FORWARD-LOOKING INFORMATION

The information contained in this Quarterly Report on Form 10-Q for the period ended September 30, 2008 contains statements that we believe to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations or forecasts of future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project," or "continue," or the negative thereof or similar words. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any public statements we make could be materially different from actual results. They can be affected by assumptions we might make or by known or unknown risks or uncertainties, including those described in Item 1A "Risk Factors" and other factors disclosed throughout this Quarterly Report on Form 10-Q and the Company's other filings with the SEC. Consequently, we cannot guarantee any forward-looking statements and undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this Quarterly Report on Form 10-Q. Investors are cautioned not to place undue reliance on any forward-looking statements. Investors should also understand that it is not possible to predict or identify all factors that might affect actual results and should not consider these factors to be a complete statement of all potential risks and uncertainties. We assume no obligation and disclaim any duty to update the forward-looking statements in this Quarterly Report on Form 10-Q or any other public statement.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationship of certain items to sales for the period indicated (in thousands, except percentages):

                                                  THREE MONTHS ENDED          SIX MONTHS ENDED
                                                  SEPTEMBER 30, 2008         SEPTEMBER 30, 2008


Sales                                           $    80,386    100.0 %    $    145,514    100.0 %
Cost of sales                                        62,597     77.9           113,475     78.0

Gross margin                                         17,790     22.1            32,039     22.0
Selling, general and administrative expenses          6,616      8.2            13,242      9.1

Income from operations                               11,174     13.9            18,797     12.9
Investment income                                       115      0.1               257      0.2

Income before income taxes                           11,289     14.0            19,053     13.1
Provision for income taxes                            4,466      5.6             7,355      5.1

Net income                                      $     6,823      8.5 %    $     11,699      8.0 %

                                                  THREE MONTHS ENDED         SIX MONTHS ENDED
                                                  SEPTEMBER 30, 2007        SEPTEMBER 30, 2007


Sales                                           $    48,144    100.0 %    $    96,767    100.0 %
Cost of sales                                        36,268     75.3           73,061     75.5

Gross margin                                         11,875     24.7           23,706     24.5
Selling, general and administrative expenses          7,499     15.6           14,993     15.5

Income from operations                                4,377      9.1            8,712      9.0
Investment income                                       312      0.6              615      0.6

Income before income taxes                            4,689      9.7            9,327      9.6
Provision for income taxes                            1,768      3.7            3,454      3.6

Net income                                      $     2,921      6.1 %    $     5,872      6.1 %

SALES

Sales increased $32,242,579, or 67.0%, in the three months ended September 30, 2008, and increased $48,747,168, or 50.4%, in the six months ended September 30, 2008 as compared to the same periods a year ago. Sales of bulk chemicals, including caustic soda, were approximately 37% and 35% of sales for the three and six months ended September 30, 2008, respectively, compared to approximately 35% and 33% in the comparable periods a year ago. Industrial segment sales increased by $25,285,848 in the three months ended September 30, 2008 and increased by $37,209,443 in the six-month period ended September 30, 2008, as compared to the comparable periods in fiscal 2008. Water Treatment segment sales increased by $7,294,932 in the three months ended September 30, 2008 and increased $11,717,729 in the six-month period ended September 30, 2008, as compared to the same periods in fiscal 2008. The Industrial and Water Treatment segments' sales increases were primarily attributable to significant increases in selling prices related to rising material costs along existing product lines, with total volumes across these two segments increasing approximately 8% this quarter compared to the same period last year.

Pharmaceutical segment sales decreased by 15.0% to $1,923,302 for the three months ended September 30, 2008 and decreased by 3.8% to $4,496,550 for the six months ended September 30, 2008 as compared to the same periods in fiscal 2008. The Food and Drug Administration (FDA) is currently exercising an industry-wide enforcement against two major compounding chemicals, which negatively impacted the Pharmaceutical segment sales during the three and six months ended September 30, 2008. During the six months ended September 30, 2007, the Pharmaceutical segment was restricted from selling certain products by the Minneapolis District Office of the FDA. The Company worked to resolve this matter and, during the third quarter of fiscal 2008, received clearance from the FDA to sell the majority of the products initially affected. Although sales within the Pharmaceutical segment were negatively impacted by these regulatory actions in fiscal 2008 and the first half of fiscal 2009, there was not a material impact to the Company's results of operations or cash flows.

