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INDEX TO ANNUAL REPORT ON FORM 10-K
Item 8

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

FORM 10-K

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

For the fiscal year ended August 31, 2004

Commission File Number: 1-9852

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

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

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

www.chasecorp.com
(Registrant's Website)

Securities registered pursuant to section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act: Common Stock, $.10 per share par value

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 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. o

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12-b-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 27, 2004 (the last business day of the registrant's second quarter of fiscal 2004), was approximately $32,672,884.

As of October 31, 2004, the Company had outstanding 3,752,483 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, 2004, are incorporated by reference into Part III hereof.

CHASE CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Year Ended August 31, 2004

PART I

Item 1—Business

Primary Operating Divisions and Facilities and Industry Segment

Chase Corporation (the "Company" or "Chase") is a multi-divisional advanced manufacturing company providing industrial products to a wide variety of industries including wire and cable, construction and electronics. The Company's strategy is to maximize its core businesses while seeking future opportunities through selective acquisitions. The Company is organized into six major operating divisions. All operating divisions are part of the Company's Specialized Manufacturing segment with the exception of Chase EMS, which is part of the Company's Electronic Manufacturing Services segment. A summary of the Company's operating divisional structure is as follows:

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Other Business Developments

International Operations—Chase Canada

In April 1992, the Company acquired certain tape product lines and associated assets for cash from the Stewart Group, Ltd. This division, Chase Canada, was part of the Company's Specialized Manufacturing segment. However, in fiscal year 2004, the Company closed this Canadian facility, located in Winnipeg, Canada, and reorganized it within the domestic operating facilities of the Company's Coating & Laminating division in the United States. The Company decided to close its only manufacturing facility located outside of the United States, as a result of the consolidation of the customer base of its Canadian facility, which is predominantly located in the United States.

Investment in Joint Venture—The Stewart Group, Inc.

In June 1995, the Company formed a joint venture, The Stewart Group, Inc. ("SGI"), with The Stewart Group, Ltd. of Canada, to produce various products for the fiber optic cable market. In February 1996, the Company increased its original investment in this entity which resulted in the Company having a 42% interest in the joint venture. In May 1997, the majority of the assets related to the original business were sold to Owens Corning. The joint venture continues to operate two manufacturing facilities selling polymers and specialty coatings primarily to the telecommunications industry.

In November 2003 (the Company's first quarter of fiscal 2004), the Company recorded an impairment charge of $500,000 related to the Company's investment in SGI due to changes in SGI's projected future cash flows. This impairment charge was determined based upon an updated understanding of SGI's businesses through discussions with SGI's majority shareholder as well as an analysis of SGI's projected future cash flows.

Sunburst Electronic Manufacturing Solutions, Inc.

In August 1996, the Company purchased a 20% interest in DC Scientific located in West Bridgewater, Massachusetts. In January 1997, the Company purchased a controlling interest in DC Scientific. In January 1999, the Company acquired the remaining interest of DC Scientific Inc., and changed the name to Sunburst Electronic Manufacturing Solutions Inc. ("Sunburst"). On December 10, 2003 (the Company's second quarter of fiscal 2004), the Company sold Sunburst to the Edward L. Chase Revocable Trust (the "Trust") in exchange for shares of Chase common stock that were held by the Trust.

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Employees

As of October 31, 2004, the Company employed approximately 320 people (including certain union employees). The Company believes that its relationship with its employees is good.

Products and Markets

The Company's principal products are protective coatings and tape products that are sold by Company salespeople and manufacturers' representatives. These products consist of: (i) 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; (ii) protective pipe coating tapes and other protectants for valves, regulators, casings, joints, metals, concrete, and wood, which are sold to oil companies, gas utilities, and pipeline companies; (iii) protectants for highway bridge deck metal supported surfaces, which are sold to municipal transportation authorities; (iv) moisture protective coatings, which are sold to the electronics industry; and (v) laminated, durable papers, which are produced and sold primarily to the envelope converting and commercial printing industries. The Company's Electronic Manufacturing Services segment provides circuit board assembly and contract manufacturing services to electronic goods manufacturers. There are no material seasonal aspects to the Company's business and the Company has introduced no new products or segments requiring an investment of a material amount of the Company's assets.

Backlog, Customers and Competition

As of October 31, 2004, the backlog of orders believed to be firm was approximately $8,025,000, of which $3,635,000 was related to our Electronic Manufacturing Services segment. This compared with a total of $11,288,000 as of October 31, 2003 of which $7,193,000 was associated with the Company's Electronic Manufacturing Services segment. Of the total backlog amount as of October 31, 2003, $2,778,000 related to Sunburst, which was sold in fiscal 2004 and, therefore, is not included in the October 31, 2004 backlog amount. The backlog is not seasonal. During fiscal 2004, 2003 and 2002, no customer accounted for more than 10% of sales. No material portion of the Company's business is subject to renegotiation or termination of profits or contracts at the election of the government.

