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 OF19
2、34 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,Shelton
3、,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 whichregisteredCommon Stock,No Par ValueEMLNASDAQ
4、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 or
5、 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 SecuritiesExchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file suchreports),and(2
6、)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursuant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period th
7、at the registrant was requiredto 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 smallerreporting company,or an emerging growth company.See definitions of“large accelerated filer,”“accelerated filer,”
8、“smallerreporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company 2025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm1/86Emerging growth com
9、pany If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant ha
10、s filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)bythe registered public accounting firm that prepared or issued its audit report.If securities are regi
11、stered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of theregistrant included in the fi ling reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that
12、 required a recovery analysis of incentive-basedcompensation received by any of the registrants executive 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 29,2
13、024,the last day of registrants most recently completed second fiscal quarter,the aggregate market value of thevoting stock held by non-affiliates of the registrant was$124,230,742(based on the closing sales price of the registrants commonstock on the last trading date prior to that date).Shares of
14、the registrants common stock held by each officer and director andshares held in trust by the pension plans of the Company have been excluded in that such persons may be deemed to be affiliates.This determination of affiliate status is not necessarily a conclusive determination for other purposes.As
15、 of February 15,2025,6,135,278 shares of the registrants common stock,no par value per share,were issued 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 theCompanys
16、 2025 Annual Meeting of Shareholders,which will be filed with the Securities and Exchange Commission pursuant toRegulation 14A not later than 120 days after December 28,2024.2025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm2/86 The Eastern Company
17、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 Item 1C.Cybersecurity 15 Item 2.Properties 17 Item 3.Legal Proceedings 18 Item 4.Mine Safety Di
18、sclosures 18 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities 19 Item 6.Reserved 19 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A.Quantitative and Qualitative Disclosures
19、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 Item 9B.Other Information 71 Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent In
20、spections 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 Stockholder Matters 71 Item 13.Certain Relationships and Related Transactions,and Director Indep
21、endence 72 Item 14.Principal Accountant Fees and Services 72 PART IV Item 15.Exhibits and Financial Statement Schedules 73 Exhibit Index 74 2025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm3/86 Item 16.Form 10-K Summary 76 Signatures 77 22025/5/19
22、14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm4/86Table of Contents SAFE 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 consolidat
23、ed subsidiaries,unless otherwise specified or suggested by the context,the“Company,”“Eastern,”“we,”“us,”or“our”)that are not based onhistorical facts are“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995.Forward-looking statements may be identified
24、 by the use of forward-looking terminology such as“would,”“should,”“could,”“may,”“will,”“expect,”“believe,”“estimate,”“anticipate,”“intend,”“continue,”“plan,”“potential,”“opportunities,”or similarterms or variations of those terms or the negative of those terms.There are many factors that affect the
25、 Companys business and theresults of its operations and that may cause the actual results of operations in future periods to differ materially from those currentlyexpected or anticipated.These factors include:risks associated with doing business overseas,including fluctuations in exchange rates and
26、the inability to repatriateforeign cash,the impact on cost structure and on economic conditions as a result of actual and threatened increases intrade tariffs and the impact of political,economic,and social instability;the impact of tariffs,trade sanctions or political instability on the availabilit
27、y or cost of raw materials;the impact of higher raw material and component costs and cost inflation,supply chain disruptions 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 gl
28、obal economic conditions and interest rates,and more specifically conditions in the automotive,construction,aerospace,energy,oil and gas,transportation,electronic,and general industrial markets,including theimpact,length and degree of economic downturns on the customers and markets we serve and dema
29、nd for our products,reductions in production levels,the availability,terms and cost of financing,including borrowings 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
30、credit facility;the inability to achieve the savings expected from global sourcing of materials;lower-cost competition;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
31、 or dispositions or the inability to effectively integrate acquiredbusinesses and achieve expected synergies;costs and liabilities associated with environmental compliance;the impact of climate change,natural disasters,geopolitical events,and public health crises,including pandemics andepidemics,and
32、 any related Company or government policies or actions;military conflict(including the Russia/Ukraine conflict,the conflict in the Middle East,the possible expansion of suchconflicts and geopolitical consequences)or terrorist threats and the possible responses by the U.S.and foreigngovernments;failu
33、re to protect our intellectual property;cyberattacks;and materially adverse or unanticipated legal judgments,fines,penalties,or settlements.The Company is also subject to other risks identified and discussed in Item 1A,Risk Factors,and Item 7,ManagementsDiscussion and Analysis of Financial Condition
34、 and Results of Operations,of this Form 10-K and that may be identified from timeto time in our quarterly reports on Form 10-Q,current reports on Form 8-K and other filings we make with the Securities andExchange Commission(the“SEC”).Although the Company believes it has an appropriate business strat
35、egy and the resourcesnecessary for its operations,future revenue and margin trends cannot be reliably predicted and the Company may alter its businessstrategies to address changing conditions.Also,the Company makes estimates and assumptions that may materially affect reportedamounts and disclosures.
