Classic Brands Meet Modern Technology
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Acme United Corporation Classic Brands Meet Modern Technology 2012 Annual Report Financial Highlights (Amounts in thousands except per share data) 2010 2011 2012 Operating Results Net Sales $ 63,149 $ 73,302 $ 84,370 Operating Income 2,980 4,285 5,361 Net Income 2,573 2,811 3,549 Earnings Per Share 0.81 0.91 1.13 Financial Positions at December 31 Working Capital $ 33,410 $ 37,818 $ 46,679 Total Assets 49,581 55,222 67,828 Shareholders’ Equity 25,352 27,775 30,866 Net Sales 84,370 73,302 68,719 63,173 63,149 59,149 56,863 49,946 43,381 34,975 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 To Our Fellow Shareholders: Acme United had a very good year in 2012. Many of our the hardness of our blades, reduce friction, provide key initiatives came together, and our team executed non-stick properties and resist corrosion. Nearly well. More importantly, we believe we are positioned to all our technologies have been developed by our continue strong performance in 2013 and beyond. internal team. Net sales in 2012 increased 15% to a record $84.4 Leveraging Brands million. Operating income grew 25% to $5.4 million. We have acquired a number of companies, brands Net income was $3.5 million, an increase of 26%. and product families during the past several years. Earnings per share were $1.13, up from $.91 in the These brands – Clauss, Camillus and Pac-Kit – have prior year, or 24%. been integrated into our company, and together with During the past five years, we have expanded our our Westcott and Physician’s Care brands provided product and customer focus substantially. In 2007, the foundation for our performance in 2012. our revenues were largely reliant on school and The Westcott family of scissors, rulers, pencil office distributors and superstores. Today we are sharpeners and lettering had a record year. more broadly distributed with revenues from mass Particular standouts were our non-stick cutting market chains, industrial distributors, office supply products, the iPoint family of sharpeners and customers and specialty retailers. TrimAir paper trimmers. We experienced growth in the mass and craft markets in particular, and had Expanding Product Range record performance in our international markets. Our product range during the past five years has expanded from primarily scissors and rulers to Clauss hardware and industrial cutting tools a broad range of cutting, measuring and safety reached new revenue levels. We had strong growth products. We have created specialized items with of these high-performance products across proprietary coatings and expertise that go deeply our end-user markets, with our titanium nitride into our markets. and carbonitride coatings providing enhanced durability and value. The strength of our technical base has grown. Acme United today holds numerous patents We had a very successful year with the Camillus globally in coating technologies, which enhance knife product family, with new distribution to the Cutting and Coatings Technology Leader mass market, as well as to specialized hunting direct export sales. This subsidiary improved our and fishing chains, and sporting goods stores. The flexibility and reduced our product costs. Camillus team worked with Les Stroud, a highly During 2012, we moved our banking to HSBC, acclaimed survival expert, to develop a specialized which has a global presence. We expanded our family of survival tools. These have been widely and bank line to $30.0 million and reduced borrowing broadly well received, and provide a base for new costs. The new facility provides excess availability additional products in 2013. to finance growth and acquisitions, and had an Our PhysiciansCare and Pac-Kit first aid and interest rate in 2012 of 2.0%. safety products had record sales in 2012, covering We would like to thank our customers, suppliers the school, home and office markets, as well as the and shareholders for their support, and our industrial, safety, transportation, marine and oil employees for their efforts. There are many exciting service segments. The market strength of our high- opportunities for 2013, and we hope that together quality, unitized ANSI kits and refills has brought we can deliver another year of strong performance. new customers to our other product families. In June 2012, we purchased the C- Thru brand of Sincerely, measuring and lettering products for $1.5 million. We integrated it into the Westcott brand, leveraged our global sourcing, and improved the quality and packaging of the products. The acquisition strengthened our position in the craft and hobby Walter C. Johnsen markets, and provided the opportunity to sell our Chairman and Chief Executive Officer Westcott products to an expanded customer base. Looking Forward Acme United formed a separate subsidiary in China to facilitate new coating development Brian Olschan and production, product sales within China and President and Chief Operating Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (P) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fi scal year ended December 31, 2012 OR (X) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission fi le number 01-07698 ACME UNITED CORPORATION Exact name of registrant as specifi ed in its charter Connecticut 06-0236700 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identifi cation No.) 60 Round Hill Road Fairfi eld, Connecticut 06824 (Address of principal executive offi ces) (Zip Code) Registrant’s telephone number, including area code 203-254-6060 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered $2.50 par value Common Stock NYSE MKT Securities registered pursuant to Section 12 (g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defi ned in Rule 405 of the Securities Act. YES (P) NO (P) Indicate by check mark if the registrant is not required to fi le reports pursuant to Section 13 or Section 15(d) of the Act. YES (P) NO (P) Indicate by check mark whether the registrant (l) has fi led all reports required to be fi led 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 fi le such reports) and (2) has been subject to such fi ling requirements for the past 90 days. YES (P) NO (P) Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such fi les). YES (P) NO (P) Indicate by check mark if disclosure of delinquent fi lers pursuant to Item 405 of Regulation S-K (Sec. 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in defi nitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (P) Indicate by check mark whether the Registrant is a large accelerated fi ler, an accelerated fi ler, a non-accelerated fi ler, or a smaller reporting company. See defi nition of “large accelerated fi ler”, “accelerated fi ler” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one). Large accelerated fi ler (P) Accelerated fi ler (P) Non-accelerated fi ler (P) Smaller Reporting Company (P) Indicate by check mark whether the registrant is a shell company as defi ned in Rule 12b-2 of the Exchange Act. YES (P) NO (P) The aggregate market value of the voting stock held by non-affi liates of the registrant as of the last business day of the registrant’s most recently completed second fi scal quarter was $26,794,065. Registrant had 3,142,202 shares of its $2.50 par value Common Stock outstanding as of March 2, 2013. Documents Incorporated By Reference (1) Certain portions of the Company’s Proxy Statement for the Annual Meeting scheduled for April 22, 2013 are incorporated into the Company’s 2012 Annual Report on Form 10-K, Part III. 2 Part I Item 1. Business 4 Item 1A. Risk Factors 7 Item 1B. Unresolved Staff Comments 11 Item 2. Properties 11 Item 3. Legal Proceedings 11 Item 4. Mine Safety Disclosures 11 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 12 Item 6. Selected Financial Data 14 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14 Item 7A. Quantitative and Qualitative Disclosure about Market Risk 19 Item 8. Financial Statements and Supplementary Data 20 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure 40 Item 9A. Controls and Procedures 40 Item 9B. Other Information 40 Part III Item 10. Directors, Executive Offi cers and Corporate Governance 41 Item 11. Executive Compensation 42 Item 12. Security Ownership of Certain Benefi cial Owners and Management 43 Item 13. Certain Relationships and Related Transactions, and Director Independence 43 Item 14. Principal Accountant Fees and Services 43 Part IV Item 15. Exhibits and Financial Statement Schedules 44 3 Part I Item 1. Business General Acme United Corporation (together with its subsidiaries, the “Company”) was organized as a partnership in l867 and incorporated in l882 under the laws of the State of Connecticut.