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

Raw Materials

The Company obtains raw materials from a wide variety of suppliers with alternative sources of all essential materials available within reasonable lead times.

Patents, Trademarks, Licenses, Franchises and Concessions

The Company owns the following trademarks: HumiSeal®, a trademark for moisture protective coatings sold to the electronics industry; Chase BLH₂OCK®, a trademark for 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; and Paper Tyger®, a trademark for laminated durable papers sold to the envelope converting and commercial printing industries. The Company has no other material trademarks, licenses, franchises, or concessions. The Company holds various patents but believes that, at this time, they are not material to the success of the business.

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Working Capital and Research and Development

There are no special practices followed by the Company relating to working capital. Approximately $1,200,000, $746,000, and $781,000 was spent for Company-sponsored research and development during fiscal 2004, 2003 and 2002, respectively. Research and development increased by $454,000 in fiscal 2004 compared to 2003 due to increased expenses at the Company's Coating & Laminating division, including its newly acquired Paper Tyger business.

Available Information

The Company maintains a website at www.chasecorp.com. The Company makes available, free of charge, on its website its Annual Report on Form 10-K, as soon as reasonably practicable after such report is electronically filed with, or furnished to, the SEC. Additionally, the Company's 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) of 15(d) of the Securities Exchange Act of 1934, as amended, are available at the SEC's website at www.sec.gov. Information contained on the Company's 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.

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Item 2—Properties

The Company owns office and manufacturing properties and leases office and manufacturing space as outlined in the table below. All properties are used by the Company's Specialized Manufacturing segment except for Corporate and the Chase EMS division. The Chase EMS property is used by the Company's Electronic Manufacturing Services segment.

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. The Company also owns equipment and machinery that is in good repair and, in the opinion of management, adequate and suitable for present operations. The Company could significantly add to its 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

From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is not party to any lawsuit or proceeding that, in management's opinion, is likely to seriously harm the Company's business.

The Company is one of over a hundred defendants in each of three personal injury lawsuits, all of which allege personal injury from exposure to asbestos contained in various products. Of these lawsuits, one is pending in Mississippi and two are pending in Ohio. The Mississippi lawsuit is a wrongful death action that is in discovery and has not yet been given a firm trial date. One of the two lawsuits in Ohio has been scheduled for trial on August 5, 2005, and is in discovery. The other Ohio lawsuit has been inactive with respect to Chase since Chase was named as a defendant in July 2004.

The Company is also a defendant in a case pending in Massachusetts Superior Court alleging that two of its employees had disclosed confidential information and/or trade secrets of their former employer to the Company and that the Company had improperly used that information. In addition, the complaint alleges that the Company engaged in unfair and deceptive trade practices pursuant to Massachusetts General Law, Chapter 93A. Discovery in the case is closed but no trial date has yet been set.

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

There were no matters submitted to a vote of the Company's security holders during the fourth quarter of the Company's fiscal year ended August 31, 2004.

Item 4a—Executive Officers of the Registrant

The following table sets forth information concerning the Company's Executive Officers. Each officer is selected by the Company's Board of Directors and holds office until his successor is elected and qualified.

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PART II

Item 5—Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock is traded on the American Stock Exchange (Symbol: CCF). The approximate number of common stock shareholders of record on October 31, 2004 was 1,466, and the closing price of Chase Corporation's common stock was $15.70 per share as reported by the American Stock Exchange.

The following table sets forth the high and low sales prices for the Company's common stock as reported by the American Stock Exchange for each quarter in the fiscal years ended August 31, 2004 and 2003:

The Company paid a cash dividend per common share of $0.35, $0.31, and $0.27 for the years ended August 31, 2004, 2003 and 2002, respectively. The cash dividend for each fiscal year was paid subsequent to year end.

The following table summarizes the Company's stock option plans as of August 31, 2004. Further details on the Company's stock option plans are discussed in the notes to the consolidated financial statements.

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Item 6—Selected Consolidated 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"

(1)

As of September 1, 2001 (fiscal 2002), the Company ceased the amortization of goodwill in accordance with SFAS 142. In fiscal 2001 and 2000, prior to the Company's adoption of SFAS 141, goodwill amortization expense was $667,000 and $660,000, respectively.

(2)

Single annual dividend payments declared and paid subsequent to fiscal year end.

Note: Information related to the Company's acquisitions and dispositions can be found in the Overview section 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 the Company's 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

Overview

Overall performance in fiscal year 2004 was good, reflecting continuing improvement from last fiscal year. All of the Company's businesses benefited from a steadily improving economy. Strong gains in the Electronic Manufacturing Services segment and increased demand for products in the Specialized Manufacturing segment, and HumiSeal in particular, indicates a resurgence of activity of manufacturers needing to rebuild inventories. The following charges had a negative effect of approximately $1,347,000 on the Company's net income in fiscal year 2004 (a) the impairment of the Company's investment in unconsolidated joint venture, SGI, of $500,000 (b) the impairment of goodwill related to Sunburst of $579,000, and (c) the after tax losses of the Company's Canadian operations. Over the past two years, the Company has been restructuring manufacturing operations as a means of better positioning its businesses and maximizing resources. This will continue into fiscal year 2005.