36、These relate to valuation allowances for accounts receivable and excess and obsolete inventories,accrualsfor pensions and other postretirement benefits(including forecasted future cost increases and returns on plan assets),provisions fordepreciation(estimating useful lives),uncertain tax positions,a
37、nd,on occasion,accruals for contingent losses.The Companyundertakes no obligation to update,alter,or otherwise revise any forward-looking statements,whether written or oral,that may bemade from time to time,whether because of new information,future events,or otherwise,except as required by law.32025
38、/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm5/86Table of Contents PART I ITEM 1 BUSINESS General Development of Business The Eastern Company was incorporated under the laws of the State of Connecticut in October 1912,succeeding a co-partnershipest
39、ablished in October 1858.The businesses of the Company design,manufacture and sell unique engineered solutions forindustrial markets.Today,the Company maintains fifteen physical locations across North America and Asia.BUSINESS HIGHLIGHTS In the third quarter of 2024,the Company decided to sell Big 3
40、 Mold and determined that the Big 3 Mold business met the criteriato be held for sale and that the assets held for sale qualify for discontinued operations.As such,the financial results of the Big 3Mold business are reflected in our consolidated statements of income as discontinued operations for al
41、l periods presented.Additionally,current and non-current assets and liabilities of discontinued operations are reflected in the consolidated balancesheets for all periods presented.On June 29,2023,the Company acquired certain assets of Sureflex,Inc.(“Sureflex”).Sureflex,which manufactures tractor-tr
42、ailerelectrical 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 servicefacility based in the U.K.The closure was completed in the second quarter of 2023.Description of Busines
43、s The Eastern Company manages industrial businesses that design,manufacture and sell unique engineered solutions to industrialmarkets.We believe Easterns businesses operate in industries with long-term macroeconomic growth opportunities.Eastern manages the financial,operational,and strategic perform
44、ance of its businesses to increase cash generation,operatingearnings,and long-term shareholder value.Among other things,Eastern monitors the financial and operational performance of eachof its businesses and instills consistent financial discipline.Easterns management analyzes and pursues prudent or
45、ganic growthstrategies 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 leaders who areaccountable,maintain cost discipline,act quickly,and build strong followersh
46、ip.The Eastern Company has one reportable segment:Engineered Solutions.The Engineered Solutions segment provides engineeredsolutions to support our customers needs primarily in the commercial transportation and logistics markets.The Chief OperatingDecision Maker(CODM),who is the Companys Chief Execu
47、tive Officer,uses both segment gross profit and segment profit orloss from operations before interest and income taxes to allocate resources(including employees,property,and financial or capitalresources)for the Engineered Solutions segment predominantly in the annual budget and forecasting process.
