effective date.

Note 15Split-Dollar Life Insurance Arrangements

In September 2006, the Emerging Issues Task Force ("EITF") reached a final consensus on Issue 06-04, Accounting for
Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. In March 2007, the EITF reached a final conclusion on Issue 06-10,
Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements. Both of these Issues stipulate that an agreement by an employer to make life insurance premium payments and/or share a
portion of the proceeds of a life insurance policy with an employee during the postretirement period is a postretirement benefit arrangement required to be accounted for by the employer. The Issues
conclude that the purchase of a split-dollar life insurance policy does not constitute a settlement and, therefore, a liability for the postretirement obligation must be recognized. EITF Issues
06-04 and 06-10 allow the Company to record the initial recognition of the liability through stockholders' equity.

The
Company adopted EITF Issues 06-04 and 06-10 on September 1, 2008. The net liability related to these postretirement benefits was calculated as the
difference between the present value of future premiums to be paid by the Company reduced by the present value of the expected proceeds to be returned to the Company upon the insured's death. The
Company prepared its calculation by using mortality assumptions which were based on the 2008 Combined Static Mortality Table, and an appropriate discount rate. Upon the adoption of EITF Issues
06-04 and 06-10 on September 1, 2008, the Company recorded a
decrease of $184 to stockholders' equity which represents the Company's net liability related to these postretirement obligations. Ongoing expenses in future years will be recognized through
operations. As of August 31, 2009, the Company's net liability related to these postretirement obligations was $155.

Note 16Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("FAS 157"). The provisions of FAS 157
define fair value, establish a framework for measuring fair value in generally accepted accounting principles, and expand disclosures about fair value measurements. FAS 157 is effective for
financial assets and financial liabilities for fiscal years beginning after November 15, 2007. FSP 157-2 "Partial Deferral of the Effective Date of Statement 157," deferred the
effective date of FAS 157 for all nonfinancial assets and nonfinancial liabilities except for those that are recognized at fair value on a recurring basis (at least annually) to fiscal years
beginning after November 15, 2008.

The
implementation of FAS 157 for financial assets and financial liabilities, effective September 1, 2008 for the Company, did not have a material impact on the Company's
consolidated financial position and results of operations. The Company is currently assessing the impact of FAS 157 for nonfinancial assets and nonfinancial liabilities on its consolidated
financial position and results of operations.

FAS 157
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (exit price). FAS 157 establishes a three-tier fair value hierarchy, which classifies the inputs used in measuring fair value. These tiers include: Level 1,
defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The
Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measurement. The Company has determined that it does not have any financial liabilities measured at fair value and that its financial assets are currently
all classified within Level 1 and Level 2 in the fair value hierarchy.

55

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The
following table sets forth the Company's financial assets that were accounted for at fair value on a recurring basis as of August 31, 2009:

Fair value measurements at August 31, 2009 using:Balance at
08/31/09

Quoted prices
in active markets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant
unobservable inputs
(Level 3)Restricted investments

$
573

$
239

$
334

$
$
573

$
239

$
334

$



In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment of FAS No. 115",
("FAS 159"). FAS 159 permits entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an
instrument-by-instrument basis (the fair value option). Unrealized gains and losses on items for which the fair value option has been elected are to be recognized in earnings
at each subsequent reporting date. Upon adoption of FAS 159 as of September 1, 2008, the Company elected to not apply the provisions of FAS 159 to its eligible assets and
liabilities. As such, the adoption of FAS 159 did not impact the Company's consolidated financial statements.

Note 17Related Party Transactions

In June 2009, the Company sold real property (building and land) to ChaseBay Real Estate Holdings, Inc. ("ChaseBay") for a
purchase price of $1,370. The property is located in West Bridgewater, MA and was being leased by the Company to Sunburst Electronics Manufacturing Solutions, Inc. ("Sunburst") for a monthly
base rent of $15. Andrew Chase, President of Sunburst and partner of ChaseBay, is the son of Edward L. Chase (deceased), and a Trustee of the Edward L. Chase Revocable Trust (the "Trust"), the brother
of Peter R. Chase (the Chairman and CEO of the Company) and the uncle of Adam P. Chase (the President and COO of the
Company). The Trust is the sole owner of Sunburst and is a significant shareholder of Chase Corporation, holding 1,157,902 shares of the Company's common stock as of the date of the transaction.

The
terms and conditions of the sale transaction were reviewed and approved by an independent committee of the Company's Board of Directors which concluded that the sale price was
appropriate given a recent market appraisal of the land and building performed by an independent third party valuation firm.

