1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year ended December 28,2024OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1
2、934 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.Employerincorporation or organization)Identification No.)3 Enterprise Drive,Suite 408,Shelto
3、n,Connecticut 06484(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(203)729-2255 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,No Par ValueEMLNASDA
4、Q Global Market Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13
5、or Section 15(d)of the Act.Yes No 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 thepreceding 12 months(or for such shorter period that the registrant was required to file such reports),an
6、d(2)has been subject to such filing requirements for the past 90days.Yes 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-Tduring the preceding 12 months(or for such shorter period
7、that the registrant was required to submit such files).Yes 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 growthcompany.See definitions of“large accelerated filer,”“accelerated file
8、r,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the ExchangeAct.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the
9、 extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal
10、 control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of
11、 the registrant included in the fi ling reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of theregistrants execu
12、tive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No As of June 29,2024,the last day of registrants most recently completed second fiscal quarter,the aggregate market va
13、lue of the voting stock held by non-affiliates of theregistrant was$124,230,742(based on the closing sales price of the registrants common stock on the last trading date prior to that date).Shares of the registrantscommon stock held by each officer and director and shares held in trust by the pensio
14、n plans of the Company have been excluded in that such persons may be deemed tobe affiliates.This determination of affiliate status is not necessarily a conclusive determination for other purposes.As of February 15,2025,6,135,278 shares of the registrants common stock,no par value per share,were iss
15、ued and outstanding.DOCUMENTS INCORPORATED BY REFERENCE Certain information required for Part III of this report is incorporated herein by reference to portions of the proxy statement for the Companys 2025 Annual Meeting ofShareholders,which will be filed with the Securities and Exchange Commission
16、pursuant to Regulation 14A not later than 120 days after December 28,2024.The Eastern Company Form 10-K FOR THE FISCAL YEAR ENDED DECEMBER 28,2024 TABLE OF CONTENTS Page Table of Contents 2 Safe Harbor Statement 3 PART I Item 1.Business 4 Item 1A.Risk Factors 6 Item 1B.Unresolved Staff Comments 15 I
17、tem 1C.Cybersecurity 15 Item 2.Properties 17 Item 3.Legal Proceedings 18 Item 4.Mine Safety Disclosures 18 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6.Reserved 19 Item 7.Managements Discussion and Analysis of Fin
18、ancial Condition and Results of Operations 20 Item 7A.Quantitative and Qualitative Disclosures About Market Risk 30 Item 8.Financial Statements and Supplementary Data 31 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 69 Item 9A.Controls and Procedures 69
19、Item 9B.Other Information 71 Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 71 PART III Item 10.Directors,Executive Officers,and Corporate Governance 71 Item 11.Executive Compensation 71 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related S
20、tockholder Matters 71 Item 13.Certain Relationships and Related Transactions,and Director Independence 72 Item 14.Principal Accountant Fees and Services 72 PART IV Item 15.Exhibits and Financial Statement Schedules 73 Exhibit Index 74 Item 16.Form 10-K Summary 76 Signatures 77 2Table of Contents SAF
21、E HARBOR STATEMENT UNDER THE PRIVATE SECURITIESLITIGATION REFORM ACT OF 1995 Statements contained in this Annual Report on Form 10-K of The Eastern Company(together with its consolidated subsidiaries,unless otherwise specified or suggestedby the context,the“Company,”“Eastern,”“we,”“us,”or“our”)that
22、are not based on historical facts are“forward-looking statements”within the meaning of the PrivateSecurities Litigation Reform Act of 1995.Forward-looking statements may be identified by the use of forward-looking terminology such as“would,”“should,”“could,”“may,”“will,”“expect,”“believe,”“estimate,
23、”“anticipate,”“intend,”“continue,”“plan,”“potential,”“opportunities,”or similar terms or variations of those terms or thenegative of those terms.There are many factors that affect the Companys business and the results of its operations and that may cause the actual results of operations infuture per
24、iods to differ materially from those currently expected or anticipated.These factors include:risks associated with doing business overseas,including fluctuations in exchange rates and the inability to repatriate foreign cash,the impact on coststructure and on economic conditions as a result of actua
25、l and threatened increases in trade tariffs and the impact of political,economic,and socialinstability;the impact of tariffs,trade sanctions or political instability on the availability or cost of raw materials;the impact of higher raw material and component costs and cost inflation,supply chain dis
26、ruptions and shortages,particularly with respect to steel,plastics,scrap iron,zinc,copper,and electronic components;delays in delivery of our products to our customers;the impact of global economic conditions and interest rates,and more specifically conditions in the automotive,construction,aerospac
27、e,energy,oil and gas,transportation,electronic,and general industrial markets,including the impact,length and degree of economic downturns on the customers and markets weserve and demand for our products,reductions in production levels,the availability,terms and cost of financing,including borrowing
28、s under creditarrangements or agreements,and the impact of market conditions on pension plan funded status;restrictions on operating flexibility imposed by the agreement governing our credit facility;the inability to achieve the savings expected from global sourcing of materials;lower-cost competiti
29、on;our ability to design,introduce and sell new or updated products and related components;market acceptance of our products;the inability to attain expected benefits from acquisitions or dispositions or the inability to effectively integrate acquired businesses and achieve expectedsynergies;costs a
30、nd liabilities associated with environmental compliance;the impact of climate change,natural disasters,geopolitical events,and public health crises,including pandemics and epidemics,and any related Companyor government policies or actions;military conflict(including the Russia/Ukraine conflict,the c
31、onflict in the Middle East,the possible expansion of such conflicts and geopoliticalconsequences)or terrorist threats and the possible responses by the U.S.and foreign governments;failure to protect our intellectual property;cyberattacks;and materially adverse or unanticipated legal judgments,fines,
32、penalties,or settlements.The Company is also subject to other risks identified and discussed in Item 1A,Risk Factors,and Item 7,Managements Discussion and Analysis of Financial Conditionand Results of Operations,of this Form 10-K and that may be identified from time to time in our quarterly reports
33、on Form 10-Q,current reports on Form 8-K and otherfilings we make with the Securities and Exchange Commission(the“SEC”).Although the Company believes it has an appropriate business strategy and the resourcesnecessary for its operations,future revenue and margin trends cannot be reliably predicted an
34、d the Company may alter its business strategies to address changingconditions.Also,the Company makes estimates and assumptions that may materially affect reported amounts and disclosures.These relate to valuation allowances foraccounts receivable and excess and obsolete inventories,accruals for pens
35、ions and other postretirement benefits(including forecasted future cost increases and returns onplan assets),provisions for depreciation(estimating useful lives),uncertain tax positions,and,on occasion,accruals for contingent losses.The Company undertakes noobligation to update,alter,or otherwise re
36、vise any forward-looking statements,whether written or oral,that may be made from time to time,whether because of newinformation,future events,or otherwise,except as required by law.3Table of Contents PART I ITEM 1 BUSINESS General Development of Business The Eastern Company was incorporated under t
37、he laws of the State of Connecticut in October 1912,succeeding a co-partnership established in October 1858.Thebusinesses of the Company design,manufacture and sell unique engineered solutions for industrial markets.Today,the Company maintains fifteen physical locations across North America and Asia
38、.BUSINESS HIGHLIGHTS In the third quarter of 2024,the Company decided to sell Big 3 Mold and determined that the Big 3 Mold business met the criteria to be held for sale and that the assetsheld for sale qualify for discontinued operations.As such,the financial results of the Big 3 Mold business are
39、reflected in our consolidated statements of income asdiscontinued operations for all periods presented.Additionally,current and non-current assets and liabilities of discontinued operations are reflected in the consolidatedbalance sheets for all periods presented.On June 29,2023,the Company acquired
40、 certain assets of Sureflex,Inc.(“Sureflex”).Sureflex,which manufactures tractor-trailer electrical connection cable assemblies,is part of Easterns Velvac subsidiary.On May 1,2023,the Company announced plans to close Associated Toolmakers,Limited,its European mold tooling service facility based in t
41、he U.K.The closure wascompleted in the second quarter of 2023.Description of Business The Eastern Company manages industrial businesses that design,manufacture and sell unique engineered solutions to industrial markets.We believe Easterns businessesoperate in industries with long-term macroeconomic
42、growth opportunities.Eastern manages the financial,operational,and strategic performance of its businesses to increase cash generation,operating earnings,and long-term shareholder value.Among other things,Eastern monitors the financial and operational performance of each of its businesses and instil
43、ls consistent financial discipline.Easternsmanagement analyzes and pursues prudent organic growth strategies and works to execute attractive external growth and acquisition opportunities.In addition,the Company seeks to recruit and retain talented managers to operate its businesses.We look for leade
44、rs who are accountable,maintain cost discipline,actquickly,and build strong followership.The Eastern Company has one reportable segment:Engineered Solutions.The Engineered Solutions segment provides engineered solutions to support our customersneeds primarily in the commercial transportation and log
45、istics markets.The Chief Operating Decision Maker(CODM),who is the Companys Chief Executive Officer,uses both segment gross profit and segment profit or loss from operations before interest and income taxes to allocate resources(including employees,property,andfinancial or capital resources)for the
46、Engineered Solutions segment predominantly in the annual budget and forecasting process.Company Operations The Engineered Solutions segment consists of Big 3 Precision,including Big 3 Precision Products Inc.(“Big 3 Products”)and Big 3 Mold,and Hallink Moulds,Inc.(“Hallink Moulds”or“Hallink”);Eberhar
47、d Manufacturing Company(“Eberhard Manufacturing”),Eastern Industrial Ltd,World Lock Company Ltd.,DongguanReeworld Security Products Ltd.,and World Security Industries(together,“Eberhard”);and Velvac Holdings Inc.(“Velvac”).These businesses design,manufacture,andmarket a diverse product line of custo
48、m and standard vehicular and industrial hardware,including turnkey returnable packaging solutions,access and security hardware,mirrors,and mirror-cameras.Big 3 Products turnkey returnable packaging solutions are used in the assembly processes of vehicles,aircraft,and durable goods and works with lea