48、Company Operations The Engineered Solutions segment consists of Big 3 Precision,including Big 3 Precision Products Inc.(“Big 3 Products”)and Big3 Mold,and Hallink Moulds,Inc.(“Hallink Moulds”or“Hallink”);Eberhard Manufacturing Company(“EberhardManufacturing”),Eastern Industrial Ltd,World Lock Compan
49、y Ltd.,Dongguan Reeworld Security Products Ltd.,and WorldSecurity Industries(together,“Eberhard”);and Velvac Holdings Inc.(“Velvac”).These businesses design,manufacture,and marketa diverse product line of custom and standard vehicular and industrial hardware,including turnkey returnable packaging so
50、lutions,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 goodsand works with leading original equipment manufacturers(“OEMs”)to design and produce custom returnable transp
51、ort packagingto integrate with OEM assembly processes.42025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm6/86Table of Contents Big 3 Mold is a global leader in the design and manufacture of blow mold tools and in the production processes of plasticp
52、ackaging products,packaged consumer goods and pharmaceuticals.Hallink Moulds is a leader in innovative injection blow moldtooling and is a leading supplier of blow molds and change parts to the food,beverage,healthcare,and chemical industries.Hallinkspecializes in the design,development and manufact
53、ure of 2-step stretch blow molds,and related components for the stretch blowmolding 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 ofrotary latches,
54、compression latches,draw latches,hinges,camlocks,key switches,padlocks,and handles,among other products,aswell as comprehensive development and program management services for custom electromechanical and mechanical systemsdesigned for specific OEMs and customer applications.Eberhards products are f
55、ound in an expansive range of applications andproducts globally.Velvac is a designer and manufacturer of proprietary vision technology for OEMs and aftermarket applications,and a leadingprovider of aftermarket components to the heavy-duty truck market in North America.Velvac serves diverse,niche seg
56、mentswithin 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 teamplaces significant focus and attention on the attraction,development,and retention of employ
57、ees,as well as ensuring our corporateculture 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 our performance.We have made and
58、 continue 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 manufactureof unique engineered solutions to industrial markets.We operate globa
59、lly under policies and programs that provide competitivewages,benefits,and terms of employment.We are committed to efforts to increase diversity and foster an inclusive workenvironment that supports our global workforce through recruiting efforts and equitable compensation policies.The health and sa
60、fety of our employees is also a top priority.Our focus on the reduction of injuries and illnesses has significantlyimproved our safety performance.We have attained these improvements by fostering a global safety culture supported with regulartraining and education that includes robust systems and ph
61、ilosophies centered on personal responsibility and accountability.TheBoard has an Environment,Health,and Safety Committee that is responsible for reviewing the overall performance of theCompanys health and safety program and making recommendations to management.There is a high level of leadershipeng
62、agement,ensuring installation and maintenance of appropriate safety equipment at all our manufacturing sites worldwidecombined with vigorous reviews of root causation and systemic corrective actions of any safety incidents that may occur.Employee levels are managed to align with business demand and
63、management believes it currently has sufficient human capital tooperate its business successfully.As of December 28,2024,we employed 1,246 full-time employees:612 in the United States and634 in other countries.Approximately 21%of employees in the United States are represented by collective bargainin
64、g agreements.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 currentpatents and trademark protection is sufficient to protect the C
65、ompanys competitive positions.Patent durations are from 1 to 20years.No business operation is dependent on any patent,nor would the loss of any patent have any material adverse effect on theCompanys business.Customers of the Company are broad-based by geography and by market,and sales are not highly
66、 concentrated by customer.Onlyone customer exceeded 10%of accounts receivable for each of fiscal year 2024 and fiscal year 2023.Foreign sales were notsignificant for fiscal years 2024 and 2023.The Company encounters competition in its business.Imports from Asia and Latin America with favorable curre
67、ncy exchange ratesand low-cost labor have created additional pricing pressure.The Company competes successfully by offering high-quality,customengineered products on a timely basis.To compete,the Company deploys internal engineering resources,maintains cost effectivemanufacturing capabilities throug
68、h its wholly owned Asian subsidiaries,expands its product lines through product developmentand acquisitions,and maintains sufficient inventory for fast turnaround of customer orders.52025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm7/86Table of Con