The
sale of the property resulted in an accounting charge of $262 in the third quarter ending May 31, 2009, which represented the write down of the property to its current market
value, as required by generally accepted accounting principles.

Additionally,
a voting agreement between Chase and the Trust expires in 2013. Pursuant to the voting agreement, the Trustees have agreed to vote for the nominees for director of the
Company, as approved from time to time by the Company's Nominating and Governance Committee, through the annual meeting in January 2013. The voting agreement requires that a designated representative
of the Trust be elected a director of the Company. The voting agreement which had an original book value of $200, has been capitalized as an intangible asset and is being amortized over its ten year
useful life. As of August 31, 2009, this intangible asset has a net book value of $85.

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 18Net Income Per Share

Net income per share is calculated as follows:

Years Ended August 31,2009

2008

2007Net income

$
6,385

$
12,374

$
10,193Weighted average common shares outstanding


8,408,614


8,248,296


8,080,770Additional dilutive common stock equivalents


345,822


398,249


273,605Weighted average diluted shares outstanding


8,754,436


8,646,545


8,354,375Net income per shareBasic

$
0.76

$
1.50

$
1.26Net income per shareDiluted

$
0.73

$
1.43

$
1.22


For
the year ended August 31, 2009, stock options to purchase 250,000 shares of common stock were outstanding, but were not included in the calculation of diluted net income per
share because the options' exercise prices were greater than the average market price of the common stock and thus would be anti-dilutive. Included in the calculation of dilutive common
stock equivalents are the unvested portion of restricted stock, restricted stock units and stock options.

Note 19Contingencies

The Company is one of over 100 defendants in a personal injury lawsuit, pending in Ohio, which alleges personal injury from exposure to
asbestos contained in certain Chase products. The case is captioned Marie Lou Scott, Executrix of the Estate of James T. Scott v. A-Best Products, et al., No. 312901 in the Court of
Common Pleas for Cuyahoga County, Ohio. The plaintiff in the case issued discovery requests to Chase in August 2005, to which Chase timely responded in September 2005. The trial had initially been
scheduled to begin on April 30, 2007. However, that date had been postponed and no new trial date has been set. As of October 2009, there have been no new developments as this Ohio lawsuit has
been inactive with respect to Chase.

The
Company was named as one of the defendants in a complaint filed on June 25, 2009, in a lawsuit captioned Lois Jansen, Individually and as Special Administrator of the Estate
of Thomas Jansen v. Beazer East, Inc., et al., No: 09-CV-6248 in the Milwaukee County (Wisconsin) Circuit Court. The plaintiff alleges that her husband suffered and died
from malignant mesothelioma resulting from exposure to asbestos in his workplace. The plaintiff has sued seven alleged manufacturers or distributors of asbestos-containing products, including Royston
Laboratories (formerly an independent company and now a division of Chase Corporation). Chase has filed an answer to the claim denying the material allegations in the complaint. The parties are
currently engaged in discovery.

In
addition to the matters described above, the Company is involved from time to time in litigation incidental to the conduct of its business. Although the Company does not expect that
the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, litigation is inherently unpredictable.
Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company's operating results or cash flows in a particular period. The Company routinely assesses all of
its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where the Company assesses the
likelihood of loss as probable.

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

Note 20Selected Quarterly Financial Data (Unaudited)

The following table presents unaudited operating results for each of the Company's quarters in the years ended August 31, 2009
and 2008:

Fiscal Year 2009 QuartersFirst

Second

Third

Fourth

YearNet Sales

$
30,607

$
22,751

$
25,012

$
28,159

$
106,529Gross Profit on Sales


9,047


5,111


7,375


9,254


30,787Net Income


2,260


454


862


2,809


6,385Net income per sharebasic

$
0.27

$
0.05

$
0.10

$
0.33

$
0.76Net income per sharediluted

$
0.26

$
0.05

$
0.10

$
0.31

$
0.73




Fiscal Year 2008 QuartersFirst

Second

Third

Fourth

YearNet Sales

$
34,224

$
27,872

$
33,489

$
35,118

$
130,703Gross Profit on Sales


11,260


8,163


10,567


11,033


41,023Net Income


3,474


1,865


3,218


3,817


12,374Net income per sharebasic

$
0.42

$
0.23

$
0.39

$
0.46

$
1.50Net income per sharediluted

$
0.41

$
0.22

$
0.37

$
0.44

$
1.43


Note 21Valuation and Qualifying Accounts

The following table sets forth activity in the Company's accounts receivable reserve:

Year ended

Balance at
Beginning of
Year

Charges to
Operations

Deductions to
Reserves

Balance at
End of YearAugust 31, 2009

$
447

$
89

$
(186
)
$
350August 31, 2008

$
580

$
128


(261
)
$
447August 31, 2007

$
513

$
287


(220
)
$
580


The
following table sets forth activity in the Company's warranty reserve:

Year ended

Balance at
Beginning of
Year

Charges to
Operations

Deductions to
Reserves

Balance at
End of YearAugust 31, 2009

$
315

$
22

$
(206
)
$
131August 31, 2008

$
268

$
166


(119
)
$
315August 31, 2007

$
163

$
136


(31
)
$
268


Note 22Subsequent Events

In accordance with FAS 165, the Company evaluated subsequent events through November 13, 2009, the date these financial
statements were filed.

Acquisition of C.I.M. Industries Inc.

On September 4, 2009, Chase Corporation acquired all of the outstanding capital stock of C.I.M. Industries Inc.
("C.I.M."), which is based in Peterborough, NH and has a manufacturing facility in Texas. C.I.M. is a specialized manufacturer of high performance coating and lining systems used worldwide in the
liquid storage and containment industry. The total purchase price, net of cash received, was $18,894,000, subject to certain adjustments relating to the closing date working capital.

58

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Table of Contents

CHASE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In thousands, except share and per share amounts

The
purchase price consists of cash in the amount of $16,500 (subject to closing adjustments) and the delivery of non-negotiable promissory notes (the "Notes") in the
aggregate amount of $3,000. The net assets acquired by Chase include cash, inventories, trade receivables, property, plant & equipment, trade payables and certain other current assets and
liabilities. The principal of the Notes will be paid in three consecutive annual installments of $1,000 each, with the initial payment due on September 4, 2010. Interest on the unpaid principal
balance of the Notes will accrue at a rate per annum equal to the applicable Federal rate, and will be paid annually with each principal payment. At October 31, 2009, the applicable interest
rate was 0.75% per annum.

The
Company funded this acquisition partly through its available cash on hand and funded the balance through a loan in the amount of $10,000 from Bank of America and the $3,000 Notes to
C.I.M. shareholders described above. The loan from Bank of America (the "Loan") is an unsecured, three year term note with interest and principal payments due monthly. Interest is calculated at the
applicable LIBOR rate plus a margin of 1.75% per annum, with interest payments due on the last day of each month. In addition to monthly interest payments, Chase Corporation will repay the principal
in equal installments of $167 each, beginning on September 30, 2009, and on the last day of each month thereafter, ending on August 31, 2012 (the "Repayment Period"). In any event, on
the last day of the Repayment Period, Chase will repay the remaining principal balance plus any interest then due.

The
Loan is subject to certain covenants which require the Company to maintain certain financial ratios, including total liabilities to tangible net worth and debt service coverage
ratios. Prepayment of the Loan is allowed at any time during the term of the Loan.

Dividend Declared

On October 15, 2009, the Company announced a cash dividend of $0.20 per share to shareholders of record on October 31,
2009 payable on December 3, 2009.

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Table of Contents

ITEM 9CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9ACONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the
Company's reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms and that
such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

The
Company carries out a variety of ongoing procedures, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange
Act Rule 13a-15(f). The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

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

Under
the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the
effectiveness of the Company's internal control over financial reporting based on the framework in "Internal ControlIntegrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management has concluded that the internal control over financial reporting was effective as of August 31, 2009.

There
has been no change in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.

ITEM 9BOTHER INFORMATION

Not applicable.

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Table of Contents

PART III

ITEM 10DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to Directors of the Company, information with respect to compliance with the reporting obligations under
Section 16(a) of the Exchange Act, information concerning the Company's code of ethics applicable to senior management, information concerning procedures for shareholder nominations to the
Company's Board of Directors, and information relating to the Company's Audit Committee is incorporated by reference from the information contained in the Definitive Proxy Statement for the Annual
Meeting of Stockholders, which is expected to be filed within 120 days after the Company's fiscal year ended August 31, 2009. Information regarding the Company's executive officers found
in the section captioned "Executive Officers of the Registrant" in Item 4A of Part I hereof is also incorporated by reference into this Item 10.

ITEM 11EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K, relating to executive and director compensation and certain
matters relating to the Company's Compensation and Management Development Committee, is incorporated by reference from the information contained in the Definitive Proxy
Statement for the Annual Meeting of Stockholders, which is expected to be filed within 120 days after the Company's fiscal year ended August 31, 2009.

ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 of Form 10-K, relating to the stock ownership of certain beneficial
owners and management, is incorporated by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which is expected to be filed within
120 days after the Company's fiscal year ended August 31, 2009.

The
following table summarizes the Company's stock option plans as of August 31, 2009. Further details on the Company's stock option plans are discussed in the notes to the
consolidated financial statements. The adoption of each of the Company's stock option plans was approved by its shareholders.

Number of shares of Chase
common stock to be
issued upon the exercise
of outstanding options

Weighted average
exercise price
of outstanding
options

Number of shares of Chase
common stock remaining
available for future
issuance2001 Senior Management Stock Plan


481,000

$
12.66


14,1362001 Non-Employee Director Stock Plan


12,500


5.25


10,0002005 Incentive Plan


25,000


11.15


478,494Total


518,500

$
12.41


502,630


ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 of Form 10-K, relating to transactions with related persons and the
independence of members of the Company's Board of Directors, is incorporated by reference from the information contained in the Definitive Proxy Statement for the Annual Meeting of Stockholders, which
is expected to be filed within 120 days after the Company's fiscal year ended August 31, 2009.

ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 of Form 10-K, relating to fees paid to the Company's independent
registered public accounting firm and pre-approval policies of the Company's Audit Committee, is incorporated by reference from the information contained in the Definitive Proxy
Statement for the Annual Meeting of Stockholders, which is expected to be filed within 120 days after the Company's fiscal year ended August 31, 2009.

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Table of Contents

PART IV

ITEM 15EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) and (2)Financial Statements and Schedules:

The
financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules have been
omitted since they are either not required, not applicable, or the information is otherwise included.

(a)(3)Exhibit Index:

Exhibit
Number

Description3.1.1

Articles of Organization of Chase Corporation (incorporated by reference from Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2004, filed on November 24,
2004 (the "2004 Form 10-K")).3.1.2

Articles of Amendment to Articles of Organization of Chase Corporation (incorporated by reference from Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 29,
 2008, filed on April 9, 2008).3.2

By-Laws (incorporated by reference from Exhibit 3.2 to the Company's 2004 Form 10-K).10.1.1

Voting Agreement between the Trustees of The Edward L. Chase Revocable Trust and the Company dated December 26, 2002 (incorporated by reference from Exhibit 10.30 to the Company's 2004
Form 10-K).10.1.2

Voting Agreement Amendment between the Trustees of The Edward L. Chase Revocable Trust and the Company dated December 10, 2003 (incorporated by reference from Exhibit 10.2 to the Company's current report on
Form 8-K filed December 29, 2003).10.2

Amended and Restated Stock Agreement dated as of August 31, 2004, between the Company and Peter R. Chase (incorporated by reference to Exhibit 10 to the Company's current report on Form 8-K filed on
September 2, 2004).*10.3

Chase Corporation Employee's Supplemental Pension Plan effective January 1, 2008 (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 31, 2008, filed on July 10, 2008).*10.4

Chase Corporation Employee's Supplemental Savings Plan effective January 1, 2008 (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 31, 2008, filed on July 10, 2008).*10.5

Chase Corporation Non-Qualified Retirement Savings Plan for the Board of Directors, amended and restated effective January 1, 2009 (incorporated by reference from Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 2009, filed on April 9, 2009).*10.6.1

Severance Agreement between the Company and Peter R. Chase dated July 10, 2006 (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 31, 2006, filed on July 17, 2006).*10.6.2

Severance Agreement between the Company and Terry M. Jones dated July 10, 2006 (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 2007, filed on April 16, 2007).*10.6.3

Severance Agreement between the Company and Adam P. Chase dated October 1, 2008.*10.6.4

Severance Agreement between the Company and Kenneth L. Dumas dated July 10, 2006 (incorporated by reference from Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 2007, filed on April 16, 2007).*10.7.1

Chase Corporation 2001 Senior Management Stock Plan (incorporated by reference from Exhibit 10.44 to the Company's 2004 Form 10-K).*


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Exhibit
Number

Description10.7.2

Form of award issued under Chase Corporation 2001 Senior Management Stock Plan (incorporated by reference from Exhibit 10.45 to the Company's 2004 Form 10-K).*10.8.1

Chase Corporation 2001 Non-Employee Director Stock Option Plan (incorporated by reference from Exhibit 10.46 to the Company's 2004 Form 10-K).*10.8.2

Form of award issued under Chase Corporation 2001 Non-Employee Director Stock Option Plan (incorporated by reference from Exhibit 10.47 to the Company's 2004 Form 10-K).*10.9

Second Amended and Restated Loan Agreement, dated September 4, 2009, between Chase Corporation and Bank of America, N.A.10.10.1

