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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 June 30, 2008
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 of (I.R.S. Employer
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, a non-accelerated filer or a smaller reporting company. 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 |_|
Small Reporting Company |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 July 21, 2008 the registrant had outstanding 3,521,433 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 as of June 30, 2008
and December 31, 2007...................................... 3
Condensed Consolidated Statements of Operations for the
three and six months ended June 30, 2008 and 2007.......... 5
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2008 and 2007.................... 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 1A. Risk Factors.................................................. 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds... 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...................................................... 15
Signatures.............................................................. 16
(2)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(all amounts in thousands)
June 30, December 31,
2008 2007
(unaudited) (Note 1)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,703 $ 4,988
Accounts receivable, less allowance 20,852 12,727
Inventories:
Finished goods 20,304 18,069
Work in process 321 113
Raw materials and supplies 833 753
------------ ------------
21,458 18,935
Prepaid expenses and other current assets 1,121 1,211
------------ ------------
Total current assets 47,134 37,860
------------ ------------
Property, plant and equipment:
Land 187 175
Buildings 3,117 2,971
Machinery and equipment 8,619 8,050
------------ ------------
11,923 11,196
Less accumulated depreciation 9,444 8,717
------------ ------------
2,479 2,479
Other assets 1,838 1,794
Goodwill 89 89
------------ ------------
Total assets $ 51,540 $ 42,222
============ ============
See notes to condensed consolidated financial statements.
(3)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(all amounts in thousands)
June 30, December 31,
2008 2007
(unaudited) (Note 1)
------------ ------------
LIABILITIES
Current liabilities:
Accounts payable $ 6,623 $ 4,575
Other accrued liabilities 4,630 3,959
------------ ------------
Total current liabilities 11,253 8,534
Long-term debt, less current portion 14,992 10,135
Other 551 507
------------ ------------
Total liabilities 26,796 19,175
STOCKHOLDERS' EQUITY
Common stock, par value $2.50:
authorized 8,000,000 shares;
issued - 4,293,024 shares in 2008
and 4,267,274 shares in 2007,
including treasury stock 10,733 10,668
Additional paid-in capital 3,785 3,550
Retained earnings 16,675 14,473
Treasury stock, at cost - 771,591 shares
in 2008 and 714,391 shares in 2007 (6,717) (5,930)
Accumulated other comprehensive income:
Translation adjustment 904 921
Minimum pension liability (635) (635)
------------ ------------
269 286
------------ ------------
Total stockholders' equity 24,744 23,047
------------ ------------
Total liabilities and stockholders' equity $ 51,540 $ 42,222
============ ============
See notes to condensed consolidated financial statements.
(4)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(all amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
------------------------------ ------------------------------
2008 2007 2008 2007
-------------- ------------- -------------- --------------
Net sales $ 22,708 $ 18,999 $ 36,977 $ 31,240
Cost of goods sold 13,790 11,020 22,073 17,927
-------------- ------------- -------------- --------------
Gross Profit 8,918 7,979 14,904 13,313
Selling, general and administrative expenses 6,121 5,435 11,039 9,593
-------------- ------------- -------------- --------------
Operating income 2,797 2,544 3,865 3,720
-------------- ------------- -------------- --------------
Non-operating items:
Interest expense, net 90 156 187 310
Other expense (income), net 24 41 (162) 14
-------------- ------------- -------------- --------------
Total other income 114 197 25 324
-------------- ------------- -------------- --------------
Income before income taxes 2,683 2,347 3,840 3,396
Income tax expense 953 825 1,358 1,224
-------------- ------------- -------------- --------------
Net income $ 1,730 $ 1,522 $ 2,482 $ 2,172
============== ============= ============== ==============
Basic earnings per share $ 0.49 $ 0.43 $ 0.71 $ 0.62
============== ============= ============== ==============
Diluted earnings per share $ 0.47 $ 0.41 $ 0.68 $ 0.59
============== ============= ============== ==============
Weighted average number of common shares outstanding-
denominator used for basic per share computations 3,518 3,525 3,519 3,527
Weighted average number of dilutive stock options
outstanding 147 171 147 171
-------------- ------------- -------------- --------------
Denominator used for diluted per share computations 3,665 3,698 3,666 3,698
============== ============= ============== ==============
Dividends declared per share $ 0.04 $ 0.04 $ 0.08 $ 0.08
============== ============= ============== ==============
See notes to condensed consolidated financial statements.