49、ding originalequipment manufacturers(“OEMs”)to design and produce custom returnable transport packaging to integrate with OEM assembly processes.4Table of Contents Big 3 Mold is a global leader in the design and manufacture of blow mold tools and in the production processes of plastic packaging prod
50、ucts,packaged consumer goodsand pharmaceuticals.Hallink Moulds is a leader in innovative injection blow mold tooling and is a leading supplier of blow molds and change parts to the food,beverage,healthcare,and chemical industries.Hallink specializes in the design,development and manufacture of 2-ste
51、p stretch blow molds,and related components for the stretchblow molding industry offering integrated turnkey solutions to its customers worldwide.Eberhard,a global leader in the engineering and manufacturing of access and security hardware,offers a standard product line of rotary latches,compression
52、 latches,draw latches,hinges,camlocks,key switches,padlocks,and handles,among other products,as well as comprehensive development and program management services forcustom electromechanical and mechanical systems designed for specific OEMs and customer applications.Eberhards products are found in an
53、 expansive range ofapplications and products globally.Velvac is a designer and manufacturer of proprietary vision technology for OEMs and aftermarket applications,and a leading provider of aftermarket components to theheavy-duty truck market in North America.Velvac serves diverse,niche segments with
54、in the heavy-and medium-duty truck,motorhome,and bus markets.Human Capital We believe our success depends on the skills,experience,and industry knowledge of our key talent.As such,our management team places significant focus and attentionon the attraction,development,and retention of employees,as we
55、ll as ensuring our corporate culture reflects Easterns values,and our Board of Directors(our“Board”)provides oversight for various employee initiatives.Easterns values and our Code of Business Conduct and Ethics guide our actions,reflect our culture,and drive ourperformance.We have made and continue
56、 to make investments in training,and we have a well-established performance management process.An engaged,innovative,skilled,and collaborative workforce is critical to our continued leadership in the design and manufacture of unique engineered solutions toindustrial markets.We operate globally under
57、 policies and programs that provide competitive wages,benefits,and terms of employment.We are committed to efforts toincrease diversity and foster an inclusive work environment that supports our global workforce through recruiting efforts and equitable compensation policies.The health and safety of
58、our employees is also a top priority.Our focus on the reduction of injuries and illnesses has significantly improved our safety performance.Wehave attained these improvements by fostering a global safety culture supported with regular training and education that includes robust systems and philosoph
59、iescentered on personal responsibility and accountability.The Board has an Environment,Health,and Safety Committee that is responsible for reviewing the overallperformance of the Companys health and safety program and making recommendations to management.There is a high level of leadership engagemen
60、t,ensuringinstallation and maintenance of appropriate safety equipment at all our manufacturing sites worldwide combined with vigorous reviews of root causation and systemiccorrective actions of any safety incidents that may occur.Employee levels are managed to align with business demand and managem
61、ent believes it currently has sufficient human capital to operate its business successfully.As ofDecember 28,2024,we employed 1,246 full-time employees:612 in the United States and 634 in other countries.Approximately 21%of employees in the United Statesare represented by collective bargaining agree
62、ments.We believe that our relations with employees,unions and works councils are in good standing.General Patent and trademark protection for the various product lines of the Company is limited,but the Company believes the current patents and trademark protection issufficient to protect the Companys
63、 competitive positions.Patent durations are from 1 to 20 years.No business operation is dependent on any patent,nor would the loss ofany patent have any material adverse effect on the Companys business.Customers of the Company are broad-based by geography and by market,and sales are not highly conce
64、ntrated by customer.Only one customer exceeded 10%ofaccounts receivable for each of fiscal year 2024 and fiscal year 2023.Foreign sales were not significant for fiscal years 2024 and 2023.The Company encounters competition in its business.Imports from Asia and Latin America with favorable currency e
65、xchange rates and low-cost labor have createdadditional pricing pressure.The Company competes successfully by offering high-quality,custom engineered products on a timely basis.To compete,the Companydeploys internal engineering resources,maintains cost effective manufacturing capabilities through it
66、s wholly owned Asian subsidiaries,expands its product lines throughproduct development and acquisitions,and maintains sufficient inventory for fast turnaround of customer orders.5Table of Contents The Company does not anticipate that compliance with federal,state,or local environmental laws or regul
67、ations is likely to have a material effect on the Companyscapital expenditures,earnings,or competitive position.We anticipate that the new U.S.presidential administration will seek to implement a regulatory reform agenda thatis significantly different than that of the prior administration,which may
68、impact agency rulemaking and enforcement priorities,which could,in turn,have a materialeffect on our business.The Company obtains materials from nonaffiliated domestic sources,as well as from Company-affiliated and unaffiliated sources in Asia.The Companys continuing operations ratio of working capi
69、tal(current assets less current liabilities)to sales was 25.1%in 2024 and 25.7%in 2023.Working capitalincludes cash held in various foreign subsidiaries.Other factors affecting working capital include our average days sales in accounts receivable,inventory turnover ratio,and payment of vendor accoun
70、ts payable.In some cases,the Company must hold extra inventory due to extended lead time in receiving products ordered from our foreignsubsidiaries to ensure the product is available for our customers.The Company continues to monitor working capital needs with the goal of reducing our ratio of worki
71、ngcapital to sales.Available Information The Company makes available,free of charge through its Internet website at http:/,its annual report on Form 10-K,quarterly reports on Form10-Q,current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of t
72、he Securities Exchange Act of 1934,asamended(the“Exchange Act”),as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.The information posted on theCompanys website is not incorporated into this Form 10-K and is not part of this Form 10-K.The SEC m
73、aintains an internet site at www.sec.gov that contains reports,proxy and information statements,and other information regarding issuers that file electronically with the SEC.The Companys reports filed with,or furnished to,theSEC are available on that website.ITEM 1A RISK FACTORS The Companys busines
74、s is subject to a variety of risks and uncertainties,including,without limitation,the risks and uncertainties described below.In addition to theother information contained in this Form 10-K and the Companys other filings with the SEC,these risk factors should be considered carefully in evaluating th
75、eCompanys business.If any of these risks,or any risks not presently known to the Company or currently deemed immaterial by the Company,materialize,the Companysbusiness,reputation,stock price,financial condition or results of operations could be materially adversely affected,and the Company may not b
76、e able to achieve its goalsor expectations.This section should be read in conjunction with Item 7,Managements Discussion and Analysis of Financial Condition and Results of Operations,and the consolidatedfinancial statements and accompanying notes in Item 8,Financial Statements and Supplementary Data
77、,of this Form 10-K.Risks Related to Competition and Global Operations The Companys business is subject to risks associated with conducting business overseas.International operations have been and could in the future be adversely affected by changes in political and economic conditions,trade protecti
78、on measures,restrictionson repatriation of earnings,differing intellectual property rights and changes in regulatory requirements that restrict the sales of products or increase costs.Changes inexchange rates between the U.S.dollar and foreign currencies could result in increases or decreases in ear
79、nings and may adversely affect the value of the Companysassets outside the United States.Increased pricing in response to fluctuations in foreign currency exchange rates may offset portions of the currency impacts but couldalso have a negative impact on demand for the Companys products,which would a
80、ffect sales and profits.Some of the Companys competitors import products from Asiaand Latin America that benefit from favorable currency exchange rates and lower cost labor,which has created downward pricing pressure with respect to the Companysproducts that is likely to continue.Exchange rate fluct
81、uations have at times and could in the future exacerbate this pricing pressure and impair the ability of theCompanys products to compete with products imported from regions with favorable exchange rates.6Table of Contents The Companys operations are also subject to the effects of international trade
82、 agreements and regulations.These trade agreements could impose requirements thatadversely affect the Companys business,such as,but not limited to,setting quotas on products that may be imported from a particular country into the Companys keymarkets in North America.The Companys ability to import pr
83、oducts in a timely and cost-effective manner may also be affected by conditions at ports or issues thatotherwise affect transportation and warehousing providers,such as port and shipping capacity,labor disputes,severe weather or increased homeland security requirementsin the United States or other c
84、ountries.These issues could delay importation of products or require the Company to locate alternative ports or warehousing providers toavoid disruption to customers.These alternatives may not be available on short notice or could result in higher transit costs,which could have an adverse impact on
85、theCompanys business,financial conditions,or results of operations.In addition,the Companys growth strategy involves expanding sales of its products into foreign markets.There is no guarantee that the Companys products will beaccepted by foreign customers or how long it may take to develop sales of
86、the Companys products in these foreign markets.Tariffs,trade sanctions and political instability may impact the availability or cost of raw materials,which could adversely affect our margins,ability to meetcustomer demand,business,results of operations and financial condition.The Company obtains raw
87、 materials used in the production of its products from domestic sources,as well as from Company-affiliated and unaffiliated sources in Asia.Changes in international trade duties and other aspects of international trade policy,both in the United States and abroad,could materially impact the cost of t
88、hese rawmaterials.For example,from March 2018 until March 2021,the United States imposed an additional 25%tariff under Section 232 of the Trade Expansion Act of 1962,asamended,on steel products imported into the United States.While these tariffs have mostly been lifted on imports from countries othe
89、r than China,imports from manyjurisdictions are subject to limitations on volume,after which substantial tariffs will be reimposed.The United States also imposed a 10%tariff on all aluminum importsinto the United States,with initial exemptions for aluminum imported from certain U.S.trading partners.
