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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
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Commission file number 001-07698
ACME UNITED CORPORATION
(Exact name of registrant as specified in its charter)
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CONNECTICUT 06-0236700
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
60 ROUND HILL ROAD, FAIRFIELD, CONNECTICUT 06824
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 254-6060
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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act (Check
one).
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of April 18, 2006 the registrant had outstanding 3,484,833 shares of its
$2.50 par value Common Stock.
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....................... 11
Item 3. Quantitative and Qualitative Disclosure About Market Risk..... 14
Item 4. Controls and Procedures....................................... 14
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings........................................... 15
Item 1a. Risk Factors................................................ 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 15
Item 3. Defaults Upon Senior Securities............................. 15
Item 4. Submission of Matters to a Vote of Security Holders......... 15
Item 5. Other Information........................................... 15
Item 6. Exhibits.................................................... 16
Signatures............................................................ 17
(2)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in thousands, except share data)
March 31 December 31
2006 2005
(unaudited)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 990 $ 1,076
Accounts receivable, less allowance 9,567 9,392
Inventories:
Finished goods 13,412 11,691
Work in process 92 116
Raw materials and supplies 870 723
------------- -------------
14,374 12,530
Prepaid expenses and other current assets 982 542
Deferred income taxes 325 325
------------- -------------
Total current assets 26,238 23,865
------------- -------------
Property, plant and equipment:
Land 156 152
Buildings 2,943 2,954
Machinery and equipment 6,615 6,525
------------- -------------
9,714 9,631
Less accumulated depreciation 7,082 6,845
------------- -------------
2,632 2,786
Other assets 1,483 1,454
Goodwill 89 89
------------- -------------
Total assets $ 30,442 $ 28,194
============= =============
See notes to condensed consolidated financial statements.
(3)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(all amounts in thousands, except share data)
March 31 December 31
2006 2005
(unaudited)
------------- -------------
LIABILITIES
Current liabilities:
Accounts payable $ 2,582 $ 2,174
Other accrued liabilities 4,265 5,356
Current portion of long-term debt 10 10
------------- -------------
Total current liabilities 6,857 7,540
Deferred income taxes 131 141
Long-term debt, less current portion 7,785 5,577
Other 906 871
------------- -------------
Total liabilities 15,679 14,129
STOCKHOLDERS' EQUITY
Common stock, par value $2.50:
authorized 8,000,000 shares;
issued - 4,163,824 shares in 2006
and 4,161,824 shares in 2005,
including treasury stock 10,408 10,405
Treasury stock, at cost - 678,991 shares
in 2006 and 2005 (5,439) (5,439)
Additional paid-in capital 2,692 2,624
Retained earnings 8,201 7,547
Accumulated other comprehensive loss:
Translation adjustment (209) (182)
Minimum pension liability (890) (890)
------------- -------------
(1,099) (1,072)
------------- -------------
Total stockholders' equity 14,763 14,065
------------- -------------
Total liabilities and stockholders' equity $ 30,442 $ 28,194
============= =============
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
March 31
----------------------------
2006 2005
------------- -------------
Net sales $ 12,257 $ 10,583
Costs and expenses:
Cost of goods sold 6,705 5,722
Selling, general and administrative expenses 4,259 3,719
------------- -------------
10,964 9,441
------------- -------------
Income before non-operating items 1,293 1,142
Non-operating items:
Interest expense 125 13
Other (income) expense (76) 49
------------- -------------
49 62
------------- -------------
Income before income taxes 1,244 1,080
Income tax expense 485 430
------------- -------------
Net income 759 650
Other comprehensive expense (income) -
Foreign currency translation 27 16
Change in fair value of derivative financial instrument - (2)
------------- -------------
Comprehensive income $ 732 $ 636
============= =============
Basic earnings per share $ 0.22 $ 0.19
============= =============
Diluted earnings per share $ 0.20 $ 0.17
============= =============
Weighted average number of common shares outstanding-
denominator used for basic per share computations 3,484 3,489
Weighted average number of dilutive stock options
outstanding 251 368
------------- -------------
Denominator used for diluted per share computations 3,735 3,857
============= =============
Dividends declared per share $ 0.03 $ 0.02
