SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JULY 4, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM________ to ________ .
Commission File Number 0-599
THE EASTERN COMPANY
- -------------------
(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, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2)has been subject to such filing
requirements for the past 90 days.
Yes X No__ .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of JULY 4, 1998
----- ------------------------------
Common Stock, No par value 2,426,728
-1-
<PAGE>
PART I
<TABLE>
FINANCIAL INFORMATION
THE EASTERN COMPANY AND SUBSIDIARIES
ITEM I CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
<CAPTION>
ASSETS
July 4, 1998 January 3, 1998
------------ ---------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents 3,175,272 2,111,289
Accounts receivable, less allowance: 8,672,451 8,725,167
1998- $392,000; 1997- $329,000
Inventories 13,008,241 12,414,866
Prepaid expenses and other current assets 2,147,414 2,846,557
---------- ----------
Total Current Assets 27,003,378 26,097,879
Property, plant and equipment 27,167,559 25,434,424
Accumulated depreciation (13,232,266) (11,997,894)
---------- ----------
13,935,293 13,436,530
Prepaid pension cost 4,219,593 4,217,604
Other assets, net 1,875,433 2,046,148
---------- ----------
TOTAL ASSETS $47,033,697 $45,798,161
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable 8,634,976 3,663,662
Accounts payable 3,026,382 3,499,857
Accrued compensation and withholding 1,833,214 1,413,418
Other accrued expenses 1,817,321 2,662,088
---------- ----------
Total Current Liabilities 15,311,893 11,239,025
Deferred federal income taxes 2,492,200 2,492,200
Long-term debt - 60,000
Accrued postretirement benefits 2,769,795 2,763,795
Shareholders' Equity
Common Stock, No Par Value:
Authorized shares - 25,000,000
Issued and outstanding shares: 1,614,447 6,078,427
1998-2,426,728; 1997-2,593,089
(Excluding shares in Treasury:
1998-1,012,335; 1997-831,780)
Preferred Stock, No Par Value
Authorized shares - 2,000,000
(No shares issued)
Unearned compensation (548,906) (492,969)
Accumulated other comprehensive loss - translation adjustment (699,221) (563,211)
Retained earnings 26,093,489 24,220,894
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $47,033,697 $45,798,161
========== ==========
</TABLE>
See accompanying notes.
-2-
<PAGE>
<TABLE>
THE EASTERN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
July 4, 1998 June 28, 1997 July 4, 1998 June 27, 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Net sales 35,765,163 32,853,668 17,353,207 16,919,070
Interest income 72,376 69,947 48,932 33,970
---------- ---------- ---------- ----------
Total 35,837,532 32,923,615 17,402,139 16,953,040
Cost of products sold 26,067,883 24,413,837 12,586,316 12,464,078
---------- ---------- ---------- ----------
9,769,656 8,509,778 4,815,823 4,488,962
Selling and administrative expenses 5,486,435 6,094,355 2,562,066 3,112,386
Interest expense 300,976 134,095 225,406 67,788
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 3,982,245 2,281,328 2,028,351 1,308,788
Income taxes 1,387,639 833,965 723,842 475,848
NET INCOME 2,594,606 1,447,363 1,304,509 832,940
========== ========== ========== ==========
Net income per share:
Basic $ 1.05 $ 0.53 $ 0.55 $ 0.30
Diluted $ 1.01 $ 0.52 $ 0.52 $ 0.30
Cash dividends per share $ 0.28 $ 0.23 $ 0.150 $ 0.115
</TABLE>
See accompanying notes.
-3-
<PAGE>
<TABLE>
THE EASTERN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
July 4, 1998 June 28, 1997
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,594,606 $ 1,447,363
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,493,379 1,524,692
(Gain) loss on sale of equipment and other assets (90,638) 2,335
Postretirement benefits other than pensions 6,000 5,887
Provision for losses on accounts receivable 66,047 62,991
Issuance of Common Stock for directors' fees 25,814 40,323
Changes in operating assets and liabilities:
Accounts receivable (52,218) (2,071,798)
Inventories (663,521) (1,421,504)
Prepaid expenses 694,708 552,897
Prepaid pension (1,989) (35,801)
Accounts payable (431,505) 739,302
Accrued expenses (427,853) 801,187
Other assets (13,747) (281,494)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,210,536 1,354,927
INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (1,833,540) (1,028,524)
Other 99,535 46,429
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (1,734,005) (982,095)
FINANCING ACTIVITIES:
Payment on line of credit - (500,000)
Proceeds from line of credit 5,000,000 -
Principal payments on long-term debt (94,100) (128,556)
Proceeds from sales of Common Stock 453,529 93,750
Purchases of Common Stock for treasury (4,673,678) (371,740)
Dividens paid (702,324) (632,651)
---------- ----------
NET CASH USED BY FINANCING ACTIVITIES (376,352) (1,179,418)
Effect of exchange rate changes on cash (36,196) 2,344
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,063,983 (804,242)
Cash and Cash Equivalents at Beginning of Year 2,111,289 2,269,031
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,175,272 $ 1,464,789
========== ==========
</TABLE>
See accompanying notes.
