Acme United (ACU) 10-Q 2 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 22, 2014
Document And Entity Information	'	'
Entity Registrant Name	'ACME UNITED CORP	'
Entity Central Index Key	'0000002098	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	3,212,352
Document Fiscal Period Focus	'Q1	'
Document Fiscal Year Focus	'2014	'

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current assets:	'	'
Cash and cash equivalents	$3,367	$11,644
Accounts receivable, less allowance	16,111	15,629
Inventories:	'	'
Finished goods	26,961	26,004
Work in process	48	187
Raw materials and supplies	1,968	2,028
Total inventory	28,977	28,219
Prepaid expenses and other current assets	1,755	1,494
Total current assets	50,210	56,986
Property, plant and equipment:	'	'
Land	596	597
Buildings	5,919	5,854
Machinery and equipment	9,587	8,905
Total property, plant and equipment	16,102	15,356
Less accumulated depreciation	9,647	9,420
Net plant, property and equipment	6,455	5,936
Intangible assets, less amortization	4,035	4,072
Other assets	1,081	1,085
Total assets	61,781	68,079
Current liabilities:	'	'
Accounts payable	4,312	4,790
Other accrued liabilities	4,867	5,087
Total current liabilities	9,179	9,877
Long-term debt	17,286	22,912
Other	277	286
Total liabilities	26,742	33,075
STOCKHOLDERS' EQUITY	'	'
Common stock, par value $2.50: authorized 8,000,000 shares; issued - 4,563,174 shares in 2014 and 2013, including treasury stock	11,407	11,407
Additional paid-in capital	6,592	6,466
Retained earnings	30,211	30,099
Treasury stock, at cost - 1,362,072 shares in 2014 and 2013	-12,283	-12,283
Accumulated other comprehensive (loss) income:	'	'
Minimum pension liability	-791	-791
Translation adjustment	-97	106
Total accumulated other comprehensive (loss) income	-888	-685
Total stockholders' equity	35,039	35,004
Total liabilities and stockholders' equity	$61,781	$68,079

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
STOCKHOLDERS' EQUITY	'	'
Common stock, par value	$2.50	$2.50
Common stock, shares authorized	8,000,000	8,000,000
Common stock, shares issued	4,563,174	4,563,174
Treasury stock, shares	1,362,072	1,362,072

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Operations (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements Of Operations	'	'
Net sales	$19,152	$17,651
Cost of goods sold	12,275	11,224
Gross profit	6,877	6,427
Selling, general and administrative expenses	6,252	5,914
Operating income	625	513
Interest:	'	'
Interest expense	89	127
Interest income	-6	-58
Interest expense, net	83	69
Other expense, net	19	3
Total other expense, net	102	72
Income before income taxes	523	441
Income tax expense	155	132
Net income	$368	$309
Basic earnings per share	$0.12	$0.10
Diluted earnings per share	$0.11	$0.10
Weighted average number of common shares outstanding - denominator used for basic per share computations	3,201,000	3,132,000
Weighted average number of dilutive stock options outstanding	242,000	81,000
Denominator used for diluted per share computations	3,443,000	3,213,000
Dividends declared per share	$0.08	$0.07

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Comprehensive Income (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Condensed Consolidated Statements Of Comprehensive Income	'	'
Net income	$368	$309
Other comprehensive income -	'	'
Foreign currency translation adjustment	-203	-259
Comprehensive income	$165	$50

Condensed_Consolidated_Stateme2

Condensed Consolidated Statements of Cash Flows (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Operating Activities:	'	'
Net income	$368	$309
Adjustments to reconcile net income to net cash used by operating activities:	'	'
Depreciation	256	220
Amortization	65	67
Stock compensation expense	126	105
Changes in operating assets and liabilities:	'	'
Accounts receivable	-651	1,411
Inventories	-871	-288
Prepaid expenses and other assets	-253	-23
Accounts payable	-505	-1,637
Other accrued liabilities	-140	-1,033
Total adjustments	-1,973	-1,178
Net cash used by operating activities	-1,605	-869
Investing Activities:	'	'
Purchase of property, plant, and equipment	-762	-155
Purchase of patents and trademarks	-28	-26
Net cash used by investing activities	-790	-181
Financing Activities:	'	'
(Repayments) borrowing of long-term debt	-5,626	132
Proceeds from issuance of common stock	'	100
Distributions to stockholders	-256	'
Net cash (used) provided by financing activities	-5,882	232
Effect of exchange rate changes	'	9
Net decrease in cash and cash equivalents	-8,277	-809
Cash and cash equivalents at beginning of period	11,644	9,750
Cash and cash equivalents at end of period	$3,367	$8,941

