Acme United Corporation (NYSE AMEX:ACU) today announced that net sales for the second quarter ended June 30, 2010 were $20.6 million, compared to $19.2 million in the comparable period of 2009, an increase of 7% (8% in local currency). Net income was $1,567,000, or $.48 per diluted share, for the quarter ended June 30, 2010, compared to $1,341,000 or $.40 per diluted share for the comparable period last year, an increase of 17% in net income and 20% in diluted earnings per share.

Net sales for the six months ended June 30, 2010 were $33.7 million, compared to $30.5 million in the same period in 2009, an increase of 11% (10% in local currency). Net income for the six months ended June 30, 2010 was $1,780,000, or $.54 per diluted share, compared to $1,383,000, or $.41 per diluted share in the comparable period last year, a 29% increase in net income and 32% in diluted earnings per share.

Net sales for the quarter ended June 30, 2010 in the U.S. segment increased 1% compared to the same period in 2009. Net sales for the six months ended June 30, 2010 in the U.S. segment increased 5% compared to the same period in 2009. Sales in the U.S. were a reflection of the slow economic recovery in the U.S. Net sales in Canada for the three and six months ended June 30, 2010 increased 10% and 14%, respectively, in U.S. dollars compared to the same periods in 2009 but decreased 2% and 1% respectively, in local currency. European net sales for the three and six months ended June 30, 2010 increased 64% and 46%, respectively, in U.S. dollars compared to the same periods in 2009 and increased 75% and 49% respectively, in local currency. Sales in Europe increased due to growth in the mass and office markets.

Gross margins were 36.7% in the second quarter of 2010 versus 37.1% in the comparable period last year. The gross margins in the second quarter of 2010 were impacted by higher airfreight expense of approximately $250,000 due to labor shortages and production constraints in the Asian factories. For the first six months of 2010, gross margins were 37.6%, compared to 37.4% in the same period in 2009.

The effective tax rate for the first six months of 2010 was 17%, compared to 34% in the same period of 2009. The effective tax rate for the six months ended June 30, 2010, reflects approximately $180,000 of tax benefits associated with the Company’s donation of land to the City of Bridgeport, CT in the fourth quarter of 2009.

Walter C. Johnsen, Chairman and CEO said, “We had a solid quarter in sales, earnings, and cash flow. However, the Company incurred substantial air freights costs due to lower production than planned, with the resultant need to expedite shipments to meet customer demand on time. We are addressing this by increasing supply stock and expanding capacity.” Mr. Johnsen added that he was pleased with the growth in European sales.

The Company’s bank debt less cash on June 30, 2010 was $8.9 million compared to $8.9 million on June 30, 2009. During the 12 month period ended June 30, 2010, Acme purchased 241,000 shares of its common stock for treasury for a total of approximately $2.25 million and paid a total of $650,000 in dividends, which were offset by cash flow from operations of $3 million. As of June 30, 2010, there were 83,376 shares remaining for purchase under the Company’s stock repurchase program.

ACME UNITED CORPORATION is a leading worldwide supplier of innovative cutting, measuring and safety products to the school, home, office and industrial markets. Its leading brands include Westcott®, Clauss®, Camillus® and Physicians Care ®.

Forward-looking statements in this report, including without limitation, statements related to the Company’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, without limitation, the following: (i) the Company’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the impact of current uncertainties in global economic conditions and the ongoing financial crisis affecting the domestic and foreign banking system and financial markets, including the impact on the Company’s suppliers and customers (iii) currency fluctuations (iv) the Company’s plans and results of operations will be affected by the Company’s ability to manage its growth, and (v) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.
ACME UNITED CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOMESECOND QUARTER REPORT 2010(Unaudited)
         
 
Three Months Ended Three Months Ended
Amounts in 000's except per share data           June 30, 2010       June 30, 2009  
 
 
Net sales $ 20,585 $ 19,161
Cost of goods sold 13,034   12,056  
Gross profit 7,551 7,105
Selling, general, and administrative expenses 5,605   5,086  
Income from operations 1,946 2,019
Interest expense 79 44
Interest income (41 ) (31 )
Net interest expense 38 13
Other expense (income) 24   (30 )
Total other expense (income) 62 (17 )
Pre-tax income 1,884   2,036  
Income tax expense 317   695  

Net income
$ 1,567   $ 1,341  
 

Shares outstanding - Basic

 
3,158 3,325

Shares outstanding - Diluted

 
3,289 3,388
 
Earnings per share basic $ 0.50 $ 0.40
Earnings per share diluted 0.48 0.40
ACME UNITED CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOMESECOND QUARTER REPORT 2010 (cont.)(Unaudited)
               
 
Six Months Ended Six Months Ended
Amounts in 000's except per share data                 June 30, 2010       June 30, 2009  
 
Net sales $ 33,706 $ 30,458
Cost of goods sold 21,042   19,056  
Gross profit 12,664 11,402
Selling, general, and administrative expenses 10,417   9,302  
Income from operations 2,247 2,100
Interest expense 131 86
Interest income (73 ) (66 )
Net interest expense 58 20
Other expense (income) 39   (19 )
Total other (expense) 97 1
Pre-tax income 2,150   2,099  
Income tax expense 370   716  
Net income $ 1,780   $ 1,383  
 

Shares outstanding - Basic

 
3,163 3,336

Shares outstanding - Diluted

 
3,270 3,396
 
Earnings per share basic $ 0.56 $ 0.41
Earnings per share diluted 0.54 0.41
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SECOND QUARTER REPORT 2010
(Unaudited)
       
Amounts in 000's           June 30, 2010     June 30, 2009
 

Assets:
Current assets:

Cash
$ 4,250 $ 3,228
Accounts receivable, net 20,416 18,467
Inventories 17,970 19,299
Prepaid and other current assets   1,213   961
Total current assets 43,849 41,955
 
Property and equipment, net 1,994 2,249
Long term receivable 1,865 1,919
Other assets   2,562   2,509
Total assets $ 50,270 $ 48,633
 

Liabilities and stockholders' equity:
Current liabilities
Accounts payable $ 6,177 $ 6,131
Other current liabilities 4,298 4,276
Total current liabilities 10,475 10,407
Bank debt 13,125 12,122
Other non current liabilities   1,746   1,995
25,346 24,524
Total stockholders' equity   24,924   24,109
Total liabilities and stockholders' equity $ 50,270 $ 48,633

Copyright Business Wire 2010

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