UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM l0-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number Q4823
ACME UNITED CORPORATION
____________________________________________________________
(Exact name of registrant as specified in its charter)
Connecticut 06-0236700
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
75 Kings Highway Cutoff, Fairfield, Connecticut 06430
_______________________________________________ __________
(Address of principal executive offices) (Zip Code)
________________________________________________________________________________
Former name, former address and former fiscal year, if changed since last report
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Registrant had 3,337,620 shares outstanding as of November 9, 1995 of its
$ 2.50 par value Common Stock.
PART 1 - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
ACME UNITED CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
September 30 December 31
1995 1995
(Unaudited)
______________ ______________
Current Assets:
Cash and cash equivalents $ 180,313 $ 450,480
Accounts and other receivables 9,855,727 7,893,838
Inventories:
Finished goods 11,504,100 11,227,978
Work in process 5,251,400 5,246,507
Raw materials & supplies 4,540,256 4,525,053
Deferred income taxes 407,302 356,874
Prepaid expenses and other current assets 1,233,922 747,758
______________ ______________
Total current assets 32,973,020 30,448,488
Plant, Property and Equipment:
Land 793,754 756,625
Buildings 4,731,410 4,580,669
Machinery and equipment 16,324,276 16,063,066
Additions 782,412 -
______________ ______________
Total plant, property and equipment 22,631,852 21,400,360
Less, accumulated depreciation 14,037,266 12,852,430
______________ ______________
Net plant, property and equipment 8,594,586 8,547,930
Licensing agreements 1,262,013 1,705,416
Other assets 1,136,588 1,330,109
Goodwill 828,962 856,480
______________ ______________
Total assets $ 44,795,169 $ 42,888,423
============== ==============
See notes to financial statements
ACME UNITED CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
LIABILITIES
September 30 December 31
1995 1995
(Unaudited)
______________ ______________
Current Liabilities:
Accounts payable $ 2,103,410 $ 2,473,125
Notes payable due within one year 5,621,261 4,000,069
Accrued liabilities:
Pension 505,455 470,400
Employee benefit claims 472,255 435,041
Other accrued liabilities 1,848,121 2,035,705
______________ ______________
Total current liabilities 10,550,502 9,414,340
Deferred income taxes 663,983 1,003,893
Long term debt 15,244,521 14,387,590
______________ ______________
Total liabilities 26,459,006 24,805,823
STOCKHOLDERS' EQUITY
Common stock, par value $2.50:
authorized 4,000,000 shares;
Issued 3,384,620, outstanding
3,337,620 8,461,550 8,461,550
Treasury Stock, 47,000 shares (357,631) (357,631)
Additional paid-in capital 2,145,119 2,145,119
Retained earnings 8,981,157 8,973,803
Translation adjustment (894,032) (1,140,241)
______________ ______________
Total stockholders' equity 18,336,163 18,082,600
______________ ______________
Total liabilities and stockholders' equity $ 44,795,169 $ 42,888,423
============== ==============
See notes to financial statements
ACME UNITED CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
Unaudited
Three months ended Nine months ended
_____________________________ _____________________________
September 30 September 30 September 30 September 30
1995 1994 1995 1994
_____________ _____________ _____________ _____________
Net Sales $ 13,837,518 $ 13,389,145 $ 41,204,804 $ 40,110,339
Other income 14,484 68,762 52,816 198,414
_____________ _____________ _____________ _____________
13,852,002 13,457,907 41,257,620 40,308,753
Costs and expenses:
Cost of goods sold 10,020,288 9,518,323 29,586,653 29,020,803
Selling, general and
administrative expense 3,444,891 3,499,585 10,176,348 10,092,087
Interest expense 526,093 423,115 1,479,055 1,154,549
_____________ _____________ _____________ _____________
13,991,272 13,441,023 41,242,056 40,267,439
_____________ _____________ _____________ _____________
Income (loss) before income taxes (139,270) 16,884 15,564 41,314
Provision (benefit) for
income taxes 27,060 (2,453) 8,210 (41,120)
_____________ _____________ _____________ _____________
Net income (loss) $ (166,330) $ 19,337 $ 7,354 $ 85,434
