6 unchanged sentences
2022-$ 677,000 ;
+Added: 2021-$ 515,000
Raw materials and component parts
13 unchanged sentences
Long term note receivable, less current portion
+Added: Deferred income taxes
Right of Use Assets
−Removed: Long-term assets held for sale
Total Other Assets
17 unchanged sentences
Accrued pension cost
−Removed: Long-term liabilities held for sale
Total Liabilities
7 unchanged sentences
Common Stock, no par value, Authorized:
−Removed: 50,000,000 shares
+Added: 50,000,000 shares Issued:
9,056,421 shares in 2022 and 9,029,852 shares in 2021
7 unchanged sentences
Foreign currency translation
−Removed: Unrealized (loss) gain on interest rate swap, net of tax
( 1,140,978 )
+Added: Unrealized (loss) gain on interest rate swap, net of tax
Unrecognized net pension and postretirement benefit costs, net of tax
9 unchanged sentences
See accompanying notes.
+Added: The Eastern Company
Consolidated Statements of Income
10 unchanged sentences
( 35,218,028 )
−Removed: Goodwill impairment loss
Restructuring costs
8 unchanged sentences
Discontinued Operations (see note 2)
−Removed: Gain (loss) from operations of discontinued units
−Removed: $ ( 7,191,198 )
−Removed: Loss on sale of businesses
−Removed: ( 11,807,512 )
−Removed: Income tax benefit
−Removed: Net loss on discontinued operations
+Added: Gain from operations of discontinued units
+Added: Gain (loss) on sale of businesses
( 11,807,512 )
+Added: Income tax (expense) benefit
+Added: Net gain (loss) on discontinued operations
$ ( 6,833,172 )
Earnings per share from continuing operations:
−Removed: Loss per Share from discontinued operations:
+Added: Gain (loss) per share from discontinued operations:
Total earnings per share:
1 unchanged sentence
See accompanying notes.
+Added: The Eastern Company
Consolidated Statements of Comprehensive Income
1 unchanged sentence
Change in foreign currency translation
−Removed: Change in fair value of interest rate swap,
−Removed: net of tax (cost) benefit of:
−Removed: $ 327,118 in 2021 and $ 490,234 in 2020
( 1,959,424 )
−Removed: Change in pension and other postretirement benefit costs,
−Removed: net of taxes of:
+Added: Change in fair value of interest rate swap, net of tax cost of:
$531,425 in 2022 and $327,118 in 2021
−Removed: ( 5,695,386 )
−Removed: Total other comprehensive income (loss)
−Removed: ( 4,262,180 )
+Added: Change in pension and other postretirement benefit costs, net of taxes of:
+Added: $941,964 in 2022 and $1,208,497 in 2021
+Added: Total other comprehensive income
Comprehensive income
See accompanying notes.
−Removed: CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
+Added: The Eastern Company
+Added: Consolidated Statements of Shareholders’ Equity
Comprehensive
1 unchanged sentence
Income (Loss)
−Removed: Balances at December 28, 2019
+Added: Balances at January 2, 2021
( 2,749,729 )
9 unchanged sentences
Change in fair value of interest
−Removed: ( 1,558,610 )
−Removed: ( 1,558,610 )
Change in pension and other
postretirement benefit costs,
−Removed: ( 5,695,386 )
−Removed: ( 5,695,386 )
+Added: Stock Options Exercised
Treasury Stock Purchase
13 unchanged sentences
Currency translation adjustment
+Added: ( 1,959,424 )
+Added: ( 1,959,424 )
Change in fair value of interest
3 unchanged sentences
Treasury Stock Purchase
+Added: ( 1,637,071 )
+Added: ( 1,637,071 )
Issuance of SARS
1 unchanged sentence
for directors' fees
−Removed: Balances at January 1, 2022
+Added: Balances at December 31, 2022
( 2,834,445 )
4 unchanged sentences
See accompanying notes.
+Added: THE EASTERN COMPANY AND SUBSIDIARIES
+Added: CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Consolidated Statements of Cash Flows
+Added: December 31, 2022
+Added: January 1, 2022
Operating Activities
−Removed: Loss from discontinued operations
−Removed: ( 6,833,172 )
+Added: Gain (loss) from discontinued operations
( 6,833,172 )
3 unchanged sentences
Depreciation and amortization
−Removed: Loss on disposition of subsidiaries
Unrecognized pension and postretirement benefits
1 unchanged sentence
( 4,032,917 )
−Removed: Goodwill impairment
Gain on sale of equipment and other assets
9 unchanged sentences
( 11,282,090 )
−Removed: Prepaid expenses and other
( 5,298,977 )
( 19,608,565 )
+Added: Prepaid expenses and other
+Added: ( 3,527,171 )
Accounts payable
+Added: ( 1,741,258 )
Accrued compensation
Other accrued expenses
−Removed: Net cash (used in) provided by operating activities
+Added: Net cash provided by (used in) operating activities
( 7,757,423 )
1 unchanged sentence
Marketable securities
−Removed: Business acquisition, net of cash acquired
−Removed: ( 7,172,868 )
Business disposition
1 unchanged sentence
( 2,500,000 )
−Removed: ( 2,172,068 )
Payments received from notes receivable
4 unchanged sentences
( 3,719,815 )
−Removed: Net cash provided by (used in) investing activities
−Removed: ( 8,347,644 )
+Added: Net cash provided by investing activities
Financing Activities
+Added: Proceeds from issuance of long-term debt and notes payable
+Added: Proceeds from short term borrowings (revolver)
Principal payments on long-term debt
3 unchanged sentences
Purchase common stock for treasury
+Added: ( 1,637,072 )
Dividends paid
5 unchanged sentences
Discontinued Operations
−Removed: Cash provided by operating activities
+Added: Cash provided by (used in) operating activities
Cash used in investing activities
( 1,022,256 )
−Removed: ( 1,407,932 )
Cash provided by discontinued operations
2 unchanged sentences
( 9,499,205 )
−Removed: ( 1,894,870 )
Cash and cash equivalents at beginning of period
5 unchanged sentences
Lease liability
−Removed: 1 includes cash from assets held for sale of $0.4 million as of January 1, 2022 and $0.8 million as of January 2, 2021
+Added: ¹ includes cash from assets held for sale of $0.4 million as of January 1, 2022
See accompanying notes
31 unchanged sentences
Notes to Consolidated Financial Statements (continued)
−Removed: BUSINESS ACQUISITIONS
−Removed: Hallink Moulds, Inc.
−Removed: Effective August 10, 2020 the Company acquired certain assets, including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights and rights existing under all sales and purchase agreements, and assumed certain liabilities, of Hallink, RSB Inc.
−Removed: These assets are held in our subsidiary, Hallink Moulds.
−Removed: Hallink Moulds produces injection blow mold tooling and is a supplier of blow molds and change parts to the food, beverage, healthcare and chemical industry.
−Removed: Hallink Moulds specializes in the design, development and manufacture of 2-step stretch blow molds, and related components for the stretch blow molding industry offering integrated turnkey solutions to its customers worldwide.
−Removed: The cost of the acquisition of Hallink Moulds was approximately $ 7,173,000 .
−Removed: The above acquisition was accounted for under ASU 2014-18, Business Combinations (Topic 805).
−Removed: The acquired business is included in the consolidated operating results of the Company from the effective date of the acquisition.
−Removed: The excess of the cost of Hallink Moulds over the fair market value of the net assets acquired of $ 2,302,000 has been recorded as goodwill.