90、Such actions could increase steel and aluminum costs anddecrease supply availability.In response to the invasion of Ukraine by the military forces of the Russian Federation,the United States,the European Union,and otherjurisdictions have imposed sanctions that,among other things,prohibit the importa
91、tion of a wide array of commodities and products from Russia,which is a major globalsupplier of nickel.Any increase in nickel,steel and/or aluminum prices,whether as a result of existing tariffs and trade policy or as a result of new tariffs or policies thatmay be imposed by the new presidential adm
92、inistration or otherwise,that is not offset by an increase in the Companys prices could have an adverse effect on theCompanys business,financial position,results of operations or cash flows.In addition,if the Company is unable to acquire timely nickel,steel or aluminum supplies,theCompany may need t
93、o decline customer orders,which could also have an adverse effect on the business,financial position,results of operations or cash flows of theCompany.Supply chain disruptions,delays in production,and forecast inaccuracies have affected and could continue to affect our ability to meet customer deman
94、d,leadto higher costs,result in excess inventory,and could have an adverse effect on our results of operations and financial condition.Raw materials needed to manufacture the Companys products are obtained from numerous suppliers.Under normal market conditions,these raw materials are readilyavailabl
95、e on the open market from a variety of producers.However,from time to time,the prices and availability of these raw materials fluctuate due to changes inexisting and expected rates of inflation,which could impair the Companys ability to procure the required raw materials for its operations or increa
96、se the cost ofmanufacturing its products.The Company may be unable to pass all of these price increases on to its customers and could experience reductions in its profit margins.Anydecrease in the availability of raw materials could impair the Companys ability to meet production requirements in a ti
97、mely manner or at all.Similarly,any prolongedinterruption in service by one of our key component suppliers could have a material adverse effect on our business,results of operations and financial condition.Additionally,we may not be able to establish additional or replacement suppliers for such comp
98、onents within a reasonable period of time,or on commercially reasonableterms,if at all,which could result in delays or interruptions in our operations,which in turn would adversely affect our business,results of operations and financialcondition.7Table of Contents The Company faces active global com
99、petition and if it does not compete effectively,its business may suffer.The Company encounters competition in all its business operations,and imports from Asia and Latin America with favorable currency exchange rates and low-cost laborhave resulted in pricing pressure.The Company competes with other
100、 companies that offer comparable products or that produce different products appropriate for the sameuses.To remain profitable and defend market share,the Company must continue to offer high quality custom engineered products on a timely basis,develop new productsor update existing products to compe
101、te with new or updated products introduced by competitors,deploy internal engineering resources,maintain cost-effectivemanufacturing capabilities through its wholly owned Asian subsidiaries,expand its product lines through product development and acquisitions,and maintain sufficientinventory for fas
102、t turnaround of customer orders.Additionally,technological developments and enhancements of products and services offerings in our industry mayrequire an expanded use of artificial intelligence(“AI”)and machine learning;if we are unable to keep pace with the rate of these and other developments,our
103、ability toeffectively compete could be adversely affected.We expect the level of competition to remain high in the future,which,if not effectively matched or exceeded,couldlimit our ability to maintain or increase our profitability.The Company may not be able to compete effectively on all these fron
104、ts and with all its competitors,and thefailure to do so could have a material adverse effect on its sales and profit margins.Furthermore,the Company may have to reduce prices on its products and services,or make other concessions,to stay competitive and retain market share.Pricereductions taken by t
105、he Company in response to customer and competitive pressures,as well as price reductions and promotional actions taken to drive demand that maynot result in anticipated sales levels,could also negatively impact the Companys business.Changes in competition in the markets that the Company services cou
106、ld impact revenues and earnings.Any change in competition may result in lost market share or reduced prices,which could result in reduced profits and margins.This may impair the ability to grow oreven maintain current levels of revenues and earnings.The loss of certain customers could adversely affe
107、ct the Companys business,financial condition,or results ofoperations until such business is replaced,and no assurances can be made that the Company would be able to regain or replace any lost customers.Risks Related to Acquisitions,Dispositions,and Organic Growth The inability to develop new or upda
108、ted products could limit growth.Demand for new products,or the need to update existing products to compete with new or updated products offered by competitors,could adversely affect the Companysperformance,ability to maintain current levels of revenues and earnings,and prospects for future growth if
109、 the Company were unable to develop and introduce newcompetitive products or updates to existing products at favorable profit margins.The uncertainties associated with developing and introducing new products or updates toexisting products,such as the market demands and the costs of development and p
110、roduction,may impede the successful development and introduction of new products orupdates to existing products.Acceptance of the new or updated products may not meet sales expectations due to several factors,such as the Companys potential inabilityto accurately predict market demand or to resolve t
111、echnical issues in a timely and cost-effective manner.Additionally,the inability to develop new or updated products ona timely basis could result in the loss of business to competitors.The inability to identify or complete acquisitions could limit growth.The Companys future growth may partly depend
112、on its ability to acquire and successfully integrate new businesses.The Company intends to seek additional acquisitionopportunities,both to expand into new markets and to enhance the Companys position in existing markets.However,there can be no assurances that the Company willbe able to successfully
113、 identify suitable candidates,negotiate appropriate terms,obtain financing on acceptable terms,complete proposed acquisitions,successfullyintegrate acquired businesses or expand into new markets.Once acquired,operations may not achieve anticipated levels of revenues or profitability.Acquisitions inv
114、olve risk,including difficulties in the integration of the operations,technologies,services,and products of the acquired companies and the diversion ofmanagements attention from other business concerns.Although the Companys management will endeavor to evaluate the risks inherent in any particular tr
115、ansaction,there can be no assurances that the Companys management will properly ascertain all such risks.In addition,prior acquisitions have resulted,and future acquisitionscould result in the incurrence of substantial debt and other expenses.Future acquisitions may also result in potentially diluti
116、ve issuances of equity securities.Difficultiesencountered with acquisitions may have a material adverse effect on our business,financial condition,and results of operations.8Table of Contents We may be unable to successfully execute acquisitions or dispositions or effectively integrate businesses we
117、 may acquire in the future.We regularly review our portfolio of businesses and pursue growth through acquisitions.We also regularly review our operations and results to identify businesses that nolonger fit within our core capabilities,offerings,and markets and that we may determine to divest.We may
118、 not be able to complete these acquisition or dispositiontransactions on favorable terms,on a timely basis,or at all,and the success of any such acquisitions depends on our ability to combine the acquired business with ourexisting business in a manner that does not disrupt our and the acquired busin
119、esss ongoing relationships with customers,suppliers,and employees.Our results ofoperations and cash flows have been and may in the future be adversely impacted by(i)the failure of acquired businesses to meet or exceed expected returns,includingrisk of impairment;(ii)the failure to integrate multiple
120、 acquired businesses into the Company simultaneously and on schedule or to achieve expected synergies;(iii)thediscovery of unanticipated liabilities,cybersecurity and compliance issues,labor relations difficulties or other problems in acquired businesses for which we lackcontractual protections,or i
121、nsurance or indemnities;(iv)the potential disruption of our ongoing operations and distraction of management away from oversight of theseactivities that may be caused by the pursuit of acquisition or disposition transactions;(v)failure to realize the anticipated benefits and cost savings of a transa
122、ction fully orwithin the expected time frame,or at all.Risks Related to Technology and Information Security Our technology is important to the Companys success and the failure to protect this technology could put the Company at a competitive disadvantage.Some of the Companys products rely on proprie
123、tary technology;therefore,the Company believes that the development and protection of intellectual property rightsthrough patents,copyrights,trade secrets,trademarks,confidentiality agreements and other contractual provisions are important to the future success of its business.Despite the Companys e
124、fforts to protect proprietary rights,unauthorized parties or competitors may copy or otherwise obtain and use the Companys products ortechnology.Actions to enforce these rights may result in substantial costs and diversion of resources and the Company makes no assurances that any such actions will b
125、esuccessful.In addition to the United States,we have applied for intellectual property protection in other jurisdictions with respect to certain innovations and new products,productfeatures,and processes.The laws of certain foreign countries in which we do business,or may contemplate doing business
126、in the future,do not recognize intellectualproperty rights or protect them to the same extent as U.S.law.As a result,these factors could weaken our competitive advantage with respect to our products,services,and brands in foreign jurisdictions,which could adversely affect our financial performance.W
127、e may also encounter significant problems in protecting and defending ourlicensed and owned intellectual property in foreign jurisdictions.For example,China currently affords less protection to a companys intellectual property than some otherjurisdictions.As such,the lack of strong patent and other
128、intellectual property protection in China may significantly increase our vulnerability regarding unauthorizeddisclosure or use of our intellectual property and undermine our competitive position.Proceedings to enforce our intellectual property rights in foreign jurisdictions couldresult in substanti
129、al cost and divert our efforts and attention from other aspects of our business.The Company relies on information and technology for many of its business operations,which could fail and cause disruption to the Companys businessoperations.The Companys business operations are dependent upon informatio
130、n technology networks and systems to securely transmit,process and store electronic information andto communicate among its locations around the world and with clients and vendors.A shut-down of,or inability to access,one or more of the Companys facilities,apower outage,a ransomware incident,or a fa
