10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 29, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ________________ to _______________

Commission File Number 001-35383

THE EASTERN COMPANY

(Exact name of registrant as specified in its charter)

Connecticut	06-0330020
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

112 Bridge Street, Naugatuck, Connecticut	06770
(Address of principal executive offices)	(Zip Code)

(203)-729-2255

Registrant's telephone number

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	EML	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           Yes [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).             Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [X]
Non-accelerated filer [  ]	Smaller reporting company [X]
	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes [  ]  No [X]

As of June 29, 2019, approximately 6,236,000 shares of the registrant's common stock, no par value per share, were issued and outstanding.

The Eastern Company

Form 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 29, 2019

TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements	3.
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23.
Item 4.	Controls and Procedures	23.
PART II
Item 1.	Legal Proceedings	24.
Item 1A.	Risk Factors	24.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24.
Item 3.	Defaults Upon Senior Securities	24.
Item 4.	Mine Safety Disclosures	24.
Item 5.	Other Information	25.
Item 6	Exhibits	25.
	Signatures	26.

2

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Net sales	$	122,323,077		$	120,305,849		$	61,439,929		$	60,860,852
Cost of products sold		(93,504,144	)		(90,531,018	)		(46,430,039	)		(45,807,496	)
Gross margin		28,818,933			29,744,831			15,009,890			15,053,356
Product development expenses		(4,414,579	)		(3,084,258	)		(2,174,803	)		(1,581,719	)
Selling and administrative expenses		(16,474,766	)		(18,130,180	)		(8,076,501	)		(9,083,131	)
Restructuring costs		(2,635,987	)		—			(1,799,293	)		—
Operating profit		5,293,601			8,560,393			2,959,293			4,388,506
Interest expense		(554,158	)		(608,390	)		(261,618	)		(312,060	)
Other income		600,748			444,500			586,823			225,769
Income before income taxes		5,340,191			8,396,503			3,284,498			4,302,215
Income taxes		1,239,458			2,037,831			754,725			1,043,738
Net income	$	4,100,733		$	6,358,672		$	2,529,773		$	3,258,477
Earnings per Share:
Basic	$	.66		$	1.02		$	.41		$	.52
Diluted	$	.65		$	1.01		$	.40		$	.52
Cash dividends per share:	$	.22		$	.22		$	.11		$	.11

See accompanying notes.

3

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Net income	$	4,100,733		$	6,358,672		$	2,529,773		$	3,258,477
Other comprehensive income/(loss):
Change in foreign currency translation		191,094			(274,318	)		(221,530	)		(883,246	)
Change in marketable securities, net of tax benefit/(cost) of: 2019 – $(463) and $3,008 respectively		(1,420	)		—			9,219			—
Change in fair value of interest rate swap, net of tax benefit/(cost) of: 2019 – $69,817 and $45,197 respectively 2018 – $59,166 and $19,202 respectively		(221,086	)		226,645			(143,125	)		60,806
Change in pension and postretirement benefit costs, net of taxes of: 2019 – $141,876 and $70,938 respectively 2018 – $131,685 and $65,843 respectively		445,362			445,449			222,681			222,724
Total other comprehensive income/(loss)		413,950			397,776			(132,755	)		(599,716	)
Comprehensive income	$	4,514,683		$	6,756,448		$	2,397,018		$	2,658,761

See accompanying notes.

4

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

ASSETS	June 29, 2019			December 29, 2018
Current Assets
Cash and cash equivalents	$	13,667,902		$	13,925,765
Marketable securities		23,136			—
Accounts receivable, less allowances: $476,000 - 2019; $680,000 -2018		32,103,399			30,285,316
Inventories		49,271,813			52,773,209
Prepaid expenses and other assets		3,162,089			3,071,888
Refundable taxes		1,082,011			1,133,847
Total Current Assets		99,310,350			101,190,025
Property, Plant and Equipment		72,671,980			73,768,615
Accumulated depreciation		(45,677,158	)		(43,915,238	)
		26,994,822			29,853,377
Goodwill		34,880,617			34,840,376
Trademarks		3,686,063			3,686,063
Patents and other intangibles net of accumulated amortization		9,118,632			10,281,720
Right of Use Assets		10,026,397			—
Deferred income taxes		1,396,006			1,396,006
		59,107,715			50,204,165
TOTAL ASSETS	$	185,412,887		$	181,247,567

See accompanying notes.

5

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

LIABILITIES AND SHAREHOLDERS' EQUITY	June 29, 2019			December 29, 2018
Current Liabilities
Accounts payable	$	18,504,766		$	18,497,626
Accrued compensation		2,853,541			4,159,808
Other accrued expenses		3,883,036			3,095,666
Contingent liability		—			2,070,000
Current portion of long-term debt		3,100,000			2,325,000
Total Current Liabilities		28,341,343			30,148,100
Deferred income taxes		1,516,012			1,516,012
Other long-term liabilities		353,856			353,856
Lease Liability		10,026,397			—
Long-term debt, less current portion		19,300,000			26,350,000
Accrued postretirement benefits		632,500			648,635
Accrued pension cost		24,939,439			25,362,325
Shareholders' Equity
Preferred Stock, no par value:
Authorized and unissued: 2,000,000 shares
Common Stock, no par value, Authorized: 50,000,000 shares		30,288,617			29,994,890
Issued: 8,970,509 shares in 2019 and 8,965,987 shares in 2018
Treasury Stock: 2,734,729 shares in 2019 and 2,634,729 shares in 2018		(20,169,098	)		(20,169,098	)
Retained earnings		112,398,386			109,671,362
Accumulated other comprehensive income (loss):
Foreign currency translation		(1,915,235	)		(2,106,329	)
Unrealized loss on marketable securities, net of tax		(1,420	)		—
Unrealized gain (loss) on interest rate swap, net of tax		(54,642	)		166,444
Unrecognized net pension and postretirement benefit costs, net of tax		(20,243,268	)		(20,688,630	)
Accumulated other comprehensive loss		(22,214,565	)		(22,628,515	)
Total Shareholders' Equity		100,303,340			96,868,639
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	185,412,887		$	181,247,567

See accompanying notes.

6

THE EASTERN COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended
	June 29, 2019			June 30, 2018
Operating Activities
Net income	$	4,100,733		$	6,358,672
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,391,314			2,314,985
Unrecognized pension and postretirement benefits		448,214			116,578
Loss on restructuring of equipment and other assets		2,208,740			50,348
Provision for doubtful accounts		43,420			201,552
Stock compensation expense		293,726			214,821
Changes in operating assets and liabilities:
Accounts receivable		(1,794,182	)		(3,717,778	)
Inventories		3,618,303			(2,658,358	)
Prepaid expenses and other		(21,533	)		(339,385	)
Other assets		709,357			(58,426	)
Accounts payable		(89,081	)		3,712,586
Accrued compensation		(1,307,966	)		(1,527,545	)
Other accrued expenses		(1,893,440	)		946,368
Net cash provided by operating activities		8,707,605			5,614,417
Investing Activities
Marketable securities		(23,136	)		—
Business acquisition, net of cash acquired		—			(4,994,685	)
Capitalized software		—			(1,444,459	)
Purchases of property, plant and equipment		(1,261,942	)		(1,236,375	)
Net cash used in investing activities		(1,285,078	)		(7,675,519	)
Financing Activities
Proceeds from short term borrowings		—			7,000,000
Payments on revolving credit note		—			(6,000,000	)
Principal payments on long-term debt		(6,275,000	)		(775,000	)
Dividends paid		(1,373,700	)		(1,378,456	)
Net cash used in financing activities		(7,648,700	)		(1,153,456	)
Effect of exchange rate changes on cash		(31,690	)		(80,996	)
Net change in cash and cash equivalents		(257,863	)		(3,295,553	)
Cash and cash equivalents at beginning of period		13,925,765			22,275,477
Cash and cash equivalents at end of period	$	13,667,902		$	18,979,924

Non-cash investing and financing activities

Right of use asset	10,026,397
Lease liability	(10,026,397	)

See accompanying notes.

7

THE EASTERN COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 29, 2019

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 Regulation S-X 10-01 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 Company's consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 29, 2018, as filed with the Securities and Exchange Commission (SEC) on March 14, 2019 the ("2018 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. All intercompany accounts and transactions are eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The condensed consolidated balance sheet at December 29, 2018 has been derived from the audited consolidated balance sheet at that date.

Commencing with the financial statements contained in the Quarterly Report on Form 10-Q for the period ended March 30, 2019, in accordance with ASC 842 – Leases, right of use assets and lease liabilities have been separately identified on the balance sheet for the current period.

Note B – Earning Per Share

The denominators used to calculate earnings per share are as follow:

	Six Months Ended				Three Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Basic:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Diluted:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Dilutive stock options		29,258		27,002		29,258		27,002
Denominator for diluted earnings per share		6,262,002		6,291,437		6,263,031		6,292,317

Note C – Inventories

Inventories consist of the following components:

	June 29, 2019		December 29, 2018
Raw material and component parts	$	16,657,441	$	17,841,166
Work in process		8,365,711		8,960,202
Finished goods		24,248,661		25,971,841
Total inventories	$	49,271,813	$	52,773,209

8

Note D – Right-of-Use Assets

In February 2016, the 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 M – Recent Accounting Pronouncements.

In calculating the effect of Topic 842 – Leases, 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 22 operating leases with a ROU asset and lease liability totaling $10,026,397 as of June 29, 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 – 120 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.

Note E – Debt

On April 3, 2017, the Company signed an amended and restated loan agreement (the "Restated Loan Agreement") with People's United Bank that included a $31 million term portion and a $10 million revolving credit portion.  Proceeds of the loan were used to repay the remaining outstanding term loan of the Company (approximately $1,429,000) and to acquire 100% of the common stock of Velvac Holdings, Inc.  ("Velvac").  The term loan and revolving credit facility are secured by all of the Company's assets as well as mortgages on the properties owned by the Company.  The term portion of the loan requires quarterly principal payments of $387,500 for two years beginning July 3, 2017.  The repayment amount then increases to $775,000 per quarter beginning July 1, 2019.  The term loan is a five-year loan with any remaining outstanding balance due on March 1, 2022.  The revolving credit portion has a quarterly commitment fee ranging from 0.2% to 0.375% based on operating results.  Under the terms of the Restated Loan Agreement, the revolving credit portion has a maturity date of April 1, 2022.  On April 3, 2017, the Company borrowed approximately $6.6 million on the revolving credit facility. The Company subsequently paid off $1.6 million on the revolving credit facility leaving a balance on the credit facility of $5 million as of December 30, 2017.  During 2018, the Company paid $5 million on the revolving credit facility, resulting in a zero-dollar balance as of June 29, 2019.

The interest rates on the term and revolving credit portion of the Restated Loan Agreement vary.  The interest rates may vary based on the LIBOR rate plus a margin spread of 1.75% to 2.50%.  The margin spread is based on operating results calculated on a rolling-four-quarter basis.  The Company may also borrow funds at the lender's prime rate.  The Company made additional principal payments during the quarter ended June 29, 2019, of $5.5 million.    On June 29, 2019, the interest rate for one half ($8.4 million) of the term portion was 4.09%, using a 1 month LIBOR rate and 3.94% on the remaining balance ($13.9 million) of the term loan based on a 3 month LIBOR rate.