(5)
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(all amounts in thousands)
Six Months Ended
June 30,
-----------------------------
2008 2007
-------------- --------------
Operating Activities:
Net income $ 2,482 $ 2,172
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation 451 406
Amortization 53 23
Stock compensation expense 166 184
Changes in operating assets and liabilities:
Accounts receivable (8,122) (6,962)
Inventories (2,330) (1,201)
Prepaid expenses and other current assets 92 (155)
Accounts payable 2,007 2,263
Other accrued liabilities 678 557
-------------- --------------
Total adjustments (7,006) (4,885)
-------------- --------------
Net cash used by operating activities (4,524) (2,713)
-------------- --------------
Investing Activities:
Purchase of property, plant, and equipment (412) (337)
Purchase of patents and trademarks (97) (45)
-------------- --------------
Net cash used by investing activities (510) (382)
-------------- --------------
Financing Activities:
Net borrowing of long-term debt 4,851 2,469
Proceeds from issuance of common stock 133 281
Distributions to stockholders (281) (246)
Purchase of treasury stock (787) (347)
-------------- --------------
Net cash provided by financing activities 3,916 2,157
-------------- --------------
Effect of exchange rate changes (167) 159
-------------- --------------
Net change in cash and cash equivalents (1,285) (781)
Cash and cash equivalents at beginning of period 4,988 3,838
-------------- --------------
Cash and cash equivalents at end of period $ 3,703 $ 3,057
============== ==============
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, 2007 for such disclosures. The condensed consolidated balance
sheet as of December 31, 2007 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. The
information included in this Quarterly Report on Form 10-Q should be read in
conjunction with the Management's Discussion and Analysis of Financial Condition
and Results of Operations and financial statements and notes thereto, included
in the Company's 2007 Annual Report on Form 10-K.
Reclassifications - Certain prior year amounts have been reclassified to
conform to the current year presentation.
Note 2 -- Contingencies
The Company is involved from time to time in disputes and other litigation
in the ordinary course of business and may encounter other contingencies, which
may include 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.
Note 3 -- Pension
Components of net periodic pension cost are as follows:
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ -------------------------------
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Components of net periodic benefit cost:
Interest cost $ 45,000 $ 45,948 $ 90,000 $ 91,896
Service cost 7,500 6,250 15,000 12,500
Expected return on plan assets (56,250) (62,048) (112,500) (124,096)
Amortization of prior service costs 2,250 2,138 4,500 4,276
Amortization of actuarial gain 18,750 24,408 37,500 48,816
-----------------------------------------------------------------
$ 17,250 $ 16,696 $ 34,500 $ 33,392
=================================================================
Note 4 -- Long Term Debt
On June 23, 2008, the Company modified its revolving loan agreement (the
"Modified Loan Agreement") with Wachovia Bank. The amendments include an
increase in the maximum borrowing amount from $15 million to $20 million; an
extension of the maturity date of the loan from June 30, 2009 to June 30, 2010;
a decrease in the interest rate to LIBOR plus 7/8% (from LIBOR plus 1.0%) as
well as the modification of certain covenant restrictions. Funds borrowed under
the Modified Loan Agreement are primarily used for working capital, general
operating expenses and certain other purposes.
At June 30, 2008 and December 31, 2007, the Company had outstanding
borrowings under the Modified Loan Agreement of $14,949,000 and $10,098,000,
respectively. Based on the scheduled maturity date, the Company has classified
the borrowings at June 30, 2008 as long-term liabilities.
