The Eastern Company (EML) 10-Q 12 Aug 21 2022 Q2 Quarterly report Financial data

Cover

Cover	6 Months Ended
	Jul. 03, 2021shares
Cover [Abstract]
Entity Registrant Name	THE EASTERN COMPANY
Entity Central Index Key	0000031107
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--01-02
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jul. 3, 2021
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding	6,268,754
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-35383
Entity Incorporation State Country Code	CT
Entity Tax Identification Number	06-0330020
Entity Address Address Line 1	112 Bridge Street
Entity Address City Or Town	Naugatuck
Entity Address State Or Province	CT
Entity Address Postal Zip Code	06770
City Area Code	203
Local Phone Number	729-2255
Security 12b Title	Common Stock, No Par Value
Trading Symbol	EML
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Net sales	$ 61,247,592	$ 39,507,800	$ 123,021,025	$ 91,353,901
Cost of products sold	(47,270,990)	(29,188,182)	(93,535,153)	(68,111,738)
Gross margin	13,976,602	10,319,618	29,485,872	23,242,163
Product development expense	(1,088,380)	(917,513)	(2,105,942)	(1,839,464)
Selling and administrative expenses	(9,375,537)	(6,545,525)	(18,319,931)	(14,752,316)
Operating profit	3,512,685	2,856,580	9,059,999	6,650,383
Interest expense	(434,147)	(454,915)	(961,291)	(1,075,663)
Other income	525,124	303,741	2,951,873	603,322
Income from continuing operations before income taxes	3,603,662	2,705,406	11,050,581	6,178,042
Income taxes	(848,302)	(624,949)	(2,601,424)	(1,455,033)
Net income from continuing operations	2,755,360	2,080,457	8,449,157	4,723,009
Discontinued Operations (see note B )
Gain (loss) from operations of discontinued units	1,128,286	(5,137,249)	1,339,467	(4,831,485)
Loss on classification as held for sale	(10,583,078)	0	(10,583,078)	0
Income tax benefit	2,225,658	1,168,011	2,175,946	1,115,512
Loss on discontinued operations	(7,229,134)	(3,969,238)	(7,067,665)	(3,715,973)
Net (loss) income	$ (4,473,774)	$ (1,888,781)	$ 1,381,491	$ 1,007,036
Earnings per share from continuing operations:
Basic	$ 0.44	$ 0.33	$ 1.35	$ 0.76
Diluted	0.44	0.33	1.35	0.76
Basic	(1.15)	(0.64)	(1.13)	(0.60)
Diluted	(1.15)	(0.64)	(1.13)	(0.60)
Total (loss) earnings per share:
Basic	(0.71)	(0.30)	0.22	0.16
Diluted	(0.71)	(0.30)	0.22	0.16
Cash dividends per share:	$ 0.11	$ 0.11	$ 0.22	$ 0.22

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Net (loss) income	$ (4,473,774)	$ (1,888,781)	$ 1,381,491	$ 1,007,036
Other comprehensive income/(loss):
Change in foreign currency translation	363,848	765,195	284,795	(526,404)
Change in marketable securities, net of taxes of: 2021 - $(25) and $42 respectively; 2020 - $679 and $(2,063) respectively	(77)	2,083	128	(6,325)
Change in fair value of interest rate swap, net of tax cost (benefit) of: 2021 - $26,560 and $156,994 respectively; 2020 - $48,169 and $582,673 respectively	84,107	(152,519)	497,147	(1,847,297)
Change in pension and postretirement benefit costs, net of taxes of: 2021 - $107,961 and $200,155 respectively; 2020 - $81,142 and $162,285 respectively	346,329	260,295	642,073	520,591
Total other comprehensive income (loss)	794,207	875,054	1,424,143	(1,859,435)
Comprehensive (loss) income	$ (3,679,567)	$ (1,013,727)	$ 2,805,634	$ (852,399)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Other comprehensive income/(loss):
Change in fair value of marketable securities, tax benefit	$ (25)	$ 679	$ 42	$ (2,063)
Change in fair value of interest rate swap and marketable securities, tax benefit	26,560	48,169	156,994	582,673
Change in pension and postretirement benefit costs, income tax expense	$ 107,961	$ 81,142	$ 200,155	$ 162,285

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jul. 03, 2021	Jan. 02, 2021
Current Assets
Cash and cash equivalents	$ 16,890,642	$ 15,291,825
Marketable securities	29,121	28,951
Accounts receivable, less allowances: 2021 - $564,061; 2020 - $486,707	35,109,931	31,804,207
Inventories	48,830,376	43,121,737
Current portion of notes receivable	459,863	398,414
Prepaid expenses and other assets	6,470,105	3,152,720
Current assets held for sale	33,268,203	17,937,918
Total Current Assets	141,058,241	111,735,772
Property, Plant and Equipment	51,395,884	52,173,305
Accumulated depreciation	(25,381,312)	(25,976,187)
Property, Plant and Equipment, Net	26,014,572	26,197,118
Goodwill	71,061,057	70,994,178
Trademarks	5,404,284	5,404,284
Patents and other intangibles net of accumulated amortization	24,908,099	27,089,071
Long term notes receivable, less current portion	985,916	1,677,277
Right of Use Assets	12,109,866	12,594,663
Long-term assets held for sale	0	19,894,688
Other Assets	114,469,222	137,654,161
TOTAL ASSETS	281,542,035	275,587,051
Current Liabilities
Accounts payable	27,223,679	21,311,619
Accrued compensation	3,364,766	3,474,686
Other accrued expenses	3,496,332	3,362,032
Current portion of lease liability	2,951,252	2,798,712
Current portion of long-term debt	7,687,689	6,437,689
Current liabilities held for sale	5,697,064	3,281,225
Total Current Liabilities	50,420,782	40,665,963
Deferred income taxes	2,957,771	2,957,771
Other long-term liabilities	1,144,127	1,144,126
Lease liability	9,367,281	9,834,853
Long-term debt, less current portion	78,672,380	82,255,803
Accrued postretirement benefits	1,154,279	1,185,139
Accrued pension cost	30,929,978	33,188,623
Long-term liabilities held for sale	0	48,315
Total Liabilities	174,646,598	171,280,593
Shareholders' Equity
Common Stock, no par value, Authorized: 50,000,000 shares Issued: 9,018,483 shares in 2021 and 8,996,625 shares in 2020 Outstanding: 6,268,754 shares in 2021 and 6,246,896 shares in 2020	32,181,055	31,501,041
Treasury Stock: 2,749,729 shares in 2021 and 2,749,729 shares in 2020	(20,537,962)	(20,537,962)
Retained earnings	123,324,953	122,840,131
Accumulated other comprehensive income (loss):
Foreign currency translation	1,238,658	953,863
Unrealized loss on marketable securities, net of tax	(4,379)	(4,507)
Unrealized loss on interest rate swap, net of tax	(889,938)	(1,387,085)
Unrecognized net pension and postretirement benefit costs, net of tax	(28,416,950)	(29,059,023)
Accumulated other comprehensive loss	(8,072,609)	(29,496,752)
Total Shareholders' Equity	106,895,437	104,306,458
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 281,542,035	$ 275,587,051

