Exhibit 99
FOR IMMEDIATE RELEASE
October 25, 2006
THE EASTERN COMPANY REPORTS RESULTS
FOR THE THIRD QUARTER AND NINE MONTHS OF 2006
Naugatuck, CT-The Eastern Company (AMEX-EML) today announced the results of its
operations for the third quarter and nine months of 2006. All per share data
reflects the impact of the three-for-two stock split announced on September 28,
2006. Sales for the third quarter were $31.2 million, compared to $27.2 million
for the same period in 2005, a 15% increase, while net income was $1.7 million,
or $0.28 per diluted share, compared to the $1.3 million, or $0.21 per diluted
share, reported in the second quarter of 2005, a 33% increase.
Net sales for the nine months were $88.7 million compared to $80.9 million for
the first nine months of the previous year, a 10% increase. Year to date
earnings for the nine month period ended September 30, 2006 were $4.0 million or
$0.69 per diluted share, compared to $3.1 million or $0.53 per diluted share for
the same period in 2005, a 31% increase. Both the quarter and nine month results
reflect favorable tax provision adjustments of approximately $0.06 per diluted
share.
Leonard F. Leganza, President and CEO stated, "Our sales increase in the third
quarter was the sixteenth consecutive quarter of improved year-to-year sales, a
trend that should continue into 2007. In September, the Industrial Hardware
segment received orders from a military contractor for door latching components
to be used in a project to retro-fit military Humvees which should result in an
additional $31.5 million in sales between September 2006 and March of 2007."
Mr. Leganza added, "Also, toward the end of the third quarter, the Security
Products segment of the Company completed the acquisition of the Royal Lock
Corporation. That acquisition will expand our product range and provide a
stronger market presence for that segment of our business. Royal Lock is a
supplier of cam locks, switch locks, padlocks, latches, handles and specialty
hardware parts. Its products are sold to numerous OEM's in several market
segments, including automotive, recreational vehicles and furniture as well as
to electronics and fabricated metal parts producers. Royal Lock's capabilities
provide customized solutions to an unlimited range of lock and specialty part
requirements."
Mr. Leganza continued, "We are encouraged that sales at our Metal Products
segment continue to improve, however, productivity in this segment fell far
short of our anticipated goals in the third quarter. The installation of new
metal pouring systems, which will improve the efficiency and productivity in
manufacturing ductile iron castings, took longer to implement and encountered
factors that we had not expected. The installation has now been completed, is
operating reliably and improvements in our production efficiency should now
begin to be realized. During the third quarter charges to earnings resulted in a
loss of approximately $0.11 per diluted share."
Mr. Leganza concluded, "As I stated earlier this year, we continue to be
optimistic about our current and future opportunities and results despite the
escalating costs of raw materials, utilities and health care presently being
experienced. Our optimism is reflected in the 9% dividend increase announced in
April of this year and the three-for-two stock split announced in September
2006."
The Eastern Company is a 148-year-old manufacturer of industrial hardware,
security products and metal castings. It operates from nine locations in the
U.S., Canada, Mexico, Taiwan and China. The diversity of the Company's products
helps it to respond to the changing requirements of a broad array of markets.
Forward-Looking Statements: Information in this news release contains statements
which reflect the Company's current expectations regarding its future operating
performance and achievements. Actual results may differ due to the many economic
uncertainties that affect the Company's business environment. Further
information about the potential factors which could affect the Company's
financial results are included in the Company's reports and filings with the
Securities and Exchange Commission. The Company is not obligated to update or
revise the aforementioned statements for those new developments.
Contact: Leonard F. Leganza or John L. Sullivan III
(203) 729-2255
Statement of Consolidated Income (unaudited)
THE EASTERN COMPANY (AMEX - EML)
THREE Months Ended NINE Months Ended
13 wks 13 wks 39 wks 39 wks
Sept. 30, 2006 Oct. 1, 2005 Sept. 30, 2006 Oct. 1, 2005
-------------- ------------ -------------- ------------
Net Sales $ 31,206,388 $ 27,204,815 $ 88,735,730 $ 80,893,693
Net Income After Tax $ 1,667,167 $ 1,256,367 $ 4,023,489 $ 3,070,338
Net Income Per Share:
Basic $ 0.30 $ 0.23 $ 0.74 $ 0.56
Diluted $ 0.28 $ 0.21 $ 0.69 $ 0.53
Weighted average
shares outstandings:
Basic 5,477,302 5,455,973 5,472,682 5,454,197
Diluted 5,855,170 5,878,151 5,822,208 5,835,614