−Removed: An independent third party was utilized to establish the fair market value of net assets acquired.
−Removed: In connection with the above acquisition, the Company recorded the following intangible assets:
−Removed: Asset Class/Description
−Removed: Weighted-Average Useful Lives in Years
−Removed: Customer relationships
−Removed: Intellectual property
−Removed: Non-compete agreements
−Removed: There is no anticipated residual value relating to these intangible assets.
Discontinued Operations
3 unchanged sentences
As such, the financial results of the former Diversified Products segment are reflected in our condensed consolidated statements of operations as discontinued operations for all periods presented.
−Removed: Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the condensed consolidated balance sheets for both periods presented.
+Added: Additionally, both current and non-current assets and liabilities of discontinued operations are reflected in the condensed consolidated balance sheets for both periods presented.
+Added: On October 19, 2022, the Company sold its Argo EMS business (“Argo”).
+Added: Argo supplies printed circuit boards and other electronic assemblies to original equipment manufacturers in various industries, including measurement systems, semiconductor equipment manufacturing, and industrial control, medical, and military products.
On November 3, 2021, the Company sold its Greenwald Industries, Inc.
−Removed: division (“Greenwald”) for a sales price of $ 8.0 million, subject to a final working capital adjustment.
+Added: division (“Greenwald”).
Greenwald, located in Chester, CT, is an OEM manufacturer offering a range of payment solutions from coin-vending products to smart card systems and payment applications.
6 unchanged sentences
The following table represents income from discontinued operations, net of tax:
+Added: December 31, 2022
+Added: January 1, 2022
+Added: $ 7,574,181 $ 44,289,411
Cost of products sold
3 unchanged sentences
( 891,519 ) ( 15,962,532 )
−Removed: ( 8,591,915 )
−Removed: Restructuring costs
−Removed: ( 11,807,512 )
−Removed: Operating loss
+Added: Restructuring benefit (costs)
305,539 ( 11,807,512 )
+Added: Operating income (loss)
1,850,821 ( 8,354,350 )
Interest expense
−Removed: Loss from discontinued operations before income taxes
( 184,509 ) ( 582,574 )
+Added: Income (loss) from discontinued operations before income taxes
1,666,312 ( 8,936,924 )
−Removed: Income tax benefit
−Removed: Loss from discontinued operations
+Added: Income tax (expense) benefit
( 414,855 ) 2,103,752
+Added: Gain (loss) from discontinued operations, net of tax
$ 1,251,457 $ ( 6,833,172 )
+Added: The following table represents the assets and liabilities from discontinued operations:
Eastern Company
Notes to Consolidated Financial Statements (continued)
−Removed: The following table represents the assets and liabilities from discontinued operations:
+Added: December 31, 2022
+Added: January 1, 2022
+Added: $ - $ 434,126
Accounts receivable
1 unchanged sentence
Property, plant and equipment, net
−Removed: Patents and other intangibles net of accumulated amortization
Right of use assets
Total assets of discontinued operations
+Added: $ - $ 3,521,899
Current assets of discontinued operations
+Added: $ - $ 3,521,899
Non-current assets of discontinued operations
Total assets of discontinued operations
+Added: $ - $ 3,521,899
Accounts payable
+Added: $ - $ 167,794
Accrued compensation and other accrued expenses
−Removed: Note payable, current
Current portion of lease liability
−Removed: Other long-term liabilities
Total liabilities of discontinued operations
+Added: $ - $ 580,990
Current liabilities of discontinued operations
+Added: $ - $ 580,990
Non-current liabilities of discontinued operations
Total liabilities of discontinued operations
−Removed: ¹ The total assets and liabilities of discontinued operations are presented as current in the January 1, 2022 balance sheet as we expect to sell the discontinued operations and collect proceeds within one year.
+Added: $ - $ 580,990
Accounting Policies
The Company’s year ends on the Saturday nearest to December 31.
−Removed: Based on this policy, fiscal year 2021 was comprised of 52 weeks and fiscal 2020 included 53 weeks.
−Removed: References in these Notes to the consolidated financial statements to “2021” or “fiscal year 2021” mean the fiscal year ended January 1, 2022, and references to “2020” or “fiscal year 2020” mean the fiscal year ended January 2, 2021.
−Removed: References to the “fourth quarter of 2021” or the “fourth fiscal quarter of 2021” mean the thirteen-week period from October 3, 2021 to January 1, 2022, and references to the “fourth quarter of 2020” or the “fourth fiscal quarter of 2020” mean the thirteen-week period from October 4, 2020 to January 2, 2021.
+Added: Based on this policy, fiscal years 2022 and 2021 were each comprised of 52 weeks.
+Added: References in these Notes to the consolidated financial statements to “2022” or “fiscal year 2022” mean the fiscal year ended December 31, 2022, and references to “2021” or “fiscal year 2021” mean the fiscal year ended January 1, 2022.
+Added: References to the “fourth quarter of 2022” or the “fourth fiscal quarter of 2022” mean the thirteen-week period from October 2, 2022 to December 31, 2022, and references to the “fourth quarter of 2021” or the “fourth fiscal quarter of 2021” mean the thirteen-week period from October 3, 2021 to January 1, 2022.
Eastern Company
31 unchanged sentences
The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts are deemed uncollectible.
−Removed: As of January 1, 2022 and January 2, 2021, the Company’s allowance for doubtful accounts total was $ 515,000 and $ 487,000 , respectively.
−Removed: As of January 1, 2022, and January 2, 2021, the Company’s bad debt expense was $ 48,000 and $ 253,000 respectively.
+Added: As of December 31, 2022 and January 1, 2022, the Company’s allowance for doubtful accounts total was $ 677,000 and $ 515,000 , respectively.
+Added: As of December 31, 2022, and January 1, 2022, the Company’s bad debt expense was $ 208,000 and $ 48,000 respectively.
Inventories are valued at the lower of cost or net realizable value.
−Removed: Cost is determined by the last-in, first-out (LIFO) method in the U.S.
−Removed: ($ 23.4 million for U.S.
−Removed: inventories at January 1, 2022, excluding Big 3 Precision and Velvac) and by the first-in, first-out (FIFO) method for inventories outside the U.S.
−Removed: ($ 4.5 million for inventories outside the U.S.
−Removed: at January 1, 2022) and for Big 3 Precision and Velvac.
−Removed: Cost exceeds the LIFO carrying value by approximately $ 3.6 million at January 1, 2022 and $ 2.9 million at January 2, 2021.
−Removed: There was no material LIFO quantity liquidation in 2021 or 2020.
−Removed: In addition, as of the balance sheet dates, the Company has recorded reserves for excess/obsolete inventory.
+Added: Cost is determined by the last-in, first-out (LIFO) method at Eberhard ($ 23.6 million on December 31, 2022) and by the first-in, first-out (FIFO) method for inventories at Big 3 Precision, Velvac and outside the U.S.
+Added: ($ 41.0 million on December 31, 2022).
Eastern Company
Notes to Consolidated Financial Statements (continued)
+Added: Cost exceeds the LIFO carrying value by approximately $ 4.2 million on December 31, 2022 and $ 3.6 million on January 1, 2022.
+Added: There was no material LIFO quantity liquidation in 2022 or 2021.
+Added: In addition, as of the balance sheet dates, the Company has recorded reserves for excess/obsolete inventory.