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The Company has two reportable segments summarized below:

Chase Canada, the Company's only manufacturing plant located outside of the United States, in Winnipeg, Canada has been reorganized within the domestic operating facilities of the Company's Specialized Manufacturing segment. This was completed in the fourth quarter of fiscal 2004. This reorganization of plant facilities is a result of the continued consolidation of Chase Canada's customer base, predominantly to the United States. For the fiscal year ended August 31, 2004, the Company incurred losses before income taxes of approximately $754,000 from its operations in Canada. Included in the fiscal year loss was approximately $300,000 in costs related to employee severance, stay bonuses, accelerated depreciation on certain manufacturing equipment, a one time termination fee related to the building lease commitment, realization of unrealized foreign currency translation adjustments and other shut down costs.

In January 2004, the Company purchased manufacturing equipment. The Company utilized this manufacturing equipment to begin manufacturing operations at a newly leased facility in Taylorsville, North Carolina. This new operating facility is part of the Company's Specialized Manufacturing segment. The equipment purchase was financed through an increase in the Company's long-term debt.

On December 10, 2003, the Company sold its subsidiary, Sunburst Electronics Manufacturing Solutions, Inc. ("Sunburst") to the Edward L. Chase Revocable Trust (the "Trust") in exchange for shares of Chase common stock that were held by the Trust. The closing date of the transaction was December 10, 2003, with an effective date for accounting purposes of December 1, 2003. The Company received 230,406 shares of Chase common stock valued at $3,000,000. Sunburst was part of the Company's Electronic Manufacturing Services segment through the end of the first quarter of fiscal year 2004.

In December 2003, the Company acquired the assets of Paper Tyger, LLC ("Paper Tyger"), headquartered in Middlefield, Connecticut. The Paper Tyger business manufactures and markets laminated, durable papers produced with patented technology. Paper Tyger products, marketed under the names Paper Tygerâ, NaturalWhite and SuperWhite, are sold primarily to the envelope converting and commercial printing industries. The total purchase price for this acquisition was $702,000 with additional contingent payments to be made by the Company if certain revenue and product margin targets are met with respect to the Paper Tyger products over the next three years. The additional contingent payments will be recorded as goodwill in accordance with SFAS 141. In connection with the acquisition, the Company recorded $763,000 of goodwill and $360,000 of intangible assets related to the customer relationships of Paper Tyger. The Paper Tyger products are being manufactured in the Company's Webster facility and are part of the Coating & Laminating division which is part of the Specialized Manufacturing segment.

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Effective February 12, 2003, Chase Facile, Inc. ("Chase Facile"), a wholly owned subsidiary of the Company, acquired certain assets of Facile, Inc. ("Facile") for $5,032,000 (including $150,000 of acquisition costs) from Facile and Facile's lender. The acquired assets consisted principally of equipment, inventory and receivables. The majority of the assets that the Company acquired from Facile are being used in the Coating & Laminating division's Paterson facility which is part of the Specialized Manufacturing segment.

Effective November 1, 2001, the Company purchased the assets of the Tapecoat division of TC Manufacturing, Inc. for a total purchase price of $5,855,000, $5,427,000 of which was paid in cash and $428,000 of which was paid through the issuance of 40,000 shares of Chase common stock, valued at $10.70 per share. Tapecoat is part of the Company's Specialized Manufacturing segment.

Results of Operations

Revenues and Operating Profit by Segment are as follows (dollars in thousands)

* Includes loss on impairment of goodwill of $579,000

Total Revenues

Total revenues for fiscal 2004 increased $12.5 million or 17% to $87.1 million from $74.6 million in the prior year. The increase in revenues for the Company's Specialized Manufacturing segment is primarily due to the following: (a) the acquisition of Paper Tyger; (b) Chase Facile's Paterson facility has been fully integrated with a full year of production and has bolstered revenues through sales in CATV and Insulfab and contributed additional revenues in fiscal 2004 as it was included in Chase Corporation's results for only six months in fiscal 2003; (c) strong demand has resulted in increased sales of Chase BLH₂OCK®; (d) demand internationally for HumiSeal® products has increased; and (e) the Specialized

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Manufacturing segment's product lines have continued to improve and become more diversified. These increases in Specialized Manufacturing were offset by a decrease of approximately $1.0 million in revenues from the Company's Canadian operation as it was reorganized in fiscal 2004. Additionally, increased demand internationally in Europe and Asia Pacific caused royalty revenues to increase $259,000 or 28% to $1,196,000 in fiscal 2004 compared to $937,000 in fiscal 2003.