69、tents The Company does not anticipate that compliance with federal,state,or local environmental laws or regulations is likely to have amaterial effect on the Companys capital expenditures,earnings,or competitive position.We anticipate that the new U.S.presidential administration will seek to impleme
70、nt a regulatory reform agenda that is significantly different than that of the prioradministration,which may impact agency rulemaking and enforcement priorities,which could,in turn,have a material effect onour business.The Company obtains materials from nonaffiliated domestic sources,as well as from
71、 Company-affiliated and unaffiliated sourcesin Asia.The Companys continuing operations ratio of working capital(current assets less current liabilities)to sales was 25.1%in 2024and 25.7%in 2023.Working capital includes cash held in various foreign subsidiaries.Other factors affecting working capital
72、include our average days sales in accounts receivable,inventory turnover ratio,and payment of vendor accounts payable.In somecases,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 cus
73、tomers.The Company continues to monitor working capital needs with thegoal of reducing our ratio of working capital to sales.Available Information The Company makes available,free of charge through its Internet website at http:/,its annual report onForm 10-K,quarterly reports on Form 10-Q,current re
74、ports on Form 8-K and amendments to those reports filed or furnishedpursuant to Section 13(a)or 15(d)of the Securities Exchange Act of 1934,as amended(the“Exchange Act”),as soon as reasonablypracticable after such material is electronically filed with or furnished to the SEC.The information posted o
75、n the Companyswebsite is not incorporated into this Form 10-K and is not part of this Form 10-K.The SEC maintains an internet site atwww.sec.gov that contains reports,proxy and information statements,and other information regarding issuers that fileelectronically with the SEC.The Companys reports fi
76、led with,or furnished to,the SEC are available on that website.ITEM 1A RISK FACTORS The Companys business is subject to a variety of risks and uncertainties,including,without limitation,the risks and uncertaintiesdescribed below.In addition to the other information contained in this Form 10-K and th
77、e Companys other filings with the SEC,these risk factors should be considered carefully in evaluating the Companys business.If any of these risks,or any risks notpresently known to the Company or currently deemed immaterial by the Company,materialize,the Companys business,reputation,stock price,fina
78、ncial condition or results of operations could be materially adversely affected,and the Company maynot be able to achieve its goals or expectations.This section should be read in conjunction with Item 7,Managements Discussion and Analysis of Financial Condition and Resultsof Operations,and the conso
79、lidated financial statements and accompanying notes in Item 8,Financial Statements andSupplementary Data,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
80、could in the future be adversely affected by changes in political and economic conditions,trade protection measures,restrictions on repatriation of earnings,differing intellectual property rights and changes in regulatoryrequirements that restrict the sales of products or increase costs.Changes in e
81、xchange rates between the U.S.dollar and foreigncurrencies could result in increases or decreases in earnings and may adversely affect the value of the Companys assets outside theUnited States.Increased pricing in response to fluctuations in foreign currency exchange rates may offset portions of the
82、 currencyimpacts but could also have a negative impact on demand for the Companys products,which would affect sales and profits.Someof the Companys competitors import products from Asia and Latin America that benefit from favorable currency exchange ratesand lower cost labor,which has created downwa
83、rd pricing pressure with respect to the Companys products that is likely tocontinue.Exchange rate fluctuations have at times and could in the future exacerbate this pricing pressure and impair the ability ofthe Companys products to compete with products imported from regions with favorable exchange
84、rates.62025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm8/86Table of Contents The Companys operations are also subject to the effects of international trade agreements and regulations.These trade agreementscould impose requirements that adversely a
85、ffect the Companys business,such as,but not limited to,setting quotas on products thatmay be imported from a particular country into the Companys key markets in North America.The Companys ability to importproducts in a timely and cost-effective manner may also be affected by conditions at ports or i
86、ssues that otherwise affecttransportation and warehousing providers,such as port and shipping capacity,labor disputes,severe weather or increased homelandsecurity requirements in the United States or other countries.These issues could delay importation of products or require theCompany to locate alt
87、ernative ports or warehousing providers to avoid disruption to customers.These alternatives may not beavailable on short notice or could result in higher transit costs,which could have an adverse impact on the Companys business,financial conditions,or results of operations.In addition,the Companys g
88、rowth strategy involves expanding sales of its products into foreign markets.There is no guaranteethat the Companys products will be accepted by foreign customers or how long it may take to develop sales of the Companysproducts in these foreign markets.Tariffs,trade sanctions and political instabili
