SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JUNE 28, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM --- to ---.
Commission File Number 0-599
THE EASTERN COMPANY
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(Exact Name of Registrant as specified in its charter)
Connecticut 06-0330020
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
112 Bridge Street, Naugatuck, Connecticut 06770
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(Address of principal executive offices) (Zip Code)
(203) 729-2255
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) 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 whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes -- No X .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of June 28, 2003
----- -------------------------------
Common Stock, No par value 3,612,746
-1-
PART I
FINANCIAL INFORMATION
THE EASTERN COMPANY AND SUBSIDIARIES
ITEM I CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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ASSETS
June 28, 2003 December 28, 2002
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CURRENT ASSETS
Cash and cash equivalents $ 5,058,728 $ 5,939,232
Investment in common stock, at market 872,209 807,438
Accounts receivable, less allowances:
2003 - $373,000; 2002 - $304,000 11,289,161 10,824,807
Inventories 16,925,297 16,534,657
Prepaid expenses and other 1,249,199 1,336,383
Deferred income taxes 564,000 564,000
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Total Current Assets 35,958,594 36,006,517
--------------------
Property, plant and equipment 41,418,387 40,442,628
Accumulated depreciation (17,055,417) (15,392,659)
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24,362,970 25,049,969
Goodwill and trademarks 10,635,032 10,514,047
Patents, technology and licenses,
less accumulated amortization 2,033,752 2,111,865
Intangible pension asset 1,112,129 1,112,129
Prepaid pension cost 1,021,160 1,338,010
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TOTAL ASSETS $ 75,123,637 $ 76,132,537
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,232,941 $ 3,838,412
Accrued compensation 1,177,347 1,923,463
Other accrued expenses 1,634,261 2,015,979
Current portion of long-term debt 2,624,254 2,628,664
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Total Current Liabilities 9,668,803 10,406,518
-------------------------
Deferred federal income taxes 841,687 737,987
Long-term debt, less current portion 17,615,723 18,920,747
Accrued postretirement benefits 2,614,948 2,578,156
Accrued rate swap obligation 943,690 1,138,086
Accrued pension obligation 3,848,197 4,448,197
Shareholders' Equity
Preferred Stock, no par value
Authorized shares - 2,000,000
(No shares issued)
Common Stock, no par value:
Authorized Shares - 25,000,000
Issued and outstanding shares:
2003-3,612,746; 2002-3,631,869
excluding 1,680,320 in 2003 and 1,657,320
shares held in treasury 615,489 883,695
Accumulated other comprehensive (loss)/income:
Foreign currency translation (189,535) (898,137)
Additional minimum pension liability, net of taxes (4,073,870) (4,073,870)
Derivative financial instruments, net of taxes (566,690) (683,086)
Unrealized holding gain on investment in common
stock, net of taxes 74,964 35,893
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(4,755,131) (5,619,200)
Retained earnings 43,730,231 42,638,351
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TOTAL SHAREHOLDERS' EQUITY 39,590,589 37,902,846
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 75,123,637 $ 76,132,537
============= =============
See accompanying notes.
-2-
THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended Three Months Ended
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
------------- ------------- ------------- -------------
Net sales $43,181,825 $41,612,262 $21,591,111 $21,291,745
Other income 25,818 40,400 13,249 27,185
----------- ----------- ----------- -----------
43,207,643 41,652,662 21,604,360 21,318,930
Cost of products sold 32,409,625 31,689,505 16,318,446 16,478,547
----------- ----------- ----------- -----------
10,798,018 9,963,157 5,285,914 4,840,383
Selling and administrative expenses 7,293,196 6,911,464 3,473,743 3,269,684
Interest expense 669,091 884,582 322,572 437,867
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 2,835,731 2,167,111 1,489,599 1,132,832
Income taxes 945,666 731,486 552,911 374,314
----------- ----------- ----------- -----------
NET INCOME $ 1,890,065 $ 1,435,625 $ 936,688 $ 758,518
=========== =========== =========== ===========
Net income per share:
Basic $ 0.52 $ 0.40 $ 0.26 $ 0.21
Diluted $ 0.52 $ 0.38 $ 0.26 $ 0.20
Cash dividends per share $ 0.22 $ 0.22 $ 0.11 $ 0.11
-3-
THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 28, 2003 June 29, 2002
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OPERATING ACTIVITIES:
Net income $ 1,890,065 $ 1,435,625
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,840,656 1,811,709
Loss on sales of equipment and other assets - -
Postretirement benefits other than pensions 36,792 37,500
Provision for losses on accounts receivable 66,315 4,836
Issuance of Common Stock for directors' fees 49,189 42,785
Changes in operating assets and liabilities:
Accounts receivable (391,352) (1,242,184)
Inventories (752,313) 2,313,644
Prepaid expenses 471,293 139,483
Prepaid pension (24,062) 148,360
Accounts payable (413,884) (34,521)
Accrued expenses (460,712) (113,501)
Other Assets (72,502) (272,200)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 2,239,485 4,271,536
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (742,674) (752,733)
Other 33,307 3,177
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NET CASH USED BY INVESTING ACTIVITIES (709,367) (749,556)
