Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 28, 2019 | Feb. 15, 2020 | Jun. 29, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | EASTERN CO | ||
Entity Central Index Key | 0000031107 | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 143,544,835 | ||
Entity Common Stock, Shares Outstanding | 6,240,705 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 28, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Address, State or Province | CT |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 28, 2019 | Dec. 29, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 17,996,505 | $ 13,925,765 |
Marketable securities | 34,305 | 0 |
Accounts receivable, less allowances of $556,000 in 2019 and $680,000 in 2018 | 37,941,900 | 30,285,316 |
Inventories: | ||
Raw materials and component parts | 17,225,469 | 17,841,166 |
Work in process | 11,009,648 | 8,960,202 |
Finished goods | 26,364,149 | 25,971,841 |
Total inventories | 54,599,266 | 52,773,209 |
Prepaid expenses and other current assets | 4,343,507 | 3,071,888 |
Refundable income taxes | 0 | 1,133,847 |
Total Current Assets | 114,915,483 | 101,190,025 |
Property, Plant and Equipment | ||
Land | 1,341,289 | 1,159,813 |
Buildings | 21,830,568 | 16,477,462 |
Machinery and equipment | 65,164,386 | 56,131,340 |
Accumulated depreciation | (46,313,630) | (43,915,238) |
Property, Plant and Equipment, Net | 42,022,613 | 29,853,377 |
Other Assets | ||
Goodwill | 79,518,012 | 34,840,376 |
Trademarks | 5,404,283 | 3,686,063 |
Patents, technology and other intangibles net of accumulated amortization | 26,460,110 | 10,281,720 |
Right of Use Assets | 12,342,475 | 0 |
Deferred income taxes | 0 | 1,396,006 |
Total other assets | 123,724,880 | 50,204,165 |
TOTAL ASSETS | 280,662,976 | 181,247,567 |
Current Liabilities | ||
Accounts payable | 19,960,507 | 18,497,626 |
Accrued compensation | 3,815,186 | 4,159,808 |
Other accrued expenses | 2,967,961 | 3,095,666 |
Contingent liability | 0 | 2,070,000 |
Current portion of long-term debt | 5,187,689 | 2,325,000 |
Total Current Liabilities | 31,931,343 | 30,148,100 |
Deferred income taxes | 5,270,465 | 1,516,012 |
Other long-term liabilities | 2,465,261 | 353,856 |
Lease Liability | 12,342,475 | 0 |
Long-term debt, less current portion | 93,577,544 | 26,350,000 |
Accrued other postretirement benefits | 1,007,146 | 648,635 |
Accrued pension cost | 28,631,485 | 25,362,325 |
Commitments and contingencies (See Note 6) | ||
Shareholders' Equity | ||
Voting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares | ||
Nonvoting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares | ||
Common Stock, no par value: Authorized: 50,000,000 shares Issued: 8,975,434 shares in 2019 and 8,965,987 shares in 2018 Outstanding: 6,240,705 shares in 2019 and 6,231,258 shares in 2018 | 30,651,815 | 29,994,890 |
Treasury Stock: 2,734,729 shares in 2019 and 2,734,729 shares in 2018 | (20,169,098) | (20,169,098) |
Retained earnings | 120,189,111 | 109,671,362 |
Accumulated other comprehensive income (loss): | ||
Foreign currency translation | (2,037,952) | (2,106,329) |
Unrealized gain/(loss) on interest rate swap, net of tax | 167,018 | 166,444 |
Unrecognized net pension and other postretirement benefit costs, net of taxes | (23,363,637) | (20,688,630) |
Accumulated other comprehensive loss | (25,234,571) | (22,628,515) |
Total Shareholders' Equity | 105,437,257 | 96,868,639 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 280,662,976 | $ 181,247,567 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 28, 2019 | Dec. 29, 2018 |
Current Assets | ||
Accounts receivable, allowances | $ 556,000 | $ 680,000 |
Shareholders' Equity | ||
Voting Preferred Stock, par value (in dollars per share) | $ 0 | $ 0 |
Voting Preferred Stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Nonvoting Preferred Stock, par value (in dollars per share) | $ 0 | $ 0 |
Nonvoting Preferred Stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common Stock, par value (in dollars per share) | $ 0 | $ 0 |
Common Stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common Stock, shares issued (in shares) | 8,975,434 | 8,965,987 |
Common Stock, shares outstanding (in shares) | 6,240,705 | 6,231,258 |
Treasury Stock, shares (in shares) | 2,734,729 | 2,734,729 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Consolidated Statements of Income [Abstract] | ||
Net sales | $ 251,742,619 | $ 234,275,463 |
Cost of products sold | (189,890,070) | (175,550,418) |
Gross margin | 61,852,549 | 58,725,045 |
Product development expenses | (6,024,567) | (6,950,969) |
Selling and administrative expenses | (35,719,188) | (33,914,735) |
Restructuring costs | (2,650,940) | 0 |
Operating profit | 17,457,854 | 17,859,341 |
Interest expense | (1,857,961) | (1,202,272) |
Other income | 606,078 | 933,260 |
Income before income taxes | 16,205,971 | 17,590,329 |
Income taxes | 2,939,829 | 3,084,392 |
Net income | $ 13,266,142 | $ 14,505,937 |
Earnings per Share: | ||
Basic (in dollars per share) | $ 2.13 | $ 2.32 |
Diluted (in dollars per share) | $ 2.12 | $ 2.31 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Consolidated Statements of Comprehensive Income [Abstract] | ||
Net income | $ 13,266,142 | $ 14,505,937 |
Other comprehensive income/(loss) | ||
Change in foreign currency translation | 68,377 | (1,163,136) |
Change in fair value of interest rate swap, net of tax benefit of: $26 in 2019 and $26,969 in 2018 | 574 | 124,687 |
Change in pension and other postretirement benefit costs, net of income taxes (expense)/benefit of: $664,279 in 2019 and $578,090 in 2018 | (2,675,007) | (203,353) |
Total other comprehensive income/(loss) | (2,606,056) | (1,241,802) |
Comprehensive income/(loss) | $ 10,660,086 | $ 13,264,135 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Other comprehensive income/(loss) | ||
Change in fair value of interest rate swap, taxes benefit | $ 26 | $ 26,969 |
Change in pension and postretirement benefit costs, income taxes (expense)/ benefit | $ 664,279 | $ 578,090 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) | Common Stock [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balances at Dec. 30, 2017 | $ 29,501,123 | $ (19,105,723) | $ 97,921,903 | $ (21,386,713) | $ 86,930,590 |
Balances (in shares) at Dec. 30, 2017 | 8,957,974 | (2,694,729) | |||
Net income | 14,505,937 | 14,505,937 | |||
Cash dividends declared | (2,756,478) | (2,756,478) | |||
Currency translation adjustment | (1,163,136) | (1,163,136) | |||
Change in fair value of interest rate swap | 124,687 | 124,687 | |||
Change in pension and other postretirement benefit costs, net of tax | (203,353) | (203,353) | |||
Treasury stock purchases | $ (1,063,375) | (1,063,375) | |||
Treasury stock purchases (in shares) | (40,000) | ||||
Issuance of SARS | $ 276,777 | 276,777 | |||
Issuance of SARS (in shares) | 151 | ||||
Issuance of Common Stock for directors' fees | $ 216,990 | 216,990 | |||
Issuance of Common Stock for directors' fees (in shares) | 7,862 | ||||
Balances at Dec. 29, 2018 | $ 29,994,890 | $ (20,169,098) | 109,671,362 | (22,628,515) | 96,868,639 |
Balances (in shares) at Dec. 29, 2018 | 8,965,987 | (2,734,729) | |||
Net income | 13,266,142 | 13,266,142 | |||
Cash dividends declared | (2,748,393) | (2,748,393) | |||
Currency translation adjustment | 68,377 | 68,377 | |||
Change in fair value of interest rate swap | 574 | 574 | |||
Change in pension and other postretirement benefit costs, net of tax | (2,675,007) | (2,675,007) | |||
Issuance of SARS | $ 397,250 | 397,250 | |||
Issuance of SARS (in shares) | 151 | ||||
Issuance of Common Stock for directors' fees | $ 259,675 | 259,675 | |||
Issuance of Common Stock for directors' fees (in shares) | 9,296 | ||||
Balances at Dec. 28, 2019 | $ 30,651,815 | $ (20,169,098) | $ 120,189,111 | $ (25,234,571) | $ 105,437,257 |
Balances (in shares) at Dec. 28, 2019 | 8,975,434 | (2,734,729) |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Consolidated Statements of Shareholders' Equity [Abstract] | ||
Cash dividends declared, per share (in dollars per share) | $ 0.44 | $ 0.44 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Operating Activities | ||
Net income | $ 13,266,142 | $ 14,505,937 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,454,881 | 5,329,208 |
Unrecognized pension & other postretirement benefits | 1,844,814 | (2,226,083) |
(Gain) Loss on sale of equipment and other assets | (568,956) | (413,333) |
Non cash restructuring charges | 2,641,890 | 0 |
Provision for doubtful accounts | 63,564 | 185,136 |
Deferred Taxes | (2,093,654) | 947,851 |
Stock compensation expense | 656,925 | 493,767 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 5,982,435 | (3,483,484) |
Inventories | 1,463,409 | (5,356,646) |
Prepaid expenses | 860,607 | (761,135) |
Other assets | (499,010) | 102,068 |
Accounts payable | (2,337,146) | 4,106,130 |
Accrued compensation | (1,462,262) | (165,828) |
Other accrued expenses | (3,315,476) | (387,526) |
Net cash provided by operating activities | 22,958,164 | 12,876,062 |
Investing Activities | ||
Purchases of property, plant and equipment | (5,440,488) | (3,596,572) |
Capitalized software | 0 | (1,813,973) |
Proceeds from sale of equipment and other assets | 857,967 | 0 |
Marketable securities | (34,305) | 0 |
Business acquisitions, net of cash acquired | (81,155,753) | (4,994,685) |
Net cash used in investing activities | (85,772,579) | (10,405,230) |
Financing Activities | ||
Proceeds from issuance of long-term debt | 100,000,000 | 0 |
Principal payments on long-term debt | (30,285,146) | (1,550,000) |
Proceeds from short-term borrowing (Revolver) | 0 | 7,000,000 |
Payments on Revolving Credit Note | 0 | (12,000,000) |
Purchase Common Stock for Treasury | 0 | (1,063,375) |
Dividends paid | (2,743,993) | (2,756,478) |
Net cash used in financing activities | 66,970,861 | (10,369,853) |
Effect of exchange rate changes on cash | (85,704) | (450,691) |
Net change in cash and cash equivalents | 4,070,740 | (8,349,712) |
Cash and cash equivalents at beginning of year | 13,925,765 | 22,275,477 |
Cash and cash equivalents at end of year | $ 17,996,505 | $ 13,925,765 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 28, 2019 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | 1. Description of Business The Eastern Company (the “Company”) includes nine separate operating businesses located within the United States, two wholly-owned Canadian subsidiaries (one located in Tillsonburg, Ontario, Canada, and one in Kelowna, British Columbia, Canada), a wholly-owned Taiwanese subsidiary located in Taipei, Taiwan, a wholly-owned subsidiary in Hong Kong, two wholly-owned Chinese subsidiaries (one located in Shanghai, China, and one located in Dongguan, China), two wholly-owned subsidiaries in Mexico (one located in Lerma, Mexico and one located in Reynosa, Mexico) and a wholly owned subsidiary in Wrexham, United Kingdom. The operations of the Company consist of three business segments: industrial hardware, security products, and metal products. Industrial Hardware The Industrial Hardware segment consists of Big 3 Precision, including Big 3 Products and Big 3 Mold; Eberhard Manufacturing Company, Eberhard Hardware Manufacturing Ltd., and Eastern Industrial Ltd; Velvac Holdings; Canadian Commercial Vehicles Corporation; and Sesamee Mexicana, S.A. de C.V. These businesses design, manufacture and market a diverse product line of custom and standard vehicular and industrial hardware, including turnkey returnable packaging solutions; passenger restraint and vehicular locks, latches, hinges; mirrors, mirror-cameras; and light-weight sleeper boxes and truck bodies. The segment also designs and manufactures a wide selection of fasteners and other closure devices used to secure access doors on various types of industrial equipment such as metal cabinets, machinery housings and electronic instruments. Big 3 Products and Big 3 Mold’s turnkey returnable packaging solutions are used in the assembly process for vehicles, aircraft, and durable goods and in the production process of plastic packaging products, packaged consumer goods and pharmaceuticals. Big 3 Products works with leading manufacturers to design and produce custom returnable packaging to integrate with their assembly processes. Other products are found on tractor-trailer trucks, specialty commercial vehicles, recreational vehicles, fire and rescue vehicles, school buses, military vehicles and other vehicles. In addition, through Big 3 Precision Products and Big 3 Precision Mold Services, Big 3 Precision serves diverse markets including truck, automotive, plastic packaging products, consumer packaged goods and pharmaceuticals. The segment sells directly to “OEM’s” and to distributors through in-house sales personnel and outside sales representatives. Sales, customer engineering and customer service are primarily provided through in-house sales personnel and engineering staff. Security Products The Security Products segment consists of Illinois Lock Company/CCL Security Products, World Lock Company Ltd., Dongguan Reeworld Security Products Ltd., and World Security Industries Ltd.; Greenwald Industries (“Greenwald”); and Argo EMS (formerly Argo Transdata). Illinois Lock Company/CCL Security Products, known in the market as ILC, is a global leader in the design and manufacture of engineered security and access solutions in the form of mechanical, electronic and wireless products. ILC focuses on the industrial, vehicle accessory, outdoor recreational equipment, medical, and point of sale and vending segments. These products and solutions are specified and sold to OEM’s, contract equipment manufacturers, and industrial distributors globally. Greenwald designs, manufactures and markets payment systems and coin security products used primarily in the commercial laundry market. Greenwald’s products include timers, drop meters, coin chutes, money boxes, meter cases, mobile payment apps, smart cards, value transfer stations, smart card readers, card management software, and access control units. Argo EMS supplies printed circuit boards and other electronic assemblies to original equipment manufacturers in various industries, including measurement systems, semiconductor equipment manufacturing, and industrial controls, medical and military products. Metal Products The Metal Products segment consists of Frazer & Jones, The Frazer & Jones Company, designs and manufactures high quality ductile and malleable iron castings. Products include valves, rings, torque screws, bean clamps, and concrete anchors. These products are sold to a wide range of industrial markets, including oil, water, gas; truck/automotive rail, and military/aerospace. In addition, the Company believes that its Metal Products segment, is the largest and most efficient producer of expansion shells for use in supporting the roofs of underground mines in North America. Sales are made to customers primarily in North America. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 12 Months Ended |
Dec. 28, 2019 | |
BUSINESS ACQUISITIONS [Abstract] | |
BUSINESS ACQUISITIONS | 2. B usiness Acquisitions Load N Lock Systems, Inc. Effective June 1, 2018 the Company acquired certain assets of Load N Lock Systems, Inc. (“Load N Lock”), including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights, and assumed certain liabilities and rights existing under all sales and purchase agreements. Load N Lock provides innovative truck cap and tonneau cover locks that keep truck contents safe and secure. Load N Lock developed and patented the first integrated power lock for the automotive industry and has developed numerous truck cap and tonneau cover lock related products. Load N Lock provides its innovative products and solutions to the automotive industry’s leading manufacturers of truck and automotive accessories in the United States and Asia. The above acquisition was accounted for under ASC 805 – Business Combinations. Load N Lock has been included in the Security Products segment of the Company from the date of the acquisition. The cost of the acquisition of Load N Lock was approximately $4,995,000. The excess of the cost of Load N Lock over the fair market value of the net definitive tangible and intangible assets acquired was $2,694,700, which has been recorded as goodwill. In connection with the above acquisition, the Company recorded the following intangible assets: Asset Class/Description Amount Weighted-average Life in Years Patents, technology, and licenses Customer relationships $ 689,675 8.3 Intellectual property 586,762 8.3 Non-compete agreements 52,570 8.3 $ 1,329,007 8.3 Big 3 Precision Products On August 30, 2019, the Company and its newly-formed wholly-owned subsidiary, Eastern Engineered Systems, Inc., a Delaware corporation (“EES”) entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Big 3 Holdings, LLC, a Delaware limited liability company (“Seller”), Big 3 Precision Mold Services, Inc., a Delaware corporation and wholly-owned subsidiary of Seller (“Big 3 Mold”), Big 3 Precision Products, Inc., a Delaware corporation and wholly owned subsidiary of Seller (“Big 3 Products”), Industrial Design Innovations, LLC, a Delaware limited liability company and wholly-owned subsidiary of Big 3 Products (“Design Innovations”), Sur-Form, LLC, a Delaware limited liability company and wholly-owned subsidiary of Big 3 Products (“Sur-Form”), Associated Toolmakers Limited, a limited company formed under the laws of England and Wales and wholly-owned subsidiary of Big 3 Mold (“Associated” and together with Big 3 Mold, Big 3 Products, Design Innovations and Sur-Form, collectively “Big 3 Precision”), TVV Capital Partners III, L.P., a Delaware limited partnership, TVV Capital Partners III-A, L.P., a Delaware limited partnership, Alan Scheidt, Todd Riley, Clinton Hyde, and Big 3 Holdings, LLC, a Delaware limited liability company, as the initial Seller Representative (the “Seller Representative”). On August 30, 2019, pursuant to the Stock Purchase Agreement, the Company, through EES, acquired all of the outstanding equity interests of Big 3 Precision Products and Big 3 Mold Services, and indirectly through them, all of the outstanding equity interests in Design The Innovations, Sur-Form and Associated, for an adjusted purchase cash price of $81.2 million. The Big acquisition was financed with a combination of of cash on hand, a and a revolving credit line. In connection with the Credit Agreement, the Company also used its cash to repay the remaining balance (approximately ) of its then outstanding term loan with People’s United Bank National Association. The following table summarizes the consideration paid for Big 3 Precision and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date. At August 30, 2019: Consideration Cash $ 338,714 Cash proceeds from debt 80,817,039 $ 81,155,753 Recognized amounts of identifiable assets acquired and liabilities assumed Accounts receivable $ 13,649,937 Inventory 3,240,382 Prepaid and other assets 32,268 Property plant and equipment 13,770,170 Other noncurrent assets 1,337,337 Other intangible assets 21,054,000 Current liabilities (4,910,384 ) Deferred revenue (1,585,709 ) Income tax payable (2,039,117 ) Note payable (375,379 ) Deferred tax liabilities (7,114,732 ) Total identifiable net assets 37,058,773 Goodwill 44,096,980 $ 81,155,753 Accounts Receivable Acquired receivables are amounts due from customers, and are stated at net realizable value. Inventories The estimated fair value of inventories acquired, which is at net realizable value based upon third party valuation specialist. Property, Plant and Equipment The property plant and equipment are estimated at net realizable value at the time of the acquisition based upon third party valuation specialist. Intangible Assets The estimated fair value of identifiable intangible assets is determined primarily using the Income Approach method which is a valuation technique that provides an estimate of the fair value of an asset based on the market participant’s expectations of the cash flows that an asset would generate over its remaining useful life. Some of the more significant assumption inherent in the development of the identifiable intangible assets valuation, from the perspective of a market participant, include the estimate net cash flows for each year for each project or product, the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream as well as other factors. Goodwill Allocation Goodwill of $44,096,980 arising from the acquisition consists of the difference between the consideration paid and the fair value of the assets and liabilities acquired. None of the goodwill recognized is expected to be deductible for income tax purposes. Current Liabilities Acquired current liabilities are amounts owed to vendors or accrued expenses. Deferred Revenue Deferred revenue is the amount of customers deposits at the time of the acquisition. Income taxes Income taxes are the estimated amount of state and federal taxes to settle certain tax positions prior to the acquisition. Deferred Tax Liability The deferred tax liability is stated at estimated tax liability due to the difference in the book basis of assets compared to the tax basis of those assets at the time of acquisition. Acquisition Related Expenses Included in general and administrative expenses in the consolidated statements of operations for the three and twelve month periods ended December 28, 2019 were $765,000 and $1,184,000, respectively, for acquisition expenses. |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 12 Months Ended |
Dec. 28, 2019 | |
ACCOUNTING POLICIES [Abstract] | |
ACCOUNTING POLICIES | 3. A ccounting P olicies Fiscal Year The Company’s year ends on the Saturday nearest to December 31. Fiscal years, 2019 and 2018, were 52 weeks each. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany accounts and transactions are eliminated. Reclassification Commencing with the first quarter of 2018, pension service costs have been broken out and reclassified from the gains and losses associated with the pension assets. The reclassification of these expenses does not affect the net income reported. Product development expense is not necessarily a cost of product sold. Rather, these expenses are related to product development. The reclassification of these expenses does not affect the net income reported. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis the Company evaluates its estimates, including those related to product returns, bad debts, carrying value of inventories, intangible and other long-lived assets, income taxes, pensions and other postretirement benefits. Actual results could differ from those estimates. Foreign Currency For foreign operations asset and liability accounts are translated with an exchange rate at the respective balance sheet dates; income statement accounts are translated at the average exchange rate for the years. Resulting translation adjustments are made directly to a separate component of shareholders’ equity – “Accumulated other comprehensive income (loss) – Foreign currency translation”. Foreign currency exchange transaction gains and losses are not material in any year. Cash Equivalents Highly liquid investments purchased with a maturity of three months or less are considered cash equivalents. The Company has deposits that exceed amounts insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, but the Company does not consider this a significant concentration of credit risk based on the strength of the financial institution. Approximately 50% of available cash is located outside of the United States in our foreign subsidiaries. Accounts Receivable Accounts receivable are stated at their net realizable value. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company reviews the collectability of its receivables on an ongoing basis taking into account a combination of factors. The Company reviews potential problems, such as past due accounts, a bankruptcy filing or deterioration in the customer’s financial condition, to ensure the Company is adequately accrued for potential loss. Accounts are considered past due based on when payment was originally due. If a customer’s situation changes, such as a bankruptcy or creditworthiness, or there is a change in the current economic climate, the Company may modify its estimate of the allowance for doubtful accounts. The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts are deemed uncollectible. Inventories Inventories are valued at the lower of cost or net realizable value. Cost is determined by the last-in, first-out (LIFO) method in the U.S. ($31,011,130 for U.S. inventories at December 28, 2019, excluding Big 3 and Velvac) and by the first-in, first-out (FIFO) method for inventories outside the U.S. ($7,295,793 for inventories outside the U.S. at December 28, 2019). Cost exceeds the LIFO carrying value by approximately $6,712,162 at December 28, 2019 and $6,957,972 at December 29, 2018. There was no material LIFO quantity liquidation in 2019 or 2018. In addition, as of the balance sheet dates, the Company has recorded reserves for excess/obsolete inventory. Property, Plant and Equipment and Related Depreciation Property, plant and equipment (including equipment under capital lease) are stated at cost. Depreciation ($4,722,758 in 2019, $4,329,136 in 2018) is computed generally using the straight-line method based on the following estimated useful lives of the assets: Buildings 10 to 39.5 years; Machinery and equipment 3 to 10 years. Impairment of Long-Lived Assets In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long Lived Assets, Goodwill The Company performed qualitative assessments of goodwill as of the end of fiscal 2019 and fiscal 2018 and determined it is more likely than not that no impairment of goodwill existed at the end of 2019 or 2018. The Company will perform annual qualitative assessments in subsequent years as of the end of each fiscal year. Additionally, the Company will perform interim analysis whenever conditions warrant. Goodwill would be considered impaired whenever the historical carrying amount exceeds the fair value. Pursuant to the qualitative assessment performed, goodwill was not impaired in 2019 or 2018. Should we reach a different conclusion in the future, additional work would be performed to determine the amount of the non-cash impairment charge to be recognized. The maximum future impairment of goodwill that could occur is the amount recognized on our balance sheet. Intangible Assets Patents are recorded at cost and are amortized using the straight-line method over the lives of the patents. Technology and licenses are recorded at cost and are generally amortized on a straight-line basis over periods ranging from 5 to 17 years. Generally, non-compete agreements and customer relationships are being amortized using the straight-line method over a period of 5 years. Amortization expense in 2019 and 2018 was $1,726,539 and $1,452,084, respectively. In the event that 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. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. The Company’s financial instruments are primarily investments in pension assets, see footnote 11, and consists of an interest rate swap. The Company’s interest rate swap is not an exchange-traded instrument. However, it is valued based on observable inputs for similar liabilities and accordingly is classified as Level 2. The amount of the interest rate swap is included in other accrued liabilities. The carrying amounts of other financial instruments (cash and cash equivalents, accounts receivable, accounts payable and debt) as of December 28, 2019 and December 29, 2018, approximate fair value based on the expected future cash flows of the related instruments. Right of Use Assets In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (“Topic 842”). ASU 2016-02 requires lessees to present right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. See Note 13 – Recent Accounting Pronouncements. In calculating the effect of ASU 2016-02, the Company elected the transition method thereby not restating comparable periods. The Company elected to account for non-lease components as part of the lease component to which they relate. Lease accounting involves significant judgments, including making estimates related to the lease term, lease payments, and discount rate. In accordance with the guidance, the Company recognized ROU assets and lease liabilities for all leases with a term greater than 12 months. The Company has operating leases for buildings, warehouses and office equipment. Currently, the Company has 45 operating leases with a ROU asset and lease liability totaling $12,342,000 as of December 28, 2019. The basis, terms and conditions of the leases are determined by the individual agreements. The Company’s option to extend certain leases ranges from 12 – 140 months. All options to extend have been included in the calculation of the ROU asset and lease liability. The leases do not contain residual value guarantees, restrictions, or covenants that could incur additional financial obligations to the Company. There are no subleases, sale-leaseback, or related party transactions. Revenue Recognition The Company recognizes revenue in accordance with ASC 606 when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates wholesale revenues primarily from the sale of products to original equipment manufacturers and distributers in the United States. The Company recognizes revenue upon shipment or transfer of title to the customer as that is when the customer obtains control of the promised goods. The Company typically extends credit terms to its customers based on their creditworthiness and generally does not receive advance payments. As such, the Company records accounts receivable at the time of shipment, when the Company’s right to the consideration becomes unconditional. Accounts receivable from the Company’s customers are typically due within 30 days of invoicing. An allowance for doubtful accounts is provided based on a periodic analysis of individual account balances, including an evaluation of days outstanding, payment history, recent payment trends and the Company’s assessment of the customer’s credit worthiness. As of December 28, 2019 and December 29, 2018, the Company’s allowance for doubtful accounts total was $556,000 and $680,000, respectively. As of December 28, 2019 and December 29, 2018, the Company’s bad debt expense was $64,000 and $220,000, respectively. The Company considers several factors in determining that control transfers to the customer upon shipment of products. These factors include that legal title transfers to the customer, the Company has a present right to payment, and the customer has assumed the risk and rewards of ownership at the time of shipment. Big 3 Mold division may employ the efforts expended method for the percentage of completion for revenue recognition for certain transactions. 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. The amount of revenue recognized employing the percentage of completion method was $576,000 for the year ended December 28, 2019. No revenue was recognized employing the percentage of completion method for the year ended December 29, 2018. Based on historical experience, the Company does not accrue a reserve for product returns. For the years ended December 28, 2019 and December 29, 2018, the Company recorded sales returns of $613,000 and $725,000, respectively, as a reduction of revenue. Greenwald Industries generates subscription services revenue from access provided to customers to the division’s specific online databases. For the years ended December 28, 2019 and December 29, 2018, Greenwald Industries subscription services revenue was $567,000 and $448,000, respectively. Sales and similar taxes that are imposed on the Company’s sales and collected from the customer are excluded from revenues. 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. For the years ended December 28, 2019 and December 29, 2018, the Company recorded no revenues related to performance obligations satisfied in prior periods. As part of the Company’s adoption of the new revenue standard, 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. There was no subscription services revenue from remaining performance obligations as of December 28, 2019. See footnote 12 regarding the Company’s revenue disaggregated by reporting segment, intersegment sales by reporting segment and geography. Cost of Goods Sold Cost of goods sold reflects the cost of purchasing, manufacturing and preparing a product for sale. These costs generally represent the expenses to acquire or manufacture products for sale (including an allocation of depreciation and amortization) and are primarily comprised of direct materials, direct labor, and overhead, which includes indirect labor, facility and equipment costs, inbound freight, receiving, inspection, purchasing, warehousing and any other costs related to the purchasing, manufacturing or preparation of a product for sale. Shipping and Handling Costs Shipping and handling costs are included in cost of goods sold. Product Development Costs Product development costs, charged to expense as incurred, were $6,024,567 in 2019, $6,950,969 in 2018. Selling and Administrative Expenses Selling and administrative expenses include all operating costs of the Company that are not directly related to the cost of purchasing, manufacturing and preparing a product for sale. These expenses generally represent administrative expenses for support functions and related overhead. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs were $462,911 in 2019, $501,615 in 2018. Software Development Costs Software development costs, are primarily costs to develop software sold, leased, or otherwise marketed, that are incurred subsequent to the establishment of technological feasibility are capitalized if significant. Capitalized software development costs are amortized using the straight-line amortization method over the estimated useful life of the applicable software. There were no capitalized software development costs in the 2019. For the year ended December 29, 2018 capitalized software development costs were $1,813,973. Stock Based Compensation 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 options and restricted stock awards. The Company estimates the fair value of granted stock options using the Black-Scholes valuation model. This model requires the Company to make estimates and assumptions including, without limitation, estimates regarding the length of time an employee will retain vested stock options before exercising them, the estimated volatility of the Company’s common stock price and the number of options that will be forfeited prior to vesting. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Changes in these estimates and assumptions can materially affect the determination of the fair value of stock-based compensation and consequently, the related amount recognized in the Company’s consolidated statements of operations. For the year ended December 28, 2019, there were 96,000 SARs granted under the 2010 Plan. Under the terms of the Director’s Fee Program, the directors can elect to receive their Director’s fees in cash or in common shares of the Company. This election is made at the beginning of each fiscal year and remains in effect for the entire year. Income Taxes The Company and its U.S. subsidiaries file a consolidated federal income tax return. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases 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. On December, 22, 2017, SAB 118 was issued due to the complexities involved in accounting for the enacted Tax Act. SAB 118 requires the company to include in its financial statements a reasonable estimate of the impact of the Tax Act on earnings to the extent such estimate has been determined. Accordingly, the U.S. provision for income tax for 2017 was based on the reasonable estimate guidance provided by SAB 118. The company has assessed the impact from the Tax Act and recorded the impact in the fourth quarter of 2018. 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. These provisions detail how companies should recognize, measure, present and disclose uncertain tax positions that have or are expected to be taken. As such, the financial statements will reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. See Note 7 Income Taxes. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill [Abstract] | |
GOODWILL | 4. G oodwill The following is a roll-forward of goodwill for 2019 and 2018: Industrial Hardware Segment Security Products Segment Metal Products Segment Total 2019 Beginning balance $ 19,086,634 $ 15,753,742 $ — $ 34,840,376 Investment in Big 3 44,636,744 — — 44,636,744 Foreign exchange 40,892 — — 40,892 Ending balance $ 63,764,270 $ 15,753,742 $ — $ 79,518,012 Industrial Hardware Segment Security Products Segment Metal Products Segment Total 2018 Beginning balance $ 19,169,849 $ 13,059,042 $ — $ 32,228,891 Investment in Load N Lock — 2,694,700 — 2,694,700 Foreign exchange (83,215 ) — — (83,215 ) Ending balance $ 19,086,634 $ 15,753,742 $ — $ 34,840,376 |
INTANGIBLES
INTANGIBLES | 12 Months Ended |
Dec. 28, 2019 | |
INTANGIBLES [Abstract] | |
INTANGIBLES | 5. Intangibles Trademarks are not amortized as their lives are deemed to be indefinite. Total amortization expense for each of the next five years is estimated to be as follows: 2020 - $4,082,000; 2021 - $4,062,000; 2022 - $4,055,000; 2023 - $4,055,000 and 2024 - $3,372,000. Industrial Hardware Segment Security Products Segment Metal Products Segment Total Weighted-Average Amortization Period (Years) 2019 Gross Amount Patents and developed technology $ 5,375,680 $ 1,618,950 $ — $ 6,994,630 10.2 Customer relationships 22,899,000 1,139,381 — 24,038,381 9.6 Non-compete agreements 12,000 459,570 — 471,570 1.9 Intellectual property — 307,370 — 307,370 2.0 Total Gross Intangibles $ 28,286,680 $ 3,525,271 $ — $ 31,811,951 9.5 2019 Accumulated Amortization Patents and developed technology $ 1,505,097 $ 789,056 $ — $ 2,294,153 Customer relationships 1,751,225 581,262 — 2,332,487 Non-compete agreements 800 417,032 — 417,832 Intellectual property — 307,369 — 307,369 Accumulated Amortization $ 3,257,122 $ 2,094,719 $ — $ 5,351,841 Net per Balance Sheet $ 25,029,558 $ 1,430,552 $ — $ 26,460,110 2018 Gross Amount Patents and developed technology $ 7,884,498 $ 1,648,731 $ — $ 9,533,229 10.2 Customer relationships 3,650,000 1,139,381 — 4,789,381 8.1 Non-compete agreements — 459,570 — 459,570 4.4 Intellectual property — 307,370 — 307,370 5.0 Total Gross Intangibles $ 11,534,498 $ 3,555,052 $ — $ 15,089,550 9.2 2018 Accumulated Amortization Patents and developed technology $ 2,448,380 $ 737,276 $ — $ 3,185,656 Customer relationships 638,750 408,233 — 1,046,983 Non-compete agreements — 329,296 — 329,296 Intellectual property — 245,895 — 245,895 Accumulated Amortization $ 3,087,130 $ 1,720,700 $ — $ 4,807,830 Net per Balance Sheet $ 8,447,368 $ 1,834,352 $ — $ 10,281,720 |
DEBT
DEBT | 12 Months Ended |
Dec. 28, 2019 | |
DEBT [Abstract] | |
DEBT | 6. D ebt On August 30, 2019, the Company entered into the Credit Agreement with Santander Bank, N.A., for itself, People’s United Bank, National Association. and TD Bank, N.A. as lenders, that included a $100 million term portion and a $20 million revolving commitment portion. 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. (approximately $19 million) and to acquire Big 3 Precision. The term portion of the loan requires quarterly principal payments of $1,250,000 for an 18-month period beginning December 31, 2019. The repayment amount then increases 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. The term loan is a 5-year loan with the remaining balance due on August 30, 2024. The revolving commitment portion has an annual commitment fee of 0.25% based on the unused portion of the revolver. The revolving commitment portion has a maturity date of August 30, 2024. During 2019, the Company did not borrow any funds on the revolving commitment portion of the facility. The interest rates on the term and revolving credit portion of the Credit Agreement vary. The interest rates may vary based on the LIBOR rate plus a margin spread of 1.25% to 2.25%. The Company’s obligations under the Credit Agreement are secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement, dated August 30, 2019 with Santander Bank, N.A., as administrative agent. The Company’s loan covenants under the Credit Agreement require the Company to maintain a senior net leverage ratio not to exceed 4.25 to 1. In addition, the Company will be required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1. On August 30, 2019, the Company entered into an interest rate swap contract with Santander Bank, N.A., with an original notational amount of $50,000,000, which was equal to 50% of the outstanding balance of the term loan on that date. 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%. On December 28, 2019, the interest rate for half ($50 million) of the term portion was 3.44%, using a one month LIBOR rate, and 3.19% one the remaining balance ($50 million) of the term loan based on a one month LIBOR rate. 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. Information regarding the potential phasing out of LIBOR is provided below. On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. In the United States, efforts to identify a set of alternative U.S. Dollar reference interest rates have been initiated by the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Bank of New York. At this time, it is not possible to predict whether any such changes will occur, whether LIBOR will be phased out or any such alternative reference rates or other reforms to LIBOR will be enacted in the United Kingdom, the United States or elsewhere or the effect that any such changes, phase-out, alternative reference rates or other reforms, if they occur, would have on the amount of interest paid on the Company’s LIBOR-based borrowings. Uncertainty as to the nature of such potential changes, phase-out, alternative reference rates or other reforms may materially adversely affect interest rates paid by the Company on its borrowings. Reform of, or the replacement or phasing out of, LIBOR and proposed regulation of LIBOR and other “benchmarks” may materially adversely affect the amount of interest paid on the Company’s LIBOR-based borrowings and could have a material adverse effect on the Company’s business, financial condition and results of operations. Debt consists of: 2019 2018 Term loans $ 98,765,233 $ 28,675,000 Revolving credit loan — — 98,765,233 28,675,000 Less current portion 5,187,689 2,325,000 $ 93,577,544 $ 26,350,000 1 The Company paid interest of $1,857,961 in 2019, $1,202,272 in 2018. 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. In addition, the Company will be required to show a senior net leverage ratio of 4.25 to 1. The Company was in compliance with all covenants as of December 28, 2019. 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. The Company was in compliance with all covenants in 2018 and 2019. As of December 29, 2019, scheduled annual principal maturities of long-term debt for each of the next five years follow: 2020 $ 5,187,689 2021 6,437,689 2022 7,500,000 2023 8,750,000 2024 70,889,855 Thereafter — $ 98,765,233 |
STOCK OPTIONS AND AWARDS
STOCK OPTIONS AND AWARDS | 12 Months Ended |
Dec. 28, 2019 | |
Stock Options and Awards [Abstract] | |
Stock Options and Awards | 7. S tock O ptions and A wards Stock Options As of December 28, 2019, the Company had one stock option plan, The Eastern Company 2010 Executive Stock Incentive Plan (the “2010 Plan”), for officers, other key employees, and non-employee Directors. Incentive stock options granted under the 2010 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 options are granted. Restricted stock awards may also be granted to participants under the 2010 Plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors. Under the 2010 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Company’s Board of Directors. During 2019 and 2018, no stock options or restricted stock were granted that were subject to the meeting of performance measurements. For the period of 2019, the Company used several assumptions which included an expected term of 3.5 to 4 years, volatility deviation of 28.88% and 32.33% and a risk free rate of 1.42% to 2.48%. For the period of 2018, the Company used several assumptions which included an expected term of 3.5 years, volatility deviation of 29.5% and a risk free rate of 2.33%. The 2010 Plan also permits the issuance of Stock Appreciation Rights (“SARs”). The SARs are in the form of an option 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. During 2019, the Company issued 96,000 SARs and during 2018 51,000 SARs were issued. Stock-based compensation expense in connection with SARs granted to employees during fiscal year 2019 was $397,250 and for 2018 was $276,778. As of December 28, 2019, there were 178,500 shares of common stock reserved and available for future grant under the above noted 2010 Plan. The following tables set forth the outstanding SARs for the period specified: Year Ended December Year Ended December 29, 2018 Units Weighted - Average Exercise Price Units Weighted - Average Exercise Price Outstanding at beginning of period 189,167 $ 21.46 141,500 $ 20.36 Issued 96,000 23.65 51,000 24.90 Exercised (1,667 ) 19.10 — — Forfeited (7,500 ) 21.20 (3,333 ) 19.10 Outstanding at end of period 276,000 22.30 189,167 21.46 SARs Outstanding and Exercisable Range of Exercise Prices Outstanding as of December Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Exercisable as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price $ 19.10-26.30 276,000 3.3 $ 22.30 38,003 2.3 19.10 The following tables set forth the outstanding stock grants for the period specified: Year Ended December Year Ended December 29, 2018 Shares Weighted - Average Exercise Price Shares Weighted - Average Exercise Price Outstanding at beginning of period 25,000 $ — 25,000 $ — Issued — — — — Forfeited — — — — Outstanding at end of period 25,000 — 25,000 — Stock Grants Outstanding and Exercisable Range of Exercise Prices Outstanding as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Exercisable as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price $ 0.00 25,000 2.3 — — — — As of December 28, 2019, outstanding SARs and options had an intrinsic value of $2,898,945. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 28, 2019 | |
Income Taxes [Abstract] | |
INCOME TAXES | 8. I ncome T axes Deferred income taxes are provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and those for income tax reporting purposes. Deferred income tax (assets) liabilities relate to: 2019 2018 Property, plant and equipment $ 4,638,141 $ 2,582,792 Right of Use Asset 2,933,189 -- Intangible assets 9,236,711 4,710,052 Other 380,336 218,710 Foreign Withholding Tax 315,747 540,761 Total deferred income tax liabilities 17,504,124 8,052,315 Other postretirement benefits (239,348 ) (156,710 ) Inventories (1,422,472 ) (1,133,427 ) Allowance for doubtful accounts (123,172 ) (146,576 ) Accrued compensation (311,125 ) (200,232 ) Lease Obligation (2,933,189 ) -- Pensions (6,804,275 ) (6,127,538 ) Foreign Tax Credit (400,078 ) (167,826 ) Total deferred income tax assets (12,233,659 ) (7,932,309 ) Net deferred income tax (assets) liabilities $ 5,270,465 $ 120,006 Income before income taxes consists of: 2019 2018 Domestic $ 12,537,168 $ 12,431,889 Foreign 3,668,803 5,158,440 $ 16,205,971 $ 17,590,329 The provision for income taxes follows: 2019 2018 Current: Federal $ 2,783,481 $ 484,451 Foreign 1,001,270 753,521 State 489,921 347,199 Deferred: Federal (756,206 ) 815,858 Foreign (225,014 ) 153,726 State (353,623 ) 529,637 $ 2,939,829 $ 3,084,392 A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows: 2019 2018 Amount Percent Amount Percent Income taxes using U.S. federal statutory rate $ 3,403,254 21 % $ 3,693,968 21 % State income taxes, net of federal benefit 117,276 1 692,698 4 Impact on Foreign Repatriation Tax Reform -- 0 (83,479 ) (1 ) Impact of foreign subsidiaries on effective tax rate (239,823 ) (2 ) (401,992 ) (2 ) Impact of New Tax Law -- 0 (507,847 ) (2 ) Impact of Research & Development tax credit (411,090 ) (3 ) (216,675 ) (1 ) Impact of manufacturers deduction on effective tax rate 0 0 0 0 Other—net 70,212 1 (92,281 ) (1 ) 2,939,829 18 % 3,084,392 18 % Total income taxes paid were $3,197,984 in 2019 and $3,741,021 in 2018. Pursuant to the SAB118, the company is allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts and as such has adjusted for the finalization of the tax impacts in the fourth quarter of 2018. The change primarily related to deferred taxes. Under accounting standards (ASC 740) a deferred tax liability is not recorded for the excess of the financial reporting (book) basis over the tax basis of an investment in a foreign subsidiary if the indefinite reinvestment criteria is met. Effective for foreign earnings after December 30, 2017, if such earnings are distributed in the form of cash dividends, the Company would not be subject to additional U.S. income taxes but could be subject to foreign income and withholding taxes. A provision has not been made for additional U.S. federal and foreign taxes at December 28, 2019 on approximately $7,460,584 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. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes. The list of changes is comprehensive. The changes include removing exceptions to incremental intraperiod tax allocation of losses and gains from different financial statement components, exceptions to the method of recognizing income taxes on interim period losses and exceptions to deferred tax liability recognition related to foreign subsidiary investments. In addition, ASU 2019-12 requires that entities recognize franchise tax based on an incremental method, requires an entity to evaluate the accounting for step-ups in the tax basis of Goodwill as inside or outside of a business combination, and removes the requirement to allocate the current and deferred tax provision among entities in standalone financial statement reporting. The ASU also now requires that an entity reflect enacted changes in tax laws in the annual effective rate, and other Codification adjustments have been made to employee stock ownership plans. 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. 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. 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. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company is currently evaluating whether to early adopt ASU 2019-12 in the first interim period of 2020. A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows: 2018 Balance at beginning of year $ 299,722 $ 299,734 Increases for positions taken during the current period 137,927 0 Increases for positions taken during the prior period 2,039,117 74,219 Decreases resulting from the expiration of the statute of limitations (69,384 ) (74,231 ) Balance at end of year $ 2,407,382 $ 299,722 The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015 and non-U.S. income tax examinations by tax authorities prior to 2013. Included in the balance at December 28, 2019, are $1,640,609 of unrecognized tax benefits that would affect the annual effective tax rate. In 2019, the Company recognized accrued interest related to unrecognized tax benefits in income tax expense. The Company had approximately $57,879 of accrued interest at December 28, 2019. The total amount of unrecognized tax benefits could increase or decrease within the next twelve months for a number of 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. The Company believes that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months. |
LEASES
LEASES | 12 Months Ended |
Dec. 28, 2019 | |
LEASES [Abstract] | |
LEASES | 9. L eases The Company leases certain equipment and buildings under operating lease arrangements. Most leases are for a fixed term and for a fixed amount. The Company is not a party to any leases that have step rent provisions, escalation clauses, capital improvement funding or payment increases based on any index or rate. Future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year during each of the next five years follow: 2020 $ 4,721,598 2021 2,935,895 2022 1,743,488 2023 955,255 2024 647,597 $ 11,003,833 Rent expense for all operating leases was $3,106,630 in 2019 and $2,552,887 in 2018. The weighted average lease term for all operating leases is five years. The weighted average discount rate for all operating leases is 5%. |
RETIREMENT BENEFIT PLANS
RETIREMENT BENEFIT PLANS | 12 Months Ended |
Dec. 28, 2019 | |
RETIREMENT BENEFIT PLANS [Abstract] | |
RETIREMENT BENEFIT PLANS | 10. Retirement Benefit Plans The Company has non-contributory defined benefit pension plans covering most U.S. employees. Plan benefits are generally based upon age at retirement, years of service and, for its salaried plan, the level of compensation. The Company also sponsors unfunded non-qualified supplemental retirement plans that provide certain former officers with benefits in excess of limits imposed by federal tax law. The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements. Effective for October 31, 2018, as a result of the collective bargaining agreement between the Frazer and Jones Company, Division of the Eastern Company and the International Union of Electronic, Electrical, Salaried (Machine and Furniture Workers) CWA-AFL-CIO pension accruals for the covered employees have been frozen. Under ASC 715, the Company is required to remeasure plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances affecting the pension costs. After consulting with our actuary, although the freezing of benefits under the Frazer and Jones Plan would normally be considered a significant event pursuant to such standard, there was no remaining unrecognized Prior Service Cost as of the date of the freeze, thus, Eastern Company did not increase the expense. In addition, the freezing of benefit accruals did not impact the pension benefit obligation. Thus there was no additional recognition required and a remeasurement was not necessary. Effective for January 1, 2018, as a result of the collective bargaining agreement between the Illinois Lock Company and the Service Employees International Union Local, 1 C.L.C. pension accruals for the covered employees have been frozen. Under ASC 715, the Company is required to remeasure plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances affecting the pension costs. After consulting with our actuary, the freezing of benefits under the Illinois Lock Plan was considered a significant event pursuant to such standard. As a result, the Company expensed the previously unrecognized Prior Service Cost. The Eastern Company increased the expense by $14,928. The freezing of benefit accruals did not impact the pension benefit obligation. The additional recognition occurred as of the beginning of the fiscal year; thus, a remeasurement was not necessary. Components of the net periodic benefit cost of the Company’s pension benefit plans for the fiscal year indicated were as follows: 2019 2018 Service cost $ 1,055,410 $ 1,319,841 Interest cost 3,510,618 3,107,164 Expected return on plan assets (4,761,320 ) (5,219,515 ) Amortization of prior service cost 99,380 114,822 Amortization of the net loss 1,162,196 1,110,111 Net periodic benefit cost $ 1,071,984 $ 432,423 Assumptions used to determine net periodic benefit cost for the Company’s pension benefit plans for the fiscal year indicated were as follows: 2019 2018 Discount rate - Pension plans 4.20% - 3.54% - 3.57% - Supplemental pension plans 3.81% 3.10% Expected return on plan assets 7.5% 7.5% Rate of compensation increase 0% 0% Components of the net periodic benefit cost of the Company’s other postretirement benefit plan were as follows: 2019 2018 Service cost $ 33,287 $ 37,024 Interest cost 56,755 77,161 Expected return on plan assets (28,033 ) (55,650 ) Amortization of prior service cost (5,072 ) (5,072 ) Amortization of the net loss (47,272 ) (65,591 ) Net periodic benefit cost $ 9,665 $ (12,128 ) Assumptions used to determine net periodic benefit cost for the Company’s other postretirement plan for the fiscal year indicated were as follows: 2019 2018 Discount rate 4.26% 3.60% Expected return on plan assets 4.0% 4.0% As of December 28, 2019 and December 29, 2018, the status of the Company’s pension benefit plans and other postretirement benefit plan was as follows: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Benefit obligation at beginning of year $ 91,533,200 $ 98,522,201 $ 2,096,761 $ 2,423,410 Change in discount rate 12,313,831 (8,319,874 ) 239,138 (217,539 ) Service cost 1,055,410 1,319,841 33,287 37,024 Interest cost 3,516,318 3,107,164 56,755 77,161 Actuarial (gain)/loss (1,508,935 ) 531,799 77,813 (89,664 ) Significant Event -- -- (902,719 ) -- Benefits paid (3,918,781 ) (3,627,931 ) (35,016 ) (133,631 ) Benefit obligation at end of year $ 102,991,043 $ 91,533,200 $ 1,566,019 $ 2,096,761 2019 2018 2019 2018 Fair value of plan assets at beginning of year $ 66,170,875 $ 72,098,772 $ 1,448,126 $ 1,391,239 Actual return on plan assets 11,803,359 (4,827,641 ) 13,466 56,887 Employer contributions 304,105 2,527,675 35,016 133,631 Significant Event -- -- (902,719 ) -- Benefits paid (3,918,781 ) (3,627,931 ) (35,016 ) (133,631 ) Fair value of plan assets at end of year $ 74,359,558 $ 66,170,875 $ 558,873 $ 1,448,126 Pension Benefit Other Postretirement Benefit Funded Status 2019 2018 2019 2018 Net amount recognized in the balance sheet $ (28,631,485 ) $ (25,362,325 ) $ (1,007,146 ) $ (648,635 ) Amounts recognized in accumulated other comprehensive income consist of: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Net (loss)/gain $ (36,315,245 ) $ (33,714,584 ) $ 499,701 $ 1,332,634 Prior service (cost) credit (265,012 ) (364,392 ) 8,253 13,325 $ (36,580,257 ) $ (34,078,976 ) $ 507,954 $ 1,345,959 Change in the components of accumulated other comprehensive income consist of: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Balance at beginning of period $ (34,078,976 ) $ (33,059,756 ) $ 1,345,959 $ 1,108,182 Change due to availability of final actual assets and census data --- --- -- -- Charged to net periodic benefit cost Prior service cost 99,380 114,822 (5,072 ) (5,072 ) Net loss (gain) 1,162,196 1,110,111 (47,272 ) (65,591 ) Liability (gains)/losses Discount rate (12,313,831 ) 8,319,874 (239,138 ) 217,539 Asset (gains)/losses deferred 7,724,649 (9,531,647 ) (14,567 ) 1,237 Significant Event -- -- (454,143 ) -- Additional recognition due to plan amendment -- 14,928 — — Other 826,325 (1,047,308 ) (77,813 ) 89,664 Balance at end of period $ (36,580,257 ) $ (34,078,976 ) $ 507,954 $ 1,345,959 In 2019, the net periodic pension benefit cost included $1,300,134 of net loss and $99,380 of prior service cost and the net periodic other postretirement benefit cost included $25,509 of net gain and $5,072 of prior service credit. During 2019, the Company bought out certain Retiree Life Insurance benefits for a gain of $454,143. 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: 2019 2018 Discount rate - Pension plans 3.18% - 4.20% - 4.22% - Supplemental pension plans 2.61% 3.81% - Other postretirement plan 3.35% 4.26% At December 28, 2019 and December 29 2018, the accumulated benefit obligation for all qualified and nonqualified defined benefit pension plans was $102,991,053 and $91,533,200, respectively. Information for the under-funded pension plans with a projected benefit obligation and an accumulated benefit obligation in excess of plan assets: 2019 2018 Number of plans 5 5 Projected benefit obligation $ 102,991,043 $ 91,533,200 Accumulated benefit obligation 102,991,043 91,533,200 Fair value of plan assets 74,359,558 66,170,875 Net amount recognized in accrued benefit liability (28,631,485 ) (25,362,325 ) Estimated future benefit payments to participants of the Company’s pension plans are $4.3 million in 2020, $4.5 million in 2021, $4.7 million in 2022, $4.9 million in 2023, $5.1 million in 2024 and a total of $28.0 million from 2025 through 2029. Estimated future benefit payments to participants of the Company’s other postretirement plan are $50,000 in 2020, $49,000 in 2021, $50,000 in 2022, $51,000 in 2023, $52,000 in 2024 and a total of $293,000 from 2025 through 2029. The Company expects to make cash contributions to its qualified pension plans of approximately $2,700,000 and to its other postretirement plan of approximately $50,000 in 2020. We consider a number of factors in determining and selecting assumptions for the overall expected long-term rate of return on plan assets. We consider the historical long-term return experience of our assets, the current and expected allocation of our plan assets, and expected long-term rates of return. We derive these expected long-term rates of return with the assistance of our investment advisors and generally base these rates on a 10-year horizon for various asset classes and consider the expected positive impact of active investment management. We base our expected allocation of plan assets on a diversified portfolio consisting of domestic and international equity securities and fixed income securities. We consider a variety of factors in determining and selecting our assumptions for the discount rate at the end of the year. In 2019, as in 2018, 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. The fair values of the company’s pension plans assets at December 28, 2019 and December 29, 2018, utilizing the fair value hierarchy discussed in Note 2, follow: December Level Level Level Total Cash and Equivalents: Common/collective trust funds $ — $ 334,138 $ — $ 334,138 Equities: The Eastern Company Common Stock 6,625,560 — 6,625,560 Common/collective trust funds Russell Multi Asset Core Plus Fund (a) — 33,413,819 — 33,413,819 Fixed Income: Common/collective trust funds Target Duration LDI Fixed Income Funds (b) • Russell 8 Year LDI Fixed Income Fund — 12,796,482 — 12,796,482 • Russell 14 Year LDI Fixed Income Fund — 11,387,626 — 11,387,626 STRIPS Fixed Income Funds (c) • Russell 15 Year STRIPS Fixed Income Fund — 3,050,389 — 3,050,389 • Russell 10 Year STRIPS Fixed Income Fund — 4,616,924 — 4,616,924 • Russell 28 to 29 Year STRIPS Fixed Income Fund — 2,134,620 — 2,134,620 Total $ 6,625,560 $ 67,733,998 $ — $ 74,359,558 December 29, 2018 Level 1 Level 2 Level 3 Total Cash and Equivalents: Common/collective trust funds $ — $ 306,882 $ — $ 306,882 Equities: The Eastern Company Common Stock 5,247,495 — 5,247,495 Common/collective trust funds Russell Multi Asset Core Plus Fund (a) — 30,611,519 — 30,611,519 Fixed Income: Common/collective trust funds Target Duration LDI Fixed Income Funds (b) • Russell 8 Year LDI Fixed Income Fund — 5,735,993 — 5,735,993 • Russell 14 Year LDI Fixed Income Fund — 17,044,596 — 17,044,596 STRIPS Fixed Income Funds (c) • Russell 15 Year STRIPS Fixed Income Fund — 1,811,436 — 1,811,436 • Russell 10 Year STRIPS Fixed Income Fund — 3,408,879 — 3,408,879 • Russell 28 to 29 Year STRIPS Fixed Income Fund — 2,004,075 — 2,004,075 Total $ 5,247,495 $ 60,923,380 $ — $ 66,170,875 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. The Level 1 investment is made up of shares of The Eastern Company Common Stock and is valued at market price. Level 2 investments include commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying publicly traded securities. (a) The investment objective of the RITC (formerly Russell) Multi-Asset Core Plus Fund seeks to provide long-term growth of capital over a market cycle by offering a diversified portfolio of funds and separate accounts investing in global stock, return seeking fixed income, commodities, global real estate and opportunistic investments. They hold a dynamic mix of underlying Russell Investments funds and/or separate accounts. Russell Investments is a strong proponent of disciplined strategic asset allocation and rebalancing strategies, and believes that unstable movements in the market have the potential to create opportunities. By identifying short-term mispricing, and making small tactical adjustments to the Multi-Asset Core Plus Fund, they believe there is potential to enhance returns while continuing to manage risks. (b) The Target Duration LDI Fixed Income Funds seek to outperform their respective Barclays-Russell LDI Indexes over a full market cycle. These Funds invest primarily in investment grade corporate bonds that closely match those found in discount curves used to value U.S. pension liabilities. They seek to provide additional incremental return through modest interest rate timing, security selection and tactical use of non-credit sectors. Generally, for use in combination with other bond funds to gain additional credit exposure, with the goal of reducing the mismatch between a plan’s assets and liabilities. (c) The STRIPS (Separate Trading of Registered Interest and Principal of Securities) Funds seek to provide duration and Treasury exposure by investing in an optimized subset of the STRIPS universe with a similar duration profile as the Barclays U.S. Treasury STRIPS 10-11 year, 16-16 year or 28-29 year Index. These passively managed funds are generally used with other bond funds to add additional duration to the asset portfolio. This will help reduce the mismatch between a plan’s assets and liabilities. The investment portfolio contains a diversified blend of common stocks, bonds, cash equivalents, and other investments, which may reflect varying rates of return. The investments are further diversified within each asset classification. The portfolio diversification provides protection against a single security or class of securities having a disproportionate impact on aggregate performance. The Company has elected to change its investment strategy to better match the assets with the underlying plan liabilities. Currently, the long-term target allocations for plan assets are 50% in equities and 50% in fixed income although the actual plan asset allocations may be within a range around these targets. The actual asset allocations are reviewed and rebalanced on a periodic basis to maintain the target allocations. It is expected that, as the funded status of the plans improves, more assets will be invested in long-duration fixed income instruments. The plans’ assets include 217,018 shares of the common stock of the Company having a market value of $6,625,560 and $5,247,495 at December 28, 2019 and December 29, 2018, respectively. No shares were purchased in 2019 or 2018 nor were and shares sold in either period. Dividends received during 2019 and 2018 on the common stock of the Company were $95,488 and $95,488 respectively. U.S. salaried and non-union hourly employees and most employees of the Company’s Canadian subsidiaries are covered by defined contribution plans. The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code covering substantially all U.S. non-union employees. This plan allows participants to make voluntary contributions of up to 100% of their annual compensation on a pretax basis, subject to IRS limitations. The plan provides for contributions by the Company at its discretion. The Company amended the Eastern Company Savings and Investment Plan (“401(k) Plan Amendment”) effective June 1, 2016. The 401(k) Plan Amendment increased this match to 50% of the first 6% of contributions for the remainder of Fiscal 2016. The 401(k) Plan Amendment also provided for an additional non-discretionary contribution (the “transitional credit”) for certain non-union U.S. employees who were eligible to participate in the Salaried Plan. The amount of this non-discretionary contribution ranges from 0% to 4% of wages, based on the age of the individual on June 1, 2016. The 401(k) Plan Amendment increased the non-discretionary safe harbor contribution to 3%, and changed the eligibility to all non-union U.S. employees. The Company made contributions to the plan as follows: 2019 2018 Regular matching contributions $ 540,693 $ 551,046 Transitional credit contributions 305,226 349,062 Non-discretionary contributions 638,745 578,373 Total contributions made for the period $ 1,484,664 $ 1,478,481 At December 28, 2019, the Company had accrued $550,286 for the non-discretionary safe harbor contribution this amount was expensed in 2019 and was contributed to the plan in January 2020. At December 29, 2018, the Company had accrued $565,748 for the non-discretionary safe harbor contribution. This amount was contributed to the Plan in January 2019 and was expensed in 2018. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 28, 2019 | |
Earning Per Share [Abstract] | |
Earning Per Share | 11. Earnings per Share The denominators used in the earnings per share computations follow: 2019 2018 Basic: Weighted average shares outstanding 6,235,098 6,258,277 Diluted: Weighted average shares outstanding 6,235,098 6,258,277 Dilutive stock options 34,910 15,697 Denominator for diluted earnings per share 6,270,008 6,273,974 There were no anti-dilutive stock equivalents in 2019 or 2018. |
REPORTABLE SEGMENTS
REPORTABLE SEGMENTS | 12 Months Ended |
Dec. 28, 2019 | |
REPORTABLE SEGMENTS [Abstract] | |
REPORTABLE SEGMENTS | 12. Reportable Segments 2019 2018 Sales: Sales to unaffiliated customers: Industrial Hardware $ 164,505,888 $ 140,293,409 Security Products 58,324,085 64,897,871 Metal Products 28,912,646 29,084,183 $ 251,742,619 $ 234,275,463 Inter-segment Sales: Industrial Hardware $ 61,557 $ 366,381 Security Products 3,382,791 3,365,695 Metal Products 11,731 13,421 $ 3,456,079 $ 3,745,497 Income Before Income Taxes: Industrial Hardware $ 11,067,011 $ 9,588,185 Security Products 5,389,612 7,122,640 Metal Products 1,001,231 1,148,516 Operating Profit 17,457,854 17,859,341 Interest expense (1,857,961 ) (1,202,272 ) Other income 606,078 933,260 $ 16,205,971 $ 17,590,329 Geographic Information: Net Sales: United States $ 230,920,619 $ 207,789,058 Foreign 20,822,000 26,486,405 $ 251,742,619 $ 234,275,463 Foreign sales are primarily to customers in North America. Identifiable Assets: United States $ 263,295,787 $ 166,665,767 Foreign 17,367,189 14,581,800 $ 280,662,976 $ 181,247,567 Industrial Hardware $ 66,008,663 $ 47,600,805 Security Products 54,804,360 54,593,837 Metal Products 19,439,404 19,909,256 140,252,427 122,103,898 General corporate 140,410,549 59,143,669 $ 280,662,976 $ 181,247,567 2019 2018 Depreciation and Amortization: Industrial Hardware $ 4,015,017 $ 2,978,324 Security Products 1,281,008 1,135,811 Metal Products 1,158,856 1,215,073 $ 6,454,881 $ 5,329,208 Capital Expenditures: Industrial Hardware $ 3,603,863 $ 3,029,406 Security Products 935,722 1,482,267 Metal Products 897,573 901,400 5,437,158 5,413,073 Currency translation adjustment 3,330 (9,014 ) General corporate — 6,486 $ 5,440,488 $ 5,410,545 |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 28, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | 13. Recent Accounting Pronouncements Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (“Topic 842”). ASU 2016-02 requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. The guidance is to be applied at the beginning of the earliest comparative period in the financial statements and is effective for years beginning after December 15, 2018. Early adoption was permitted. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842 - Leases. ASU 2018-10 clarifies and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The guidance is to be applied upon adoption of Topic 842 and is effective for years beginning after December 15, 2018. Also in July 2018, the FASB issued ASU No. 2018-11, Leases. ASU 2018-11 provides clarification and an additional (and optional) transition method to adopt the new leases standard. The guidance is to be applied upon adoption of Topic 842 and is effective for years beginning after December 15, 2018. In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements. ASU No. 2019-01 aligns the new leases guidance with existing guidance for the fair value of the underlying asset by lessors that are not manufacturers or dealers and clarifies an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the FASB’s new lease accounting standard. The guidance is to be applied upon adoption of Topic 842 and is effective for years beginning after December 15, 2018. See Note 3 – Right-of-Use Assets. Upcoming In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. Early adoption of the amendments is permitted. For public business entities, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this amendment will not have a material impact on the consolidated financial statements of the Company. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 28, 2019 | |
CONTINGENCIES [Abstract] | |
CONTINGENCIES | 14. C ontingencies The Company is party to various legal proceedings from time to time related to its normal business operations. Currently, the Company is not involved in any legal proceedings. In 2010, the Company was contacted by the State of Illinois regarding potential ground contamination at its plant in Wheeling, Illinois. The Company entered into a voluntary remediation program in Illinois and engaged an environmental clean-up company to perform testing and develop a remediation plan. Since 2010, the environmental company completed a number of tests and the design of a final remediation system was approved in the second quarter of 2018. As of the end of the of 2019, the remediation plan was completed. The State of Illinois has received the documentation related to the remediation and is in the process of approving the final documentation. The total estimated cost for the remediation system is anticipated to be approximately $50,000, which the Company previously accrued for and expensed in prior years. In 2016, the Company created a plan to remediate a landfill of spent foundry sand maintained at the Company’s metal casting facility in New York. This plan was agreed to by the New York Department of Environmental Conservation (the “DEC”) on March 27, 2018. Based on estimates provided by the Company’s environmental engineers, the anticipated cost to remediate and monitor the landfill was $430,000. The Company accrued for and expensed the entire $430,000 in the first quarter of 2018 and fiscal 2017. In the Fall of 2018, detailed construction drawings were prepared by an outside consultant in conjunction with informal progress reviews by the New York State Department of Environmental Conservation (the “NYSDEC”). Long-term groundwater monitoring commenced in April of 2019. Verbal approval for the closure plan was received from the NYSDEC in May of 2019. Written approval is anticipated in the first quarter of 2020. Construction of the closure remedies, including improved drainage system, regrading, and installation of a low permeability cap, is anticipated in spring of 2020. In the Summer of 2020, following the completion of construction work, a closure report and maintenance plan will be prepared for the NYSDEC. This closure report and maintenance plan will document the work done and request acknowledgment of satisfactory completion of the Order on Consent between Frazer and Jones, and the NYSDEC. |
CONCENTRATION OF RISK
CONCENTRATION OF RISK | 12 Months Ended |
Dec. 28, 2019 | |
CONCENTRATION OF RISK [Abstract] | |
CONCENTRATION OF RISK | 15. Concentration of risk Credit Risk Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Company, as and when they become due. The primary credit risk for the Company is its accounts receivable due from customers. The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss. As of December 28, 2019 and December 29, 2018, there were no significant concentrations of credit risk. One customer exceeded 10% of total accounts receivable for 2019. No customer exceeded 10% of total accounts receivable for 2018. The maximum exposure to credit risk is primarily represented by the carrying amount of the Company’s accounts receivable. Interest Rate Risk 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%. The Company has an interest rate swap with a notional amount of $50,000,000 on December 28, 2019 to convert a portion of its 2019 Credit Agreement from variable to fixed rates. The valuation of this swap is determined using the three month LIBOR rate index and mitigates the Company’s exposure to interest rate risk. 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. More information regarding the potential phasing out of LIBOR is discussed in greater detail under Note 7 to Consolidated Financial Statements. Currency Exchange Rate Risk The Company’s currency exposure is concentrated in the Canadian dollar, Mexican peso, New Taiwan dollar, Chinese RMB, Hong Kong dollar and United Kingdom pound sterling. Because of the Company’s limited exposure to any single foreign market, any exchange gains or losses have not been material and are not expected to be material in the future. As a result, the Company does not attempt to mitigate its foreign currency exposure through the acquisition of any speculative or leveraged financial instruments. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying accounts | 12 Months Ended |
Dec. 28, 2019 | |
Schedule II - Valuation and Qualifying accounts [Abstract] | |
Schedule II - Valuation and Qualifying accounts | The Eastern Company and Subsidiaries Schedule II – Valuation and Qualifying accounts COL. A COL. B COL. C COL. D COL. E ADDITIONS Description Balance at Beginning of Period (1) Charged to Costs and Expenses (2) Charged to Other Accounts-Describe Deductions – Describe Balance at End of Period Fiscal year ended December 28, 2019: Deducted from asset accounts: Allowance for doubtful accounts $ 680,000 $ 202,000 $ 78,000 (b) $ 0 (a) $ 556,000 Fiscal year ended December 29, 2018: Deducted from asset accounts: Allowance for doubtful accounts $ 470,000 $ 220,000 $ 0 $ 10,000 (a) $ 680,000 (a) Uncollectible accounts written off, net of recoveries. (b) Acquired company opening balance. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 28, 2019 | |
ACCOUNTING POLICIES [Abstract] | |
Fiscal Year | Fiscal Year The Company’s year ends on the Saturday nearest to December 31. Fiscal years, 2019 and 2018, were 52 weeks each. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All intercompany accounts and transactions are eliminated. |
Reclassification | Reclassification Commencing with the first quarter of 2018, pension service costs have been broken out and reclassified from the gains and losses associated with the pension assets. The reclassification of these expenses does not affect the net income reported. Product development expense is not necessarily a cost of product sold. Rather, these expenses are related to product development. The reclassification of these expenses does not affect the net income reported. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis the Company evaluates its estimates, including those related to product returns, bad debts, carrying value of inventories, intangible and other long-lived assets, income taxes, pensions and other postretirement benefits. Actual results could differ from those estimates. |
Foreign Currency | Foreign Currency For foreign operations asset and liability accounts are translated with an exchange rate at the respective balance sheet dates; income statement accounts are translated at the average exchange rate for the years. Resulting translation adjustments are made directly to a separate component of shareholders’ equity – “Accumulated other comprehensive income (loss) – Foreign currency translation”. Foreign currency exchange transaction gains and losses are not material in any year. |
Cash Equivalents | Cash Equivalents Highly liquid investments purchased with a maturity of three months or less are considered cash equivalents. The Company has deposits that exceed amounts insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, but the Company does not consider this a significant concentration of credit risk based on the strength of the financial institution. Approximately 50% of available cash is located outside of the United States in our foreign subsidiaries. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at their net realizable value. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company reviews the collectability of its receivables on an ongoing basis taking into account a combination of factors. The Company reviews potential problems, such as past due accounts, a bankruptcy filing or deterioration in the customer’s financial condition, to ensure the Company is adequately accrued for potential loss. Accounts are considered past due based on when payment was originally due. If a customer’s situation changes, such as a bankruptcy or creditworthiness, or there is a change in the current economic climate, the Company may modify its estimate of the allowance for doubtful accounts. The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts are deemed uncollectible. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value. Cost is determined by the last-in, first-out (LIFO) method in the U.S. ($31,011,130 for U.S. inventories at December 28, 2019, excluding Big 3 and Velvac) and by the first-in, first-out (FIFO) method for inventories outside the U.S. ($7,295,793 for inventories outside the U.S. at December 28, 2019). Cost exceeds the LIFO carrying value by approximately $6,712,162 at December 28, 2019 and $6,957,972 at December 29, 2018. There was no material LIFO quantity liquidation in 2019 or 2018. In addition, as of the balance sheet dates, the Company has recorded reserves for excess/obsolete inventory. |
Property, Plant and Equipment and Related Depreciation | Property, Plant and Equipment and Related Depreciation Property, plant and equipment (including equipment under capital lease) are stated at cost. Depreciation ($4,722,758 in 2019, $4,329,136 in 2018) is computed generally using the straight-line method based on the following estimated useful lives of the assets: Buildings 10 to 39.5 years; Machinery and equipment 3 to 10 years. Impairment of Long-Lived Assets In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long Lived Assets, |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long Lived Assets, |
Goodwill | Goodwill The Company performed qualitative assessments of goodwill as of the end of fiscal 2019 and fiscal 2018 and determined it is more likely than not that no impairment of goodwill existed at the end of 2019 or 2018. The Company will perform annual qualitative assessments in subsequent years as of the end of each fiscal year. Additionally, the Company will perform interim analysis whenever conditions warrant. Goodwill would be considered impaired whenever the historical carrying amount exceeds the fair value. Pursuant to the qualitative assessment performed, goodwill was not impaired in 2019 or 2018. Should we reach a different conclusion in the future, additional work would be performed to determine the amount of the non-cash impairment charge to be recognized. The maximum future impairment of goodwill that could occur is the amount recognized on our balance sheet. |
Intangible Assets | Intangible Assets Patents are recorded at cost and are amortized using the straight-line method over the lives of the patents. Technology and licenses are recorded at cost and are generally amortized on a straight-line basis over periods ranging from 5 to 17 years. Generally, non-compete agreements and customer relationships are being amortized using the straight-line method over a period of 5 years. Amortization expense in 2019 and 2018 was $1,726,539 and $1,452,084, respectively. In the event that 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. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. The Company’s financial instruments are primarily investments in pension assets, see footnote 11, and consists of an interest rate swap. The Company’s interest rate swap is not an exchange-traded instrument. However, it is valued based on observable inputs for similar liabilities and accordingly is classified as Level 2. The amount of the interest rate swap is included in other accrued liabilities. The carrying amounts of other financial instruments (cash and cash equivalents, accounts receivable, accounts payable and debt) as of December 28, 2019 and December 29, 2018, approximate fair value based on the expected future cash flows of the related instruments. |
Right of Use Assets | Right of Use Assets In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (“Topic 842”). ASU 2016-02 requires lessees to present right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. See Note 13 – Recent Accounting Pronouncements. In calculating the effect of ASU 2016-02, the Company elected the transition method thereby not restating comparable periods. The Company elected to account for non-lease components as part of the lease component to which they relate. Lease accounting involves significant judgments, including making estimates related to the lease term, lease payments, and discount rate. In accordance with the guidance, the Company recognized ROU assets and lease liabilities for all leases with a term greater than 12 months. The Company has operating leases for buildings, warehouses and office equipment. Currently, the Company has 45 operating leases with a ROU asset and lease liability totaling $12,342,000 as of December 28, 2019. The basis, terms and conditions of the leases are determined by the individual agreements. The Company’s option to extend certain leases ranges from 12 – 140 months. All options to extend have been included in the calculation of the ROU asset and lease liability. The leases do not contain residual value guarantees, restrictions, or covenants that could incur additional financial obligations to the Company. There are no subleases, sale-leaseback, or related party transactions. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606 when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates wholesale revenues primarily from the sale of products to original equipment manufacturers and distributers in the United States. The Company recognizes revenue upon shipment or transfer of title to the customer as that is when the customer obtains control of the promised goods. The Company typically extends credit terms to its customers based on their creditworthiness and generally does not receive advance payments. As such, the Company records accounts receivable at the time of shipment, when the Company’s right to the consideration becomes unconditional. Accounts receivable from the Company’s customers are typically due within 30 days of invoicing. An allowance for doubtful accounts is provided based on a periodic analysis of individual account balances, including an evaluation of days outstanding, payment history, recent payment trends and the Company’s assessment of the customer’s credit worthiness. As of December 28, 2019 and December 29, 2018, the Company’s allowance for doubtful accounts total was $556,000 and $680,000, respectively. As of December 28, 2019 and December 29, 2018, the Company’s bad debt expense was $64,000 and $220,000, respectively. The Company considers several factors in determining that control transfers to the customer upon shipment of products. These factors include that legal title transfers to the customer, the Company has a present right to payment, and the customer has assumed the risk and rewards of ownership at the time of shipment. Big 3 Mold division may employ the efforts expended method for the percentage of completion for revenue recognition for certain transactions. 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. The amount of revenue recognized employing the percentage of completion method was $576,000 for the year ended December 28, 2019. No revenue was recognized employing the percentage of completion method for the year ended December 29, 2018. Based on historical experience, the Company does not accrue a reserve for product returns. For the years ended December 28, 2019 and December 29, 2018, the Company recorded sales returns of $613,000 and $725,000, respectively, as a reduction of revenue. Greenwald Industries generates subscription services revenue from access provided to customers to the division’s specific online databases. For the years ended December 28, 2019 and December 29, 2018, Greenwald Industries subscription services revenue was $567,000 and $448,000, respectively. Sales and similar taxes that are imposed on the Company’s sales and collected from the customer are excluded from revenues. 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. For the years ended December 28, 2019 and December 29, 2018, the Company recorded no revenues related to performance obligations satisfied in prior periods. As part of the Company’s adoption of the new revenue standard, 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. There was no subscription services revenue from remaining performance obligations as of December 28, 2019. See footnote 12 regarding the Company’s revenue disaggregated by reporting segment, intersegment sales by reporting segment and geography. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold reflects the cost of purchasing, manufacturing and preparing a product for sale. These costs generally represent the expenses to acquire or manufacture products for sale (including an allocation of depreciation and amortization) and are primarily comprised of direct materials, direct labor, and overhead, which includes indirect labor, facility and equipment costs, inbound freight, receiving, inspection, purchasing, warehousing and any other costs related to the purchasing, manufacturing or preparation of a product for sale. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are included in cost of goods sold. |
Product Development Costs | Product Development Costs Product development costs, charged to expense as incurred, were $6,024,567 in 2019, $6,950,969 in 2018. |
Selling and Administrative Expenses | Selling and Administrative Expenses Selling and administrative expenses include all operating costs of the Company that are not directly related to the cost of purchasing, manufacturing and preparing a product for sale. These expenses generally represent administrative expenses for support functions and related overhead. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. Advertising costs were $462,911 in 2019, $501,615 in 2018. |
Software Development Costs | Software Development Costs Software development costs, are primarily costs to develop software sold, leased, or otherwise marketed, that are incurred subsequent to the establishment of technological feasibility are capitalized if significant. Capitalized software development costs are amortized using the straight-line amortization method over the estimated useful life of the applicable software. There were no capitalized software development costs in the 2019. For the year ended December 29, 2018 capitalized software development costs were $1,813,973. |
Stock Based Compensation | Stock Based Compensation 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 options and restricted stock awards. The Company estimates the fair value of granted stock options using the Black-Scholes valuation model. This model requires the Company to make estimates and assumptions including, without limitation, estimates regarding the length of time an employee will retain vested stock options before exercising them, the estimated volatility of the Company’s common stock price and the number of options that will be forfeited prior to vesting. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Changes in these estimates and assumptions can materially affect the determination of the fair value of stock-based compensation and consequently, the related amount recognized in the Company’s consolidated statements of operations. For the year ended December 28, 2019, there were 96,000 SARs granted under the 2010 Plan. Under the terms of the Director’s Fee Program, the directors can elect to receive their Director’s fees in cash or in common shares of the Company. This election is made at the beginning of each fiscal year and remains in effect for the entire year. |
Income Taxes | Income Taxes The Company and its U.S. subsidiaries file a consolidated federal income tax return. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases 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. On December, 22, 2017, SAB 118 was issued due to the complexities involved in accounting for the enacted Tax Act. SAB 118 requires the company to include in its financial statements a reasonable estimate of the impact of the Tax Act on earnings to the extent such estimate has been determined. Accordingly, the U.S. provision for income tax for 2017 was based on the reasonable estimate guidance provided by SAB 118. The company has assessed the impact from the Tax Act and recorded the impact in the fourth quarter of 2018. 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. These provisions detail how companies should recognize, measure, present and disclose uncertain tax positions that have or are expected to be taken. As such, the financial statements will reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. See Note 7 Income Taxes. |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
BUSINESS ACQUISITIONS [Abstract] | |
Intangible Assets | In connection with the above acquisition, the Company recorded the following intangible assets: Asset Class/Description Amount Weighted-average Life in Years Patents, technology, and licenses Customer relationships $ 689,675 8.3 Intellectual property 586,762 8.3 Non-compete agreements 52,570 8.3 $ 1,329,007 8.3 |
Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid for Big 3 Precision and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date. At August 30, 2019: Consideration Cash $ 338,714 Cash proceeds from debt 80,817,039 $ 81,155,753 Recognized amounts of identifiable assets acquired and liabilities assumed Accounts receivable $ 13,649,937 Inventory 3,240,382 Prepaid and other assets 32,268 Property plant and equipment 13,770,170 Other noncurrent assets 1,337,337 Other intangible assets 21,054,000 Current liabilities (4,910,384 ) Deferred revenue (1,585,709 ) Income tax payable (2,039,117 ) Note payable (375,379 ) Deferred tax liabilities (7,114,732 ) Total identifiable net assets 37,058,773 Goodwill 44,096,980 $ 81,155,753 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Goodwill [Abstract] | |
Roll-forward of Goodwill | The following is a roll-forward of goodwill for 2019 and 2018: Industrial Hardware Segment Security Products Segment Metal Products Segment Total 2019 Beginning balance $ 19,086,634 $ 15,753,742 $ — $ 34,840,376 Investment in Big 3 44,636,744 — — 44,636,744 Foreign exchange 40,892 — — 40,892 Ending balance $ 63,764,270 $ 15,753,742 $ — $ 79,518,012 Industrial Hardware Segment Security Products Segment Metal Products Segment Total 2018 Beginning balance $ 19,169,849 $ 13,059,042 $ — $ 32,228,891 Investment in Load N Lock — 2,694,700 — 2,694,700 Foreign exchange (83,215 ) — — (83,215 ) Ending balance $ 19,086,634 $ 15,753,742 $ — $ 34,840,376 |
INTANGIBLES (Tables)
INTANGIBLES (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
INTANGIBLES [Abstract] | |
Gross Carrying Amount and Accumulated Amortization of Amortizable Intangible Assets | Industrial Hardware Segment Security Products Segment Metal Products Segment Total Weighted-Average Amortization Period (Years) 2019 Gross Amount Patents and developed technology $ 5,375,680 $ 1,618,950 $ — $ 6,994,630 10.2 Customer relationships 22,899,000 1,139,381 — 24,038,381 9.6 Non-compete agreements 12,000 459,570 — 471,570 1.9 Intellectual property — 307,370 — 307,370 2.0 Total Gross Intangibles $ 28,286,680 $ 3,525,271 $ — $ 31,811,951 9.5 2019 Accumulated Amortization Patents and developed technology $ 1,505,097 $ 789,056 $ — $ 2,294,153 Customer relationships 1,751,225 581,262 — 2,332,487 Non-compete agreements 800 417,032 — 417,832 Intellectual property — 307,369 — 307,369 Accumulated Amortization $ 3,257,122 $ 2,094,719 $ — $ 5,351,841 Net per Balance Sheet $ 25,029,558 $ 1,430,552 $ — $ 26,460,110 2018 Gross Amount Patents and developed technology $ 7,884,498 $ 1,648,731 $ — $ 9,533,229 10.2 Customer relationships 3,650,000 1,139,381 — 4,789,381 8.1 Non-compete agreements — 459,570 — 459,570 4.4 Intellectual property — 307,370 — 307,370 5.0 Total Gross Intangibles $ 11,534,498 $ 3,555,052 $ — $ 15,089,550 9.2 2018 Accumulated Amortization Patents and developed technology $ 2,448,380 $ 737,276 $ — $ 3,185,656 Customer relationships 638,750 408,233 — 1,046,983 Non-compete agreements — 329,296 — 329,296 Intellectual property — 245,895 — 245,895 Accumulated Amortization $ 3,087,130 $ 1,720,700 $ — $ 4,807,830 Net per Balance Sheet $ 8,447,368 $ 1,834,352 $ — $ 10,281,720 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
DEBT [Abstract] | |
Debt | Debt consists of: 2019 2018 Term loans $ 98,765,233 $ 28,675,000 Revolving credit loan — — 98,765,233 28,675,000 Less current portion 5,187,689 2,325,000 $ 93,577,544 $ 26,350,000 |
Annual Principal Maturities of Long-Term Debt | As of December 29, 2019, scheduled annual principal maturities of long-term debt for each of the next five years follow: 2020 $ 5,187,689 2021 6,437,689 2022 7,500,000 2023 8,750,000 2024 70,889,855 Thereafter — $ 98,765,233 |
STOCK OPTIONS AND AWARDS (Table
STOCK OPTIONS AND AWARDS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Stock Options and Awards [Abstract] | |
Stock Appreciation Rights Activity | The following tables set forth the outstanding SARs for the period specified: Year Ended December Year Ended December 29, 2018 Units Weighted - Average Exercise Price Units Weighted - Average Exercise Price Outstanding at beginning of period 189,167 $ 21.46 141,500 $ 20.36 Issued 96,000 23.65 51,000 24.90 Exercised (1,667 ) 19.10 — — Forfeited (7,500 ) 21.20 (3,333 ) 19.10 Outstanding at end of period 276,000 22.30 189,167 21.46 |
SARs Outstanding and Exercisable | SARs Outstanding and Exercisable Range of Exercise Prices Outstanding as of December Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Exercisable as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price $ 19.10-26.30 276,000 3.3 $ 22.30 38,003 2.3 19.10 |
Stock Option Activity | The following tables set forth the outstanding stock grants for the period specified: Year Ended December Year Ended December 29, 2018 Shares Weighted - Average Exercise Price Shares Weighted - Average Exercise Price Outstanding at beginning of period 25,000 $ — 25,000 $ — Issued — — — — Forfeited — — — — Outstanding at end of period 25,000 — 25,000 — |
Stock Grants Outstanding and Exercisable | Stock Grants Outstanding and Exercisable Range of Exercise Prices Outstanding as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Exercisable as of December 2019 Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price $ 0.00 25,000 2.3 — — — — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Income Taxes [Abstract] | |
Deferred Income Tax (Assets) Liabilities | Deferred income tax (assets) liabilities relate to: 2019 2018 Property, plant and equipment $ 4,638,141 $ 2,582,792 Right of Use Asset 2,933,189 -- Intangible assets 9,236,711 4,710,052 Other 380,336 218,710 Foreign Withholding Tax 315,747 540,761 Total deferred income tax liabilities 17,504,124 8,052,315 Other postretirement benefits (239,348 ) (156,710 ) Inventories (1,422,472 ) (1,133,427 ) Allowance for doubtful accounts (123,172 ) (146,576 ) Accrued compensation (311,125 ) (200,232 ) Lease Obligation (2,933,189 ) -- Pensions (6,804,275 ) (6,127,538 ) Foreign Tax Credit (400,078 ) (167,826 ) Total deferred income tax assets (12,233,659 ) (7,932,309 ) Net deferred income tax (assets) liabilities $ 5,270,465 $ 120,006 |
Income Before Income Taxes | Income before income taxes consists of: 2019 2018 Domestic $ 12,537,168 $ 12,431,889 Foreign 3,668,803 5,158,440 $ 16,205,971 $ 17,590,329 |
Provision for Income Taxes | The provision for income taxes follows: 2019 2018 Current: Federal $ 2,783,481 $ 484,451 Foreign 1,001,270 753,521 State 489,921 347,199 Deferred: Federal (756,206 ) 815,858 Foreign (225,014 ) 153,726 State (353,623 ) 529,637 $ 2,939,829 $ 3,084,392 |
Reconciliation of Income Taxes Computed Using the U.S. Federal Statutory Rate to that Reflected in Operations | A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows: 2019 2018 Amount Percent Amount Percent Income taxes using U.S. federal statutory rate $ 3,403,254 21 % $ 3,693,968 21 % State income taxes, net of federal benefit 117,276 1 692,698 4 Impact on Foreign Repatriation Tax Reform -- 0 (83,479 ) (1 ) Impact of foreign subsidiaries on effective tax rate (239,823 ) (2 ) (401,992 ) (2 ) Impact of New Tax Law -- 0 (507,847 ) (2 ) Impact of Research & Development tax credit (411,090 ) (3 ) (216,675 ) (1 ) Impact of manufacturers deduction on effective tax rate 0 0 0 0 Other—net 70,212 1 (92,281 ) (1 ) 2,939,829 18 % 3,084,392 18 % |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows: 2018 Balance at beginning of year $ 299,722 $ 299,734 Increases for positions taken during the current period 137,927 0 Increases for positions taken during the prior period 2,039,117 74,219 Decreases resulting from the expiration of the statute of limitations (69,384 ) (74,231 ) Balance at end of year $ 2,407,382 $ 299,722 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
LEASES [Abstract] | |
Future Minimum Payments Under Non-Cancelable Operating Leases | Future minimum payments under non-cancelable operating leases with initial or remaining terms in excess of one year during each of the next five years follow: 2020 $ 4,721,598 2021 2,935,895 2022 1,743,488 2023 955,255 2024 647,597 $ 11,003,833 |
RETIREMENT BENEFIT PLANS (Table
RETIREMENT BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Funded Status of Pension Benefit Plans and Postretirement Benefit Plan | As of December 28, 2019 and December 29, 2018, the status of the Company’s pension benefit plans and other postretirement benefit plan was as follows: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Benefit obligation at beginning of year $ 91,533,200 $ 98,522,201 $ 2,096,761 $ 2,423,410 Change in discount rate 12,313,831 (8,319,874 ) 239,138 (217,539 ) Service cost 1,055,410 1,319,841 33,287 37,024 Interest cost 3,516,318 3,107,164 56,755 77,161 Actuarial (gain)/loss (1,508,935 ) 531,799 77,813 (89,664 ) Significant Event -- -- (902,719 ) -- Benefits paid (3,918,781 ) (3,627,931 ) (35,016 ) (133,631 ) Benefit obligation at end of year $ 102,991,043 $ 91,533,200 $ 1,566,019 $ 2,096,761 2019 2018 2019 2018 Fair value of plan assets at beginning of year $ 66,170,875 $ 72,098,772 $ 1,448,126 $ 1,391,239 Actual return on plan assets 11,803,359 (4,827,641 ) 13,466 56,887 Employer contributions 304,105 2,527,675 35,016 133,631 Significant Event -- -- (902,719 ) -- Benefits paid (3,918,781 ) (3,627,931 ) (35,016 ) (133,631 ) Fair value of plan assets at end of year $ 74,359,558 $ 66,170,875 $ 558,873 $ 1,448,126 Pension Benefit Other Postretirement Benefit Funded Status 2019 2018 2019 2018 Net amount recognized in the balance sheet $ (28,631,485 ) $ (25,362,325 ) $ (1,007,146 ) $ (648,635 ) |
Amounts Recognized in Accumulated Other Comprehensive Income | Amounts recognized in accumulated other comprehensive income consist of: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Net (loss)/gain $ (36,315,245 ) $ (33,714,584 ) $ 499,701 $ 1,332,634 Prior service (cost) credit (265,012 ) (364,392 ) 8,253 13,325 $ (36,580,257 ) $ (34,078,976 ) $ 507,954 $ 1,345,959 |
Change in the Components of Accumulated Other Comprehensive income | Change in the components of accumulated other comprehensive income consist of: Pension Benefit Other Postretirement Benefit 2019 2018 2019 2018 Balance at beginning of period $ (34,078,976 ) $ (33,059,756 ) $ 1,345,959 $ 1,108,182 Change due to availability of final actual assets and census data --- --- -- -- Charged to net periodic benefit cost Prior service cost 99,380 114,822 (5,072 ) (5,072 ) Net loss (gain) 1,162,196 1,110,111 (47,272 ) (65,591 ) Liability (gains)/losses Discount rate (12,313,831 ) 8,319,874 (239,138 ) 217,539 Asset (gains)/losses deferred 7,724,649 (9,531,647 ) (14,567 ) 1,237 Significant Event -- -- (454,143 ) -- Additional recognition due to plan amendment -- 14,928 — — Other 826,325 (1,047,308 ) (77,813 ) 89,664 Balance at end of period $ (36,580,257 ) $ (34,078,976 ) $ 507,954 $ 1,345,959 |
Assumptions Used to Determine Projected Benefit Obligations for Benefit Plans | 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: 2019 2018 Discount rate - Pension plans 3.18% - 4.20% - 4.22% - Supplemental pension plans 2.61% 3.81% - Other postretirement plan 3.35% 4.26% |
Projected Benefit Obligation and Accumulated Benefit Obligation in Excess of Plan Assets | Information for the under-funded pension plans with a projected benefit obligation and an accumulated benefit obligation in excess of plan assets: 2019 2018 Number of plans 5 5 Projected benefit obligation $ 102,991,043 $ 91,533,200 Accumulated benefit obligation 102,991,043 91,533,200 Fair value of plan assets 74,359,558 66,170,875 Net amount recognized in accrued benefit liability (28,631,485 ) (25,362,325 ) |
Defined Contribution Plan | The Company made contributions to the plan as follows: 2019 2018 Regular matching contributions $ 540,693 $ 551,046 Transitional credit contributions 305,226 349,062 Non-discretionary contributions 638,745 578,373 Total contributions made for the period $ 1,484,664 $ 1,478,481 |
Pension Benefit [Member] | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Components of Net Periodic Benefit Cost | Components of the net periodic benefit cost of the Company’s pension benefit plans for the fiscal year indicated were as follows: 2019 2018 Service cost $ 1,055,410 $ 1,319,841 Interest cost 3,510,618 3,107,164 Expected return on plan assets (4,761,320 ) (5,219,515 ) Amortization of prior service cost 99,380 114,822 Amortization of the net loss 1,162,196 1,110,111 Net periodic benefit cost $ 1,071,984 $ 432,423 |
Assumptions Used to Determine Net Periodic Benefit Cost for Benefit Plans | Assumptions used to determine net periodic benefit cost for the Company’s pension benefit plans for the fiscal year indicated were as follows: 2019 2018 Discount rate - Pension plans 4.20% - 3.54% - 3.57% - Supplemental pension plans 3.81% 3.10% Expected return on plan assets 7.5% 7.5% Rate of compensation increase 0% 0% |
Fair Values of Plans Assets Utilizing Fair Value Hierarchy | The fair values of the company’s pension plans assets at December 28, 2019 and December 29, 2018, utilizing the fair value hierarchy discussed in Note 2, follow: December Level Level Level Total Cash and Equivalents: Common/collective trust funds $ — $ 334,138 $ — $ 334,138 Equities: The Eastern Company Common Stock 6,625,560 — 6,625,560 Common/collective trust funds Russell Multi Asset Core Plus Fund (a) — 33,413,819 — 33,413,819 Fixed Income: Common/collective trust funds Target Duration LDI Fixed Income Funds (b) • Russell 8 Year LDI Fixed Income Fund — 12,796,482 — 12,796,482 • Russell 14 Year LDI Fixed Income Fund — 11,387,626 — 11,387,626 STRIPS Fixed Income Funds (c) • Russell 15 Year STRIPS Fixed Income Fund — 3,050,389 — 3,050,389 • Russell 10 Year STRIPS Fixed Income Fund — 4,616,924 — 4,616,924 • Russell 28 to 29 Year STRIPS Fixed Income Fund — 2,134,620 — 2,134,620 Total $ 6,625,560 $ 67,733,998 $ — $ 74,359,558 December 29, 2018 Level 1 Level 2 Level 3 Total Cash and Equivalents: Common/collective trust funds $ — $ 306,882 $ — $ 306,882 Equities: The Eastern Company Common Stock 5,247,495 — 5,247,495 Common/collective trust funds Russell Multi Asset Core Plus Fund (a) — 30,611,519 — 30,611,519 Fixed Income: Common/collective trust funds Target Duration LDI Fixed Income Funds (b) • Russell 8 Year LDI Fixed Income Fund — 5,735,993 — 5,735,993 • Russell 14 Year LDI Fixed Income Fund — 17,044,596 — 17,044,596 STRIPS Fixed Income Funds (c) • Russell 15 Year STRIPS Fixed Income Fund — 1,811,436 — 1,811,436 • Russell 10 Year STRIPS Fixed Income Fund — 3,408,879 — 3,408,879 • Russell 28 to 29 Year STRIPS Fixed Income Fund — 2,004,075 — 2,004,075 Total $ 5,247,495 $ 60,923,380 $ — $ 66,170,875 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. The Level 1 investment is made up of shares of The Eastern Company Common Stock and is valued at market price. Level 2 investments include commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying publicly traded securities. (a) The investment objective of the RITC (formerly Russell) Multi-Asset Core Plus Fund seeks to provide long-term growth of capital over a market cycle by offering a diversified portfolio of funds and separate accounts investing in global stock, return seeking fixed income, commodities, global real estate and opportunistic investments. They hold a dynamic mix of underlying Russell Investments funds and/or separate accounts. Russell Investments is a strong proponent of disciplined strategic asset allocation and rebalancing strategies, and believes that unstable movements in the market have the potential to create opportunities. By identifying short-term mispricing, and making small tactical adjustments to the Multi-Asset Core Plus Fund, they believe there is potential to enhance returns while continuing to manage risks. (b) The Target Duration LDI Fixed Income Funds seek to outperform their respective Barclays-Russell LDI Indexes over a full market cycle. These Funds invest primarily in investment grade corporate bonds that closely match those found in discount curves used to value U.S. pension liabilities. They seek to provide additional incremental return through modest interest rate timing, security selection and tactical use of non-credit sectors. Generally, for use in combination with other bond funds to gain additional credit exposure, with the goal of reducing the mismatch between a plan’s assets and liabilities. (c) The STRIPS (Separate Trading of Registered Interest and Principal of Securities) Funds seek to provide duration and Treasury exposure by investing in an optimized subset of the STRIPS universe with a similar duration profile as the Barclays U.S. Treasury STRIPS 10-11 year, 16-16 year or 28-29 year Index. These passively managed funds are generally used with other bond funds to add additional duration to the asset portfolio. This will help reduce the mismatch between a plan’s assets and liabilities. |
Other Postretirement Benefit [Member] | |
Defined Benefit Plans and Other Postretirement Benefit Plans [Line Items] | |
Components of Net Periodic Benefit Cost | Components of the net periodic benefit cost of the Company’s other postretirement benefit plan were as follows: 2019 2018 Service cost $ 33,287 $ 37,024 Interest cost 56,755 77,161 Expected return on plan assets (28,033 ) (55,650 ) Amortization of prior service cost (5,072 ) (5,072 ) Amortization of the net loss (47,272 ) (65,591 ) Net periodic benefit cost $ 9,665 $ (12,128 ) |
Assumptions Used to Determine Net Periodic Benefit Cost for Benefit Plans | Assumptions used to determine net periodic benefit cost for the Company’s other postretirement plan for the fiscal year indicated were as follows: 2019 2018 Discount rate 4.26% 3.60% Expected return on plan assets 4.0% 4.0% |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
Earning Per Share [Abstract] | |
Denominators Used in the Earnings Per Share Computations | The denominators used in the earnings per share computations follow: 2019 2018 Basic: Weighted average shares outstanding 6,235,098 6,258,277 Diluted: Weighted average shares outstanding 6,235,098 6,258,277 Dilutive stock options 34,910 15,697 Denominator for diluted earnings per share 6,270,008 6,273,974 |
REPORTABLE SEGMENTS (Tables)
REPORTABLE SEGMENTS (Tables) | 12 Months Ended |
Dec. 28, 2019 | |
REPORTABLE SEGMENTS [Abstract] | |
Segment Financial Information | 2019 2018 Sales: Sales to unaffiliated customers: Industrial Hardware $ 164,505,888 $ 140,293,409 Security Products 58,324,085 64,897,871 Metal Products 28,912,646 29,084,183 $ 251,742,619 $ 234,275,463 Inter-segment Sales: Industrial Hardware $ 61,557 $ 366,381 Security Products 3,382,791 3,365,695 Metal Products 11,731 13,421 $ 3,456,079 $ 3,745,497 Income Before Income Taxes: Industrial Hardware $ 11,067,011 $ 9,588,185 Security Products 5,389,612 7,122,640 Metal Products 1,001,231 1,148,516 Operating Profit 17,457,854 17,859,341 Interest expense (1,857,961 ) (1,202,272 ) Other income 606,078 933,260 $ 16,205,971 $ 17,590,329 Geographic Information: Net Sales: United States $ 230,920,619 $ 207,789,058 Foreign 20,822,000 26,486,405 $ 251,742,619 $ 234,275,463 Foreign sales are primarily to customers in North America. Identifiable Assets: United States $ 263,295,787 $ 166,665,767 Foreign 17,367,189 14,581,800 $ 280,662,976 $ 181,247,567 Industrial Hardware $ 66,008,663 $ 47,600,805 Security Products 54,804,360 54,593,837 Metal Products 19,439,404 19,909,256 140,252,427 122,103,898 General corporate 140,410,549 59,143,669 $ 280,662,976 $ 181,247,567 2019 2018 Depreciation and Amortization: Industrial Hardware $ 4,015,017 $ 2,978,324 Security Products 1,281,008 1,135,811 Metal Products 1,158,856 1,215,073 $ 6,454,881 $ 5,329,208 Capital Expenditures: Industrial Hardware $ 3,603,863 $ 3,029,406 Security Products 935,722 1,482,267 Metal Products 897,573 901,400 5,437,158 5,413,073 Currency translation adjustment 3,330 (9,014 ) General corporate — 6,486 $ 5,440,488 $ 5,410,545 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) | 12 Months Ended |
Dec. 28, 2019DivisionSubsidiarySegment | |
Description of Business Information [Abstract] | |
Number of operating segments | Segment | 3 |
United States [Member] | |
Description of Business Information [Abstract] | |
Number of separate operating businesses | Division | 9 |
Canada [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 2 |
Tillsonburg, Ontario, Canada [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Kelowna, British Columbia, Canada [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Taipei, Taiwan [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Hong Kong [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
China [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 2 |
Shanghai, China [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Dongguan, China [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Mexico [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 2 |
Lerma, Mexico [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Reynosa, Mexico [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
Wrexham, United Kingdom [Member] | |
Description of Business Information [Abstract] | |
Number of wholly-owned subsidiaries | 1 |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) | Aug. 30, 2019USD ($)Division | Jun. 01, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 28, 2019USD ($) | Dec. 28, 2019USD ($) | Dec. 29, 2018USD ($) | Dec. 30, 2017USD ($) |
Recognized amounts of identifiable assets acquired and liabilities assumed [Abstract] | |||||||
Goodwill | $ 79,518,012 | $ 79,518,012 | $ 34,840,376 | $ 32,228,891 | |||
Acquisition expenses | $ 765,000 | $ 1,184,000 | |||||
Term Loan [Member] | |||||||
Intangible Assets Acquired [Abstract] | |||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Repayment of debt | (19,100,000) | ||||||
Revolving Credit Loan [Member] | |||||||
Intangible Assets Acquired [Abstract] | |||||||
Maximum borrowing capacity | 20,000,000 | ||||||
Big 3 Holdings, LLC [Member] | |||||||
Acquisitions [Abstract] | |||||||
Total consideration | 81,155,753 | ||||||
Intangible Assets Acquired [Abstract] | |||||||
Cash on hand | $ 2,100,000 | ||||||
Number of divisions | Division | 2 | ||||||
Consideration [Abstract] | |||||||
Cash | $ 338,714 | ||||||
Cash proceeds from debt | 80,817,039 | ||||||
Total consideration | 81,155,753 | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed [Abstract] | |||||||
Accounts receivable | 13,649,937 | ||||||
Inventory | 3,240,382 | ||||||
Prepaid and other assets | 32,268 | ||||||
Property plant and equipment | 13,770,170 | ||||||
Other noncurrent assets | 1,337,337 | ||||||
Other intangible assets | 21,054,000 | ||||||
Current liabilities | (4,910,384) | ||||||
Deferred revenue | (1,585,709) | ||||||
Income tax payable | (2,039,117) | ||||||
Note payable | (375,379) | ||||||
Deferred tax liabilities | (7,114,732) | ||||||
Total identifiable net assets | 37,058,773 | ||||||
Goodwill | 44,096,980 | ||||||
Identifiable assets acquired, goodwill, and liabilities assumed, net | 81,155,753 | ||||||
Goodwill expected to be deductible for income tax purposes | $ 0 | ||||||
Load N Lock [Member] | |||||||
Acquisitions [Abstract] | |||||||
Total consideration | $ 4,995,000 | ||||||
Intangible Assets Acquired [Abstract] | |||||||
Intangible assets | $ 1,329,007 | ||||||
Weighted-average life | 8 years 3 months 18 days | ||||||
Consideration [Abstract] | |||||||
Total consideration | 4,995,000 | ||||||
Recognized amounts of identifiable assets acquired and liabilities assumed [Abstract] | |||||||
Goodwill | $ 2,694,700 | ||||||
Load N Lock [Member] | Customer Relationships [Member] | |||||||
Intangible Assets Acquired [Abstract] | |||||||
Intangible assets | $ 689,675 | ||||||
Weighted-average life | 8 years 3 months 18 days | ||||||
Load N Lock [Member] | Intellectual Property [Member] | |||||||
Intangible Assets Acquired [Abstract] | |||||||
Intangible assets | $ 586,762 | ||||||
Weighted-average life | 8 years 3 months 18 days | ||||||
Load N Lock [Member] | Non-compete Agreements [Member] | |||||||
Intangible Assets Acquired [Abstract] | |||||||
Intangible assets | $ 52,570 | ||||||
Weighted-average life | 8 years 3 months 18 days |
ACCOUNTING POLICIES, Cash Equiv
ACCOUNTING POLICIES, Cash Equivalents and Inventories (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Cash Equivalents [Abstract] | ||
Amount of deposits insured by Federal Deposit Insurance Corporation (FDIC) | $ 250,000 | |
Percentage of available cash located in foreign subsidiaries | 50.00% | |
Inventories [Abstract] | ||
LIFO inventory amount | $ 31,011,130 | |
FIFO inventory amount | 7,295,793 | |
Excess of current cost over LIFO carrying value | $ 6,712,162 | $ 6,957,972 |
ACCOUNTING POLICIES, Property,
ACCOUNTING POLICIES, Property, Plant and Equipment and Related Depreciation (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Property, Plant and Equipment and Related Depreciation [Abstract] | ||
Depreciation | $ 4,722,758 | $ 4,329,136 |
Building [Member] | Minimum [Member] | ||
Property, Plant and Equipment and Related Depreciation [Abstract] | ||
Estimated useful lives of the assets | 10 years | |
Building [Member] | Maximum [Member] | ||
Property, Plant and Equipment and Related Depreciation [Abstract] | ||
Estimated useful lives of the assets | 39 years 6 months | |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment and Related Depreciation [Abstract] | ||
Estimated useful lives of the assets | 3 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment and Related Depreciation [Abstract] | ||
Estimated useful lives of the assets | 10 years |
ACCOUNTING POLICIES, Goodwill (
ACCOUNTING POLICIES, Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill [Abstract] | ||
Impairment of goodwill | $ 0 | $ 0 |
ACCOUNTING POLICIES, Intangible
ACCOUNTING POLICIES, Intangible Assets and Right of Use Assets (Details) | 12 Months Ended | |
Dec. 28, 2019USD ($)Lease | Dec. 29, 2018USD ($) | |
Intangibles Assets [Abstract] | ||
Amortization expense | $ 1,726,539 | $ 1,452,084 |
Right of Use Assets [Abstract] | ||
Number of operating leases | Lease | 45 | |
Right of use assets | $ 12,342,475 | 0 |
Lease liability | 12,342,475 | $ 0 |
ASU 2016-02 [Member] | ||
Right of Use Assets [Abstract] | ||
Right of use assets | 12,342,000 | |
Lease liability | $ 12,342,000 | |
ASU 2016-02 [Member] | Minimum [Member] | ||
Right of Use Assets [Abstract] | ||
Lease extension option term | 12 months | |
ASU 2016-02 [Member] | Maximum [Member] | ||
Right of Use Assets [Abstract] | ||
Lease extension option term | 140 months | |
Technology and Licenses [Member] | Minimum [Member] | ||
Intangibles Assets [Abstract] | ||
Useful lives of intangible assets | 5 years | |
Technology and Licenses [Member] | Maximum [Member] | ||
Intangibles Assets [Abstract] | ||
Useful lives of intangible assets | 17 years | |
Non-Compete Agreements [Member] | ||
Intangibles Assets [Abstract] | ||
Useful lives of intangible assets | 5 years | |
Customer Relationships [Member] | ||
Intangibles Assets [Abstract] | ||
Useful lives of intangible assets | 5 years |
ACCOUNTING POLICIES, Revenue Re
ACCOUNTING POLICIES, Revenue Recognition (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Revenue Recognition [Abstract] | ||
Accounts receivable, customers due period | 30 days | |
Accounts receivable, allowance for doubtful accounts | $ 556,000 | $ 680,000 |
Bad debt expense | 64,000 | 220,000 |
Revenue recognized employing the percentage of completion method | 576,000 | 0 |
Sales returns | 613,000 | 725,000 |
Revenue [Abstract] | ||
Net sales | 251,742,619 | 234,275,463 |
Subscription [Member] | ||
Revenue [Abstract] | ||
Net sales | 567,000 | 448,000 |
Subscription services revenue related to performance obligations satisfied in prior periods | $ 0 | $ 0 |
ACCOUNTING POLICIES, Product De
ACCOUNTING POLICIES, Product Development Costs, Advertising Costs and Software Development Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Product Development Costs [Abstract] | ||
Product development expenses | $ 6,024,567 | $ 6,950,969 |
Advertising Costs [Abstract] | ||
Advertising costs | 462,911 | 501,615 |
Software Development Costs [Abstract] | ||
Capitalized software | $ 0 | $ 1,813,973 |
ACCOUNTING POLICIES, Stock Base
ACCOUNTING POLICIES, Stock Based Compensation (Details) - shares | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Stock Appreciation Rights (SARs) [Member] | ||
Stock Based Compensation [Abstract] | ||
Options granted (in shares) | 96,000 | 51,000 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 34,840,376 | $ 32,228,891 |
Foreign exchange | 40,892 | (83,215) |
Ending balance | 79,518,012 | 34,840,376 |
Big 3 Holdings, LLC [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 44,636,744 | |
Load N Lock [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 2,694,700 | |
Industrial Hardware Segment [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 19,086,634 | 19,169,849 |
Foreign exchange | 40,892 | (83,215) |
Ending balance | 63,764,270 | 19,086,634 |
Industrial Hardware Segment [Member] | Big 3 Holdings, LLC [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 44,636,744 | |
Industrial Hardware Segment [Member] | Load N Lock [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 0 | |
Security Products Segment [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 15,753,742 | 13,059,042 |
Foreign exchange | 0 | 0 |
Ending balance | 15,753,742 | 15,753,742 |
Security Products Segment [Member] | Big 3 Holdings, LLC [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 0 | |
Security Products Segment [Member] | Load N Lock [Member] | ||
Goodwill [Roll Forward] | ||
Investment | 2,694,700 | |
Metal Products Segment [Member] | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Foreign exchange | 0 | 0 |
Ending balance | 0 | 0 |
Metal Products Segment [Member] | Big 3 Holdings, LLC [Member] | ||
Goodwill [Roll Forward] | ||
Investment | $ 0 | |
Metal Products Segment [Member] | Load N Lock [Member] | ||
Goodwill [Roll Forward] | ||
Investment | $ 0 |
INTANGIBLES (Details)
INTANGIBLES (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Amortization expense fiscal year maturity [Abstract] | ||
2020 | $ 4,082,000 | |
2021 | 4,062,000 | |
2022 | 4,055,000 | |
2023 | 4,055,000 | |
2024 | 3,372,000 | |
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 31,811,951 | $ 15,089,550 |
Accumulated Amortization | 5,351,841 | 4,807,830 |
Net per Balance Sheet | $ 26,460,110 | $ 10,281,720 |
Weighted-Average Amortization Period | 9 years 6 months | 9 years 2 months 12 days |
Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 28,286,680 | $ 11,534,498 |
Accumulated Amortization | 3,257,122 | 3,087,130 |
Net per Balance Sheet | 25,029,558 | 8,447,368 |
Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 3,525,271 | 3,555,052 |
Accumulated Amortization | 2,094,719 | 1,720,700 |
Net per Balance Sheet | 1,430,552 | 1,834,352 |
Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Net per Balance Sheet | 0 | 0 |
Patents and Developed Technology [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 6,994,630 | 9,533,229 |
Accumulated Amortization | $ 2,294,153 | $ 3,185,656 |
Weighted-Average Amortization Period | 10 years 2 months 12 days | 10 years 2 months 12 days |
Patents and Developed Technology [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 5,375,680 | $ 7,884,498 |
Accumulated Amortization | 1,505,097 | 2,448,380 |
Patents and Developed Technology [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 1,618,950 | 1,648,731 |
Accumulated Amortization | 789,056 | 737,276 |
Patents and Developed Technology [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Customer Relationships [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 24,038,381 | 4,789,381 |
Accumulated Amortization | $ 2,332,487 | $ 1,046,983 |
Weighted-Average Amortization Period | 9 years 7 months 6 days | 8 years 1 month 6 days |
Customer Relationships [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 22,899,000 | $ 3,650,000 |
Accumulated Amortization | 1,751,225 | 638,750 |
Customer Relationships [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 1,139,381 | 1,139,381 |
Accumulated Amortization | 581,262 | 408,233 |
Customer Relationships [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Non-Compete Agreements [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 471,570 | 459,570 |
Accumulated Amortization | $ 417,832 | $ 329,296 |
Weighted-Average Amortization Period | 1 year 10 months 24 days | 4 years 4 months 24 days |
Non-Compete Agreements [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 12,000 | $ 0 |
Accumulated Amortization | 800 | 0 |
Non-Compete Agreements [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 459,570 | 459,570 |
Accumulated Amortization | 417,032 | 329,296 |
Non-Compete Agreements [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Intellectual Property [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 307,370 | 307,370 |
Accumulated Amortization | $ 307,369 | $ 245,895 |
Weighted-Average Amortization Period | 2 years | 5 years |
Intellectual Property [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 0 | $ 0 |
Accumulated Amortization | 0 | 0 |
Intellectual Property [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 307,370 | 307,370 |
Accumulated Amortization | 307,369 | 245,895 |
Intellectual Property [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | $ 0 | $ 0 |
DEBT (Details)
DEBT (Details) - USD ($) | Aug. 30, 2019 | Dec. 28, 2019 | Dec. 28, 2019 | Dec. 29, 2018 | |
Disclosure of Debt [Abstract] | |||||
Period for quarterly principal payment | 18 months | ||||
Schedule of debt [Abstract] | |||||
Term loans | $ 98,765,233 | $ 98,765,233 | $ 28,675,000 | ||
Revolving credit loan | 0 | 0 | 0 | ||
Long term debt | [1] | 98,765,233 | 98,765,233 | 28,675,000 | |
Less current portion | 5,187,689 | 5,187,689 | 2,325,000 | ||
Long term debt, less current portion | 93,577,544 | 93,577,544 | 26,350,000 | ||
Unamortized discounts and debt Issuance costs | 360,146 | 360,146 | 0 | ||
Interest paid | $ 1,857,961 | $ 1,202,272 | |||
Credit Agreement [Member] | Minimum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Fixed charge coverage ratio | 1.25 | ||||
Credit Agreement [Member] | Maximum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Senior net leverage ratio | 4.25 | ||||
Term Loan [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Maximum borrowing capacity | $ 100,000,000 | ||||
Payments on term loan | (19,100,000) | ||||
Term of loan | 5 years | ||||
Maturity date of loan | Aug. 30, 2024 | ||||
Term Loan [Member] | Interest Rate Swap [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Original notional amount | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | ||
Percentage of outstanding balance of term loan | 50.00% | ||||
Fixed rate of interest | 1.44% | ||||
Term Loan [Member] | LIBOR [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Term of variable rate | 3 months | ||||
Term Loan [Member] | LIBOR [Member] | Minimum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Basis spread on variable rate | 1.25% | ||||
Term Loan [Member] | LIBOR [Member] | Maximum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Basis spread on variable rate | 2.25% | ||||
Term Loan [Member] | 1 Month LIBOR [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Fixed rate of interest | 3.19% | 3.19% | |||
Term of variable rate | 1 month | ||||
Schedule of debt [Abstract] | |||||
Revolving credit loan | $ 50,000,000 | $ 50,000,000 | |||
Term Loan [Member] | 1 Month LIBOR [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Fixed rate of interest | 3.44% | 3.44% | |||
Term of variable rate | 1 month | ||||
Schedule of debt [Abstract] | |||||
Revolving credit loan | $ 50,000,000 | $ 50,000,000 | |||
Term Loan [Member] | December 31, 2019 through June 30, 2021 [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Quarterly principal payment | 1,250,000 | ||||
Term Loan [Member] | September 30, 2021 through June 30, 2023 [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Quarterly principal payment | 1,875,000 | ||||
Term Loan [Member] | September 30, 2023 through June 30, 2024 [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Quarterly principal payment | $ 2,500,000 | ||||
Revolving Credit Loan [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Maximum borrowing capacity | $ 20,000,000 | ||||
Maturity date of loan | Aug. 30, 2024 | ||||
Annual commitment fee percentage | 0.25% | ||||
Revolving Credit Loan [Member] | LIBOR [Member] | Minimum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Basis spread on variable rate | 1.25% | ||||
Revolving Credit Loan [Member] | LIBOR [Member] | Maximum [Member] | |||||
Disclosure of Debt [Abstract] | |||||
Basis spread on variable rate | 2.25% | ||||
[1] | Amounts are net of unamortized discounts and debt issuance costs of $360,146 as of December 28, 2019 and $0 as of December 29, 2018. |
DEBT, Principal Maturities of D
DEBT, Principal Maturities of Debt (Details) - USD ($) | Dec. 28, 2019 | Dec. 29, 2018 |
Scheduled annual principal maturities of long-term debt [Abstract] | ||
2020 | $ 5,187,689 | |
2021 | 6,437,689 | |
2022 | 7,500,000 | |
2023 | 8,750,000 | |
2024 | 70,889,855 | |
Thereafter | 0 | |
Long term debt | $ 98,765,233 | $ 28,675,000 |
STOCK OPTIONS AND AWARDS (Detai
STOCK OPTIONS AND AWARDS (Details) | 12 Months Ended | |
Dec. 28, 2019USD ($)Plan$ / sharesshares | Dec. 29, 2018USD ($)$ / sharesshares | |
Stock Options [Abstract] | ||
Number of plans that have shares reserved for further issuance | Plan | 1 | |
Minimum [Member] | ||
Stock Options [Abstract] | ||
Percentage of fair market value of stock on grant date for exercise price | 100.00% | |
Stock Appreciation Rights (SARs) [Member] | ||
Stock Options [Abstract] | ||
Stock-based compensation expense | $ | $ 397,250 | $ 276,778 |
Number of Units, Stock Appreciation Rights (SARs) [Roll Forward] | ||
Outstanding at beginning of period (in shares) | shares | 189,167 | 141,500 |
Issued (in shares) | shares | 96,000 | 51,000 |
Exercised (in shares) | shares | (1,667) | 0 |
Forfeited (in shares) | shares | (7,500) | (3,333) |
Outstanding at end of period (in shares) | shares | 276,000 | 189,167 |
Weighted - Average Exercise Price, Stock Appreciation Rights (SARs) [Abstract] | ||
Outstanding at beginning of period (in dollars per share) | $ 21.46 | $ 20.36 |
Issued (in dollars per share) | 23.65 | 24.90 |
Exercised (in dollars per share) | 19.10 | 0 |
Forfeited (in dollars per share) | 21.20 | 19.10 |
Outstanding at end of period (in dollars per share) | 22.30 | $ 21.46 |
SARs Grants Outstanding and Exercisable [Abstract] | ||
Minimum Range of Exercise Prices (in dollars per share) | 19.10 | |
Maximum Range of Exercise Prices (in dollars per share) | $ 26.30 | |
Outstanding (in shares) | shares | 276,000 | |
Weighted- Average Remaining Contractual Life | 3 years 3 months 18 days | |
Weighted- Average Exercise Price (in dollars per share) | $ 22.30 | |
Exercisable as of December 29, 2018 (in shares) | shares | 38,003 | |
Exercisable, Weighted- Average Remaining Contractual Life | 2 years 3 months 18 days | |
Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 19.10 | |
Stock Options [Member] | ||
Number of Units, Stock Appreciation Rights (SARs) [Roll Forward] | ||
Outstanding at beginning of period (in shares) | shares | 25,000 | 25,000 |
Issued (in shares) | shares | 0 | 0 |
Forfeited (in shares) | shares | 0 | 0 |
Outstanding at end of period (in shares) | shares | 25,000 | 25,000 |
Weighted - Average Exercise Price, Stock Appreciation Rights (SARs) [Abstract] | ||
Outstanding at beginning of period (in dollars per share) | $ 0 | $ 0 |
Issued (in dollars per share) | 0 | 0 |
Forfeited (in dollars per share) | 0 | 0 |
Outstanding at end of period (in dollars per share) | 0 | $ 0 |
SARs Grants Outstanding and Exercisable [Abstract] | ||
Maximum Range of Exercise Prices (in dollars per share) | $ 0 | |
Outstanding (in shares) | shares | 25,000 | |
Weighted- Average Remaining Contractual Life | 2 years 3 months 18 days | |
Weighted- Average Exercise Price (in dollars per share) | $ 0 | |
Exercisable as of December 29, 2018 (in shares) | shares | 0 | |
Exercisable, Weighted- Average Remaining Contractual Life | 0 years | |
Exercisable, Weighted- Average Exercise Price (in dollars per share) | $ 0 | |
Restricted Stock [Member] | ||
Stock Options [Abstract] | ||
Issued (in shares) | shares | 0 | 0 |
Stock Options and SARs [Member] | ||
SARs Grants Outstanding and Exercisable [Abstract] | ||
Outstanding options, intrinsic value | $ | $ 2,898,945 | |
2010 Plan [Member] | ||
Stock Options [Abstract] | ||
Expected term | 3 years 6 months | |
Volatility deviation | 29.50% | |
Risk free rate | 2.33% | |
Shares available for future grant (in shares) | shares | 178,500 | |
2010 Plan [Member] | Minimum [Member] | ||
Stock Options [Abstract] | ||
Expected term | 3 years 6 months | |
Volatility deviation | 28.88% | |
Risk free rate | 1.42% | |
2010 Plan [Member] | Maximum [Member] | ||
Stock Options [Abstract] | ||
Expected term | 4 years | |
Volatility deviation | 32.33% | |
Risk free rate | 2.48% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Components of Deferred Tax (Assets) and Liabilities [Abstract] | ||
Property, plant and equipment | $ 4,638,141 | $ 2,582,792 |
Right of Use Asset | 2,933,189 | 0 |
Intangible assets | 9,236,711 | 4,710,052 |
Other | 380,336 | 218,710 |
Foreign Withholding Tax | 315,747 | 540,761 |
Total deferred income tax liabilities | 17,504,124 | 8,052,315 |
Other postretirement benefits | (239,348) | (156,710) |
Inventories | (1,422,472) | (1,133,427) |
Allowance for doubtful accounts | (123,172) | (146,576) |
Accrued compensation | (311,125) | (200,232) |
Lease Obligation | (2,933,189) | 0 |
Pensions | (6,804,275) | (6,127,538) |
Foreign Tax Credit | (400,078) | (167,826) |
Total deferred income tax assets | (12,233,659) | (7,932,309) |
Net deferred income tax (assets) liabilities | 5,270,465 | 120,006 |
Income before income taxes [Abstract] | ||
Domestic | 12,537,168 | 12,431,889 |
Foreign | 3,668,803 | 5,158,440 |
Income before income taxes | 16,205,971 | 17,590,329 |
Current [Abstract] | ||
Federal | 2,783,481 | 484,451 |
Foreign | 1,001,270 | 753,521 |
State | 489,921 | 347,199 |
Deferred [Abstract] | ||
Federal | (756,206) | 815,858 |
Foreign | (225,014) | 153,726 |
State | (353,623) | 529,637 |
Provision for income taxes | 2,939,829 | 3,084,392 |
Reconciliation of income taxes computed using U.S. federal statutory rate to that reflected in operations [Abstract] | ||
Income taxes using U.S. federal statutory rate, Amount | 3,403,254 | 3,693,968 |
State income taxes, net of federal benefit, Amount | 117,276 | 692,698 |
Impact on Foreign Repatriation Tax Reform, Amount | 0 | (83,479) |
Impact of foreign subsidiaries on effective tax rate, Amount | (239,823) | (401,992) |
Impact of New Tax Law, Amount | 0 | (507,847) |
Impact of Research & Development tax credit, Amount | (411,090) | (216,675) |
Impact of manufacturers deduction on effective tax rate, Amount | 0 | 0 |
Other-net, Amount | 70,212 | (92,281) |
Provision for income taxes | $ 2,939,829 | $ 3,084,392 |
Income taxes using U.S. federal statutory rate, Percent | 21.00% | 21.00% |
State income taxes, net of federal benefit, Percent | 1.00% | 4.00% |
Impact on Foreign Repatriation Tax Reform, percent | 0 | (0.01) |
Impact of foreign subsidiaries on effective tax rate, Percent | (2.00%) | (2.00%) |
Impact of New Tax Law, percent | 0 | (0.02) |
Impact of Research & Development tax credit, Percent | (3.00%) | (1.00%) |
Impact of manufacturers deduction on effective tax rate, Percent | 0.00% | 0.00% |
Other-net, Percent | 1.00% | (1.00%) |
Effective income tax rate | 18.00% | 18.00% |
Total income taxes paid | $ 3,197,984 | $ 3,741,021 |
Effect of tax cuts and jobs act of 2017 [Abstract] | ||
Undistributed earnings of foreign subsidiaries | 7,460,584 | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits [Roll Forward] | ||
Balance at beginning of year | 299,722 | 299,734 |
Increases for positions taken during the current period | 137,927 | 0 |
Increases for positions taken during the prior period | 2,039,117 | 74,219 |
Decreases resulting from the expiration of the statute of limitations | (69,384) | (74,231) |
Balance at end of year | 2,407,382 | $ 299,722 |
Tax Year [Abstract] | ||
Unrecognized tax benefits that would affect the annual effective tax rate | 1,640,609 | |
Accrued interest related to unrecognized tax benefits | $ 57,879 | |
U.S. Federal [Member] | ||
Tax Year [Abstract] | ||
Open tax year | 2015 | |
State and Local Jurisdiction [Member] | ||
Tax Year [Abstract] | ||
Open tax year | 2015 | |
Foreign Jurisdiction [Member] | ||
Tax Year [Abstract] | ||
Open tax year | 2013 |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Future minimum payments under non-cancelable operating leases [Abstract] | ||
Rent expense for all operating leases | $ 3,106,630 | $ 2,552,887 |
Weighted average lease term | 5 years | |
Weighted average discount rate | 5.00% | |
Non-Cancelable Leases [Member] | ||
Future minimum payments under non-cancelable operating leases [Abstract] | ||
2020 | $ 4,721,598 | |
2021 | 2,935,895 | |
2022 | 1,743,488 | |
2023 | 955,255 | |
2024 | 647,597 | |
Total | $ 11,003,833 |
RETIREMENT BENEFIT PLANS, Net P
RETIREMENT BENEFIT PLANS, Net Periodic Benefit Cost and Assumptions (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
RETIREMENT BENEFIT PLANS [Abstract] | ||
Increase in expense of unrecognized prior service cost | $ 14,928 | |
Pension Benefit [Member] | ||
Components of the net periodic benefit cost [Abstract] | ||
Service cost | $ 1,055,410 | 1,319,841 |
Interest cost | 3,516,318 | 3,107,164 |
Expected return on plan assets | (4,761,320) | (5,219,515) |
Amortization of prior service cost | 99,380 | 114,822 |
Amortization of the net loss | 1,162,196 | 1,110,111 |
Net periodic benefit cost | $ 1,071,984 | $ 432,423 |
Assumptions used to determine net periodic benefit cost [Abstract] | ||
Expected return on plan assets | 7.50% | 7.50% |
Rate of compensation increase | 0.00% | 0.00% |
Pension Benefit [Member] | Minimum [Member] | ||
Assumptions used to determine net periodic benefit cost [Abstract] | ||
Discount rate | 4.20% | 3.54% |
Pension Benefit [Member] | Maximum [Member] | ||
Assumptions used to determine net periodic benefit cost [Abstract] | ||
Discount rate | 4.22% | 3.57% |
Other Postretirement Benefit [Member] | ||
Components of the net periodic benefit cost [Abstract] | ||
Service cost | $ 33,287 | $ 37,024 |
Interest cost | 56,755 | 77,161 |
Expected return on plan assets | (28,033) | (55,650) |
Amortization of prior service cost | (5,072) | (5,072) |
Amortization of the net loss | (47,272) | (65,591) |
Net periodic benefit cost | $ 9,665 | $ (12,128) |
Assumptions used to determine net periodic benefit cost [Abstract] | ||
Discount rate | 4.26% | 3.60% |
Expected return on plan assets | 4.00% | 4.00% |
Supplemental Pension [Member] | ||
Assumptions used to determine net periodic benefit cost [Abstract] | ||
Discount rate | 3.81% | 3.10% |
RETIREMENT BENEFIT PLANS, Funde
RETIREMENT BENEFIT PLANS, Funded Status (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Pension Benefit [Member] | ||
Change in benefit obligation [Roll Forward] | ||
Benefit obligation at beginning of year | $ 91,533,200 | $ 98,522,201 |
Change in discount rate | 12,313,831 | (8,319,874) |
Service cost | 1,055,410 | 1,319,841 |
Interest cost | 3,516,318 | 3,107,164 |
Actuarial (gain)/loss | (1,508,935) | 531,799 |
Significant Event | 0 | 0 |
Benefits paid | (3,918,781) | (3,627,931) |
Benefit obligation at end of year | 102,991,043 | 91,533,200 |
Change in fair value of plan assets [Roll Forward] | ||
Fair value of plan assets at beginning of year | 66,170,875 | 72,098,772 |
Actual return on plan assets | 11,803,359 | (4,827,641) |
Employer contributions | 304,105 | 2,527,675 |
Significant Event | 0 | 0 |
Benefits paid | (3,918,781) | (3,627,931) |
Fair value of plan assets at end of year | 74,359,558 | 66,170,875 |
Funded Status [Abstract] | ||
Net amount recognized in the balance sheet | (28,631,485) | (25,362,325) |
Other Postretirement Benefit [Member] | ||
Change in benefit obligation [Roll Forward] | ||
Benefit obligation at beginning of year | 2,096,761 | 2,423,410 |
Change in discount rate | 239,138 | (217,539) |
Service cost | 33,287 | 37,024 |
Interest cost | 56,755 | 77,161 |
Actuarial (gain)/loss | 77,813 | (89,664) |
Significant Event | (902,719) | 0 |
Benefits paid | (35,016) | (133,631) |
Benefit obligation at end of year | 1,566,019 | 2,096,761 |
Change in fair value of plan assets [Roll Forward] | ||
Fair value of plan assets at beginning of year | 1,448,126 | 1,391,239 |
Actual return on plan assets | 13,466 | 56,887 |
Employer contributions | 35,016 | 133,631 |
Significant Event | (902,719) | 0 |
Benefits paid | (35,016) | (133,631) |
Fair value of plan assets at end of year | 558,873 | 1,448,126 |
Funded Status [Abstract] | ||
Net amount recognized in the balance sheet | $ (1,007,146) | $ (648,635) |
RETIREMENT BENEFIT PLANS, Amoun
RETIREMENT BENEFIT PLANS, Amounts Recognized in, and Changes in Components of AOCI (Details) - USD ($) | 12 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 28, 2019 | Dec. 29, 2018 | |
Amounts recognized in accumulated other comprehensive income [Abstract] | ||||
Total | $ 23,363,637 | $ 20,688,630 | $ 23,363,637 | $ 20,688,630 |
Defined Benefit Plan, Change in components of accumulated other comprehensive income [Abstract] | ||||
Balance at beginning of period | 20,688,630 | |||
Liability (gains)/losses [Abstract] | ||||
Balance at end of period | 23,363,637 | 20,688,630 | ||
Pension Benefit [Member] | ||||
Amounts recognized in accumulated other comprehensive income [Abstract] | ||||
Net (loss)/gain | (36,315,245) | (33,714,584) | ||
Prior service (cost) credit | (265,012) | (364,392) | ||
Total | (34,078,976) | (33,059,756) | (36,580,257) | (34,078,976) |
Defined Benefit Plan, Change in components of accumulated other comprehensive income [Abstract] | ||||
Balance at beginning of period | (34,078,976) | (33,059,756) | ||
Change due to availability of final actual assets and census data | 0 | 0 | ||
Charged to net periodic benefit cost [Abstract] | ||||
Prior service cost | 99,380 | 114,822 | ||
Net loss (gain) | 1,162,196 | 1,110,111 | ||
Liability (gains)/losses [Abstract] | ||||
Discount rate | (12,313,831) | 8,319,874 | ||
Asset (gains)/losses deferred | 7,724,649 | (9,531,647) | ||
Significant Event | 0 | 0 | ||
Additional recognition due to plan amendment | 0 | 14,928 | ||
Other | 826,325 | (1,047,308) | ||
Balance at end of period | (36,580,257) | (34,078,976) | ||
Amounts that will be amortized from accumulated other comprehensive income in next fiscal year [Abstract] | ||||
Net (loss) gain | (1,300,134) | |||
Prior service cost (credit) | 99,380 | |||
Other Postretirement Benefit [Member] | ||||
Amounts recognized in accumulated other comprehensive income [Abstract] | ||||
Net (loss)/gain | 499,701 | 1,332,634 | ||
Prior service (cost) credit | 8,253 | 13,325 | ||
Total | 1,345,959 | 1,108,182 | 507,954 | $ 1,345,959 |
Defined Benefit Plan, Change in components of accumulated other comprehensive income [Abstract] | ||||
Balance at beginning of period | 1,345,959 | 1,108,182 | ||
Change due to availability of final actual assets and census data | 0 | 0 | ||
Charged to net periodic benefit cost [Abstract] | ||||
Prior service cost | (5,072) | (5,072) | ||
Net loss (gain) | (47,272) | (65,591) | ||
Liability (gains)/losses [Abstract] | ||||
Discount rate | (239,138) | 217,539 | ||
Asset (gains)/losses deferred | (14,567) | 1,237 | ||
Significant Event | (454,143) | 0 | ||
Additional recognition due to plan amendment | 0 | 0 | ||
Other | (77,813) | 89,664 | ||
Balance at end of period | $ 507,954 | $ 1,345,959 | ||
Amounts that will be amortized from accumulated other comprehensive income in next fiscal year [Abstract] | ||||
Net (loss) gain | 25,509 | |||
Prior service cost (credit) | $ (5,072) |
RETIREMENT BENEFIT PLANS, Assum
RETIREMENT BENEFIT PLANS, Assumptions Used to Determine the Projected Benefit Obligations and Estimated Benefit Payments (Details) | 12 Months Ended | |
Dec. 28, 2019USD ($)Plan | Dec. 29, 2018USD ($)Plan | |
Estimated future benefit payments to participants [Abstract] | ||
Period of horizon for various asset classes used in calculating expected long term rates of return | 10 years | |
Pension Benefit [Member] | ||
Assumptions used to determine net periodic benefit obligations [Abstract] | ||
Accumulated benefit obligation for all qualified and nonqualified defined benefit pension plans | $ 102,991,053 | $ 91,533,200 |
Pension plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets [Abstract] | ||
Number of plans | Plan | 5 | 5 |
Projected benefit obligation | $ 102,991,043 | $ 91,533,200 |
Accumulated benefit obligation | 102,991,043 | 91,533,200 |
Fair value of plan assets | 74,359,558 | 66,170,875 |
Net amount recognized in accrued benefit liability | (28,631,485) | $ (25,362,325) |
Estimated future benefit payments to participants [Abstract] | ||
2020 | 4,300,000 | |
2021 | 4,500,000 | |
2022 | 4,700,000 | |
2023 | 4,900,000 | |
2024 | 5,100,000 | |
2025 through 2029 | 28,000,000 | |
Contributions expected to be made by Company in next fiscal year | $ 2,700,000 | |
Pension Benefit [Member] | Minimum [Member] | ||
Assumptions used to determine net periodic benefit obligations [Abstract] | ||
Discount rate | 3.18% | 4.20% |
Pension Benefit [Member] | Maximum [Member] | ||
Assumptions used to determine net periodic benefit obligations [Abstract] | ||
Discount rate | 3.23% | 4.22% |
Other Postretirement Benefit [Member] | ||
Assumptions used to determine net periodic benefit obligations [Abstract] | ||
Discount rate | 3.35% | 4.26% |
Pension plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets [Abstract] | ||
Net amount recognized in accrued benefit liability | $ (1,007,146) | $ (648,635) |
Estimated future benefit payments to participants [Abstract] | ||
2020 | 50,000 | |
2021 | 49,000 | |
2022 | 50,000 | |
2023 | 51,000 | |
2024 | 52,000 | |
2025 through 2029 | 293,000 | |
Contributions expected to be made by Company in next fiscal year | $ 50,000 | |
Supplemental Pension [Member] | ||
Assumptions used to determine net periodic benefit obligations [Abstract] | ||
Discount rate | 2.61% | 3.81% |
RETIREMENT BENEFIT PLANS, Fair
RETIREMENT BENEFIT PLANS, Fair Value of Pension Plan Assets (Details) - USD ($) | 12 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | Dec. 30, 2017 | ||
Equity Securities [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Long-term target allocations for plan assets | 50.00% | |||
Fixed income [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Long-term target allocations for plan assets | 50.00% | |||
Pension Benefit [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | $ 74,359,558 | $ 66,170,875 | $ 72,098,772 | |
Number of shares of employer common stock included plan assets (in shares) | 0 | 0 | ||
Cash dividends received | $ 95,488 | $ 95,488 | ||
Pension Benefit [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 6,625,560 | 5,247,495 | ||
Pension Benefit [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 67,733,998 | 60,923,380 | ||
Pension Benefit [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 0 | 0 | ||
Pension Benefit [Member] | Common/Collective Trust Funds [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 334,138 | 306,882 | ||
Pension Benefit [Member] | Common/Collective Trust Funds [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 0 | 0 | ||
Pension Benefit [Member] | Common/Collective Trust Funds [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 334,138 | 306,882 | ||
Pension Benefit [Member] | Common/Collective Trust Funds [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 0 | 0 | ||
Pension Benefit [Member] | Equity Securities [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Value of employer common stock included plan assets | 0 | 0 | ||
Pension Benefit [Member] | The Eastern Company Common Stock [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 6,625,560 | 5,247,495 | ||
Pension Benefit [Member] | The Eastern Company Common Stock [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 6,625,560 | 5,247,495 | ||
Pension Benefit [Member] | The Eastern Company Common Stock [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 0 | 0 | ||
Pension Benefit [Member] | The Eastern Company Common Stock [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | 0 | 0 | ||
Pension Benefit [Member] | Russell Multi Asset Core Plus Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [1] | 33,413,819 | 30,611,519 | |
Pension Benefit [Member] | Russell Multi Asset Core Plus Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Pension Benefit [Member] | Russell Multi Asset Core Plus Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [1] | 33,413,819 | 30,611,519 | |
Pension Benefit [Member] | Russell Multi Asset Core Plus Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [1] | 0 | 0 | |
Pension Benefit [Member] | Russell 8 Year LDI Fixed Income Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 12,796,482 | 5,735,993 | |
Pension Benefit [Member] | Russell 8 Year LDI Fixed Income Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 0 | 0 | |
Pension Benefit [Member] | Russell 8 Year LDI Fixed Income Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 12,796,482 | 5,735,993 | |
Pension Benefit [Member] | Russell 8 Year LDI Fixed Income Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 0 | 0 | |
Pension Benefit [Member] | Russell 14 Year LDI Fixed Income Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 11,387,626 | 17,044,596 | |
Pension Benefit [Member] | Russell 14 Year LDI Fixed Income Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 0 | 0 | |
Pension Benefit [Member] | Russell 14 Year LDI Fixed Income Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 11,387,626 | 17,044,596 | |
Pension Benefit [Member] | Russell 14 Year LDI Fixed Income Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [2] | 0 | 0 | |
Pension Benefit [Member] | Russell 15 Year STRIPS Fixed Income Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 3,050,389 | 1,811,436 | |
Pension Benefit [Member] | Russell 15 Year STRIPS Fixed Income Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Pension Benefit [Member] | Russell 15 Year STRIPS Fixed Income Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 3,050,389 | 1,811,436 | |
Pension Benefit [Member] | Russell 15 Year STRIPS Fixed Income Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Pension Benefit [Member] | Russell 10 Year STRIPS Fixed Income Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 4,616,924 | 3,408,879 | |
Pension Benefit [Member] | Russell 10 Year STRIPS Fixed Income Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Pension Benefit [Member] | Russell 10 Year STRIPS Fixed Income Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 4,616,924 | 3,408,879 | |
Pension Benefit [Member] | Russell 10 Year STRIPS Fixed Income Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Pension Benefit [Member] | Russell 28 to 29 Year STRIPS Fixed Income Fund [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 2,134,620 | 2,004,075 | |
Pension Benefit [Member] | Russell 28 to 29 Year STRIPS Fixed Income Fund [Member] | Level 1 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 0 | 0 | |
Pension Benefit [Member] | Russell 28 to 29 Year STRIPS Fixed Income Fund [Member] | Level 2 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | 2,134,620 | 2,004,075 | |
Pension Benefit [Member] | Russell 28 to 29 Year STRIPS Fixed Income Fund [Member] | Level 3 [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Fair value of plan assets | [3] | $ 0 | $ 0 | |
Pension Benefit [Member] | Equity Securities, Common Stock [Member] | ||||
Fair values of pension plans assets [Abstract] | ||||
Number of shares of employer common stock included plan assets (in shares) | 217,018 | 217,018 | ||
Value of employer common stock included plan assets | $ 6,625,560 | $ 5,247,495 | ||
[1] | The investment objective of the RITC (formerly Russell) Multi-Asset Core Plus Fund seeks to provide long-term growth of capital over a market cycle by offering a diversified portfolio of funds and separate accounts investing in global stock, return seeking fixed income, commodities, global real estate and opportunistic investments. They hold a dynamic mix of underlying Russell Investments funds and/or separate accounts. Russell Investments is a strong proponent of disciplined strategic asset allocation and rebalancing strategies, and believes that unstable movements in the market have the potential to create opportunities. By identifying short-term mispricing, and making small tactical adjustments to the Multi-Asset Core Plus Fund, they believe there is potential to enhance returns while continuing to manage risks. | |||
[2] | The Target Duration LDI Fixed Income Funds seek to outperform their respective Barclays-Russell LDI Indexes over a full market cycle. These Funds invest primarily in investment grade corporate bonds that closely match those found in discount curves used to value U.S. pension liabilities. They seek to provide additional incremental return through modest interest rate timing, security selection and tactical use of non-credit sectors. Generally, for use in combination with other bond funds to gain additional credit exposure, with the goal of reducing the mismatch between a plan's assets and liabilities. | |||
[3] | The STRIPS (Separate Trading of Registered Interest and Principal of Securities) Funds seek to provide duration and Treasury exposure by investing in an optimized subset of the STRIPS universe with a similar duration profile as the Barclays U.S. Treasury STRIPS 10-11 year, 16-16 year or 28-29 year Index. These passively managed funds are generally used with other bond funds to add additional duration to the asset portfolio. This will help reduce the mismatch between a plan's assets and liabilities. |
RETIREMENT BENEFIT PLANS, Defin
RETIREMENT BENEFIT PLANS, Defined Contribution Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Contribution Plan [Abstract] | ||
Total contributions for the period | $ 1,484,664 | $ 1,478,481 |
Regular Matching Contributions [Member] | ||
Contribution Plan [Abstract] | ||
Total contributions for the period | 540,693 | 551,046 |
Transitional Credit Contributions [Member] | ||
Contribution Plan [Abstract] | ||
Total contributions for the period | 305,226 | 349,062 |
Non-discretionary Contributions [Member] | ||
Contribution Plan [Abstract] | ||
Total contributions for the period | $ 638,745 | 578,373 |
Plan 401 K Plan Amendment [Member] | ||
Contribution Plan [Abstract] | ||
Percentage of voluntary contributions allowed to participants, maximum | 100.00% | |
Employer matching contribution percentage | 50.00% | |
Increase in employer matching contribution on first of total employee contributions, percentage | 6.00% | |
Non-discretionary contribution percentage for employees who were not eligible to participate in the salaried plan | 3.00% | |
Non-Union U.S. Employees [Member] | ||
Contribution Plan [Abstract] | ||
Total contributions for the period | $ 550,286 | $ 565,748 |
Non-Union U.S. Employees [Member] | Minimum [Member] | ||
Contribution Plan [Abstract] | ||
Non-discretionary contribution percentage for certain employees who were eligible to participate in the salaried plan | 0.00% | |
Non-Union U.S. Employees [Member] | Maximum [Member] | ||
Contribution Plan [Abstract] | ||
Non-discretionary contribution percentage for certain employees who were eligible to participate in the salaried plan | 4.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Basic [Abstract] | ||
Weighted average shares outstanding (in shares) | 6,235,098 | 6,258,277 |
Diluted [Abstract] | ||
Weighted average shares outstanding (in shares) | 6,235,098 | 6,258,277 |
Dilutive stock options (in shares) | 34,910 | 15,697 |
Denominator for diluted earnings per share (in shares) | 6,270,008 | 6,273,974 |
Anti-dilutive stock equivalents (in shares) | 0 | 0 |
REPORTABLE SEGMENTS (Details)
REPORTABLE SEGMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 28, 2019 | Dec. 29, 2018 | |
Reportable Segments Information [Abstract] | ||
Sales | $ 251,742,619 | $ 234,275,463 |
Income before income taxes | 16,205,971 | 17,590,329 |
Operating profit | 17,457,854 | 17,859,341 |
Interest expense | (1,857,961) | (1,202,272) |
Other income | 606,078 | 933,260 |
Assets | 280,662,976 | 181,247,567 |
Depreciation and amortization | 6,454,881 | 5,329,208 |
Capital expenditures before currency translation adjustment | 5,437,158 | 5,413,073 |
Currency translation adjustment | 3,330 | (9,014) |
Capital expenditures | 5,440,488 | 5,410,545 |
Operating Segments [Member] | ||
Reportable Segments Information [Abstract] | ||
Assets | 140,252,427 | 122,103,898 |
Operating Segments [Member] | Industrial Hardware [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 164,505,888 | 140,293,409 |
Income before income taxes | 11,067,011 | 9,588,185 |
Assets | 66,008,663 | 47,600,805 |
Depreciation and amortization | 4,015,017 | 2,978,324 |
Capital expenditures before currency translation adjustment | 3,603,863 | 3,029,406 |
Operating Segments [Member] | Security Products [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 58,324,085 | 64,897,871 |
Income before income taxes | 5,389,612 | 7,122,640 |
Assets | 54,804,360 | 54,593,837 |
Depreciation and amortization | 1,281,008 | 1,135,811 |
Capital expenditures before currency translation adjustment | 935,722 | 1,482,267 |
Operating Segments [Member] | Metal Products [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 28,912,646 | 29,084,183 |
Income before income taxes | 1,001,231 | 1,148,516 |
Assets | 19,439,404 | 19,909,256 |
Depreciation and amortization | 1,158,856 | 1,215,073 |
Capital expenditures before currency translation adjustment | 897,573 | 901,400 |
Intersegment Eliminations [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 3,456,079 | 3,745,497 |
Intersegment Eliminations [Member] | Industrial Hardware [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 61,557 | 366,381 |
Intersegment Eliminations [Member] | Security Products [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 3,382,791 | 3,365,695 |
Intersegment Eliminations [Member] | Metal Products [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 11,731 | 13,421 |
General Corporate [Member] | ||
Reportable Segments Information [Abstract] | ||
Assets | 140,410,549 | 59,143,669 |
Capital expenditures | 0 | 6,486 |
Reportable Geographical Components [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 251,742,619 | 234,275,463 |
Reportable Geographical Components [Member] | United States [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 230,920,619 | 207,789,058 |
Assets | 263,295,787 | 166,665,767 |
Reportable Geographical Components [Member] | Foreign [Member] | ||
Reportable Segments Information [Abstract] | ||
Sales | 20,822,000 | 26,486,405 |
Assets | $ 17,367,189 | $ 14,581,800 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) - USD ($) | 15 Months Ended | |
Mar. 31, 2018 | Dec. 28, 2019 | |
Contingency Information [Abstract] | ||
Remediation costs accrual | $ 50,000 | |
Cost to remediate and monitor the landfill | $ 430,000 |
CONCENTRATION OF RISK (Details)
CONCENTRATION OF RISK (Details) | 12 Months Ended | ||
Dec. 28, 2019USD ($)Customer | Dec. 29, 2018Customer | Aug. 30, 2019USD ($) | |
Term Loan [Member] | Interest Rate Swap [Member] | |||
Interest Rate Risk [Abstract] | |||
Interest rate swap, notional amount | $ | $ 50,000,000 | $ 50,000,000 | |
Term Loan [Member] | LIBOR [Member] | |||
Interest Rate Risk [Abstract] | |||
Term of variable rate | 3 months | ||
Term Loan [Member] | LIBOR [Member] | Minimum [Member] | |||
Interest Rate Risk [Abstract] | |||
Basis spread on variable rate | 1.25% | ||
Term Loan [Member] | LIBOR [Member] | Maximum [Member] | |||
Interest Rate Risk [Abstract] | |||
Basis spread on variable rate | 2.25% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Accounts Receivable, Net [Abstract] | |||
Number of major customers | Customer | 1 | 0 | |
Threshold percentage of concentration risk | 10.00% | 10.00% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying accounts (Details) - Allowance for Doubtful Accounts [Member] - USD ($) | 12 Months Ended | |||
Dec. 28, 2019 | Dec. 29, 2018 | |||
Valuation and qualifying accounts information [Abstract] | ||||
Balance at beginning of period | $ 680,000 | $ 470,000 | ||
Charged to costs and expenses | 202,000 | 220,000 | ||
Charged to other accounts - Describe | 78,000 | [1] | 0 | |
Deductions - Describe | [2] | 0 | 10,000 | |
Balance at end of period | $ 556,000 | $ 680,000 | ||
[1] | Acquired company opening balance. | |||
[2] | Uncollectible accounts written off, net of recoveries. |