131、ilure of one or more of the Companys information technology,telecommunications or other systems could significantlyimpair the Companys ability to perform such functions on a timely basis.Computer viruses,cyberattacks,other external hazards and human error could result in themisappropriation of asset
132、s or sensitive information,corruption of data or operational disruption.If sustained or repeated,such a business interruption,system failure,service denial or data loss and damage could result in a deterioration of the Companys ability to write and process orders,provide customer service,or perform
133、othernecessary business functions.9Table of Contents A breach in the security of the Companys software or information technology systems could harm its reputation,result in a loss of current and potentialcustomers,and subject the Company to material claims,which could materially harm our operating r
134、esults and financial condition.If the Companys security measures are breached,an unauthorized party may obtain access to the Companys data or users or customers data.In addition,cyberattacksand similar acts could lead to interruptions and delays in operations or customer processing or a loss or brea
135、ch of the Companys or a customers data.Because thetechniques used to obtain unauthorized access,disable,or degrade service,or sabotage systems change frequently and often are not recognized until launched against atarget,the Company may be unable to anticipate these techniques or to implement adequa
136、te preventative measures.The risk that these types of events could seriouslyharm the Companys business is likely to increase as the Company expands its reliance on technology for its operations and order processing.Data breaches and other serious cybersecurity incidents have increased globally,along
137、 with the methods,techniques,and complexity of attacks,including use of viruses,ransomware and other malicious software,phishing,and other efforts to discover and exploit any design flaws,bugs,or other security vulnerabilities.Continuedgeopolitical turmoil,including the ongoing conflict between Russ
138、ia and Ukraine and relations between the United States and foreign governments,has heightened the riskof cyberattacks.We have been,and likely will continue to be,subject to such cyberattacks,although none has had a material impact on our operations.Also,the samecybersecurity threats exist for the th
139、ird parties with whom we interact and share information and cyberattacks on third parties that possess or use our customer,personneland other information could adversely impact us in the same way as would a direct cyberattack on us.The rapid development and adoption of AI technologies further increa
140、ses these risks,both because AI can be used to enhance the capabilities of attackers and because ofits potential to help those subject to cyberattacks develop more advanced security measures and defenses.As a result,we may need to invest additional resources toprotect the security of our systems.The
141、 Company is subject to federal,state,and international laws and regulations relating to the collection,use,retention,security and transfer of personally identifiableinformation and individual payment data.The information,security and privacy requirements imposed by such laws and regulations are cons
142、tantly evolving and arebecoming increasingly demanding in the United States and other jurisdictions in which the Company operates.In addition,the interpretation and application of consumerand data protection laws in the United States and elsewhere are often uncertain and in flux.It is possible that
143、these laws may be interpreted and applied in a manner that isinconsistent with the Companys data practices.If so,in addition to the possibility of fines or other penalties,this could result in an order requiring that the Companychange its data practices,which could be costly,divert management attent
144、ion,and have an adverse effect on the Companys business and results of operations.TheCompany has incurred and may continue to incur significant costs relating to compliance with these laws and regulations,including costs related to updating certainbusiness practices and systems and ensuring continue
145、d compliance and any changes to laws,regulations or enforcement could expose the Company to additional costsand liability.Any security breaches for which the Company is,or is perceived to be,responsible,in whole or in part,or any actual or perceived violations of data privacy laws andregulations,cou
146、ld subject the Company to legal claims or legal proceedings,including regulatory investigations,which could harm the Companys reputation and result insignificant litigation costs and damage awards or settlement amounts.Any imposition of liability,particularly liability that is not covered by insuran
147、ce or is in excess ofinsurance coverage,could materially harm our operating results and financial condition.Security breaches also could cause the Company to lose current and potentialcustomers,which could have an adverse effect on the Companys business.Moreover,the Company may be required to expend
148、 significant financial and other resources tofurther protect against security breaches or to rectify problems caused by any security breach.10Table of Contents Litigation,Compliance and Regulatory Risks Delays in,or disagreements with the Companys independent registered public accounting firm regard
149、ing,the Companys evaluation of its internal control overfinancial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on the market price of the Companys stock or itsborrowing ability.In addition,future changes in operating conditions could result in in
150、adequate internal control over financial reporting.The Company is an“accelerated filer”as defined in Rule 12b-2 under the Exchange Act and is thus required to comply with Section 404 of the Sarbanes-Oxley Act of2002.Section 404 requires the Company to include in its Annual Report on Form 10-K manage
151、ments assessment of the effectiveness of the Companys internal controlover financial reporting as of the end of the fiscal period for which the Company is filing the report.This report must also include disclosure of any material weaknessesin internal control over financial reporting that the Compan
152、y has identified.Additionally,the Companys independent registered public accounting firm is required toissue a report on the Companys internal control over financial reporting and their evaluation of the operating effectiveness of the Companys internal control overfinancial reporting.The Companys as
153、sessment requires it to make subjective judgments,and the independent registered public accounting firm may not agree with theCompanys assessment.If the Company or its independent registered public accounting firm were unable to complete the assessments within the period prescribed bySection 404 and
154、 thus be unable to conclude that the internal control over financial reporting is effective,investors could lose confidence in the Companys reportedfinancial information,which could have an adverse effect on the market price of the Companys common stock or impact the Companys borrowing ability.In ad
155、dition,changes in operating conditions and changes in compliance with policies and procedures currently in place may result in inadequate internal control over financialreporting in the future.Environmental compliance costs and liabilities could increase the Companys expenses and adversely affect th
156、e Companys financial condition.The Companys operations and properties are subject to laws and regulations relating to environmental protection,including air emissions,water discharges,wastemanagement and workplace safety.These laws and regulations can result in the imposition of substantial fines an
157、d sanctions for violations and could require theinstallation of pollution control equipment or operational changes to limit pollution emissions and/or decrease the likelihood of accidental hazardous substance releases.The Company must conform its operations and properties to these laws and adapt to
158、regulatory requirements in the countries in which the Companys businesses operateas these requirements change.The Company uses and generates hazardous substances and wastes in its operations and,as a result,could be subject to potentially material liabilities relating to theinvestigation and clean-u
159、p of contaminated properties and to claims alleging personal injury.The Company has experienced,and expects to continue to experience,costsrelating to compliance with environmental laws and regulations.In connection with the Companys acquisitions,the Company may assume significant environmentalliabi
160、lities,some of which it may not be aware of at the time of acquisition.In addition,new laws and regulations,stricter enforcement of existing laws and regulations,thediscovery of previously unknown contamination or the imposition of new clean-up requirements could require the Company to incur costs o
161、r become the basis for new orincreased liabilities that could have a material adverse effect on our business,financial condition,and results of operations.Natural disasters,changes in climate,geo-political events,and public health crises,including pandemics and epidemics,and any related Company orgo
162、vernment policies or actions may negatively impact our business.Natural disasters,changes in climate,geo-political events,and public health crises,including pandemics and epidemics,as well as Company or government policiesadopted or actions taken as a result of such events,could materially adversely
163、 affect our business and financial performance.The occurrence of one or more naturaldisasters,such as hurricanes,tropical storms,floods,fires,earthquakes,tsunamis,cyclones,typhoons,weather conditions such as major or extended winter storms,droughts and tornadoes,whether as a result of climate change
164、 or otherwise,severe changes in climate,geo-political events,such as war,civil unrest or terrorist attacks,orpublic health crises in a country in which we operate or in which our suppliers are located could result in loss of human life,significant property and equipment damage,environmental pollutio
165、n,or reputational harm and could adversely affect our operations and financial performance.Our business and operations may be disrupted if we donot respond,or are perceived not to respond,in an appropriate manner to any of these hazards and risks or any other major crisis or if we are unable to effi
166、ciently restoreor replace affected operational components and capacity.Countermeasures to address global health crises,epidemics or pandemics may result in reduced demand for ourproducts;disruptions to our supply chain,the global economy or financial or commodity markets;disruptions in our contractu
167、al arrangements with our service providers,suppliers and other counterparties;or failures by our suppliers,contract manufacturers,contractors,joint venture partners and external business partners,to meet theirobligations to us;or reduced workforce productivity.Any such occurrence could materially an
168、d adversely impact our financial condition,results of operations,cash flowsor liquidity position.Further,our insurance may not be adequate to compensate us for all resulting losses described above,and the cost to obtain adequate coverage mayincrease for us in the future or may not be available.11Tab
169、le of Contents The Company is from time to time subject to litigation,which could have a material impact on the Companys business,financial condition,or results ofoperations.From time to time,the Companys operations are parties to or targets of lawsuits,claims,investigations,and proceedings,includin
170、g product liability,personal injury,patent,and intellectual property,commercial,contract,and environmental and employment matters,which are defended and settled in the ordinary course of business.Any litigation to which the Company may be subject could have a material adverse effect on its business,