On April 4, 2017, the Company entered into an interest rate swap contract with the lender with an original notional amount of $15,500,000, which is equal to 50% of the outstanding balance of the term loan on that date.  The notional amount will decrease on a quarterly basis beginning July 3, 2017, following the principal repayment schedule of the term loan.  The Company has a fixed interest rate of 1.92% on the swap contract and will pay the difference between the fixed-rate and the LIBOR rate when the LIBOR rate is below 1.92% and will receive interest when the LIBOR rate exceeds 1.92%.

The interest rates on the Loan Agreement, Restated Loan 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

9

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.

The Company's loan covenants under the Restated Loan Agreement require the Company to maintain a consolidated minimum debt service coverage ratio of at least 1.1 to 1 for periods through December 31, 2018, and 1.2 to 1 thereafter, which is to be tested quarterly on a twelve-month trailing basis.  In addition, the Company is required to show a maximum total leverage ratio of 4.0x for the calendar year ended December 31, 2018, 3.5x for the calendar year ended December 31, 2019, 3.25x for the calendar year ended December 31, 2020, and 3.0x thereafter.  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 through and including June 29, 2019, the last day of the Company's second fiscal quarter.

Note F - Stock Options and awards

Stock Options

As of June 29, 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 (the "Compensation Committee").  Under the 2010 Plan, non-qualified stock options granted to participants have exercise prices determined by the Compensation Committee. During the second quarters of 2019 and 2018, no stock option or restricted stock grant was issued subject to meeting performance measurements.  For the first half of 2019, the Company used several assumptions, which included an expected term of 3.5 years, volatility deviation of 28.88% and a risk-free rate of 2.48%.  For the first half 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 the second quarter of 2019, the Company did not issue any SARs.

Stock-based compensation expense in connection with SARs previously granted to employees in the second quarter of 2019 and 2018 was approximately $93,000 and $74,000, respectively and for the first six months of fiscal years 2019 and 2018 was approximately $173,000 and $130,000, respectively.

As of June 29, 2019, there were 238,500 shares of Company 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:

	Six Months Ended June 29, 2019					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		36,000			26.30		51,000			24.90
Exercised		(1,667	)		19.10		--			--
Forfeited		--			--		(3,333	)		19.10
Outstanding at end of period		223,500			22.15		189,167			21.46

10

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	19.10-26.30		223,500		3.3	$	22.15		38,003		2.7		19.10

The following tables set forth the outstanding stock grants for the period specified:

	Six Months Ended June 29, 2019				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 June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	0.00		25,000		2.8		—		—		—		—

As of June 29, 2019, outstanding SARs and options had an intrinsic value of $1,990,010.

Note G – Shareholder's Equity 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.  During the second quarter and first six months of 2019, the Company did not repurchase any shares of its common stock in connection with the share repurchase program.  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").

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 March 30, 2019		40,000	$	26.58		40,000		160,000
March 31, 2019 – June 29, 2019		—		—		—		—
Balance as of June 29, 2019		40,000	$	26.58		40,000		160,000

11

Note H – 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 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, determining the transaction price, allocating the contract transaction price to the performance obligations (when applicable), and recognizing 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.

The Company elected the Modified Retrospective Method (the "Cumulative Effect Method") to comply with ASC Topic 606.  ASC Topic 606 was adopted on December 31, 2017, which was the first day of the Company's 2018 fiscal year.  The financial effect of ASC Topic 606 on the June 29, 2019 financial statements was not significant.

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 L for revenues reported by segment.  The Company has not experienced any impairment losses, has no future performance obligations and does not capitalize costs to obtain or fulfill contracts.

Note I – Restructuring Costs

The Company has consolidated the Composites Group by relocating the Composite Panels Technologies Division based in Salisbury, North Carolina to the Canadian Commercial Vehicle Division located in Kelowna, British Columbia.    Non-recurring costs incurred in the second quarter and first six months of 2019 were $0.2 million and $1.0 million, respectively, which include the write off of inventory $0.5 million, fixed assets $0.3 million, moving costs $0.1 million, severance $0.1 million and lease termination costs.  The facility was closed in April of 2019.

During the second quarter of 2019, the Company discontinued the Velvac Road IQ development operations based in Bellingham, Washington.  Non-recurring costs related to the discontinuation of this operation in the second quarter and the first six months of 2019 were $3.7 million in total, which included the write-off of fixed assets $0.2 million, inventory $0.6 million, intangible assets $2.4 million, severance $0.2 million, lease termination costs $0.3 million, and other non-recurring operating expenses.  These costs were partially offset by the reversal of a $2.1 million contingent liability the Company established with the acquisition of Velvac in April of 2017 which was no longer applicable at June 29, 2019, resulting in a net charge to earnings of $1.6 million.

Note J – Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, and 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 2014 and is no longer subject to non-U.S. income tax examinations by foreign tax authorities for years prior to 2012.

The Tax Cuts and Jobs Act (the "2017 Tax Act") was enacted into law on December 22, 2017. The 2017 Tax Act significantly changed U.S. corporate income tax laws by, among other provisions, reducing the maximum U.S. corporate income tax rate from 35% to 21%, effective in 2018, and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. Pursuant to SAB118, the Company is allowed a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. The Company finalized its accounting for the 2017 Tax Act during the fourth quarter of 2018, resulting in a deferred income tax benefit of $507,847 related to the re-measurement of deferred tax assets and liabilities to the new lower statutory rate of 21%.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state and foreign tax years by the expiration of the statute of limitations and the

12

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 June 29, 2019.  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.

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, Income Statement—Reporting Comprehensive Income  (Topic 220). ASU 2018-02 allows a company to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for periods beginning after December 15, 2018.  Upon adoption of ASU 2018-02, the Company did not elect to reclassify the tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

Note K – 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.

Significant disclosures relating to these benefit plans for the second quarter of fiscal years 2019 and 2018 are as follows:

	Pension Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	527,706			$	659,922			$	263,854			$	329,901
Interest cost			1,758,160				1,553,583				879,080				776,791
Expected return on plan assets			(2,380,661	)			(2,609,758	)			(1,190,331	)			(1,304,878	)
Amortization of prior service cost			49,690				65,381				24,845				32,690
Amortization of the net loss			581,099				555,056				290,550				277,528
Net periodic benefit cost		$	535,994			$	224,184			$	267,998			$	112,032
	Postretirement Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	16,432			$	18,512			$	8,216			$	9,256
Interest cost			40,692				38,581				20,346				19,291
Expected return on plan assets			(28,963	)			(27,825	)			(14,482	)			(13,912	)
Amortization of prior service cost			(2,536	)			(2,536	)			(1,268	)			(1,268	)
Amortization of the net loss			(41,014	)			(32,796	)			(20,507	)			(16,398	)
Net periodic benefit cost		$	(15,389	)		$	(6,064	)		$	(7,695	)		$	(3,031	)

The Company's funding policy for its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations.  In the fiscal year 2019, the Company expects to contribute $600,000 into its pension plans and $105,000 into its postretirement plans. As of June 29, 2019, the Company has not made contributions to its pension plans, has contributed $33,000 to its postretirement plan and will 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.

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The Company made contributions to the plan as follows:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Regular matching contribution		$	293,063		$	306,121		$	136,796		$	140,106
Transitional credit contribution			178,376			205,614			74,852			81,506
Non-discretionary contribution			605,129			540,831			18,088			16,458
Total contributions for the period		$	1,076,568		$	1,052,566		$	229,736		$	238,070

The non-discretionary contribution of $565,748 made in the six months ended June 29, 2019, was accrued for and expensed in the prior fiscal year.

Note L – Segment Information

Financial information by segment is as follows:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Revenues:
Sales to unaffiliated customers:
Industrial Hardware	$	75,894,296		$	72,410,627		$	37,490,953		$	35,853,583
Security Products		31,185,702			33,007,356			16,502,698			17,888,028
Metal Products		15,243,079			14,887,866			7,446,278			7,119,241
	$	122,323,077		$	120,305,849		$	61,439,929		$	60,860,852
Income before income taxes:
Industrial Hardware	$	2,015,552		$	5,284,529		$	747,415		$	2,518,086
Security Products		2,875,435			2,649,180			1,902,547			1,664,041
Metal Products		402,614			626,684			309,331			206,379
Operating Profit		5,293,601			8,560,393			2,959,293			4,388,506
Interest expense		(554,158	)		(608,390	)		(261,618	)		(312,060	)
Other income		600,748			444,500			586,823			225,769
	$	5,340,191		$	8,396,503		$	3,284,498		$	4,302,215

Note M – 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

14

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 D – Leases.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify and address implementation issues around the new standards related to credit losses, hedging and recognizing and measuring financial instruments. Amendments in this ASU related to credit losses and hedging have the same effective dates as the respective standards unless an entity has already adopted the standards, in which case the amendments are effective for annual and interim reporting periods in 2020.  Amendments in this ASU related to recognizing and measuring financial instruments are effective for annual and interim reporting periods in 2020 for public entities and nonpublic entities. The Company has not yet determined the potential impact of this ASU on its consolidated financial statements and related disclosures.

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 any other new accounting pronouncements have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company.

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 June 29, 2019, and December 29, 2018, there were no significant concentrations of credit risk. No single customer represented more than 10% of the Company's net accounts receivable as of June 29, 2019, or on December 29, 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 1.50% to 2.50%. The Company has an interest rate swap with a notional amount of $13,950,000 on June 29, 2019, to convert a portion of its 2017 Term Loan 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 Item 7 of the Company's 2018 Form 10-K.

Currency Exchange Rate Risk

The Company's currency exposure is concentrated in the 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.

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ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to highlight significant changes in the Company's financial position and results of operations for the quarter ended June 29, 2019. The interim financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended December 29, 2018 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Company's 2018 Form 10-K, which was filed with the SEC on March 14, 2019 (the "2018 Form 10-K").

Safe Harbor for Forward-Looking Statements

Certain statements set forth in this discussion and analysis of financial condition and results of operations are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the rules, regulation and releases of the Securities and Exchange Commission (the "SEC").  Any statement that is not historical fact, including statements containing such words as "may," "will," "could," "expects," "intends," "believes," "plans," "anticipates," "estimated," or similar expressions should be considered forward-looking statements. Readers should not place undue influence on these statements which, reflect management's current expectations regarding future events and operating performance and are made only as of the date of this Report. These forward-looking statements are subject to risks and uncertainties, and actual future results and trends might differ materially from those discussed in, or implied by, the forward-looking statements.

The risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements depend on a variety of factors, including changing customer preferences, lack of success of new products, loss of customers, competition, increased raw material prices, tariffs, including the anticipated tariff on Chinese products in 2019 as proposed by the U.S. Trade Representative, problems associated with foreign sourcing of parts and products, changes within the Company's industry segments and in the overall economy, litigation, legislation and the impact of an acquisition and related integration. In addition, terrorist threats and the possible responses by the U.S. and foreign governments, the effects on consumer demand, the financial markets, the travel industry, the trucking industry and other conditions increase the uncertainty inherent in forward-looking statements.