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jul. 03, 2021	Jan. 02, 2021
Shareholders' Equity
Accounts receivable, less allowances	$ 564,061	$ 486,707
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)	9,018,483	8,996,625
Common Stock, shares outstanding (in shares)	6,268,754	6,246,896
Treasury Stock, shares (in shares)	2,749,729	2,749,729

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
Operating Activities
Net income	$ 1,381,491	$ 1,007,036
Less: Loss from discontinued operations	(7,067,665)	(3,715,973)
Income from continuing operations	8,449,156	4,723,009
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,531,159	3,212,648
Unrecognized pension and postretirement benefits	(1,722,275)	(962,094)
(Gain) on sale of equipment and other assets	(1,555,983)	(424,211)
Provision for doubtful accounts	73,097	156,286
Stock compensation expense	680,014	448,669
Changes in operating assets and liabilities:
Accounts receivable	(3,343,695)	2,949,581
Inventories	(5,763,475)	(2,379,330)
Prepaid expenses and other	(3,057,099)	420,134
Other assets	(143,156)	734,790
Accounts payable	6,047,550	256,484
Accrued compensation	(144,509)	(1,527,149)
Other accrued expenses	1,215,384	(1,057,698)
Net cash provided by operating activities	4,266,168	6,551,119
Investing Activities
Marketable securities	(171)	8,389
Business disposition	0	1,178,601
Issuance of notes receivable	0	(1,251,943)
Payments received from notes receivable	629,912	0
Proceeds from sale of equipment	2,044,338	445,212
Purchases of property, plant and equipment	(1,810,434)	(830,077)
Net cash provided by/used in investing activities	863,645	(449,818)
Financing Activities
Principal payments on long-term debt	(2,336,564)	(2,622,745)
Financing leases, net	169,765	0
Purchase common stock for treasury	0	(368,864)
Dividends paid	(1,375,509)	(1,372,673)
Net cash used in financing activities	(3,542,308)	(4,364,282)
Discontinued Operations
Cash provided by operating activities	1,261,868	805,880
Cash used in investing activities	(571,945)	(153,342)
Cash provided by discontinued operations	689,923	652,538
Effect of exchange rate changes on cash	147,050	(400,006)
Net change in cash and cash equivalents	2,424,478	1,989,551
Cash and cash equivalents at beginning of period	16,101,635	14,883,954
Cash and cash equivalents at end of period ?	18,526,113	16,873,505
Supplemental disclosure of cash flow information:
Interest	1,264,023	1,400,035
Income taxes	284,075	209,100
Non-cash investing and financing activities
Right of use asset	(484,797)	(299,567)
Lease liability	$ 315,032	$ 299,567

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jul. 03, 2021
Basis of Presentation
Note A - Basis of Presentation	Note A – Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. Refer to the consolidated financial statements of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or our”) and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2021, filed with the Securities and Exchange Commission on March 16, 2021 (the “2020 Form 10-K”), for additional information. The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for interim periods have been reflected therein. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. All intercompany accounts and transactions are eliminated. The condensed consolidated balance sheet as of January 2, 2021 has been derived from the audited consolidated balance sheet at that date. The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31. References to 2020 or the 2020 fiscal year mean the 53-week period ended on January 2, 2021 and references to 2021 or the 2021 fiscal year mean the 52-week period ending on January 1, 2022. In a 52-week fiscal year, each quarter is 13 weeks long. In a 53-week fiscal year, each of the first two fiscal quarters and the fourth quarter are 13 weeks long, and the third fiscal quarter is 14 weeks long. References to the second quarter of 2020, the second fiscal quarter of 2020 or the three months ended June 27, 2020 mean the period from March 29, 2020 to June 27, 2020. References to the second quarter of 2021, the second fiscal quarter of 2021 or the three months ended July 3, 2021 mean the 13-week period from April 4, 2021 to July 3, 2021. Certain amounts in the 2020 financial statements have been reclassified to conform with the 2021 presentation with no impact or change to previously reported net income or shareholder’s equity. The Company now reports continuing operations as one segment – Engineered Solutions.

Discontinued Operations

Discontinued Operations	6 Months Ended
	Jul. 03, 2021
Discontinued Operations
Note B - Discontinued Operations	Note B – Discontinued Operations We have determined that the companies included in our Diversified Products segment no longer fit with our long-term strategy and we have initiated the process of selling the companies within the Diversified Products segment. Selling the companies within this segment will allow management to focus on our core capabilities and offerings. The Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualify for discontinued operations. As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented. Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented. Summarized Financial Information of Discontinued Operations The following table represents income from discontinued operations, net of tax: Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 (unaudited) (unaudited) (unaudited) (unaudited) Net sales $ 13,693,457 $ 9,325,609 $ 25,017,899 $ 22,805,124 Cost of products sold (11,139,886 ) (9,179,960 ) (21,044,606 ) (20,833,343 ) Gross margin 2,553,571 145,649 3,973,293 1,971,781 Selling and administrative expenses (1,280,570 ) (5,131,259 ) (2,313,397 ) (6,444,713 ) Restructuring costs (10,583,078 ) - (10,583,078 ) - Operating loss (9,310,077 ) (4,985,610 ) (8,923,182 ) (4,472,932 ) Interest expense (144,715 ) (151,639 ) (320,429 ) (358,553 ) Loss from discontinued operations before income taxes (9,454,792 ) (5,137,249 ) (9,243,611 ) (4,831,485 ) Income tax benefit 2,225,658 1,168,011 2,175,946 1,115,512 Loss from discontinued operations, net of tax $ (7,229,134 ) $ (3,969,238 ) $ (7,067,665 ) $ (3,715,973 ) The following table represents the assets and liabilities from discontinued operations: July 3, 2021 January 2, 2021 (unaudited) Cash $ 1,635,481 $ 809,809 Accounts receivable 8,578,397 5,944,922 Inventory 10,426,383 9,990,656 Prepaid expenses 1,086,981 1,192,530 Property, plant and equipment, net 11,428,744 13,813,553 Patents and other intangibles net of accumulated amortization - 6,935 Goodwill - 5,900,837 Right of use assets 112,217 173,364 Total assets of discontinued operations $ 33,268,203 $ 37,832,606 Current assets of discontinued operations¹ $ 33,268,203 $ 17,937,917 Non-current assets of discontinued operations - 19,894,689 Total assets of discontinued operations $ 33,268,203 $ 37,832,606 Accounts payable $ 3,515,373 $ 2,196,101 Accrued compensation 2,069,474 960,074 Current portion of lease liability 101,243 125,049 Other long-term liabilities 10,974 48,315 Total liabilities of discontinued operations $ 5,697,064 $ 3,329,539 Current liabilities of discontinued operations¹ $ 5,697,064 $ 3,281,224 Non-current liabilities of discontinued operations - 48,315 Total liabilities of discontinued operations $ 5,697,064 $ 3,329,539 ¹ The total assets and liabilities of discontinued operations are presented as current in the July 3, 2021 balance sheet as we expect to sell the discontinued operations and collect proceeds within one year.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jul. 03, 2021
Total (loss) earnings per share:
Note C - Earnings Per Share	Note C – Earnings Per Share The denominators used to calculate earnings per share are as follow: Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Basic: Weighted average shares outstanding 6,259,654 6,246,410 6,253,996 6,234,665 Diluted: Weighted average shares outstanding 6,259,654 6,246,410 6,253,996 6,234,665 Dilutive stock appreciation rights 17,751 - 17,751 - Denominator for diluted earnings per share 6,277,405 6,246,410 6,271,747 6,234,665