171、financial condition,or results of operations.See Item 3 LegalProceedings of this Form 10-K for a discussion of current litigation.The Company could be subject to additional or unanticipated tax liabilities.The Company is subject to income tax laws of the United States,its states,and municipalities a
172、nd those of other foreign jurisdictions in which the Company has businessoperations.These laws are complex,evolving,and subject to interpretation by the taxpayer and the relevant governmental taxing authorities.The Companys future annual and quarterly tax rates could be affected by numerous factors,
173、including changes in the(1)applicable tax laws;(2)composition of earningsin countries with differing tax rates;or(3)recoverability of our deferred tax assets and liabilities.Due to the pace of legislative changes,any substantial changes in taxpolicies or legislative initiatives may materially and ad
174、versely affect our business,the taxes we are required to pay,our financial position,and results of operations.Forexample,beginning in 2022,the U.S.Tax Cuts and Jobs Act of 2017 eliminated the existing option to deduct research and development expenditures and requirestaxpayers to amortize them over
175、five years pursuant to IRC Section 174.This requirement is expected to reduce our cash flow.Further,in August 2022,the United Statesenacted the Inflation Reduction Act of 2022(the“IRA”)which includes a new 15%corporate minimum tax as well as a 1%excise tax on fair value of corporate stockrepurchases
176、 made after December 31,2022.The IRA could have a negative impact on our tax position.Many countries and organizations such as the Organization forEconomic Cooperation and Development(the“OECD”)are also actively considering changes to existing tax laws or have proposed or enacted new laws that could
177、increase our tax obligations in countries where we do business or cause us to change the way we operate our business.Any of these developments or changes in federal,state,or international tax laws or tax rulings could adversely affect our effective tax rate and our results of operations.For example,
178、the OECD has released guidancecovering various topics,including country-by-country reporting and an initiative that aims to standardize and modernize global tax policy.The guidance has alsoestablished a global minimum tax of 15%,which is being or may be implemented in various jurisdictions.Depending
179、 on the final form of legislation and the jurisdictionswhich enact it,there may be significant tax consequences for us.In addition,the U.S.presidential administration has directed the U.S.Department of Treasury to developoptions for“protective measures”in response to tax rules imposed by non-U.S.cou
180、ntries that are extraterritorial or disproportionately affect U.S.companies(which mayinclude taxes imposed under the OECD guidance)and legislation has been introduced that would increase U.S.tax rates on non-U.S.companies and investors if theirhome jurisdictions impose discriminatory or extraterrito
181、rial taxes on U.S.companies,but we cannot predict whether such protective measures or legislation will beadopted or what,if any,responsive measures may be adopted by non-U.S.countries.We continue to monitor the effects of the IRA,the OECD guidelines and otherregulatory developments on our financial
182、conditions,operating results,and income tax rate.Significant judgment and interpretation are required in determining the Companys worldwide provision for income taxes.In the ordinary course of business,transactionsarise where the ultimate tax determination is uncertain.Although the Company believes
183、that our tax estimates are reasonable,the outcome of tax audits and any relatedlitigation could be materially different from that which is reflected in historical income tax provisions and accruals.Based on the status of a given tax audit or relatedlitigation,a material effect on the Companys income
184、 tax provision or net income may result during the period or periods from the initial recognition of a particular matterin the Companys reported financial results to the final closure of that tax audit or settlement of related litigation when the ultimate tax and related cash flow is knownwith certa
185、inty.New or existing U.S.or foreign laws and regulations could subject the Company to claims or otherwise impact the Companys business,financial condition,orresults of operations.The Company is subject to a variety of laws,regulations,rules,and policies in both the U.S.and foreign countries that are
186、 costly to comply with,can result in negativepublicity and diversion of management time and effort,and can subject the Company to claims or other remedies.These laws,regulations,rules,and policies could relateto any of an array of issues including,but not limited to,data privacy and security,environ
187、mental,tax,intellectual property,trade secrets,product liability,contracts,antitrust,employment,securities,import/export,and unfair competition.These laws and regulations may differ in different jurisdictions and are subject to change,including as a result of changes to regulatory,legislative and en
188、forcement priorities with changes in U.S.presidential administration,and regulatory actions that non-U.S.countries may take in response to such changes.The cost of maintaining compliance under multiple and changing regulatory regimes,and expenditures that may berequired to comply with new laws and r
189、egulations,may adversely affect the Companys business,financial condition,and results of operations.In the event that theCompany fails to comply with or violates applicable U.S.or foreign laws or regulations or customer policies,the Company could be subject to civil or criminal claims orproceedings
190、that may result in monetary fines,penalties or other costs against the Company or its employees,which may adversely affect the Companys operatingresults,financial condition,customer relations and ability to conduct its business.12Table of Contents Risks Related to Our Indebtedness Indebtedness may a
191、ffect our business and may restrict our operating flexibility.As of December 28,2024,the Company had$42.2 million in total consolidated indebtedness.Subject to restrictions contained in the Credit Agreement,the Companymay incur additional indebtedness in the future,including indebtedness incurred to
192、 finance acquisitions.The level of indebtedness and servicing costs associated with thatindebtedness could have important effects on our operation and business strategy.For example,the indebtedness could:Place the Company at a competitive disadvantage relative to the Companys competitors,some of whi
193、ch have lower debt service obligations and greaterfinancial resources;Limit the Companys ability to borrow additional funds;Limit the Companys ability to complete future acquisitions;Limit the Companys ability to pay dividends;Limit the Companys ability to make capital expenditures;and Increase the
194、Companys vulnerability to general adverse economic and industry conditions.The Companys ability to make scheduled principal payments,to pay interest on,or to refinance our indebtedness and to satisfy other debt obligations will depend uponfuture operating performance,which may be affected by factors
195、 beyond the Companys control.In addition,there can be no assurance that future borrowings or theissuance of equity would be available to the Company on favorable terms for the payment or refinancing of the Companys debt.If the Company were unable to serviceits indebtedness,the business,financial con
196、dition,and results of operations would be materially adversely affected.The Credit Agreement contains covenants requiring the Company to achieve certain financial and operational results and maintain compliance with specified financialratios.The Companys ability to meet the financial covenants or re
197、quirements in the Credit Agreement may be affected by events beyond our control,and the Companymay not be able to satisfy such covenants and requirements.The Credit Agreement also contains several restrictive covenants that could adversely affect the Companys ability to operate its business.These co
198、venants restrict,among other things,the Companys ability to:Merge with or into another company or sell assets;Grant liens;Incur additional indebtedness;Make investments or guarantee indebtedness of another person or entity;Pay dividends,make distributions,or repurchase equity;Engage in certain trans
199、actions with affiliates;and Make certain changes to the Companys business.A breach of these covenants or the Companys inability to comply with the financial ratios,tests or other restrictions contained in our Credit Agreement could result in anevent of default under the Credit Agreement.Upon the occ
200、urrence of an event of default under the Credit Agreement and/or the expiration of any grace periods,thelenders could elect to declare all amounts outstanding under our credit facility,together with accrued interest,to be immediately due and payable.If this were to occur,theCompanys assets may not b
201、e sufficient to fully repay the amounts due under our credit facility or the Companys other indebtedness.13Table of Contents Risks Related to Global Economic Conditions Global economic conditions have in the past had and may in the future have a material adverse effect on the Companys financial cond
202、ition and operatingresults.Global economic conditions have impacted in the past and may in the future impact the Companys results.For example,volatile economic conditions that resulted fromthe COVID-19 pandemic led to economic slowdowns that caused contractions in some or all the markets we serve,an
203、d these impacts may recur in the future.This has ledto and may continue to lead to decreased demand for the Companys products,which in turn has negatively impacted,and may continue to negatively impact,theCompanys financial condition and operating results.Other macroeconomic factors also remain dyna
204、mic,and any causes of market size contraction,and overall economicslowdowns could reduce the Companys sales or erode operating margin,in either case reducing earnings.Economic conditions or changes in asset returns interest rates could increase our pension plan funding obligations and reduce our pro
205、fitability.In addition,pension plan funded status,the ratio of plan assets over plan liabilities,is largely influenced by current market conditions.To the extent asset returns andinterest rates,which are used to discount future plan benefits,change from prior measurement periods,the plans funded rat
206、io has the potential to change significantly.Declines in interest rates and projected rates of return could require us to make significant additional contributions to our pension plans in the future.General Risk Factors The Companys goodwill or indefinite-lived intangible assets may become impaired,
207、which has in the past required and could in the future require a significantcharge to earnings be recognized.Under accounting principles generally accepted in the United States,goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment atleast annually.Future o
208、perating results used in the assumptions,such as sales or profit forecasts,may not materialize,and the Company has been and could in the futurebe required to record a significant charge to earnings in the financial statements during the period in which any impairment is determined,resulting in an un
209、favorableimpact on our results of operations.The Company may not be able to reach acceptable terms for contracts negotiated with its labor unions and be subject to work stoppages or disruption ofproduction.During 2025,union contracts covering approximately 35%of the Companys total workforce are expe
210、cted to expire.The Company has been successful in negotiatingnew contracts over the years but cannot guarantee that will continue and the Company has,in the past experienced,and could in the future experience,temporary workstoppages during negotiation of such contracts.Failure to negotiate new union
211、 contracts,or any work stoppage that is prolonged,could result in the disruption ofproduction,inability to deliver product,or several unforeseen circumstances,any of which could have an unfavorable material impact on the Companys results ofoperations or financial condition.The Company may need addit