============= =============
See notes to condensed consolidated financial statements
(5)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(all amounts in thousands)
Three Months Ended
March 31
----------------------------
2006 2005
------------- -------------
Operating Activities:
Net income $ 759 $ 650
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation 199 125
Amortization 8 11
Stock compensation expense 66 -
Loss on disposal/sale of assets - 39
Changes in operating assets and liabilities:
Accounts receivable (228) 832
Inventories (1,821) (859)
Prepaid expenses and other current assets (436) (84)
Accounts payable 404 (148)
Other accrued liabilities (1,059) (1,594)
------------- -------------
Total adjustments (2,867) (1,678)
------------- -------------
Net cash used by operating activities (2,108) (1,028)
------------- -------------
Investing Activities:
Purchase of property, plant, and equipment (35) (133)
Purchase of patents and trademarks (39) (34)
Proceeds from sale of property, plant, and equipment - 164
------------- -------------
Net cash used by investing activities (74) (3)
------------- -------------
Financing Activities:
Net borrowing of long-term debt 2,206 617
Proceeds from issuance of common stock 7 570
Distributions to stockholders (117) (74)
Purchase of treasury stock - (954)
------------- -------------
Net cash provided by financing activities 2,096 159
------------- -------------
Effect of exchange rate changes - (10)
------------- -------------
Net change in cash and cash equivalents (86) (882)
Cash and cash equivalents at beginning of period 1,076 1,888
------------- -------------
Cash and cash equivalents at end of period $ 990 $ 1,006
============= =============
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 of Acme United Corporation (the
"Company"). 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, 2005
for such disclosures. The condensed consolidated balance sheet as of December
31, 2005 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 is involved from time to time in disputes and other litigation in
the ordinary course of business, including certain environmental and other
matters. The Company presently believes that none of these matters, individually
or in the aggregate, would be likely to have 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
-------------------------------
March 31 March 31
2006 2005
-------------- --------------
Components of net periodic benefit cost:
Interest cost $ 48,000 $ 48,750
Service cost 8,750 8,750
Expected return on plan assets (52,250) (61,000)
Amortization of prior service costs 2,250 2,250
Amortization of actuarial gain 22,000 16,000
-------------------------------
$ 28,750 $ 14,750
===============================
Note 4 -- Long Term Debt and Capital Structure
The Company's revolving loan agreement, as amended, provides for borrowing up to
$15 million with the related loan to be repaid in June 2009. At March 31, 2006
and December 31, 2005, the Company had borrowings of $7,751,000 and $5,544,500,
respectively. Based on the scheduled maturity date, the Company has classified
the borrowings at March 31, 2006 as long-term.
During the first three months of 2006, the Company issued 2,000 shares of common
stock with proceeds of $6,880 upon the exercise of outstanding stock options.
(7)
Note 5 -- Non-Recurring Charge
In the quarter ended September 30, 2005, the Company accrued a charge of
approximately $1.5 million related to the estimated cost to demolish a former
manufacturing facility and remove certain environmentally hazardous material
included in the buildings to be demolished. The estimated costs were based on a
third party contractor's estimate. Adjustments to the cost will be recorded when
better estimates or actual costs are known. After the demolition is complete,
the Company will explore options to sell the property.
As of March 31, 2006, the Company had approximately $1,100,000 remaining in its
accrual for demolition costs related to the former manufacturing site. Please
refer to Company's report on Form 10-K for the year ended December 31, 2005 for
a more detailed discussion.
Note 6 -- Segment Information
The Company reports financial information based on the organization structure
used by management for making operating and investment decisions and for
assessing performance. The Company's reportable business segments include (1)
United States; (2) Canada and (3) Europe. The activities of the Company's Asian
operating segment are closely linked to those of the U.S. operating segment;
consequently, Management reviews the financial results of both segments on a
consolidated basis. Therefore, the results of the Asian operating segment have
been aggregated with the results of the United States operating segment to form
one reportable segment. The determination of reportable segments is based on the
guidance set forth in SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information". Each reportable segment derives its revenue from the
sales of cutting devices, measuring instruments and safety products for school,
office, home and industrial use.