89、ty may impact the availability or cost of raw materials,which could adverselyaffect our margins,ability to meet customer demand,business,results of operations and financial condition.The Company obtains raw materials used in the production of its products from domestic sources,as well as from Compan
90、y-affiliated and unaffiliated sources in Asia.Changes in international trade duties and other aspects of international trade policy,bothin the United States and abroad,could materially impact the cost of these raw materials.For example,from March 2018 untilMarch 2021,the United States imposed an add
91、itional 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 countriesother than China,imports from many jurisdictions are subject to limitations on volume,after which su
92、bstantial tariffs will bereimposed.The United States also imposed a 10%tariff on all aluminum imports into the United States,with initial exemptions foraluminum imported from certain U.S.trading partners.Such actions could increase steel and aluminum costs and decrease supplyavailability.In response
93、 to the invasion of Ukraine by the military forces of the Russian Federation,the United States,the EuropeanUnion,and other jurisdictions have imposed sanctions that,among other things,prohibit the importation of a wide array ofcommodities and products from Russia,which is a major global supplier of
94、nickel.Any increase in nickel,steel and/or aluminumprices,whether as a result of existing tariffs and trade policy or as a result of new tariffs or policies that may be imposed by thenew presidential administration or otherwise,that is not offset by an increase in the Companys prices could have an a
95、dverse effecton the Companys business,financial position,results of operations or cash flows.In addition,if the Company is unable to acquiretimely nickel,steel or aluminum supplies,the Company may need to decline customer orders,which could also have an adverseeffect on the business,financial positi
96、on,results of operations or cash flows of the Company.Supply chain disruptions,delays in production,and forecast inaccuracies have affected and could continue to affect ourability to meet customer demand,lead to higher costs,result in excess inventory,and could have an adverse effect on ourresults o
97、f operations and financial condition.Raw materials needed to manufacture the Companys products are obtained from numerous suppliers.Under normal marketconditions,these raw materials are readily available on the open market from a variety of producers.However,from time to time,the prices and availabi
98、lity of these raw materials fluctuate due to changes in existing and expected rates of inflation,which couldimpair the Companys ability to procure the required raw materials for its operations or increase the cost of manufacturing itsproducts.The Company may be unable to pass all of these price incr
99、eases on to its customers and could experience reductions in itsprofit margins.Any decrease in the availability of raw materials could impair the Companys ability to meet productionrequirements in a timely manner or at all.Similarly,any prolonged interruption in service by one of our key component s
100、upplierscould have a material adverse effect on our business,results of operations and financial condition.Additionally,we may not be ableto establish additional or replacement suppliers for such components within a reasonable period of time,or on commerciallyreasonable terms,if at all,which could r
101、esult in delays or interruptions in our operations,which in turn would adversely affect ourbusiness,results of operations and financial condition.72025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm9/86Table of Contents The Company faces active globa
102、l competition 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 favorablecurrency exchange rates and low-cost labor have resulted in pricing pressure.The Company competes with
103、other companies thatoffer comparable products or that produce different products appropriate for the same uses.To remain profitable and defend marketshare,the Company must continue to offer high quality custom engineered products on a timely basis,develop new products orupdate existing products to c
104、ompete with new or updated products introduced by competitors,deploy internal engineeringresources,maintain cost-effective manufacturing capabilities through its wholly owned Asian subsidiaries,expand its product linesthrough product development and acquisitions,and maintain sufficient inventory for
105、 fast turnaround of customer orders.Additionally,technological developments and enhancements of products and services offerings in our industry may require anexpanded use of artificial intelligence(“AI”)and machine learning;if we are unable to keep pace with the rate of these and otherdevelopments,o
106、ur ability to effectively compete could be adversely affected.We expect the level of competition to remain high inthe future,which,if not effectively matched or exceeded,could limit our ability to maintain or increase our profitability.TheCompany may not be able to compete effectively on all these f
107、ronts and with all its competitors,and the failure to do so could havea 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 competitiveand retain market share.Price reductions taken b