Inventories

Inventories	6 Months Ended
	Jul. 03, 2021
Inventories
Note D - Inventories	Note D – Inventories Inventories from continuing operations consist of the following components: July 3, 2021 January 2, 2021 Raw material and component parts $ 18,544,799 $ 16,376,772 Work in process 6,027,748 5,323,059 Finished goods 24,257,829 21,421,906 Total inventories $ 48,830,376 $ 43,121,737

Goodwill

Goodwill	6 Months Ended
	Jul. 03, 2021
Goodwill
Note E - Goodwill	Note E - Goodwill The aggregate carrying amount of goodwill from continuing operations is approximately $71.1 million as of July 3, 2021. A goodwill write-off of approximately $5.9 million was recognized in discontinued operations when classifying the disposal group as held for sale. See Note B – Discontinued Operations for further discussion. The Company tests its reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Such events and circumstances could include, among other things, increased competition or unexpected loss of market share, significant adverse changes in the markets in which the Company operates, or unexpected business disruptions. The Company tests reporting units for impairment by comparing the estimated fair value of each reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its estimated fair value, the Company records an impairment loss based on the difference between fair value and carrying amount not to exceed the associated carrying amount of goodwill. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industry and have been based on historical data from both external and internal sources.

Leases

Leases	6 Months Ended
	Jul. 03, 2021
Leases
Note F - Leases	Note F – Leases The Company presents right-of-use (ROU) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases. The Company elected to account for non-lease components as part of the lease component to which they relate. Lease accounting involves significant judgements, including making estimates related to the lease term, lease payments, and discount rate. The Company has operating leases for buildings, warehouses and office equipment. The Company determines whether an arrangement is, or contains, a lease at contract inception. An arrangement contains a lease if the Company has the right to direct the use of and obtain substantially all of the economic benefits of an identified asset. ROU assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew. The exercise of lease renewal options is at our sole discretion. The Company’s option to extend certain leases ranges from 4 – 113 months. All options to extend, when it is reasonably certain the option will be exercised, have been included in the calculation of the ROU asset and lease liability. Currently, the Company has 27 operating leases and three finance leases with a lease liability of $12.3 million as of July 3, 2021. The finance lease arrangements are immaterial. The terms and conditions of the leases are determined by the individual agreements. The leases do not contain residual value guarantees, restrictions, or covenants that could cause the Company to incur additional financial obligations. There are no related party transactions. There are no leases that have not yet commenced that could create significant rights and obligations for the Company. Total lease expense for each of the next five fiscal years is estimated to be as follows: remainder of 2021 - $1.5 million; 2022 - $2.5 million; 2023 - $2.1 million; 2024 - $1.6 million; 2025 - $0.9 million; and $3.7 million thereafter. The weighted average remaining lease term is 6.5 years. The implicit interest rate used was 5.0%.

Debt

Debt	6 Months Ended
	Jul. 03, 2021
Debt
Note G - Debt	Note G - Debt On August 30, 2019, the Company entered into a credit agreement with Santander Bank, N.A., for itself, People’s United Bank, National Association and TD Bank, N.A. as lenders (the “Credit Agreement”), 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 certain subsidiaries of Big 3 Holdings, LLC (collectively “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. As of July 3, 2021, the Company has not borrowed any funds on the revolving commitment portion of the facility. The term loan bears interest at a variable rate based on the LIBOR rate plus an applicable margin of 1.25% to 2.25%, depending on the Company’s senior net leverage ratio. Borrowings under the revolving portion bear interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.25% to 1.25% or the LIBOR rate plus an applicable margin of 1.25% to 2.25%, with such margins determined based on the Company’s senior net leverage ratio. 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 is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1. The Company was in compliance with all of its covenants under the Credit Agreement at July 3, 2021 and through the date of filing this Form 10-Q. On August 30, 2019, the Company entered into an interest rate swap contract with Santander Bank, N.A., with an original notional 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 July 3, 2021, the interest rate for half ($40.6 million) of the term portion was 1.84%, using a one-month LIBOR rate, and 3.19% on the remaining balance ($45.6 million) of the term loan based on a one-month LIBOR rate. The interest rates under the Credit Agreement and the interest rate swap contract are susceptible to changes to the method of determining LIBOR rates 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 Financial Conduct Authority (the “FCA”) (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021. In December 2020, the ICE Benchmark Administration (the “IBA”) announced a market consultation regarding the extension of US dollar LIBOR tenors through June 30, 2023 which the FCA supports. On March 5, 2021, the IBA released its feedback statement reporting the results of the market consultation. Pursuant to its feedback statement, the IBA intends to cease publication of all settings of non-US dollar LIBOR and only the one-week and two-month U.S. dollar LIBOR settings on December 31, 2021, with the publication of the remaining U.S. dollar LIBOR settings being discontinued after June 30, 2023. The Alternative Reference Rates Committee (ARRC), a financial industry group convened by the Federal Reserve Board, has recommended the use of SOFR to replace LIBOR. The difference between LIBOR and SOFR is that LIBOR is a forward-looking rate which means the interest rate is set at the beginning of the period with payment due at the end. SOFR is a backward-looking overnight rate which has implications for how interest and other payments are based. Changes in the method of calculating the replacement of LIBOR with an alternative rate or benchmark are still in flux, and once an alternate rate is adopted, may adversely affect interest rates and result in higher borrowing costs. This could materially and adversely affect the Company’s results of operations, cash flows and liquidity. We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks at this time. We are working with our senior lender and may need to renegotiate our credit facilities as LIBOR phases out in June 2023.