The Chief Operating Decision Maker evaluates the performance of each operating
segment based on segment revenues and operating income. Segment amounts are
presented after converting to U.S. dollars and consolidating eliminations.
Financial data by segment:
(in thousands)
March 31, 2006 United States Canada Europe Consolidated
- ---------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 9,681 $ 1,522 $ 1,054 $ 12,257
Operating income 1,407 69 (183) 1,293
Assets 23,437 3,952 3,053 30,442
Additions to property, plant
and equipment 29 5 1 35
Depreciation and amortization 176 13 18 207
March 31, 2005
- ---------------------------------------------------------------------------------------------------
Sales to unaffiliated customers $ 8,128 $ 1,343 $ 1,112 $ 10,583
Operating income 1,133 51 (42) 1,142
Assets 15,645 3,416 2,848 21,909
Additions to property, plant
and equipment 115 3 15 133
Depreciation and amortization 100 12 24 136
(8)
Note 7 -- Stock Based Compensation
Effective January 1, 2006, the Company adopted the provisions of, and
accounted for stock-based compensation in accordance with, the Financial
Accounting Standards Board's ("FASB") Statement of Financial Accounting
Standards No. 123--revised 2004 ("SFAS 123R"), "Share-Based Payment" which
replaced Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation" and supersedes APB Opinion No. 25
("APB 25"), "Accounting for Stock Issued to Employees." Under the fair value
recognition provisions of this statement, stock-based compensation cost is
measured at the grant date based on the fair value of the award and is
recognized as expense over the requisite service period, which is generally the
vesting period. The Company adopted SFAS 123R using the modified-prospective
method, under which prior periods are not restated for comparative purposes. The
valuation provisions of SFAS 123R apply to new grants and to grants that were
outstanding as of the effective date and are subsequently modified. Estimated
compensation for grants that were outstanding as of the effective date will be
recognized over the remaining service period using the compensation cost
estimated for pro forma disclosures.
The Company uses the Black-Scholes option pricing model to determine the
fair value of employee and non-employee director stock options. The
determination of the fair value of stock-based payment awards on the date of
grant, using an option-pricing model, is affected by our stock price as well as
assumptions regarding a number of complex and subjective variables. These
assumptions include estimating the length of time employees will retain their
vested stock options before exercising them ("expected term"), the estimated
volatility of the Company's common stock price over the expected term and the
number of options that will ultimately not complete their vesting requirements
("forfeitures").
The Company estimates the expected term of options granted by evaluating
various factors including the vesting period, historical employee information as
well as current and historical stock prices and market conditions. The Company
estimates the volatility of its common stock by calculating historical
volatility based on the closing stock price on the last day of each of the
forty-eight months leading up to the month the option was granted. The risk-free
interest rate that the Company uses in the option valuation model is the
interest rate on U.S. Treasury zero-coupon issues with remaining terms similar
to the expected term of the options granted. Historical information was the
basis for calculating the dividend yield. The Company is required to estimate
forfeitures at the time of grant and to revise those estimates in subsequent
periods if actual forfeitures differ from those estimates. The Company used a
mix of historical data and future assumptions to estimate pre-vesting option
forfeitures and to record stock-based compensation expense only for those awards
that are expected to vest. All stock-based payment awards are amortized over the
requisite service periods of the awards, which are generally the vesting
periods. The option grants generally vest at a rate of 25% one day after the
date of grant and 25% in each of the next three years.
The assumptions used to value option grants for the quarters ended March
31, 2006 and March 31, 2005 are as follows:
----------- -----------
2006 2005
----------- -----------
Expected life in years 4 5
Interest rate 4.3% - 4.6% 3.84%
Volatility 0.338 0.386
Dividend yield 0.90% 0.70%
Total stock-based compensation recognized on the Company's consolidated
statement of operations for the quarter ended March 31, 2006 is $66,408. As of
March 31, 2006, there was approximately $292,000 of unrecognized compensation
cost, adjusted for estimated forfeitures, related to non-vested stock-based
payments granted to the Company's employees prior to the adoption of SFAS 123R.
Total unrecognized compensation cost will be adjusted for future changes in
estimated forfeitures.