Property, Plant and Equipment and Related Depreciation
4 unchanged sentences
Impairment of Long-Lived Assets
−Removed: In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews its long-lived assets and certain intangible assets for impairment whenever events or changes in circumstances indicate the that carrying amount may not be recoverable.
+Added: In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews its long-lived assets and certain intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
In such an event, the carrying value of long-lived assets is reviewed by management to determine if the value may be impaired.
3 unchanged sentences
Where quoted market prices in active markets are not available, management would estimate fair value based on the best information available in the circumstances such as the price of similar assets, a discounted cash flow analysis or other techniques.
−Removed: No impairment losses were recognized for the years ended January 1, 2022 and January 2, 2021.
+Added: No impairment losses were recognized for the years ended December 31, 2022 and January 1, 2022.
The Company tests its reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
5 unchanged sentences
The Company performed qualitative assessments of goodwill as of the end of fiscal 2022 and determined that no impairment existed at the end of 2022.
−Removed: In the fourth quarter of 2020 the Company announced that the Eberhard Hardware, subsidiary in Ontario, Canada would be closed, and all tangible assets would be moved to Eberhard Manufacturing division in Cleveland, Ohio.
−Removed: As a result, approximately $ 1.0 million of goodwill associated with Eberhard Hardware was impaired and an impairment charge was recognized in the fourth quarter of 2020.
The Company will continue to perform annual qualitative assessments as of the end of each fiscal year.
7 unchanged sentences
Trademarks are deemed to have indefinite lives.
−Removed: Amortization expense recognized in 2021 and 2020 was $ 3,985,179 and $ 3,607,577 , respectively.
If facts and circumstances indicate that the carrying value of the intangible assets, including definite life intangible assets, may be impaired, an evaluation is performed to determine if a write-down is required.
−Removed: No impairment losses were recognized for the periods ended January 1, 2022 and January 2, 2021.
+Added: No impairment losses were recognized for the periods ended December 31, 2022 and January 1, 2022.
Fair Value of Financial Instruments
6 unchanged sentences
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.
−Removed: The Company’s financial instruments are primarily investments in pension assets, see Note 10, Retirement Benefit Plans , and consists of an interest rate swap.
+Added: The Company’s financial instruments are primarily investments in pension assets, see Note 10, Retirement Benefit Plans , and an interest rate swap.
The Company’s interest rate swap is not an exchange-traded instrument.
1 unchanged sentence
The amount of the interest rate swap is included in other accrued liabilities.
−Removed: The carrying amounts of other financial instruments (cash and cash equivalents, accounts receivable, accounts payable and debt) as of January 1, 2022 and January 2, 2021, approximate fair value because of their short-term nature and market based interest rates.
+Added: The carrying amounts of other financial instruments (cash and cash equivalents, accounts receivable, accounts payable and debt) as of December 31, 2022 and January 1, 2022, approximate fair value because of their short-term nature and market based interest rates.
The Company presents right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases.
3 unchanged sentences
The Company determines whether an arrangement is, or contains, a lease at contract inception.
−Removed: An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset.
+Added: An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all the economic benefits of an identified asset.
ROU assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term.
7 unchanged sentences
Notes to Consolidated Financial Statements (continued)
−Removed: Currently, the Company has 28 operating leases and three finance leases with a lease liability of $ 11.3 million as of January 1, 2022.
+Added: Currently, the Company has 22 operating leases and two finance leases with a lease liability of $ 12.3 million as of December 31, 2022.
The finance lease arrangements are immaterial.
1 unchanged sentence
The leases do not contain residual value guarantees, restrictions, or covenants that could cause the Company to incur additional financial obligations.
−Removed: We rent or sublease a part of one real estate property to a third party.
+Added: We rent or sublease one real estate property to two unrelated third parties.
There are no related party transactions.
There are no leases that have not yet commenced that could create significant rights and obligations for the Company.
−Removed: Total lease expense for each of the next five fiscal years is estimated to be as follows:
−Removed: 2022 - $ 2,664,761 ;
−Removed: 2023 - $ 2,186,238 ;
−Removed: 2024 - $ 1,700,834 ;
−Removed: 2025 - $ 1,081,468 ;
−Removed: 2026 - $ 805,722 and $ 2,865,077 thereafter.
The weighted average remaining lease term is 5.7 years.
6 unchanged sentences
The efforts expended method calculates the proportion of effort expended to date in comparison to the total effort expected to be expended for the contract.
−Removed: The amount of revenue recognized employing the percentage of completion method was $ 795,000 for the year ended January 1, 2022 and $ 505,000 for the year ended January 2, 2021.
−Removed: Based on historical experience, the Company does not accrue a reserve for product returns.
−Removed: For the years ended January 1, 2022 and January 2, 2021, the Company recorded sales returns of $ 395,000 and $ 374,000 , respectively, as a reduction of revenue.
+Added: The amount of revenue recognized employing the percentage of completion method was $ 1,385,000 for the year ended December 31, 2022 and $ 795,000 for the year ended January 1, 2022.
+Added: Based on historical experience, product returns have been immaterial, and the Company does not accrue a reserve for product returns.
+Added: For the years ended December 31, 2022 and January 1, 2022, the Company recorded sales returns of $ 580,000 and $ 395,000 , respectively, as a reduction to revenue.
Sales and similar taxes that are imposed on the Company’s sales and collected from the customer are excluded from revenues.
−Removed: Costs for shipping and handling activities, including those activities that occur subsequent to transfer of control to the customer, are recorded as cost of sales and are expensed as incurred.
−Removed: For the years ended January 1, 2022 and January 2, 2021, the Company recorded no revenues related to performance obligations satisfied in prior periods.
+Added: Costs for shipping and handling activities, including those activities that occur after transfer of control to the customer, are recorded as cost of sales and are expensed as incurred.
+Added: For the years ended December 31, 2022 and January 1, 2022, the Company recorded no revenues related to performance obligations satisfied in prior periods.
The Company has elected to use the practical expedient to exclude disclosure of transaction prices allocated to remaining performance obligations, and when the Company expects to recognize such revenue, for all periods prior to the date of initial application of the standard.
−Removed: See Note 13 regarding the Company’s revenue disaggregated by geography.
+Added: See Note 12 – Geographic Information regarding the Company’s revenue disaggregated by geography.
Cost of Goods Sold
6 unchanged sentences
Product Development Costs
−Removed: Product development costs, charged to expense as incurred, were $ 4,101,399 in 2021 and $ 2,749,333 in 2020.
+Added: Product development costs, charged to expense as incurred, were $ 4,241,211 in 2022 and $ 4,101,399 in 2021 and include costs to develop new or enhance existing products to better serve our customers.
Selling and Administrative Expenses
5 unchanged sentences
Stock - Based Compensation
−Removed: The Company accounts for its stock-based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”), which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to its employees and Directors, including employee stock awards and restricted stock awards.
+Added: The Company accounts for its stock-based awards in accordance with ASC 718-10, Compensation, which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to its employees and Directors, including employee stock awards and restricted stock awards.
The Company estimates the fair value of granted stock awards using the Black-Scholes valuation model at the date of grant.
6 unchanged sentences
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
−Removed: The Company accounts for uncertain tax positions pursuant to the provisions of FASB Accounting Standards Codification (“ASC”) 740 which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements.
+Added: The Company accounts for uncertain tax positions pursuant to the provisions of ASC 740 which clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements.
These provisions detail how companies should recognize, measure, present, and disclose uncertain tax positions that have or are expected to be taken.