-4-
<PAGE>
<TABLE>
THE EASTERN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNADUITED)
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
July 4, 1998 June 28, 1997 July 4, 1998 June 28, 1997
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net income 2,594,606 1,447,363 1,304,509 832,940
Other comprehensive (loss) income:
Foreign currency translation (136,010) 107,138 (92,152) 91,401
-------- ------- ------- ------
Comprehensive income 2,458,596 1,554,501 1,212,357 924,341
========= ========= ========= =======
</TABLE>
See accompanying notes.
-5-
<PAGE>
THE EASTERN COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JULY 4, 1998
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
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 such interim periods have been reflected therein.
The condensed balance sheet as of January 3, 1998 has been derived from the
audited financial statements at that date.
<TABLE>
Note B - Earnings Per Share
The denominators used in the earnings per share computations follow:
<CAPTION>
SIX MONTHS ENDED
July 4,1998 June 28, 1997
----------- -------------
<S> <C> <C>
Basic:
Weighted average shares outstanding 2,508,820 2,745,116
Contingent shares outstanding (32,500) (22,500)
---------- ----------
Denominator for basic earnings per share 2,476,320 2,722,616
Diluted:
Weighted average shares outstanding 2,508,820 2,745,116
Contingent shares outstanding (32,500) (22,500)
Dilutive stock options 104,301 32,102
---------- ----------
Denominator for diluted earnings per share 2,580,621 2,754,718
THREE MONTHS ENDED
July 4,1998 June 28, 1997
----------- -------------
Basic:
Weighted average shares outstanding 2,425,858 2,757,355
Contingent shares outstanding (32,500) (22,500)
----------- ----------
Denominator for basic earnings per share 2,425,858 2,734,855
Diluted:
Weighted average shares outstanding 2,393,358 2,757,355
Contingent shares outstanding (32,500) (22,500)
Dilutive stock options 118,727 30,726
---------- ----------
Denominator for diluted earnings per share 2,512,085 2,765,581
</TABLE>
-6-
<PAGE>
THE EASTERN COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
JULY 4, 1998
Note C - Changes in Accounting Principles
Effective January 4, 1998, The Eastern Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". The adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Under SFAS 130 the Company's foreign currency translation adjustments,
which are reported separately in shareholders' equity, are also required to be
included in the determination of other comprehensive income or loss. The prior
year financial statements have been reclassified to conform to the requirements
of SFAS 130.
Note D - Litigation
The Registrant is involved in litigation relating to environmental matters for
which the ultimate outcome is not expected to have any material adverse impact
on financial position, operating results or liquidity. See Part II Item 1 Legal
Proceedings for further information.
-7-
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Net income per share (basic) for the second quarter of 1998 was the highest
level reported in the Company's 140-year history and represented the sixth
consecutive quarter of increased earnings. Net income for the second quarter
was $1.3 million or $.55 per share (basic) on sales of $17.4 million versus the
second quarter of 1997 of $833 thousand or $.30 per share (basic) on sales of
$16.9 million. Net income for the first six months of 1998 was $2.6 million or
$1.05 per share (basic) on sales of $35.8 million versus the first six months
of 1997 of $1.4 million or $.53 per share (basic) on sales of $32.9 million.
Second quarter sales were up 3% compared to the same period a year ago. While
volume was down 1%, price increases and new products each contributed 2% over
the comparable quarter of 1997. Sales for the first half of 1998 were up 9%
compared to the same period a year ago. Volume was up 5%, while prices and new
products were both up 2%, respectively over the same period last year. New
products include vehicular hardware products produced and designed by Eberhard
Manufacturing division and contract malleable iron casting products manufactured
by the Frazer & Jones division. Contract malleable casting sales were up 2% from
the comparable six-month period a year ago. Sales of expansion shells, used in
the underground mining industry, were down 4% for the first half of 1998 versus
the first half of 1997. Sales of expansion shells are expected to be down
slightly in the second half of 1998 as compared to the second half of 1997.