GROSS MARGIN

Gross margin, as a percentage of sales, for the three and six months ended September 30, 2008 was 22.1% and 22.0%, respectively, compared to 24.7% and 24.5%, respectively, for the comparable periods of fiscal 2008. Due to significant increases in raw material inventory costs, the LIFO method of valuing inventory resulted in a LIFO charge that negatively impacted the gross margin for the three and six months ended September 30, 2008 by 4.4% and 3.6%, respectively. The pass-through of higher raw material costs also serves to reduce the reported gross margin rate as a percentage of sales. To more accurately reflect their underlying nature, certain operating expenses that would have been classified as selling, general and administrative expenses in fiscal 2008, are now classified as cost of sales. For the three and six months ended September 30, 2008, these operating expenses totaled $890,562 and $1,585,089, respectively. Excluding the effect of the LIFO adjustment and change in expense classification for the three and six months ended September 30, 2008, gross margin as a percentage of sales would have been 27.7% and 26.7%, respectively. The higher margin rates were primarily due to an increase in margins on certain products due to the Company having the inventory to meet high demands from its current customers and gaining new customers during a period of constrained supply. Reported margins were also higher due to the sale of lower-cost inventory in storage. Many of the Company's products are commodity based and therefore are subject to cost and pricing fluctuations that will impact the reported gross margin percentage rate, which are expected to continue in future periods.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative (SG&A) expenses, for the three and six months ended September 30, 2008 were $6,615,868 and $13,241,594, respectively, compared to $7,498,645 and $14,993,929 for the comparable periods a year ago. Excluding the impact of the $890,562 and $1,585,089 changes in classification of certain expenses to cost of sales for the three and six months ended September 30, 2008, respectively, expenses were relatively consistent for the three months ended September 30, 2008 and decreased by $167,246 for the six months ended September 30, 2008, as compared to a year ago. SG&A expenses during the six months ended September 30, 2007 included contractor and consulting fees related to the Company's implementation of an Enterprise Resource Planning system and approximately $300,000 of non-recurring acquisition-related expenses associated with the Trumark acquisition. Employee compensation, including variable pay plans and additional sales staff to support sales growth in the Water Treatment and Pharmaceutical segments, were higher during the six months ended September 30, 2008 as compared to a year ago.

INCOME FROM OPERATIONS

Income from operations for the three and six months ended September 30, 2008 increased by $6,797,150 to $11,174,004 and by $10,084,840 to $18,796,961, respectively. The increase for the three and six months ended September 30, 2008 were driven by the Industrial segment, which increased by $6,677,918 and $9,317,420, respectively, and the Water Treatment segment, which increased by $376,256 and $1,083,898, respectively. The increases during the three and six month periods were driven by increases in sales volumes and higher than usual margins on certain products due to high demand coupled with raw material supply constraints. Shortages of certain raw materials in the Industrial segment's industry acutely impacted certain competitors' ability to meet their customers' product requirements, while the Company's inventory position allowed it to meet the requirements of its current customer base and to expand its business. Income from the Pharmaceutical segment decreased by $257,024 and $316,478, respectively, for the three and six months ended September 30, 2008 due to the decrease in sales discussed above, higher lab testing expenses, and an increase in selling expense due to additional sales staff.

INVESTMENT INCOME

Investment income was $256,508 for the six months ended September 30, 2008 as compared to $614,568 earned during the same period a year ago. The decrease was primarily due to lower average investment balances due to the May 2007 Trumark acquisition and lower yields due to the change in mix in investment balances in the current year as compared to the prior year, as the Company has continued to move the substantial portion of its investment assets into cash equivalents over the past year.