5 unchanged sentences
Beginning Balance
+Added: ( 1,225,226 )
Foreign Exchange
1 unchanged sentence
Beginning Balance
−Removed: Investment in Hallink
−Removed: Impairment Charge
Foreign Exchange
3 unchanged sentences
Trademarks are not amortized as their lives are deemed to be indefinite.
+Added: Amortization expense recognized in 2022 and 2021 was $ 3,953,838 and $ 3,985,179 , respectively.
Total amortization expense for each of the next five years is estimated to be as follows:
5 unchanged sentences
Period (Years)
−Removed: Patents and developed
+Added: Patents and developed technology
+Added: $ 7,412,101 4.8
Customer relationships
+Added: 25,883,709 4.8
Non-compete agreements
+Added: 1,040,714 2.4
Total Gross Intangibles
+Added: $ 34,340,524 4.7
Accumulated Amortization
−Removed: Patents and developed
+Added: Patents and developed technology
Customer relationships
2 unchanged sentences
Net 2022 per Balance Sheet
−Removed: Patents and developed
+Added: Patents and developed technology
+Added: $ 6,749,169 6.5
Customer relationships
+Added: 26,040,691 5.9
Non-compete agreements
+Added: 1,111,756 3.3
Total Gross Intangibles
+Added: $ 33,901,616 5.9
Accumulated Amortization
−Removed: Patents and developed
+Added: Patents and developed technology
Customer relationships
4 unchanged sentences
Notes to Consolidated Financial Statements (continued)
−Removed: On August 30, 2019, the Company entered into the Credit Agreement with Santander Bank, N.A., for itself, People’s United Bank, National Association.
+Added: On August 30, 2019, the Company entered into the Credit Agreement with Santander Bank, N.A., for itself, M&T Bank, National Association.
and TD Bank, N.A.
−Removed: as lenders, that included a $100 million term portion and a $ 20 million revolving commitment portion.
−Removed: Proceeds of the term loan were used to repay the Company’s remaining outstanding term loan (and to terminate its existing credit facility) with People’s United Bank, N.A.
+Added: as lenders (the “Credit Agreement”), that included a $ 100 million term portion and a $ 20 million revolving commitment portion.
+Added: Proceeds of the term loan were used to repay the Company’s remaining outstanding term loan (and to terminate its existing credit facility) with M&T Bank, N.A.
(approximately $ 19 million) and to acquire Big 3 Precision.
−Removed: The term portion of the loan requires quarterly principal payments of $ 1,250,000 for an 18-month period beginning December 31, 2019.
−Removed: The repayment amount then increases to $ 1,875,000 per quarter beginning September 30, 2021 and continues through June 30, 2023.
+Added: The term portion of the loan required quarterly principal payments of $ 1,250,000 for an 18-month period beginning December 31, 2019.
+Added: The repayment amount then increased to $ 1,875,000 per quarter beginning September 30, 2021, and continues through June 30, 2023.
The repayment amount then increases to $ 2,500,000 per quarter beginning September 30, 2023, and continues through June 30, 2024.
2 unchanged sentences
The revolving commitment portion has a maturity date of August 30, 2024.
−Removed: During 2020 and 2021, the Company did not borrow any funds on the revolving commitment portion of the facility.
+Added: The Company borrowed $ 10,000,000 on the revolving credit facility and subsequently paid it back during 2022 and did not borrow any funds on the revolving commitment portion of the facility during 2021.
The interest rates on the term and revolving credit portion of the Credit Agreement vary.
6 unchanged sentences
The Company has a fixed interest rate of 1.44 % on the swap contract and will pay the difference between the fixed rate and LIBOR when LIBOR is below 1.44% and will receive interest when the LIBOR rate exceeds 1.44 %.
−Removed: On January 1, 2022, the interest rate for half ($ 27.8 million) of the term portion was 1.6 %, using a one-month LIBOR rate, and 2.94 % one the remaining balance ($ 43.8 million) of the term loan based on a one-month LIBOR rate .
−Removed: The interest rates on the Credit Agreement, and interest rate swap contract are susceptible to changes to the method that LIBOR rates are determined and to the potential phasing out of LIBOR after 2021.
−Removed: Information regarding the potential phasing out of LIBOR is provided below.
−Removed: On July 27, 2017, the Financial Conduct Authority (the “FCA”) (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021.
−Removed: The ICE Benchmark Administration (the “IBA”) recently announced market consultation regarding the extension of US dollar LIBOR tenors through June 30, 2023, which the FCA supports.
−Removed: The Alternative Reference Rates Committee (the “ARRC”), a financial industry group convened by the Federal Reserve Board, has recommended the use of the Secured Overnight Financing Rate (“SOFR”) to replace LIBOR.
+Added: On December 31, 2022, the interest rate for half ($24.0 million) of the term portion was 6.1%, using a one-month LIBOR rate, and 3.19% on the remaining balance ($40.0 million) of the term loan based on a one-month LIBOR rate .
+Added: The interest rates on the Credit Agreement and the interest rate swap contract are susceptible to that the transition from LIBOR to alternative benchmark rates such as SOFR.
+Added: Information regarding this transition is provided below.
+Added: The ICE Benchmark Administration (the “IBA”) ceased publication of all settings of non-US dollar LIBOR and the one-week and two-month U.S.
+Added: dollar LIBOR settings on December 31, 2021, with the publication of the remaining U.S.
+Added: dollar LIBOR settings scheduled to be discontinued after June 30, 2023.
+Added: The Adjustable Interest Rate Act (the “LIBOR Act”), which was signed into law on March 15, 2022, provided a replacement framework for outstanding financial contracts tied to LIBOR once LIBOR ceases to be published.
+Added: The LIBOR Act provides a statutory mechanism and safe harbor that applies on a nationwide basis to replace LIBOR with a benchmark rate, selected by the Federal Reserve Board based on SOFR, for certain contracts that reference LIBOR and contain no or insufficient fallback provisions.
+Added: The LIBOR Act preempts and supersedes any state or local law, statute, rule, regulation, or standard relating to the selection or use of a benchmark replacement or related changes and allows parties that already have effective fallback provisions to opt out of the legislation.
+Added: On December 16, 2022, the Federal Reserve adopted a final rule implementing the LIBOR Act that, among other things, identifies the applicable SOFR-based benchmark replacements under the LIBOR Act for various contact types.
The difference between LIBOR and SOFR is that LIBOR is a forward-looking rate which means the interest rate is set at the beginning of the period with payment due at the end.
2 unchanged sentences
Notes to Consolidated Financial Statements (continued)
−Removed: DEBT (continued)
+Added: D ebt (continued)
Debt consists of:
+Added: $ 64,147,028 $ 71,313,522
Revolving credit loan
+Added: 64,147,028 71,313,522
Less current portion
−Removed: Amounts are net of unamortized discounts and debt issuance costs of $ 186,478 as of January 1, 2022 and $ 273,312 as of January 2, 2021.
−Removed: The Company paid interest of $ 2,271,818 in 2021, $ 2,754,980 in 2020.
+Added: 9,010,793 7,500,000
+Added: $ 55,136,231 $ 63,813,522
+Added: Amounts are net of unamortized discounts and debt issuance costs of $ 113,769 as of December 31, 2022 and $ 186,478 as of January 1, 2022.
+Added: The Company paid interest of $ 2,502,883 in 2022 and $ 2,271,818 in 2021.
The Company’s loan covenants under the Credit Agreement require the Company to maintain a consolidated fixed charge coverage ratio of at least 1.25 to 1, which is to be tested quarterly on a twelve-month trailing basis.