Basis_of_Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Basis of Presentation	'
	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, 2013 for such disclosures. The condensed consolidated balance sheet as of December 31, 2013 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 the financial statements and notes thereto, included in the Company’s 2013 Annual Report on Form 10-K.
	The Company has evaluated events and transactions subsequent to March 31, 2014 and through the date these condensed consolidated financial statements were included in this Form 10-Q and filed with the SEC. On April 7, 2014 the Company sold its Fremont, NC distribution facility for $850,000.

Contingencies

Contingencies	3 Months Ended
	Mar. 31, 2014
Contingencies	'
Contingencies	'
	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 has no matters other than the environmental remediation accrual described below.
	In December 2008, the Company sold property it owned in Bridgeport, Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million was secured by a mortgage on the property. The property consists of approximately four acres of land and 48,000 sq. feet of warehouse space. The property was the site of the Company’s original scissor factory which opened in 1887 and was closed in 1996.
	Under the terms of the sale agreement, and as required by the Connecticut Transfer Act, the Company is required to remediate any environmental contamination on the property. During 2008, the Company hired an independent environmental consulting firm to conduct environmental studies in order to identify the extent of the environmental contamination on the property and to develop a remediation plan. As a result of those studies and the estimates prepared by the independent environmental consulting firm, the Company recorded an undiscounted liability of approximately $1.8 million related to the remediation of the property. This accrual included the costs of required investigation, remedial activities, and post-remediation operating and maintenance.
	Remediation work on the project began in the third quarter of 2009 and was completed during the third quarter of 2012. At March 31, 2014, the Company had approximately $34,000 remaining in its accrual for environmental remediation, all of which was classified as a current liability at that date.
	In addition to the remediation work, the Company, with the assistance of its independent environmental consulting firm, must continue to monitor contaminant levels on the property to ensure they comply with set governmental standards. The Company expects that the entire project will be completed by the end of 2014.
	The change in the accrual for environmental remediation for the three months ended March 31, 2014 follows (in thousands):
	Balance at	Payments	Balance at
	31-Dec-13		31-Mar-14
	$  39	$  (5)	$  34
	Also, as part of the sale of the Bridgeport property, the Company provided the buyer with a mortgage of $2.0 million at six percent interest per year. During the third quarter of 2013, the Company received $1,726,888 from B&E Juices, Inc. as an early repayment in full of the outstanding balance on the mortgage.

Pension

Pension	3 Months Ended
	Mar. 31, 2014
Compensation and Retirement Disclosure [Abstract]	'
Pension	'
	Note 3 — Pension
	Components of net periodic pension cost are as follows (in thousands):
		Three Months Ended
		31-Mar			31-Mar
		2014			2013
	Components of net periodic benefit cost:
	Interest cost	$	16		$	17
	Service cost		10			9
	Expected return on plan assets		(17	)		(27	)
	Amortization of prior service costs		2			2
	Amortization of actuarial loss		35			39
		$	46		$	40
	The Company’s funding policy with respect to its qualified plan is to contribute at least the minimum amount required by applicable laws and regulations. In 2014, the Company is required to contribute approximately $235,000.

Long_Term_Debt_and_Stockholder

Long Term Debt and Stockholders Equity	3 Months Ended
	Mar. 31, 2014
Long Term Debt And Stockholders Equity	'
Long Term Debt and Stockholders Equity	'
	Note 4 — Long Term Debt and Stockholders Equity
	On April 25, 2013, the Company amended its revolving loan agreement with HSBC Bank N.A. dated April 5, 2012. The amendment increased the borrowing limit to $40 million from $30 million. The interest rate remains the same at LIBOR plus 1.75%. All principal amounts outstanding under the agreement are required to be repaid in a single amount on April 5, 2017, the date the agreement expires; interest is payable monthly. Funds borrowed under the agreement may be used for working capital, general operating expenses, share repurchases, acquisitions and certain other purposes. Under the amended loan agreement, the Company is required to maintain specific amounts of tangible net worth, a debt/net worth ratio, and a fixed charge coverage ratio. At March 31, 2014 the Company was in compliance with the financial covenants referenced above.
	As of March 31, 2014 and December 31, 2013, the Company had outstanding borrowings of $17,285,829 and $22,911,829, respectively, under the Company’s revolving loan agreement with HSBC.