There are important, additional factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the factors described in the 2018 Form 10-K.  Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, future revenue and margin trends cannot be reliably predicted and the Company may alter its business strategies to address changing conditions.

The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise.

In addition, the Company makes estimates and assumptions that may materially affect reported amounts and disclosures. These relate to valuation allowances for accounts receivable and excess and obsolete inventories, accruals for pensions and other postretirement benefits (including forecasted future cost increases and returns on plan assets), provisions for depreciation (estimating useful lives), uncertain tax positions, and, on occasion, accruals for contingent losses.

Overview

Net sales in the second quarter of 2019 increased 1% to $61.4 million as compared to $60.9 million in the second quarter of 2018.  Net sales increased in the Industrial Hardware Segment by 5% in the second quarter of 2019 as compared to net sales in the second quarter of 2018 as a result of strong sales growth in Class 8 trucks, distribution and specialty vehicle markets.  Net sales decreased in the Security Products Segment by 8% in the second quarter of 2019 as compared to net sales in the second quarter of 2018 as a result of lower demand for commercial laundry products and the termination of a supply contract with a customer to manufacture mechatronic padlock systems for cellphone tower security access applications.  Net sales increased in the Metal Products Segment by 4% in the second quarter of 2019 as compared to net sales in the second quarter of 2018 as a result of a 9% increase in net sales to industrial casting customers, more than

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offsetting a decrease of 7% in net sales to mining product customers, as compared to sales to these customers in the second quarter of 2018.

Total sales volume in the second quarter of 2019 decreased by 5%, while new products contributed 5% as compared to the second quarter of 2018. New products included a hood mount truck mirror, a molded toolbox latching system for pickup trucks, and various industrial castings for the agricultural market.

Net sales in the first six months of 2019 increased $2.0 million or 2% compared to net sales in the first six months of 2018.  Sales volume of existing products decreased by 3% while new products increased net sales by 5% in the first six months of 2019 as compared to the first six months of 2018.  Net sales increased in the first six months of 2019 by 5% in the Industrial Hardware segment, and 2% in the Metal Products segment, and decreased by 5% in the Security Products segment, as compared to the corresponding period in 2018.

Cost of products sold in the second quarter of 2019 increased by $0.6 million or 1% as compared to the second quarter of 2018.  The increase in cost of products sold for the second quarter of 2019 reflects the mix of products sold, increased costs due to additional sales volume, and costs incurred for the launch of the Class 8 truck mirror program, as not all required components have been approved by alternate suppliers who offer more favorable pricing, and partially offset by a decrease in raw material prices.  The Company experienced $0.3 million in tariff-related costs on China-sourced products in the second quarter of 2019, which were not incurred in the second quarter of 2018.  Raw material pricing declined by 20% for hot rolled steel and by 13% for cold-rolled steel in the second quarter of 2019 as compared to the second quarter of 2018.

Cost of products sold in the first six months of 2019 increased $3.0 million or 3% as compared to the first six months of 2018.  Material costs increased $2.2 million due to higher sales volume and higher material costs incurred in producing the new Class 8 truck mirror program that was awarded in 2018.  The Company has been actively re-sourcing higher component cost items to more cost-competitive suppliers and working with its customer to ensure that all components are approved through the Production Part Approval Process ("PPAP") as quickly as possible. This is expected to be completed by the end of October of 2019.  At such time, costs should begin to normalize.  Further impacting the first six months of 2019 were increased freight costs, which were up $0.3 million or 10% over the first six months of 2018, due to a slowdown at the Port of Long Beach, California, in addition to forecasting errors, which resulted in expedited shipping costs at the Company's expense.  Also, lower production levels resulted in operating costs of $0.6 million not being fully absorbed during the first half of 2019 as compared to the first half of 2018.  The Company experienced tariff costs of $0.5 million on China-sourced products in the first six months of 2019 that were not incurred in the first six months of 2018.  Raw material pricing declined in the first half of 2019 as compared to the first half of 2018 for the following materials: hot rolled steel (28%), cold-rolled steel (22%), zinc (17%), copper (12%) and scrap iron (23%).

Gross margin as a percent of net sales in the second quarter of 2019 was 24% as compared to 25% in the second quarter of 2018.  Gross margin as a percent of net sales in the first six months of 2019 was 24% as compared to 25% in the first six months of 2018.

Product development expenses increased $0.6 million or 38% in the second quarter of 2019 as compared to the second quarter of 2018.  The majority of the increase relates to the ongoing development of the new truck mirror program awarded in 2018.  Product development expenses in the first six months of 2019 increased $1.3 million or 43% compared to the first six months of 2018.

Selling and administration expenses decreased $1.0 million or 11% in the second quarter of 2019 compared to the second quarter of 2018, primarily as a result of a decline in payroll and payroll-related expenses. Selling and administration expenses in the first six months of 2019 decreased $1.7 million or 9% as compared to the first six months of 2018.

During the first quarter of 2019, the Company consolidated the Composites Group by relocating the Composite Panels Technologies Division based in Salisbury, North Carolina to the Canadian Commercial Vehicle Division located in Kelowna, British Columbia.  Non-recurring costs incurred in the second quarter and first six months of 2019 were $0.2 million and $1.0 million, respectively. These costs included the sale of inventory, fixed assets, moving costs, severance and lease termination costs.  The facility was closed in April 2019.

During the second quarter of 2019, the Company discontinued the Velvac Road IQ development operations based in Bellingham, Washington.  Non-recurring costs related to the discontinuation in the second quarter and the first six months of 2019 were $3.7 million in total, which included the write-off of fixed assets, inventory, intangible assets, severance, lease termination costs, and other non-recurring operating expenses.  These costs were partially offset by the

17

reversal of a $2.1 million contingent liability the Company established with the acquisition of Velvac in April of 2017, which is no longer applicable as of June 29, 2019, resulting in a net charge to earnings of $1.6 million.

Interest expense decreased $0.1 million or 16% in the second quarter of 2019 as compared to the second quarter of 2018 and decreased $0.1 million or 9% in the first six months of 2019 as compared to the first six months of 2018.

Other income increased $0.4 million or 160% in the second quarter of 2019 compared to the second quarter of 2018 primarily due to the sale of land at the Company headquarters location, which resulted in a gain of $0.6 million.

Net Income for the second quarter of 2019 decreased to $2.5 million, or $0.40 per diluted share, from $3.3 million, or $0.52 per diluted share, for the second quarter of 2018.  Net Income for the first six months of 2019 decreased to $4.1 million, or $0.65 per diluted share, from $6.4 million, or $1.01 per diluted share, for the first six months of 2018. Net income in the second quarter of 2019 and for the six months ended June 29, 2019, the Company incurred significant one-time costs of $1.4 million and $2.0 million in restructuring costs, respectively, net of tax.

A more detailed analysis of the Company's results of operations and financial condition is provided below.

Results of Operations

The following table displays selected line items from the condensed consolidated statements of operations as a percentage of net sales, by segment, for the periods indicated:

	Three Months Ended June 29, 2019
	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		76.3	%		68.3	%		88.0	%		75.6	%
Gross margin		23.7	%		31.7	%		12.0	%		24.4	%
Product development expense		4.2	%		3.7	%		—			3.5	%
Selling and administrative expense		12.8	%		16.5	%		7.9	%		13.1	%
Restructuring cost		4.7	%		—			—			2.9	%
Operating profit		2.0	%		11.5	%		4.1	%		4.9	%
	Three Months Ended June 30, 2018
	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		75.3	%		70.3	%		87.5	%		75.3	%
Gross margin		24.7	%		29.7	%		12.5	%		24.7	%
Product development expense		3.1	%		2.6	%		—			2.6	%
Selling and administrative expense		14.6	%		17.8	%		9.6	%		14.9	%
Operating profit		7.0	%		9.3	%		2.9	%		7.2	%

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The following table displays the change in net sales and operating profit by segment for the second quarter of 2019 compared to the second quarter of 2018 (dollars in thousands):

	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales	$	1,637		$	(1,385	)	$	327		$	579
Volume		-2.5	%		-8.7	%		-6.5	%		-4.8	%
Prices		0.2	%		0.6	%		2.1	%		0.5	%
New products		6.9	%		0.4	%		9.0	%		5.3	%
		4.6	%		-7.7	%		4.6	%		1.0	%
Operating profit	$	(1,771	)	$	239		$	103		$	(1,429	)
		-5.0	%		2.2	%		1.2	%		-2.4	%

The following table displays selected line items from the condensed consolidated statements of operations as a percentage of net sales, by segment, for the periods indicated:

	Six Months Ended June 29, 2019
	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		76.6	%		69.6	%		89.7	%		76.4	%
Gross margin		23.4	%		30.4	%		10.3	%		23.6	%
Product development expense		4.2	%		4.0	%		—			3.6	%
Selling and administrative expense		13.1	%		17.2	%		7.7	%		13.5	%
Restructuring costs		3.5	%								2.2	%
Operating profit		2.6	%		9.2	%		2.6	%		4.3	%
	Six Months Ended June 30, 2018
	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of products sold		75.1	%		70.6	%		86.5	%		75.2	%
Gross margin		24.9	%		29.4	%		13.5	%		24.8	%
Product development expense		2.9	%		2.9	%		—			2.6	%
Selling and administrative expense		14.7	%		18.5	%		9.3	%		15.1	%
Operating profit		7.3	%		8.0	%		4.2	%		7.1	%

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The following table displays the change in net sales and operating profit by segment for the first six months of 2019 compared to the first six months of 2018 (dollars in thousands):

	Industrial			Security			Metal
	Hardware			Products			Products			Total
Net sales	$	3,484		$	(1,822	)	$	355		$	2,017
Volume		-0.6	%		-7.2	%		-8.0	%		-3.3	%
Prices		-0.1	%		0.8	%		2.1	%		0.4	%
New products		5.5	%		0.9	%		8.3	%		4.6	%
		4.8	%		-5.5	%		2.4	%		1.7	%
Operating profit	$	(3,269	)	$	226		$	(224	)	$	(3,267	)
		-4.7	%		1.2	%		-1.6	%		-2.8	%

Industrial Hardware Segment

Net sales in the Industrial Hardware Segment increased 5% in the second quarter and 5% in the first six months of 2019 as compared to the corresponding periods of 2018.  Net sales increased in the Class 8 truck, distribution and specialty vehicles markets. New products contributed 7% in the second quarter and 6% in the first six months of 2019 as compared to the corresponding periods of 2018.  New products included a Class 8 hood mount mirror, mini rotary with adapter, a vent assembly for Class 8 trucks, and a molded toolbox latching system for pickup trucks.

