Acme United Update Report Q2 2009

• Although Acme United’s sales and earnings were impacted by the economic downturn in the second quarter, it’s encouraging to note that while net sales in the U.S. segment decreased 17% compared to the same period in 2008, sales in Canada only declined approximately 1% in local currency (down 12% in U.S. dollars) and even increased 11% in Europe in local currency (down 3% in U.S. dollars).

• Product innovation and attention to customer needs is what really separates Acme from its competitors and what makes it grow and prosper. As a result, Acme’s design and utility patents are part of a large and growing intellectual property, and are increasingly valuable corporate assets.

• Acme has been paying quarterly dividends for many years and has increased the amount by 1 cent every 6 quarters. Currently it pays 5 cents per quarter.

• A whole line of non-stick products is being developed, we also expect a nice contribution to revenues from the Flu Protection Kit and the 24 new PhysiciansCare items that are ready to be shipped. Additionally, the recently re-launched Camillus Cutlery is selling more knives than originally planned and the SpeedPak is also selling well and gaining distribution. All these new items will add momentum to the Company’s revenue line, which should positively impact late FY 2009 and FY 2010 earnings.

• ACU’s balance sheet remains healthy as it has more than $3 million in the bank, a satisfying current ratio, excluding bank debt (see page 4), of 4 and a book value of $7.12 per share. At its current stock price, Acme is trading at a Price/Book of only 1.26.

Although Acme’s shares have already gone up more than 20% since our initial report, we’re convinced there’s plenty of room for further appreciation. Based on this report, we reiterate our Buy recommendation and adjust our 12-month price target slightly upwards from $11.64 to $11.83, which is 32% above today’s stock price.

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