−Removed: In addition, the Company will be required to show a senior net leverage ratio of 4.25 to 1.
−Removed: The Company was in compliance with all covenants as of January 1, 2022.
+Added: In addition, the Company is required to show a senior net leverage ratio not to exceed 4.25 to 1 .
+Added: The Company was in compliance with all covenants as of December 31, 2022.
In addition, the Company has restrictions on, among other things, new capital leases, purchases or redemptions of its capital stock, mergers and divestitures, and new borrowing.
−Removed: The Company was in compliance with all covenants in 2021 and 2020.
−Removed: As of January 1, 2022, scheduled annual principal maturities of long-term debt for each of the next five years follow:
+Added: The Company was in compliance with all covenants as of December 31, 2022 and January 1, 2022.
+Added: As of December 31, 2022, scheduled annual principal maturities of long-term debt for each of the next five years follow:
Stock Options and awards
−Removed: As of January 1, 2022, the Company has one incentive stock award plan, The Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”), for officers, other key employees, and non-employee Directors.
−Removed: The Eastern Company 2010 Executive Stock Incentive Plan expired in February 2020.
+Added: As of December 31, 2022, the Company has one incentive stock award plan, The Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”), for officers, other key employees, and non-employee Directors.
Incentive stock awards granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock awards are granted.
1 unchanged sentence
Under the 2020 Plan, non-qualified stock awards granted to participants will have exercise prices determined by the Compensation Committee of the Company’s Board of Directors.
−Removed: The Company granted 27,300 awards during 2021.
−Removed: During 2020 the Company did not grant stock awards or restricted stock.
+Added: The Company granted 43,300 and 27,300 awards during 2022 and 2021, respectively.
The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”).
The SARs are in the form of an award with a cashless exercise price equal to the difference between the fair value of the Company’s common stock at the date of grant and the fair value as of the exercise date resulting in the issuance of the Company’s common stock.
−Removed: The Company did not issue SARs during 2021 and issued 44,000 SARs during 2020.
+Added: The Company did not issue SARs in 2022 or 2021.
The Eastern Company
1 unchanged sentence
Stock options and awards (continued)
−Removed: Stock-based compensation expense in connection with stock awards and SARs granted to employees during fiscal year 2021 was $ 418,000 and for 2020 was $ 376,000 .
−Removed: For the period of 2021, the Company used several assumptions which included an expected term of 4 years, volatility deviation of 47.25 % to 48.55 % and a risk-free rate of 0.18 % to 0.35 %.
−Removed: For the period of 2020, the Company used several assumptions which included an expected term of 4 years, volatility deviation of 38.62 % and a risk-free rate of 0.26 %.
−Removed: As of January 1, 2022, there were 804,703 shares of common stock reserved and available for future grant under the above noted 2020 Plan.
+Added: Stock-based compensation expense in connection with stock awards and SARs was $ 504,694 for awards granted to employees during fiscal year 2022 and $ 418,000 for awards granted to employees during fiscal year 2021.
+Added: For the 2022 fiscal year, the Company used several assumptions which included an expected term of 3 years, volatility deviation of 47.15 % to 47.70 % and a risk-free rate of 2.04 % to 2.66 %.
+Added: For the 2021 fiscal year, the Company used several assumptions which included an expected term of 4 years, volatility deviation of 47.25 % to 48.55 % and a risk-free rate of 0.18 to 0.35 %.
+Added: As of December 31, 2022, there were 808,101 shares of common stock reserved and available for future grant under 2020 Plan.
The following tables set forth the outstanding SARs for the period specified:
−Removed: January 1, 2022
+Added: December 31, 2022
January 1, 2022
2 unchanged sentences
Outstanding at beginning of period
+Added: 180,833 $ 22.88 244,001 $ 21.87
+Added: ( 16,667 ) 21.20 ( 55,668 ) 19.31
+Added: ( 18,000 ) 21.74 ( 7,500 ) 21.20
Outstanding at end of period
+Added: 146,166 23.22 180,833 22.88
SARs Outstanding and Exercisable
−Removed: Range of Exercise Prices
−Removed: Outstanding as of
−Removed: January 1, 2022
−Removed: Weighted- Average Remaining Contractual Life
−Removed: Weighted- Average Exercise Price
−Removed: Exercisable as of
−Removed: January 1, 2022
−Removed: Weighted- Average Remaining Contractual Life
−Removed: Weighted- Average Exercise Price
+Added: December 31, 2022
+Added: Remaining Contractual
+Added: December 31, 2022
+Added: Remaining Contractual
$ 20.20 -$ 26.30
+Added: 146,166 1.1 $ 23.22 115,166 0.6 $ 23.50
The following tables set forth the outstanding stock grants for the period specified:
−Removed: January 1, 2022
+Added: December 31, 2022
January 1, 2022
Outstanding at beginning of period
+Added: 27,300 25,000
+Added: 43,300 27,300
+Added: ( 6,100 ) ( 25,000 )
Outstanding at end of period
−Removed: As of January 1, 2022, outstanding SARs and awards had an intrinsic value of $ 1,087,570 .
+Added: 64,500 27,300
+Added: As of December 31, 2022, outstanding SARs and awards had an intrinsic value of $ 1,243,560 .
The Eastern Company
3 unchanged sentences
Property, plant and equipment
+Added: $ 3,568,209 $ 3,586,257
Right of Use Asset
+Added: 2,786,486 2,564,741
Intangible assets
+Added: 3,374,192 6,364,038
+Added: 876,731 495,881
Foreign Withholding Tax
+Added: 60,462 60,462
Total deferred income tax liabilities
+Added: 10,666,080 13,071,379
Other postretirement benefits
2 unchanged sentences
Allowance for doubtful accounts
−Removed: Accrued compensation
−Removed: Lease Obligation
( 160,446 ) ( 114,113 )
+Added: Accrued compensation
( 498,530 ) ( 390,693 )
+Added: Lease Obligation
( 2,786,486 ) ( 2,564,741 )
3 unchanged sentences
Capital Loss Carry forward
−Removed: Total deferred income tax assets
- ( 182,582 )
+Added: Total deferred income tax assets
( 11,155,069 ) ( 11,919,620 )
Net deferred income tax (assets) liabilities
+Added: $ ( 488,989 ) $ 1,151,759
Income before income taxes consists of:
−Removed: Continued Operations
+Added: Continuing Operations
Discontinued Operations
Total Income Statement
−Removed: Continued Operations
+Added: Continuing Operations
Discontinued Operations
3 unchanged sentences
$ 14,402,917 $ 1,666,312 $ 16,069,229 $ 19,070,560 $ ( 8,936,924 ) $ 10,133,636
−Removed: $ ( 7,191,198 )
The Eastern Company
2 unchanged sentences
The provision for income taxes follows:
−Removed: Continued Operations
+Added: Continuing Operations
Discontinued Operations
Total Income Statement
−Removed: Continued Operations
+Added: Continuing Operations
Discontinued Operations
11 unchanged sentences
federal statutory rate
+Added: $ 3,374,538 21 % $ 2,128,063 21 %
State income taxes, net of federal benefit
+Added: 714,416 4 ( 165,221 ) ( 2 )
Impact on Foreign Repatriation Tax Reform
Impact of foreign subsidiaries on effective tax rate
+Added: ( 41,404 ) 0 ( 282,614 ) ( 3 )
Impact of Research & Development tax credit
+Added: ( 131,005 ) ( 1 ) ( 188,944 ) ( 3 )
Uncertain tax positions reserve
+Added: 54,705 0 ( 417,197 ) ( 3 )
+Added: ( 203,939 ) ( 1 ) ( 300,935 ) ( 3 )
+Added: $ 3,767,311 23 % $ 784,465 7 %
A reconciliation of income taxes computed using the U.S.