108、y the Company in response to customer and competitive pressures,as well as pricereductions and promotional actions taken to drive demand that may not result in anticipated sales levels,could also negativelyimpact the Companys business.Changes in competition in the markets that the Company services c
109、ould 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 or even maintain current levels of revenues and earnings.The loss of certain customers couldadversely af
110、fect the Companys business,financial condition,or results of operations until such business is replaced,and noassurances 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 up
111、dated products could limit growth.Demand for new products,or the need to update existing products to compete with new or updated products offered bycompetitors,could adversely affect the Companys performance,ability to maintain current levels of revenues and earnings,andprospects for future growth i
112、f the Company were unable to develop and introduce new competitive products or updates to existingproducts 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
113、production,may impede the successfuldevelopment and introduction of new products or updates to existing products.Acceptance of the new or updated products may notmeet sales expectations due to several factors,such as the Companys potential inability to accurately predict market demand or toresolve t
114、echnical issues in a timely and cost-effective manner.Additionally,the inability to develop new or updated products on atimely 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
115、on its ability to acquire and successfully integrate new businesses.The Companyintends to seek additional acquisition opportunities,both to expand into new markets and to enhance the Companys position inexisting markets.However,there can be no assurances that the Company will be able to successfully
116、 identify suitable candidates,negotiate appropriate terms,obtain financing on acceptable terms,complete proposed acquisitions,successfully integrate acquiredbusinesses or expand into new markets.Once acquired,operations may not achieve anticipated levels of revenues or profitability.Acquisitions inv
117、olve risk,including difficulties in the integration of the operations,technologies,services,and products of theacquired companies and the diversion of managements attention from other business concerns.Although the Companysmanagement will endeavor to evaluate the risks inherent in any particular tra
118、nsaction,there can be no assurances that theCompanys 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 dilutive
119、issuances of equity securities.Difficulties encountered with acquisitions may have a material adverse effect on our business,financial condition,and results of operations.82025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm10/86Table of Contents We m
120、ay be unable to successfully execute acquisitions or dispositions or effectively integrate businesses we may acquire inthe future.We regularly review our portfolio of businesses and pursue growth through acquisitions.We also regularly review our operationsand results to identify businesses that no l
121、onger fit within our core capabilities,offerings,and markets and that we may determineto divest.We may not be able to complete these acquisition or disposition transactions on favorable terms,on a timely basis,or atall,and the success of any such acquisitions depends on our ability to combine the ac
122、quired business with our existing business in amanner that does not disrupt our and the acquired businesss ongoing relationships with customers,suppliers,and employees.Ourresults of operations and cash flows have been and may in the future be adversely impacted by(i)the failure of acquired businesse
123、sto meet or exceed expected returns,including risk of impairment;(ii)the failure to integrate multiple acquired businesses into theCompany simultaneously and on schedule or to achieve expected synergies;(iii)the discovery of unanticipated liabilities,cybersecurity and compliance issues,labor relatio
124、ns difficulties or other problems in acquired businesses for which we lackcontractual protections,or insurance or indemnities;(iv)the potential disruption of our ongoing operations and distraction ofmanagement away from oversight of these activities that may be caused by the pursuit of acquisition o
125、r disposition transactions;(v)failure to realize the anticipated benefits and cost savings of a transaction fully or within 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 techn
126、ology could put the Company ata competitive disadvantage.Some of the Companys products rely on proprietary technology;therefore,the Company believes that the development andprotection of intellectual property rights through patents,copyrights,trade secrets,trademarks,confidentiality agreements and o
127、thercontractual provisions are important to the future success of its business.Despite the Companys efforts to protect proprietaryrights,unauthorized parties or competitors may copy or otherwise obtain and use the Companys products or technology.Actions toenforce these rights may result in substanti
128、al costs and diversion of resources and the Company makes no assurances that any suchactions will be successful.In addition to the United States,we have applied for intellectual property protection in other jurisdictions with respect to certaininnovations and new products,product features,and proces