FINANCING ACTIVITIES:
Principal payments on long-term debt (1,307,505) (1,608,384)
Purchases of Common Stock for treasury (317,395) -
Dividends paid (798,185) (797,568)
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NET CASH USED BY FINANCING ACTIVITIES (2,423,085) (2,405,952)
Effect of exchange rate changes on cash 12,463 11,204
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NET CHANGE IN CASH AND CASH EQUIVALENTS (880,504) 1,127,232
Cash and Cash Equivalents at Beginning of Period 5,939,232 4,955,020
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,058,728 $ 6,082,252
=========== ============
-4-
THE EASTERN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Six Months Ended Three Months Ended
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
------------- ------------- ------------- -------------
Net income $ 1,890,065 $ 1,435,625 $ 936,688 $ 758,518
Other comprehensive income --
Foreign currency translation 708,602 386,061 531,344 137,717
Change in fair value of derivative financial
instruments, net of income tax (expense)/benefit:
2003 - ($78,000) and ($38,000) respectively; 116,396 55,829
2002 - ($13,000) and $61,000 respectively 18,304 (92,274)
Unrealized holding gain on investment in
common stock, net of income tax expense
2003 - ($25,700) and ($40,000)respectively; 39,071 60,639
2002 - ($4,500) and ($24,000) respectively 6,338 35,610
----------- ----------- ----------- -----------
Comprehensive income $ 2,754,134 $ 1,846,328 $ 1,584,500 $ 839,571
=========== =========== =========== ===========
-5-
THE EASTERN COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 28, 2003
Note A - Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles in the United States for complete financial statements. Refer to the
Company's consolidated financial statements and notes thereto included in its
Form 10-K for the year ended December 28, 2002 for additional information.
The accompanying condensed consolidated financial statements are unaudited.
However, in the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the results of
operations for interim periods have been reflected therein. Operating results
for interim periods are not necessarily indicative of the results that may be
expected for the full year.
Certain prior year amounts have been reclassified to conform to the 2003
presentation.
The condensed balance sheet as of December 28, 2002 has been derived from the
audited consolidated balance sheet at that date.
Note B - Earnings Per Share
- ---------------------------
The denominators used in the earnings per share computations follow:
Six Months Ended Three Months Ended
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
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Basic:
Weighted average shares outstanding 3,627,807 3,629,931 3,625,310 3,630,586
Contingent shares outstanding -- -- -- --
--------- --------- --------- ---------
Denominator for basic earnings per share 3,627,807 3,629,931 3,625,310 3,630,586
========= ========= ========= =========
Diluted:
Weighted average shares outstanding 3,627,807 3,629,931 3,625,310 3,630,586
Contingent shares outstanding -- -- -- --
Dilutive stock options 2,602 99,611 5,204 86,445
--------- --------- --------- ---------
Denominator for diluted earnings per share 3,630,409 3,729,542 3,630,514 3,717,031
========= ========= ========= =========
Note C - Inventories
- --------------------
The components of inventories follow:
June 28, 2003 December 28, 2002
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Raw materials and component parts $ 7,836,413 $ 7,658,722
Work in process 4,332,876 4,226,858
Finished goods 4,756,008 4,649,077
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$ 16,925,297 $ 16,534,657
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-6-
THE EASTERN COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 28, 2003
Note D - Segment Information
- ----------------------------
Segment financial information follows:
SIX MONTHS ENDED THREE MONTHS ENDED
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
------------- ------------- ------------- -------------
Revenues:
Sales to unaffiliated customers:
Industrial Hardware $17,066,514 $14,902,415 $ 8,461,310 $ 8,005,345
Security Products 18,861,109 18,494,321 9,379,421 9,438,508
Metal Products 7,254,202 8,215,526 3,750,380 3,847,892
----------- ----------- ----------- -----------
43,181,825 41,612,262 21,591,111 21,291,745
General corporate 25,818 40,400 13,249 27,185
----------- ----------- ----------- -----------
$43,207,643 $41,652,662 $21,604,360 $21,318,930
=========== =========== =========== ===========
Income Before Income Taxes:
Industrial Hardware $ 2,197,375 $ 1,799,473 $ 1,073,507 $ 1,062,078
Security Products 2,160,267 1,973,095 1,090,493 1,169,217
Metal Products 270,842 211,834 126,267 (35,530)
----------- ----------- ----------- -----------
Operating Profit 4,628,484 3,984,402 2,290,267 2,195,765
General corporate expenses (1,123,662) (932,707) (478,096) (625,066)
Interest expense (669,091) (884,584) (322,572) (437,867)
----------- ----------- ----------- -----------
$ 2,835,731 $ 2,167,111 $ 1,489,599 $ 1,132,832
=========== =========== =========== ===========
Note E - Stock-Based Compensation
- ---------------------------------
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" which addressed financial accounting
and reporting for recording expenses for the fair value of stock options. SFAS
148 provides alternative methods of transition for a voluntary change to the
fair value method of accounting for stock-based employee compensation as
originally provided by SFAS No. 123, "Accounting for Stock-Based Compensation."