Stock Options and Awards

Stock Options and Awards	6 Months Ended
	Jul. 03, 2021
Stock Options and Awards
Note H - Stock Options and Awards	Note H - Stock Options and Awards The Eastern Company 2010 Executive Stock Incentive Plan (the “2010 Plan”), for officers, other key employees, and non-employee Directors expired in February 2020. On February 19, 2020, the board of directors of the Company adopted the Eastern Company 2020 Stock Incentive Plan (the “2020 Plan”). On April 29, 2020, at the Company’s 2020 Annual Meeting of Shareholders, the shareholders of the Company approved and adopted the 2020 Plan. The 2020 Plan replaced the 2010 Plan. The Company has no other existing plan pursuant to which equity awards may be granted. Incentive stock options granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock options are granted. Restricted stock awards may also be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors. Under the 2020 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 the first six months of fiscal 2021, the Company issued 24,600 stock options that were granted that were subject to the meeting of performance measurements. The Company did not issue any stock options or restricted stock in the first six months of fiscal 2020. For the first six months of fiscal 2021, the Company used several assumptions which included an expected term of 4.0 years, volatility deviation between 47.25% to 48.55% and a risk-free rate between 0.18% to 0.35% for the purposes of measuring compensation under the Black Scholes Method. The 2020 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 the first six months of fiscal 2021 the Company did not issue any SARs. During the first six months of fiscal 2020 the company issued 44,000 SARs. For the first six months of fiscal 2020, the Company used several assumptions which included an expected term of 4.0 years, volatility deviation of 38.62% and a risk-free rate of 0.26% for the purposes of measuring compensation under the Black Scholes Method. Stock-based compensation expense in connection with SARs previously granted to employees was approximately $100,000 and $85,000 in the second quarter of 2021 and the second quarter of 2020, respectively and was approximately $214,000 and $195,000 in the first six months of fiscal years 2021 and 2020, respectively. As of July 3, 2021, there were 811,072 shares of Company common stock reserved and available for future grant under the 2020 Plan. The following tables set forth the outstanding SARs for the period specified: Six Months Ended Year Ended July 3, 2021 January 2, 2021 Units Weighted- Average Exercise Price Units Weighted- Average Exercise Price Outstanding at beginning of period 244,001 $ 21.87 276,000 $ 22.30 Issued - - 44,000 20.20 Exercised (50,667 ) 19.33 - - Forfeited (6,000 ) 21.20 (75,999 ) 22.00 Outstanding at end of period 187,334 22.77 244,001 21.87 SARs Outstanding and Exercisable Range of Exercise Prices Outstanding as of July 3, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Exercisable as of July 3, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ 19.10 - $26.30 187,334 2.0 $ 22.77 87,335 1.0 $ 22.33 The following tables set forth the outstanding stock grants for the period specified: Six Months Ended Year Ended July 3, 2021 January 2, 2021 Units Units Outstanding at beginning of period 25,000 25,000 Issued 27,300 - Exercised - - Forfeited - - Outstanding at end of period 52,300 25,000 As of July 3, 2021, outstanding SARs and grants had an intrinsic value of $3,105,000.

Share Repurchase Program

Share Repurchase Program	6 Months Ended
	Jul. 03, 2021
Share Repurchase Program
Note I - Share Repurchase Program	Note I – Share Repurchase Program On May 2, 2018, the Company announced that its Board of Directors had authorized a new program to repurchase up to 200,000 shares of the Company’s common stock. The Company’s share repurchase program does not obligate it to acquire the Company’s common stock at any specific cost per share. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company did not repurchase any shares under its share repurchase program during the second quarter of 2021. Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that may yet be Purchased Under the Plans or Programs Balance as of April 3, 2021 55,000 $ 26.04 55,000 145,000 April 4, 2021 - July 3, 2021 - - - Balance as of July 3, 2021 55,000 $ 26.04 55,000 145,000

Revenue Recognition

Revenue Recognition	6 Months Ended
	Jul. 03, 2021
Revenue Recognition
Note J - Revenue Recognition	Note J – Revenue Recognition The Company’s revenues result from the sale of goods and services and reflect the consideration to which the Company expects to be entitled. The Company records revenues based on a five-step model in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”. The Company has defined purchase orders as contracts in accordance with ASC Topic 606. For its customer contracts, the Company identifies its performance obligations, which are delivering goods or services, determines the transaction price, allocates the contract transaction price to the performance obligations (when applicable), and recognizes the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when the customer obtains control of that good or service. The Company’s revenues are recorded at a point in time from the sale of tangible products. Revenues are recognized when products are shipped. Customer volume rebates, product returns, discount and allowance are variable consideration and are recorded as a reduction of revenue in the same period that the related sales are recorded. The Company has reviewed the overall sales transactions for variable consideration and has determined that these costs are not material. Refer to Note M for revenues reported by segment. The Company has no future performance obligations and does not capitalize costs to obtain or fulfill contracts.

Income Taxes

Income Taxes	6 Months Ended
	Jul. 03, 2021
Income Taxes
Note K - Income Taxes	Note K - Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, and in various states and foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2016 and is no longer subject to non-U.S. income tax examinations by foreign tax authorities for years prior to 2014. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The changes implemented in ASU 2019-12 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. The Company adopted ASU 2019-12 in the first quarter of 2021. On March 27, 2020, the $2 trillion bipartisan Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (the “CARES Act”) became law. For additional information on the impact of the CARES Act on the Company see Note 8 – Income Taxes in the 2020 Form 10-K. The Company will also continue to assess the effect of state level tax relief provisions as enacted, such as state net operating loss rule changes and conformity to the federal interest, depreciation and charitable contribution deduction changes. The total amount of unrecognized tax benefits could increase or decrease within the next 12 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 FASB ASC Topic 740, “Income Taxes.” There have been no significant changes to the amount of unrecognized tax benefits during the six months ended July 3, 2021. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.

