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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934


Commission file number 0-4823

ACME UNITED CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)

Connecticut 06-0236700
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

75 Kings Highway Cutoff, Fairfield, Connecticut 06430
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:(203) 332-7330

Securities registered pursuant to Section 12(b) of the Act.

Name of each exchange on
Title of each class which registered
- ---------------------------- -------------------------
$2.50 par value Common Stock American Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark whether the registrant (l) has filed all
reports required to be filed 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
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES x NO

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

Registrant had 3,325,500 shares outstanding as of March 20, 1997
of its $2.50 par value Common Stock. The aggregate market value
of the voting stock held by non-affiliates of the registrant as
of March 20, 1997 was approximately $17,458,875.

Documents Incorporated By Reference

(1) Proxy Statement for the annual meeting scheduled for
April 28, 1997 incorporated into 1996 10-K, Part III


Acme United Corporation is one of the largest producers of
shears, scissors, rulers, first aid kits and related products for
consumers, as well as a leading producer of metal disposable
medical scissors, instruments and sterile procedure trays. The
Company's subsidiary in the United Kingdom, Acme United Ltd.,
also manufactures medical scissors, household scissors and
shears, nail files and other manicure items. The Canadian
subsidiary, Acme United Limited, is one of the largest marketers
of scissors, rulers and metric rulers in Canada. The German
subsidiary, Emil Schlemper GmbH, manufactures scissors, shears
and manicure implements.


ACME UNITED CORPORATION


TO OUR SHAREHOLDERS:

In 1996 Acme United accomplished the turnaround actions planned
last year, and exceeded expectations on a number of fronts. We
believe that Acme now has the platform to build on in 1997 and
into the future.

The Company reported a net loss in 1996 of $3,175,000, or 95
cents per share. Restructuring related charges of approximately
$1,780,000 were incurred in 1996 for closure of the Bridgeport
plant, severance, and inventory reduction. This compares to a
net loss in 1995 of $8,716,000, or $2.61 per share, which
included asset revaluations and restructuring charges of
$6,518,000.

SIGNIFICANT EVENTS IN 1996

One of the major goals in 1996 was to address excess
manufacturing capacity. The Seneca Falls, New York ruler plant
was closed in 1995 and sold in 1996. The sale proceeds increased
cash flow by $108,000, and reduced annual operating expenses by
$60,000. The Bridgeport, Connecticut facility was closed during
the year. These were the final steps in consolidating all
domestic manufacturing and warehouse activities to our lower cost
and more efficient North Carolina facilities.

On May 1, 1996 Acme sold the assets of Peter Altenbach & Sohne
GmbH, a cutlery subsidiary in Solingen, Germany. In the four
months prior to the divestiture Altenbach lost $271,000, and the
business was not part of our strategy. Its sale allows Acme to
focus on continuing international operations.

An important part of the strategy announced in 1995 was a company
wide inventory reduction plan to produce funds for investment in
the Company. The goal of $2.8 million was exceeded as inventory
levels at year end 1996 were reduced by $7,590,000.
Approximately $2,200,000 of the reduction resulted from the
divestiture of Altenbach. Inventory levels excluding Altenbach
decreased by 34%. The outstanding year end debt declined from
$18.5 million in 1995 to $13.7 million in 1996, a reduction of
$4.8 million.

The emphasis on inventory reductions and plant consolidations in
the U.S. resulted in a significant decline in plant utilization
during most of 1996, and generated over $1.0 million in losses.
Production levels in 1997 are forecast to be at more normal
utilization levels.

MANAGEMENT STRUCTURE

The demands of the restructuring required a substantial change in
management, which was not fully anticipated. None of the four
executive officers reporting directly to me on January 1, 1996
are still at Acme. Severance costs for these employees and five
other senior managers totaled $965,000.

We built a cohesive team during the year by promoting from within
and hiring outside executives.

Brian S. Olschan joined Acme in September as Senior Vice
President of Sales and Marketing. He has over thirteen years of
consumer marketing and sales experience, and most recently was
Vice President and General Manager of the Cordset and Assembly
Business of General Cable Corporation.


The Company recruited Cheryl L. Kendall as Chief Financial
Officer in July. She has over twenty two years of experience in
financial operations, treasury, cost accounting, and corporate
planning at Westinghouse Electric Corporation, Joyce
International and Collegiate Marketing.

Martin C. Metzler was promoted to Senior Vice President of
Manufacturing. He joined Acme in 1991 and had been Vice
President of Manufacturing since 1994. He and his team were
instrumental in the exhaustive plant consolidations.

During the year, Andrew T. Harrison, Senior Vice President,
retired after 28 years of service and significant contribution to
Acme. We miss his enthusiasm and daily presence.

Gary D. Penisten was elected Chairman of the Board in February
1996. He was formerly Chief Financial Officer of Sterling Drug,
Inc., and serves as a member of the Board of Directors. His
experience and support have been invaluable to me this past year.

NORTH AMERICAN CONSUMER PRODUCTS

The consumer products business achieved $23.9 million in sales in
1996, an increase of 7% over the previous year. This resulted
from increases in the U.S. sales of rulers and first aid kits.
Despite the sales growth in 1996, the division's profit
performance was adversely affected by plant underutilization and
restructuring charges. The Company expects operating efficiency
to steadily improve in 1997.

For the division in 1997, we plan to continue efforts to increase
sales of the stationery line to the office products super stores,
develop new items for the children's scissor and craft markets,
expand distribution for first aid kits, and obtain a larger share
of the back-to-school market.

The Company's Canadian subsidiary, Acme United Limited, had
stable sales in 1996, and its efficiency and asset utilization
improved. The subsidiary had operating profit of $248,000 in
1996 compared to a loss of $211,000 in 1995. Its pre-interest
return on equity was 20% in 1996, which is reflective of the
team's hard work.

U.S. MEDICAL PRODUCTS

Sales in 1996 of the Company's medical products business declined
by 12% compared to 1995. The decrease was primarily the result
of a volume decline in the low margin custom tray market.

The Medical Division has made a number of changes to enhance
growth. David Buck, who built our major accounts program, was
promoted to Vice President. We added fifty manufacturers
representatives to sell our disposable instruments, kits and
trays, and tubular bandages. The Division signed a five year
exclusive distribution agreement with a Japanese company for Acme
product sales in the Pacific rim. Finally, we initiated a number
of new programs with our major hospital distributors and buying
groups to increase sales volume.

On March 3, 1997, the Company sold its U.S. marketing rights of
certain wound care products to Seton Healthcare International
Limited for approximately $2.0 million. The proceeds were used
to pay off
$1.7 million of debt and repurchase 64,620 shares of common
stock. The sale allows the Company to focus on its core line,
and to continue to develop new related products.

The division plans to improve manufacturing efficiency and
utilization at the Goldsboro, North Carolina facility during
1997.


EUROPEAN OPERATIONS

A significant event for European operations in 1996 was the
divestiture of Altenbach. Sales in 1996 excluding Altenbach were
$7.6 million, or 4% below the 1995 level. The two continuing
operations reported a loss of $717,000 in 1996 compared to a loss
of $1,039,000 in 1995.

The UK operation has begun to shift a portion of its production
to our U.S. and German facilities, and reduce its fixed costs.
We continue an aggressive effort to increase sales.

The European divisions are important to service the overseas
expansion of super stores and major U.S. customers, and we intend
to begin to develop closer relationships with the local
purchasing managers.

CONCLUSION

The Board and management made some hard decisions in late 1995 to
effect a turnaround. The Company made significant progress in
1996 to implement the changes. Acme closed the Bridgeport plant,
sold Altenbach, lowered debt by $4.8 million, and reduced
headcount.

The team is dedicated to delivering improved operational and
financial results.



Sincerely,



Walter C. Johnsen,
President and Chief Executive Officer


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.
The Company operates two business segments, consumer and medical.
The Company's operations are in the United States, Canada,
England and Germany. Financial information concerning sales,
operating profit and identifiable assets by business segment and
geographic area appears in note 9 of the notes to consolidated
financial statements.

CONSUMER

The Company manufactures and distributes scissors, shears, rulers
and first aid kits for school, office and home use. Acquisitions
of Emil Schlemper GmbH and Co. KG of Solingen, Germany in
January l990, Homeric, Ltd. of Sheffield, England in July l990
and Peter Altenbach and Sohne GmbH of Solingen, Germany in l99l
extended the Company's presence in Europe as a scissor and shear
manufacturer. On May 1, 1996, the Company sold the assets
(excluding accounts receivable) of Peter Altenbach and Sohne
GmbH. The Company continues to be a major manufacturer of
scissors and shears in the United States, England and Germany,
and rulers in the United States; and a distributor of scissors,
shears and other products in Canada. In addition to local
competitors in each country, the Company competes with imported
products from China, Taiwan and Korea. The Company also imports
scissors, shears, and other products to supplement its
manufactured products.

Independent manufacturer representatives are primarily used to
sell its line of consumer products with wholesale, contract and
retail stationery distributors, office supply super stores,
school supply distributors, and mass market retailers in the
United States. Foreign operations use a combination of
independent commission agents and an internal sales force.

A seasonal surge in revenues arises from March through July which
is attributed to sales in the educational field, primarily
through school supply distributors and mass market retailers.
Unfilled backlog at year end 1996 was $1,539,625 as compared to
$1,848,084 in l995.

MEDICAL

The Company entered the medical products field in l965, producing
disposable medical scissors and instruments in bulk for hospital
distributors. In l972 the Company's Medical Products Division
began marketing its own line of products, including ONE TIME(registered
trademark) disposable procedure trays, RESPOSABLE (registered trademark)
stainless steel instruments, and ACU-DYNE (registered trademark)
povidone-iodine germicide packaged in bottles and flexible packages.
New products have been added to the procedure tray line every year to
meet the specialized needs of hospitals, clinics and convalescent homes.