(7)
Note 5 -- Shareholder's Equity
During the first six months of 2008, the Company issued 25,750 shares of
common stock upon the exercise of outstanding stock options and received
proceeds of $132,818. During the same period, the Company also repurchased
57,200 shares of common stock for treasury. These shares were purchased at fair
market value, with a total cost to the Company of $786,866.
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 consist of
(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; accordingly, management reviews the financial results of both segments
on a consolidated basis, and the results of the Asian operating segment have
been aggregated with the results of the United States operating segment to form
one reportable segment called the "United States operating 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)
Three months ended June 30, Six months ended June 30,
------------------------------ -------------------------------
2008 2007 2008 2007
-------------- -------------- -------------- --------------
Sales to external customers:
United States $ 18,018 $ 14,642 $ 28,935 $ 23,916
Canada 2,988 2,925 4,686 4,495
Europe 1,702 1,432 3,356 2,829
-------------- -------------- -------------- --------------
Consolidated $ 22,708 $ 18,999 $ 36,977 $ 31,240
============== ============== ============== ==============
Operating income (loss):
United States $ 2,545 $ 2,294 $ 3,635 $ 3,595
Canada 469 401 579 458
Europe (217) (151) (349) (333)
-------------- -------------- -------------- --------------
Consolidated $ 2,797 $ 2,544 $ 3,865 $ 3,720
-------------- -------------- -------------- --------------
Interest expense, net 90 156 187 310
Other expense (income), net 24 41 (162) 14
-------------- -------------- -------------- --------------
Consolidated income before taxes $ 2,683 $ 2,347 $ 3,840 $ 3,396
============== ============== ============== ==============
(8)
Assets by segment:
June 30, December 31,
2008 2007
------------ --------------
United States $ 37,370 $ 28,350
Canada 8,442 7,886
Europe 5,728 5,986
------------ --------------
Consolidated $ 51,540 $ 42,222
============ ==============
Note 7 -- Stock Based Compensation
The Company recognizes share-based compensation in accordance with the
provisions of Statement of Financial Accounting Standards No. 123R, "Share-Based
Payment" ("SFAS 123R"). Share-based compensation expense was $94,000 and
$131,000 for the quarters ended June 30, 2008 and June 30, 2007, respectively.
Share-based compensation expense was $166,000 and $184,000 for the six months
ended June 30, 2008 and June 30, 2007, respectively. During the three and six
months ended June 30, 2008, the Company issued 12,250 options with a weighted
average fair value of $3.86. During the three and six months ended June 30,
2007, the Company issued 97,750 options with a weighted average fair value of
$4.96. The assumptions used to value option grants for the three and six months
ended June 30, 2008 and June 30, 2007 are as follows:
Three months ended Six months ended
June 30, June 30,
---------------------------- ------------------------------
2008 2007 2008 2007
---------------------------- ------------------------------
Expected life in years 5 5 5 5
Interest rate 2.95% 4.51 - 5.18% 2.95% 4.51 - 5.18%
Volatility 0.31 0.32 .31 .32
Dividend yield 1.2% 1.1% 1.2% 1.1%
As of June 30, 2008, there was a total of $398,078 of unrecognized
compensation cost related to non-vested share -based payments granted to the
Company's employees. The remaining unamortized expense is expected to be
recognized over a weighted average period of approximately 2 years.
Note 8 -- Comprehensive Income
Comprehensive income for the three and six months ended June 30, 2008 and
June 30, 2007 consisted of the following:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ -------------------------------
Sales to external customers: 2008 2007 2008 2007
-------------- -------------- -------------- --------------
Net income $ 1,730 $ 1,522 2,482 2,172
Other comprehensive income / (loss) -
Foreign currency translation 47 469 (16) 532
-------------- -------------- -------------- --------------
Comprehensive income $ 1,777 $ 1,991 $ 2,466 $ 2,704
============== ============== ============== ==============
(9)
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, 2007.