2 unchanged sentences
federal statutory rate
+Added: $ 3,024,612 21 % $ 4,004,817 21 %
State income taxes, net of federal benefit
+Added: 649,486 4 61,777 1
Impact on Foreign Repatriation Tax Reform
Impact of foreign subsidiaries on effective tax rate
+Added: ( 41,404 ) 0 ( 282,614 ( 2 )
Impact of Research & Development tax credit
+Added: ( 131,005 ) ( 1 ) ( 188,944 ( 1 )
Uncertain tax positions reserve
+Added: 54,705 0 ( 417,197 ( 2 )
+Added: ( 203,938 ) ( 1 ) ( 300,935 ( 2 )
+Added: $ 3,352,456 23 % $ 2,888,217 15 %
The Eastern Company
3 unchanged sentences
federal statutory rate to that reflected in operations follows for discontinued operations:
+Added: Percent Amount
Income taxes using U.S.
1 unchanged sentence
$ 349,925 21 % $ ( 1,876,754 ) 21 %
−Removed: $ ( 1,510,152 )
State income taxes, net of federal benefit
6 unchanged sentences
A provision has not been made for additional U.S.
−Removed: federal and foreign taxes at January 1, 2022 on approximately $ 11,176,328 of undistributed earnings of foreign subsidiaries because the Company intends to reinvest these funds indefinitely.
+Added: federal and foreign taxes on December 31, 2022 on approximately $ 12,218,919 of undistributed earnings of foreign subsidiaries because the Company intends to reinvest these funds indefinitely.
It is not practicable to estimate the unrecognized deferred tax liability for withholding taxes on these undistributed earnings.
5 unchanged sentences
For public business entities, the amendments in ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
−Removed: Early adoption of ASU 2019-12 is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued.
−Removed: An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.
−Removed: Additionally, an entity that elects early adoption must adopt all the amendments in the same period.
The Company adopted ASU 2019-12 in the first interim period of 2021.
−Removed: On March 27, 2020, the $ 2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security Act (H.R.
−Removed: 748) (the “CARES Act”) became law.
−Removed: The CARES Act includes a variety of economic and tax relief measures intended to stimulate the economy, including loans for small businesses, payroll tax credits/deferrals, and corporate income tax relief.
−Removed: We are analyzing the following components of the CARES Act to determine their effect on our income tax provision:
−Removed: Net operating losses arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years, which may result in refunds of prior period corporate income tax.
−Removed: The Company had taxable income in 2018, 2019 and 2020, thus we did not benefit from this item of CARES Act relief.
−Removed: Furthermore, for taxable years beginning before 2021, net operating loss carryforwards and carrybacks to that year may offset 100% of taxable income in the year.
−Removed: Previously, net operating losses generated through 2017 could offset 100% of taxable income, while losses generated after 2017 could only offset 80% of taxable income.
−Removed: As noted previously, the Company had taxable income in 2018, 2019 and 2020, thus we did not benefit from this item of CARES Act relief.
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: INCOME TAXES (continued)
−Removed: For taxable years beginning in 2019 and 2020, the interest deduction limitation is increased from 30% to 50% of “adjusted taxable income” (taxable income without interest, tax depreciation and tax amortization) plus interest income.
−Removed: Furthermore, the Company may choose to use the 2019 adjusted taxable income (instead of 2020) in determining the 2020 interest expense limitation.
−Removed: The Company was not subject to an interest limitation in 2019 nor 2020.
−Removed: A technical correction to the Tax Cuts and Jobs Act permits bonus depreciation and a 15-year straight-line recovery period on qualified improvement property placed in service after December 31, 2017.
−Removed: Prior to this technical correction, such property placed in service after 2017 was subject to the 39-year straight-line recovery period and was ineligible for bonus depreciation.
−Removed: The Company will take advantage of this accelerated recovery period and bonus depreciation.
−Removed: To the extent the Company has eligible improvements in 2021, the Company can claim bonus depreciation which would reduce taxes payable and increase the deferred tax liability for fixed assets.
−Removed: Other CARES Act corporate income tax provisions will not significantly impact the Company, including alternative minimum tax refunds and increases in the charitable contributions deduction limitation.
−Removed: The Company will also continue to assess the effect of state level tax relief provisions as enacted, such as state net operating loss rule changes and conformity to the federal interest, depreciation and charitable contribution deduction changes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:
Balance at beginning of year
−Removed: Increase (decrease) for positions taken during the current period
+Added: $ 672,098 $ 1,078,309
+Added: Increase for positions taken during the current period
+Added: 58,586 45,721
Increase (decrease) for positions taken during the prior period
−Removed: Increase (decrease) resulting from the expiration of the statute of limitations
+Added: Decrease resulting from the expiration of the statute of limitations
( 45,166 ) ( 451,932 )
Balance at end of year
+Added: $ 685,518 $ 672,098
The Company files income tax returns in the U.S.
3 unchanged sentences
income tax examinations by tax authorities prior to 2016.
−Removed: Included in the balance at January 1, 2022, are $ 243,052 of unrecognized tax benefits that would affect the annual effective tax rate.
+Added: The Eastern Company
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Income Taxes (continued)
+Added: Included in the balance as of December 31, 2022, are $ 253,655 of unrecognized tax benefits that would affect the annual effective tax rate.
In 2022, the Company recognized accrued interest related to unrecognized tax benefits in income tax expense.
−Removed: The Company had approximately $ 65,836 of accrued interest at January 1, 2022.
+Added: The Company had approximately $ 69,245 of accrued interest as of December 31, 2022.
The total amount of unrecognized tax benefits could increase or decrease within the next twelve months for several reasons, including the closure of federal, state, and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under ASC 740.
3 unchanged sentences
The Company is not a party to any leases that have capital improvement funding or payment increases based on any index or rate.
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: LEASES (continued)
Future minimum payments under non-cancelable operating leases with initial or remaining terms more than one year during each of the next five fiscal years follow:
8 unchanged sentences
Components of the net periodic benefit cost of the Company’s pension benefit plans for the fiscal year indicated were as follows:
+Added: $ 1,078,973 $ 1,087,333
Interest cost
−Removed: Expected return on plan assets
2,432,756 2,017,015
+Added: Expected return on plan assets
( 5,842,641 ) ( 5,794,694 )
Amortization of prior service cost
+Added: 66,252 99,380
Amortization of the net loss
−Removed: Net periodic benefit cost
1,560,299 1,730,150
+Added: Net periodic benefit cost
$ ( 704,361 ) $ ( 860,816 )
+Added: The Eastern Company
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Retirement Benefit Plans (continued)
Service costs are reported in the cost of products sold and the other components of net periodic benefit costs are reported in other income in the consolidated statements of income.