Cost of products sold increased by 6% in the second quarter and 7% in the first six months of 2019, as compared to the corresponding periods of 2018.  Material costs increased due to higher sales volume and higher material costs incurred in producing the new Class 8 truck mirror program awarded in 2018.  Many of the components utilized incurred at higher than normal costs.  Some of these components have yet to be resourced to more cost-competitive suppliers.  We believe that cost will nominalize once all components are tested and approved by the Company's customer, which we expect to occur by the end of October of 2019.  Further impacting the first six months of 2019 were increased freight costs, which were up $0.3 million, or 10%, over the first six months of 2018 due to a slowdown at the Port of Long Beach, California, in addition to forecasting errors that resulted in expedited shipping costs at the Company's expense.  The Company experienced tariff costs on China-sourced products of $0.3 million in the second quarter and $0.5 million in the first six months of 2019, which were not incurred in the comparable periods of 2018.

Gross margin as a percentage of net sales was 24% in the second quarter of 2019 as compared to 25% in the second quarter of 2018.  Gross margin as a percentage of net sales was 23% in the first six months of 2019 as compared to 25% in the first six months of 2018.

Product development expense as a percentage of net sales was 4% in the second quarter of 2019 and the first six months of 2019 as compared to 3% in the corresponding periods of 2018.  The increase in the 2019 periods reflects a continuation in the development of the Class 8 truck hood mount mirror program.

Restructuring costs incurred in the second quarter of 2019 related to the discontinuation of the Velvac Road IQ development operations based in Bellingham, Washington.  Non-recurring costs recorded in the second quarter and first six months of 2019 were $3.7 million in total, which included the write-off of fixed assets, inventory, intangible assets, severance. lease termination costs, and other non-recurring operating expenses.  These costs were partially offset by the reversal of a $2.1 million contingent liability the Company established with the acquisition of Velvac in April of 2017, resulting in a net write-off of $1.6 million in the second quarter of 2019.

Selling and administrative expenses decreased 11% in the second quarter of 2019 as compared to the second quarter of 2018, primarily as a result of a decline in payroll and payroll-related expenses.  Selling and administrative expensesdecreased 9% in the first six months of 2019 compared to the first six months of 2018.

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Security Products Segment

Net sales in the Security Products Segment decreased by 8% in the second quarter and 6% in the first six months of 2019 as compared to the corresponding periods of 2018.  This decrease in net sales reflects lower demand for the Company's commercial laundry products and the termination of a supply contract with a customer to manufacture mechatronic padlock systems for cellphone tower security access applications.  New product sales contributed 1% in the first six months of 2019 as compared to the first six months of 2018 and included sales of an electronic switch lock for the mass transit industry.

Cost of products sold decreased by 10% in the second quarter and 7% for the first six months of 2019 as compared to the corresponding periods of 2018, as a result of decreased sales volume and a reduction in the price of copper.  Copper is an important material in the products this segment produces.  The price of copper decreased by 12% in the first six months of 2019.

Gross margin as a percentage of net sales was 32% in the second quarter and 30% in the first six months of 2019, as compared to 30% in the corresponding periods of 2018.  The increase in gross margin in the second quarter of 2019 reflects the mix of products produced and a reduction in raw materials costs.

Product development expense as a percentage of net sales was 4% in the second quarter and first six months of 2019, as compared to 3% for the corresponding periods of 2018.  The increase reflects the continued development of a Blue tooth locking product and a blade key core.

Selling and administrative expenses decreased 15% in the second quarter and 12% in the first six months of 2019, as compared to the corresponding periods of 2018, primarily as a result of a decline in payroll and payroll-related expenses.

Metal Products Segment

Net sales in the Metal Products Segment increased 5% in the second quarter and 2% in the first six months of 2019 as compared to the corresponding periods of 2018.   Net sales to mining customers decreased by 4% while net sales to industrial casting customers increased by 15% in the first six months of 2019 as compared to the first six months of 2018.  Sales volume decreased by 7% while new product net sales and price increases contributed 11% during the second quarter of 2019 as compared to the second quarter of 2018.  New product net sales included various industrial castings serving the agriculture market.

Cost of products sold increased 5% in the second quarter and 6% in the first six months of 2019, as compared to the corresponding periods in 2018 primarily as a result of increased sales volume and under absorption of overhead costs due to lower production levels not sufficient to cover fixed operating expenses.

Gross margin as a percentage of net sales was 12% in the second quarter of 2019 as compared to 13% in the second quarter of 2018. Gross margin as a percentage of net sales was 10% in the first six months of 2019 as compared to 14% in the first six months of 2018.

Selling and administrative expenses decreased 14% in the second quarter of 2019 and 15% in the first six months of 2019 as compared to the corresponding periods of 2018, primarily as a result of a decrease in payroll and payroll-related expenses.

Liquidity and Sources of Capital

The Company generated approximately $8.7 million of cash from its operations during the first six months of 2019 compared to approximately $5.6 million during the same period in 2018.  The Company allocated $6.3 million of its cash towards its long-term debt, of which $5.5 million was an accelerated payment.  The Company also repatriated $0.7 million from its Canadian operations and $0.5 million from its Mexican operations in the first half of 2019.  The Company expects to repatriate $2.5 million from its Chinese operations in the third quarter of 2019.  Cash flow from

21

operations coupled with cash at the beginning of the 2019 fiscal year was sufficient to fund capital expenditures, debt service, and dividend payments.

Additions to property, plant and equipment were approximately $1.3 million for the first six months of 2019 and $1.2 million for the corresponding period of 2018.  As of June 29, 2019, there was approximately $0.2 million of outstanding commitments for capital expenditures.

The following table shows key financial ratios at the end of each specified period:

	Second Quarter 2019			Second Quarter 2018			Year End 2018
Current ratio		3.5			3.0			3.4
Average days' sales in accounts receivable		49			46			44
Inventory turnover		3.8			3.6			3.4
Total debt to shareholders' equity		22.3	%		38.3	%		29.6	%

The following table shows important liquidity measures as of the balance sheet date for each specified period (in millions):

	Second			Second			Year
	Quarter			Quarter			End
	2019			2018			2018
Cash and cash equivalents
- Held in the United States	$	4.9		$	4.1		$	5.6
- Held by a foreign subsidiary		8.8			14.9			8.3
		13.7			19.0			13.9
Working capital		71.0			68.6			71.0
Net cash provided by operating activities		8.7			5.6			12.9
Change in working capital impact on net cash     (used) in operating activities		(0.8	)		(3.5	)		(5.9	)
Net cash (used) in investing activities		(1.3	)		(7.7	)		(10.4	)
Net cash (used) in financing activities		(7.6	)		(1.2	)		(10.4	)

Inventories of $49.3 million represent a decrease of 7% on June 29, 2019, as compared to $52.7 million at the end of the fiscal year 2018.  Inventories decreased by 1% in the second quarter of 2019, as compared to $49.9 million at the end of the second fiscal quarter of 2018.  Accounts receivable, less allowances were $32.1 million on June 29, 2019, as compared to $30.3 million at the 2018 fiscal year-end and $30.5 million at the end of the second fiscal quarter of 2018.

Cash, cash flow from operating activities and funds available under the revolving credit portion of the Restated Loan Agreement are expected to be sufficient to cover future foreseeable working capital requirements.

Subsequent to date of this report and prior to filing this report, the Company paid an additional $2.5 million on its long-term debt.

On July 27, 2017, the Financial Conduct Authority (FCA), a regulator of financial services firms in the United Kingdom, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. The FCA and submitting LIBOR banks have indicated they will support the LIBOR indices through 2021 to allow for an orderly transition to an alternative reference rate. In the United States, efforts to identify a set of alternative U.S. dollar reference interest rates include proposals by the Alternative Reference Rates Committee of the Federal Reserve Board. Other financial services regulators and industry groups are evaluating the possible phase-out of LIBOR and the development of alternate reference rate indices or reference rates. Some of our assets and liabilities are indexed to LIBOR. We are evaluating the potential impact of the possible replacement of the LIBOR benchmark interest rate, but are not able to predict whether LIBOR will cease to be available after 2021, whether the alternative rates the Federal Reserve Board proposes to publish will become market benchmarks in place of LIBOR, or what the impact of such a transition will have

22

on our business, financial condition, or results of operations. 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 any LIBOR-based loans, investment securities and borrowings of the Company and the Company's business, financial condition and results of operations."

Off-Balance Sheet Arrangements

As of the end of the fiscal quarter ended June 29, 2019, the Company does not have any material transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons, as described by Item 303(a)(4) of Regulation S-K, that have or are reasonably likely to have a material current or future impact on the Company's financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a result of the Company's status as a smaller reporting company pursuant to Rule 12b-2 of the Exchange Act, the Company is no longer required to provide the information under this Item 3, of Form 10-Q pursuant to Item 305 of Regulation S-K.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures:

As of the end of the quarter ended June 29, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer (the "CEO") and Chief Financial Officer (the "CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 240.13a-15.  As defined in Exchange Act Rules 240.13a-15(e) and 240.15d-15(e), "the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure."

The Company believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  Based upon their evaluation, the CEO and CFO have concluded that these controls and procedures are effective at the "reasonable assurance" level as of June 29, 2019.

Changes in Internal Control Over Financial Reporting:

During the period covered by this Quarterly Report on Form 10-Q, there have been no changes in the Company's internal control over financial reporting that have materially affected or are reasonably likely to materially affect, the Company's internal control over financial reporting.

23

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company is a party to various legal proceedings from time to time-related to its normal business operations.  As of the end of the quarter ended June 29, 2019, 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 third quarter of 2018, 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 third quarter of 2019.  Construction of the closure remedies, including improved drainage system, regrading, and installation of a low permeability cap, is anticipated in October of 2019.  In the Winter 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.

ITEM 1A – RISK FACTORS

The Company's business is subject to a number of risks, some of which are beyond its control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the Company's shareholders should carefully consider the factors discussed in Item 1A.  "Risk Factors" of the Company's 2018 Form 10-K, as filed with the SEC on March 14, 2019.  These risk factors could have a material adverse effect on the Company's business, results of operations, financial condition and/or liquidity and could cause its operating results to vary significantly from period to period. As of June 29, 2019, there have been no material changes to the risk factors disclosed in the Company's 2018 Form 10-K. The Company may also disclose changes to such risk factors or disclose additional risk factors from time to time in its future filings with the SEC.  Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its business, financial condition, or operating results.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

24

ITEM 5 – OTHER INFORMATION

None

ITEM 6 – EXHIBITS

31) Certifications required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32) Certifications pursuant to Rule 13a-14(b) and 18 USC 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101) The following materials from Eastern Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2019, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 29, 2019, and June 30, 2018; (ii) Condensed Consolidated Statement Balance Sheet at June 29, 2019 and June 30, 2018; (iii) Condensed Consolidated Statement of Cash Flows for the six months ended June 29, 2019 and June 30, 2018; and (iv) Notes to the (Unaudited) Condensed Consolidated Financial Statements**.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE EASTERN COMPANY
	(Registrant)
DATE:  August 8, 2019	/s/August M. Vlak
	August M. Vlak President and Chief Executive Officer
DATE:  August 8, 2019	/s/John L. Sullivan III
	John L. Sullivan III Vice President and Chief Financial Officer

26

EX-31

EXHIBIT 31

CERTIFICATIONS

I, August M. Vlak, certify that:

1.    I have reviewed this report on Form 10-Q of The Eastern Company;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 8, 2019

/s/August M. Vlak

August M. Vlak

CEO

EXHIBIT 31

CERTIFICATIONS

I, John L. Sullivan III, certify that:

1.    I have reviewed this report on Form 10-Q of The Eastern Company;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: August 8, 2019

/s/John L. Sullivan III

John L. Sullivan III

CFO

EX-32

EXHIBIT 32

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

Pursuant to 18 United States Code Section 1350,

as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, August M. Vlak, the Chief Executive Officer of The Eastern Company (the "Company") and John L. Sullivan III, the Chief Financial Officer of the Company, hereby certify that, to the best of their knowledge:

1) The Company's Quarterly Report on Form 10-Q for the Period ended June 29, 2019, and to which this certification is attached as Exhibit 32 (the "Periodic Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2) The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In Witness Whereof, the undersigned have set their hands hereto as of the 8^thday of August, 2019.