Demand for the Registrant's heavy hardware, servicing the tractor trailer
industry, was up 29% from the first half of 1997. Sales to independent
distributors, original equipment manufacturers of industrial hardware and
vehicular accessories was strong during the first half of 1998 and is expected
to remain strong for the second half of 1998. Sales of custom locks were up 2%
in the second quarter and up 12% for the first half over the comparable period a
year ago. Sales of custom locks are expected to decrease in the second half as
shipments of computer lock applications decline over the comparable period a
year ago. The Registrant's overall results are expected to show further
improvement in the second half of 1998 as compared to the same period of 1997.
Gross margin as a percentage of sales for the three and six months ended July 4,
1998 was approximately 27% compared to 26% for the comparable periods a year
ago. The improvement in gross margin in 1998 for both the three and six month
periods versus the comparable period a year ago is due mainly to increased sales
volume and price increases.
Selling and administrative expenses were down 18% or $550 thousand and down 10%
or $608 thousand for the three and six months ended July 4, 1998 as compared to
the same periods a year ago. Selling and administrative expenses were lower in
the second quarter of 1998 as compared to the same periods in 1997. This was due
primarily to favorable reductions in group insurance costs in 1998. In addition,
one time charges were experienced in 1997 in connection with the early
retirement of the Company's former Chief Executive Officer as well as some
higher costs associated with the Beacon Heights and Laurel Park landfill suits
discussed under legal proceedings below. Additionally, the first half of 1997
included one time charges incurred as a result of a proxy contest.
Interest expense for the second quarter of 1998 was $225 thousand versus $68
thousand for the second quarter of 1997. This increase was due to additional
short-term borrowing to fund the purchase of Common Stock for treasury.
-8-
<PAGE>
Liquidity and Sources of Capital
Cash flows from operations were $3.2 million for the first half of 1998 versus
$1.4 million in the first half of 1997. The change in cash flows resulted from
timing differences for collections of accounts receivable and payments of
liabilities and an increase in inventory. Cash flow from operations was
sufficient to fund capital expenditures and dividend payments to shareholders.
However, the purchase of 178,400 shares of Common Stock for treasury at the end
of the first quarter was funded by borrowing $5 million against the Registrant's
short-term line of credit at the beginning of the second quarter 1998.
Additions to property, plant and equipment were $1.8 million during the first
half of 1998 versus $1.0 million for the comparable period a year ago. Total
1998 capital expenditures are expected to be higher than the expected $2.6
million level of depreciation for the year. A capital expansion program has been
approved for the Registrant's Frazer & Jones division as added manufacturing
capacity is required to accommodate additional contract casting business
expected in 1999. In addition, the Registrant's Canadian subsidiary, Eberhard
Hardware Manufacturing Ltd., is expanding its manufacturing facility to
accommodate increased business from two Canadian trailer manufacturers.
Inventory balances at the end of the second quarter of 1998 of $13 million were
$593 thousand higher than year end 1997 and $702 thousand higher than the second
quarter of 1997. Inventory turns of 4.2 times at the end of the second quarter
of 1998 was comparable to both the previous year end rate and also the second
quarter of 1997. Accounts receivable at the end of the second quarter 1998 were
$8.7 million which was $53 thousand lower than year end and $342 thousand lower
than the second quarter of 1997. The average day's sales in accounts receivable
was 45 days at the end of the second quarter 1998 versus 48 days for the
comparable period a year ago. The decrease in accounts receivable was driven by
increased collection activity.
The Registrant has a $10 million line of credit of which $8.5 million has been
utilized. The Registrant's strong balance sheet and internal cash flow
generation should be sufficient to cover future working capital requirements and
the aforementioned capital expansion programs.
Other Matters
On July 22, 1998, the Board of Directors of The Eastern Company approved a new
Rights Agreement and declared a dividend of one common share purchase right for
each outstanding share of Common Stock, no par value, of the Company. The
dividend is payable on August 21, 1998 to the shareholders of record on August
7, 1998. The description and terms of the Rights are set forth in a Rights
Agreement between the Company and BankBoston, NA, as Rights Agent as filed with
the Securities and Exchange Commission on Form 8-K on August 6, 1998.