Retirement Benefit Plans

Retirement Benefit Plans	6 Months Ended
	Jul. 03, 2021
Retirement Benefit Plans
Note L - Retirement Benefit Plans	Note L - Retirement Benefit Plans The Company has four non-contributory defined benefit pension plans covering most U.S. employees. Three of these pension plans are frozen and participants in these three plans have not accrued benefits since the date on which these plans were frozen. A fourth pension plan does not permit new participants but existing participants in this fourth pension plan continue to accrue benefits. Plan benefits are generally based upon age at retirement, years of service and, for the plan covering salaried employees, 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. Significant disclosures relating to these benefit plans for the first six months of fiscal years 2021 and 2020 are as follows: Pension Benefits Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Service cost $ 271,835 $ 266,434 $ 543,668 $ 532,870 Interest cost 504,254 714,142 1,008,509 1,428,285 Expected return on plan assets (1,448,675 ) (1,365,262 ) (2,897,349 ) (2,730,523 ) Amortization of prior service cost 24,845 24,845 49,690 49,690 Amortization of the net loss 432,536 325,034 865,075 650,068 Net periodic benefit $ (215,205 ) $ (34,807 ) $ (430,407 ) $ (69,610 ) Postretirement Benefits Postretirement Benefits Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Service cost $ 13,626 $ 10,855 $ 27,252 $ 21,710 Interest cost 9,842 11,667 19,684 23,334 Expected return on plan assets (6,420 ) (5,589 ) (12,840 ) (11,178 ) Gain on significant event - - - - Amortization of prior service cost - (2,063 ) - (4,126 ) Amortization of the net loss (3,094 ) (6,377 ) (6,188 ) (12,754 ) Net periodic benefit cost $ 13,954 $ 8,493 $ 27,908 $ 16,986 The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations. In fiscal year 2021, the Company expects to contribute $3,100,000 into its pension plans and $50,000 into its postretirement plan. The Company is currently reviewing the American Rescue Plan Act for applicable pension funding relief for the minimum required contributions and will adjust accordingly. As of July 3, 2021, the Company has made contributions of approximately $1,171,000 into its pension plans, has contributed $8,000 to its postretirement plan and expects to make the remaining contributions as required during the remainder of the fiscal year. The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering substantially all U.S. non-union employees. The 401(k) Plan allows participants to make voluntary contributions from their annual compensation on a pre-tax basis, subject to limitations under the Internal Revenue Code. The 401(k) Plan provides for contributions by the Company at its discretion. The Company made contributions to the plan as follows: Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Regular matching contribution $ 144,081 $ 132,016 $ 297,397 $ 294,808 Transitional credit contribution 33,102 40,529 75,870 95,200 Non-discretionary contribution 14,895 12,390 362,484 371,613 Total contributions for the period $ 192,078 $ 184,935 $ 735,751 $ 761,621 The non-discretionary contribution of $332,092 made in the six months ended July 3, 2021 was accrued for and expensed in the prior fiscal year.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jul. 03, 2021
Recent Accounting Pronouncements
Note M - Recent Accounting Pronouncements	Note M - Recent Accounting Pronouncements Adopted In December 2019, FASB issued ASU 2019-12, Simplifying the Accounting for Income Tax. The changes implemented in ASU 2019-12 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. The Company adopted ASU 2019-12 as of January 3, 2021. The adoption of this guidance did 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.

Concentration of Risk

Concentration of Risk	6 Months Ended
	Jul. 03, 2021
Concentration of Risk
Note N - Concentration of risk	Note N - 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 July 3, 2021, there was one significant concentration of credit risk with a customer, who has receivables representing 15% of our total accounts receivable. One single customer represented more than 10% of the Company’s net accounts receivable as of January 2, 2021. 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 $45.6 million on July 3, 2021, to convert a portion of the borrowing under the Credit Agreement from variable to fixed rates. The valuation of this swap is determined using the one-month LIBOR rate index and mitigates the Company's exposure to interest rate risk. 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. The potential phasing out of LIBOR is discussed in greater detail in Note G — Debt hereof and under the heading “The phaseout of the London Interbank Offered Rate (LIBOR), or the replacement of LIBOR with a different reference rate, may adversely affect interest rates” in Part I, Item 8of the 2020 Form 10-K. Currency Exchange Rate Risk The Company’s currency exposure is concentrated in the British pound, Canadian dollar, Mexican peso, New Taiwan dollar, Chinese RMB and the Hong Kong dollar. Because of the Company’s limited exposure to any single foreign market, any currency 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.

Business Acquisition

Business Acquisition	6 Months Ended
	Jul. 03, 2021
Business Acquisition
Note O - Business Acquisition	Note O – Business Acquisition Effective August 10, 2020 the Company acquired certain assets, including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights and rights existing under all sales and purchase agreements, and assumed certain liabilities, of Hallink, RSB Inc. These assets are held in our subsidiary, Hallink Moulds, Inc. (“Hallink Moulds”). Hallink Moulds produces injection blow mold tooling and is a supplier of blow molds and change parts to the food, beverage, healthcare and chemical industry. Hallink Moulds specializes in the design, development and manufacture of 2-step stretch blow molds, and related components for the stretch blow molding industry offering integrated turnkey solutions to its customers worldwide. Hallink Moulds is included in the Engineered Solutions segment of the Company from the date of the acquisition. The cost of the acquisition of Hallink Moulds was approximately $7,173,000. The above acquisition was accounted for under ASU 2014-18, Business Combinations (Topic 805). The acquired business is included in the consolidated operating results of the Company from the effective date of the acquisition. The excess of the cost of Hallink Moulds over the fair market value of the net assets acquired of $2,302,000 has been recorded as goodwill. An independent third party was utilized to establish the fair market value of net assets acquired. In connection with the above acquisition, the Company recorded the following intangible assets: Asset Class/Description Amount Weighted- Average Period in Years Customer relationships $ 2,345,000 6 Intellectual property 591,000 6 Non-compete agreements 1,001,000 5 $ 3,937,000 There is no anticipated residual value relating to these intangible assets. Neither the actual results nor the pro forma effects of the acquisition of Hallink are material to the Company's financial statements.