Revenues in the Company's Electronic Manufacturing Services segment were flat in fiscal 2004 compared to fiscal 2003. However, this segment's revenues were negatively affected by the December 2003 sale of Sunburst, which accounted for $8.8 million in revenues in fiscal 2003 compared to $2.5 million in the current fiscal year (Sunburst revenues were included for only three months of fiscal year 2004 prior to being sold). The shortfall caused by the sale of Sunburst was offset by an increase in revenues of $6.0 million from the Company's Chase EMS division, which is also part of the Electronic Manufacturing Services segment. The increase in Chase EMS sales was predominantly due to the strengthening of the hi-tech market, which continues to rebound from the economic downturn suffered in 2001 and 2002, and greater demand for specialized turnkey production from its existing and new customers.

Export sales from continuing domestic operations to unaffiliated third parties were $8,964,000, $5,459,000, and $4,504,000 for the years ended August 31, 2004, 2003 and 2002, respectively. The change in export sales was due to the general improvement of the global economy. A license and royalty arrangement entered into in 2002, with a manufacturer in the Far East, caused a reduction in export sales in 2002 and corresponding increase to royalty income as certain customers who were purchasing directly from the Company in the United States began purchasing from the Company's new licensee. The Company does not anticipate any material change to export sales during fiscal 2005

Total revenues for fiscal 2003 increased $5.3 million or 8% to $74.6 million from $69.3 million in the prior fiscal year. The increase in revenues was primarily a result of sales generated by the Company's acquisitions of Tapecoat (acquired in fiscal 2002) and Chase Facile (acquired in fiscal 2003). Fiscal 2003 Specialized Manufacturing revenues increased over the previous year as this segment continued to benefit from the asset purchase of the Tapecoat division as well as seven months of sales activity generated by the February 2003 acquisition of Chase Facile.

Cost of Products and Services Sold

In fiscal 2004, cost of products and services sold increased $10.1 million or 20% to $61.7 million compared to $51.6 million in the prior fiscal year. The majority of the dollar value increase was a direct result of increased revenues in fiscal 2004. As a percentage of revenues, cost of products and services sold increased to 71% in fiscal 2004 compared to 69% in fiscal 2003. This percentage increase was primarily due to the Company's Specialized Manufacturing segment which experienced increased pricing pressure on raw material costs in fiscal 2004 coupled with increased sales of lower margin products. Additionally, sales related to the Paper Tyger product line have lower margins compared to some of the Company's other divisions due to the higher cost of raw materials used in Paper Tyger products. Fiscal 2004 included nine months of Paper Tyger compared to no sales activity in fiscal 2003, which was prior to the acquisition.

In fiscal 2003, cost of products and services sold increased $2.4 million or 5% to $51.6 million compared to $49.2 million in the prior year period. The dollar value increase was a direct result of increased revenues in fiscal 2003. As a percentage of revenues, cost of products and services sold decreased to 69% in fiscal 2003 compared to 71% in fiscal 2002, primarily due to increased revenues from the Company's Tapecoat and Chase Facile's divisions. Fiscal 2003 included a full year of Tapecoat and seven months of Chase Facile's operations compared to four months and no activity for Tapecoat and Chase Facile, respectively, in fiscal 2002. These two divisions, which are in the Specialized Manufacturing segment, sell products with higher margins compared to the Company's Electronic Manufacturing Services segment. Accordingly, there were more sales of these higher margin products in fiscal 2003.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $1.3 million or 9% to $15.9 million in fiscal 2004 compared to $14.6 million in fiscal 2003, and increased $1.3 million or 9% to $14.6 million in fiscal 2003 compared to $13.3 million in fiscal 2002. As a percent of revenues, selling, general and administrative expenses decreased in fiscal 2004 to 18% compared to 19% in fiscal 2003 and 2002. The increase in fiscal 2004 and 2003 relates primarily to salary and benefits, including health care costs; information technology and telecommunication costs; higher public company expenses, including accounting and legal fees; and costs associated with the Paper Tyger sales office, which was acquired in fiscal 2004. Additionally, selling expenses are higher in the current fiscal year due to a proportionate increase in commissions associated with the increase in revenues. The Company has also invested in certain personnel that it believes are required to support continued growth in future periods.

Bad debt expense, net of recoveries, decreased $97,000 to $397,000 in fiscal 2004 compared to $494,000 in fiscal 2003. The decrease in 2004 is a result of the financial difficulties of a long standing customer in the Company's Specialized Manufacturing segment whose receivable balance was written off in fiscal 2003.

Loss on Impairment of Goodwill

As discussed in the notes of the Company's consolidated financial statements, in fiscal year 2004, the Company recorded a $579,000 charge related to the impairment of goodwill in connection with its sale of Sunburst. Goodwill related to Sunburst, having a pre-impairment book value of $1,412,000, was written down to its fair value of $833,000, which was realized upon the December 10, 2003 sale of Sunburst. The impairment was recorded in the Company's first fiscal quarter ended November 30, 2003 while the effective date of the sale of Sunburst for accounting purposes was December 1, 2003 in the second fiscal quarter ended February 29, 2004.

