FORWARD-LOOKING STATEMENTS/RISK FACTORS:

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company's operations, future results and prospects. Generally, "may," "could," "will," "would," "expect," "believe," "estimate," "anticipate," "intend," "continue" and similar words identify forward-looking statements. Forward-looking statements appearing in this Report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire Report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources; general business regulations, including taxes and other risks as detailed from time-to-time in the Company's reports and filings filed with the U.S. Securities and Exchange Commission (the "SEC"). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Report.

Results of Operations (in Thousands)

2008 Compared with 2007:



                                      2008        2007       Change
                    Net sales:
                    Crop            $ 193,273   $ 185,886   $  7,387
                    Non-crop           44,265      30,776     13,489

                                    $ 237,538   $ 216,662   $ 20,876

                    Gross profit:
                    Crop            $  82,345   $  81,502   $    843
                    Non-crop           18,786      14,228      4,558

                                    $ 101,131   $  95,730   $  5,401

Our net sales for 2008 ended at $237,538 and were 10% higher than sales for the same period in 2007 of $216,662. Our insecticide product lines performed extremely well. This included the newly acquired Orthene product line. Furthermore, we saw high demand for our mosquito adulticide product, DiBrom®. This was a direct result of the intense hurricane season in the Southeast, and we are pleased to report that our sales performance was improved by first time orders from Texas. Our performance was also positively impacted by strong sales of our soil fumigant product line. Our PCNB product line, which has been a core product for the Company throughout our history and has been augmented in the last 12-months with the purchase of the Chemtura Terraclor® and Turfside® brands, performed better than expected. Our international sales continue to be an important growth segment for the Company. We have established a dedicated team based in the USA. We are developing our business in Mexico and we have opened an office in Costa Rica. Led by soil fumigant products on vegetable crops in Mexico, Central and South America; Thimet® and Counter® on corn and vegetables in Asia; and fungicide products in Canada, our international sales increased strongly, ending 25% higher than the same period of 2007.

These significant improvements were partially offset by a number of factors. We experienced lower demand for our cotton insecticide Bidrin®, driven by reduced cotton acres under cultivation in the USA. Our granular corn soil insecticide products underperformed compared to 2007-as a result of very adverse weather conditions which persisted during the Midwest planting season. Furthermore, sales of our leading corn herbicide product Impact ® have been lower in 2008-as some key distributors managed inventory levels through the 2008 season. Sales improved in the last few months of 2008, but did not make up for the slow start to the year. Industry field data shows that actual on-the-ground applications of Impact applied during 2008 have been very strong.

Our cost of sales for 2008 was $136,407 or 57% of sales. This compared to $120,932 or 56% of sales for the same period in 2007. Raw material prices have moved dramatically during the year, increasing significantly in the first half of the year and declining in the second half of the year. Major cost movements-both up and down-have been seen in raw materials based on petroleum, sulfur and phosphorus. We have worked hard to manage this exposure with focused inventory purchasing decisions and entering into favorable long-term purchase commitments. In addition, we have instituted some selective product line selling price increases.

During the latter part of 2007 we acquired our manufacturing facility in Hannibal, MO, and then in the early part of 2008, we acquired our facility in Marsing, ID. These facilities previously provided product for the company. Also, during 2008 we have carried out some third party tolling activities. These activities are targeted at improving overall manufacturing asset utilization. The products identified for tolling contracts are based on chemistries that fit well with our manufacturing capabilities and equipment.

Finally, our new products Orthene, Turfside and Terraclor generate combined gross margins that are in line with our average performance.

Gross profit ended at $101,131 or 43% of sales in 2008 compared to $95,730 and 44% of sales for 2007.

It should be noted that, when making comparisons with other companies' financial statements, the Company reports distribution costs in operating expenses and not as a part of cost of sales.

Operating expenses in 2008 increased by $5,270 to $64,987 or 27% of sales as compared to $59,717 or 28% in 2007. The differences in operating expenses by department are as follows:

                                                       2008       2007     Change
      Selling                                        $ 19,516   $ 19,487   $    29
      General and administrative                       17,274     16,020     1,254
      Research, product development and regulatory      8,631      6,947     1,684
      Freight, delivery and warehousing                19,566     17,263     2,303

                                                     $ 64,987   $ 59,717   $ 5,270

• Our selling expenses remained flat at $19,516 for 2008. Advertising costs have increased by $1,438 as we continue to support market awareness of some of our key product lines. Building our sales and marketing activities in Mexico and Costa Rica cost an additional $878. These increases were offset by lower product liability insurance premiums and a sales mix effect driving reduced program expenses.