By: /s/August M. Vlak

August M. Vlak

CEO

By: /s/John L. Sullivan III

John L. Sullivan III

CFO

A signed original of this written statement required by Section 906 has been provided to The Eastern Company and will be retained by The Eastern Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification "accompanies" the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q, irrespective of any general incorporation language contained in such filing.)

XML

Document and Entity Information	6 Months Ended
	Jun. 29, 2019 shares
Cover [Abstract]
Entity Registrant Name	EASTERN CO
Entity Central Index Key	0000031107
Current Fiscal Year End Date	--12-28
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 Common Stock, Shares Outstanding	6,236,000
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 29, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Address, State or Province	CT

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [Abstract]
Net sales	$ 61,439,929	$ 60,860,852	$ 122,323,077	$ 120,305,849
Cost of products sold	(46,430,039)	(45,807,496)	(93,504,144)	(90,531,018)
Gross margin	15,009,890	15,053,356	28,818,933	29,744,831
Product development expenses	(2,174,803)	(1,581,719)	(4,414,579)	(3,084,258)
Selling and administrative expenses	(8,076,501)	(9,083,131)	(16,474,766)	(18,130,180)
Restructuring costs	(1,799,293)	0	(2,635,987)	0
Operating profit	2,959,293	4,388,506	5,293,601	8,560,393
Interest expense	(261,618)	(312,060)	(554,158)	(608,390)
Other income	586,823	225,769	600,748	444,500
Income before income taxes	3,284,498	4,302,215	5,340,191	8,396,503
Income taxes	754,725	1,043,738	1,239,458	2,037,831
Net income	$ 2,529,773	$ 3,258,477	$ 4,100,733	$ 6,358,672
Earnings per Share:
Basic (in dollars per share)	$ 0.41	$ 0.52	$ 0.66	$ 1.02
Diluted (in dollars per share)	0.40	0.52	0.65	1.01
Cash dividends per share: (in dollars per share)	$ 0.11	$ 0.11	$ 0.22	$ 0.22

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract]
Net income	$ 2,529,773	$ 3,258,477	$ 4,100,733	$ 6,358,672
Other comprehensive income/(loss):
Change in foreign currency translation	(221,530)	(883,246)	191,094	(274,318)
Change in marketable securities, net of tax benefit/(cost) of: 2019 - $3,008 and $(463)	9,219	0	(1,420)	0
Change in fair value of interest rate swap, net of tax benefit/(cost) of: 2019 - $45,197 and $69,817 2018 - $19,202 and $59,166	(143,125)	60,806	(221,086)	226,645
Change in pension and postretirement benefit costs, net of taxes of: 2019 - $70,938 and $141,876 2018 - $65,843 and $131,685	222,681	222,724	445,362	445,449
Total other comprehensive income/(loss)	(132,755)	(599,716)	413,950	397,776
Comprehensive income	$ 2,397,018	$ 2,658,761	$ 4,514,683	$ 6,756,448

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Other comprehensive income/(loss):
Change in fair value of marketable securities, tax benefit/(cost)	$ 3,008	$ 0	$ (463)	$ 0
Change in fair value of interest rate swap and marketable securities, tax benefit/(cost)	45,197	19,202	69,817	59,166
Change in pension and postretirement benefit costs, tax expense	$ 70,938	$ 65,843	$ 141,876	$ 131,685

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Jun. 29, 2019	Dec. 29, 2018
Current Assets
Cash and cash equivalents	$ 13,667,902	$ 13,925,765
Marketable securities	23,136	0
Accounts receivable, less allowances: $476,000 - 2019; $680,000 -2018	32,103,399	30,285,316
Inventories	49,271,813	52,773,209
Prepaid expenses and other assets	3,162,089	3,071,888
Refundable taxes	1,082,011	1,133,847
Total Current Assets	99,310,350	101,190,025
Property, Plant and Equipment	72,671,980	73,768,615
Accumulated depreciation	(45,677,158)	(43,915,238)
Property, Plant and Equipment, Net	26,994,822	29,853,377
Goodwill	34,880,617	34,840,376
Trademarks	3,686,063	3,686,063
Patents and other intangibles net of accumulated amortization	9,118,632	10,281,720
Right of Use Assets	10,026,397	0
Deferred income taxes	1,396,006	1,396,006
Total other assets	59,107,715	50,204,165
TOTAL ASSETS	185,412,887	181,247,567
Current Liabilities
Accounts payable	18,504,766	18,497,626
Accrued compensation	2,853,541	4,159,808
Other accrued expenses	3,883,036	3,095,666
Contingent Liability	0	2,070,000
Current portion of long-term debt	3,100,000	2,325,000
Total Current Liabilities	28,341,343	30,148,100
Deferred income taxes	1,516,012	1,516,012
Other long-term liabilities	353,856	353,856
Lease liability	10,026,397	0
Long-term debt, less current portion	19,300,000	26,350,000
Accrued postretirement benefits	632,500	648,635
Accrued pension cost	24,939,439	25,362,325
Shareholders' Equity
Preferred Stock, no par value: Authorized and unissued: 2,000,000 shares	0	0
Common Stock, no par value, Authorized: 50,000,000 shares Issued: 8,970,509 shares in 2019 and 8,965,987 shares in 2018	30,288,617	29,994,890
Treasury Stock: 2,734,729 shares in 2019 and 2,634,729 shares in 2018	(20,169,098)	(20,169,098)
Retained earnings	112,398,386	109,671,362
Accumulated other comprehensive income (loss):
Foreign currency translation	(1,915,235)	(2,106,329)
Unrealized loss on marketable securities, net of tax	(1,420)	0
Unrealized gain (loss) on interest rate swap, net of tax	(54,642)	166,444
Unrecognized net pension and postretirement benefit costs, net of tax	(20,243,268)	(20,688,630)
Accumulated other comprehensive loss	(22,214,565)	(22,628,515)
Total Shareholders' Equity	100,303,340	96,868,639
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 185,412,887	$ 181,247,567

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Jun. 29, 2019	Dec. 29, 2018
Current Assets
Accounts receivable, allowances	$ 476,000	$ 680,000
Shareholders' Equity
Preferred Stock, par value (in dollars per share)	$ 0	$ 0
Preferred Stock, shares authorized (in shares)	2,000,000	2,000,000
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)	8,970,509	8,965,987
Treasury Stock, shares (in shares)	2,734,729	2,634,729

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018
Operating Activities
Net income	$ 4,100,733	$ 6,358,672
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,391,314	2,314,985
Unrecognized pension and postretirement benefits	448,214	116,578
Loss on restructuring of equipment and other assets	2,208,740	50,348
Provision for doubtful accounts	43,420	201,552
Stock compensation expense	293,726	214,821
Changes in operating assets and liabilities:
Accounts receivable	(1,794,182)	(3,717,778)
Inventories	3,618,303	(2,658,358)
Prepaid expenses and other	(21,533)	(339,385)
Other assets	709,357	(58,426)
Accounts payable	(89,081)	3,712,586
Accrued compensation	(1,307,966)	(1,527,545)
Other accrued expenses	(1,893,440)	946,368
Net cash provided by operating activities	8,707,605	5,614,417
Investing Activities
Marketable securities	(23,136)	0
Business acquisition, net of cash acquired	0	(4,994,685)
Capitalized software	0	(1,444,459)
Purchases of property, plant and equipment	(1,261,942)	(1,236,375)
Net cash used in investing activities	(1,285,078)	(7,675,519)
Financing Activities
Proceeds from short term borrowings	0	7,000,000
Payments on revolving credit note	0	(6,000,000)
Principal payments on long-term debt	(6,275,000)	(775,000)
Dividends paid	(1,373,700)	(1,378,456)
Net cash used in financing activities	(7,648,700)	(1,153,456)
Effect of exchange rate changes on cash	(31,690)	(80,996)
Net change in cash and cash equivalents	(257,863)	(3,295,553)
Cash and cash equivalents at beginning of period	13,925,765	22,275,477
Cash and cash equivalents at end of period	13,667,902	$ 18,979,924
Non-cash investing and financing activities
Right of use asset	10,026,397
Lease liability	$ (10,026,397)

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Basis of Presentation

6 Months Ended

Jun. 29, 2019

Basis of Presentation [Abstract]

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 Regulation S-X 10-01 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 Company's consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 29, 2018, as filed with the Securities and Exchange Commission (SEC) on March 14, 2019 the ("2018 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. All intercompany accounts and transactions are eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The condensed consolidated balance sheet at December 29, 2018 has been derived from the audited consolidated balance sheet at that date.

Commencing with the financial statements contained in the Quarterly Report on Form 10-Q for the period ended March 30, 2019, in accordance with ASC 842 – Leases, right of use assets and lease liabilities have been separately identified on the balance sheet for the current period.

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Earnings Per Share

6 Months Ended

Jun. 29, 2019

Earning Per Share [Abstract]

Earning Per Share

Note B – Earning Per Share

The denominators used to calculate earnings per share are as follow:

	Six Months Ended				Three Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Basic:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Diluted:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Dilutive stock options		29,258		27,002		29,258		27,002
Denominator for diluted earnings per share		6,262,002		6,291,437		6,263,031		6,292,317

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Inventories

6 Months Ended

Jun. 29, 2019

Inventories [Abstract]

Inventories

Note C – Inventories

Inventories consist of the following components:

	June 29, 2019		December 29, 2018
Raw material and component parts	$	16,657,441	$	17,841,166
Work in process		8,365,711		8,960,202
Finished goods		24,248,661		25,971,841
Total inventories	$	49,271,813	$	52,773,209

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Leases

6 Months Ended

Jun. 29, 2019

Leases [Abstract]

Leases

Note D – Right-of-Use Assets

In February 2016, the 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 M – Recent Accounting Pronouncements.

In calculating the effect of Topic 842 – Leases, 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 22 operating leases with a ROU asset and lease liability totaling $10,026,397 as of June 29, 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 – 120 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.

