The Eastern Company Reports Results for the Third Quarter of 2002

10/23/2002 1:17:00 PM

NAUGATUCK, Conn., Oct 23, 2002 (BUSINESS WIRE) -- The Eastern Company (AMEX:EML) today announced its operating results for the third quarter. Third quarter net income increased 28% to $678 thousand, or $.19 per diluted share compared to the $529 thousand or $.15 per diluted share reported for the third quarter of 2001. Sales for the third quarter of 2002 were $20.0 million, compared to $20.6 million for the third quarter of 2001.

Year-to-date earnings for the nine month period ended September 28, 2002 were $2.1 million or $.57 per diluted share, compared to $2.2 million or $.61 per diluted share for the same period in 2001. Net sales for nine months were $61.7 million compared to $63.9 million as compared to the same period a year ago.

Leonard F. Leganza, President and CEO stated, "We are pleased with the results for the third quarter considering that we are operating in a very difficult economic environment for manufacturing companies. While sales are slightly lower than the comparable quarter of 2001, net earnings in the third quarter of 2002 reflect improved product profit margins, when compared to the same period a year ago. The Company also continues to invest in new product development as well as more productive manufacturing methods which helps improve our profitability.

Although we expect the fourth quarter to continue to be affected negatively by a slow economy, we continue to look for acquisitions which provide us with opportunities for future growth. Effective October 1, 2002 the Company acquired a Canadian company that manufactures lightweight sleeper boxes used in Class 8 trailer trucks. Utilizing core composite honeycomb technology, this material produces extremely lightweight panels ranging from low strength and stiffness, for low load applications such as domestic internal doors to high strength and stiffness for components used in aircraft structures. While the impact of this acquisition is not yet material to the Company's consolidated financial statements, it lends itself to the types of markets we presently serve in providing locking, latching and other hardware devices to the industrial, transportation and marine industries. We intend to invest the resources necessary to expand the current operation and introduce the composite honeycomb technology into market areas such as automotive, recreational vehicles and the marine industries. Using The Eastern Company's strengths in manufacturing and marketing we are confident we can expand the use of that technology into the markets we serve and beyond."

Mr. Leganza further commented, "Our metal casting segment has been adversely affected by the strong U. S. dollar, which has continued to facilitate greater foreign competition in our contract casting business. Consequently, beginning in the third quarter the Company's Metal Product Segment has focused its business efforts in the market for its proprietary mine roof support anchors. In addition, the Company will continue to invest in its ductile iron capabilities and the development of a mechanical mine roof support anchor to effectively compete with other products in the market for roof support systems. These changes to our business model had only a minor impact on our expenses."

The Eastern Company is a 144-year-old manufacturer of industrial hardware, security products and metal castings. It operates from ten locations in the U.S., Canada, Mexico, Taiwan and China. The diversity of the Company's products enables it to respond to the changing requirements of a broad array of markets.

Forward-Looking Statements: Information in this news release contains statements which reflect the Company's current expectations regarding its future operating performance and achievements. Actual results may differ due to the many economic uncertainties that affect the Company's business environment. Further information about the potential factors, which could affect the Company's financial results, are included in the Company's reports and filings with the Securities and Exchange Commission. The Company is not obligated to update or revise the aforementioned statements for those new developments.

Statement of Consolidated Income (unaudited)
                       THREE Months Ended       NINE Months Ended
                      13 wks       13 wks      39 wks       39 wks
                     Sept. 28,    Sept. 29,   Sept. 28,    Sept. 29,
                       2002         2001        2002         2001
Net Sales          $20,040,682  $20,551,161  $61,652,944  $63,918,185
Net Income After Tax   678,043      529,272    2,113,668    2,231,359
Net Income Per Share:
    Basic                $0.19        $0.15        $0.58        $0.62
    Diluted              $0.19        $0.15        $0.57        $0.61
Weighted average
 shares outstandings:
    Basic            3,632,046    3,624,180    3,630,644    3,621,924
    Diluted          3,632,046    3,648,714    3,697,051    3,680,441
The Eastern Company
Leonard F. Leganza or John L. Sullivan III, 203/729-2255