Pension and Profit Sharing

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Profit Sharing

6. Pension and Profit Sharing

United States employees, hired prior to July 1, 1993, are covered by a funded, defined benefit pension plan. The benefits of this pension plan are based on years of service and the average compensation of the highest three consecutive years during the last ten years of employment. In December 1995, the Company's Board of Directors approved an amendment to the United States pension plan that terminated all future benefit accruals as of February 1, 1996, without terminating the pension plan.

The Company’s funding policy with respect to its qualified plan is to contribute at least the minimum amount required by applicable laws and regulations. In 2013, the Company contributed $482,455 to the plan and expects to contribute approximately $200,000 during 2014.

The plan asset weighted average allocation at December 31, 2013 and December 31, 2012, by asset category, were as follows:

Asset Category	2013		2012
Equity Securities		70%		70%
Fixed Income Securities		29%		29%
Other Securities / Investments		1%		1%
Total		100%		100%

The Company’s investment policy for the pension plan is to minimize risk by balancing investments between equity securities and fixed income securities, utilizing a weighted average approach of 70% equity securities, 29% fixed income securities, and 1% cash investments. Plan funds are invested in long-term obligations with a history of moderate to low risk.

As of December 31, 2013 and 2012, equity securities in the pension plan included 10,000 shares of the Company's Common Stock, having a market value of $149,000 and $110,400, respectively.

The pension plan asset information included below is presented at fair value. ASC 820 establishes a framework for measuring fair value and requires disclosures about assets and liabilities measured at fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

· Level 1 – Inputs to the valuation methodology based on unadjusted quoted market prices in active markets that are accessible at the measurement date.

· Level 2 – Inputs to the valuation methodology that include quoted market prices that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

· Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following tables present the pension plan assets by level within the fair value hierarchy as of December 31, 2013 and 2012:

2013	Level 1		Level 2		Level 3		Total
Money Market Fund	$	8,322	$	—	$	—	$	8,322
Acme United Common Stock		149,000		—		—		149,000
Equity Common and Collected Funds		—		1,054,416		—		1,054,416
Fixed Income Common and Collected Funds		—		491,864		—		491,864
Total	$	157,322	$	1,546,280	$	—	$	1,703,602

2012	Level 1		Level 2		Level 3		Total
Money Market Fund	$	19,609	$	—	$	—	$	19,609
Acme United Common Stock		110,400		—		—		110,400
Equity Common and Collected Funds		—		811,113		—		811,113
Fixed Income Common and Collected Funds		—		384,280		—		384,280
Total	$	130,009	$	1,195,393	$	—	$	1,325,402

Other disclosures related to the pension plan follow:

	2013			2012
Assumptions used to determine benefit obligation:
Discount rate		3.78	%		2.99	%
Changes in benefit obligation:
Benefit obligation at beginning of year	$	(2,225,693	)	$	(2,259,522	)
Interest cost		(64,649	)		(85,108	)
Service cost		(40,000	)		(36,000	)
Actuarial gain (loss)		51,022			(137,609	)
Benefits and plan expenses paid		392,684			292,546
Benefit obligation at end of year		(1,886,636	)		(2,225,693	)
Changes in plan assets:
Fair value of plan assets at beginning of year		1,325,402			1,246,736
Actual return on plan assets		288,429			149,717
Employer contribution		482,455			221,495
Benefits and plan expenses paid		(392,684	)		(292,546	)
Fair value of plan assets at end of year		1,703,602			1,325,402
Funded status	$	(183,034	)	$	(900,291	)

	2013			2012
Assumptions used to determine net periodic benefit cost:
Discount rate		2.99	%		3.99	%
Expected return on plan assets		6.00	%		8.25	%
Components of net benefit expense:
Interest cost	$	64,649		$	85,109
Service cost		40,000			36,000
Expected return on plan assets		(69,439	)		(94,765	)
Amortization of prior service costs		9,154			9,154
Amortization of actuarial loss		141,171			135,759
Net periodic benefit cost	$	185,535		$	171,257

The Company employs a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved consistent with the widely-accepted capital market principle that assets with higher volatility generate higher returns over the long run.   Our expected 6% long-term rate of return on plan assets is determined based on long-term historical performance of plan assets, current asset allocation and projected long-term rates of return.

The following table discloses the change recorded in other comprehensive income related to benefit costs:

	2013			2012
Balance at beginning of the year	$	1,700,089		$	1,762,345
Change in net loss		(270,011	)		82,657
Amortization of actuarial loss		(141,173	)		(135,759	)
Amortization of prior service cost		(9,154	)		(9,154	)
Change recognized in other comprehensive income		(420,338	)		(62,256	)
Total recognized in other comprehensive income	$	1,279,751		$	1,700,089

Amounts recognized in Accumulated Other Comprehensive Income:

Net actuarial loss	$	1,258,731	$	1,669,914
Prior service cost		21,020		30,175
Total	$	1,279,751	$	1,700,089

Accrued benefits costs are included in other accrued liabilities (non-current).  

In 2014, net periodic benefit cost will include approximately $115,000 of net actuarial loss and $9,000 of prior service cost.

The following benefits are expected to be paid:

2014	$	256,000
2015		239,000
2016		223,000
2017		205,000
2018		187,000
Years 2019 - 2023		691,000

The Company also has a The Company also has a qualified, profit sharing plan covering substantially all of its United States employees. Annual Company contributions to this profit sharing plan are determined by the Company’s Compensation Committee. For the years ended December 31, 2013 and 2012, the Company contributed 50% of employee’s contributions, up to the first 6% contributed by each employee. Total contribution expense under this profit sharing plan was $139,421 in 2013 and $99,105 in 2012.