212、ional capital in the future,which may not be available on acceptable terms,if at all.From time to time,the Company has historically relied on outside financing to fund expanded operations,capital expenditure programs and acquisitions.The Companymay require additional capital in the future to fund op
213、erations or strategic opportunities.The Company cannot be assured that additional financing will be available onfavorable terms,or at all.In addition,the terms of available financing may place limits on the Companys financial and operating flexibility.If the Company is unable toobtain sufficient cap
214、ital in the future,the Company may not be able to expand or acquire complementary businesses and may not be able to continue to develop newproducts or otherwise respond to changing business conditions or competitive pressures.14Table of Contents The Companys stock price may become highly volatile,an
215、d investors may not be able to sell their shares at their desired prices,or at all.The Companys stock price may change dramatically when buyers seeking to purchase shares of the Companys common stock exceed the shares available on the market,or when there are no buyers to purchase shares of the Comp
216、anys common stock when shareholders are trying to sell their shares.The Companys common stock hashistorically been“thinly”traded,meaning that the number of persons interested in purchasing shares of Company common stock at prevailing prices at any given timemay be relatively small.This may contribut
217、e to price volatility,as the trading of relatively small quantities of shares by our shareholders may disproportionately influenceshare price and may prevent investors from selling their shares at or above their purchase price if there is not sufficient demand for the shares at the time of sale.The
218、Company depends on key management,sales and marketing and technical personnel,the loss of whom could harm its business.The Company depends on key management and technical personnel.The loss of one or more key employees could materially and adversely affect the Company.The Companys success also depen
219、ds on its ability to attract and retain highly qualified technical,sales and marketing and management personnel necessary for themaintenance and expansion of its activities.The Company faces strong competition for such personnel and may not be able to attract or retain such personnel.In addition,whe
220、n the Company experiences periods with little or no profits,a decrease in compensation based on profits may make it difficult to attract and retain highly qualifiedpersonnel.To attract and retain executives and other key employees,the Company must provide a competitive compensation package.If the Co
221、mpanys profits decrease,or if theCompanys total compensation package is not viewed as competitive,the Companys ability to attract,retain and motivate executives and key employees could beweakened.The failure to successfully hire and retain executives and key employees or the loss of any executives a
222、nd key employees could have a significant impact onour operations.Deterioration in the creditworthiness of several major customers could have a material impact on the Companys business,financial condition,or results ofoperations.Included as a significant asset on the Companys balance sheet are accou
223、nts receivable from our customers.If several large customers become insolvent or are otherwiseunable to pay for products or become unwilling or unable to make payments in a timely manner,it could have an unfavorable material impact on the Companys results ofoperations or financial condition.Although
224、 the Company is not dependent on any one customer,deterioration in several large customers at the same time could have an unfavorable material impact on theCompanys results of operations or financial condition.One customer represented 14%of total accounts receivable as of December 28,2024 and one cu
225、stomerrepresented 12%of total accounts receivable as of December 30,2023.The Companys operating results may fluctuate,which makes the results of operations difficult to predict and could cause the results to fall short ofexpectations.The Companys operating results may fluctuate because of several fa
226、ctors,including those described above,many of which are outside of our control.As a result,comparing the Companys operating results on a period-to-period basis may not be meaningful,and past results should not be relied upon as an indication of futureperformance.Quarterly,year to date,and annual cos
227、ts and expenses as a percentage of revenues may differ significantly from historical or projected levels.Futureoperating results may fall below expectations.These types of events could cause the Companys stock price to drop.ITEM 1B UNRESOLVED STAFF COMMENTS None.ITEM 1C CYBERSECURITY The Companys Bo
228、ard recognizes the critical importance of maintaining the trust and confidence of our customers,clients,business partners and employees.The Board isactively involved in oversight of the Companys risk management program,and cybersecurity represents a key component of the Companys overall approach toe
229、nterprise risk management(“ERM”).The Companys cybersecurity policies,standards,processes,and practices are fully integrated into the Companys ERM programand are based on recognized frameworks established by the National Institute of Standards and Technology,the International Organization for Standar
230、dization and otherapplicable industry standards.In general,the Company seeks to address cybersecurity risks through a comprehensive,cross-functional approach that is focused onpreserving the confidentiality,security,and availability of the information that the Company collects and stores by identify
231、ing,preventing,and mitigating cybersecuritythreats and effectively responding to cybersecurity incidents when they occur.15Table of Contents Risk Management and Strategy As one of the critical elements of the Companys overall ERM approach,the Companys cybersecurity program is focused on the followin
232、g key areas:Governance:As discussed in more detail under the heading“Governance,”the Boards oversight of cybersecurity risk management is supported by the Audit Committeeof the Board(the“Audit Committee”),which regularly interacts with the Companys ERM function,the Companys Director of Information T
233、echnology&Cybersecurity,and other members of management and relevant management committees and councils,including managements Cybersecurity Council.Collaborative Approach:The Company has implemented a comprehensive,cross-functional approach to identifying,preventing and mitigating cybersecurity thre
234、ats andincidents,while also implementing controls and procedures that are designed to provide for the prompt and appropriate internal reporting of certain cybersecurityincidents,either in the form of a single unauthorized occurrence or a series of unauthorized occurrences,so that decisions regarding
235、 the public disclosure and reporting ofsuch incidents can be made by management in a timely manner.Technical Safeguards:The Company deploys technical safeguards that are designed to protect the Companys information systems from cybersecurity threats,includingfirewalls,intrusion prevention and detect
236、ion systems,anti-malware functionality and access controls,which are evaluated and improved through vulnerabilityassessments and cybersecurity threat intelligence.Incident Response and Recovery Planning:The Company has established and maintains comprehensive incident response and recovery plans inte
237、nded to fully andtimely address the Companys response to a cybersecurity incident,and such plans are tested and evaluated on a regular basis.Third-Party Risk Management:The Company maintains a comprehensive,risk-based approach to identifying and overseeing cybersecurity risks presented by thirdparti
238、es,including vendors,service providers and other external users of the Companys systems,as well as the systems of third parties that could adversely impact ourbusiness in the event of a cybersecurity incident affecting those third-party systems.Education and Awareness:The Company provides regular,ma
239、ndatory training for personnel regarding cybersecurity threats to equip the Companys personnel witheffective tools to proactively address cybersecurity threats and prevent incursions,and to communicate the Companys evolving information security policies,standards,processes,and practices.Our awarenes
240、s program includes assessment of our personnels preparedness through regular phishing e-mail alerts,highlighted banners thatwarn about external senders,and tests administered to help the Companys personnel interrogate,navigate around,and avoid clicking suspicious and unfamiliar linksfrom unknown sen
241、ders.The Company engages in the periodic assessment and testing of the Companys policies,standards,processes,and practices that are designed to address cybersecuritythreats and incidents.These efforts include a wide range of activities,including audits,assessments,tabletop exercises,threat modeling,
242、vulnerability testing and otherexercises focused on evaluating the effectiveness of our cybersecurity measures and planning.The Company engages third parties to perform assessments on ourcybersecurity measures,including information security maturity assessments,audits and independent reviews of our
243、information security control environment andoperating effectiveness.The results of such assessments,audits and reviews are reported to the Audit Committee and the Board,and the Company adjusts itscybersecurity policies,standards,processes,and practices as appropriate based on the information provide
244、d by these assessments,audits,and reviews.16Table of Contents Governance The Board,in coordination with the Audit Committee,oversees the Companys ERM process,including the management of risks arising from cybersecurity threats.TheBoard and the Audit Committee each receive regular presentations and r
245、eports on cybersecurity risks,which address a wide range of topics including recentdevelopments,evolving standards,vulnerability assessments,third-party and independent reviews,the threat environment,technological trends,and information securityconsiderations arising with respect to the Companys pee
246、rs and third parties.The Board and the Audit Committee also receive prompt and timely information regardingany cybersecurity incident that meets established reporting thresholds,or that management otherwise deems to be significant,as well as ongoing updates regarding anysuch incident until it has be
247、en fully addressed.On an annual basis,the Board and the Audit Committee discuss the Companys approach to cybersecurity risk managementwith the members of managements Cybersecurity Council,which includes the Companys Chief Executive Officer(“CEO”),Chief Financial Officer(“CFO”),Directorof Risk,and Di
248、rector of Information Technology&Cybersecurity.The Cybersecurity Council,in coordination with the Companys outside legal counsel,works collaboratively across the Company to implement a program designed toprotect the Companys information systems from cybersecurity threats and to promptly respond to a
249、ny cybersecurity incidents in accordance with the Companys incidentresponse and recovery plans.To facilitate the success of the Companys cybersecurity risk management program,multidisciplinary teams throughout the Company aredeployed to address cybersecurity threats and to respond to cybersecurity i
250、ncidents.Through ongoing communications with these teams,the Director of InformationTechnology&Cybersecurity and the Cybersecurity Council monitor the prevention,detection,mitigation and remediation of cybersecurity threats and incidents in realtime and report such threats and incidents to the Audit
251、 Committee when appropriate.The Director of Information Technology&Cybersecurity has served in various roles in information technology and information security for over 25 years,including thedesign and management of operational and cybersecurity activities of two large public companies.The Director
