Good day everyone and welcome to Acme United’s Fourth 2011 Earnings Call. As a reminder this call is being recorded. At this time I would like to turn the conference over to Mr. Walter Johnsen, Chairman and CEO. Please go ahead.

Good morning. Welcome to the fourth quarter and year end 2011 conference call for Acme United Corporation. I'm Walter C. Johnsen, Chairman and CEO. With me is Paul Driscoll, who will first read a Safe Harbor statement. Paul

Forward-looking statements in this conference call 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: One, the company’s plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the company; two, the company’s plans and results of operation will be affected by the company’s ability to manage its growth; and three, other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

Thank you Paul. Acme United has a strong year in 2011. We had record sales of $73.3 million. Operating income increased 43%. Net income was $2.8 million, an increase of 9% over last year; earnings per share were $0.91 compared to $0.81 in 2010. The underlying trends were strong as evidenced by the 19% sales growth in the fourth quarter of 2011 and operating income increasing from $77,000 to $522,000. Earnings per share increased 50% in the fourth quarter. Our business has evolved during the past years from one relying heavily on sales to the office channel to one much more broadly based. Our purchase and subsequent building of the Clauss line brought the industrial and hardware markets. The purchase of Camillus Cutlery gave us a strong brand to enter the knife and sporting goods markets. The acquisition of Pac-Kit Safety Equipment in 2011 added a base of industrial safety customers. We have broadened our distribution to many departments in the mass market. We have also leveraged our coating technology and innovation to bring value added products to our broader markets. We grew in nearly every market segment in 2011. Our office channel increased due to gains in market shares with our Non Stick Scissors, High Point Pencil Sharpeners, First Aid products and international expansion. There are indications that the office market in the U.S. is slowly improving which we hope will benefit us in the future. The integration of Pac-Kit Safety Equipment Company which we purchased about a year ago has been better than we anticipated. We've added mass market distribution to its product line, captured new industrial customers and increased sales. We bit out the components utilizing the confined volumes of our PhysiciansCare First Aid Kits with Pac-Kits. We improved the efficiency of the factory. The gross margins of the Pac-Kit product family have increased and are continuing to improve. The Camillus Knife family has gained serious new placement in the sporting goods and mass markets. The new customers are a who's who in the outdoors old and shipments begin in a meaningful way at the end of the first quarter of this year. In February we announced the Les Trout whose Survivorman serious has carried our Network TV in the U.S. and Canada has co-developed a line of Camillus Knifes and survivals tool. We have had an excellent reception to these products and anticipate that they will make an impact in 2012 sales. We have a strong order book for 2012. Of course there are many factors that impact sales. Our guidance for revenues in 2012 is $80 million to $85 million in revenues but we will have a much better sense by the end of the second quarter. I will now turn the call to Paul.

Acme's net sales for the fourth quarter were $15.8 million, compared to $13.4 million in 2010, an increase of 19%. Sales for the year ended December 31, 2011 was $73.3 million, compared to $63.1 million in the same period in 2010, an increase of 16% or 14% in local currency. Excluding Pac-Kits, sales increased 9% in the quarter and 8% for the year. Net sales in the U.S. segment increased 22% in the quarter and 20% for the year ended December 31. Excluding Pac-Kits, sales in the U.S. increased 9% in both the fourth quarter and the year. The biggest contributor to sales increase came from the Ipoint Pencil Sharpeners and First Aid Kits on the existing business. Net sales for Canada were constant in both U.S. dollars and local currency in the corner. Sales for the year in Canada increased 10% in U.S. dollars and 5% in local currency. Net sales for Europe increased by 10% in the quarter in both U.S. dollars and local currency. Sales for the year in Europe decreased 2% in U.S. dollars and 8% in local currency. However, because costs have been reduced, Europe's operating loss declined from $485,000 in 2010 to $125,000 in 2011, an improvement of $360,000. The revenue decline was due to the timing of shipments of promotional products to the mass market business. The fourth quarter gross margin was 36%, compared to 38% in the fourth quarter of 2010. The yearend gross margin was 36%, compared to 37% last year. The 1% decline in the quarter and the year was mainly due to mutation of Pac-Kit. This was anticipated when we acquired Pac-Kit, however we have been taking steps to drive the margins closer to company averages. SG&A expenses for the fourth quarter of 2011 were $5.2 million or 33% of sales compared with $5 million or 37% of sales for the same period of 2010. SG&A expenses for the year ended December 31, 2011 were $22 million, or 30% of sales, compared with $20.4 million or 32% of sales in 2010. The increase for the quarter and the year was primarily due to the added Pac-Kit business and higher sales commissions and delivery costs associated with higher sales. Additionally there were nonrecurring transaction costs of $125,000 for the Pac-Kit acquisition in the first quarter. Operating profit in the fourth quarter increased from $77,000 last year to $522,000 this year. Operating profit for the year ended in December 31, 2011 increased by 43%. Net income for the fourth quarter and year-end increased by 49% and 9% respectively. A disparity in net income growth rates compared to operating profit was primarily due to tax credits recorded in 2010 for the donation of property in Bridgeport. The company's bank debt less cash on December 31, 2011 was $9.7 million, compared to $6.9 million on December 31, 2010. During 2011 we spent $3.4 million on Pac-Kit, $800,000 in dividends and generated $2.1 million of cash from operations.