The pro forma effects of recognizing the estimated fair value of
stock-based compensation for the first quarter of 2005 has been disclosed
previously in the Company's footnotes under provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), Accounting for Stock-Based
Compensation. The previously-disclosed pro forma information is presented below.
(9)
Three Months Ended
March 31
----------------------
2005
----------------------
Net income, as reported $ 650,101
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related income tax effects 21,204
----------------------
Pro forma net income $ 628,897
======================
Net income per share:
Basic-as reported $ 0.19
Basic-pro forma $ 0.18
Diluted-as reported $ 0.17
Diluted-pro forma $ 0.16
(10)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. -- Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Information
- ---------------------------
The Company may from time to time make written or oral "forward-looking
statements" including statements contained in this report and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements of the Company's plans,
objectives, expectations, estimates and intentions, which are subject to change
based on various important factors (some of which are beyond the Company's
control). The following factors, in addition to others not listed, could cause
the Company's actual results to differ materially from those expressed in
forward looking statements: the strength of the domestic and local economies in
which the Company conducts operations, changes in client needs and consumer
spending habits, the impact of competition and technological change on the
Company, the Company's ability to manage its growth effectively, including its
ability to successfully integrate any business which it might acquire, and
currency fluctuations. All forward-looking statements in this report are based
upon information available to the Company on the date of this report. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events, or otherwise, except as required by law.
Critical Accounting Policies
- ----------------------------
There have been no material changes to our critical accounting policies and
estimates from the information provided in Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2005, except
as follows:
Accounting for Stock-Based Compensation. In the first quarter of 2006, the
Company began accounting for stock-based compensation in accordance with the
fair value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123R. The Company uses the Black-Scholes option - pricing model,
which requires the input of subjective assumptions. These assumptions include
estimating the length of time employees will retain their vested stock options
before exercising them ("expected term"), the estimated volatility of the
Company's common stock price over the expected term and the number of options
that will ultimately not complete their vesting requirements ("forfeitures").
Changes in the subjective assumptions can materially affect the estimate of fair
value stock-based compensation and consequently, the related amount recognized
on the consolidated statements of operations. Refer to Note 7 "Stock Based
Compensation" for a more detailed discussion of the effects of SFAS 123R on our
results of operations and financial condition.
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 back-to-school season. Consolidated net sales for the
quarter ended March 31, 2006 were $12,257,000, compared with $10,583,000 for the
same period in 2005, a 15.8% increase. Net sales for the first quarter in the
U.S. operating segment increased 19% over net sales for the same period in 2005
as the result of a sales initiative with a large warehouse club chain and the
initiation of a continuing program at a global superstore. Sales in Europe and
Canada increased by 5% in both U.S. dollars and local currency.
Gross Profit
The gross profit for the first quarter of 2006 was $5,552,000 (45.3% of net
sales) compared to $4,861,000 (45.9% of net sales) for the first quarter of
2005. The lower margin in 2006 is due to expedited air freight costs and other
one time expenses associated with the launch of a new program in Europe with a
multinational office superstore located in twelve countries.
(11)
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses for the first quarter of
2006 were $4,259,000 (34.7% of net sales) compared with $3,719,000 (35.1% of net
sales) for the same period of 2005, an increase of $540,000. The majority of the
increase was due to higher sales commissions and freight costs associated with
higher sales, the addition of sales, marketing, logistics and quality control
personnel. SG&A expenses for the first quarter of 2006 also included $66,000 in
stock option compensation expense due to the Company's adoption of SFAS 123R.
Operating Income
Operating income was $1,293,000 in the first quarter of 2006 compared with
$1,142,000 in the first quarter of 2005. Operating income for the United States
increased by $274,000 or 24%. Operating income in Canada increased by $18,000 or
35% due to a 13% increase in sales (6% in constant currency). The European
operating loss increased by $141,000 primarily due to expedited freight costs
and other one time expenses associated with the launch of a new program.
Interest Expense
Interest expense for the first quarter of 2006 was $125,000, compared with
$13,000 for the same quarter of 2005, a $112,000 increase. The increase in
interest expense was primarily the result of higher borrowings under the
Company's bank revolving credit facility.