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Debt

6 Months Ended

Jun. 29, 2019

Debt [Abstract]

Debt

Note E - Debt

On April 3, 2017, the Company signed an amended and restated loan agreement (the "Restated Loan Agreement") with People's United Bank that included a $31 million term portion and a $10 million revolving credit portion.  Proceeds of the loan were used to repay the remaining outstanding term loan of the Company (approximately $1,429,000) and to acquire 100% of the common stock of Velvac Holdings, Inc.  ("Velvac").  The term loan and revolving credit facility are secured by all of the Company's assets as well as mortgages on the properties owned by the Company.  The term portion of the loan requires quarterly principal payments of $387,500 for two years beginning July 3, 2017.  The repayment amount then increases to $775,000 per quarter beginning July 1, 2019.  The term loan is a five-year loan with any remaining outstanding balance due on March 1, 2022.  The revolving credit portion has a quarterly commitment fee ranging from 0.2% to 0.375% based on operating results.  Under the terms of the Restated Loan Agreement, the revolving credit portion has a maturity date of April 1, 2022.  On April 3, 2017, the Company borrowed approximately $6.6 million on the revolving credit facility. The Company subsequently paid off $1.6 million on the revolving credit facility leaving a balance on the credit facility of $5 million as of December 30, 2017.  During 2018, the Company paid $5 million on the revolving credit facility, resulting in a zero-dollar balance as of June 29, 2019.

The interest rates on the term and revolving credit portion of the Restated Loan Agreement vary.  The interest rates may vary based on the LIBOR rate plus a margin spread of 1.75% to 2.50%.  The margin spread is based on operating results calculated on a rolling-four-quarter basis.  The Company may also borrow funds at the lender's prime rate.  The Company made additional principal payments during the quarter ended June 29, 2019, of $5.5 million.    On June 29, 2019, the interest rate for one half ($8.4 million) of the term portion was 4.09%, using a 1 month LIBOR rate and 3.94% on the remaining balance ($13.9 million) of the term loan based on a 3 month LIBOR rate.

On April 4, 2017, the Company entered into an interest rate swap contract with the lender with an original notional amount of $15,500,000, which is equal to 50% of the outstanding balance of the term loan on that date.  The notional amount will decrease on a quarterly basis beginning July 3, 2017, following the principal repayment schedule of the term loan.  The Company has a fixed interest rate of 1.92% on the swap contract and will pay the difference between the fixed-rate and the LIBOR rate when the LIBOR rate is below 1.92% and will receive interest when the LIBOR rate exceeds 1.92%.

The interest rates on the Loan Agreement, Restated Loan 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.

The Company's loan covenants under the Restated Loan Agreement require the Company to maintain a consolidated minimum debt service coverage ratio of at least 1.1 to 1 for periods through December 31, 2018, and 1.2 to 1 thereafter, which is to be tested quarterly on a twelve-month trailing basis.  In addition, the Company is required to show a maximum total leverage ratio of 4.0x for the calendar year ended December 31, 2018, 3.5x for the calendar year ended December 31, 2019, 3.25x for the calendar year ended December 31, 2020, and 3.0x thereafter.  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 through and including June 29, 2019, the last day of the Company's second fiscal quarter.

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Stock Options and Awards

6 Months Ended

Jun. 29, 2019

Stock Options and Awards [Abstract]

Stock Options and Awards

Note F - Stock Options and awards

Stock Options

As of June 29, 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 (the "Compensation Committee").  Under the 2010 Plan, non-qualified stock options granted to participants have exercise prices determined by the Compensation Committee. During the second quarters of 2019 and 2018, no stock option or restricted stock grant was issued subject to meeting performance measurements.  For the first half of 2019, the Company used several assumptions, which included an expected term of 3.5 years, volatility deviation of 28.88% and a risk-free rate of 2.48%.  For the first half 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 the second quarter of 2019, the Company did not issue any SARs.

Stock-based compensation expense in connection with SARs previously granted to employees in the second quarter of 2019 and 2018 was approximately $93,000 and $74,000, respectively and for the first six months of fiscal years 2019 and 2018 was approximately $173,000 and $130,000, respectively.

As of June 29, 2019, there were 238,500 shares of Company 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:

	Six Months Ended June 29, 2019					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		36,000			26.30		51,000			24.90
Exercised		(1,667	)		19.10		--			--
Forfeited		--			--		(3,333	)		19.10
Outstanding at end of period		223,500			22.15		189,167			21.46

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	19.10-26.30		223,500		3.3	$	22.15		38,003		2.7		19.10

The following tables set forth the outstanding stock grants for the period specified:

	Six Months Ended June 29, 2019				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 June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	0.00		25,000		2.8		—		—		—		—

As of June 29, 2019, outstanding SARs and options had an intrinsic value of $1,990,010.

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Shareholder's Equity Share Repurchase Program

6 Months Ended

Jun. 29, 2019

Shareholder's Equity Share Repurchase Program [Abstract]

Shareholder's Equity Share Repurchase Program

Note G – Shareholder's Equity 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.  During the second quarter and first six months of 2019, the Company did not repurchase any shares of its common stock in connection with the share repurchase program.  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").

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 March 30, 2019		40,000	$	26.58		40,000		160,000
March 31, 2019 – June 29, 2019		—		—		—		—
Balance as of June 29, 2019		40,000	$	26.58		40,000		160,000

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Revenue Recognition

6 Months Ended

Jun. 29, 2019

Revenue Recognition [Abstract]

Revenue Recognition

Note H – 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 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, determining the transaction price, allocating the contract transaction price to the performance obligations (when applicable), and recognizing 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.

The Company elected the Modified Retrospective Method (the "Cumulative Effect Method") to comply with ASC Topic 606.  ASC Topic 606 was adopted on December 31, 2017, which was the first day of the Company's 2018 fiscal year.  The financial effect of ASC Topic 606 on the June 29, 2019 financial statements was not significant.

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 L for revenues reported by segment.  The Company has not experienced any impairment losses, has no future performance obligations and does not capitalize costs to obtain or fulfill contracts.

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Restructuring Costs

6 Months Ended

Jun. 29, 2019

Restructuring Costs [Abstract]

Restructuring Costs

Note I – Restructuring Costs

The Company has consolidated the Composites Group by relocating the Composite Panels Technologies Division based in Salisbury, North Carolina to the Canadian Commercial Vehicle Division located in Kelowna, British Columbia.    Non-recurring costs incurred in the second quarter and first six months of 2019 were $0.2 million and $1.0 million, respectively, which include the write off of inventory $0.5 million, fixed assets $0.3 million, moving costs $0.1 million, severance $0.1 million and lease termination costs.  The facility was closed in April of 2019.

During the second quarter of 2019, the Company discontinued the Velvac Road IQ development operations based in Bellingham, Washington.  Non-recurring costs related to the discontinuation of this operation in the second quarter and the first six months of 2019 were $3.7 million in total, which included the write-off of fixed assets $0.2 million, inventory $0.6 million, intangible assets $2.4 million, severance $0.2 million, lease termination costs $0.3 million, and other non-recurring operating expenses.  These costs were partially offset by the reversal of a $2.1 million contingent liability the Company established with the acquisition of Velvac in April of 2017 which was no longer applicable at June 29, 2019, resulting in a net charge to earnings of $1.6 million.

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Income Taxes

6 Months Ended

Jun. 29, 2019

Income Taxes [Abstract]

Income Taxes

Note J - Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, and 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 2014 and is no longer subject to non-U.S. income tax examinations by foreign tax authorities for years prior to 2012.

The Tax Cuts and Jobs Act (the "2017 Tax Act") was enacted into law on December 22, 2017. The 2017 Tax Act significantly changed U.S. corporate income tax laws by, among other provisions, reducing the maximum U.S. corporate income tax rate from 35% to 21%, effective in 2018, and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. Pursuant to SAB118, the Company is allowed a measurement period of up to one year after the enactment date of the 2017 Tax Act to finalize the recording of the related tax impacts. The Company finalized its accounting for the 2017 Tax Act during the fourth quarter of 2018, resulting in a deferred income tax benefit of $507,847 related to the re-measurement of deferred tax assets and liabilities to the new lower statutory rate of 21%.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state and foreign tax years by the 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 June 29, 2019.  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.

In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-02, Income Statement—Reporting Comprehensive Income  (Topic 220). ASU 2018-02 allows a company to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for periods beginning after December 15, 2018.  Upon adoption of ASU 2018-02, the Company did not elect to reclassify the tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings.

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Retirement Benefit Plans

6 Months Ended

Jun. 29, 2019

Retirement Benefit Plans [Abstract]

Retirement Benefit Plans

Note K - 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.

Significant disclosures relating to these benefit plans for the second quarter of fiscal years 2019 and 2018 are as follows:

	Pension Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	527,706			$	659,922			$	263,854			$	329,901
Interest cost			1,758,160				1,553,583				879,080				776,791
Expected return on plan assets			(2,380,661	)			(2,609,758	)			(1,190,331	)			(1,304,878	)
Amortization of prior service cost			49,690				65,381				24,845				32,690
Amortization of the net loss			581,099				555,056				290,550				277,528
Net periodic benefit cost		$	535,994			$	224,184			$	267,998			$	112,032
	Postretirement Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	16,432			$	18,512			$	8,216			$	9,256
Interest cost			40,692				38,581				20,346				19,291
Expected return on plan assets			(28,963	)			(27,825	)			(14,482	)			(13,912	)
Amortization of prior service cost			(2,536	)			(2,536	)			(1,268	)			(1,268	)
Amortization of the net loss			(41,014	)			(32,796	)			(20,507	)			(16,398	)
Net periodic benefit cost		$	(15,389	)		$	(6,064	)		$	(7,695	)		$	(3,031	)

The Company's funding policy for its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations.  In the fiscal year 2019, the Company expects to contribute $600,000 into its pension plans and $105,000 into its postretirement plans. As of June 29, 2019, the Company has not made contributions to its pension plans, has contributed $33,000 to its postretirement plan and will 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:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Regular matching contribution		$	293,063		$	306,121		$	136,796		$	140,106
Transitional credit contribution			178,376			205,614			74,852			81,506
Non-discretionary contribution			605,129			540,831			18,088			16,458
Total contributions for the period		$	1,076,568		$	1,052,566		$	229,736		$	238,070

The non-discretionary contribution of $565,748 made in the six months ended June 29, 2019, was accrued for and expensed in the prior fiscal year.

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Segment Information

6 Months Ended

Jun. 29, 2019

Segment Information [Abstract]

Segment Information

Note L – Segment Information

Financial information by segment is as follows:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Revenues:
Sales to unaffiliated customers:
Industrial Hardware	$	75,894,296		$	72,410,627		$	37,490,953		$	35,853,583
Security Products		31,185,702			33,007,356			16,502,698			17,888,028
Metal Products		15,243,079			14,887,866			7,446,278			7,119,241
	$	122,323,077		$	120,305,849		$	61,439,929		$	60,860,852
Income before income taxes:
Industrial Hardware	$	2,015,552		$	5,284,529		$	747,415		$	2,518,086
Security Products		2,875,435			2,649,180			1,902,547			1,664,041
Metal Products		402,614			626,684			309,331			206,379
Operating Profit		5,293,601			8,560,393			2,959,293			4,388,506
Interest expense		(554,158	)		(608,390	)		(261,618	)		(312,060	)
Other income		600,748			444,500			586,823			225,769
	$	5,340,191		$	8,396,503		$	3,284,498		$	4,302,215

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Recent Accounting Pronouncements

6 Months Ended

Jun. 29, 2019

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note M - 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 D – Leases.