Discontinued Operations (Tables

Discontinued Operations (Tables)	6 Months Ended
	Jul. 03, 2021
Discontinued Operations
Schedule income from discontinued operations	Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 (unaudited) (unaudited) (unaudited) (unaudited) Net sales $ 13,693,457 $ 9,325,609 $ 25,017,899 $ 22,805,124 Cost of products sold (11,139,886 ) (9,179,960 ) (21,044,606 ) (20,833,343 ) Gross margin 2,553,571 145,649 3,973,293 1,971,781 Selling and administrative expenses (1,280,570 ) (5,131,259 ) (2,313,397 ) (6,444,713 ) Restructuring costs (10,583,078 ) - (10,583,078 ) - Operating loss (9,310,077 ) (4,985,610 ) (8,923,182 ) (4,472,932 ) Interest expense (144,715 ) (151,639 ) (320,429 ) (358,553 ) Loss from discontinued operations before income taxes (9,454,792 ) (5,137,249 ) (9,243,611 ) (4,831,485 ) Income tax benefit 2,225,658 1,168,011 2,175,946 1,115,512 Loss from discontinued operations, net of tax $ (7,229,134 ) $ (3,969,238 ) $ (7,067,665 ) $ (3,715,973 )
Schedule of assets and liabilities from discontinued operations	July 3, 2021 January 2, 2021 (unaudited) Cash $ 1,635,481 $ 809,809 Accounts receivable 8,578,397 5,944,922 Inventory 10,426,383 9,990,656 Prepaid expenses 1,086,981 1,192,530 Property, plant and equipment, net 11,428,744 13,813,553 Patents and other intangibles net of accumulated amortization - 6,935 Goodwill - 5,900,837 Right of use assets 112,217 173,364 Total assets of discontinued operations $ 33,268,203 $ 37,832,606 Current assets of discontinued operations¹ $ 33,268,203 $ 17,937,917 Non-current assets of discontinued operations - 19,894,689 Total assets of discontinued operations $ 33,268,203 $ 37,832,606 Accounts payable $ 3,515,373 $ 2,196,101 Accrued compensation 2,069,474 960,074 Current portion of lease liability 101,243 125,049 Other long-term liabilities 10,974 48,315 Total liabilities of discontinued operations $ 5,697,064 $ 3,329,539 Current liabilities of discontinued operations¹ $ 5,697,064 $ 3,281,224 Non-current liabilities of discontinued operations - 48,315 Total liabilities of discontinued operations $ 5,697,064 $ 3,329,539 ¹ The total assets and liabilities of discontinued operations are presented as current in the July 3, 2021 balance sheet as we expect to sell the discontinued operations and collect proceeds within one year.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jul. 03, 2021
Total (loss) earnings per share:
Schedule of Denominators Used in Earnings Per Share Computations	Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Basic: Weighted average shares outstanding 6,259,654 6,246,410 6,253,996 6,234,665 Diluted: Weighted average shares outstanding 6,259,654 6,246,410 6,253,996 6,234,665 Dilutive stock appreciation rights 17,751 - 17,751 - Denominator for diluted earnings per share 6,277,405 6,246,410 6,271,747 6,234,665 July 3, 2021 January 2, 2021 Raw material and component parts $ 18,544,799 $ 16,376,772 Work in process 6,027,748 5,323,059 Finished goods 24,257,829 21,421,906 Total inventories $ 48,830,376 $ 43,121,737

Stock Options and Awards (Table

Stock Options and Awards (Tables)	6 Months Ended
	Jul. 03, 2021
Stock Options and Awards
Schedule of Stock Appreciation Rights Activity	Six Months Ended Year Ended July 3, 2021 January 2, 2021 Units Weighted- Average Exercise Price Units Weighted- Average Exercise Price Outstanding at beginning of period 244,001 $ 21.87 276,000 $ 22.30 Issued - - 44,000 20.20 Exercised (50,667 ) 19.33 - - Forfeited (6,000 ) 21.20 (75,999 ) 22.00 Outstanding at end of period 187,334 22.77 244,001 21.87
Schedule of SARs Outstanding and Exercisable	SARs Outstanding and Exercisable Range of Exercise Prices Outstanding as of July 3, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Exercisable as of July 3, 2021 Weighted Average Remaining Contractual Life Weighted Average Exercise Price $ 19.10 - $26.30 187,334 2.0 $ 22.77 87,335 1.0 $ 22.33
Schedule of Stock Option Activity	Six Months Ended Year Ended July 3, 2021 January 2, 2021 Units Units Outstanding at beginning of period 25,000 25,000 Issued 27,300 - Exercised - - Forfeited - - Outstanding at end of period 52,300 25,000

Share Repurchase Program (Table

Share Repurchase Program (Tables)	6 Months Ended
	Jul. 03, 2021
Share Repurchase Program
Schedule of Share Repurchase Program	Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that may yet be Purchased Under the Plans or Programs Balance as of April 3, 2021 55,000 $ 26.04 55,000 145,000 April 4, 2021 - July 3, 2021 - - - Balance as of July 3, 2021 55,000 $ 26.04 55,000 145,000

Retirement Benefit Plans (Table

Retirement Benefit Plans (Tables)	6 Months Ended
	Jul. 03, 2021
Retirement Benefit Plans
Schedule of Significant Disclosures Relating to Benefit Plans	Pension Benefits Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Service cost $ 271,835 $ 266,434 $ 543,668 $ 532,870 Interest cost 504,254 714,142 1,008,509 1,428,285 Expected return on plan assets (1,448,675 ) (1,365,262 ) (2,897,349 ) (2,730,523 ) Amortization of prior service cost 24,845 24,845 49,690 49,690 Amortization of the net loss 432,536 325,034 865,075 650,068 Net periodic benefit $ (215,205 ) $ (34,807 ) $ (430,407 ) $ (69,610 ) Postretirement Benefits Postretirement Benefits Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Service cost $ 13,626 $ 10,855 $ 27,252 $ 21,710 Interest cost 9,842 11,667 19,684 23,334 Expected return on plan assets (6,420 ) (5,589 ) (12,840 ) (11,178 ) Gain on significant event - - - - Amortization of prior service cost - (2,063 ) - (4,126 ) Amortization of the net loss (3,094 ) (6,377 ) (6,188 ) (12,754 ) Net periodic benefit cost $ 13,954 $ 8,493 $ 27,908 $ 16,986
Schedule of Defined Contribution Plan	Three Months Ended Six Months Ended July 3, 2021 June 27, 2020 July 3, 2021 June 27, 2020 Regular matching contribution $ 144,081 $ 132,016 $ 297,397 $ 294,808 Transitional credit contribution 33,102 40,529 75,870 95,200 Non-discretionary contribution 14,895 12,390 362,484 371,613 Total contributions for the period $ 192,078 $ 184,935 $ 735,751 $ 761,621

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jul. 03, 2021
Segment Information (Tables)
Schedule of Segment Financial Information	Asset Class/Description Amount Weighted- Average Period in Years Customer relationships $ 2,345,000 6 Intellectual property 591,000 6 Non-compete agreements 1,001,000 5 $ 3,937,000