============= ============= ============= =============
Weighted average common and
dilutive common equivalent shares 3,337,620 3,337,620 3,337,620 3,337,620
============= ============= ============= =============
Income (loss) per common share $ (.05) $ .01 $ .00 $ .03
============= ============= ============= =============
See notes to financial statements
ACME UNITED CORPORATION
Consolidated Statement of Cash Flows
Unaudited
Nine months ended
_____________________________
September 30 September 30
1995 1994
_____________ _____________
Cash flows from operating activities:
Net income $ 7,354 $ 85,434
Adjustments for non-cash transactions:
Depreciation 1,021,311 937,847
Amortization 420,957 420,372
Deferred tax credits (423,737) (167,631)
Gain on sale of property, plant
and equipment (22,785) -
Change in assets and liabilities:
Increase in accounts receivable (2,270,609) (1,262,797)
Decrease/(Increase) in inventory 171,309 (118,590)
Decrease/(Increase) in prepaid expenses
and other current assets 115,389 (228,707)
Decrease in other assets 216,747 29,269
Decrease in accounts payable (465,927) (1,576,107)
Increase in income taxes payable 300,226 358,735
(Decrease)/Increase in other liabiliti (483,164) 615,368
_____________ _____________
Total adjustments (1,420,283) (992,223)
_____________ _____________
Net cash used by operations (1,412,929) (906,789)
_____________ _____________
Cash flow from investing activities:
Capital expenditures (783,486) (1,015,056)
Proceeds from sales of property, plant
and equipment 38,577 74,636
_____________ _____________
Net cash used for investing activities (744,909) (940,420)
_____________ _____________
Cash flows from financing activities:
Net borrowings 1,895,793 1,749,518
_____________ _____________
Net cash provided by
financing activities 1,895,793 1,749,518
_____________ _____________
Effect of exchange rate changes on cash (8,122) 12
_____________ _____________
Net change in cash and cash equivalents (270,167) (97,679)
Cash and cash equivalents at beginning of perid 450,480 318,660
_____________ _____________
Cash and cash equivalents at end of period $ 180,313 $ 220,981
============= =============
See notes to financial statements
ACME UNITED CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of Management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the financial
position as of September 30, 1995 and December 31, 1994 and the results
of its operations for the three and nine month periods ended
September 30, 1995 and 1994 and changes in the cash flows for the nine
months then ended. The financial statements reflect all recurring
adjustments but do not include all of the disclosures normally required by
generally accepted accounting principles or those normally made in the
annual Form 10-K filing. Please refer to the Company's annual report,
incorporated by reference into Form 10-K, for year ended December 31, 1994
for such disclosures.
2. The results of operations for the three and nine months ended
September 30, 1995 are not necessarily indicative of the results to be
expected for the full year.
3. Net Income per share is based on the weighted average number of common
shares and dilutive common equivalent shares (common stock options)
outstanding using the treasury stock method.
4. The Company was unsuccessful in the relaunch of the OPCO Line of I.V.
therapy products and incurred a $210,000 charge in the third quarter of
1995 for the remaining assets which included inventory and licensing rights.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONSOLIDATED STATEMENTS OF OPERATION
RESULTS OF OPERATIONS
Net Sales
Consolidated net sales increased $448,000 or 3% and $1,094,000 or 3% for the
three and nine month periods ended September 30, 1995 as compared to the
similar periods in 1994. Net sales for consumer operations increased
$619,000 or 7% and $1,463,000 or 5% for the three and nine month periods in
1995 over 1994 which can be mainly attributed to an increase in U.S. Consumer
operations and the effect of exchange rates on the translation of foreign
operations. Net sales for medical operations decreased $171,000 or 4% and
$369,000 or 3% for the three and nine month periods in 1995 over 1994 mainly
due to a volume decrease in some wound care products.