Results of Operations
Net Sales
Consolidated net sales for the three months ended June 30, 2008 were
$22,708,000 compared with $18,999,000 in the same period in 2007, a 20% increase
(17% at constant currency). Consolidated net sales for the six months ended June
30, 2008 were $36,977,000, compared with $31,240,000 for the same period in
2007, an 18% increase (15% at constant currency). Net sales for the three and
six months ended June 30, 2008 in the U.S. segment increased 23% and 21%,
respectively, primarily as a result of market acceptance of new anti-microbial
school scissors, rulers, and math kits and iPoint pencil sharpeners. Net sales
in Canada in the three and six months ended June 30, 2008 increased by 3% and 5%
in U.S. dollars but declined 5% and 6% in local currency, primarily due to soft
demand in the overall office products market. European net sales for the three
and six months ended June 30, 2008 increased 18% in U.S. dollars and 3% in local
currency.
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 market.
Gross Profit
Gross profit for the three months ended June 30, 2008 was $8,918,000 (39.3%
of net sales) compared to $7,979,000 (42.0% of net sales) for the same period in
2007. Gross profit for the six months ended June 30, 2008 was $14,904,000 (40.3%
of net sales) compared to $13,313,000 (42.6% of net sales) in the same period in
2007. The gross margin declines for the three and six months ended June 30, 2008
were primarily due to increased costs of material, labor and energy, as well as
the appreciation of the Chinese currency against the U.S. dollar. Also, during
the second quarter of 2008 the company gained additional market share in the
highly competitive back to school segment which reduced gross margins.
(10)
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses for the three months
ended June 30, 2008 were $6,121,000 (27.0% of net sales) compared with
$5,435,000 (28.6% of net sales) for the same period of 2007, an increase of
$686,000. SG&A expenses for the six months ended June 30, 2008 were $11,039,000
(29.9% of net sales) compared with $9,593,000 (30.7% of net sales) in the
comparable period of 2007, an increase of $1,446,000. SG&A expenses increased
for the three and six months ended June 30, 2008 primarily as a result of the
addition of sales, marketing and quality control personnel as well as
incrementally higher freight costs and sales commissions associated with higher
sales.
Operating Income
Operating income for the three months ended June 30, 2008 was $2,797,000
compared with $2,544,000 in the same period of 2007. Operating income for the
six months ended June 30, 2008 was $3,865,000 compared to $3,720,000 in the same
period of 2007.
Interest Expense
Interest expense for the three months ended June 30, 2008 was $90,000,
compared with $156,000 for the same period of 2007, a $66,000 decrease. Interest
expense for the six months ended June 30, 2008 was $187,000 as compared to
$310,000 for the same period in 2007, a $123,000 decrease. The decrease in
interest expense for both the three and six months ended June 30, 2008 was
primarily the result of lower interest rates under the Company's revolving
credit facility, partially offset by a higher average outstanding debt balance.
Other Expense (Income), Net
Net other expense was $24,000 in the three months ended June 30, 2008 as
compared to $41,000 in the same period of 2007. Net other income was $162,000 in
the first six months of 2008 compared to net other expense of $14,000 in the
first six months of 2007. The increase other expense (income), net for the six
months ended June 30, 2008 was primarily due to gains from foreign currency
transactions.
Income Taxes
The effective tax rate for the three months ended June 30, 2008 was 36%
compared to 35% in the same period of 2007. The effective tax rate for the six
months ended June 30, 2008 was 35% compared to 36% in the same period of 2007.