252、of Information Technology&Cybersecurity holdsundergraduate and graduate degrees in computer science and is certified in National Institute of Standards and Technology(“NIST”),Cybersecurity Maturity ModelCertification(“CMMC”),Cybersecurity and Infrastructure Security(“CIS”),and General Data Protectio
253、n Regulation(“GDPR”).The Companys CEO and CFO eachhold undergraduate and graduate degrees in their respective fields,and each has over 20 years of experience managing risks at the Company and at similar companies,including risks arising from cybersecurity threats.Cybersecurity threats,including as a
254、 result of previous cybersecurity incidents,have not materially affected and are not reasonably likely to materially affect theCompany,including its business strategy,results of operations or financial condition.ITEM 2 PROPERTIES The Company leases 3,947 square feet of corporate office space in Shel
255、ton,Connecticut.The current lease expires on March 31,2033.All the Companys properties are owned or leased and are adequate to satisfy current requirements.All the Companys properties have the necessary flexibility to coverany long-term expansion requirements.Company facilities include the following
256、:Big 3 Products in Centralia,Illinois owns 156,160 square feet of administrative and manufacturing space located in an industrial park.The single-story building is steelframe with steel siding and roof.Big 3 Products in Dearborn,Michigan leases 86,250 square feet of building space.The building is ma
257、de from industrial block.Approximately 6,000 square feet of officespace is used for design engineers.The current lease is month-to-month.Big 3 Products in Chesterfield,Michigan leases 45,000 square feet for a design and manufacturing facility.This building is industrial block and metal frame.The cur
258、rentlease expires on February 28,2026.Big 3 Mold,currently reported as discontinued operations,owns 54,450 square feet of building space in Millville,New Jersey.The building is industrial block.Big 3 Precision in Kimball,Michigan leases 3,500 square feet of building space.The current lease is month-
259、to-month.Hallink Moulds,a wholly owned subsidiary in Cambridge,Ontario,leases 15,000 square feet of building space.The building is industrial block and metal frame.Thecurrent lease expires on February 1,2026,with the option to renew for an additional twenty-four months.17Table of Contents Eberhard M
260、anufacturing in Strongsville,Ohio owns 9.6 acres of land and a building containing 157,580 square feet,located in an industrial park.The building is steelframe,is one-story and has curtain walls of brick,glass,and insulated steel panels.The building has two high bays,one of which houses two units of
261、 automatedwarehousing.Eberhard Manufacturing leases 8,551 square feet of office space in Arlington Heights,IL.The current lease expires on September 1,2026.Eastern Industrial Ltd.,a wholly owned subsidiary in Shanghai,China,leases brick and concrete buildings containing approximately 47,500 square f
262、eet of space that arein both industrial and commercial areas.In 2022,Eastern Industrial,Ltd.entered a three-year lease,which expires on March 31,2025,and is intended to be renewed.The World Lock Co.Ltd.Subsidiary leases 5,285 square feet of space in a building located in Taipei,Taiwan.The building i
263、s made from brick and concrete and isprotected by a fire alarm and sprinklers.The current lease expires on October 28,2026.The Dongguan Reeworld Security Products Ltd.Subsidiary leases 103,800 square feet of space in concrete buildings that are in an industrial park in Dongguan,China.The current lea
264、se expires on May 31,2027,and is renewable.Velvac,Inc.,a wholly owned subsidiary in New Berlin,Wisconsin,leases a 98,000 square foot building.The building includes 17,000 square feet of office space and81,000 square feet of warehousing and distribution operations.The current lease expires on May 31,
265、2029.Velvac,Inc.leases 100,000 square feet of warehouse space in Pharr,TX.The current lease expires on April 15,2025 and is intended to be renewed.Velvac de Reynosa,S.De R.L De C.V.,a maquiladora wholly owned in Reynosa,Tamaulipas,Mexico,leases 225,000 square feet of building space located in anindu
266、strial park identified as Lots 2,3 and 4.The building is one level and is made from brick and concrete.The current lease expires on April 15,2033.All owned properties are free and clear of any encumbrances.ITEM 3 LEGAL PROCEEDINGS The Company is party to various legal proceedings from time to time r
267、elated to its normal business operations.Currently,the Company is not involved in any materialpending legal proceedings,and no such material proceedings are known to the Company to be contemplated by governmental authorities.ITEM 4 MINE SAFETY DISCLOSURES Not applicable.18Table of Contents PART II I
268、TEM 5 MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES The Companys common stock is quoted on the NASDAQ Global Market under the symbol“EML.”The approximate number of record holders of the Company commonstock on December 28,2024 was 259.The Co
269、mpany expects to continue its policy of paying regular cash dividends,although there can be no assurance as to future dividends because they are dependent onfuture earnings,capital requirements and financial conditions.During fiscal years 2024 and 2023,there were no sales by the Company of its secur
270、ities that were not registered under the Securities Act of 1933,as amended(the“Securities Act”).On August 21,2023,the Company announced that its Board had approved a new share repurchase program authorizing the Company to repurchase up to 200,000 sharesof the Companys common stock through August 20,
271、2028.The Companys share repurchase program does not obligate it to acquire the Companys common stock at anyspecific cost per share.Under this program,shares may be repurchased in privately negotiated and/or open market transactions,including under plans complying withRule 10b5-1 under the Exchange A
272、ct.The Company made the following share repurchases during the fourth quarter of 2024,as set forth in the table below:Issuer Purchases of Equity SecuritiesPeriod Total number of sharespurchased Average pricepaid per share Total number ofsharespurchased aspart of publiclyannounced plansor programs Ma
273、ximumnumber ofshares that mayyet be purchasedunder the plansor programs (a)(b)(c)(d)September 29,2024 to November 2,2024 0 -0 89,924 November 3,2024 to November 30,2024 19,337 28.31 19,337 70,587 December 1,2024 to December 28,2024 20,000 29.61 20,000 50,587 Total 39,337 28.97 39,337 50,587 ITEM 6 R
274、ESERVED 19Table of Contents ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Companys fiscal year ends on the Saturday nearest to December 31.Fiscal years 2024 and 2023 were each 52 weeks in length.References in this ManagementsDiscussion and Analysis o
275、f Financial Condition and Results of Operations to results for“2024”or“fiscal year 2024”mean the fiscal year ended December 28,2024,and references to results for“2023”or“fiscal year 2023”mean the fiscal year ended December 30,2023.References to the“fourth quarter of 2024”or the“fourthfiscal quarter
276、of 2024”mean the thirteen-week period from September 29,2024 to December 28,2024,and references to the“fourth quarter of 2023”or the“fourthfiscal quarter of 2023”mean the thirteen-week period from October 1,2023 to December 30,2023.The following analysis excludes discontinued operations.Summary Net
277、sales for 2024 were$272.8 million compared to$258.9 million for 2023.Net income for 2024 was$13.2 million,or$2.13 per diluted share,compared to$11.8million,or$1.88 per diluted share,for 2023.Sales for the fourth quarter of 2024 were$66.7 million compared to$63.8 million for the same period in 2023.N
278、et incomefor the fourth quarter of 2024 was$1.6 million,or$0.26 per diluted share compared to$3.9 million,or$0.63 per diluted share,for the comparable 2023 period.The Companys backlog was$89.2 million on December 28,2024,compared to$77.1 million on December 30,2023,primarily due to an increase of$13
279、.7 million inbacklog at Velvac related to the launch of new mirror programs for Class 8 trucks,partially offset by a decrease of$1.7 million in backlog for returnable packagingproducts at Big 3 Products.Critical Accounting Estimates The preparation of financial statements in accordance with accounti
280、ng principles generally accepted in the United States(“U.S.GAAP”)requires management to makejudgments,estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities,the disclosure of contingent assets and liabilitiesand the reported amounts of revenues a
281、nd expenses.Areas of uncertainty that require judgments,estimates and assumptions include items such as the allowance fordoubtful accounts;inventory accounting;the testing of goodwill and other intangible assets for impairment;and pensions and other postretirement benefits.Managementuses historical
282、experience and all available information to make its estimates and assumptions,but actual results will inevitably differ from the estimates and assumptionsthat are used to prepare the Companys financial statements at any given time.Despite these inherent limitations,management believes that Manageme
283、nts Discussion andAnalysis of Financial Condition and Results of Operations and the financial statements and related footnotes provide a meaningful and fair presentation of the Companysfinancial position and results of operations.Management believes that the application of these estimates and assump
284、tions on a consistent basis enables the Company to provide the users of the financial statementswith useful and reliable information about the Companys operating results and financial condition.Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated los
285、ses resulting from the inability of its customers to make required payments.The Companyreviews the collectability of its receivables on an ongoing basis,considering a combination of factors that require judgment and estimates,including among others,ourcustomers access to capital,customers willingnes
286、s,or ability to pay,customer payment patterns,general economic conditions and geopolitical trends,and our ongoingrelationship with our customers.The Company reviews potential problems,such as past due accounts,a bankruptcy filing or deterioration in the customers financialcondition,to ensure that th
287、e Company has adequately accrued for potential loss.Accounts are considered past due based on when payment was originally due.If acustomers situation changes,such as a bankruptcy or a change in its creditworthiness,or there is a change in the current economic climate,the Company may modify itsestima
288、te of the allowance for doubtful accounts.The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts aredeemed uncollectible.If our estimates and assumptions as to collectability were materially incorrect,or if any of our significant customers
289、were to develop unexpectedand immediate financial problems that would prevent payment of amounts due to us,and our allowance for doubtful accounts were inadequate,this could result in anunexpected loss in profitability.20Table of Contents As of December 28,2024 and December 30,2023,the Companys allo
290、wance for doubtful accounts total was$0.5 million and$0.5 million,respectively.As of December28,2024,and December 30,2023,the Companys bad debt expense was$0.1 million and$0.1 million,respectively.Inventory Inventories are valued at the lower of cost or net realizable value.Cost is determined by the
291、 last-in,first-out(“LIFO”)method at Eberhard while Big 3 Precision andVelvac are valued using a first-in,first-out(“FIFO”)method.Accordingly,a LIFO valuation reserve is calculated using the dollar value link chain method.We review the net realizable value of inventory in detail on an ongoing basis,c
292、onsidering deterioration,obsolescence,estimated future demand,current marketconditions,and other factors.Based on these assessments,we provide for an inventory reserve in the period in which an impairment is identified.The reserve fluctuateswith market conditions,design cycles,and other economic fac
293、tors and could vary significantly,whether favorably or unfavorably,from actual results due to,among otherthings,unanticipated changes in economic conditions,customer demand,or the competitive landscape.The inventory reserve for excess or obsolete inventory reduced the Companys inventory valuation by