PROVISION FOR INCOME TAXES

The effective income tax rate was 39.6% and 38.6%, respectively, for the three and six months ended September 30, 2008 compared to 37.7% and 37.0%, respectively, for the three and six months ended September 30, 2007. The increase was primarily due to an increase in pre-tax income.

LIQUIDITY AND CAPITAL RESOURCES

For the six-month period ended September 30, 2008, cash provided by operations was $8,444,039 compared to $7,423,285 for the same period one year ago. The increase in cash provided by operating activities was due primarily to the increase in income from operations and the timing of inventory purchases and the related vendor payments, which were partially mitigated by an increase in trade receivables associated with the increase in sales. Due to the nature of our operations, which includes purchases of large quantities of bulk chemicals, timing of purchases can result in significant changes in working capital investment and the resulting operating cash flow. Historically, the Company's cash requirements for working capital increase during the period from April through September as caustic soda inventory levels increase as the majority of barges are received during this period. Additionally, due to the seasonality of the water treatment business, the Company's trade receivable balance generally increases during this period. Cash used in investing activities increased by $2,506,032 for the six months ended September 30, 2008 compared to the same period one year ago primarily due to the purchase of the land and facility in Centralia, Illinois during the second quarter of fiscal 2009. In the prior year, the acquisition of Trumark was largely offset by the proceeds obtained from the sale of investments during the six months ended September 30, 2007. Other capital expenditures during the six months ended September 30, 2008 consisted primarily of facilities improvement projects, machinery and equipment, new route sales trucks, and returnable containers. The Company has plans to spend approximately $8.0 million on capacity expansion during the current fiscal year, of which approximately $3.5 million has been incurred through September 30, 2008. Recurring capital expenditures for the remainder of this fiscal year are expected to be comparable with the three previous years and they will primarily relate to facilities improvement projects.

Cash, cash equivalents and investments available-for-sale decreased by $792,463 from March 30, 2008 to $23,321,912 as of September 30, 2008 due primarily to dividends paid of $2,459,150 and capital spending of $6,812,169, partially offset by cash generated from operating activities during the six-month period ended September 30, 2008. Cash equivalents consist of money market accounts and certificates of deposit with an original maturity of three months or less. Investments available-for-sale consists of corporate bonds and U.S. Government agency securities. The Company's investment objectives in order of importance are the preservation of principal, maintenance of liquidity and rate of return. The fixed income portfolio consists primarily of investment grade securities to minimize credit risk, and they generally mature within 10 years. The Company monitors the maturities of its investments to ensure that funding is available for anticipated cash needs. At September 30, 2008, $299,780 of available-for-sale investments were classified as non-current assets as they were determined to be temporarily impaired with an aggregate carrying value exceeding market value by approximately $7,500 and have maturity dates of one year or longer. These investments were not determined to be other-than-temporarily impaired, as the Company has the intent and ability to hold these investments for a period of time sufficient to allow a recovery of fair value.

At September 30, 2008, the Company had an investment portfolio of fixed income securities of $1,669,056 and cash and cash equivalents of $21,910,542. The fixed income securities, like all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. However, while the value of the investment may fluctuate in any given period, the Company intends to hold its fixed income investments until recovery. Consequently, the Company would not expect to recognize an adverse impact on net income or cash flows during the holding period.

Expected future cash flows from operations, coupled with the Company's strong financial position, puts the Company in a position to fund both short and long-term working capital and capital investment needs with internally generated funds. Management does not, therefore, anticipate the need to engage in significant financing activities in either the short or long-term. If the need to obtain additional capital does arise, however, management is confident that the Company's total debt to capital ratio at September 30, 2008 puts it in a position to obtain debt financing on favorable terms, although there can be no assurance of this.

Although management continually reviews opportunities to enhance the value of the Company through strategic acquisitions, other capital investments and strategic divestitures, no material commitments for such investments or divestitures currently exist.

CRITICAL ACCOUNTING POLICIES

The significant accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2008. The accounting policies used in preparing the Company's interim fiscal 2009 financial statements are the same as those described in the Company's Annual Report.