Thank you Paul. I will now open the call to questions.

[Operator Instructions] We will take a question from Rick Betterman with Betterman Investments.

I got on the call just 2 or 3 minutes late and I caught in the release the reason for the slight decrease in gross profit margins being from the addition of Pac-Kit which was expected. If I recall correctly, last conference call you said that the gross profit margin was expanding on Pac-Kit and I wonder if you expect it to reach the company average where you will get back up to the gross profit margin of last year, say?

This is Walter Johnsen. Well, I know we are making substantial progress and we acquired Pac-Kit the margins were running somewhere around 27% and given the proportion in the U.S. that related to the about 1% decline. The margins are in the 30s at the point and climbing. And what I've seen in January and February suggests we should be able to get pretty close to the company average margin, which is terrific. When you look at what is no longer a $5 million, but it was probably this year in the $7 million to $8 million range and you add 5 or 6 percentage point increases or more its real money and that's happening. So I'm delighted with that aspect.

Okay. Is the plan currently to continue in Europe? I know things improved noticeably this year but do you see continued improvement or…

Europe had a customer whose last promotion was pushed into the first quarter of this year if that had been in a proper sequence it would have been a profitable year. But Europe is continuing to improve. I think the most encouraging part is that it shows in the office area as well as the manicure and the mass-market area. So we made some changes in people. We really clearly reduced our operating cost and the margins have slightly expanded. So it's coming together. I'm being a little bit cautious here but I'm happy right now in the first quarter.

Speaking of first quarter can you give us any idea on how revenues are proceeding versus last year's first quarter since we're 2 months into the quarter at this point? The fourth-quarter had an indication of kind of the run rate we are running right now and in the first quarter we're continuing at that pace. It's pretty much across the board. The office business is slowly moving up but because of the Ipoint Pencil Sharpeners and some of the Non Stick and another new items that’s expanding. We have in the sporting-goods area a customer that 2 years ago was quite small in the boating and fishing area that is now going to be maybe a $1 million customer this year and some of that gets shipped in the first quarter. The Camillus Knives, a lot of those will be in the second quarter around father's day but some of them will be shipped in March. So it's all building to a pretty good first quarter.

We'll take our next question from Howard Lu with First Wilshire Securities.

Good morning guys. This is actually Dmitri [ph] speaking. Could you talk about the growth opportunities for this year, the Wal-Mart initiative and the garden tools and other things that you have?

Yes, but I am not going to talk about specific customers because my competitors are looking to it all. There is placement of the more iPoint pencil sharpeners in both office superstores as well as in the mass market that we didn’t have last year and just off the coffee would be in the $2 million or more growth. The Camillus ice business is a little bit more complicated because it’s a pretty large sale into the retailers and of course you have been sale proof, but we are projecting somewhere between $2 and $3 million of incremental growth with Camillus and that will be across the board. Part of it will be we think in, should be in the outdoor hunting and fishing area and you can think of companies like [indiscernible] and companies like that who are a lot of retailing into the outdoor area and there are also mass market accounts like Wal-Mart that will be carrying some of the Camillus items and much of this is new business. So $2 to $3 million number of Camillus we believe is quite reasonable. There is a new cutting tool that has gotten a lot of attention and we call it Scissor Mouse and that will be showing up in retail beginning of this quarter and what a Scissor Mouse is, is a tool that looks like a computer mouse but it's got a blade on it and it will cut very, very quickly, paper and several layers of paper. The order book for that is in the $8.5 million to $10 million. We've got international expansion both in Europe as well as in the US and we're gaining in that aspect. In the garden area we've had slower growth and it's quite a competitive market, but they'll probably be about a $1 million of pickup there. The Les Stroud line is again an exciting opportunity. We've quite a number of orders that have been placed where you have to get the sell through and see where that goes. They probably had at least another $1 to that and very quickly those numbers begin to add up to some growth that we can identify. We've got the new line of paper trimmers that are placed both the super stores and a number of mass market accounts. We've expanded in the educational area with more accessories that relate to cutting and measuring and we'll gain accounts. So the numbers that lead up to an $80 to $85 million number, you can start to identify where they are, the execution of that I am confident in, the part that I don't know is the sell through but we based on our experience, $80 to $85 million number seems reasonable right now.