Segment_Information

Segment Information	3 Months Ended
	Mar. 31, 2014
Segment Information	'
Segment Information	'
	Note 5— Segment Information
	The Company reports financial information based on the organizational 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. As described below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly, management reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. operating segment”. Each reportable segment derives its revenue from the sales of cutting devices, measuring instruments and safety products for school, office, home, hardware and industrial use.
	Domestic sales orders are filled from the Company’s distribution center in North Carolina. The Company is responsible for the costs of shipping, insurance, customs clearance, duties, storage and distribution related to such products. Orders filled from the Company’s inventory are generally for less than container-sized lots.
	Direct import sales are products sold by the Company’s Asian subsidiary, directly to major U.S. retailers, who take ownership of the products in Asia. These sales are completed by delivering product to the customers’ common carriers at the shipping points in Asia. Direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 10% and 12% of the Company’s total net sales for the three months ended March 31, 2014 and 2013, respectively.
	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 March 31
	Sales to external customers:	2014			2013
	United States	$	16,105		$	14,227
	Canada		1,510			1,625
	Europe		1,537			1,799
	Consolidated	$	19,152		$	17,651
	Operating income:
	United States	$	676		$	564
	Canada		32			(10	)
	Europe		(83	)		(41	)
	Consolidated	$	625		$	513
	Interest expense, net		83			69
	Other expense, net		19			3
	Consolidated income before income taxes	$	523		$	441
		31-Mar			31-Dec
	Assets by segment	2014			2013
	United States	$	51,542		$	57,068
	Canada		5,555			5,329
	Europe		4,684			5,682
	Consolidated	$	61,781		$	68,079

Stock_Based_Compensation

Stock Based Compensation	3 Months Ended
	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'
Stock Based Compensation	'
	Note 6 – Stock Based Compensation
	The Company recognizes share-based compensation at fair value of the equity instrument on the grant date. Compensation expense is recognized over the required service period. Share-based compensation expenses were $126,000 and $105,000 for the quarters ended March 31, 2014 and March 31, 2013, respectively. During the three months ended March 31, 2014 and 2013, the Company granted 34,000 and 37,500 employee stock options, respectively, with a weighted average fair value of $3.33 and $2.65, respectively. As of March 31, 2014, there was a total of $913,766 of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested, share –based payments granted to the Company’s employees.

Fair_Value_Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2014
Fair Value Measurements	'
Fair Value Measurements	'
	Note 7 – Fair Value Measurements
	The carrying value of the Company’s bank debt and note receivable approximates fair value. Fair value was determined using a discounted cash flow analysis.

Contingencies_Tables

Contingencies (Tables)	3 Months Ended
	Mar. 31, 2014
Contingencies Tables	'
Accrual for Environmental Remediation Table	'
	Balance at	Payments	Balance at
	31-Dec-13		31-Mar-14
	$  39	$  (5)	$  34

Pension_Tables

Pension (Tables)	3 Months Ended
	Mar. 31, 2014
Pension Tables	'
Components of Net Benefit Cost	'
		Three Months Ended
		31-Mar			31-Mar
		2014			2013
	Components of net periodic benefit cost:
	Interest cost	$	16		$	17
	Service cost		10			9
	Expected return on plan assets		(17	)		(27	)
	Amortization of prior service costs		2			2
	Amortization of actuarial loss		35			39
		$	46		$	40

Segment_Information_Tables

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2014
Segment Information Tables	'
Financial Data By Segment Table	'
		Three months ended March 31
	Sales to external customers:	2014			2013
	United States	$	16,105		$	14,227
	Canada		1,510			1,625
	Europe		1,537			1,799
	Consolidated	$	19,152		$	17,651
	Operating income:
	United States	$	676		$	564
	Canada		32			(10	)
	Europe		(83	)		(41	)
	Consolidated	$	625		$	513
	Interest expense, net		83			69
	Other expense, net		19			3
	Consolidated income before income taxes	$	523		$	441
Assets By Segment	'
		31-Mar			31-Dec
	Assets by segment	2014			2013
	United States	$	51,542		$	57,068
	Canada		5,555			5,329
	Europe		4,684			5,682
	Consolidated	$	61,781		$	68,079

Basis_of_Presentation_Details_

Basis of Presentation (Details Narrative) (USD $)	Apr. 07, 2014	Dec. 31, 2008
In Thousands, unless otherwise specified
Basis Of Presentation Details Narrative	'	'
Proceeds from sale of asset	$850	$2,500