Interest Expense

Interest expense was $346,000 in fiscal 2004 compared to $381,000 and $517,000 in fiscal 2003 and 2002, respectively. The change in interest expense is a direct result of the Company's ability to reduce overall debt balances through principal payments from operating cash flow offset by increases in the Company's outstanding debt as a result of: (a) the repurchase of common stock (b) the acquisition of Paper Tyger and (c) the acquisition of manufacturing equipment located in Taylorsville, North Carolina. The Company's debt will continue to be paid down through operating cash flow in fiscal 2005. The Company continues to receive the benefits from favorable borrowing rates from its financial institutions.

Other Income (Expense)

Other income (expense) in fiscal year 2004 includes $151,000 of foreign currency translation loss which was realized upon the closing of the Company's Canadian facility offset by $107,000 ($11,900 per month) related to rental income on property (building and land) owned by the Company and leased to Sunburst under a 36-month rental agreement entered into in conjunction with the Company's sale of Sunburst.

Income Taxes

The effective tax rate for fiscal 2004 was 40.0% compared to 33.3% and 31.5% in fiscal 2003 and 2002, respectively. In all three years, the Company has received the benefit of strong export sales and foreign tax credits. In fiscal 2004, the sale of Sunburst created a capital loss carryforward for income tax purposes of approximately $2.3 million. This capital loss expires in 2008 and will be used to offset capital gains generated by the Company in future periods. As of August 31, 2004, management has concluded that it is more likely than not that the Company will not realize the benefit of this capital loss carryforward and thus the deferred tax asset has been offset by a full valuation allowance.

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Accordingly, the Company's annual fiscal 2004 effective income tax rate reflects this valuation allowance as well as less favorable state income tax rates in the form of a higher effective tax rate compared to prior fiscal years.

Income Before Minority Interest

Income before minority interest decreased 4% in fiscal 2004 compared to prior year. Income before minority interest increased 22% in fiscal 2003 compared to fiscal 2002. Excluding the $579,000 loss on impairment of goodwill related to Sunburst, which was recorded in the first quarter of fiscal 2004, income before minority interest increased 7% for the fiscal year 2004 compared to the prior year. This increase was a direct result of increased revenues offset by continued pressure on profit margins and additional selling, general and administrative expenses as discussed above.

Income (Loss) from Unconsolidated Joint Venture

The income (loss) from unconsolidated joint venture relates to a 42% equity position in the Stewart Group, Inc. ("SGI"), located in Toronto, Canada. In fiscal 1995, the Company formed a joint venture, SGI with The Stewart Group, Ltd. of Canada, to produce various products for the fiber optic cable market. The business focus is geared toward the telecommunication's market, which the Company anticipates will continue to be a soft economic market in fiscal 2005.

In accordance with the Company's accounting policies, the carrying value of this investment in joint venture asset is reviewed periodically to determine if an impairment exists. In fiscal year 2004, an impairment of $500,000 related to the Company's investment in SGI was recorded due to changes in SGI's projected future cash flows due to the expected future loss of a key customer. This impairment charge was determined based upon an updated understanding of SGI's businesses through discussions with SGI's majority shareholder as well as an analysis of SGI's projected future cash flows.

Net Income

Net income in fiscal 2004 decreased 12% compared to the prior fiscal year. Net income increased 18% in fiscal 2003 compared to fiscal 2002. The decrease in net income in the current fiscal year is a direct result of the three significant charges recorded in fiscal 2004 all of which are discussed above (a) the impairment of the Company's investment in unconsolidated joint venture, SGI, of $500,000 (b) the impairment of goodwill related to Sunburst of $579,000, and (c) the after tax losses of the Company's Canadian operations, which were approximately $498,000 in fiscal 2004 compared to $230,000 in fiscal 2003. Included in the fiscal year loss for the Canadian operations was approximately $300,000 in costs related to employee severance, stay bonuses, accelerated depreciation on certain manufacturing equipment, one time buy out of the building lease commitment, realization of unrealized foreign currency translation adjustments, and other shut down costs. The charges discussed above had a negative effect of approximately $1,347,000 on the Company's net income in fiscal year 2004. These decreases in net income were partially offset by increases in net income due to higher revenues in fiscal 2004 compared to fiscal 2003.

Fiscal 2003 earnings were primarily affected by increased revenues as a result of acquisitions in the Company's Tapecoat division and Chase Facile operating facility. Chase Facile is part of the Company's Coating & Laminating division and along with Tapecoat are both part of the Specialized Manufacturing segment. The margin on the increased revenues generated from the Specialized Manufacturing segment was higher when compared to the Company's Electronic Manufacturing Services segment.

