================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-Q ------------------------------------ |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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 (I.R.S. Employer of incorporation or organization) Identification No.) 1931 BLACK ROCK TURNPIKE, Fairfield, Connecticut 06825 - ------------------------------------------------ ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 332-7330 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 |_| Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| Registrant had 3,394,721 shares outstanding as of July 28, 2004 of its $2.50 par value Common Stock. (1)ACME UNITED CORPORATION Page ---- Part I -- FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets.................... 3 Condensed Consolidated Statements of Operations and Comprehensive Income.............................. 5 Condensed Consolidated Statements of Cash Flows.......... 6 Notes to Condensed Consolidated Financial Statements..... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 10 Item 3. Quantitative and Qualitative Disclosure About Market Risk.. 13 Item 4. Controls and Procedures.................................... 13 Part II -- OTHER INFORMATION Item 1. Legal Proceedings.......................................... 14 Item 2. Changes in Securities...................................... 14 Item 3. Defaults Upon Senior Securities............................ 14 Item 4. Submission of Matters to a Vote of Security Holders........ 14 Item 5. Other Information.......................................... 14 Item 6. Exhibits and Reports on Form 8-K........................... 14 Signatures......................................................... 16 (2)
ACME UNITED CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (all amounts in thousands, except per share data) June 30 December 31 2004 2003 (unaudited) (audited) ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 804 $ 1,391 Accounts receivable, less allowance 11,869 7,075 Inventories: Finished goods 7,536 7,252 Work in process 64 120 Raw materials and supplies 659 807 ------------ ------------ 8,259 8,179 Prepaid expenses and other current assets 505 260 Deferred income taxes 266 286 ------------ ------------ Total current assets 21,703 17,191 ------------ ------------ Property, plant and equipment: Land 228 235 Buildings 2,630 2,644 Machinery and equipment 5,599 5,772 ------------ ------------ 8,457 8,651 Less accumulated depreciation 6,232 6,266 ------------ ------------ 2,225 2,385 Other assets 592 358 Goodwill 89 89 ------------ ------------ Total assets $ 24,609 $ 20,023 ============ ============ See notes to condensed consolidated financial statements. (3)
ACME UNITED CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS - continued (all amounts in thousands, except per share data) June 30 December 31 2004 2003 (unaudited) (audited) ------------ ------------ LIABILITIES Current liabilities: Notes payable $ 392 $ 141 Accounts payable 2,203 1,743 Other accrued liabilities 4,358 2,494 Current portion of long-term debt 2,481 2,035 ------------ ------------ Total current liabilities 9,434 6,413 Deferred income taxes 156 156 Long-term debt, less current portion 2,533 2,752 Other 653 524 ------------ ------------ Total liabilities 12,776 9,845 STOCKHOLDERS' EQUITY Common stock, par value $2.50: authorized 8,000,000 shares; issued 3,828,812 shares, including treasury stock 9,572 9,132 Treasury stock, at cost - 434,091 shares in 2004 and 387,261 shares in 2003 (1,857) (1,622) Additional paid-in capital 2,214 2,029 Retained earnings 3,406 2,010 Accumulated other comprehensive loss: Translation adjustment (811) (680) Minimum pension liability (691) (691) ------------ ------------ (1,502) (1,371) ------------ ------------ Total stockholders' equity 11,833 10,178 ------------ ------------ Total liabilities and stockholders' equity $ 24,609 $ 20,023 ============ ============ See notes to condensed consolidated financial statements. (4)
ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (all amounts in thousands, except per share amounts) Three Months Ended Six Months Ended June 30 June 30 ------------------------- -------------------------- 2004 2003 2004 2003 ------------ ----------- ------------- ----------- Net sales $ 12,298 $ 10,142 $ 20,865 $ 17,331 Costs and expenses: Cost of goods sold 6,779 6,221 11,626 10,528 Selling, general and administrative expenses 3,579 2,906 6,550 5,206 ------------ ----------- ------------- ----------- 10,358 9,127 18,176 15,734 ------------ ----------- ------------- ----------- Income before non-operating items 1,940 1,015 2,689 1,597 Non-operating items: Interest expense 40 72 85 152 Other (income) expense 80 (15) 74 135 ------------ ----------- ------------- ----------- 120 57 159 287 ------------ ----------- ------------- ----------- Income before income taxes 1,820 958 2,530 1,310 Income tax expense 745 343 1,062 617 ------------ ----------- ------------- ----------- Net income 1,075 615 1,468 693 Other comprehensive (expense) income - Foreign currency translation (73) 315 (130) 549 Change in fair value of derivative financial instrument less