Contingencies_Details_Narrativ

Contingencies (Details Narrative) (USD $)	1 Months Ended	3 Months Ended
In Thousands, unless otherwise specified	Dec. 31, 2008	Sep. 30, 2013	Apr. 07, 2014	Mar. 31, 2014	Dec. 31, 2013
Contingencies Details Narrative	'	'	'	'	'
Description of property sale	'	'	'	'	'
	In December 2008, the Company sold property it owned in Bridgeport, Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million was secured by a mortgage on the property.  The property consists of approximately four acres of land and 48,000 sq. feet of warehouse space.  The property was the site of the Company’s original scissor factory which opened in 1887 and was closed in 1996.
Proceeds from sale of asset	$2,500	'	$850	'	'
Mortgage receivable from sale of asset	2,000	'	'	'	'
Interest rate on mortgage receivable	6.00%	'	'	'	'
Undiscounted environmental remediation liability	1,800	'	'	'	'
Accrual for environmental remediation and monitoring	'	'	'	34	39
Accrual for environmental remediation and monitoring, current	'	'	'	34	'
Proceeds received as repayment of mortgage receivable	'	$1,727	'	'	'

Contingencies_Accrual_for_Envi

Contingencies - Accrual for Environmental Remediation (Details) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Contingencies - Accrual For Environmental Remediation Details	'
Environmental remediation accrual at December 31, 2013	$39
Payments	-5
Environmental remediation accrual at March 31, 2014	$34

Pension_Details_Narrative

Pension (Details Narrative) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Compensation and Retirement Disclosure [Abstract]	'
Expected plan contributions during 2014	$235

Pension_Periodic_Benefit_Cost_

Pension - Periodic Benefit Cost (Details) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Components of net periodic benefit cost:	'	'
Interest cost	$16	$17
Service cost	10	9
Expected return on plan assets	-17	-27
Amortization of prior service costs	2	2
Amortization of actuarial loss	35	39
Net periodic benefit cost	$46	$40

Long_Term_Debt_and_Stockholder1

Long Term Debt and Stockholders Equity (Details Narrative) (USD $)	1 Months Ended		3 Months Ended
In Thousands, unless otherwise specified	Apr. 30, 2013	Apr. 30, 2012	Mar. 31, 2014	Dec. 31, 2013	Apr. 25, 2013	Apr. 05, 2012
Long Term Debt And Stockholders Equity Details Narrative	'	'	'	'	'	'
Outstanding borrowings under revolving loan agreement	'	'	$17,286	$22,912	'	'
Credit facility borrowing capacity	'	'	'	'	$40,000	$30,000
Interest rate of LIBOR plus percentage	1.75%	1.75%	'	'	'	'
Credit facility interest rate	'Interest rate of LIBOR plus 1.75%	'	'	'	'	'
Credit facility expiration date	5-Apr-17	'	'	'	'	'
Covenant terms and compliance	'	'	'Under the amended loan agreement, the Company is required to maintain specific amounts of tangible net worth, a debt/net worth ratio, and a fixed charge coverage ratio. At March 31, 2014 the Company was in compliance with the financial covenants referenced above.	'	'	'

Segment_Information_Financial_

Segment Information - Financial Data by Segment (Details) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Sales to external customers	$19,152	$17,651	'
Operating income	625	513	'
Interest expense, net	83	69	'
Other expense, net	19	3	'
Consolidated income before income taxes	523	441	'
Assets	61,781	'	68,079
United States	'	'	'
Sales to external customers	16,105	14,227	'
Operating income	676	564	'
Assets	51,542	'	57,068
Canada	'	'	'
Sales to external customers	1,510	1,625	'
Operating income	32	-10	'
Assets	5,555	'	5,329
Europe	'	'	'
Sales to external customers	1,537	1,799	'
Operating income	-83	-41	'
Assets	$4,684	'	$5,682

Segment_Information_Details_Na

Segment Information (Details Narrative)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Information Details Narrative	'	'
Direct import sales to total net sales ratio	10.00%	12.00%

Stock_Based_Compensation_Detai

Stock Based Compensation (Details Narrative) (USD $)	3 Months Ended
In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Stock Based Compensation Details Narrative	'	'
Share-based compensation expense	$126	$105
Stock options granted during period (in shares)	34,000	37,500
Weighted average fair value of stock options granted during period	$3.33	$2.65
Unrecognized compensation cost	$914	'