• General and administrative expenses increased by $1,254 to $17,274 for 2008 when compared to $16,020 for 2007. Intangible amortization increased by $592 following product line acquisitions during late 2007 and 2008. We have increased resources in our finance team to support our growing business at a cost of $280. These increased general administration costs were partially offset by a negotiated settlement of a long outstanding claim with an insurer in liquidation.

• Research, product development costs and regulatory expenses increased by $1,684 for 2008 as compared to 2007. The main driver was increased product defense costs of $947 and included defense of recently acquired product lines. We also increased our product line development activity by $343 for future market opportunities.

• Freight, delivery and warehousing costs increased by $2,303 to $19,566 or 8% of sales for 2008. This compares with $17,263 or 8% of sales in the same period of 2007.

Interest expense including capitalized interest and interest income were $3,971 in 2008 compared to $5,487 in 2007. Interest costs are summarized in the following table:

                                                                      2008                                                       2007
                                                                    Interest                                                   Interest
Average Indebtedness and Interest expense       Average Debt        Expense          Interest Rate         Average Debt        Expense          Interest Rate
Term Loan                                      $       54,484      $    3,048                  5.6 %      $       58,400      $    4,233                  7.2 %
Real Estate                                             2,198             109                  5.0 %               2,305             171                  7.4 %
Working Capital Revolver                               26,269           1,143                  4.4 %              17,412           1,327                  7.6 %

Average                                                82,951           4,300                  5.2 %              78,117           5,731                  7.3 %

Other Notes Payable                                     3,706              -                    -                    500              -                    -

Other adjustments (capitalized interest &
interest income)                                           -             (329 )                 -                     -             (244 )                 -

Adjusted Average                               $       86,657      $    3,971                  4.6 %      $       78,617      $    5,487                  7.0 %

The Company's average overall indebtedness for 2008 increased by $8,040 to end at $86,657 as compared to $78,617 for 2007. The company increased revolver debt to support a major capital investment in a Metam facility at our Axis plant and increased inventory levels. Our results have been favorably impacted by movement in the LIBOR rate during 2008. LIBOR is the base for our syndicated borrowings and as can be seen from the table above, our effective interest rate was 4.6% in 2008 as compared to 7.0% in 2007. As also shown in the table, the Company had $329 in interest adjustments in 2008, including capitalized interest of $254 and interest income of $75. In 2007, the Company had interest expenses adjustments of $244 including capitalized interest of $30 and interest income of $214.

Income tax expense increased by $356 to end at $12,154 in 2008 as compared to $11,798 for 2007. Our effective tax rate is at 38%, which compares with an effective rate of 39% for 2007. The lower tax rate reflects the impact of our domestic manufacturing and greater costs incurred in R&D activities during the year. (See note 3 to the Consolidated Financial Statements for additional analysis of the changes in income tax expense.)

Net income increased by $1,291 to end at $20,019 or $.73 per diluted share in 2008 compared to $18,728 or $.68 per diluted share in 2007. This is a 7% year on year net income improvement.

Weather patterns can have an impact on the Company's operations. Weather conditions influence pest population by impacting gestation cycles for particular pests and the effectiveness of some of the Company's products, among other factors. The end user of some of the Company's products may, because of weather patterns, delay or intermittently disrupt field work during the planting season which may result in a reduction of the use of some of the Company's products. During 2008, weather patterns had significant impact as noted above.

Due to elements inherent to the Company's business, such as differing and unpredictable weather patterns, crop growing cycles, changes in product mix of sales, ordering patterns that may vary in timing, and promotional programs, measuring the Company's performance on a quarterly basis, (gross profit margins on a quarterly basis may vary significantly) even when such comparisons are favorable, is not as meaningful an indicator as full-year comparisons. The primary reason is that the use cycles do not necessarily coincide with financial reporting cycles. Because of the Company's cost structure, the combination of variable revenue streams, and the changing product mixes, results in varying quarterly levels of profitability.

Contractual Obligations and Off-Balance Sheet Arrangements

We believe that our cash flows from operations and cash and cash equivalents will be sufficient to meet our working capital and capital expenditure requirements and provide us with adequate liquidity to meet our anticipated operating needs for at least the next 12 months. Although operating activities are expected to provide cash, to the extent of significant growth in the future, our operating and investing activities may use cash and, consequently, this growth may require us to obtain additional sources of financing. There can be no assurance that any necessary additional financing will be available to us on commercially reasonable terms, if at all.

The following summarizes our contractual obligations at December 31, 2008, and the effects such obligations are expected to have on liquidity and cash flow in future periods:

                                                              Payments Due by Period
                                                         Less than       1-3         4-5         After
                                             Total        1 Year        Years       Years       5 Years
Long-term debt                             $  54,154    $     4,106    $ 18,048    $ 32,000           -
Note payable on product acquisitions
and asset purchases                            5,325          3,600       1,325         400           -
Working Capital Revolver credit line          24,500             -       24,500          -            -

Sub total Long-term debt                      83,979          7,706      43,873      32,400           -
Estimated interest liability(1)               13,501          3,983       6,830       2,688
Accrued royalty obligations                      181            181          -           -            -
Employment agreements (See note below)         4,053          1,145       1,850       1,058           -
Operating leases                                 721            296          50          50          325

                                           $ 102,435    $    13,311    $ 52,603    $ 36,196    $     325

(1) Estimated Interest Liability has been calculated using the effective rate for each category of debt over the remaining term of the debt and taking into account scheduled repayments. The working capital revolver debt has been assumed to be constant throughout the remaining term. As noted above in this Report, all of our debts are linked to LIBOR rates.

There were no off-balance sheet arrangements as of December 31, 2008.

Note: Employment agreements-please refer to item 11 executive compensation of this Report: the employment obligations listed here include Mr. Wintemute's contract which is of indefinite duration.

Results of Operations (in Thousands)

2007 Compared with 2006:



                                      2007        2006       Change
                    Net sales:
                    Crop            $ 185,886   $ 162,447   $ 23,439
                    Non-crop           30,776      31,324       (548 )

                                    $ 216,662   $ 193,771   $ 22,891

                    Gross profit:
                    Crop            $  81,502   $  68,629   $ 12,873
                    Non-crop           14,228      13,729        499

                                    $  95,730   $  82,358   $ 13,372

Our net sales for 2007 ended at $216,662 and were 12% higher than sales for the same period in 2006 of $193,771. Our granular soil insecticides performed well driven by sales of new product line Counter and established brand Aztec, both of which had strong sales performances. In addition our leading herbicide Impact and our fumigants product range both had exceptionally strong sales performances. Finally, our international sales continue to grow strongly. Led by soil fumigant products on vegetable crops in Mexico, Central and South America; Thimet® and Counter® on corn and vegetables in Asia; and fungicide products in Canada, our international sales increased strongly, ending 91% higher than the same period of 2006.

These performances were offset by a below expectation performance in our insecticides products particularly for our cotton insecticide Bidrin®, This was driven by reduced cotton acres under cultivation in the USA. Despite the continued reduction in our sales for this highly efficacious product line, our field reports indicate that our share is growing.

Sales of new products including Permethrin, Counter and Impact acquired or licenced in the last twelve to eighteen months performed well contributing strongly to the increased sales compared to the same period of 2006. Margins for this product are similar to our average margin levels.

During 2007 we have not made the significant progress that we anticipated related to third party tolling activities. This was a strong element of our performance in 2006 mainly driven by one toll manufacturing product. Despite a good start in 2006, this did not translate to significant sales in 2007.

Cost of sales for 2007 was $120,932 or 56% of sales. This compared to $111,413 or 57% of sales for the same period in 2006. Raw material prices remained relatively stable during the year, although there was some price pressure on petroleum based materials towards the end of 2007.

Gross profit ended at $95,730 or 44% of sales in 2007 compared to $82,358 and 42% of sales for 2006.

It should be noted that, when making comparisons with other companies' financial statements, the Company reports distribution costs in operating expenses and not as a part of cost of sales.

Operating expenses, which are net of other income and expenses, were up as a percentage of sales at 28% in 2007 as compared to 27% in 2006. The differences in operating expenses by specific departmental costs are as follows:

                                                      2007       2006      Change
     Selling                                        $ 19,487   $ 17,231   $  2,256
     General and administrative                       16,020     11,729      4,291
     Research, product development and regulatory      6,947      8,243     (1,296 )
     Freight, delivery and warehousing                17,263     15,939      1,324

                                                    $ 59,717   $ 53,142   $  6,575

• Our selling expenses increased by $2,256 to $19,487 in 2007 compared to $17,231 in 2006. We increased our investment in SmartBox systems field support costing $536, liability insurance costs up by $376, program expenses driven by specific sales mix of granular soil insecticides increased by $352, advertising and promotion costs by $220. Expansion of our sales and marketing activity in Mexico and other variable selling expenses accounted for the balance of the increase.

• Our general and administrative expenses increased by $4,291 to $16,020 in 2007 as compared to $11,729 in 2006. The increase was due to an increase in amortization expense of intangibles relating to the Company's recently acquired products, which increased $1,629. The expense associated with management's bonus program increased due to a better overall performance, ended at $1,347 and legal expenses increased $760. Other outside services including payroll, audit and other general administration costs accounted for the balance of the increase.

• Research, product development and regulatory registration expenses declined by $1,296 to $6,947 in 2007 from $8,243 in 2006 due to lower costs incurred to generate scientific data related to the registration of the Company's products.

• Freight, delivery and warehousing costs increased $1,324 to $17,263 or 8% of sales in 2007 as compared to $15,939 in 2006 or 8% of sales. Increased costs associated with higher volume sales offset by improved efficiencies in managing the overall supply chain.

Interest costs including capitalized interest and interest income were $5,487 in 2007 as compared to $2,694 in 2006. Interest costs are summarized in the following table:

                                                                      2007                                                       2006
                                                                    Interest                                                   Interest
Average Indebtedness and Interest expense       Average Debt        Expense          Interest Rate         Average Debt        Expense          Interest Rate
Term Loan                                      $       58,400      $    4,233                  7.2 %      $       16,096      $    1,305                  8.1 %
Real Estate                                             2,305             171                  7.4 %               2,411             173                  7.2 %
Working Capital Revolver                               17,412           1,327                  7.6 %              26,573           1,904                  7.2 %

Average                                                78,117           5,731                  7.3 %              45,080           3,382                  7.5 %

Other Notes Payable                                       500              -                    -                     -               -                    -

Other adjustments (capitalized interest &
interest income)                                           -             (244 )                 -                     -             (688 )                 -

Adjusted Average indebtedness                  $       78,617      $    5,487                  7.0 %      $       45,080      $    2,694                  6.0 %

The Company's average overall debt in 2007 was $78,617 as compared to $45,080 in 2006. The major change related to increased borrowings of the Term loan at the end of 2006 to support the acquisition of key product lines. Furthermore, the Company was able to capitalize a significant amount of interest during 2006 related to capital spending projects. As can be seen from the table above, the effective interest rate was 7.0% in 2007 as compared to 6.0% in 2006.

Income tax expense increased by $724 to $11,798 in 2007 as compared to $11,074 in 2006. The Company's effective tax rate was 39% in 2007 as compared to 42% in 2006.

The Company reported net income of $18,728 or $.68 per diluted share in 2007 as compared to net income of $15,448 or $.57 per diluted share in 2006. (Net income per share data was restated to reflect the effect of a 4 for 3 stock split that was distributed on April 17, 2006.)

Liquidity and Capital Resources

As of December 31, 2008, we had working capital of $96,881 as compared to $75,144 as of December 31, 2007. Working capital at January 1, 2007 was $99,233.

Cash provided by operating activities in 2008 was $3,073, as compared to $53,158 in 2007. Net income of $20,019, non-cash depreciation and amortization of $11,613, a foreign currency contract loss of $174, a decrease in receivables of $4,602, an increase in inventories of $27,171 and decrease in other current liabilities of $6,091, deferred income taxes of $3,700 and non-cash stock-based compensation expense of $822 provided $7,668 of cash for operations. Increases in prepaid expenses and other current assets of $2,724 coupled with a decrease in accounts payable of $1,871 used $4,595 of cash in operating activities.

Our investing activities used net cash of $23,322 in 2008, as compared to $11,538 in 2007. Our spending primarily included capital spending of $14,294, including the installation of a new Matam facility, improvement of our waste handling systems, improving complex control systems and expanding the capability of our Axis site and improving control and safety systems at our Hannibal and Los Angeles sites. Our investing activities also included product line acquisitions. In 2007, our investing activities included $3,500 spent on primarily on improving control and safety systems. Furthermore, we spent $8,038 on product line acquisitions.

Our financing activities provided net cash of $19,414 in 2008 consisting of increased debt $20,394 and proceeds from the exercise of stock options. These inflows were offset by the decisions to acquire treasury stock and the payment of dividends. In 2007, our financing activities used net cash of $40,475, including the paydown of debt of $39,606 and payment of dividends offset by proceeds from the exercise of stock options.

The Company has various different loans in place that together constitute the short-term and long-term loan balances shown in the balance sheet as at December 31, 2008 and December 31, 2007. These are summarized in the following table:-

Indebtedness                            At December 31, 2008                    At December 31, 2007
$000's                           Long-term     Short-term     Total      Long-term     Short-term     Total
Term Loan                       $    48,000   $      4,000   $ 52,000   $    52,000   $      4,000   $ 56,000
Real Estate                           2,048            106      2,154         2,155            106      2,261
Working Capital Revolver             24,500             -      24,500            -              -          -
Other Notes Payable                   1,725          3,600      5,325         2,000             -       2,000

Total Indebtedness              $    76,273   $      7,706   $ 83,979   $    56,155   $      4,106   $ 60,261

The Company has four key covenants to its credit facility with its banking syndicate. The covenants are as follows: (1) The Company must maintain its . . .