Other (Income) Expense, Net
Net other income was $76,000 in the first quarter of 2006 compared to net other
expense of $49,000 in the first quarter of 2005. The change from 2005 is
primarily due to increased gains from foreign currency transactions in the first
quarter of 2006.
Income Taxes
The effective tax rate in the first quarter of 2006 was 39% compared to 40% in
the first quarter of 2005.
(12)
Financial Condition
- -------------------
Liquidity and Capital Resources
The Company's working capital, current ratio and long-term debt to equity ratio
follow:
March 31, 2006 December 31, 2005
----------------- -----------------
Working capital $ 19,380,475 $ 16,325,098
Current ratio 3.83 3.17
Long term debt to equity ratio 52.8% 39.7%
During the first three months of 2006, total debt increased by $2,208,000
compared to total debt at December 31, 2005, principally as a result of the
buildup of inventory in anticipation of future business and payments associated
with the demolition of the Company's former manufacturing site located in
Bridgeport, CT. Refer to Note 5 "Non-Recurring Charges" for further information.
On March 6, 2006, the Company modified its Revolving Loan Agreement (the
Modified Loan Agreement) with Wachovia Bank. The Modified Loan Agreement amends
certain provisions of the original agreement. The amendments include an increase
in the maximum borrowing amount from $10 million to $15 million; an extension of
the maturity date from June 30, 2007 to June 30, 2009; a decrease in the
interest rate to LIBOR plus 1% from LIBOR plus 1.5%, as well as modifications to
certain covenant restrictions. Funds borrowed under the Modified Loan Agreement
will be used for working capital, general operating expenses and certain other
purposes. As of March 31, 2006, $7,751,000 was outstanding and $7,249,000 was
available for borrowing under the Modified Loan Agreement.
Cash expected to be generated from operating activities, together with funds
available under the Modified 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.
The remaining demolition costs of approximately $1,100,000 related to the former
manufacturing site will be paid with funds borrowed under the Company's Modified
Loan Agreement.
(13)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Continued
Recently Issued Accounting Standards
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4," to clarify that abnormal amounts of idle facility
expense, freight, handling costs and wasted material (spoilage) should be
recognized as current period charges, and that fixed production overhead costs
should be allocated to inventory based on normal capacity of production
facilities. This statement is effective for the Company's fiscal year 2006. The
Company does not expect the adoption of this standard to have a material effect
on its financial position, results of operations or cash flows.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
There are no material changes in market risks as disclosed in our annual Report
on Form 10-K for the year ended December 31, 2005.
Item 4. Controls and Procedures
(a) Evaluation of Internal Controls and Procedures
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, as of March 31, 2006, our disclosure controls and procedures
were 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 Control over Financial Reporting
During the quarter ended March 31, 2006, there were no changes in our internal
control over financial reporting that materially affected, or was reasonably
likely to materially affect, this control.
(14)
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
The Company is involved from time to time in disputes and other litigation in
the ordinary course of business, including certain environmental and other
matters. The Company presently believes that none of these matters, individually
or in the aggregate, would be likely to have a material adverse impact on its
financial position, results of operations, or liquidity from these matters.
Item 1a - Risk Factors
See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2005.
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
None.
(15)
Item 6 -- Exhibits
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
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
(16)
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: May 10, 2006
By /s/ PAUL G. DRISCOLL
------------------------------
Paul G. Driscoll
Vice President and
Chief Financial Officer
Dated: May 10, 2006
(17)
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:
I have reviewed this Quarterly Report on Form 10-Q of Acme United
Corporation;
Based on my knowledge, this 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
report;
Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
By /s/ WALTER C. JOHNSEN
------------------------------
Walter C. Johnsen
President and
Chief Executive Officer
Dated: May 10, 2006
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:
I have reviewed this Quarterly Report on Form 10-Q of Acme United
Corporation;
Based on my knowledge, this 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
report;
Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
By /s/ PAUL G. DRISCOLL
------------------------------
Paul G. Driscoll
Vice President and
Chief Financial Officer
Dated: May 10, 2006
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 March 31, 2006 (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(d), 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: May 10, 2006
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Acme United Corporation and will
be retained by Acme United Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
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
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 March 31, 2006 (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(d), 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 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: May 10, 2006
A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Acme United Corporation and will
be retained by Acme United Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.