deferred income taxes of $9 in 2003 - - - 17 ------------ ----------- ------------- ----------- Comprehensive income $ 1,002 $ 930 $ 1,338 $ 1,259 ============ =========== ============= =========== Basic earnings per share $ 0.32 $ 0.18 $ 0.44 $ 0.21 ============ =========== ============= =========== Diluted earnings per share $ 0.29 $ 0.17 $ 0.40 $ 0.20 ============ =========== ============= =========== Weighted average number of common shares outstanding- denominator used for basic per share computations 3,368 3,336 3,334 3,341 Weighted average number of dilutive stock options outstanding 354 184 311 137 ------------ ----------- ------------- ----------- Denominator used for diluted per share computations 3,722 3,520 3,645 3,478 ============ =========== ============= =========== Dividends declared per share 0.02 0.00 0.02 0.00 ============ =========== ============= =========== See notes to condensed consolidated financial statements (5)
ACME UNITED CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (all amounts in thousands) Six Months Ended June 30 ----------------------------- 2004 2003 -------------- -------------- Operating Activities: Net income $ 1,468 $ 693 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 229 204 Amortization 10 13 Deferred income taxes 20 614 Loss (gain) on disposal/sale of assets 42 (49) Changes in operating assets and liabilities: Accounts receivable (4,702) (2,720) Inventories (204) (793) Prepaid expenses and other current assets (109) (77) Other assets 28 (87) Accounts payable 423 1,165 Other accrued liabilities 1,421 109 -------------- -------------- Total adjustments (2,842) (1,621) -------------- -------------- Net cash used by operating activities (1,374) (928) -------------- -------------- Investing Activities: Purchase of property, plant, and equipment (190) (131) Proceeds from sale of property, plant, and equipment 31 50 Purchase of patents and trademarks (14) (54) -------------- -------------- Net cash used by investing activities (173) (135) -------------- -------------- Financing Activities: Net short-term borrowings 702 1,108 Payments of long-term debt (225) (149) Proceeds from issuance of common stock 625 - Purchase of 46,830 shares of common stock in 2004 and 10,000 shares of common stock in 2003 for treasury (235) (298) -------------- -------------- Net cash provided by financing activities 867 661 -------------- -------------- Effect of exchange rate changes 93 57 -------------- -------------- Net change in cash and cash equivalents (587) (345) Cash and cash equivalents at beginning of period 1,391 597 -------------- -------------- Cash and cash equivalents at end of period $ 804 $ 252 ============== ============== See notes to condensed consolidated financial statements (6)
Notes to CONDENSED CONSOLIDATED Financial Statements (UNAUDITED) Note 1 -- Basis of Presentation In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows. These adjustments are of a normal, recurring nature. However, the financial statements do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company's annual report on Form 10-K. Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2003 for such disclosures. The condensed consolidated balance sheet as of December 31, 2003 was derived from the audited consolidated balance sheet as of that date. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Note 2 -- Contingencies The Company has been involved in certain environmental and other matters. Additionally, the Company is involved in a legal action that is still in its preliminary stage. Based on information available, the Company believes that there will not be a material adverse impact on financial position, results of operations, or liquidity from these matters. Note 3 -- Pension Components of net periodic pension cost are as follows for the periods ended: Three Months Ended Six Months Ended ----------------------------- ------------------------------ June 30 June 30 June 30 June 30 2004 2003 2004 2003 ------------- ------------- ------------- -------------- Components of net periodic benefit cost: Interest cost $ 49,727 $ 55,316 $ 99,453 $ 110,633 Service cost 8,750 8,750 17,500 17,500 Expected return on plan assets (64,281) (61,531) (128,563) (123,062) Amortization of prior service costs 2,194 2,194 4,388 4,388 Amortization of actuarial gain 12,399 20,172 24,797 40,344 - ------------------------------------------------------------------------------------------------------------ $ 8,789 $ 24,901 $ 17,575 $ 49,803 ============================================================================================================ The Company previously disclosed in its financial statements for the year ended December 31, 2003 that it expected to contribute $29,000 to its pension plan. As of June 30, 2004, no contributions have been made. The Company has recalculated the expected contribution and determined that contributions to its pension plan in 2004 are not required. Therefore, the Company does not intend to contribute to the pension plan in 2004. Note 4 -- Accounting for Stock-Based Compensation At June 30, 2004, the Company has one stock-based employee compensation plan. The Company has elected to adopt the disclosure only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, and continues to measure costs for its employee stock compensation plans by using the accounting methods prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, which allows that no compensation cost be recognized unless the exercise price of the options granted is less than the fair market value of the Company's stock at date of grant. Generally, no stock-based employee compensation cost is reflected in net income, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. See Note 7 for shares exercised in 2004. (7)