In l978, wound dressings were introduced by the Company which
today include ACU-DERM (registered trademark) a sterile, non-absorbent,
self-adhering polyurethane dressing and the LYO FOAM (registered trademark)
line, a sterile absorbent polyurethane dressing. Bandage products were
added in January l992 when the Company acquired the major portion of the U.S.
medical products business of SePro Healthcare, Inc., the U.S.
subsidiary of the Seton Healthcare Group, plc of Oldham, England.
The Company entered into distribution agreements with Seton
Healthcare International Limited for exclusive U.S. rights to an
extensive line of state-of-the-art pressure therapy bandages and
specialized wound dressings. Subsequent to December 31, 1996,
the Company sold their distribution rights to Seton Healthcare
International Limited.


In l993, the Royl-Derm line of skin care and wound-care products
was launched. The Royl-Derm line of patent-pending skin-care and
wound-care products have been known to relieve or eliminate the
pain connected with skin burns, wounds, ulcers and blemishes
often experienced by elderly and bed-ridden patients. However,
simultaneous launching of several competitive brands resulted in
widespread price cutting and saturation sampling, delaying the
acceptance of the Royl-Derm line. THE COMPANY discontinued the
Royl-Derm line in 1996.

In October, l992, Acme United acquired the exclusive marketing
and distribution rights in the U.S. for the OPCO Line of I.V.
therapy products for hospitals and the after-care market. The
principal product is the patented I.V. Bubble-- a plastic, see-
through, disposable device which can be inflated to protect the
I.V. catheter and tubing while preventing the patient from
accidently pulling out the catheter. A second OPCO product is
the I.V. Board, a reusable device which immobilizes the limb,
stabilizes the I.V. site and reduces premature I.V. restarts in
active patients. Unsuccessful attempts to market the OPCO line
resulted in a write-off in 1995 for the remaining inventory and
licensing rights.

The Company has a network of medical dealers who distribute its
line of medical products with hospitals, nursing facilities and
other alternate care providers. Technical assistance is provided
by its own field sales force.

Acme sells to a number of major buying groups through its direct
sales force and a network of fifty manufacturer representatives.

Unfilled order backlog for the medical segment at year end 1996
was $649,170, compared to $203,765 in l995.

Environmental Rules and Regulations - Environmental rules and
regulations regarding hazardous waste control and electroplating
effluent have been complied with and the Company believes no
major financial impact is expected to result from current and
future compliance with these rules and regulations.

Employment - As of year end, the Company employed 384 persons,
all but a few of whom are full time and none are covered by union
contracts. Employee relations are considered good and no
foreseeable problems with the work force are evident.

Item 2. Properties

Acme United Corporation is headquartered at 75 Kings Highway
Cutoff, Fairfield, Connecticut in 15,403 square feet of leased
space. The Company owns and leases manufacturing facilities in
the United States and England, owns a facility in Germany, and
leases 29,000 square feet of warehousing space in Canada. All
facilities are part of the consumer segment except for the 60,000
square foot plant leased in Goldsboro, North Carolina which
manufactures products for the medical segment, and serves as the
warehouse and shipping operation for both the U.S. medical and
consumer segments.

At the start of 1995, manufacturing for the U.S. consumer segment
occurred in three plants. However, all manufacturing was
consolidated into the 58,000 square foot owned Fremont, North
Carolina plant in 1996. The Seneca Falls, New York ruler
manufacturing plant was sold in 1996. The Bridgeport,
Connecticut plant was closed in 1996, and the facility is for
sale or lease.

Manufacturing for the European consumer segment is presently
being conducted at the 48,000 square foot owned Solingen, Germany
plant and 50,000 square foot leased plant in Sheffield, England.

Management believes that the Company's facilities, whether leased
or owned, are adequate to meet its current needs and should
continue to be adequate for the foreseeable future.

Properties owned by the Company in Fremont, North Carolina and
Solingen, Germany are collateralized by notes and mortgages. The
leased facilities are occupied under leases for terms ranging
from five to ten years.



Item 3. Legal Proceedings

The Company has been named as a defendant in various lawsuits
arising in the ordinary course of business. Management believes
that the ultimate resolution of such litigation will not have a
material adverse impact on the Company's results of operations,
financial position or cash flows.


Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of the security holders
of the Company through the solicitation of proxies or otherwise
during the fourth quarter of the fiscal year ended December 31,
1996.

PART II

Items 5. Market for the Registrant's Common Stock and Related
Security Holder Matters

The Company's Common Stock is traded on the American Stock
Exchange under the symbol
"ACU". The following table sets forth the high and low sale
prices on the American Stock Exchange for the Common Stock for
the periods indicated:

Fiscal Year Ended December 31, 1996 High Low
First Quarter 4 1/8 3 1/2
Second Quarter 4 3/8 2 7/8
Third Quarter 4 1/8 3 1/2
Fourth Quarter 5 1/2 3 1/2

Fiscal Year Ended December 31, 1995
First Quarter 4 1/4 3 1/4
Second Quarter 4 3 5/16
Third Quarter 3 3/4 3 3/8
Fourth Quarter 4 2 13/16

As of March 20, 1997 there were approximately 1,700 holders of
record of the Company's Common Stock.

The Company has not paid cash dividends on its Common Stock in
1996 and 1995. The Company presently intends to retain earnings
to finance business improvements. However, management and the
Board of Directors believe it is important for the Company to pay
dividends when a record of consistent earnings has been achieved.



Item 6. Selected Financial Data

FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
(All figures in thousands except per share data)



1996 (A) 1995 1994 1993 1992
------------------------------------------------
Net Sales $ 47,481 $ 52,222 $ 52,755 $ 52,339 $ 53,037
Other Income 449 180 235 78 265
Total 47,930 52,402 52,990 52,417 53,302
Cost and Expenses: Cost of 35,036 38,801 37,795 38,729 38,829
Goods Sold
Inventory Valuation Losses - 3,381 - - -
Selling, General and 12,669 14,397 13,324 13,130 13,092
Administrative Expenses
Restructuring & Other Charges 1,779 3,136 - - 468
Interest Expense 1,537 1,953 1,658 1,554 1,716
Income/(Loss) Before Income Tax (3,091) (9,266) 212 (995) (803)
Provision (Benefit) for Income Tax 84 (550) 89 (398) (256)
Net Income/(Loss) (3,175) (8,716) 123 (597) (547)
Average Number of Shares Outstanding 3,342 3,338 3,338 3,338 3,325
Net Income/(Loss) per
Common Share $ (.95) $ (2.61) $ .04 $ (.18) $ (.16)
Cash Dividend per Common Share $ - $ - $ - $ .05 $ .20
Book Value per Common Share $ 1.95 $ 2.85 $ 5.42 $ 5.39 $ 5.70
Total Assets $ 27,251 $ 37,021 $ 42,888 $ 41,963 $ 43,697
Total Long Term Debt $ 8,444 $ 14,880 $ 14,388 $ 14,718 $ 6,182
Total Stockholders' Equity $ 6,515 $ 9,505 $ 18,083 $ 17,999 $ 19,009

(A) 1996 information reflects the divestiture of Altenbach as of May 1, 1996


QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(All figures in thousands except per share figures)

QUARTERS
1st 2nd 3rd 4th Total
--------------------------------------------------------------------


1996
Net sales $ 12,040 $ 12,782 $ 13,281 $ 9,378 $ 47,481
Cost of goods sold 9,122 10,191 9,807 5,916 35,036
Net income/(loss) (816) (1,239) (485) (635) (3,175)
Net income/(loss)
per share $ (.24) $ (.37) $ (.15) $ (.19) $ (.95)
--------------------------------------------------------------------
1995 (A)
Net sales $ 12,897 $ 14,470 $ 13,838 $ 11,017 $ 52,222
Cost of goods sold 9,276 10,290 10,021 9,214 38,801
Net income/(loss) (68) 242 (166) (8,724) (8,716)
Net income/(loss)
per share $ (.02) $ .07 $ (.05) $ (2.61) $ (2.61)


(A) The fourth quarter net income/(loss) includes losses resulting from
charges of $3,136 for restructuring and other charges and $3,381 for
inventory valuation.


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


The Acme United Corporation (the "Company") operates its business
in two principal business segments, consumer and medical. Note 9
to the consolidated financial statements gives details of the
Company's business segments. The medical segment operates in the
United States and the consumer segment operates in the United
States, Canada, England and Germany.

Consolidated net sales were $47,481,000, $52,222,000, and
$52,755,000 in 1996, 1995 and 1994, respectively. The consumer
segment accounted for 70%, 69% and 68% of those sales in each
respective year. In 1996, approximately 60% of consumer sales
was from U.S. operations, whereas in the prior two years consumer
sales were almost equal for the U.S. and foreign operations.
Medical segment sales comprised approximately one third of
consolidated net sales in 1996, 1995 and 1994.

On May 1, 1996, the Company sold the assets of its Peter
Altenbach & Sohne GmbH ("Altenbach") subsidiary, excluding
accounts receivable. The buyer purchased all fixed assets,
inventory and intangible assets, including the Altenbach
tradename. In exchange, the buyer paid $960,000, assumed all
lease obligations, employed substantially all Altenbach employees
and assumed responsibility for their employee related costs,
including pensions. Costs related to the restructuring of
operations in Germany, including the sale of the assets of the
Altenbach operations, were accrued for in 1995. In the four
months of 1996 prior to the divestiture, Altenbach lost $271,000.

RESULTS OF OPERATIONS 1996 COMPARED WITH 1995

Consolidated net sales in 1996 were $47,481,000 and decreased
$4,742,000 or 9% from 1995. The consumer segment net sales
decreased $2,757,000 or 8% and the medical segment net sales
decreased $1,984,000 or 12% as compared with 1995. Of the
consumer net sales decline, $4,061,000 was due to the divestiture
of Altenbach. Excluding Altenbach, consumer net sales increased
by $1,304,000 or 4%, as compared with 1995.

Consumer segment sales in the U.S. increased $1,706,000 or 9%,
and foreign operations excluding Altenbach decreased $402,000.
The U.S. consumer segment increase is mainly attributable to
increased volume resulting from the growth of the first aid kit
line and the Westcott ruler line. The foreign consumer segment
sales decrease resulted from volume declines of 4% in both
European operations, and Canadian sales decline of 1%.

Medical segment sales declined $1,984,000 in 1996 primarily due
to a volume decline in the low margin custom tray market.

Gross margin before inventory valuation losses and restructuring
related costs improved in the consumer segment from 21% in 1995
to 22% in 1996. The medical business margin remained unchanged
at 36% for both 1996 and 1995. The cost of relocating the
Bridgeport operation to North Carolina, severance for
manufacturing staff, and the inefficiencies of maintaining
duplicate facilities resulted in $1,258,000 of restructuring
related charges in 1996. Foreign operation profit margin fell
from 18% in 1995 to 17% in 1996. This was a result of margin
deterioration in all European operations. Margin in Canada
improved from 21% in 1995 (excluding charge for asset valuation)
to 26% in 1996.

Inventory valuation losses of $3,381,000 were recorded in 1995,
primarily as a result of an inventory reduction program
implemented to generate cash in 1996. Severance costs of
$1,039,000 were incurred in 1996 and are included in the
restructuring and other charges.

Selling, general and administrative expenses were $12,669,000 in
1996 as compared to $14,397,000 in 1995, a decrease of $1,728,000
or 12%. Of the decline, $846,000 was due to a decrease in U.S.
pension expense and $687,000 was as a result of the divestiture
of Altenbach. The significant decrease in pension expense
resulted from the curtailment of the U.S. pension plan in 1995.

Interest expense decreased $416,000 or 21% over 1995 primarily as
a result of a debt reduction of $4.8 million and an improvement
in the interest rates.

The provision for income taxes in 1996 was $84,000 as compared to
a benefit for income taxes of $550,000 in 1995.


RESULTS OF OPERATIONS 1995 COMPARED WITH 1994

Consolidated net sales were $52,222,000 and decreased $533,000 or
1% from 1994. The consumer segment net sales decreased $133,000
or less than 1% and the medical segment net sales decreased
$400,000 or 2%.

Consumer segment sales in the U.S. operations increased $667,000
and foreign operations decreased $800,000. The U.S. consumer
segment increase was attributed to increased volume resulting
from the growth of the first aid kit line, ruler line and
imported stainless steel scissors and shears. The foreign
consumer segment sales decrease resulted from volume declines in
the European operations despite the favorable impact of higher
translation rates.

Medical segment sales declined $400,000 primarily due to a
decline in sales of wound care products which were unfavorably
impacted by government reimbursement policies.

Gross margins before inventory valuation losses declined in both
the consumer and medical segments; the consumer segment gross
margins were 21% and 24% and medical margins were 36% and 38% for
1995 and 1994, respectively. The decline in the consumer segment
resulted primarily from excess capacity and low margin product
sales mix in the foreign operation. Foreign operations sales
were $17.8 million and profit margins fell from 24% in 1994 to
18% in 1995. Margins in the U.S. operations were 24% for both
years. Medical segment margins declined primarily as a result of
a change in product sales mix.

Inventory valuation losses of $3,381,000 were recorded in 1995,
primarily as a result of an inventory reduction program
implemented to generate cash.

Selling, general and administrative expenses were $14,397,000 in
1995 as compared to $13,324,000 in 1994, an increase of
$1,073,000 or 8%. The increase occurred in U.S. operations and
was primarily the result of increases to U.S. pension expense of
$537,000 and advertising promotion and catalog allowances of
$333,000. The significant rise in the pension expense reflected
a curtailment loss from freezing the pension plan and a change in
the expected long term rate of return on long term assets from
10% to 8%.

Interest expense increased $295,000 or 18% over 1994 primarily
because of higher rates in the United States under the revolving
line of credit.

The effective tax rate in 1995 was (6%) on a pre tax loss of
$9,266,000 as compared to 42% on pre tax income of $212,000. The
Company reported a tax benefit of only $550,000 because it was
unable to fully utilize the 1995 pre tax loss.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow from operating activities was $6,245,000 in 1996 as
compared to $909,000 and $712,000 in 1995 and 1994, respectively.
Net cash provided by operations was used primarily to reduce
borrowings. An aggressive program to reduce inventory levels
resulted in an inventory reduction, excluding Altenbach, of $5.4
million or 34% from a year ago. This enabled the Company to
reduce debt at December 31, 1996 by $4.8 million or 26% as
compared with debt at December 31, 1995.

The Company's working capital, current ratio and long term debt
to equity ratio are as follows:
1996 1995
--------------------------------------------------------------
Working Capital $5,953,000 $ 15,976,000
Current Ratio 1.48 to 1 2.42 to 1
Long Term Debt to Equity 1.30 1.57

Working capital decreased $10,023,000 in 1996 as a result of a
program to reduce inventory levels, effect of the divestiture of
Altenbach, and an increase in short term debt.

Long term debt to equity improved in 1996 due to the cash
generated from the inventory reduction being used to reduce
debt.


The U.S. revolving line of credit, renegotiated in March 1996
and in March 1997, is due to expire in May 1998 and the foreign
overdraft arrangements are due to expire at various times in
1997. Based on maintaining the U.S. revolving line of credit
and foreign overdraft arrangements, current cash balances and
cash flow from operations, the Company believes it can meet
capital expenditure, restructuring and other planned financial
commitments in 1997. Planned capital expenditures in the U.S.
for machinery and equipment are expected to exceed $1,000,000
and focus on process and productivity improvements.

The Company expects to address any computer system issues
related to the Year 2000 by implementing a new information
system in the first quarter of 1997.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ACME UNITED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



1996 1995 1994
- -------------------------------------------------------------------------------
Net Sales $ 47,480,587 $ 52,222,210 $ 52,754,799
Other Income 449,275 179,811 234,881
- -------------------------------------------------------------------------------
47,929,862 52,402,021 52,989,680
Costs and Expenses:
Cost of Goods Sold 38,800,804 37,795,384
35,035,868
Inventory Valuation Losses - 3,381,355 -
Selling, General and
Administrative Expenses 12,668,207 14,396,927 13,324,022
Interest Expense 1,537,399 1,953,090 1,657,875
Restructuring & Other Charges 1,779,031 3,136,257 -
- -------------------------------------------------------------------------------
51,020,505 61,668,433 52,777,281
- -------------------------------------------------------------------------------
Income/(Loss) before Income Tax (3,090,643) (9,266,412) 212,399
Provision (Benefit) for Income Tax
United States 49,800 (53,535) 39,127
Foreign 34,163 (496,701) 49,774
- -------------------------------------------------------------------------------
83,963 (550,236) 88,901
- -------------------------------------------------------------------------------
Net Income/(Loss) $(3,174,606) $(8,716,176) $ 123,498
- -------------------------------------------------------------------------------
Net Income/(Loss) applicable to
common stock (A) $ (.95) $ (2.61) $ .04
- -------------------------------------------------------------------------------


(A) Based on a weighted average number of shares outstanding during the year.



ACME UNITED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



Additional
Treasury Common Paid- Translation Retained
Stock Stock In Capital Adjustment Earnings
- ---------------------------------------------------------------------------------------------


Balances, December 31, 1993 $(357,631) $8,461,550 $2,145,119 $ (1,099,900) $8,850,305
Net Income 123,498
Translation Adjustment (40,341)
- --------------------------------------------------------------------------------------------
Balances, December 31, 1994 (357,631) 8,461,550 2,145,119 (1,140,241) 8,973,803
Net Loss (8,716,176)
Translation Adjustment 138,429
- ---------------------------------------------------------------------------------------------
Balances, December 31, 1995 (357,631) 8,461,550 2,145,119 (1,001,812) 257,627
Net Loss (3,174,606)
Exercise of Stock Options 125,000 34,375
Translation Adjustment 25,708
- ---------------------------------------------------------------------------------------------
Balances, December 31, 1996 $(357,631) $8,586,550 $2,179,494 $ (976,104) $(2,916,979)
- ---------------------------------------------------------------------------------------------

See notes to financial statements



ACME UNITED CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995



ASSETS 1996 1995
- ----------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 427,202 $ 531,773
Accounts receivable, net 7,006,459 8,108,483
Inventory 10,423,047 18,013,251
Prepaid expenses and other current assets 387,930 605,773
- ----------------------------------------------------------------------
Total current assets 18,244,638 27,259,280

Plant, Property and Equipment:
Land 451,963 490,589
Buildings 3,910,038 4,236,976
Machinery and equipment 14,771,828 15,736,435
- ----------------------------------------------------------------------
Total plant, property and equipment 19,133,829 20,464,000
Less, accumulated depreciation 12,460,399 13,141,747
- ----------------------------------------------------------------------
Net plant, property and equipment 6,673,430 7,322,253
Goodwill 792,475 817,340
Other assets 1,540,722 1,621,784
- ----------------------------------------------------------------------
Total Assets $ 27,251,265 $ 37,020,657


1996 1995
LIABILITIES
- ----------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 2,546,707 $ 3,193,285
Notes payable 5,257,625 3,650,116
Restructuring reserve 755,440 1,197,500
Other accrued liabilities 3,732,363 3,242,758
- ----------------------------------------------------------------------
Total current liabilities 12,292,135 11,283,659
Restructuring Reserve - 1,352,000
Long Term Debt 8,443,800 14,880,145
- ----------------------------------------------------------------------
Total Liabilities $20,735,935 $27,515,804

Commitments and Contingencies (Note 8)

STOCKHOLDERS' EQUITY

Common stock, par value $2.50, authorized
4,000,000 shares , issued 3,434,620 and
3,384,620 shares and outstanding 3,387,620
and 3,337,620 shares in 1996 and 1995,
respectively
$ 8,586,550 $ 8,461,550
Treasury Stock, 47,000 shares at cost (357,631) (357,631)
Additional paid-in capital 2,179,494 2,145,119
Retained earnings (deficit) (2,916,979) 257,627
Translation adjustment (976,104) (1,001,812)
- ----------------------------------------------------------------------
Total Stockholders' Equity 6,515,330 9,504,853
- ----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 27,251,265 $ 37,020,657


See notes to financial statements



ACME UNITED CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

1996 1995 1994
- ----------------------------------------------------------------------------------------


Cash flows from operating activities:
Net income/(loss) $ (3,174,606) $ (8,716,176) $ 123,498
Adjustments to reconcile net
income/(loss) to net
cash provided by operating activities
Depreciation 923,031 1,312,521 1,307,035
Amortization 443,977 565,972 575,081
(Decrease) in deferred income taxes - (675,196) (17,984)
(Gain)/loss on disposal of assets 120,259 (19,241) (25,749)
Restructuring & other charges - 3,136,257 -
Inventory valuation losses - 3,381,355 -
Change in assets and liabilities
Acounts receivable 684,562 824,962 (92,347)
Inventory 5,352,588 (38,468) (755,307)
Prepaid expenses and other current 2,157,901 70,516 3,740
assets
Other assets (835,892) 115,299 (83,049)
Accounts payable (324,665) 636,883 (998,692)
Income taxes payable 108,913 106,930 423,277
Other liabilities 789,190 207,488 252,438
- ----------------------------------------------------------------------------------------
Total adjustments 9,419,864 9,625,278 588,443
- ----------------------------------------------------------------------------------------
Net cash provided by operations 6,245,258 909,102 711,941
- ----------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (1,068,550) (986,647) (1,445,204)
Proceeds from sales of plant, property 484,340 453,616 135,650
and equipment
Proceeds from divestiture of Altenbach 962,290 - -
Divestiture of Altenbach (3,253,873) - -
- ----------------------------------------------------------------------------------------
Net cash used for investing (2,875,793) (533,031) (1,309,554)
activities
- ----------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (3,622,022) (282,440) 740,325
Common Stock issued 159,375 - -
- ----------------------------------------------------------------------------------------
Net cash (used for)/provided by (3,462,647) (282,440) 740,325
financing activities
- ----------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (11,389) (12,338) (10,892)
- ----------------------------------------------------------------------------------------
Net change in cash and cash equivalents (104,571) 81,293 131,820
Cash and cash equivalents at beginning of year 531,773 450,480 318,660
- ----------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 427,202 $ 531,773 $ 450,480
- ----------------------------------------------------------------------------------------

See notes to financial statements


ACME UNITED CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES:

a. Nature of Operations - Acme United Corporation is a
multinational corporation which operates in two business
segments, consumer and medical. The consumer segment operates in
the United States, Canada, England and Germany and the medical
segment operates in the United States. Principal consumer
segment products are scissors, shears, rulers, and first aid kits
which are sold primarily to wholesale, contract and retail
stationery distributors, office supply super stores, school
supply distributors and mass market retailers. Medical segment
products are disposable scissors, instruments and sterile
procedure trays which are sold to hospital supply dealers and
alternate care market dealers. Medical sales account for
approximately one third of the Company's revenue and medical
assets account for about one fourth of the assets.

b. Management Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.

c. Principles of Consolidation - The consolidated financial
statements include the accounts of the Company and Subsidiaries,
all of which are wholly owned. All significant intercompany
transactions have been eliminated in the preparation of the
consolidated financial statements.

d. Translation of Foreign Currency - The Company translates its
assets and liabilities at rates in effect at the end of the year.
Revenues and expenses are translated at average rates in effect
during the respective years. Translation adjustments are treated
as a separate component of stockholders' equity. Foreign
currency transaction gains and losses are recognized at the time
of settlement of the underlying purchase transactions and treated
as purchasing variances.

e. Hedging Activity - The Company on occasion purchases foreign
currency contracts and/or options as hedges against foreign
currency fluctuation risk related to specific purchase
commitments. The Company does not engage in foreign exchange
contracts for speculative purposes and accordingly, the contracts
are accounted for as hedges.

f. Cash Equivalents - Investments with an original maturity of
three months or less at the date of purchase are considered cash
equivalents.

g. Inventory Valuation - Inventories are stated at the lower of
average cost (first in, first out basis) or market.

h. Plant, Property and Equipment and Depreciation - All plant,
property and equipment is recorded at cost. The Company records
depreciation for financial reporting purposes using the straight-
line method. The estimated useful lives for most machinery,
equipment and tooling ranges from 3 to 15 years and for buildings
from 15 to 40 years.

Maintenance and repairs or minor renewals are charged to
operations as incurred. Major renewals and betterments are
capitalized. The carrying amounts of assets sold or otherwise
disposed of and the related allowance for depreciation have been
eliminated from the accounts in the year of disposal and the
resulting gain or loss has been recorded in operations. Assets
which are expected to have no substantial salvage value are
written off against applicable depreciation reserves at the
expiration of their useful lives.

i. Deferred Income Taxes - The Company accounts for income taxes
under the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that
have been included in the financial statements. Under this
method, deferred tax liabilities and assets are determined based
on the difference between the financial statement and tax bases
of assets and liabilities using the currently enacted tax rates.

j. Research and Development - Research and development costs
($47,277 in 1996, $91,251 in 1995 and $104,762 in 1994) are
included in the cost of goods sold caption on the consolidated
statements of income (loss).

k. Goodwill and Other Assets - Goodwill represents the excess
cost of investments over the net asset values at acquisition and
is being amortized on a straight line basis over periods ranging
from 20 to 40 years. Accumulated amortization aggregated
$261,600 and $224,111 at December 31, 1996 and 1995,
respectively.

Other assets, at cost, include license agreements, a covenant not
to compete and other fees associated with the Sepro acquisition.
These assets are being amortized on a straight line basis from 4
to 7 years. Accumulated amortization aggregated $2,431,186 and
$2,024,698 at December 31, 1996 and 1995, respectively.


The Company continually reevaluates the propriety of the carrying
amounts of goodwill and other assets as well as the amortization
period to determine whether current events and circumstances
warrant adjustments to the carrying value and estimates of useful
lives. As a result of this reevaluation, the Company in 1995
took a charge of $156,666 to write off the carrying amount of
licensing rights related to a discontinued product, which is
included in selling, general and administrative expenses on the
consolidated statement of income (loss). The Company believes
that no other significant impairment of goodwill has occurred and
that no reduction of the estimated useful lives is warranted.

l. Accounts Receivable - Accounts Receivable are shown less
allowance for doubtful accounts of $197,755 in 1996 and $132,593
in 1995.

m. Reclassifications - Certain reclassifications were made to
prior year amounts to conform to and be consistent with the 1995
presentation.

2. INVENTORY:

Inventory consisted of the following balances on December 31
which are net of a $480,924 and $3,611,355 inventory reserve in
1996 and 1995, respectively. The Company recorded an inventory
valuation loss of $3,381,355 in 1995, which resulted from a
program to convert inventory to cash and to record certain
inventory at net realizable value.
1996 1995
- -----------------------------------------------------------
Finished goods $ 4,857,763 $ 9,941,846
Work in process 1,910,880 3,962,928
Raw materials and supplies 3,654,404 4,108,477
- -----------------------------------------------------------
Total $ 10,423,047 $ 18,013,251


3. OTHER ASSETS:

Other assets consisted of the following balances on December 31:

1996 1995
- -----------------------------------------------------------
License agreements $ 790,185 $ 1,169,465
Prepaid pension costs 698,502 372,936
Other 52,035 79,383
- -----------------------------------------------------------
Total $ 1,540,722 $ 1,621,784


4. OTHER ACCRUED LIABILITIES:

Other accrued liabilities consisted of the following balances on
December 31:

1996 1995
- -----------------------------------------------------------
Pension $ 277,401 $ 520,399
Vendor Rebates 1,231,812 797,047
Other 2,223,150 1,925,312
- -----------------------------------------------------------
Total $ 3,732,363 $ 3,242,758



5. PENSION AND PROFIT SHARING:

The Company has a pension plan covering substantially all U.S.
employees and separate plans for the foreign subsidiaries'
employees. The pension expense for 1996, 1995 and 1994, which is
included in selling, general and administrative
expenses, amounted to $90,607, $1,008,511 and $442,206,
respectively.

U.S. employees are covered by a funded, defined benefit pension
plan. The benefits are based on years of service and the
average compensation of the highest three consecutive years
during the last ten years of employment.
Pension (income)/expense for U.S. employees was $(16,350),
$829,738, and $293,145 in 1996, 1995 and 1994, respectively. In
December 1995 the Company's Board of Directors approved an
amendment to the U.S. pension plan ceasing all future benefit
accruals as of February 1, 1996, without terminating the pension
plan. Accordingly, this action was accounted for as a
curtailment under the provisions of Statement of Financial
Accounting Standards No. 88 "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and
for Termination Benefits," and resulted in a curtailment loss of
$299,183 in 1995. Plan assets and liabilities and prepaid
pension costs shown reflect the effect of this curtailment loss.

Pension coverage for employees of the Company's foreign
subsidiaries vary by country and the Company's funding policy
varies in line with local commercial, actuarial and taxation
practices. The Company has not adopted the provisions of
Statement of Financial Accounting Standards No. 87 "Accounting
for Pensions" for its foreign pension plans. However,
it has been determined that the impact on total consolidated
assets, liabilities and net income is not significant as a
result of not adopting Statement of Financial Accounting
Standards No. 87. Foreign subsidiaries' pension expense for
1996, 1995 and 1994 was $106,957, $178,773, and $149,061,
respectively.

Net periodic pension cost of the U.S. pension plan for 1996, 1995
and 1994 included the following components:

1996 1995 1994
- ---------------------------------------------------------------
Service cost - benefit earned
during the period $ - $ 297,659 $ 311,048
Interest cost on projected 329,189 474,096 375,989
benefit obligation
Actual return on assets (590,930) (334,058) (114,510)
Curtailment loss - 299,183 -
Net amortization and deferral 245,391 92,858 (279,382)
- ---------------------------------------------------------------
Net pension (income)/expense $(16,350) $ 829,738 $ 293,145


Assumptions used in the accounting for pension expense were:

1996 1995 1994
- ------------------------------------------------------------
Discount rate 7.0% 7.0% 7.0%
Average wage increase N/A 5.5% 5.5%
Expected long-term rate of
return on plan assets 7.0% 8.0% 10/0%

The discount rate is the estimated rate at which the obligation
for pension benefits could effectively be settled. The average
wage increase assumption reflects the Company's best estimate of
the future compensation levels of the individual employees
covered by the plans. The expected long-term rate of return on
plan assets reflects the average rate of earnings that the
Company estimates will be generated on the assets of the plan.
The Company has reduced the expected long-term rate of return on
plan assets to more accurately reflect anticipated plan
performance.


The funded status of the Company's U.S. plan as of December 31,
1996 and 1995 is as follows:

1996 1995
- -----------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 5,150,147 $ 4,916,289
Accumulated benefit
obligation 5,270,640 5,082,890
Projected benefit obligation 5,270,640 5,082,890


Plan assets at fair value,
primarily equity securities 5,509,999 5,098,371
Projected benefit obligation 5,270,640 5,082,890
- -----------------------------------------------------------
Plan assets in excess of
projected benefit obligation 239,359 15,481
Adjustments:
Unrecognized loss from past
experience 459,143 357,455
- -----------------------------------------------------------
Prepaid pension costs at
December 31 $ 698,502 $ 372,936


The Company also has a qualified, non-contributory profit sharing
plan covering substantially all U.S. employees. Amounts are
contributed annually to provide retirement or other benefits for
employees and contributions are calculated under a formula based
on income before income taxes and gains or losses on investments,
less a fixed return on a capital base (as defined). Based on the
formula, no contribution was required for 1995 and 1994. A
specific contribution amounting to 2% of wages will be accrued
annually commencing in 1996. The 1996 contribution of $108,498
will be paid in 1997.



6. INCOME TAXES:

The current and deferred income tax provisions (benefits) are as
follows:

1996 1995 1994
- ----------------------------------------------------------------
Current:
Federal $ - $ 9,103 $ 15,642
State 49,800 35,262 28,585
Foreign 34,163 80,595 65,828
- ----------------------------------------------------------------
$ 83,963 $ 124,960 $110,055
- ----------------------------------------------------------------
Deferred:
Federal $ - $ (88,810) $ 18,037
State - (9,090) (23,137)
Foreign - (577,296) (16,054)
- ----------------------------------------------------------------
- (675,196) (21,154)
- ----------------------------------------------------------------
$ 83,963 $ (550,236) $ 88,901


The State tax provision is comprised of the minimum capital tax
and other franchise taxes related to the jurisdictions in
which the Company's manufacturing plants reside.

The U.S. and foreign income (loss) before income taxes are as
follows:

1996 1995 1994
- -----------------------------------------------------------------
U.S. (loss) $ (2,216,565) $(4,735,350) $ (35,983)
Foreign income (loss) $ (874,078) $(4,531,062) $ 248,382
- -----------------------------------------------------------------
$ (3,090,643) $(9,266,412) $ 212,399

The provision (benefit) for income taxes is different
from that which would be computed by applying the United States
statutory income tax rate to income (loss) before income taxes.
The following schedule reconciles the income tax provision
(benefit) computed at the United States statutory rate to the
actual tax provision (benefit) reported.

1996 1995 1994
- ------------------------------------------------------------------
Federal income tax at
34% statutory rate $ (1,050,819) $ (3,150,580) $ 72,216
State and local taxes,
net of federal
income tax effect 32,415 (72,500) 3,596
Foreign income tax rate (123,355) (675,600) (34,675)
Deferred tax asset
valuation 716,177 2,788,900 -
Prior year tax accrual
adjustment - - 30,000
Repatriated earnings of
foreign subsidiary 353,136 410,100 -
Permanent differences 20,436 188,500 19,267
All other items, net 135,973 (39,056) (1,503)
- ------------------------------------------------------------------
Provision (benefit) for
income taxes $ 83,963 $ (550,236) $ 88,901
- ------------------------------------------------------------------
Total income taxes paid,
net of refunds $ 20,676 $ 66,683 $(299,855)

The significant sources of deferred tax liabilities and assets as
of December 31 are as follows:
1996 1995
- ------------------------------------------------------------------
Deferred tax liabilities:

Property, plant and
equipment $ 987,803 $ 1,013,200
Pension plans 256,811 256,200
Disposal of land and building - 63,700
Repatriated earnings of
foreign subsidiary - 410,100
Other 59,722 -
- ------------------------------------------------------------------
Total deferred tax liabilities $ 1,304,336 $ 1,743,200
- ------------------------------------------------------------------
Deferred tax assets:

Reserves and allowances $ 1,099,301 $ 2,984,200
Tax basis operating loss
carryforwards 3,048,347 1,063,600
Intangible assets 541,830 475,200
Other 119,935 9,100
- ------------------------------------------------------------------
Total deferred tax assets $ 4,809,413 $ 4,532,100
- ------------------------------------------------------------------
Net deferred tax liability
(asset) before valuation
allowance $ (3,505,077) $(2,788,900)
- ------------------------------------------------------------------
Valuation Allowance 3,505,077 2,788,900
- ------------------------------------------------------------------
Net deferred tax liability $ - $ -
- ------------------------------------------------------------------


The Company provides deferred taxes on foreign subsidiary
earnings which are not considered permanently reinvested.
Earnings permanently reinvested would become taxable upon the
sale or liquidation of a foreign subsidiary or upon the
remittance of dividends. $2,592,000 and $3,808,000 of foreign
subsidiary earnings are considered permanently
reinvested as of December 31, 1996 and 1995, respectively, and
the amount of deferred taxes cannot be reasonably determined.

SFAS 109 requires that a valuation allowance be recorded against
tax assets which the Company has not determined to be more
likely than not realizable at this time. Realization of the
Company's tax assets, other than those which will be realized by
future reversals of existing taxable temporary differences, is
entirely dependent on future earnings. Due to the uncertain
nature of their realization based on past performance and carry
forward expiration dates, the Company has established a full
valuation allowance against these tax assets. The need for this
valuation allowance is subject to periodic review, and if the
allowance is reduced, the tax benefit will be recorded in future
operations as a reduction of the Company's tax expense.

At December 31, 1996, the Company has tax operating loss
carryforwards aggregating $7,250,000 of which $4,345,000, relate
to U.S. Federal income taxes and expire in 2010, and $2,905,000
relate to foreign operations. Foreign tax operating loss
carryforwards can be carried forward indefinitely.

7. NOTES PAYABLE AND LONG TERM DEBT:

Notes Payable consisted of the following:
1996 1995
- -----------------------------------------------------------------
Overdraft arrangements (B) $ 3,092,022 $ 2,595,374
Current portion of long term debt 2,165,603 1,054,742
- -----------------------------------------------------------------
$ 5,257,625 $ 3,650,116

Long Term Debt consisted of the following:

1996 1995
- -----------------------------------------------------------------
Revolving Credit (A) $ 6,700,000 $ 9,300,000
Mortgage Note (C) 292,230 522,075
Note Payable (D) 249,766 353,262
Note Payable (E) 289,038 400,745
Note Payable (F) - 1,669,834
Note Payable (G) 1,298,800 1,392,200
Note Payable (H) 1,737,744 2,213,445
Other Obligations 41,825 83,326
- -----------------------------------------------------------------
$ 10,609,403 $ 15,934,887
Less, current portion 2,165,603 1,054,742
- -----------------------------------------------------------------
$ 8,443,800 $ 14,880,145

(A) On March 7, 1996, the Company's revolving line of credit was
renegotiated with the availability determined using an asset-
based formula. The maximum availability of the credit line is
$13,000,000, reducing to $9,000,000 during the last 60 days of
each calendar year. The actual amount available is based on a
core availability of $2,250,000 plus 80% of eligible
receivables, varying percentages of eligible inventory and
$750,000 over formula which expired on October 31, 1996. On
March 19, 1997, the Company renogotiated a modification to the
agreement which allows for additional availability of $750,000
from March 19, 1997 until May 31, 1997, and $500,000 for June
and July of 1997. Principal repayment is due in May 1998 and
interest is at prime plus 1/2%. The prime interest rate at
December 31, 1996 was 8 1/4%. The line is collateralized by all
U.S. assets except real estate in Bridgeport, Connecticut, and
requires an annual fee of 1/4% of the line. The agreement
contains covenants, some of which were modified on March 19,
1997, which restrict, among other things, additional borrowings,
expenditures for fixed assets, the payment of dividends, and the
acquisition of the Company's capital stock. As of December 31,
1996, $1,700,000 was available under the general facilities.


(B) The Company has overdraft facilities for its foreign
operations with various foreign banks. At December 31, 1996,
the company had lines of credit for Canadian dollar (C$)
3,200,000 ($2,335,040), British pound (L) 735,000 ($1,258,688)
and German marks (DM) 1,300,000 ($844,220). Unused amounts
available were C$ 1,519,370 ($1,108,684), and DM 379,182
($246,241). The lines have interest rates ranging from local
prime to local prime plus 3 1/4%. On December 31, 1996, the
Company was in violation of one of its covenants relating to its
Canadian overdraft facility. In March 1997, this violation was
waived by the Bank and the covenants were renegotiated.

(C) Mortgage note payable for 450,000 German marks to a foreign
bank is collateralized by real estate. Annual principal
payment is DM 150,000 through 1999 and the interest rate is
8.85%, payable quarterly.

(D) Note payable for 384,610 German marks to a foreign bank is
collateralized by the accumulated funds of an employee sponsored
life/survivorship insurance program offered for the benefit of
the employees. Repayment is required only as funds are needed
to pay benefits under the insurance contract. The Company has
classified the debt as long term because it is not aware of any
benefits due under the contract in 1997.

(E) Note payable for 445,085 German marks to a foreign bank is
collateralized by inventory, accounts receivable, machinery and
equipment and real estate. Principal is payable in monthly
installments ending October 1999 and the annual interest rate is
9.85%.

(F) Note payable for 2,398,842 German marks to a foreign bank is
collateralized by accounts receivable, inventory, machinery and
equipment and real estate. Principal was paid in full in 1996.

(G) Note payable for 2,000,000 German marks to a foreign bank is
a two year term loan collateralized by accounts receivable,
inventory, machinery and equipment and real estate. Principal
is payable in full in October 1997 and the annual interest rate
is 5.75%. The Company expects to renew this note in 1997.

(H) Note Payable to Sepro Healthcare Inc. matures on March 31,
2000. Principal repayments are quarterly and vary during the
life of the loan. The annual interest rate is 11%. This note
was repaid in 1997 (see note 13).

Annual maturities of debt, excluding note (D), in each of the
next five years are approximately as follows:

1997 $ 2,165,603
1998 $ 7,711,418
1999 $ 482,616
2000 $ 0
2001 $ 0

Interest payments were approximately $1,537,399 in 1996,
$1,951,700 in 1995 and $1,653,600 in 1994.

The weighted average interest rate for short term borrowings was
7.2% and 8.6% at December 31, 1996 and 1995, respectively.


8. COMMITMENTS AND CONTINGENCIES:

The Company leases certain office, manufacturing and warehouse
facilities and various equipment under non-cancelable operating
leases. Total rental expense was $626,000 in 1996, $943,000 in
1995, and $918,000 in 1994. Minimum annual rental commitments
under non-cancelable leases with initial or remaining terms of 1
year or more are as follows:

1997 $ 536,000
1998 $ 356,000
1999 $ 331,000
2000 $ 318,000
2001 $ 76,000
Later $ 25,000

The Company has purchased $123,000 of forward exchange contracts
to hedge future purchases through May 1, 1997. Any gain or loss
in these contracts is deferred until settlement date of the
transaction being hedged. The deferred gain or loss as of
December 31, 1996 and 1995 is not significant.

The Company has been involved in certain environmental matters.
Based on information available, the Company does not expect a
significant impact on the financial position, future operations
or cash flows of the Company, relating to these matters.

9. BUSINESS SEGMENT AND GEOGRAPHIC DATA:

The Company operates principally in two business segments.
Operations in the medical segment involve the production and sale
of metal disposable medical scissors, instruments, and sterile
procedure trays for hospitals and the alternate care markets.
Operations in the consumer segment involve the production and
sale of scissors, shears, rulers and first aid kits for school,
office or home use. Intersegment sales and transfers between
geographic areas are not significant. Operating profit is total
sales less expenses other than general corporate expenses,
interest expense and income taxes. Identifiable assets by
business segment and geographic areas are those assets that are
used in the Company's operations in each business segment and
geographic area. Corporate assets are principally cash,
leasehold improvements and office equipment.

Information on the Company's Operations by Business Segments:

(All Figures in Thousands) 1996 1995 1994
- ----------------------------------------------------------------
Sales:
Consumer $ 33,125 $ 35,882 $ 36,015
Medical 14,356 16,340 16,740
- ----------------------------------------------------------------
Total $ 47,481 $ 52,222 $ 52,755

Operating Profit (Loss): *
Consumer $ 106 $ (4,325) $ 2,894
Medical 1,569 394 1,996
- ----------------------------------------------------------------
Total 1,675 (3,931) 4,890
General corporate expenses 3,229 3,382 3,020
Interest expense 1,537 1,953 1,658
- ----------------------------------------------------------------
Income/(loss) before income tax $ (3,091) $ (9,266) $ 212


(All Figures in Thousands) 1996 1995 1994
- ----------------------------------------------------------------
Identifiable Assets:
Consumer $ 20,278 $ 27,676 $ 30,765
Medical 6,059 8,160 9,528
Corporate 914 1,185 2,595
- ----------------------------------------------------------------
Total $ 27,251 $ 37,021 $ 42,888

*1996 Operating
profit (loss) Medical Consumer Corporate Total
includes the
following:
Restructuring & $ 95 $ 1,058 $ 626 $ 1,779
other charges

*1995 Operating
profit (loss)
included the
following:
Restructuring &
other charges $ 235 $ 2,901 - $ 3,136
Asset valuation
adjustment 981 2,584 - 3,565
$ 1,216 $ 5,485 - $ 6,701



(All Figures in Thousands) 1996 1995 1994
- ---------------------------------------------------------------
Depreciation Expenses:
Consumer $ 708 $ 1,069 $ 1,024
Medical 154 181 195
Corporate 61 63 89

Amortization Expenses:
Consumer $ 14 $ 14 $ 12
Medical 430 552 562
Corporate - - -

Capital Expenditures:
Consumer $ 971 $ 436 $ 1,320
Medical 90 272 84
Corporate 8 279 41



Information on the Company's 1996 1995 1994
Operations and Asset by
Geographic Area:

(All Figures in Thousands)
- ---------------------------------------------------------------
Sales:
United States $ 34,193 $34,471 $ 33,774
Canada 4,103 4,155 3,777
England 3,942 4,130 4,676
Germany 5,243 9,466 10,528
- ---------------------------------------------------------------
Total $ 47,481 $52,222 $ 52,755

Operating Profit (Loss): *
United States $ 2,020 $ (131) $ 3,656
Canada 248 (211) 68
England (260) (974) 735
Germany (333) (2,615) 431
- ---------------------------------------------------------------
Total 1,675 (3,931) 4,890
General corporate expenses 3,229 3,382 3,020
Interest expense 1,537 1,953 1,658
- ---------------------------------------------------------------
Income/(loss) before income tax $ (3,091) $(9,266) $ 212

Identifiable Assets:
United States $ 16,274 $20,777 $ 23,055
Canada 2,697 3,581 4,079
England 3,292 3,660 4,475
Germany 4,074 7,818 8,684
Corporate 914 1,185 2,595
- ---------------------------------------------------------------
Total $ 27,251 $ 37,021 $ 42,888


* 1996 Operating profit (loss) includes the following:
* 1995 Operating profit (loss) included the following:

Asset
Restructuring & Restructuring & Valuation
Other Charges Other Charges Adjustments Total
--------------- --------------- ----------- ------
United States $1,580 United States $ 798 $2,272 $3,070
Canada - Canada - 299 299
England 177 England 221 643 864
Germany 22 Germany 2,117 351 2,468
--------------- --------------- ----------- ------
$1,779 $3,136 $3,565 $6,701


10. STOCK OPTION PLANS:

The 1988 stock option plan was amended and restated on February
25, 1992. The Board of Directors adopted a series of amendments
to the Plan which were approved at the 1992 Annual Meeting. The
principal changes adopted were an increase in the aggregate
number of shares of Common Stock available under the Plan from
100,000 shares to 300,000 shares and provisions for the issuance
of options as Incentive Stock Options under the provision of
Section 422 of Internal Revenue Code. Options granted prior to
the amendment are nonqualified stock options and are included in
the 300,000 shares. Incentive Stock Options and nonqualified
stock options may be granted under the amended Plan. In
January, 1996 the Board of Directors adopted an amendment to the
Plan that was approved at the 1996 Annual Meeting, increasing
the aggregate number of Common Stock shares available under the
Plan from 300,000 shares to 400,000 shares.

Under the Company's Amended and Restated Stock Option Plan,
officers and key employees may be granted options, each of which
allows for the purchase of common stock at a price of not less
than 100% of fair market value at the date of grant. Generally,
each option granted under the Plan on or prior to June 24, 1996
vests immediately or within a year and is for a term not in
excess of ten years from the date of grant. Generally, each
option granted after June 24, 1996 shall vest over a four year
period and shall be for a term not in excess of ten years from
the date of grant. No option may be granted under the Plan
after the tenth anniversary of the adoption of the Plan.

In January 1996, the Board of Directors adopted a Non-Employee
Director Stock Option Plan that was approved at the 1996 Annual
Meeting. The Plan authorized 50,000 common stock shares. An
option to purchase 10,000 shares of common stock shall be
granted to each new Director elected on April 22, 1996 or
thereafter. Further, after a period of four consecutive
quarters with aggregate earnings of $.50 per share by the
Company, Directors who were elected prior to the 1996 Annual
Meeting shall be granted options to purchase 2,500 shares of
common stock of the Company. Annually thereafter, during his
continued service on the Board each such Director shall be
granted options to purchase 2,500 shares of common stock
provided that in the aggregate no such Director shall receive
grants of options for more than 10,000 shares in total. The
exercise price with respect to an option awarded under the Plan
will be 100% of the fair market value of the common stock as of
the date of grant. In February 1997, the Board of Directors
adopted an Amendment to the Plan, increasing the aggregate
number of common stock shares available under the Plan from
50,000 to 60,000 shares, amending the criteria for granting
options and renaming the Plan to Non-Salaried Director
Stock Option Plan to be approved by the shareholders at the 1997
Annual Meeting. The criteria for granting options was amended
to grant 10,000 common stock shares to non-salaried Directors
first elected to the Board prior to the 1996 Annual Meeting
after being elected at the 1997 Annual Meeting with the vesting
of option shares occurring over a four year period. The
amendment would supersede the previously approved granting of
options after a period of four consecutive quarters with
aggregate earnings of $.50 per share.


A summary of changes in options issued under the Plans is as
follows:
1996 1995 1994
- ---------------------------------------------------------------
Shares under option
and exercisable at 250,000 151,000 63,000
the beginning of the year
Options granted 159,500 155,000 90,000
Options canceled (58,000) (56,000) (2,000)
Options exercised (50,000) - -
Shares under option
and exercisable at the 301,500 250,000 151,000
end of year
Options available for
future grants at the 98,500 50,000 149,000
end of the year
Average price of $ 3.92 $ 3.63 $ 3.19
options granted
Average price of $ 4.35 $ 3.74 $ 5.13
options canceled
Average price of $ 3.19 - -
options exercised
Average price of $ 3.87 $ 3.81 $ 3.97
options exercisable

The Company applies APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting
for its stock option plans and has adopted the fair value
disclosure provision of SFAS No. 123, "Accounting for Stock-
Based Compensation." Accordingly, no compensation cost has been
recognized for its plans.

Had compensation cost for the Company's Stock Option Plans been
determined consistent with SFAS No. 123, the Company would have
expensed $143,585 in 1996 and $251,604 in 1995. The Company's
net loss per share would have been:

Net loss: 1996 1995
As reported $(3,174,606) $(8,716,176)
Pro forma under SFAS
No. 123 $(3,318,191) $(8,967,780)

Net loss per share:
As reported $ (.95) $ (2.61)
Pro forma under SFAS
No. 123 $ (.99) $ (2.69)

Because the SFAS No. 123 method of accounting has not been
applied to options granted prior to January 1, 1995, the
resulting compensation cost may not be representative of that to
be expected in future years. The weighted average fair value at
date of grant for options granted during 1996 and 1995 is $1.61
and $1.62 per option, respectively.



The fair value of options at date of grant was estimated using
the Black-Scholes model with the following weighted average
assumptions:

1996 1995
- ---------------------------------------------------------
Expected Life (years) 5 5
Interest Rate 5.91% 7.73%
Volatility 34.7% 35.3%
Dividend Yield 0% 0%


11. RESTRUCTURING AND OTHER CHARGES:

In December 1995, the Company implemented a restructuring plan
primarily designed to decrease production costs and inventory
levels in the consumer segment by consolidating manufacturing
facilities in the United States and Germany. A pretax charge of
$3,136,000 was recorded in 1995 which resulted from lease
termination costs of $1,466,000, employee termination costs of
$683,000, adjustments in the carrying value of production assets
and idle real estate of $749,000, and other costs of $238,000
The employee termination costs were in anticipation of the
elimination of nearly seventy positions, mostly production
employees. The restructuring plan was substantially complete by
the end of 1996.

During 1996, the original restructuring plan, which called for
the consolidation of certain European operations, was amended to
include the divestiture of the Altenbach subsidiary. The
transaction was completed on May 1, 1996 and the restructuring
reserve of $2,117,000 established at December 31, 1995 was
adequate to cover the loss on the sale.

In the United States, the consolidation of the Bridgeport,
Connecticut and North Carolina facilities was completed by year
end. Additional severance charges were incurred as the Company
reorganized its senior and middle management organization.
These steps resulted in a reduction of ninety-five positions in
1996.

Cash expenditures in 1996 were $1,795,000. The remaining
accrual balance of $755,000 is adequate to cover currently
planned remaining restructuring activities.


Restructuring Reserve
(Dollars in thousands) 1996 1995
- -------------------------------------------------------------------
Balance, beginning of year $ 2,550 $ -
Charges to Operations:
Severance Costs 1,039 683
Lease Termination - 1,466
Exit Costs 58
-
Asset Valuation - 749
Manufacturing Relocation 290
-
Inventory Reduction and Other 392 238
Charges
Total Charges to Operations 1,779 3,136


Costs incurred:
Divestiture of Altenbach 1,892
-
Severance Costs 1,000
-
Asset Valuation - 586
Manufacturing Relocation 290 -
Inventory Reduction and Idle 392 -
Capacity
Total costs incurred 3,574 586
Balance, end of year $ 755 $ 2,550
Cash Expenditures $ 1,795 $ -
Number of Employee Terminations
due to Restructuring Activities 95 -

12. DIVESTITURE OF PETER ALTENBACH & SOHNE GMBH:

On May 1, 1996, the Company sold the assets of its Peter
Altenbach & Sohne GmbH subsidiary, excluding accounts
receivable. The buyer purchased all fixed assets, inventory and
intangible assets, including the Altenbach tradename. In
exchange, the buyer paid $960,000, assumed all lease
obligations, employed substantially all Altenbach employees and
assumed responsibility for their employee related costs,
including pensions. Costs related to the restructuring of
operations in Germany, including the loss from the sale of the
assets of the Altenbach operations, were accrued for in 1995.
In the four months of 1996 prior to the divestiture, Altenbach
lost $271,000.

13. SUBSEQUENT EVENT:

On March 3, 1997, the Company sold its U.S. marketing rights of
certain woundcare products to Seton Healthcare International
Limited of Oldham, U.K. The sale price was approximately $2.0
million, and the proceeds were used to pay off $1.7 million of
debt, and repurchase 64,620 shares of the Company's common
stock.


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Acme United
Corporation:

We have audited the accompanying consolidated balance sheets of
Acme United Corporation and Subsidiaries as of
December 31, 1996 and 1995, and the related consolidated
statements of income (loss), stockholders' equity and cash
flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conduct our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Acme United Corporation and Subsidiaries as
of December 31, 1996 and 1995, and the consolidated results
of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

/s/ COOPERS & LYBRAND L.L.P.
- ------------------------------
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 21, 1997


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

(None)

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information with respect
to the directors and executive officers of the Company. All
directors of the Company hold office until the next annual
meeting of the shareholders or until their successors have been
elected and qualified. Executive officers are elected to the
Board of Directors to hold office until their successors are
elected and qualified.

Name Age Position Held with Company
Walter C. Johnsen 46 President, Chief Executive
Officer and Director
Gary D. Penisten 65 Chairman of the Board and
Director
Martin C. Metzler 48 Senior Vice President
Brian S. Olschan 40 Senior Vice President
Cheryl L. Kendall 44 Vice President-Chief Financial
Officer, Secretary and Treasurer
David W. Clark, Jr. 59 Director
George R. Dunbar 73 Director
Newman M. Marsilius 79 Director
Wayne R. Moore 66 Director
James L.L. Tullis 49 Director
Dwight C. Wheeler II 54 Director not standing for
reelection
Henry C. Wheeler * 80 Director

* Henry C. Wheeler is the father of Dwight C. Wheeler II.

WALTER C. JOHNSEN has served as director since 1995 and as
President and Chief Executive Officer since November 30, 1995.
Prior to that he was Executive Vice President since January 24,
1995. He also was Chief Financial Officer from March 26, 1996
until June 30, 1996. Before joining the Company he was Vice
Chairman and Principal of Marshall Products, Inc., a medical
supply distributor.

GARY D. PENISTEN has served as director since 1994 and Chairman
of the Board since February 27, 1996. He is a Director of D. E.
Foster & Partners L.P., an executive search firm, and Food Court
Entertainment Network, Inc., a shopping mall advertising
entertainment venture. From 1977 to 1988, he was Senior Vice
President of Finance, Chief Financial Officer and a Director of
Sterling Drug Inc. in New York City.

MARTIN C. METZLER was promoted to Senior Vice President on
January 1, 1997. Since January 1, 1994, he has served as Vice
President. He joined the Company in 1991.

BRIAN S. OLSCHAN has served as Senior Vice President since
September 10, 1996.

CHERYL L. KENDALL has served as Vice President - Chief Financial
Officer since July 1, 1996, and has also served as Secretary and
Treasurer since September 24, 1996.



DAVID W. CLARK, JR. has served as director since 1980. He is
Managing Director of Pryor & Clark Company, an investment
company. From July 1988 to June 1992, Mr. Clark was President of
Corcap, Inc. which was spun out of Lydall, Inc. in July 1988.
Mr. Clark joined Lydall in 1972 as Vice President-Treasurer and
Director. He became Executive Vice President in 1977 and
President in 1986. Until July of 1992, Mr. Clark was also
Chairman of the Board of CompuDyne Corporation of which he
remains a Director. He is also a Director of Checkpoint Systems,
Inc., Thorofare, NJ and SSC Technologies, Bloomfield,
Connecticut.

GEORGE R. DUNBAR has served as director since 1977. He is
President of Dunbar Associates, a municipal management consulting
firm. He was Former Chief Administrative Officer for the City of
Bridgeport and served as President (1972-1987) of the Bryant
Electric division of Westinghouse Electric Corporation,
manufacturer of electrical distribution and utilization products,
Bridgeport, Connecticut. Mr. Dunbar is also a Director of
People's Bank, Bridgeport, Connecticut.

NEWMAN M. MARSILIUS has served as director since 1956. He was
Chairman of the Board (1978 - 1986) of The Producto Machine
Company, manufacturer of special machine tools and tooling
products, Bridgeport, Connecticut.

WAYNE R. MOORE has served as director since 1976. He is
presently a Director and Chairman Emeritus of The Producto
Machine Company, manufacturer of machine tools, special machines,
and tool die and mold components. He was Chairman of the Board
of The Producto Machine Company and of Moore Tool Company,
manufacturer of machine tools, measuring machines and metrology
products. Mr. Moore was Chairman of the Association for
Manufacturing Technology/U.S. Machine Tool Builders (1985-1986)
and Committee Member of U.S. Eximbank (1984).

JAMES L.L. TULLIS has served as director since 1996. He is
Chairman and Chief Executive Officer of Tullis-Dickerson &
Company, Inc., Greenwich, Connecticut, a venture capital firm.
He has been a securities analyst researching the health care
industry at Putnam Funds and Morgan Stanley and Company, Inc. He
also was a Senior Vice President at E.F. Hutton and Company. He
is a Director of Physician Sales & Service, Inc. and American
Consolidated Laboratories, Inc.

DWIGHT C. WHEELER II has served as director since 1980. He
served as Vice Chairman from November 30, 1995 until September
19, 1996, as Treasurer from April 23, 1990 until September 19,
1996, as Secretary from March 26 , 1996 until September 19, 1996,
and Chief Executive Officer from December 20, 1994 until November
30, 1995. Mr. Wheeler was Executive Vice President and Chief
Operating Officer for five years, and held positions as Corporate
Vice President - Administration, Industrial Engineer and
Assistant to the President since joining the Company in 1966. He
resigned from the Company on September 19, 1996, and is not
standing for reelection to the Board of Directors.

HENRY C. WHEELER has served as director since 1941. He is now
Chairman Emeritus after serving as Chairman through November 29,
1995 and President, Treasurer and Chief Executive Officer from
1941 to December 20, 1994.

ITEM 11. EXECUTIVE COMPENSATION

(Refer to Proxy Statement pages 10-15)

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

(Refer to Proxy Statement pages 4-6)

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(None)

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) Documents filed as part of this report:

1. Financial Statements
Page(s)
Consolidated Balance Sheets 15-16
Consolidated Statements of Income (Loss) 13
Consolidated Statements of Changes in
Stockholders' Equity 14
Consolidated Statements of Cash Flows 17-18
Notes to Consolidated Financial Statements 19-33
Report of Independent Accountants 34


2. Financial Statement Schedules

Schedule II 39

Schedules other than those listed above have been omitted because
the required information is contained in the financial statements
and notes thereto, or because such schedules are not required or
applicable.

3. Exhibits

Exhibit 11 - Earnings/(Loss) Per Share
Computation 40
Exhibit 21 - Parents and Subsidiaries 41
Exhibit 23 - Consent of Independent
Accountants 41

The following basic documents are contained in S-1 Registration
Statement No. 230682 filed with the Commission on November 7,
1968 and amended by Substantive Amendment No. 1 on December 31,
1968 and by No. 2 on January 31, 1969:

Certificate of Organization of Registrant
Amendment to Certificate of Incorporation of
Registrant dated September 24, 1968
Proof of Common Stock Certificate

The following basic documents were filed with Form 10-K for 1971:

Amendment to Certificate of Incorporation of
Registrant dated April 27, 1971
Amendment to Certificate of Incorporation dated
June 29, 1971
Proof of Common Stock Certificate

Proof of Preferred Stock Certificate

(b) No Form 8-K was filed by the Company during the quarter
ended December 31, 1996.



Report of Independent Accountants

To the Board of Directors and Stockholders of Acme United
Corporation:

Our report on the consolidated financial statements of Acme
United Corporation and Subsidiaries is included on page 34
of this Form 10-K. In connection with our audits of such
financial statements, we have also audited and related financial
statement schedule included on page 39 of this Form 10-K.

In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.

/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 21, 1997





SCHEDULE II
ACME UNITED CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1996, 1995 and 1994

Balance at Charged to Deductions
Beginning of Costs and and Other Balance at
Period Expenses Adjustments End of Period


- ----------------------------------------------------------------------------------------
1996
Restructuring Reserve $ 2,549,500 $ 309,193 $2,103,253 $ 755,440
(A)
Inventory Reserves 3,611,355 121,966 3,252,397 480,924
Allowance for Doubtful
Accounts 132,593 134,014 68,852 197,755
- ----------------------------------------------------------------------------------------
$ 6,293,448 $ 565,173 $ 5,424,502 $1,434,119

1995
Restructuring Reserve $ - $2,549,500 $ - $ 2,549,500
(A) (A)
Inventory Reserves 230,000 3,381,355 - 3,611,355
Allowance for
Doubtful Accounts 197,822 116,321 181,550 132,593
- ----------------------------------------------------------------------------------------
$ 427,822 $ 6,047,176 $ 181,550 $ 6,293,448

1994
Inventory Reserves $ - $ 230,000 $ - $ 230,000
Allowance for Doubtful
Accounts 167,532 113,837 83,547 197,822
- ----------------------------------------------------------------------------------------
$ 167,532 $ 343,837 $ 3,547 $ 427,822


(A) Excludes $586,550 asset valuation charges relating to production assets



EXHIBIT 11
(For Exhibit to Form 10-K, 1996)


ACME UNITED CORPORATION AND SUBSIDIARIES
EARNINGS/(LOSS) PER SHARE COMPUTATION
PRIMARY AND FULLY DILUTED



1992 $(546,615) / 3,325,119 = ($.16) Per Share
Total Loss Shares


1993 $(597,245) / 3,337,620 = ($.18) Per Share
Total Loss Shares

1994
Total $123,498 / 3,337,620 = $.04 Per Share
Earnings Shares


1995 $(8,716,176) / 3,337,620 = ($2.61) Per Share
Total Loss Shares


1996 $(3,174,606) / 3,342,277 = ($.95) Per Share
Total Loss Shares



EXHIBIT 21
(For Exhibit to Form 10-K, 1996)


PARENTS AND SUBSIDIARIES


The Company was organized as a partnership in 1867 and
incorporated in 1882 under the laws of the State of Connecticut
as The Acme Shear Company. The corporate name was changed to
Acme United Corporation in 1971.

There is no parent of the registrant.

Registrant has the following subsidiaries, all of which are
totally held:

Name State or Country of Incorporation
Acme United Limited Canada
Acme United, Ltd. England
Emil Schlemper GmbH Germany
Westcott Ruler Company, Inc. New York
The Acme Shear Company Connecticut
Peter Altenbach & Sohne GmbH Germany


Only Acme United Limited (Canada), Acme United, Ltd. (England)
and Emil Schlemper GmbH are active and included in the
consolidated financial statements .


EXHIBIT 23
(For Exhibit to Form 10-K, 1996)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration
statement of Acme United Corporation and Subsidiaries on Form S-8
(File No. 33-98918) of our reports dated March 21, 1997, on our
audits of the consolidated financial statements and financial statement
schedule of Acme United Corporation and Subsidiaries as of
December 31, 1996 and 1995, and for the three years in the
period ended December 31, 1996, which reports are included in
this Annual Report on Form 10-K.

/s/ COOPERS & LYBRAND L.L.P.
- ------------------------------
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
March 21, 1997



Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 25, 1997.


ACME UNITED CORPORATION
(Registrant)

Signatures Titles

/s/ Walter C. Johnsen
- ----------------------
Walter C. Johnsen Chief Executive Officer and Director

/s/ Gary D. Penisten
- ----------------------
Gary D. Penisten Chairman of the Board and Director

/s/ Cheryl L. Kendall
- ----------------------
Cheryl L. Kendall Vice President-Chief Financial Officer,
Secretary and Treasurer

/s/ Richard L. Windt
- ----------------------
Richard L. Windt Vice President - Corporate Controller
(Chief Accounting Officer)

/s/ David W. Clark, Jr.
- ----------------------
David W. Clark, Jr. Director

/s/ George R. Dunbar
- ----------------------
George R. Dunbar Director

/s/ Newman M. Marslius
- ----------------------
Newman M. Marsilius Director

/s/ Wayne R. Moore
- ----------------------
Wayne R. Moore Director

/s/ James L. L. Tullis
- ----------------------
James L. L. Tullis Director

/s/ Dwight C. Wheeler II
- ----------------------
Dwight C. Wheeler II Director

/s/ Henry C. Wheeler
- ----------------------
Henry C. Wheeler Director




OFFICERS

Walter C. Johnsen
President and Chief Executive
Officer

Gary D. Penisten
Chairman of the Board

Martin C. Metzler
Senior Vice President-Manufacturing

Brian S. Olschan
Senior Vice President-Sales and
Marketing

Cheryl L. Kendall
Vice President-Chief Financial
Officer, Secretary and Treasurer

James A. Benkovic
Vice President-Consumer Sales

David N. Buck
Vice President -Medical Sales

Richard L. Windt
Vice President-Corporate Controller



MANAGING DIRECTORS

James A. Brownrigg
Acme United Limited
(Canada)

Wolfgang M. Lange
Emil Schlemper GmbH
(Germany)

Kenneth T. McCabe
Acme United Ltd.
(England)




DIRECTORS

David W. Clark, Jr.
Managing Director
Pryor & Clark Company
Hartford, Connecticut

President (1988-1992)
Corcap, Inc.

George R. Dunbar
President
Dunbar Associates
Monroe, Connecticut

President (1972-1987)
Bryant Electric Division
Westinghouse Electric Corporation

Walter C. Johnsen
President and Chief Executive Officer
Acme United Corporation

Newman M. Marsilius
Chairman of the Board (1978-1986)
The Producto Machine Company
Bridgeport, Connecticut

Wayne R. Moore
Director and Chairman Emeritus
The Producto Machine Company
Bridgeport, Connecticut

Gary D. Penisten
Chairman of the Board
Acme United Corporation

James L.L. Tullis
Chairman and Chief Executive Officer
Tullis-Dickerson & Company, Inc.
Greenwich, Connecticut

Dwight C. Wheeler II
Director
Acme United Corporation

Henry C. Wheeler
Chairman of the Board (Retired)
Acme United Corporation



CORPORATE OFFICES

Acme United Corporation
75 Kings Highway Cutoff
Fairfield, Connecticut 06430
(203) 332-7330

TRANSFER AGENTS
American Stock Transfer Company
40 Wall Street
New York, N.Y. 10005

STOCK LISTING
The stock of Acme United Corporation is traded on the
American Stock Exchange under the symbol ACU.

COUNSEL
Marsh, Day & Calhoun
Southport, Connecticut

AUDITORS
Coopers & Lybrand, L.L.P.
Hartford, Connecticut

ANNUAL MEETING
will be held at 11 a.m., Monday,
April 28, 1997 at People's Bank,
850 Main Street, Bridgeport,
Connecticut