Net sales from U.S. operations were $9,143,000 and $27,211,000 for the three
and nine month periods ended September 30, 1995, a decrease of $94,000 or 1%
and an increase of $835,000 or 3%, respectively, compared to similar 1994
periods. U.S. Consumer operations posted increases of $99,000 or 2% and
$1,102,000 or 8% and U.S. Medical operations declined $193,000 or 5% and
$267,000 or 2% for the three and nine month periods ended September 30, 1995,
respectively, compared with similar prior year periods. Foreign operations'
net sales were $4,695,000 and $13,994,000 for the three and nine month
periods which resulted in an increase of $542,000 or 13% and $259,000 or
2%, respectively, compared to 1994. Foreign sales were positively impacted
on translation by approximately $243,000 and $1,175,000 for the three and
nine month periods, primarily on the strength of the German mark and British
pound, and negatively impacted by volume declines in European operations.
Gross Profit Margin
The consolidated gross profit margin for the three and nine month periods
ended September 30, 1995 was 28%, as compared to 29% and 28%, respectively,
in 1994. The medical operation margins were 36% and 37% for the three and
nine month periods in 1995 as compared to 37% for the same periods in 1994
which can be attributed to product sales mix, the decision not to pass on
higher costs on selected products because of competitive market conditions
and an $84,000 charge for the remaining inventory of the OPCO I.V. therapy
product line. The consumer operation margins were 24% for the three and nine
month periods in 1995, compared to 25% and 23%, respectively. Margins on
U.S. Consumer operations for the three and nine month periods were 26% and
28% as compared to 25% and 23%, respectively, which can be attributed to
product sales mix, lower manufacturing costs and price increases. Foreign
Consumer margins were 22% and 21% as compared to 25% and 23%, and were the
result of pricing pressure and product sales mix.
Restructuring
Due to continued poor performance at the Company's German subsidiary Peter
Altenbach & Son GmbH, the Company is evaluating restructuring alternatives
for its European operations which may result in a future restructuring
charge.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $55,000 or 2% and
increased $84,000 or 1% for the three and nine month periods ended
September 30, 1995 over 1994. The Company has selectively reduced costs in
1995 which have been offset by inflationary increases and the effect of a
stronger German mark and British pound on the translation of results. The
Company reported a charge of $126,000 in the third quarter related to the
write-off of licensing rights of the OPCO I.V. therapy product line.
Interest Expense
Interest expense increased $103,000 and $325,000 for the three and nine month
periods ended September 30, 1995 as compared to 1994 which is attributable to
increased average borrowings and higher interest rates on the U.S. revolving
line of credit.
Provision for Income Taxes
The effective tax rate for the three and nine month periods ended
September 30, 1995 was negative 19% and 53% as compared to negative 15% and
negative 107% for 1994. Tax expense for the three and nine month periods
ended September 30, 1995 have been increased $71,000 due to the creation of
a valuation allowance related to the current deferred income tax asset.
The consolidated effective tax rates vary from year to year because income
(loss) before taxes vary from year to year by country of operation and the
statutory rates and laws vary by country of operation.
Liquidity and Capital Commitments
The Company's working capital, current ratio and long term debt to equity
ratio are as follows:
September 30, 1995 December 31, 1994
__________________ _________________
Working capital $22,423,000 $21,035,000
Current ratio 3.13 to 1 3.23 to 1
Long term debt to equity ratio .83 .80
Capital expenditures were $783,000 and $1,031,000 for the nine month periods
ended September 30, 1995 and 1994. The 1995 capital expenditures are
expected to be approximately $1,000,000.
The Company has a $13,000,000 U.S. revolving line of credit due to expire in
March 1997 and foreign overdraft arrangements due to expire at various times
in 1995. Based on maintaining the U.S. revolving line of credit and foreign
overdraft arrangements, current cash balances and cash flow from operations,
the Company believes it can meet capital expenditure and other planned
financial commitments in 1995.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No Form 8-K was filed by the Company during the three months
ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME UNITED CORPORATION
__________________________
(Registrant)
Date: November 9, 1995 Stephen T. Bajda
_____________________________
Stehpen T. Bajda
Senior Vice President-Finance
Date: November 9, 1995 Richard L. Windt
_____________________________
Richard L. Windt
Controller
5
9-MOS
DEC-31-1995
SEP-30-1995
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9874613
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0
7354
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