The following table illustrates the proforma effect on net income and earnings per share as if the Company had applied the fair value method under SFAS No. 123, Accounting for Stock Based Compensation, to stock-based employee compensation for the periods ended: Three Months Ended Six Months Ended June 30 June 30 -------------------------------- ------------------------------- 2004 2003 2004 2003 --------------- --------------- --------------- --------------- Net income, as reported $ 1,074,551 $ 614,998 $ 1,467,618 $ 692,832 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related income tax effects 18,521 35,477 38,826 50 770 - --------------------------------------------------------------------------------- ------------------------------- Pro forma net income $ 1,056,030 $ 579,521 $ 1,428,792 $ 642,062 ================================================================================= =============================== Basic-as reported $ 0.32 $ 0.18 $ 0.44 $ 0.21 Basic-pro forma $ 0.31 $ 0.17 $ 0.43 $ 0.19 Diluted-as reported $ 0.29 $ 0.17 $ 0.40 $ 0.20 Diluted-pro forma $ 0.28 $ 0.16 $ 0.39 $ 0.18 Note 5 -- Litigation Settlement As a result of significant developments in the first quarter of 2003 the Company's German subsidiary settled litigation for $175,000. This amount exceeded previous accruals by $153,000 and was charged to other expense. Note 6 -- Income Taxes In 2004 and 2003, consolidated income before income taxes includes losses of foreign subsidiaries with no income tax benefit, resulting in an effective consolidated income tax rate greater than the United States statutory rate. Note 7 -- Capital Structure During the first six months of 2004, the Company issued 176,000 shares of common stock with proceeds of $625,060 upon the exercise of outstanding stock options. The company also repurchased 46,830 shares of common stock for treasury. The shares were purchased at fair market value, with a total cost to the Company of $235,598. During the first quarter, an additional $31,225 of compensation expense was charged to operating results as a result of the repurchase of 16,000 shares by the Company within six months of the original option exercise. Note 8 -- Business Combination On May 28, 2004, the Company purchased Clauss Cutlery, a division of Alco Industries, Inc.. The scissor and cutting business at Clauss is expected to generate approximately $2.0 million in annual revenues. The purchase price was the aggregate value of inventory, trademarks and brand names totaling $446,754. Included in the purchase price is a stand-by letter of credit the Company issued in the amount of $230,000 for a trademark from Alco Industries, Inc. that was renewed by the U.S. Patent and Trademark Office on July 13, 2004. The letter of credit was set-up to expire on May 28, 2005, if the trademark was not renewed. Since the trademark was renewed prior to the expiration date, Alco Industries, Inc. will enforce the letter of credit and drawdown the funds. The letter of credit liability was recorded in other current liabilities as of June 30, 2004. Included in the accompanying Statement of Operations are the operations of the acquired business, which resumed on June 1, 2004. In accordance with Regulation S-X, proforma information is not provided because of the immateriality of the transaction. (8)
Note 9 -- Abandonment of Equipment During the second quarter of 2004, the Company abandoned its ruler manufacturing equipment. In accordance with FASB 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company recorded an impairment loss of $84,820, or $0.02 a share, for the full amount of the assets at the time of abandonment. (9)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the Three and Six Months Ended June 30, 2004 Results of Operations Net Sales Traditionally, the Company's sales are stronger in the second and third quarters, and weaker in the first and fourth quarters of the fiscal year due to the seasonal nature of the business specific to the back-to-school season. Consolidated net sales for the quarter ended June 30, 2004 were $12,298,000 compared with $10,142,000 for 2003, a 21% increase. Net sales for the first six months of 2004 were $20,865,000 compared with $17,331,000 for 2004, a 20% increase. Excluding the favorable effect of currency gains in Canada and Europe, net sales for the first six months increased 18%. The sales increase was mainly driven by an 18% increase in the U.S. due to market share gains and new product launches. Europe and Canada sales were up 9% in local currency. The new business in Hong Kong generated $437,000 in the first six months of 2004. Gross Profit The gross profit for the second quarter of 2004 was $5,519,000 (44.9% of net sales) compared to $3,921,000 (38.7% of net sales) for the second quarter of 2003. Gross profit for the first six months of 2004 was 44.3% of net sales compared to 39.3% in the same period of 2003. The introduction of new products coupled with positive impacts from product rationalization efforts in Europe were the main reasons for the improved gross margins. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses for the second quarter of 2004 were $3,579,000 (29% of net sales) compared with $2,906,000 (29% of net sales) for the same period of 2003, an increase of $673,000. SG&A expenses were 31% of net sales for the first six months of 2004 versus 30% in the comparable period of 2003. The majority of the increase in SG&A expenses in 2004 was selling related expenses, the new sourcing and quality control office in Hong Kong and the addition of sales and marketing personnel in North America and Europe. Interest Expense Interest expense for the first six months of 2004 was $85,000, compared with $152,000 for 2003, a $67,000 decrease. This is mainly attributable to the decline in debt. Other Expense Net other expense was $74,000 in the first six months of 2004 compared to $135,000 in the first six months of 2003. The change from 2003 primarily relates to the settlement of a $175,000 lawsuit in Germany in March of 2003 partially offset by the write-off of obsolete equipment in the second quarter of 2004. Income Before Income Taxes Income before income taxes was $1,820,000 in the second quarter of 2004 compared with $958,000 in the second quarter of 2003, an increase of $862,000. Income before income taxes was $2,530,000 for the first six months of 2004 compared with $1,310,000 in the first six months of 2003, an improvement of $1,220,000. Pretax income for North America and Asia increased by approximately $1.2 million. Despite a 15% increase in sales, the European operations had a slightly higher loss (exclusive of the one time expense of $175,000) in the first six months of 2004 compared to 2003. Increased investment in sales and marketing efforts resulted in higher costs. (10)
Income Taxes The effective tax rate in the first six months of 2004 was 42% compared to 47% in 2003. The improvement is principally due to the lower losses in Europe, for which the benefit cannot be utilized to offset earnings. Net Income Net income for the second quarter of 2004 was $1,075,000, or 29 cents per share (diluted), compared to a net income of $615,000, or 17 cents per share (diluted) for the same period of 2003. Net income for the first six months of 2004 was $1,468,000, or 40 cents per share (diluted), compared to a net income of $693,000, or 20 cents per share (diluted) for the same period of 2003. (11)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Continued For the Three and Six Months Ended June 30, 2004 Financial Condition Liquidity and Capital Resources The Company's working capital, current ratio and long-term debt to equity ratio follow: June 30, 2004 December 31, 2003 ------------------ ------------------ Working capital....................... $12,499,000 $10,778,000 Current ratio......................... 2.36 to 1 2.68 to 1 Long-term debt to equity ratio........ 21.4% 27.0% During the first six months of 2004, total debt increased by $478,000 compared to total debt at December 31, 2003 principally as a result of net additional short-term borrowings to fund inventory purchases in anticipation of next quarter's seasonal sales volume and seasonal collection terms which are longer during the second and third quarters. The Company has a revolving loan agreement, which allows for borrowings up to a maximum of $10,000,000 based on a formula, which applies specific percentages to balances of accounts receivable and inventory. Interest is payable monthly and is charged at the LIBOR rate plus 1.75 percent. As of June 30, 2004, $4,643,612 was outstanding and $5,356,388 was available for borrowing under this agreement. Maturities of long-term debt follow: 2004 - $2,873,000, 2005 - $2,533,000. All outstanding borrowings are due on July 31, 2005. Cash expected to be generated from operating activities, together with funds available under its existing loan agreement, are expected, under current conditions, to be sufficient to finance the Company's planned operations over the next twelve months. Over that same period, the Company does not expect to make significant investments in property, plant, and equipment. Safe Harbor for Forward-looking Statements Forward-looking statements in this report, including without limitation, statements related to the Company's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation the following: (i) the Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth and inventory; and (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission. (12)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Continued For the Three and Six Months Ended June 30, 2004 Item 3. Quantitative and Qualitative Disclosure About Market Risk There are no material changes in market risks since our most recent filing on Form 10-K for the year ended December 31, 2003. Item 4. Controls and Procedures (a) Evaluation of Internal Controls and Procedures As of June 30, 2004, our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, which included inquiries made to certain other of our employees. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have each concluded that our disclosure controls and procedures are effective and sufficient to ensure that we record, process, summarize and report information required to be disclosed by us in our periodic reports filed under the Securities and Exchange Commission's rules and forms. (b) Changes in Internal Controls Subsequent to the date of their evaluation, there have not been any significant changes in our internal controls or in other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses. (13)
PART II. OTHER INFORMATION Item 1 -- Legal Proceedings The Company has been involved in certain environmental and other matters. Additionally, the Company is involved in a legal action that is still in its preliminary stage. Based on information available, the Company believes that there will not be a material adverse impact on financial position, results of operations, or liquidity, from these matters. Item 2 -- Changes in Securities On July 23, 2003, the Company announced a stock repurchase program of 150,000 shares. The program does not have an expiration date. The following table discloses the shares repurchased under the program for the quarter ended June 30, 2004: Total Number of Maximum shares Number of Purchased as Shares that can Total Number of Part of Publicly be Purchased Shares Average Price Announced Under the Period Purchased Paid per Share Program Program --------------------------------------------------------------------------------------------------------------- April 1 to April 30 1,700 5.8876 1,700 150,000 May 1 to May 31 29,130 6.0039 29,130 150,000 June 1 to June 30 - - - - Item 3. --Defaults Upon Senior Securities None Item 4 -- Submission of Matters to a Vote of Security Holders None Item 5 -- Other Information None. Item 6 -- Exhibits and Reports on Form 8-K (a) Documents filed as part of this report. Exhibit 31.1 Certification of Walter C. Johnsen pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2 Certification of Paul G. Driscoll pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (14)
PART II. OTHER INFORMATION-Continued Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K A Form 8-K was filed by the Company on July 23, 2004. (15)
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 By /s/ WALTER C. JOHNSEN ------------------------------ Walter C. Johnsen President and Chief Executive Officer Dated: July 28, 2004 By /s/ PAUL G. DRISCOLL ------------------------------ Paul G. Driscoll Vice President and Chief Financial Officer Dated: July 28, 2004 (16)
Exhibit 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, WALTER C. JOHNSEN, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Acme United Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being reported; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of June 30, 2004; and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of June 30, 2004; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By /s/ WALTER C. JOHNSEN ------------------------------ Walter C. Johnsen President and Chief Executive Officer Dated: July 28, 2004 (17)
Exhibit 31.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, PAUL G. DRISCOLL, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Acme United Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being reported; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of June 30, 2004; and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of June 30, 2004; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. By /s/ PAUL G. DRISCOLL ------------------------------ Paul G. Driscoll Vice President and Chief Financial Officer Dated: July 28, 2004 (18)
Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned officer of Acme United Corporation (the "Company") hereby certifies to my knowledge that the Company's quarterly report on Form 10-Q for the quarterly period ended June 30, 2004 (the "Report"), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of section 13(a) or 15(b), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be a part of the Report or "filed" for any purpose whatsoever. By /s/ WALTER C. JOHNSEN ------------------------------ Walter C. Johnsen President and Chief Executive Officer Dated: July 28, 2004 (19)
Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned officer of Acme United Corporation (the "Company") hereby certifies to my knowledge that the Company's quarterly report on Form 10-Q for the quarterly period ended June 30, 2004 (the "Report"), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of section 13(a) or 15(b), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed to be a part of the Report or "filed" for any purpose whatsoever. By /s/ PAUL G. DRISCOLL ------------------------------ Paul G. Driscoll Vice President and Chief Financial Officer Dated: July 28, 2004 (20)