5 unchanged sentences
- Supplemental pension plans
−Removed: 1.49 % 2.61 %
Expected return on plan assets
Rate of compensation increase
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: RETIREMENT BENEFIT PLANS (continued)
Components of the net periodic benefit cost of the Company’s other postretirement benefit plan were as follows:
+Added: $ 53,291 $ 54,505
Interest cost
+Added: 43,950 39,369
Expected return on plan assets
+Added: ( 17,600 ) ( 25,681 )
Amortization of prior service cost
Amortization of the net loss
+Added: ( 8,214 ) ( 12,374 )
Net periodic benefit cost
+Added: $ 75,668 $ 55,819
Assumptions used to determine net periodic benefit cost for the Company’s other postretirement plan for the fiscal year indicated were as follows:
Discount rate
+Added: 5.28 % 2.66 %
Expected return on plan assets
−Removed: As of January 1, 2022, and January 2, 2021, the status of the Company’s pension benefit plans and other postretirement benefit plan was as follows:
+Added: As of December 31, 2022, and January 1, 2022, the status of the Company’s pension benefit plans and other postretirement benefit plan was as follows:
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Retirement Benefit Plans (continued)
Pension Benefit
2 unchanged sentences
$ 107,420,338 $ 111,549,725 $ 1,724,582 $ 1,827,169
−Removed: $ 102,991,053
Change in discount rate
( 26,408,548 ) ( 5,316,621 ) ( 562,340 ) ( 96,343 )
+Added: 1,078,973 1,087,333 53,291 54,505
Interest cost
+Added: 2,432,756 2,017,015 43,950 39,369
Plan Amendment
2 unchanged sentences
Significant Event
−Removed: Benefits paid
- - - ( 218,103 )
+Added: Benefits paid
( 4,756,015 ) ( 4,257,857 ) ( 34,962 ) ( 28,865 )
1 unchanged sentence
$ 80,701,715 $ 107,420,338 $ 1,151,126 $ 1,724,582
−Removed: $ 111,549,725
Fair value of plan assets at beginning of year
+Added: $ 80,814,956 $ 78,361,102 $ 439,993 $ 642,030
Actual return on plan assets
+Added: ( 17,701,556 ) 4,369,247 44,911 16,066
Employer contributions
+Added: 169,865 2,342,462 49,158 45,243
Significant Event
−Removed: Benefits paid
- - - ( 218,103 )
+Added: Benefits paid
( 4,756,015 ) ( 4,257,855 ) ( 49,158 ) ( 45,243 )
Fair value of plan assets at end of year
+Added: $ 58,527,250 $ 80,814,956 $ 484,904 $ 439,993
Pension Benefit
3 unchanged sentences
$ ( 22,174,465 ) $ ( 26,605,382 ) $ ( 666,222 ) $ ( 1,284,589 )
−Removed: $ ( 33,188,623 )
−Removed: $ ( 1,284,589 )
−Removed: $ ( 1,185,139 )
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: RETIREMENT BENEFIT PLANS (continued)
Amounts recognized in accumulated other comprehensive income consist of:
3 unchanged sentences
$ ( 36,956,587 ) $ ( 40,447,026 ) $ 900,694 $ 241,621
−Removed: $ ( 43,727,607 )
Prior service (cost) credit
1 unchanged sentence
$ ( 36,956,587 ) $ ( 40,513,278 ) $ 900,694 $ 241,621
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Retirement Benefit Plans (continued)
Change in the components of accumulated other comprehensive income consist of:
3 unchanged sentences
$ ( 40,513,278 ) $ ( 43,893,239 ) $ 241,621 $ 349,276
−Removed: $ ( 36,580,267 )
Change due to availability of final actual assets and census data
1 unchanged sentence
Prior service cost
+Added: 66,252 99,380 4,241 -
Net loss (gain)
+Added: 1,560,299 1,730,150 ( 8,214 ) ( 12,374 )
Liability (gains)/losses
2 unchanged sentences
Asset (gains)/losses deferred
+Added: ( 22,866,209 ) ( 771,444 ) 27,311 ( 9,615 )
Plan Amendments
+Added: - - - ( 36,388 )
Significant Event
3 unchanged sentences
$ ( 36,956,587 ) $ ( 40,513,278 ) $ 900,694 $ 241,621
−Removed: $ ( 43,893,239 )
Assumptions used to determine the projected benefit obligations for the Company’s pension benefit plans and other postretirement benefit plan for the fiscal year indicated were as follows:
5 unchanged sentences
- Other postretirement plan
−Removed: At January 1, 2022 and January 2, 2021, the accumulated benefit obligation for all qualified and nonqualified defined benefit pension plans was $ 107,420,338 and $ 111,549,725 , respectively.
−Removed: During 2021, the pension benefit obligation decreased between 3.5% to 4.8% due to the decrease in the discount rates from 2.40 %- 2.48 % to 2.75 %- 2.81 %.
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: RETIREMENT BENEFIT PLANS (continued)
+Added: On December 31, 2022 and January 1, 2022, the accumulated benefit obligation for all qualified and nonqualified defined benefit pension plans was $ 80,701,715 and $ 107,420,338 , respectively.
+Added: During 2022, the pension benefit obligation decreased between 24.1% to 26.1 % due to the increase in the discount rates from 2.75 %- 2.81 % to 5.21 %- 5.23 %.
Information for the under-funded pension plans with a projected benefit obligation and an accumulated benefit obligation in excess of plan assets:
2 unchanged sentences
$ 80,701,715 $ 107,420,338
−Removed: $ 111,549,725
Accumulated benefit obligation
+Added: 80,701,715 107,420,338
Fair value of plan assets
−Removed: Net amount recognized in accrued benefit liability
58,527,250 80,814,956
+Added: Net amount recognized in accrued benefit liability
$ ( 22,174,465 ) $ ( 26,605,382 )
1 unchanged sentence
Estimated future benefit payments to participants of the Company’s other postretirement plan are $ 46,000 in 2023, $ 46,000 in 2024, $ 49,000 in 2025, $ 52,000 in 2026, $ 53,000 in 2027 and a total of $ 302,000 from 2028 through 2032.
+Added: The Eastern Company
+Added: Notes to Consolidated Financial Statements (continued)
+Added: Retirement Benefit Plans (continued)
The Company expects to make cash contributions to its qualified pension plans of approximately $ 800,000 and to its other postretirement plan of approximately $ 50,000 in 2023.
5 unchanged sentences
In 2022, as in 2021, we developed each plan’s discount rate with the assistance of our actuaries by matching expected future benefit payments in each year to the corresponding spot rates from the FTSE Pension Liability Yield Curve, comprised of high quality (rated AA or better) corporate bonds.