(11)
Financial Condition
Liquidity and Capital Resources
The Company's working capital, current ratio and long-term debt to equity ratio
follow:
(000's omitted) June 30, 2008 December 31, 2007
------------------------------------
Working capital $ 35,881 $ 29,326
Current ratio 4.19 4.44
Long term debt to equity ratio 60.6% 44.0%
During the first six months of 2008, total debt outstanding under the Company's
Modified Loan agreement, referred to below, increased by $4,851,000 compared to
total debt at December 31, 2007, principally due to an increase in borrowings
for inventory and accounts receivables for the back to school season as well as
share repurchases, partially offset by earnings. As of June 30, 2008,
$14,949,000 was outstanding and $5,051,000 was available for borrowing under the
Modified Loan Agreement.
On June 23, 2008, the Company modified its Revolving Loan Agreement (the
"Modified Loan Agreement") with Wachovia Bank. The Modified Loan Agreement
amends certain provisions of the original Revolving Loan Agreement. The
amendments include an increase in the maximum borrowing amount from $15 million
to $20 million; an extension of the maturity date of the loan from June 30, 2009
to June 30, 2010; and a decrease in the interest rate to LIBOR plus 7/8% (from
LIBOR plus 1.0%). Funds borrowed under the Modified Loan Agreement are used for
working capital, general operating expenses and certain other purposes.
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.
Recently Issued Accounting Standards
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in GAAP and establishes a hierarchy that categorizes and
prioritizes the sources to be used to estimate fair value. SFAS No. 157 also
expands financial statement disclosures about fair value measurements. On
February 12, 2008, the FASB issued FASB Staff Position (FSP) 157-2 which delays
the effective date of SFAS No. 157 for one year, for all non-financial assets
and non-financial liabilities, except those that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
SFAS No. 157 and FSP 157-2 are effective for financial statements issued for
fiscal years beginning after November 15, 2007. We will elect a partial deferral
of SFAS No. 157 under the provisions of FSP 157-2 related to the measurement of
fair value used when evaluating long-lived assets for impairment and valuing
asset retirement obligations. The impact of partially adopting SFAS No. 157
effective January 1, 2008 will not be material to our financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities," ("SFAS No. 159") which provides
companies with an option to report selected financial assets and liabilities at
fair value in an attempt to reduce both complexity in accounting for financial
instruments and the volatility in earnings caused by measuring related assets
and liabilities differently. This statement is effective as of the beginning of
an entity's first fiscal year beginning after November 15, 2007. The Company
chose not to adopt these fair value provisions.
(12)
Item 3. Quantitative and Qualitative Disclosure About Market Risk
There are no material changes in market risks as disclosed in the Company's
annual Report on Form 10-K for the year ended December 31, 2007.
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 June 30, 2008, 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 June 30, 2008, there were no changes in our internal
control over financial reporting that materially affected, or was reasonably
likely to materially affect, this control.
(13)
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.
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, 2007.
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
The Company's Annual Meeting of Shareholders was held on April 21, 2008.
A. The following individuals were elected Directors at the Annual Meeting
and comprise the entire Board.
Votes for Votes against
--------- -------------
Rex Davidson 3,312,187 34,527
Richmond Y. Holden, Jr. 3,306,987 39,728
Walter C. Johnsen 3,123,537 223,118
Susan H. Murphy 3,312,462 34,253
Brian Olschan 3,128,382 218,333
Stevenson E. Ward 3,303,928 42,787
Item 5 -- Other Information
None.
(14)
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
(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
Chairman of the Board and
Chief Executive Officer
Dated: August 5, 2008
By /s/ PAUL G. DRISCOLL
------------------------------
Paul G. Driscoll
Vice President and
Chief Financial Officer
Dated: August 5, 2008
(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:
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)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) 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) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) 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
(d) 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 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
Chairman of the Board and
Chief Executive Officer
Dated: August 5, 2008
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)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) 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) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) 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
(d) 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 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: August 5, 2008
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, 2008 (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
Chairman of the Board and
Chief Executive Officer
Dated: August 5, 2008
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 June 30, 2008 (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: August 5, 2008
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.