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, to clarify and address implementation issues around the new standards related to credit losses, hedging and recognizing and measuring financial instruments. Amendments in this ASU related to credit losses and hedging have the same effective dates as the respective standards unless an entity has already adopted the standards, in which case the amendments are effective for annual and interim reporting periods in 2020.  Amendments in this ASU related to recognizing and measuring financial instruments are effective for annual and interim reporting periods in 2020 for public entities and nonpublic entities. The Company has not yet determined the potential impact of this ASU on its consolidated financial statements and related disclosures.

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 any other new accounting pronouncements have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company.

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Concentration of risk

6 Months Ended

Jun. 29, 2019

Concentration of risk [Abstract]

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 June 29, 2019, and December 29, 2018, there were no significant concentrations of credit risk. No single customer represented more than 10% of the Company's net accounts receivable as of June 29, 2019, or on December 29, 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 1.50% to 2.50%. The Company has an interest rate swap with a notional amount of $13,950,000 on June 29, 2019, to convert a portion of its 2017 Term Loan 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 Item 7 of the Company's 2018 Form 10-K.

Currency Exchange Rate Risk

The Company's currency exposure is concentrated in the 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.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 29, 2019

Earning Per Share [Abstract]

Denominators Used in Earnings Per Share Computations

The denominators used to calculate earnings per share are as follow:

	Six Months Ended				Three Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Basic:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Diluted:
Weighted average shares outstanding		6,232,744		6,264,435		6,233,773		6,265,315
Dilutive stock options		29,258		27,002		29,258		27,002
Denominator for diluted earnings per share		6,262,002		6,291,437		6,263,031		6,292,317

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Inventories (Tables)

6 Months Ended

Jun. 29, 2019

Inventories [Abstract]

Components of Inventories

Inventories consist of the following components:

	June 29, 2019		December 29, 2018
Raw material and component parts	$	16,657,441	$	17,841,166
Work in process		8,365,711		8,960,202
Finished goods		24,248,661		25,971,841
Total inventories	$	49,271,813	$	52,773,209

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Stock Options and Awards (Tables)

6 Months Ended

Jun. 29, 2019

Stock Options and Awards [Abstract]

Stock Appreciation Rights Activity

The following tables set forth the outstanding SARs for the period specified:

	Six Months Ended June 29, 2019					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		36,000			26.30		51,000			24.90
Exercised		(1,667	)		19.10		--			--
Forfeited		--			--		(3,333	)		19.10
Outstanding at end of period		223,500			22.15		189,167			21.46

SARs Outstanding and Exercisable

SARs Outstanding and Exercisable
Range of Exercise Prices		Outstanding as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	19.10-26.30		223,500		3.3	$	22.15		38,003		2.7		19.10

Stock Option Activity

The following tables set forth the outstanding stock grants for the period specified:

	Six Months Ended June 29, 2019				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 June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price		Exercisable as of June 29, 2019		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
$	0.00		25,000		2.8		—		—		—		—

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Shareholder's Equity Share Repurchase Program (Tables)

6 Months Ended

Jun. 29, 2019

Shareholder's Equity Share Repurchase Program [Abstract]

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 March 30, 2019		40,000	$	26.58		40,000		160,000
March 31, 2019 – June 29, 2019		—		—		—		—
Balance as of June 29, 2019		40,000	$	26.58		40,000		160,000

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Retirement Benefit Plans (Tables)

6 Months Ended

Jun. 29, 2019

Retirement Benefit Plans [Abstract]

Significant Disclosures Relating to Benefit Plans

Significant disclosures relating to these benefit plans for the second quarter of fiscal years 2019 and 2018 are as follows:

	Pension Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	527,706			$	659,922			$	263,854			$	329,901
Interest cost			1,758,160				1,553,583				879,080				776,791
Expected return on plan assets			(2,380,661	)			(2,609,758	)			(1,190,331	)			(1,304,878	)
Amortization of prior service cost			49,690				65,381				24,845				32,690
Amortization of the net loss			581,099				555,056				290,550				277,528
Net periodic benefit cost		$	535,994			$	224,184			$	267,998			$	112,032
	Postretirement Benefits
	Six Months Ended								Three Months Ended
	June 29, 2019				June 30, 2018				June 29, 2019				June 30, 2018
Service cost		$	16,432			$	18,512			$	8,216			$	9,256
Interest cost			40,692				38,581				20,346				19,291
Expected return on plan assets			(28,963	)			(27,825	)			(14,482	)			(13,912	)
Amortization of prior service cost			(2,536	)			(2,536	)			(1,268	)			(1,268	)
Amortization of the net loss			(41,014	)			(32,796	)			(20,507	)			(16,398	)
Net periodic benefit cost		$	(15,389	)		$	(6,064	)		$	(7,695	)		$	(3,031	)

Defined Contribution Plan

The Company made contributions to the plan as follows:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Regular matching contribution		$	293,063		$	306,121		$	136,796		$	140,106
Transitional credit contribution			178,376			205,614			74,852			81,506
Non-discretionary contribution			605,129			540,831			18,088			16,458
Total contributions for the period		$	1,076,568		$	1,052,566		$	229,736		$	238,070

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Segment Information (Tables)

6 Months Ended

Jun. 29, 2019

Segment Information [Abstract]

Segment Financial Information

Financial information by segment is as follows:

	Six Months Ended						Three Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Revenues:
Sales to unaffiliated customers:
Industrial Hardware	$	75,894,296		$	72,410,627		$	37,490,953		$	35,853,583
Security Products		31,185,702			33,007,356			16,502,698			17,888,028
Metal Products		15,243,079			14,887,866			7,446,278			7,119,241
	$	122,323,077		$	120,305,849		$	61,439,929		$	60,860,852
Income before income taxes:
Industrial Hardware	$	2,015,552		$	5,284,529		$	747,415		$	2,518,086
Security Products		2,875,435			2,649,180			1,902,547			1,664,041
Metal Products		402,614			626,684			309,331			206,379
Operating Profit		5,293,601			8,560,393			2,959,293			4,388,506
Interest expense		(554,158	)		(608,390	)		(261,618	)		(312,060	)
Other income		600,748			444,500			586,823			225,769
	$	5,340,191		$	8,396,503		$	3,284,498		$	4,302,215

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Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Basic [Abstract]
Weighted average shares outstanding (in shares)	6,233,773	6,265,315	6,232,744	6,264,435
Diluted [Abstract]
Weighted average shares outstanding (in shares)	6,233,773	6,265,315	6,232,744	6,264,435
Dilutive stock options (in shares)	29,258	27,002	29,258	27,002
Denominator for diluted earnings per share (in shares)	6,263,031	6,292,317	6,262,002	6,291,437

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Inventories (Details) - USD ($)	Jun. 29, 2019	Dec. 29, 2018
Components of inventories [Abstract]
Raw material and component parts	$ 16,657,441	$ 17,841,166
Work in process	8,365,711	8,960,202
Finished goods	24,248,661	25,971,841
Total inventories	$ 49,271,813	$ 52,773,209

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Leases (Details)	6 Months Ended
	Jun. 29, 2019 USD ($) Lease	Dec. 29, 2018 USD ($)
Operating Lease [Abstract]
Number of operating leases | Lease	22
Right of use assets	$ 10,026,397	$ 0
Lease liability	10,026,397	$ 0
ASU 2016-02 [Member]
Operating Lease [Abstract]
Right of use assets	10,026,397
Lease liability	$ 10,026,397
ASU 2016-02 [Member] | Minimum [Member]
Operating Lease [Abstract]
Lease extension option term	12 months
ASU 2016-02 [Member] | Maximum [Member]
Operating Lease [Abstract]
Lease extension option term	120 months

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Debt (Details) - USD ($)			3 Months Ended		6 Months Ended		12 Months Ended		24 Months Ended
	Apr. 04, 2017	Apr. 03, 2017	Sep. 30, 2019	Jun. 29, 2019	Jun. 29, 2019	Jun. 30, 2018	Dec. 29, 2018	Dec. 30, 2017	Jun. 30, 2019
Disclosure of Debt [Abstract]
Principal payments on long-term debt				$ (5,500,000)	$ (6,275,000)	$ (775,000)
Velvac Holdings, Inc [Member]
Disclosure of Debt [Abstract]
Percentage of common stock acquired		100.00%
Restated Loan Agreement [Member] | Minimum [Member]
Disclosure of Debt [Abstract]
Fixed charge coverage ratio as multiple, 2018					1.1
Fixed charge coverage ratio as multiple, thereafter					1.2
Restated Loan Agreement [Member] | Maximum [Member]
Disclosure of Debt [Abstract]
Leverage ratio as multiple, through 2018					4.0
Leverage ratio as multiple, through 2019					3.5
Leverage ratio as multiple, through 2020					3.25
Leverage ratio as multiple, there after					3.0
Term Loan [Member]
Disclosure of Debt [Abstract]
Maximum borrowing capacity				$ 31,000,000	$ 31,000,000
Payments on term loan		$ (1,429,000)
Quarterly principal payment									$ 387,500
Period for quarterly principal payment					2 years
Term of loan					5 years
Maturity date of loan					Mar. 01, 2022
Term Loan [Member] | Forecast [Member]
Disclosure of Debt [Abstract]
Quarterly principal payment			$ 775,000
Term Loan [Member] | Interest Rate Swap [Member]
Disclosure of Debt [Abstract]
Fixed rate of interest				1.92%	1.92%
Interest rate swap, notional amount	$ 15,500,000			$ 13,950,000	$ 13,950,000
Percentage of outstanding balance of term loan	50.00%
Term Loan [Member] | 1 Month LIBOR [Member]
Disclosure of Debt [Abstract]
Fixed rate of interest				4.09%	4.09%
Revolving credit loan				$ 8,400,000	$ 8,400,000
Term of variable rate					1 month
Term Loan [Member] | 3 Month LIBOR [Member]
Disclosure of Debt [Abstract]
Fixed rate of interest				3.94%	3.94%
Revolving credit loan				$ 13,900,000	$ 13,900,000
Term of variable rate					3 months
Revolving Credit Loan [Member]
Disclosure of Debt [Abstract]
Maximum borrowing capacity				10,000,000	$ 10,000,000
Revolving credit loan		$ 6,600,000		$ 0	$ 0			$ 5,000,000
Payments on revolving credit note							$ (5,000,000)	$ (1,614,611)
Maturity date of loan					Apr. 01, 2022
Revolving Credit Loan [Member] | Minimum [Member]
Disclosure of Debt [Abstract]
Quarterly commitment fee percentage					0.20%
Revolving Credit Loan [Member] | Maximum [Member]
Disclosure of Debt [Abstract]
Quarterly commitment fee percentage					0.375%
Revolving Credit Loan [Member] | LIBOR [Member] | Minimum [Member]
Disclosure of Debt [Abstract]
Basis spread on variable rate					1.75%
Revolving Credit Loan [Member] | LIBOR [Member] | Maximum [Member]
Disclosure of Debt [Abstract]
Basis spread on variable rate					2.50%
Revolving Credit Loan [Member] | 3 Month LIBOR [Member] | Minimum [Member]
Disclosure of Debt [Abstract]
Basis spread on variable rate					1.50%
Revolving Credit Loan [Member] | 3 Month LIBOR [Member] | Maximum [Member]
Disclosure of Debt [Abstract]
Basis spread on variable rate					2.50%