On June 24, 1994, the Registrant settled all claims with both the Beacon Heights
Coalition and the Laurel Park Coalition and the respective complaints against
the Registrant on behalf of the Coalitions were dismissed by stipulation. Claims
against the Registrant and certain other defendants filed by the two government
agencies as described in Part II, item 1 below were dismissed by the Court. A
final judgement was entered by the U. S. District Court in the consolidated
proceedings on March 17, 1995. Appeals, however, were filed by the two
government agencies as described in Part II, item 1 below.
-9-
<PAGE>
On November 1, 1996, the United States Court of Appeals for the Second Circuit
reversed the U.S. District Court's ruling dismissing the government agencies'
environmental claims against the Registrant and certain other defendants, and
the environmental claims by the Laurel Park and Beacon Heights Coalitions
against numerous defendants. See further description in Part II, Item 1 below.
In May 1998, the Registrant and its co-defendants entered into a proposed
consent decree with the EPA, which, if approved, would resolve the Registrant's
remaining liability with respect to the Laurel Park and Beacon Heights
landfills. The consent decree is now pending before the United States District
Court.
The Registrant continues to actively monitor the situation. It is management's
opinion that the resolution of these matters will not have a material adverse
effect on the Registrant's financial position, operating results or liquidity.
Note: The preceding information contains statements which reflect the
Registrant's current expectations regarding its future operating performance and
achievements and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those set forth in such statements. The
Registrant is not obligated to update or revise the aforementioned statements
for new developments.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------ ----------------------------------------------------------
Not applicable.
-10-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS -
- -------------------------
In April 1988, Murtha Enterprises Inc. and related parties (collectively
"Murtha"), as the result of a February 1987 suit (docket number N-87-52 PCD)
brought by the U. S. Environmental Protection Agency (the "EPA") and others,
concerning the Beacon Heights and Laurel Park landfills, instituted third-party
actions against approximately 200 companies or individuals including the
Registrant. The underlying suit against Murtha was settled with EPA and the
other parties and the Consent Decree has been approved by the Court.
On September 22, 1988, the EPA filed a complaint against the Registrant and
seven other defendants seeking recovery of present and future response costs
incurred by the United States in connection with the Beacon Heights landfill.
The complaint alleged total damages of approximately $1.8 million ($1.3 million
actual and $.5 million future). On October 31, 1988 the court consolidated the
EPA action against the Registrant with the other cases under docket number
N-87-52 (PCD).
By complaint dated September 6, 1990, the Beacon Heights Coalition (the
"Beacon Coalition"), a group of parties who have entered into a consent order
with EPA, instituted a direct action against the Registrant and approximately
400 other named parties concerning the Beacon Heights landfill. The Beacon
Coalition claimed that these defendants generated or transported hazardous
substances disposed of at the Beacon Heights landfill, and are therefore
responsible for a share of the Beacon Coalition's response costs.
The Registrant has filed answers to both the EPA Complaint and the Beacon
Coalition Complaint.
In March 1991, a Laurel Park Coalition which did not include the Registrant
entered into Consent Decree and Administrative Order by Consent with the EPA and
the State of Connecticut to remediate the Laurel Park landfill. The Consent
Decree has been approved by the Court.
In May 1991, EPA and the State of Connecticut ("State") each filed a
complaint against the Registrant and three other defendants seeking recovery of
present and future response costs incurred in connection with the Laurel Park
landfill. The EPA claims costs in excess of $1.8 million and the state claims
costs in excess of $2.5 million. On July 1, 1991, the court consolidated these
actions against the Registrant with the other cases under docket number N-87-52
(PCD). The Registrant filed answers to both of these complaints.
By order dated February 8, 1994, the court granted a motion filed by
Registrant for judgment on the pleadings against EPA and the state with respect
to each of their claims against Registrant. By motions dated February 22, 1994
and February 23, 1994, EPA and the state respectively moved for reconsideration
of the court's order, which motions were denied.
By order dated February 8, 1994, the court permitted the Laurel Park
Coalition to file a complaint against eight parties including the Registrant,
which claims were to be assigned for trial if the Coalition files a complaint.
On June 24, 1994 , the Registrant settled all claims with both the Beacon
Heights Coalition and the Laurel Park Coalition and the respective complaints
against the Registrant on behalf of the Coalitions were dismissed by
stipulation.
-11-
<PAGE>
On March 17, 1995, the U.S. District Court entered a final judgement in the
consolidated proceedings (docket number N-87-52(PCD)) which included the
granting of Registrant's motion for judgement on the pleadings. As a result of
this judgement, no complaints were then pending in the U.S. District Court
involving the Registrant.