Liquidity and Sources of Capital

The Company's cash balances increased $1,239,000 to $1,406,000 at August 31, 2004 from $167,000 at August 31, 2003. Generally, the Company manages its borrowings and payments under its revolving line of credit in order to maintain a low cash balance. The relatively high cash balance at August 31, 2004 was primarily the result of the timing

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of year end cash collections that had not yet been used by the Company to pay down its revolving line of credit. Consequently, the increase in cash at August 31, 2004 as compared to August 31, 2003 was offset by a corresponding increase in the balance of the Company's line of credit as of August 31, 2004.

Cash flow provided by operations was $5,518,000 in fiscal 2004 compared to $7,768,000 and $8,884,000 during fiscal 2003 and 2002, respectively. Cash provided by operations during fiscal 2004 was primarily due to operating income offset by increased inventory and accounts receivable balances which were higher as a direct result of increased sales volume in fiscal 2004. Additionally, there were two significant non-cash charges related to the loss on impairment of an unconsolidated joint venture, SGI, and impairment of goodwill related to Sunburst.

The ratio of current assets to current liabilities was 2.3 as of August 31, 2004 compared to 1.9 as of August 31, 2003 and 1.8 as of August 31, 2002. The increase of the Company's current ratio is primarily attributable to a higher cash balance as of August 31, 2004 combined with the elimination of notes payable to bank which related to Sunburst and Chase Canada.

Cash flow used in investing activities was primarily due to the acquisition of the Paper Tyger business for $702,000, and purchases of property, plant and equipment of $3,191,000, offset by a decrease in the cash surrender value of life insurance policies as a result of cash payments received on Company owned policies.

Cash flow provided by financing activities was primarily due to cash received from (a) new debt agreements entered into which helped finance the purchase of manufacturing equipment for the Company's Taylorsville, North Carolina plant, the Paper Tyger acquisition, and cash paid for the repurchase of common stock from the Edward L. Chase Revocable Trust (the "Trust"), and (b) proceeds from exercise of common stock options. This was offset by payments on long-term debt and dividends paid.

On December 3, 2003, the Company paid a cash dividend totaling approximately $1,255,000 on its common stock. The cash dividend of $0.31 per share was paid to shareholders of record on October 31, 2003.

In December 2003, concurrent with its sale of Sunburst, the Company purchased 250,000 shares of common stock held by the Trust for $3,255,000.

In December 2003, the Company acquired the assets of Paper Tyger for $702,000 with additional contingent payments to be made by the Company if certain revenue and product margin targets are met with respect to the Paper Tyger products over the next three years.

In December 2003, the Company increased its total available credit under its credit facility with its primary bank from a maximum of $6 million to $7 million. The Company continues to have long-term unsecured credit available up to a maximum amount of $7 million at the bank's base lending rate or, at the option of the Company, at the effective London Interbank Offered Rate (LIBOR) or "Eurodollar rate" plus 1.5 percent, or at the effective 30-day LIBOR rate plus 1.75 percent. The weighted average interest rate of outstanding balance on this credit facility was 3.32% at August 31, 2004. The Company had $3.7 million in available credit at August 31, 2004 under this credit facility and plans to use this availability to help finance its cash needs in fiscal 2005. This long-term unsecured credit facility is included in scheduled principal payments at its maturity (March 2006) although it is intended that it will continue to be renewed. As of October 31, 2004, the Company had $2.9 million in available credit under this credit facility.

Under the terms of the Company's credit facility, 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, 2004.

In January 2004, the Company purchased manufacturing equipment totaling $2,460,000. The Company utilized this manufacturing equipment to begin manufacturing operations at a newly leased facility in Taylorsville, North Carolina.

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In January 2004, to finance the purchase of the above manufacturing equipment, the Company entered into a loan agreement in the amount of $2.3 million with Citizen's Bank of Massachusetts. The interest rate on the loan is either (i) the Prime Rate or (ii) the LIBOR plus applicable margin as defined in the loan agreement. The Company may elect either interest rate option upon any interest payment date during the term of the loan. The Company is required to make monthly interest payments plus quarterly principal payments in the amount of $143,750 each quarter beginning in April 2004. The loan matures on January 8, 2008 and may be prepaid at any time during the term of the loan.

On August 31, 2004, the Board of Directors and, separately, the Audit Committee of the Company approved the amendment of the 1995 restricted stock agreement between the Company and Mr. Peter R. Chase, the Company's CEO and President, to among other things, permit Mr. Chase the right to tender a portion of his 250,000 restricted shares ("Shares") (valued at fair market value on the vesting date) to the Company to satisfy the minimum tax withholding obligations of the Company with respect to the vesting of the Shares. The Company's minimum tax withholding obligation for Mr. Chase upon the vesting of the shares was equal to approximately 31.5% of the fair market value of the shares on the vesting date.

The 250,000 Shares held by Mr. Chase vested subsequent to the 2004 fiscal year end on September 6, 2004. Mr. Chase tendered 79,375 shares to the Company on September 6, 2004 in satisfaction of the approximately $1.3 million minimum withholding obligation with respect to the vesting of the Shares, which was paid by the Company in cash.