294、$1.9 million and$1.9 million as of December 28,2024 andDecember 30,2023,respectively.Goodwill and Other Intangible Assets Intangible assets with finite useful lives are generally amortized on a straight-line basis over the periods benefited.Goodwill and other intangible assets with indefiniteuseful
295、lives are not amortized.The Company performs annual qualitative assessments on goodwill and other intangible assets as of the end of each fiscal year bycomparing the estimated fair value of each reporting unit with its carrying amount.Additionally,the Company performs an interim analysis if events o
296、r circumstancesindicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.Such events or circumstances could include,among other things,increased competition or unexpected loss of market share,significant adverse changes in the markets in which the C
297、ompany operates,or unexpected business disruptions.If the carrying amount of a reporting unit exceeds its estimated fair value,the Company records an impairment loss based on the difference between fair value andcarrying amount not to exceed the associated carrying amount of goodwill.Determining the
298、 fair value of a reporting unit involves the use of significant estimates andassumptions,including(i)macroeconomic conditions,(ii)market and industry conditions,(iii)cost factors,(iv)overall financial performance,(v)other relevant entity-specific events,and(vi)events affecting a reporting unit.The v
299、alues assigned to the key assumptions represent managements assessment of future trends in the relevantindustry and have been based on historical data from both external and internal sources.In the third quarter of 2024,a goodwill impairment of approximately$12.1 million was recognized in discontinu
300、ed operations when classifying Big 3 Mold as held forsale.The Company performed its annual qualitative assessment as of the end of each of fiscal 2024 and 2023 on the carrying value of goodwill and determined that it is morelikely than not that no impairment of goodwill existed as of such dates.See
301、Note 3 Accounting Policies Goodwill,in Item 8,Financial Statements and SupplementaryData,of this Form 10-K for more detail.Pension and Other Postretirement Benefits The amounts recognized in the consolidated financial statements related to pension and other postretirement benefits are determined fro
302、m actuarial valuations.Inherent inthese valuations are assumptions about such factors as expected return on plan assets,discount rates at which liabilities could be settled,rate of increase in futurecompensation levels,mortality rates,and trends in health insurance costs.These assumptions are review
303、ed annually and updated as required.In accordance with U.S.GAAP,actual results that differ from the assumptions are accumulated and amortized over future periods and,therefore,affect the expense recognized and obligationsrecorded in future periods.The discount rate used is based on a single equivale
304、nt discount rate derived with the assistance of our actuaries by matching expected future benefit payments in each yearto the corresponding spot rates from the FTSE Pension Liability Yield Curve,comprised of high quality(rated AA or better)corporate bonds.The Company calculates itsservice and intere
305、st costs in future years by applying the specific spot rates along the selected yield curve to the relevant projected cash flows.The expected long-term rate of return on assets is also developed with input from the Companys actuarial firms.We consider the Companys historical experience withpension f
306、und asset performance,the current and expected allocation of our plan assets and expected long-term rates of return.The long-term rate-of-return assumptionused for determining net periodic pension expense was 7.5%for both 2024 and 2023.The Company reviews the long-term rate of return each year.21Tab
307、le of Contents Future actual pension income and expenses will depend on future investment performance,changes in future discount rates and various other factors related to thepopulation of participants in the Companys pension plans.The Company expects to make cash contributions of approximately$2,90
308、0,000 and$42,000 to our pension and other postretirement plans,respectively,in 2025.In connection with our pension and other postretirement benefits,the Company reported income of$3.0 million and$1.6 million(net of tax)on its ConsolidatedStatement of Comprehensive Income for fiscal years 2024 and 20
309、23,respectively.The main factor driving this income was the change in the discount rate during theapplicable period.Assumptions used to determine net periodic pension benefit cost for the fiscal years indicated were as follows:2024 2023 Discount rate 4.99%-5.00%5.21%-5.23%Expected return on plan ass
310、ets 7.5%7.5%Rate of compensation increase 0.0%0.0%Assumptions used to determine net periodic other postretirement benefit cost for the fiscal years indicated were as follows:2024 2023 Discount rate 5.04%5.28%Expected return on plan assets 4.0%4.0%Rate of compensation increase 4.3%4.3%The changes in
311、assumptions had the following effect on the net periodic pension and other postretirement costs recorded in Other Comprehensive Income as follows:Year ended December28,December 30,2024 2023 Discount rate$4,531,239$(1,829,210)Additional recognition due to significant event -Asset gain or(loss)(2,149,
312、183)2,396,043 Amortization of:Unrecognized gain or(loss)1,231,188 1,303,879 Unrecognized prior service cost 4,241 4,241 Other 316,301 25,632 Comprehensive income,before tax 3,933,786 1,900,585 Income tax (982,414)(307,548)Comprehensive income,net of tax$2,951,372$1,593,037 The Plan has been investin
313、g a portion of the assets in long-term bonds to better match the impact of changes in interest rates on its assets and liabilities and thus reducevolatility in Other Comprehensive Income.Please refer to Note 10 Retirement Benefit Plans in Item 8,Financial Statements and Supplementary Data of this Fo
314、rm 10-Kfor additional disclosures concerning the Companys pension and other postretirement benefit plans.22Table of Contents RESULTS OF OPERATIONS Fourth Quarter 2024 Compared to Fourth Quarter 2023 The following table shows,for the fourth quarter of 2024 and 2023,selected line items from the consol
315、idated statements of income from continuing operations as apercentage of net sales for the Companys continuing operations.The Companys continuing operations include(1)Big 3 Products;(2)Eberhard;and(3)Velvac.Three Months Ended December28,2024 December 30,2023 Net Sales 100.0%100.0%Cost of Products So
316、ld 77.0%73.2%Gross Margin 23.0%26.8%Product Development Expense 1.7%2.1%Selling and Administrative Expense 16.8%15.8%Restructuring Costs -Operating Profit 4.5%8.9%Net sales in the fourth quarter of 2024 increased 4.5%to$66.7 million from$63.8 million in the fourth quarter of 2023.Sales increases wer
317、e due to higher demand forreturnable transport packaging products,partially offset by lower demand for truck accessories and truck mirror assemblies.Net sales of existing products increased 2.8%while price increases and new products increased net sales by 1.7%in the fourth quarter of 2024 when compa
318、red to sales in the fourth quarter of 2023.New productsincluded various truck mirror assemblies,rotary latches,and handles.Cost of products sold in the fourth quarter of 2024 increased$4.6 million or 10%from the corresponding period in 2023.The increase in cost of products sold isprimarily attributa
319、ble to higher sales volume and a favorable adjustment to the LIFO reserve in the fourth quarter of 2023 that did not recur in the fourth quarter of 2024.Gross margin as a percentage of net sales for the fourth quarter of 2024 was 23.0%compared to 26.8%in the prior year fourth quarter.The decrease is
320、 primarily due tohigher material costs in the fourth quarter of 2024 and a favorable adjustment to the LIFO reserve in the fourth quarter of 2023 that did not reoccur in the fourth quarter of2024.Product development expenses decreased$0.2 million,or 14%,in the fourth quarter of 2024 compared to the
321、corresponding period in 2023 as we continue to invest innew products at Eberhard,Velvac and Big 3 Products.As a percentage of net sales,product development costs were 1.7%for the fourth quarter of 2024 compared to2.1%for the corresponding period in 2023.Selling and administrative expenses in the fou
322、rth quarter of 2024 increased 11.0%compared to the fourth quarter of 2023.As a percentage of net sales,selling andadministrative costs were 16.8%for the fourth quarter of 2024 compared to 15.8%for the corresponding period in 2023.The increase was primarily the result ofincreased payroll-related expe
323、nses,legal and professional expenses,and selling costs.Net income for the fourth quarter of 2024 was$1.6 million,or$0.26 per diluted share,from$3.9 million,or$0.63 per diluted share,in 2023.23Table of Contents Fiscal Year 2024 Compared to Fiscal Year 2023 The following table shows,for fiscal year 20
324、24 and fiscal year 2023,selected line items from the consolidated statements of income as a percentage of net sales for theCompanys operations.The Companys continuing operations include(1)Big 3 Products;(2)Eberhard;and(3)Velvac.Fiscal Year Ended December28,2024 December 30,2023 Net Sales 100.0%100.0
325、%Cost of Products Sold 75.3%76.1%Gross Margin 24.7%23.9%Product Development Expense 1.8%2.2%Selling and Administrative Expense 15.5%15.1%Restructuring Costs -Operating Profit 7.4%6.6%Summary Net sales for 2024 increased 5%to$272.8 million from$258.9 million in 2023.The sales increase was primarily d
326、ue to higher demand for truck mirror assemblies andreturnable transport packaging products.Net sales of existing products were flat in 2024 compared to 2023 while price increases and new products increased net sales in2024 by 5%.Sales of new products contributed 4%to sales growth in 2024 and include
327、d various new truck mirror assemblies,rotary latches,D-rings,and mirror cams.Cost of products sold increased$8.4 million or 4%to$205.5 million in 2024 from$197.1 million in 2023.The increase in the cost of products sold is primarilyattributable to higher sales volumes and a favorable adjustment to t
328、he LIFO reserve in the fourth quarter of 2023 that did not reoccur in the fourth quarter of 2024.Tariffsincurred during 2024 were$2.5 million from China-sourced products as compared to$2.2 million in 2023.Most tariffs were recovered through price increases.Gross margin as a percentage of sales was 2
329、4.7%in 2024 compared to 23.9%in 2023.The increase primarily reflects the impact of improved pricing and various cost-savings initiatives.Product development expenses as a percentage of sales was 1.8%and 2.2%in 2024 and 2023,respectively,as the Company continues to invest in new products atEberhard,V
330、elvac and Big 3 Products to better serve our customers.Selling and administrative expenses increased$3.1 million or 7.9%to$42.2 million in 2024 from$39.1 million in 2023.As a percentage of net sales,selling andadministrative expenses were 15.5%for the fiscal year of 2024 compared to 15.1%for the cor
331、responding period in 2023.The increase was primarily the result ofincreased payroll-related expenses,legal and professional expenses,and travel related expenses.Other income and expense decreased$1.2 million to$0.3 million of expense in 2024 from$0.9 million of income in 2023.The decrease in other i
332、ncome and expense of$1.2 million was due to a$1.6 million favorable adjustment for the final settlement of our swap agreement with Santander in the second quarter of 2023 that did not recurin 2024,partially offset by an unfavorable working capital adjustment of$0.4 million in the third quarter of 20
333、23 related to the sale of the Greenwald business.Net income for 2024 increased 12%to$13.2 million,or$2.13 per diluted share,from$11.8 million,or$1.88 per diluted share,in 2023.Other Items The following table shows the amount of change from the year ended December 30,2023 to the year ended December 28,2024 in other items(dollars in thousands):Amount%Interest expense$(84)(3)%Other income$(1,209)(141
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