Good, and that all saying, the pickup of a Melena 2 sounds like from Packet through.

There is another 2 stores where we left off. And Packet has gotten some inflation in that 2 major S-market accounts as well as several industrial distributors that are plain new business.

Okay and what about your Asia initiatives, how are those playing out?

The sales in Asia are progressing reasonably well. We've picked up in China some large U.S. multinationals that will begin shipping this quarter and then throughout the year. In Thailand, the Philippines we've picked up new business. It's still a small category in sales directly into Asia but we'll exceed probably a $1 million, $1.5 million this year in that category which 2 years ago didn’t exceed and then of course we have the direct import business to accounts in Europe, the US, Mexico, South America and Asia and those we don't count in our Asian sales but they have also grown.

And could you maybe talk about the cost situation in China and the labor and the raw materials and also any price increases that you may be able to push through?

Well we announced a 6% price increase to our customers in January on many items. If I were calculating, I wouldn’t say it’s a 6% across the board because it isn't, but there was a price increase that was accepted by our customers. I want to caution though that you can't keep increasing prices, there's a sensitivity that the customer has, the end user to what he'll pay for various items. So there is an elasticity, we're very sensitive to it, but we pass through the 6% increase in many items in January. We continue to have some pressure on China on cost although in many areas it seems to now be slowing down. For example the currency seems to have stabilized and that is a big improvement for us and obviously in cost. There is still salary inflation, raw materials it depends, oil based right now are increasing so plastics for example and plastic rulers are increasing. And we'll probably have to pass that little abundant when that gets into our product family. But in general I would say the cost pressures that we've had the last couple of years has slowed down.

We'll take our next question from Jeffrey Matthews with Ram Partners.

You kind of answered my question I had about source and cost, but a little more color on what you might be doing outside of China if anything. And then my second question is, I thought I heard the games still being attributed to the iPoint and medical kits and I am wondering how this course of business is looking in this space.

Okay. First on the sourcing outside of China. The Packet added what will be this year 8 million of revenue, that's entirely produced in the U.S. Our first aid business in North Carolina is also in the U.S. So that is the domestic product line that will stay in the U.S. The bulk of the remainder though primarily is still in China. So in Pakistan and some in Italy, Mexico, and Columbia, but by and large we're China based and we've got an awfully good operation there and we're working hard on the cost. You may remember that we hired an executive who's formally been a manufacturing VP at Phillips who's now running our Asia pacific business. The big part of what's working on is improving productivity at the factories and that helps to especially with labor it helps to reduce the impact. The ability to move to other places and the kinds of lines we're doing takes time and frankly we have identified a place nearly as good as China even with the projections that we have currently for our product lines and especially Scissors. Getting to the second aspect, Scissors. Scissors is in our markets and our market share follow what happened in the office channel because we have a very high market share. It’s well over 60-65% in the office channel and so if the businesses while you would expect Scissors to be kind of flat. That's accurate except that we've not only in the office channel, we've expanded into the craft area both in the craft stores as well as the departments within the mass market and that's all new business. So against the fundamentals of the office channel again are being offset by growth in areas that we weren't before and that continues. So even with Scissors where we dominate office we had growth.

Sounds good. Can I just follow up on the [indiscernible] agreement? How'd you come up with that? And is it a costly thing for you?

Well again our competitors are listening, or they will be. I will tell you that Les Stroud has an endorsement by their grills who is also a survival person and leads a different approach to surviving. He goes with a crew and after the shoot takes a shower and has a nice dinner and those that follow Les Stroud realize that he goes alone into the wilderness and films himself and truly survives. Well, that distinction apparently is clear to the people that follow this segment and Les is a hero in a lot of places. He's a particular hero in Canada because he lives outside of Toronto. And there's a lot of outdoor people in Canada, a lot of hunting and fishing and I was amazed that the popularity he has there. In the US that was the shot show in Las Vegas in mid-January, we had people lining up around our booth and going down the aisle as far as the aisle went and it was quite crowded and I was amazed. So the line that Les has developed, we need to see what kind of sales are generated from it, but the bulk of its compensation is based on our royalty and so it's variable.

Okay, great and just finally are you going to have an analyst field trip with him, survival thing? We all have to figure out how to survive with our Acme tools?

Les will be at a number of places, at our customers and I might do that.

It'd be a great show that scores high on Wall Street; the 1% is 99%.

We'll take our next question from Tom Spiro with Spiro Capital.

Walter I know in the past we've had some challenges with air freight expense running high and I gather since you haven't mentioned it, it wasn’t the problem this year and we have the appropriate level of inventory as we go into this year. So you don't foresee any such problems?