On April 17, 1995, the State filed its notice of appeal from this final
judgement with the U.S. District Court. On May 10, 1995, EPA filed its notice of
appeal from the judgement.
On November 1, 1996 the U.S. Court of Appeals for the Second Circuit
reversed the District Court ruling dismissing EPA and State of Connecticut
environmental claims against the Registrant and environmental claims by the
Laurel Park and Beacon Heights Coalitions against numerous defendants. The Court
of Appeals remanded the case to the U.S. District Court in Connecticut for
further proceedings. The governmental lawsuits, brought after governmental
settlements with the Coalitions, seek to recover remediation costs of the
governments unreimbursed by the Coalition settlements or the settlement with the
owner/operator in connection with the Laurel Park and Beacon Heights landfills.
The EPA has claimed that the Registrant and two other corporate defendants are
responsible for an aggregate of $3.1 million in remediation costs with respect
to the Beacon Heights landfill and that the Registrant and one other corporate
defendant are responsible for an aggregate of $2.3 million in remediation costs
with respect to the Laurel Park landfill; Connecticut has claimed that the
Registrant and one other defendant are responsible for an aggregate of $.8
million in remediation costs with respect to the Laurel Park landfill. The
Registrant intends to continue to vigorously contest any liability relating to
these governmental claims. The Registrant would also pursue its rights of
contribution against the other defendants in the event of any liability, which
the Registrant expects would significantly reduce any liability imposed. In
addition, it would file claims against its insurance carriers.
In its decision, the Second Circuit also reversed the U.S. District Court's
dismissal of numerous actions brought by the Beacon Heights and Laurel Park
Coalitions against non-settling parties. These Coalitions assumed full
responsibility for cleaning up the two landfill sites and, as noted above, the
Registrant has settled with both Coalitions with respect to liability at these
sites in 1994. It is believed that many of the defendants in the pending
Coalition actions and certain other persons who have not been sued by the
governments have a responsibility for remediation cost and may be brought into
these actions as co-defendants with the Registrant. The Registrant intends to
resist the EPA claims and if necessary bring these other persons into the action
to share the costs of reimbursements to the government if ultimately imposed.
After rejecting motions for rehearing, the Court of Appeals returned the
cases to the US District Court. On July 21, 1997, the District Court issued an
order appointing a Special Master to mediate, find facts if necessary and report
back to the court within six months as to all remaining claims for contribution.
The Registrant is actively participating in this process as it pertains to the
EPA Claims against the Registrant and the Registrant's contribution rights
against the United States and third-party defendants. In January 1998, the
Registrant entered into a proposed consent decree with the State which was
approved by the court.
In May 1998, the Registrant and its co-defendants entered into a proposed
consent decree with the EPA, which, if approved, would resolve the Registrant's
remaining liability with respect to the Laurel Park and Beacon Heights
landfills. The consent decree is now pending before the United States District
Court.
The Registrant will continue to vigorously pursue its legal interest in this
matter. The Registrant believes that these actions will not have a materially
adverse impact on the Registrant's consolidated financial position, operating
results or liquidity.
There are no other significant legal proceedings, other than ordinary
routine litigation incidental to the business, to which either the Registrant or
any of its subsidiaries is a party of or which any of their property is the
subject.
-12-
<PAGE>
ITEM 2 CHANGES IN SECURITIES
- ------ ---------------------
On July 22, 1998, the Board of Directors of the Registrant
approved a new Rights Agreement and declared a dividend of one
common share purchase rights for each outstanding share of
common stock, no par value, of the Company. For a description
of the rights, see the Form 8-K filed with the Securities and
Exchange Commisssion on August 6, 1998.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES-
- ------ --------------------------------
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
None
ITEM 5 OTHER INFORMATION
- ------ -----------------
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
On August 6, 1998, the Registrant filed with the Securities
and Exchange Commission a Form 8-K describing the new Rights
Agreement approved by the Board of Directors on July 22, 1998
and the declaration of a dividend of one common stock purchase
right for each outstanding share of common stock held of
record on August 7, 1998. See Part I, Item 2, Other Matters
and Part II, Item 2, Changes in Securities.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE EASTERN COMPANY
-------------------
(Registrant)
DATE: August 18, 1998 /s/Leonard F. Leganza
--------------- ---------------------
Leonard F. Leganza
President and Chief Executive Officer
DATE: August 18, 1998 /s/Donald E. Whitmore, Jr.
--------------- --------------------------
Donald E. Whitmore, Jr.,
Executive Vice President and
Chief Financial Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
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<PERIOD-END> JUL-4-1998
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