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Stock Options and Awards (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 29, 2019 USD ($) Plan $ / shares shares	Jun. 30, 2018 USD ($) shares	Jun. 29, 2019 USD ($) Plan $ / shares shares	Jun. 30, 2018 USD ($) $ / shares shares	Dec. 29, 2018 $ / shares shares
Stock Options [Abstract]
Number of plans that have shares reserved for further issuance | Plan	1		1
Minimum [Member]
Stock Options [Abstract]
Percentage of fair market value of stock on grant date for exercise price			100.00%
Stock Options [Member]
Number of Units, Stock Appreciation Rights (SARs) [Roll Forward]
Outstanding at beginning of period (in shares) | shares			25,000	25,000	25,000
Issued (in shares) | shares	0	0	0		0
Forfeited (in shares) | shares			0		0
Outstanding at end of period (in shares) | shares	25,000		25,000		25,000
Weighted - Average Exercise Price, Stock Appreciation Rights (SARs) [Abstract]
Outstanding at beginning of period (in dollars per share)			$ 0	$ 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		$ 0
SARs Grants Outstanding and Exercisable [Abstract]
Maximum Range of Exercise Prices (in dollars per share)			$ 0
Outstanding (in shares) | shares	25,000		25,000
Weighted- Average Remaining Contractual Life			2 years 9 months 18 days
Weighted- Average Exercise Price (in dollars per share)	$ 0		$ 0
Exercisable (in shares) | shares	0		0
Exercisable, Weighted- Average Remaining Contractual life			0 years
Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 0		$ 0
Stock Appreciation Rights (SARs) [Member]
Stock Options [Abstract]
Stock-based compensation expense | $	$ 93,000	$ 74,000	$ 173,000	$ 130,000
Number of Units, Stock Appreciation Rights (SARs) [Roll Forward]
Outstanding at beginning of period (in shares) | shares			189,167	141,500	141,500
Issued (in shares) | shares			36,000		51,000
Exercised (in shares) | shares			(1,667)		0
Forfeited (in shares) | shares			0		(3,333)
Outstanding at end of period (in shares) | shares	223,500		223,500		189,167
Weighted - Average Exercise Price, Stock Appreciation Rights (SARs) [Abstract]
Outstanding at beginning of period (in dollars per share)			$ 21.46	$ 20.36	$ 20.36
Issued (in dollars per share)			26.30		24.90
Exercised (in dollars per share)			19.10		0
Forfeited (in dollars per share)			0		19.10
Outstanding at end of period (in dollars per share)	$ 22.15		22.15		$ 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	223,500		223,500
Weighted- Average Remaining Contractual Life			3 years 3 months 18 days
Weighted- Average Exercise Price (in dollars per share)	$ 22.15		$ 22.15
Exercisable (in shares) | shares	38,003		38,003
Exercisable, Weighted- Average Remaining Contractual life			2 years 8 months 12 days
Exercisable, Weighted- Average Exercise Price (in dollars per share)	$ 19.10		$ 19.10
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 | $	$ 1,990,010		$ 1,990,010
2010 Plan [Member]
Stock Options [Abstract]
Expected term			3 years 6 months	3 years 6 months
Volatility deviation			28.88%	29.50%
Risk free rate			2.48%	2.33%
Shares available for future grant (in shares) | shares	238,500		238,500

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Shareholder's Equity Share Repurchase Program (Details) - $ / shares	6 Months Ended
	Jun. 29, 2019	May 02, 2018
Shareholder's Equity Share Repurchase Program [Abstract]
Number of shares authorized to be repurchased (in shares)		200,000
Total Number of Shares Purchased [Roll Forward]
Number of shares purchased at beginning of period (in shares)	40,000
Number of shares purchased (in shares)	0
Number of shares purchased at end of period (in shares)	40,000
Average Price Paid Per Share [Roll Forward]
Average price paid per share at beginning of period (in dollars per share)	$ 26.58
Average price paid per share (in dollars per share)	0
Average price paid per share at end of period (in dollars per share)	$ 26.58
Number of Shares Purchased As Part of Publicly Announced Plans or Programs [Roll Forward]
Number of shares purchased as part of publicly announced plans or programs at beginning of period (in shares)	40,000
Number of shares purchased as part of publicly announced plans or programs (in shares)	0
Number of shares purchased as part of publicly announced plans or programs at end of period (in shares)	40,000
Number of Shares that May Yet be Purchased Under the Plans or Programs [Roll Forward]
Maximum number of shares that may yet be purchased under the plans or programs at beginning of period (in shares)	160,000
Maximum number of shares that may yet be purchased under the plans or programs (in shares)	0
Maximum number of shares that may yet be purchased under the plans or programs at end of period (in shares)	160,000

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Restructuring Costs (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 29, 2019	Jun. 29, 2019	Jun. 30, 2018
Velvac Road IQ Discontinue Operation [Member]
Restructuring Costs [Abstract]
Non-recurring costs incurred	$ 3.7		$ 3.7
Inventory Write-down	0.6
Write off of fixed assets	0.2
Write off of intangible assets	2.4
Severance	0.2
Lease termination cost	0.3
Contingent liability reversal	2.1
Net charge to earnings	1.6
Composites Group Restructuring Program [Member]
Restructuring Costs [Abstract]
Non-recurring costs incurred	0.2	$ 1.0
Inventory Write-down	0.5
Write off of fixed assets	0.3
Moving costs	0.1
Severance	$ 0.1

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Income Taxes (Details) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	Dec. 29, 2018	Jun. 29, 2019	Dec. 30, 2017
Income Taxes [Abstract]
Corporate income tax rate		21.00%	35.00%
Income tax expense (benefit)	$ (507,847)
Significant changes to the amount of unrecognized tax benefits		$ 0

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Retirement Benefit Plans, Net Periodic Benefit Cost (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Pension Benefits [Member]
Components of the net periodic benefit cost [Abstract]
Service cost	$ 263,854	$ 329,901	$ 527,706	$ 659,922
Interest cost	879,080	776,791	1,758,160	1,553,583
Expected return on plan assets	(1,190,331)	(1,304,878)	(2,380,661)	(2,609,758)
Amortization of prior service cost	24,845	32,690	49,690	65,381
Amortization of the net loss	290,550	277,528	581,099	555,056
Net periodic benefit cost	267,998	112,032	535,994	224,184
Additional information [Abstract]
Contributions expected to be made by Company in next fiscal year	600,000		600,000
Employer contributions			0
Postretirement Benefits [Member]
Components of the net periodic benefit cost [Abstract]
Service cost	8,216	9,256	16,432	18,512
Interest cost	20,346	19,291	40,692	38,581
Expected return on plan assets	(14,482)	(13,912)	(28,963)	(27,825)
Amortization of prior service cost	(1,268)	(1,268)	(2,536)	(2,536)
Amortization of the net loss	(20,507)	(16,398)	(41,014)	(32,796)
Net periodic benefit cost	(7,695)	$ (3,031)	(15,389)	$ (6,064)
Additional information [Abstract]
Contributions expected to be made by Company in next fiscal year	$ 105,000		105,000
Employer contributions			$ 33,000

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Retirement Benefit Plans, Defined Contribution Plan (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Defined Contribution Plan [Abstract]
Total contributions for the period	$ 229,736	$ 238,070	$ 1,076,568	$ 1,052,566
Regular Matching Contribution [Member]
Defined Contribution Plan [Abstract]
Total contributions for the period	136,796	140,106	293,063	306,121
Transitional Credit Contribution [Member]
Defined Contribution Plan [Abstract]
Total contributions for the period	74,852	81,506	178,376	205,614
Non-discretionary Contribution [Member]
Defined Contribution Plan [Abstract]
Total contributions for the period	$ 18,088	$ 16,458	605,129	$ 540,831
Non-Union U.S. Employees [Member]
Defined Contribution Plan [Abstract]
Total contributions for the period			$ 565,748

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Segment Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 29, 2019	Jun. 30, 2018	Jun. 29, 2019	Jun. 30, 2018
Segment Reporting Information [Abstract]
Revenues, sales to unaffiliated customers	$ 61,439,929	$ 60,860,852	$ 122,323,077	$ 120,305,849
Operating Profit	2,959,293	4,388,506	5,293,601	8,560,393
Interest expense	(261,618)	(312,060)	(554,158)	(608,390)
Other income	586,823	225,769	600,748	444,500
Income before income taxes	3,284,498	4,302,215	5,340,191	8,396,503
Operating Segments [Member] | Industrial Hardware [Member]
Segment Reporting Information [Abstract]
Revenues, sales to unaffiliated customers	37,490,953	35,853,583	75,894,296	72,410,627
Operating Profit	747,415	2,518,086	2,015,552	5,284,529
Operating Segments [Member] | Security Products [Member]
Segment Reporting Information [Abstract]
Revenues, sales to unaffiliated customers	16,502,698	17,888,028	31,185,702	33,007,356
Operating Profit	1,902,547	1,664,041	2,875,435	2,649,180
Operating Segments [Member] | Metal Products [Member]
Segment Reporting Information [Abstract]
Revenues, sales to unaffiliated customers	7,446,278	7,119,241	15,243,079	14,887,866
Operating Profit	$ 309,331	$ 206,379	$ 402,614	$ 626,684

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Concentration of risk (Details)	6 Months Ended	12 Months Ended
	Jun. 29, 2019 USD ($) Customer	Dec. 29, 2018 Customer	Apr. 04, 2017 USD ($)
Term Loan [Member] | 3 Month LIBOR [Member]
Interest Rate Risk [Abstract]
Term of variable rate	3 months
Term Loan [Member] | Interest Rate Swap [Member]
Interest Rate Risk [Abstract]
Interest rate swap, notional amount | $	$ 13,950,000		$ 15,500,000
Revolving Credit Loan [Member] | 3 Month LIBOR [Member] | Minimum [Member]
Interest Rate Risk [Abstract]
Basis spread on variable rate	1.50%
Revolving Credit Loan [Member] | 3 Month LIBOR [Member] | Maximum [Member]
Interest Rate Risk [Abstract]
Basis spread on variable rate	2.50%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Accounts Receivable, Net [Abstract]
Number of major customers | Customer	0	0
Threshold percentage of concentration risk	10.00%	10.00%