Acme United Corporation Reports Record Annual Net Sales and Earnings and Increases Dividend.

FAIRFIELD, Conn. -- Acme United Corporation (AMEX:ACU) today announced that net sales for the year ended December 31, 2006 were $56.9 million compared to $49.9 million in 2005, an increase of 14%. Net sales for 2006 in the U.S. segment increased 13% due to the sale of new products, principally our patented titanium bonded products and award winning iPoint electronic pencil sharpeners. International sales increased by 16%, and 10% in local currency compared to 2005. Net sales for the quarter ended December 31, 2006 were $12.1 million, compared to $11.1 million in the same period in 2005, an increase of 9%.

Net income for the year ended December 31, 2006 was $3.9 million, or $1.05 per diluted share, compared to $2.9 million or $.78 per diluted share, in 2005. Excluding a non-recurring charge of $1.5 million recorded in the third quarter of 2005 which related to the demolition of some former manufacturing buildings, net income would have been $3.9 million, or $1.02 per diluted share, in 2005. Pro forma (non-GAAP) results are presented to provide additional information for comparisons to Acme's results from its ongoing core business in 2006 to 2005. For the fourth quarter ended December 31, 2006, net income was $396,000, or $.11 per diluted share, compared to $773,000, or $.21 per diluted share for the same period in 2005.

Net income for 2006 was reduced by losses in Europe of $1.1 million compared to $300,000 in 2005. The losses in Europe during the fourth quarter of 2006 were $550,000 compared to $100,000 in 2005. The Company has begun to improve the product and margin mix in Europe and reduce expenses. The fourth quarter of 2006 also reflects an increase in spending for new product development and market research, and the addition of sales and marketing personnel in the U.S.

Gross margins were 43.2% for 2006 compared to 44.8% in 2005. The decrease was partially due to increased sales of private brand initiatives, which typically provide commodity items at very competitive prices, particularly in Europe. There were also a number of promotional and initial set up expenses for new business in Europe that reduced margins.

The Company's bank debt less cash on December 31, 2006 was $6.4 million compared to $4.5 million on December 31, 2005. The increase in bank debt was primarily to finance the purchase of $2.9 million of additional inventory to support sales growth, an increase in accounts receivables of $1.5 million resulting mainly from higher sales, and the payment of previously accrued costs of $1.5 million for the demolition of a former manufacturing site, partially offset by earnings.

Walter C. Johnsen, Chairman and CEO, said, "Acme United had a record year in revenues and earnings in 2006. We won the prestigious Good Design award for our iPoint Pencil Sharpener from the Chicago Athenaeum. Our European team rolled out a 12 country sales initiative. We continue to build our business in North America and Europe, and look forward to a very successful year in 2007."

The Board of Directors has approved a 33% increase in the quarterly dividend from $.03 to $.04 per share. The dividend is payable on April 27, 2007 to stockholders of record on the close of business on April 6, 2007.

ACME UNITED CORPORATION is a specialized supplier of cutting devices, measuring instruments, and safety products for school, home, office and industrial use.

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 Company's plans and results of operations will be affected by the Company's ability to manage its growth, and (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission.

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