−Removed: The Eastern Company
−Removed: Notes to Consolidated Financial Statements (continued)
−Removed: RETIREMENT BENEFIT PLANS (continued)
−Removed: The fair values of the company’s pension plans assets at January 1, 2022 and January 2, 2021, utilizing the fair value hierarchy discussed in Note 4 – Accounting Policies – Fair Value of Financial Instruments , follow:
−Removed: January 1, 2022
+Added: The fair values of the Company’s pension plans assets on December 31, 2022 and January 1, 2022, utilizing the fair value hierarchy discussed in Note 4 – Accounting Policies – Fair Value of Financial Instruments , follow:
+Added: December 31, 2022
Cash and Equivalents:
Common/collective trust funds
+Added: $ - $ 391,357 $ - $ 391,357
The Eastern Company Common Stock
+Added: 4,184,107 - 4,184,107
Common/collective trust funds
Russell Multi Asset Core Plus Fund (a)
+Added: - 26,244,623 - 26,244,623
Fixed Income:
2 unchanged sentences
• Russell 25 Year LDI Fixed Income Fund
+Added: - 4,376,600 - 4,376,600
• Russell 14 Year LDI Fixed Income Fund
+Added: - 18,012,813 - 18,012,813
STRIPS Fixed Income Funds (c)
• Russell 15 to 20 Year STRIPS Fixed Income Fund
+Added: - 2,151,410 - 2,151,410
• Russell 10 to 15 Year STRIPS Fixed Income Fund
+Added: - 3,166,340 - 3,166,340
+Added: $ 4,184,107 $ 54,343,143 $ - $ 58,527,250
The Eastern Company
4 unchanged sentences
Common/collective trust funds
+Added: $ - $ 356,173 $ - $ 356,173
The Eastern Company Common Stock
+Added: 5,460,173 - 5,460,173
Common/collective trust funds
Russell Multi Asset Core Plus Fund (a)
+Added: - 36,142,837 - 36,142,837
Fixed Income:
2 unchanged sentences
· Russell 25 Year LDI Fixed Income Fund
+Added: - 4,320,207 - 4,320,207
· Russell 14 Year LDI Fixed Income Fund
+Added: - 26,430,482 - 26,430,482
STRIPS Fixed Income Funds (c)
· Russell 15 to 20 Year STRIPS Fixed Income Fund
+Added: - 3,264,328 - 3,264,328
· Russell 10 to 15 Year STRIPS Fixed Income Fund
+Added: - 4,840,756 - 4,840,756
+Added: $ 5,460,173 $ 75,354,783 $ - $ 80,814,956
Equity common funds primarily hold publicly traded common stock of both U.S and international companies selected for purposes of total return and to maintain equity exposure consistent with policy allocations.
24 unchanged sentences
It is expected that, as the funded status of the plans improves, more assets will be invested in long-duration fixed income instruments.
−Removed: The plans’ assets include 217,018 shares of the common stock of the Company having a market value of $ 5,460,173 and $ 5,230,134 on January 1, 2022 and January 2, 2021, respectively.
+Added: The plans’ assets include 217,018 shares of the common stock of the Company having a market value of $ 4,184,107 and $ 5,460,173 on December 31, 2022 and January 1, 2022, respectively.
No shares were purchased in 2022 or 2021 nor were any shares sold in either period.
9 unchanged sentences
The Company amended the Eastern Company Savings and Investment Plan (“401(k) Plan Amendment”) effective June 1, 2016.
−Removed: The 401(k) Plan Amendment increased this match to 50% of the first 6% of contributions for the remainder of Fiscal 2016.
+Added: The 401(k) Plan Amendment increased this match to 50% of the first 6% of contributions for the remainder of Fiscal 2016 and going forward.
The 401(k) Plan Amendment also provided for an additional non-discretionary contribution (the “transitional credit”) for certain non-union U.S.
4 unchanged sentences
Regular matching contributions
+Added: $ 561,357 $ 553,619
Transitional credit contributions
+Added: 123,387 138,604
Non-discretionary contributions
+Added: 376,861 392,865
Total contributions made for the period
−Removed: As of January 1, 2022, the Company had accrued $ 323,082 for the non-discretionary safe harbor contribution this amount was expensed in 2021 and was contributed to the plan in January 2022.
+Added: $ 1,061,605 $ 1,085,088
+Added: As of December 31, 2022, the Company had accrued $ 379,090 for the non-discretionary safe harbor contribution.
+Added: This amount was expensed in 2022 and was contributed to the plan in January 2023.
As of January 1, 2022, the Company had accrued $ 323,082 for the non-discretionary safe harbor contribution.
3 unchanged sentences
Weighted average shares outstanding
+Added: 6,223,839 6,262,378
Weighted average shares outstanding
+Added: 6,223,839 6,262,378
Dilutive stock awards
Denominator for diluted earnings per share
+Added: 6,237,941 6,263,089
There were no anti-dilutive stock equivalents in 2022 or 2021.
7 unchanged sentences
$ 279,265,146 $ 246,522,823
−Removed: $ 197,614,590
Foreign sales are primarily to customers in North America.
4 unchanged sentences
$ 262,906,744 $ 266,328,935
−Removed: $ 275,528,354
Recent Accounting Pronouncements
17 unchanged sentences
Long-term groundwater monitoring commenced in April 2019.
−Removed: Verbal approval for the closure plan was received from the NYSDEC in May 2019.
+Added: Verbal approval for the closure plan was received from the NYSDEC in May 2019, and written approval was received in October 2020.
Construction of the closure remedies, including improved drainage system, regrading, and installation of a low permeability cap was completed in October 2021.
5 unchanged sentences
The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss.
−Removed: As of January 1, 2022, and January 2, 2021, there was one significant concentration of credit risk.
−Removed: One customer represented 11 % of total accounts receivable for 2021 and 2020.
+Added: As of December 31, 2022, and January 1, 2022, there was one significant concentration of credit risk.
+Added: One customer represented 14 % of total accounts receivable for 2022 and 11 % of total accounts receivable in 2021.
The maximum exposure to credit risk is primarily represented by the carrying amount of the Company’s accounts receivable.
1 unchanged sentence
The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt, which bears interest at variable rates based on the LIBOR rate plus a margin spread of 1.25 % to 2.25 %.
−Removed: The Company has an interest rate swap with a notional amount of $ 46,875,000 on January 2, 2021, to convert a portion of borrowings under the Credit Agreement from variable to fixed rates.
+Added: The Company has an interest rate swap with a notional amount of $ 40,000,000 on December 31, 2022, to convert a portion of borrowings under the Credit Agreement from variable to fixed rates.
The valuation of this swap is determined using the one-month LIBOR rate index and mitigates the Company’s exposure to interest rate risk.
−Removed: Additionally, interest rates on the Company’s debt are susceptible to changes to the method that LIBOR rates are determined and to the potential phasing out of LIBOR after 2021.
−Removed: More information regarding the potential phasing out of LIBOR is discussed in greater detail under Note 6, Debt to the Consolidated Financial Statements.
+Added: Additionally, interest rates on the Company’s debt are susceptible of the transition from LIBOR to alternative benchmark rates, such as SOFR.
+Added: This transition is discussed in greater detail under Note 6 - Debt .
Currency Exchange Rate Risk
2 unchanged sentences
As a result, the Company does not attempt to mitigate its foreign currency exposure through the acquisition of any speculative or leveraged financial instruments.
−Removed: The Eastern Company
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
+Added: The Eastern Company
Naugatuck, Connecticut
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of The Eastern Company (the Company) as of January 1, 2022 and January 2, 2021, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended January 1, 2022, including the related notes and financial statement schedule appearing under Item 15(a)(2) (collectively referred to as the financial statements).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended January 1, 2022, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 17, 2022, expressed an unqualified opinion.
+Added: We have audited the accompanying consolidated balance sheets of The Eastern Company (the Company) as of December 31, 2022 and January 1, 2022, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the years in the two-year period ended December 31, 2022, including the related notes and financial statement schedule appearing under Item 15(a)(2) on Form 10-K, (collectively referred to as the financial statements).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and January 1, 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 14, 2023 expressed an unqualified opinion.
Basis for Opinion
15 unchanged sentences
Description of the Critical Audit Matter and the Relevant Accounts and Disclosures
−Removed: As described in Notes 4 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance is $72.2 million as of January 1, 2022.
+Added: As described in Notes 3 and 4 to the financial statements, the Company’s consolidated goodwill balance is $70.8 million as of December 31, 2022.
Management tests reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
4 unchanged sentences
How the Critical Audit Matter was Addressed in the Audit
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
+Added: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.
These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Company’s reporting units.
12 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.