Additionally, SFAS 148 amends the disclosure requirements of SFAS No.123 in both
annual and interim financial statements. The interim disclosure provisions are
effective for financial reports containing financial statements for interim
periods beginning after December 15, 2002.
The Company has elected to continue to account for stock options in accordance
with Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees. As such, it does not recognize compensation expense for
stock options granted under its stock option plans if the exercise price is at
least equal to the fair market value of the Company's common stock on the date
granted. Stock-based compensation costs for stock awards are reflected in net
income over the awards' vesting period.
Pro forma information regarding net income and earnings per share, as required
by Statement No. 123 "Accounting for Stock-Based Compensation", has been
determined as if the Company had accounted for its employee stock options under
the fair value method. The fair value of the stock options was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions:
-7-
June 28, 2003 June 29, 2002
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Risk free interest rate 2.27 4.19
Expected volatility 3.07 3.10
Expected option life 5 years 5 years
Weighted-average dividend yield 3.1% 3.1%
THREE MONTHS ENDED SIX MONTHS ENDED
June 28, 2003 June 29, 2002 June 28, 2003 June 29, 2002
------------- ------------- ------------- -------------
Net (loss) income, as reported $936,688 $758,518 $1,890,065 $1,435,625
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for all
awards granted since July 19, 2000,
net of related tax effects
(12,873) (14,505) (25,746) (29,010)
Pro forma net income $923,815 $744,013 $1,864,319 $1,406,615
Earnings per share:
Basic-as reported $0.26 $0.21 $0.52 $0.40
Basic-pro forma $0.25 $0.20 $0.51 $0.39
Diluted-as reported $0.26 $0.20 $0.52 $0.38
Diluted-pro forma $0.25 $0.20 $0.51 $0.38
For the purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the stock options' vesting period ranging
from 1 to 5 years. The pro forma effect on net income and related earnings per
share may not be representative of future years' impact since the terms and
conditions of new grants may vary from the current terms.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- ------ ---------------------------------------
The Company makes estimates and assumptions that may materially affect reported
amounts and disclosures. These relate to valuation allowances for the
collectibility of accounts receivable and for excess and obsolete inventories,
accruals for pensions and other postretirement benefits (including forecasted
future cost increases and returns on plan assets), provisions for depreciation
(estimating useful lives), and, on occasion, accruals for contingent losses. The
Company is also subject to various risks and uncertainties that may cause actual
results to differ from estimated results, such as changes within our industry
segments, in the overall economy, competition, litigation and legislation.
Results of Operations
Net income per share for the second quarter of 2003 was $937,000 or $.26 per
diluted share on sales of $21.6 million compared to $759,000 or $.20 per
diluted share on sales of $21.3 million in the second quarter of 2002. Net
income for the first six months of 2003 was $1.9 million or $.52 per diluted
share on sales of $43.2 million as compared to the first six months of 2002 of
$1.4 million or $.38 per diluted share on sales of $41.6 million.
Sales for the second quarter 2003 were up 1% compared to the same period a
year ago. New product sales contributed 8%, volume of existing products
decreased 8% and prices increased 1%. Sales for the first half of 2003 were up
4% compared to the same period a year ago. Volume of existing products was
down 5% while new product sales were up 8% and prices were up 1%.
-8-
The Industrial Hardware segment's second quarter sales were up 6% compared to
the second quarter of 2002. New product sales increased 21% and volume of
existing products decreased 15%. Sales for the first six months of 2003 were
up 15% compared to the same period a year ago. New product sales increased 22%
while sales volume of existing products was down 7%. New products include
pushbutton locking systems for use on utility truck bodies, rotary locks for
the truck accessories market and "sleeper boxes" for use on class 8 trucks.