Life Insurance Reimbursement Agreement between Chase Corporation and Peter R. Chase dated January 10, 2005 (incorporated by reference from Exhibit 10.1 to the Company's current report on Form 8-K filed
January 14, 2005).*10.10.2

Split Dollar Agreement between Chase Corporation and Peter R. Chase dated January 10, 2005 (incorporated by reference from Exhibit 10.2 to the Company's current report on Form 8-K filed January 14,
2005).*10.10.3

Split Dollar Endorsement dated January 10, 2005 (incorporated by reference from Exhibit 10.3 to the Company's current report on Form 8-K filed January 14, 2005).*10.11.1

2005 Incentive Plan of Chase Corporation (incorporated by reference from Exhibit 10.1 to the Company's current report on Form 8-K filed February 9, 2006).*10.11.2

Form of restricted stock unit award issued under the Chase Corporation 2005 Incentive Plan for non-executive members of the Board of Directors (incorporated by reference from Exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the period ended February 28, 2007, filed on April 16, 2007).*10.11.3

Form of restricted stock unit award issued under the Chase Corporation 2005 Incentive Plan for members of Executive Management (incorporated by reference from Exhibit 10.5 to the Company's Quarterly Report on
Form 10-Q for the period ended February 28, 2007, filed on April 16, 2007).*10.11.4

Form of restricted stock agreement issued under the Chase Corporation 2005 Incentive Plan for non-executive members of the Board of Directors (incorporated by reference from Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the period ended February 29, 2008, filed on April 9, 2008).*10.11.5

Form of restricted stock agreement issued under the Chase Corporation 2005 Incentive Plan for members of Executive Management (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the period ended November 30, 2007, filed on January 9, 2008).*10.11.6

Form of stock option award issued under the Chase Corporation 2005 Incentive Plan.*10.12.1

FY 2009 Chase Corporation Annual Incentive Plan (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2009, filed on July 10,
2009).*10.12.2

FY 2009 Chase Corporation Long Term Incentive Plan (incorporated by reference from Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended May 31, 2009, filed on July 10,
2009).*10.13.1

Endorsement Split-Dollar Agreement among the Company, Edward L. Chase, and Sarah Chase as trustee of the ELC Irrevocable Life Insurance Trust (incorporated by reference from Exhibit 10.25 to the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1998, filed on November 27, 1998).10.13.2

Amendment to Endorsement Split-Dollar Agreement between the Company and Sarah Chase as trustee of the ELC Irrevocable Life Insurance Trust (incorporated by reference from Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the period ended February 28, 2009, filed on April 9, 2009).


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Exhibit
Number

Description10.14

Purchase and Sale Agreement dated May 21, 2009, between Chase Corporation and ChaseBay Real Estate Holdings, Inc.10.15.1

Stock Purchase Agreement dated September 4, 2009, among Chase Corporation and the shareholders of C.I.M. Industries Inc.10.15.2

Promissory Notes dated September 4, 2009, among Chase Corporation and the shareholders of C.I.M. Industries Inc.21

Subsidiaries of the Registrant23.1

Consent of Independent Registered Public Accounting FirmPricewaterhouseCoopers LLP31.1

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*Identifies
management plan or compensatory plan or arrangement.(b)See
(a)(3) above.(c)None.


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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 its behalf by the undersigned thereunto duly authorized.

Chase CorporationBy:

/s/ PETER R. CHASE Peter R. Chase, Chairman and Chief Executive OfficerNovember 12, 2009By:

/s/ KENNETH L. DUMAS Kenneth L. Dumas Chief Financial Officer and TreasurerNovember 12, 2009


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 registrant and in the capacities and on
the dates indicated.

Signature

Title

Date/s/ PETER R. CHASE Peter R. Chase

Chairman and Chief Executive Officer
(Principal executive officer)

November 12, 2009/s/ KENNETH L. DUMAS Kenneth L. Dumas

Chief Financial Officer and Treasurer
(Principal financial officer and principal accounting officer)

November 12, 2009/s/ MARY CLAIRE CHASE Mary Claire Chase

Director

November 12, 2009/s/ J. BROOKS FENNO J. Brooks Fenno

Director

November 12, 2009/s/ LEWIS P. GACK Lewis P. Gack

Director

November 12, 2009/s/ GEORGE M. HUGHES George M. Hughes

Director

November 12, 2009/s/ RONALD LEVY Ronald Levy

Director

November 12, 2009/s/ THOMAS WROE, JR. Thomas Wroe, Jr

Director

November 12, 2009


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