On October 18, 2004, the Company announced a cash dividend of $0.35 per share (totaling approximately $1,314,000) to shareholders of record on October 29, 2004 and payable on December 1, 2004.

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

The Company does not have any significant off balance sheet arrangements.

The Company has no significant capital commitments in fiscal 2005 but plans on adding additional machinery and equipment as needed to increase capacity or to enhance operating efficiencies in its manufacturing plants. Additionally, the Company may consider the acquisitions of companies or other assets in fiscal 2005, which are complementary to its business. The Company believes that its existing resources, including its credit facility, together with cash generated from operations and additional bank borrowings, will be sufficient to fund its cash flow requirements through at least the next twelve months. However, there can be no assurances that such financing will be available at favorable terms, if at all.

Contractual Obligations

The following table summarizes the Company's contractual cash obligations at August 31, 2004 and the effect such obligations are expected to have on its liquidity and cash flow in future periods.

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Recently Issued Accounting Standards

On March 31, 2004, the Financial Accounting Standards Board (FASB) issued an exposure draft No. 1102-100, Proposed Statement of Financial Accounting Standards-Share-Based Payment, effective for fiscal periods beginning after December 15, 2004. This exposure draft outlines a methodology for the accounting treatment of stock options and certain other share-based payments. It requires these payments to be recorded as an operating expense. The exposure draft is proposed to supercede SFAS 123, which allowed for footnote disclosure of this expense. Currently, the Company uses the Black-Scholes model to calculate the proforma option expense for footnote disclosure only. The Company's proforma expense calculated for this disclosure was $868,301, $1,240,545, and $1,244,443 for the years ended August 31, 2004, 2003, and 2002, respectively. The Company is currently evaluating its share-based employee compensation programs and the impact of this proposed pronouncement on its consolidated financial statements.

In March 2004, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 03-6, Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share. EITF Issue No. 03-6 clarifies what constitutes a participating security and provides further guidance in applying the two-class method of calculating earnings per share. The consensuses reached by the Task Force on EITF Issue No. 03-6 were ratified by the FASB on March 31, 2004, and are effective for reporting periods beginning after March 31, 2004. The Company has reviewed the issue and concluded that it has no participating securities as defined by EITF Issue No. 03-6.

In December 2003, the FASB issued Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities. This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of certain variable interest entities. This interpretation explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. It requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. Variable interest entities that effectively disperse risks will not be consolidated unless a single party holds an interest or combination of interests that effectively recombines risks that were previously dispersed.

An enterprise that consolidates a variable interest entity is the primary beneficiary of the variable interest entity. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other monetary interests in an entity that change with changes in the fair value of the entity's net assets excluding variable interests. This interpretation requires the primary beneficiary of a variable interest entity, and an enterprise that holds significant variable interests in a variable interest entity but is not the primary beneficiary, to make certain disclosures about the variable interest entity.

Application of this interpretation is required in financial statements of public entities that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities (other than small business issuers) for all other types of entities is required in financial statements for periods ending after March 15, 2004. The adoption of this pronouncement did not have any impact on the consolidated financial statements.

In December 2003, the FASB revised SFAS No. 132, Employers Disclosures about Pensions and Other Post-Retirement Benefits. The revised standard requires new disclosures in addition to those required by the original standard about the assets, obligations, cash flows and net periodic benefit costs of defined benefit pension plans and other defined benefit post-retirement plans. SFAS No. 132R is effective for financial statements with fiscal years ending after December 15, 2003. Disclosure of the estimated future benefit payments is effective for fiscal years ending after June 14, 2004. See Note 10 for disclosures regarding the Company's defined benefit pension plans.

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In March 2004, the EITF reached a consensus on the remaining portions of EITF 03-01, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments with an effective date of June 15, 2004. EITF 03-01 provides new disclosure requirements for other-than-temporary impairments on debt and equity investments. Investors are required to disclose quantitative information about: (i) the aggregate amount of unrealized losses, and (ii) the aggregate related fair values of investments with unrealized losses, segregated into time periods during which the investment has been in an unrealized loss position of less than 12 months and greater than 12 months. In addition, investors are required to disclose the qualitative information that supports their conclusion that the impairments noted in the qualitative disclosure are not other-than temporary. The adoption of this statement did not have an impact on the Company s consolidated financial statements.

In September 2004, the EITF reached a consensus on EITF Issue No. 04-10, Applying Paragraph 19 of FAS 131 in Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds. The consensus states that operating segments that do not meet the quantitative thresholds can be aggregated only if aggregation is consistent with the objective and basic principles of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, the segments have similar economic characteristics, and the segments share a majority of the aggregation criteria (a)-(e) listed in paragraph 17 of SFAS 131. The effective date of the consensus in this Issue is for fiscal years ending after October 13, 2004. The Company believes that there will not be a material impact to the adoptions of this EITF issue.