For those who don't know, when we're shipping things like scissors and knives, they are mostly steel and they are heavy. So air freight means that we lose the entire profit pretty much of the product when we do it. And in some years we've had substantial air freight. We have built a lot of the inventory for back to school in advance and its sitting on our balance sheet and it's in our warehouse in North Carolina. So, that doesn’t get to at afraid at, we have a number of new products that are coming into play in the first quarter and second quarter, particularly some of the Camillus Knives and we are hoping that we don’t have air freight with those and we're clearly in production but sometimes that are glitches with that. Last year 2011, we have done terrifically and air freight was a minor, minor expense. That’s the current plan, but other as we have said we have got a lot of load in during the second quarter that on top of and we got to execute.

Thank you that’s helpful and lastly you know you grew nicely and the year just concluded and you have the high hopes from the next year, I was just kind of curious Walter whether you feel like you have adequate resources, people, manufacturing space, talent, great ideas to support a larger company.

The summer and fall we went through a personnel assessment for basically doubling our business where we have holes and of course there were holes. We feel that we are in a pretty good shape for what we are projecting this year and this by chance there was an acquisition that will be the size of Pac-Kit. We feel we could handle that, however, earlier today I was interviewing a candidate for another projection here at Acme Inc and we continue to be bringing talents as the revenues are coming in and the earnings are. The manufacturing is an issue, we are stretching factories in production both in knifes and in scissors, and I don’t see that being an issue in growth but we are pushing constraints there and we got to bring on additional capacity with our suppliers. That’s not a new issue but we are continuing to work on that, relative to banking we are looking at increasing our facility for the next 5 years to maybe $30 million and this seems to be very real interest in helping us do that. I think the real issue that I face and that we face is execution this year on a lot of details and when we do that right, their freight to cost is a minimal amount and other metrics like on-time delivery and quality all fall into place. I think we are in pretty good position right now.

[Operator Instructions] We will take our next question from Richard Dearnley with Longport Partners.

I probably heard the scissor, mouse number wrong. You didn’t say $8.5 million in orders did you?

No I didn’t say that, I said maybe a $1.5 million in orders.

Yes that sounds better, could you talk about non-stick, the current mix of relevant products that could be non-stick and what the trends are and then what your capacity is being constrained, how is capacity in that whole area?

The ability to put our non-stick coatings on not only cutting items but other things where a non-stick property mean something is a pretty big opportunity. You could be putting them on paper trimmers you could be putting them on next generation scissor mouse, plus there are many different types of scissor.

Anything that cuts I would think.

Anything that cuts, but there are limitations for example at this stage we can’t put our non-stick coating on a drill bit because it's just removed by the abrasion and so the ability to adhere to harsh environment is one that we still haven’t achieved. On the other hand we have got certain formulations that are going into the garden area, both in the pruners and the head shears and loppers, which is a coating that is different than what is on a craft scissor and we've been able to segregate various properties for the trimmer optimized for tapes, some are for glues. It's quite a broad area. Cutting surfaces, for example a cutting mat, if that were a non-stick that could adhere and be resistant to cuts that might be an interesting use as well. But it's a broad application, relative to capacity, we currently have a dedicated facility that is ours, and it's staffed. They were mixing our proprietary coating’s there. That’s easily scalable, the application on to the blades that are currently in a dedicated factory to us and the capacity is hundreds of thousands a month and increasing. So, we at our volumes today, capacity is not an issue. One area that we need to work on is continuing to drop the per unit cost as we keep leveraging the throughput, we are hopeful that we can do that similar to what we did in titanium coatings.

All right, is the -- now that the term well of ’08, ’09 are over can we take a guess that SG&A is kind of back to a new normal in the 30% range?

I think I better leave that one to Paul because I don’t know the facts on it, Paul?

The SG&A role, it will run at 32% going forward.

Where is the increase then from this year?

While we are going to add some more people, development, new products spending on new products, advertising.

There is an advertising campaign that we have got in Camillus Knives that we didn’t have last year. The support and drive, the placement that we have.

And when I look through the Clauss catalog, I was staggered by the number of different -- or just products but then the differences between then, you know the bend blade versus the straight blade, the whatever it was which I don’t know if those are catalogs are widely distributed but it -- a couple of those things, I wouldn’t have the finest idea where to go to get them if I wanted them.

One place that you could go is Grainger; we are now just won all the scissor business there.

Did they have the whole catalog?

They have a lot of it and that’s the largest distributer in the United States for industrial supplies.

And at this time there are no additional questions in the queue. Mr. Johnsen I would like to turn the call back over to you for any additional or closing remarks.

I would like to thank you very much for joining us today. If there are no further questions then the call is complete. Good bye.

This concludes today’s conference. We appreciate your participation.