Discontinued Operations (Detail

Discontinued Operations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Cost of products sold	$ (47,270,990)	$ (29,188,182)	$ (93,535,153)	$ (68,111,738)
Gross margin	13,976,602	10,319,618	29,485,872	23,242,163
Selling and administrative expenses	(9,375,537)	(6,545,525)	(18,319,931)	(14,752,316)
Operating loss	3,512,685	2,856,580	9,059,999	6,650,383
Interest expense	(434,147)	(454,915)	(961,291)	(1,075,663)
Loss from discontinued operations, net of tax	(7,229,134)	(3,969,238)	(7,067,665)	(3,715,973)
Discontinued Operations [Member]
Net sales	13,693,457	9,325,609	25,017,899	22,805,124
Cost of products sold	(11,139,886)	(9,179,960)	(21,044,606)	(20,833,343)
Gross margin	2,553,571	145,649	3,973,293	1,971,781
Selling and administrative expenses	(1,280,570)	(5,131,259)	(2,313,397)	(6,444,713)
Restructuring costs	(10,583,078)	0	(10,583,078)	0
Operating loss	(9,310,077)	(4,985,610)	(8,923,182)	(4,472,932)
Interest expense	(144,715)	(151,639)	(320,429)	(358,553)
Loss from discontinued operations before income taxes	(9,454,792)	5,137,249	(9,243,611)	(4,831,485)
Income tax benefit	2,225,658	1,168,011	2,175,946	1,115,512
Loss from discontinued operations, net of tax	$ (7,229,134)	$ (3,969,238)	$ (7,067,665)	$ (3,715,973)

Discontinued Operations (Deta_2

Discontinued Operations (Details 1) - USD ($)	Jul. 03, 2021	Jan. 02, 2021
Total assets of discontinued operations	$ 33,268,203	$ 37,832,606
Total liabilities of discontinued operations	5,697,064	3,329,539
Accounts payable	27,223,679	21,311,619
Accrued compensation	3,364,766	3,474,686
Current portion of lease liability	2,951,252	2,798,712
Non-current liabilities of discontinued operations	0	48,315
Discontinued Operations [Member]
Total assets of discontinued operations	33,268,203	37,832,606
Total liabilities of discontinued operations	5,697,064	3,329,539
Cash	1,635,481	809,809
Accounts receivable	8,578,397	5,944,922
Inventory	10,426,383	9,990,656
Prepaid expenses	1,086,981	1,192,530
Property plant and equipment, net	11,428,744	13,813,553
Patents and other intangibles net of accumulated amortization	0	6,935
Goodwill	0	5,900,837
Right of use assets	112,217	173,364
Current assets of discontinued operations?	33,268,203	17,937,917
Non-current assets of discontinued operations	0	19,894,689
Accounts payable	3,515,373	2,196,101
Accrued compensation	2,069,474	960,074
Current portion of lease liability	101,243	125,049
Other long-term liabilities	10,974	48,315
Current liabilities of discontinued operations?	5,697,064	3,281,224
Non-current liabilities of discontinued operations	$ 0	$ 48,315

Earnings Per Share (Details)

Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Basic [Abstract]
Weighted average shares outstanding	6,259,654	6,246,410	6,253,996	6,234,665
Diluted [Abstract]
Weighted average shares outstanding	6,259,654	6,246,410	6,253,996	6,234,665
Dilutive stock appreciation rights	17,751		17,751
Denominator for diluted earnings per share (in shares)	6,277,405	6,246,410	6,271,747	6,234,665

Inventories (Details)

Inventories (Details) - USD ($)	Jul. 03, 2021	Jan. 02, 2021
Components of inventories [Abstract]
Raw material and component parts	$ 18,544,799	$ 16,376,772
Work in process	6,027,748	5,323,059
Finished goods	24,257,829	21,421,906
Total inventories	$ 48,830,376	$ 43,121,737

Goodwill (Details Narrative )

Goodwill (Details Narrative ) $ in Millions	Jul. 03, 2021USD ($)
Inventories
Goodwill, net	$ 71.1
Goodwill write off	$ 5.9

Leases (Details Narrative)

Leases (Details Narrative) - Leases [Member] - USD ($) $ in Millions	6 Months Ended
	Jul. 03, 2021	Dec. 28, 2026	Dec. 28, 2025	Dec. 28, 2024	Dec. 28, 2023	Dec. 28, 2022	Dec. 28, 2021
Total lease expense		$ 3.7	$ 0.9	$ 1.6	$ 2.1	$ 2.5	$ 1.5
Lease liability	$ 12.3
Interest rate	5.00%
Term of loan	6 years 6 months

Debt (Details Narrative)

Debt (Details Narrative) - USD ($)	1 Months Ended	6 Months Ended
	Aug. 30, 2019	Jul. 03, 2021
Revolving Credit Loan [Member]
Revolving commitment portion	$ 20,000,000
Annual commitment fee percentage		0.25%
Credit Agreement [Member]
Ratio description		the Credit Agreement require the Company to maintain a senior net leverage ratio not to exceed 4.25 to 1. In addition, the Company is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1
Minimum [Member] | Revolving Credit Loan [Member] | LIBOR [Member]
Basis spread on variable rate		1.25%
Maximum [Member] | Revolving Credit Loan [Member] | LIBOR [Member]
Basis spread on variable rate		2.25%
Term Loan [Member]
Percentage of annual commitment fee based on unused portion i		0.25%
Revolving commitment portion	100,000,000
Repayment of debt	19,000,000
Term of loan		5 years
Term Loan [Member] | LIBOR [Member]
Fixed rate of interest		1.44%
Term of variable rate		the term loan based on a one-month LIBOR rate.
Term Loan [Member] | December 31, 2019 through August 30, 2021 [Member]
Quarterly principal payment		$ 1,250,000
Term Loan [Member] | September 30, 2021 through June 30, 2023 [Member]
Quarterly principal payment		1,875,000
Term Loan [Member] | September 30, 2023 through June 30, 2024 [Member]
Quarterly principal payment		$ 2,500,000
Term Loan [Member] | Minimum [Member]
Variable interest rate based on senior net leverage ratio		1.25%
Term Loan [Member] | Maximum [Member]
Variable interest rate based on senior net leverage ratio		2.25%
Interest Rate Swap [Member] | Term Loan [Member]
Description of interest rate swap contract		the interest rate for half ($40.6 million) of the term portion was 1.84%, using a one-month LIBOR rate, and 3.19% on the remaining balance ($45.6 million) of the term loan based on a one-month LIBOR rate.
Interest rate swap, notional amount	$ 50,000,000
Fixed rate of interest	1.44%

Stock Options and Awards (Detai

Stock Options and Awards (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Number of units outstanding at beginning of period	25,000	25,000
Number of units, Issued	27,300	0
Number of units outstanding at end of period	52,300	25,000
Stock Options [Member]
Number of units outstanding at beginning of period	244,001	276,000
Number of units, Issued	27,300	44,000
Number of units, Exercised	(50,667)	0
Number of units, Forfeited	(6,000)	(75,999)
Number of units outstanding at end of period	187,334	244,001
Weighted average exercise price, beginning balance	$ 21.87	$ 22.30
Weighted average exercise price, issued	0	20.20
Weighted average exercise price, exercised	19.33	0
Weighted average exercise price, forfeited	21.20	22
Weighted average exercise price, ending balance	$ 22.77	$ 21.87

Stock Options and Awards (Det_2

Stock Options and Awards (Details 1) - SAR [Member]	6 Months Ended
	Jul. 03, 2021$ / sharesshares
Exercisable | shares	87,335
Weighted average exercise price, Oustanding	$ 22.77
Outstanding | shares	187,334
Weighted- Average Remaining Contractual Life, Oustanding	2 years
Weighted- Average Remaining Contractual Life, Exercisable	1 year
Weighted average exercise price, Exercisable	$ 22.33
Maximum [Member]
Range of Exercise Prices	26.30
Minimum [Member]
Range of Exercise Prices	$ 19.10

Stock Options and Awards (Det_3

Stock Options and Awards (Details 2) - shares	6 Months Ended	12 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Number of units
Number of units outstanding at beginning of period	25,000	25,000
Issued	27,300	0
Number of units outstanding at end of period	52,300	25,000

Stock Options and Awards (Det_4

Stock Options and Awards (Details Narrative) - USD ($)	6 Months Ended			12 Months Ended
	Jul. 03, 2021	Jul. 03, 2020	Jun. 27, 2020	Jan. 02, 2021	Jan. 02, 2020
Intrinsic value	$ 3,105,000
Common stock shares reserved for future issuance	811,072
Stock option granted	27,300			0
Stock compensation expense	$ 680,014		$ 448,669
SAR [Member]
Volatility deviation	38.62%
Risk free rate	0.26%
Stock option granted	44,000
Expected term	4 years
Stock compensation expense	$ 100,000	$ 85,000		$ 214,000	$ 195,000
2020 Plan [Member]
Stock option granted	24,600
Expected term	4 years
Minimum [Member]
Volatility deviation	47.25%
Risk free rate	0.18%
Maximum [Member]
Volatility deviation	48.55%
Risk free rate	0.35%

Share Repurchase Program (Detai

Share Repurchase Program (Details)	6 Months Ended
	Jul. 03, 2021$ / sharesshares
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs [Member]
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs, beginning balance	145,000
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs, ending balance	145,000
Average Price Paid Per Share [Member]
Average Price Paid Per Share, beginning balance | $ / shares	$ 26.04
Average Price Paid Per Share, ending balance | $ / shares	$ 26.04
Total Number of Shares Purchased [Member]
Total Number of Shares Purchased, beginning balance	55,000
Total Number of Shares Purchased,ending balance	55,000
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs [Member]
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs, beginning balance	55,000
Total Number of Shares Purchased As Part of Publicly Announced Plansor Programs, ending balance	55,000

Share Repurchase Program (Det_2

Share Repurchase Program (Details Narrative)	May 02, 2018shares
Share Repurchase Program
Number of shares authorized to be repurchased	200,000

Income Taxes (Details Narrative

Income Taxes (Details Narrative) $ in Trillions	Mar. 27, 2020USD ($)
Bipartisan Coronavirus Aid [Member]
Tax relief	$ 2

Retirement Benefit Plans (Detai

Retirement Benefit Plans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Pension Benefit [Member]
Service cost	$ 271,835	$ 266,434	$ 543,668	$ 532,870
Interest cost	504,254	714,142	1,008,509	1,428,285
Expected return on plan assets	(1,448,675)	(1,365,262)	(2,897,349)	(2,730,523)
Amortization of prior service cost	24,845	24,845	49,690	49,690
Amortization of the net loss	432,536	325,034	865,075	650,068
Net periodic benefit cost	215,205	(34,807)	(430,407)	(69,610)
Other Postretirement Benefit [Member]
Service cost	13,626	10,855	27,252	21,710
Interest cost	9,842	11,667	19,684	23,334
Expected return on plan assets	(6,420)	(5,589)	(12,840)	(11,178)
Amortization of prior service cost	0	2,063	0	(4,126)
Amortization of the net loss	(3,094)	(6,377)	(6,188)	(12,754)
Net periodic benefit cost	(13,954)	(8,493)	(27,908)	(16,986)
Gain on significant event	$ 0	$ 0	$ 0	$ 0

Retirement Benefit Plans (Det_2

Retirement Benefit Plans (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Total contributions for the period	$ 192,078	$ 184,935	$ 735,751	$ 761,621
Regular Matching Contributions [Member]
Total contributions for the period	144,081	132,016	297,397	294,808
Transitional Credit Contributions [Member]
Total contributions for the period	33,102	40,529	75,870	95,200
Non-Discretionary Contributions [Member]
Total contributions for the period	$ 14,895	$ 12,390	$ 362,484	$ 371,613

Retirement Benefit Plans (Det_3

Retirement Benefit Plans (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Accrued amount for non discretionary safe harbor contribution	$ 332,092
Pension Benefit [Member]
Cash contributions	1,171,000	$ 3,100,000
Other Postretirement Benefit [Member]
Cash contributions	$ 8,000	$ 50,000

Concentration of Risk (Details

Concentration of Risk (Details Narrative) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jul. 03, 2021	Jan. 02, 2021
Interest Rate Swap [Member] | Term Loan [Member]
Interest Rate Risk [Abstract]
Interest rate swap, notional amount	$ 45.6
Minimum [Member] | Revolving Credit Loan [Member] | LIBOR [Member]
Interest Rate Risk [Abstract]
Basis spread on variable rate	1.25%
Maximum [Member] | Revolving Credit Loan [Member] | LIBOR [Member]
Interest Rate Risk [Abstract]
Basis spread on variable rate	2.25%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Interest Rate Risk [Abstract]
Threshold percentage of concentration risk	15.00%	10.00%

Business Acquisition (Details)

Business Acquisition (Details)	6 Months Ended
	Jul. 03, 2021USD ($)
Assets	$ 3,937,000
Intellectual Property [Member]
Assets	$ 591,000
Weighted-Average Period in Years	6 years
Non-compete agreements [Member]
Assets	$ 1,001,000
Weighted-Average Period in Years	5 years
Customer relationships [Member]
Assets	$ 2,345,000
Weighted-Average Period in Years	6 years

Business Acquisition (Details N

Business Acquisition (Details Narrative) - USD ($)	Jul. 03, 2021	Jan. 02, 2021	Aug. 10, 2020
Business Acquisition
Cost of acquisition			$ 7,173,000
Goodwill	$ 71,061,057	$ 70,994,178	$ 2,302,000