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 require management to make its most significant estimates and judgments in the preparation of its consolidated financial statements. The Company's critical accounting policies are described below.

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. If the financial condition of the Company's customers deteriorates or if economic conditions worsen, additional allowances may be required in the future, which could have an adverse impact on the future operating results of the Company.

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 an obsolete inventory and future charges.

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Investment in Joint Venture

The Company has an investment in a joint venture related to an area of the Company's strategic focus. The Company accounts for this investment using the equity method of accounting. In assessing the recoverability of this investment, the Company must make certain assumptions and judgments based on changes in the Company's overall business strategy, the financial condition of the joint venture, market conditions and the industry and economic environment in which the entity operates. Adverse changes in market conditions or poor operating results of the joint venture could result in losses or an inability to recover the carrying value of the investment, thereby requiring an impairment charge in the future. (See notes to consolidated financial statements)

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. The Company reviews 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 the Company considers 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. The Company determines whether an impairment has occurred based on gross expected future cash flows, and measures 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 the Company to make significant judgments regarding future periods that are subject to some factors outside of the Company's 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

The Company recognizes revenue at the time of shipment which is typically 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. 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 transactions, 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 based on commission statements 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.

Deferred Income Taxes

The Company evaluates the need for a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. Should the Company determine that it would not be able to realize all or part of its 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.

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Impact of Inflation

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

Forward-Looking Information

From time to time, the Company may publish, verbally or in written form, forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, 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 the current views of the Company concerning potential future events or developments. The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements. In order to comply with the terms of the "safe harbor," the Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties which may affect the operations, performance, development and results of the Company's 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; technological developments; performance issues with suppliers and subcontractors; economic growth; delays in testing of new products; rapid technology changes and the highly competitive environment in which the Company operates. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

Risk Factors

The Company currently operates in a mature market where increases or decreases in market share could be significant. The Company's sales and net income are dependent on recurring sales from a consistent and established customer base. Organic growth opportunities are minimal; however, the Company has and will continue to use strategic acquisitions as a means to build and grow the business.

The Company's business strategy includes the pursuit of strategic acquisitions. From time to time, the Company engages in discussions with potential target companies concerning potential acquisitions. In executing its acquisition strategy, the Company may be unable to identify suitable acquisition candidates. In addition, the Company may face competition from other companies for acquisition candidates, making it more difficult to acquire suitable companies on favorable terms.

Item 7a—Quantitative and Qualitative Disclosures about Market Risk

The Company faces limited exposure to financial market risks, including adverse movements in foreign currency exchange rates and changes in interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on the Company's financial results.

The Company limits the amount of credit exposure to any one issuer. At August 31, 2004, other than the Company's restricted investments (which are restricted for use in a non qualified retirement savings plan for certain key employees and Directors), all of the Company's funds were in demand deposit accounts. If the Company places its funds in other than demand deposit accounts, it uses instruments that meet high credit quality standards such as money market funds, government securities, and commercial paper.

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During fiscal 2004, the Company had very limited currency exposure since all invoices were denominated in US dollars except for invoices from the Company's Canadian operations to Canadian customers. Historically, the Company has maintained minimal cash balances in Canada and, other than the currency conversion effects on the fixed assets in Canada which were deferred and recorded directly in equity due to the Canadian dollar being designated as the functional currency, and reported in the Statement of Changes in Equity, there were no significant assets held in foreign currencies. During fiscal 2004, the Company closed its Canadian operations. As of August 31, 2004, there were no cash balances or any other assets maintained in Canada or any other foreign geographic area. The Company does not engage in hedging activities. Foreign currency transaction gains or losses have not been material.

The Company does not have or utilize any derivative financial instruments for speculative or trading purposes.

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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 Report on Form 10-K:

Index to Consolidated Financial Statements:

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of
Directors of Chase Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders' equity and cash flows present fairly, in all material respects, the financial position of Chase Corporation and its subsidiaries at August 31, 2004, and the results of their operations and their cash flows for the year ended August 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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. We believe that our audit provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
October 18, 2004

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INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of
Directors of Chase Corporation
Bridgewater, Massachusetts

We have audited the consolidated balance sheet of Chase Corporation and subsidiaries as of August 31, 2003, and the related consolidated statements of operations, shareholders' equity and cash flows for each year in the two year period ended August 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Chase Corporation and subsidiaries at August 31, 2003, and the consolidated results of their operations and cash flows for each year in the two year period ended August 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

/s/ LIVINGSTON & HAYNES, P.C.

Wellesley, Massachusetts
October 24, 2003

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CHASE CORPORATION
CONSOLIDATED BALANCE SHEETS

See accompanying notes to the consolidated financial statements.

25

CHASE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to the consolidated financial statements.

26

CHASE CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

See accompanying notes to the consolidated financial statements.

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CHASE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS