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Pension and Profit Sharing

12 Months Ended

Dec. 31, 2016

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 2016, the Company did not contribute to the plan.

The plan asset weighted average allocation at December 31, 2016 and December 31, 2015, by asset category, were as follows:

Asset Category	2016	2015
Equity Securities	65%	58%
Fixed Income Securities	32%	37%
Other Securities / Investments	3%	5%
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. Plan funds are invested in long-term obligations with a history of moderate to low risk.

As of December 31, 2015, equity securities in the pension plan included 10,000 shares of the Company's Common Stock, having a market value of $174,000. As of December 31, 2016, the plan did not hold shares of the Company.

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, 2016 and 2015:

2016		Level 1				Level 2				Level 3				Total
Money Market Fund		$	19,327			$	19,897			$	—			$	39,224
Acme United Common Stock			—				—				—				—
Equity Common and Collected Funds			131,737				705,523				—				837,260
Fixed Income Common and Collected Funds			104,491				313,752				—				418,243
Total		$	255,555			$	1,039,172			$	—			$	1,294,727

2015		Level 1				Level 2				Level 3				Total
Money Market Fund		$	66,914			$	—			$	—			$	66,914
Acme United Common Stock			174,000				—				—				174,000
Equity Common and Collected Funds			—				652,135				—				652,135
Fixed Income Common and Collected Funds			—				524,523				—				524,523
Total		$	240,914			$	1,176,658			$	—			$	1,417,572

Other disclosures related to the pension plan follow:

		2016				2015
Assumptions used to determine benefit obligation:
Discount rate			3.40	%			3.50	%
Changes in benefit obligation:
Benefit obligation at beginning of year		$	(1,776,788	)		$	(1,904,377	)
Interest cost			(55,811	)			(59,348	)
Service cost			(36,000	)			(25,000	)
Actuarial gain (loss)			99,019				(62,677	)
Benefits and plan expenses paid			269,782				274,614
Benefit obligation at end of year			(1,499,798	)			(1,776,788	)

Changes in plan assets:
Fair value of plan assets at beginning of year			1,417,572				1,684,535
Actual return on plan assets			146,937				(22,349	)
Employer contribution			—				30,000
Benefits and plan expenses paid			(269,782	)			(274,614	)
Fair value of plan assets at end of year			1,294,727				1,417,572
Funded status		$	(205,071	)		$	(359,216	)

Amounts recognized in Accumulated Other Comprehensive Income:
Net actuarial loss		$	1,128,647			$	1,423,319
Prior service cost			2,168				2,711
Total		$	1,130,815			$	1,426,030

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

		2016				2015
Assumptions used to determine net periodic benefit cost:
Discount rate			3.50	%			3.23	%
Expected return on plan assets			6.00	%			6.00	%
Components of net benefit expense:
Interest cost		$	55,811			$	59,348
Service cost			36,000				25,000
Expected return on plan assets			(76,138	)			(92,620	)
Amortization of prior service costs			543				9,155
Amortization of actuarial loss			124,854				122,352
Net periodic benefit cost		$	141,070			$	123,235

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:

		2016				2015

Balance at beginning of the year		$	1,426,030			$	1,379,890
Change in net loss			(169,818	)			177,647
Amortization of actuarial loss			(124,854	)			(122,352	)
Amortization of prior service cost			(543	)			(9,155	)
Change recognized in other comprehensive income			(295,215	)			46,140
Total recognized in other comprehensive income		$	1,130,815			$	1,426,030

The Company anticipates that in 2017, net periodic benefit cost will include approximately $106,000 of net actuarial loss and $1,000 of prior service cost.

The following benefits are expected to be paid:

2017			$	207,000
2018				187,000
2019				169,000
2020				152,000
2021				136,000
Years 2022 - 2026				488,000

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, 2016 and 2015, 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 $188,518 in 2016 and $166,050 in 2015.