Without the additional sales of "sleeper boxes" resulting from the acquisition
of Canadian Commercial Vehicles Corporation, sales would have decreased by 9%
in the three month period and would have been flat for the 6 month period
compared to the same periods in the prior year. Sales of heavy hardware to the
tractor-trailer industry were up 13% for the first six months of 2003 as
compared to the same period a year ago. While sales of heavy hardware dipped
in the second quarter, management believes 2003 will continue to show
improvement over the prior year. Sales of our school and courtesy bus products
were up 6% for the first half of the year as compared to the first half of
2002. Sales of industrial hardware are up 4% from prior year levels. Sales of
automotive accessories decreased 7% for six months compared to the same period
in 2002. Our presence in China has recently been expanded with the
establishment of Eastern Industries (Shanghai) Ltd., a manufacturing facility
located in Shanghai, China. This subsidiary will be instrumental in helping us
remain price competitive in North America and will open up the possibility to
more effectively pursue markets in Asia and elsewhere. In addition to
producing fabricated metal products, it will include plastic injection molding
capability. It will also serve as a sourcing center for non-competitive
products. The Company anticipates continued sales improvement in the
Industrial Hardware segment throughout 2003.
The Security Products segment's sales were comparable in the second quarter
2003 as compared to the second quarter of 2002. Sales for the first half of
2003 were up 2% compared to the first half of 2002. Volume of existing
products was up 1% and new product sales increased 1%. Sales of new products
consisted of electronic drop meters for commercial laundry applications. Sales
of locks to the computer industry decreased 12% in the second quarter of 2003
as compared to the comparable quarter of 2002 while sales for the first half
of 2003 increased 8% as compared to the first half of 2002. Sales of locks to
the electronic industries were up 19% for the first half of 2003 as compared
to the first half of 2002. Sales of locks to the travel industry continue to
be below prior year levels. While the TSA (Transportation Security
Administration) has announced not to lock baggage, the Company has introduced
the PrestoSeal product line to prevent surreptitious entry into baggage and
has been working with Travel Sentry in developing a new lock that would meet
TSA requirements. Sales of security products to the commercial laundry
industry increased 2% as compared to the first half of 2002. The Company
continues to pursue new business opportunities through aggressive pricing,
improved customer service, intense marketing and a commitment to new product
development.
The Metal Products segment's sales were down 3% in the second quarter 2003 as
compared to the second quarter of 2002. Volume of existing products was down
11% and prices increased 8%. Sales for the first half were down 12% compared
to the first half of 2002. Volume of existing products was down 16% and prices
increased 4%. Sales of our contract casting products for use in the commercial
and industrial construction industry decreased 32% for the first half of 2003
as compared to the first half of 2002. Foreign competition from China and
Mexico with low labor rates and favorable foreign exchange rates has created
pricing pressure and reduced demand for our contract casting products. Sales
of our mine roof anchors were up 2% for the first half of 2003 as compared to
2002. The Company continues to look at new manufacturing methods and
alternative products to remain competitive in this industry. Sales for 2003
will be lower than those reported in 2002 as the Company continues to move
away from the production and sale of low margin contract castings.
Gross margin as a percentage of sales for the three and six months ended June
28, 2003 were approximately 24% and 25% respectively compared to 23% and 24%
in the comparable periods a year ago. The increase in gross margin is
primarily the result of product mix and increased sales volume causing higher
plant utilization at some of our production facilities.
-9-
Selling and administrative expenses were up 6% or $207,000 and 6% or $382,000
respectively for the three and six months ended June 28, 2003 compared to the
same periods a year ago. The increase in selling and administrative expenses
for both the three and six month periods are due to the addition of Canadian
Commercial Vehicles in the 2003 periods and favorable insurance premium
refunds received in the second quarter of 2002.
Interest expense decreased by $115,000 or 26% for the second quarter of 2003
and $215,000 or 24% for six months as compared to the same periods in 2003.
This decrease in interest expense was due to lower debt and lower interest
rates.
Earnings before income taxes for the three months ended June 28, 2003 were up
$357,000 or 32% and for six months ended June 28, 2003 were up 31% or $669,000
as compared to the same periods of 2002. The Industrial Hardware segment was
comparable to the prior year for the three month period and up 22% or $398,000
for the six month period as compared to the same periods a year ago. The
increase in the six months was primarily the result of increased sales over
the prior year period, which included the additional sales generated in 2003
from the acquisition of Canadian Commercial Vehicles in October 2002. The
Security Products segment earnings before income taxes for the three and six
month periods ended June 28, 2003 were down 6% or $69,000 and up 9% or
$187,000 respectively compared to the comparable periods a year ago. The
decrease in the three month period was due to lower sales volume in 2003 and
the increase in the six month period was the result of increased sales volume
and efficiency gains achieved through the consolidation of the manufacturing
operations of CCL Security Products into the Illinois Lock facility in
Wheeling Illinois during 2002. The Metal Products segment earnings were up
455% or $162,000 and 28% or $59,000 for the second quarter and first half of
2003 over the same periods a year ago. This increase was mainly due to
increased prices and elimination of some lower margin contract casting
products.
The effective tax rate of 37% for the 3 months ended June 28, 2003 was higher
than the comparable period in 2002 of 33% due to higher foreign taxes.
Liquidity and Sources of Capital
Cash flows from operations were $2.2 million for the first half of 2003 versus
$4.3 million for the same period in 2002. The change in cash flows resulted
from changes in the level of sales at all locations and the associated timing
differences for collections of accounts receivable and payments of liabilities
and changes in inventories. Cash flow from operations coupled with cash on
hand at the beginning of the year was sufficient to fund capital expenditures,
debt service, contributions to the companies pension plans, purchases of
Common Stock for the treasury and dividend payments.
Additions to property, plant and equipment were $709,000 during the first half
of 2003 versus $750,000 for the comparable period a year ago. Total capital
expenditures for 2003 are expected to be in the range of $1.5 million to $2.5
million.
Total inventories as of June 28, 2003 were $16.9 million or $391,000 higher
than year end 2002. The inventory turnover ratio of 3.8 turns at the end of
the second quarter was comparable to both the prior year second quarter of 3.9
turns and the year end ratio of 3.7 turns. Accounts receivable increased by
$464,000 from year end 2002, primarily due to increased sales volume compared
to the fourth quarter of 2002. The average days sales in accounts receivable
for the second quarter of 2003 was 48 days compared to 52 days in the second
quarter of 2002 and 48 days at year end 2002.
Cash flow from operating activities and funds available under the revolving
credit portion of the Company's loan agreement should be sufficient to cover
future foreseeable working capital requirements.
-10-
Note: The preceding information contains forward looking statements which
reflect the Company's current expectations regarding its future operating
performance and achievements and is subject to certain risks and uncertainties
that could cause actual results to differ materially from those set forth in
such statements. Such risks and uncertainties include changing customer
preferences, lack of success of new products, loss of customers, competition,
increased raw material prices and problems associated with foreign sourcing of
parts and products. The Company is not obligated to update or revise the
aforementioned statements for new developments.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------ ----------------------------------------------------------
There have been no material changes in market risk from what was reported in the
2003 Annual Report on Form 10-K.
ITEM 4 CONTROLS AND PROCEDURES
- ------ -----------------------
Evaluation of Disclosure Controls and Procedures
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. The Company's disclosure controls and
procedures are designed to ensure that information required to be disclosed by
the Company in its periodic SEC filings is recorded, processed and reported
within the time periods specified in the SEC's rules and forms.
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the
Company's periodic SEC filings.
Changes in Internal Controls
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS -
- ------ -------------------
There are no significant pending legal proceedings, other than
ordinary routine litigation incidental to the Company's
business, to which either the Registrant or any of its
subsidiaries is a party or of which any of their property is
the subject.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
- ------ -----------------------------------------
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES-
- ------ -------------------------------
None
-11-
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
See the information set forth in Item 4 of the Form 10-Q of
the Company for the quarterly period ended March 29, 2003.
ITEM 5 OTHER INFORMATION
- ------ -----------------
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) 99(1) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 28, 2002 is incorporated
herein by reference.
99(2) The Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 29, 2003 is incorporated
herein by reference.
99(3) Certifications pursuant to Rule 13a-14 or Rule
15d-14 and 18 USC 1350 as adopted pursuant to the
Sarbanes-Oxley Act of 2002.
(b) 99(4) Form 8-K filed on April 23, 2003 setting forth the
press release reporting the Company's earnings for the
quarter ended March 29, 2003.
99(5) Form 8-K filed on July 30, 2003 setting forth the
press release reporting the Company's earnings for the
quarter ended June 28, 2003.
SIGNATURES
----------
Pursuant to the requirements 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.
THE EASTERN COMPANY
(Registrant)
DATE: August 11, 2003 /s/Leonard F. Leganza
--------------- ---------------------
Leonard F. Leganza
President and Chief Executive Officer
DATE: August 11, 2003 /s/John L. Sullivan III
--------------- ------------------------
John L. Sullivan III
Vice President, Secretary and Treasurer
-12-