129、ses.The laws of certain foreign countries in which we do business,ormay contemplate doing business in the future,do not recognize intellectual property rights or protect them to the same extent asU.S.law.As a result,these factors could weaken our competitive advantage with respect to our products,se
130、rvices,and brands inforeign jurisdictions,which could adversely affect our financial performance.We may also encounter significant problems inprotecting and defending our licensed and owned intellectual property in foreign jurisdictions.For example,China currentlyaffords less protection to a company
131、s intellectual property than some other jurisdictions.As such,the lack of strong patent andother intellectual property protection in China may significantly increase our vulnerability regarding unauthorized disclosure or useof our intellectual property and undermine our competitive position.Proceedi
132、ngs to enforce our intellectual property rights inforeign jurisdictions could result in substantial 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 causedisruption t
133、o the Companys business operations.The Companys business operations are dependent upon information technology networks and systems to securely transmit,process and store electronic information and to communicate among its locations around the world and with clients and vendors.Ashut-down of,or inabi
134、lity to access,one or more of the Companys facilities,a power outage,a ransomware incident,or a failure ofone or more of the Companys information technology,telecommunications or other systems could significantly impair theCompanys ability to perform such functions on a timely basis.Computer viruses
135、,cyberattacks,other external hazards and humanerror could result in the misappropriation of assets or sensitive information,corruption of data or operational disruption.Ifsustained or repeated,such a business interruption,system failure,service denial or data loss and damage could result in adeterio
136、ration of the Companys ability to write and process orders,provide customer service,or perform other necessary businessfunctions.92025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm11/86Table of Contents A breach in the security of the Companys softw
137、are or information technology systems could harm its reputation,result in aloss of current and potential customers,and subject the Company to material claims,which could materially harm ouroperating results and financial condition.If the Companys security measures are breached,an unauthorized party
138、may obtain access to the Companys data or users orcustomers data.In addition,cyberattacks and similar acts could lead to interruptions and delays in operations or customerprocessing or a loss or breach of the Companys or a customers data.Because the techniques used to obtain unauthorized access,disa
139、ble,or degrade service,or sabotage systems change frequently and often are not recognized until launched against a target,theCompany may be unable to anticipate these techniques or to implement adequate preventative measures.The risk that these typesof events could seriously harm the Companys busine
140、ss is likely to increase as the Company expands its reliance on technology forits operations and order processing.Data breaches and other serious cybersecurity incidents have increased globally,along with the methods,techniques,andcomplexity of attacks,including use of viruses,ransomware and other m
141、alicious software,phishing,and other efforts to discoverand exploit any design flaws,bugs,or other security vulnerabilities.Continued geopolitical turmoil,including the ongoing conflictbetween Russia and Ukraine and relations between the United States and foreign governments,has heightened the risk
142、ofcyberattacks.We have been,and likely will continue to be,subject to such cyberattacks,although none has had a material impacton our operations.Also,the same cybersecurity threats exist for the third parties with whom we interact and share information andcyberattacks on third parties that possess o
143、r use our customer,personnel and other information could adversely impact us in thesame way as would a direct cyberattack on us.The rapid development and adoption of AI technologies further increases these risks,both because AI can be used to enhance thecapabilities of attackers and because of its p
144、otential to help those subject to cyberattacks develop more advanced security measuresand defenses.As a result,we may need to invest additional resources to protect the security of our systems.The Company is subject to federal,state,and international laws and regulations relating to the collection,u
145、se,retention,securityand transfer of personally identifiable information and individual payment data.The information,security and privacy requirementsimposed by such laws and regulations are constantly evolving and are becoming increasingly demanding in the United States andother jurisdictions in wh
146、ich the Company operates.In addition,the interpretation and application of consumer and data protectionlaws in the United States and elsewhere are often uncertain and in flux.It is possible that these laws may be interpreted and appliedin a manner that is inconsistent with the Companys data practice
147、s.If so,in addition to the possibility of fines or other penalties,this could result in an order requiring that the Company change its data practices,which could be costly,divert managementattention,and have an adverse effect on the Companys business and results of operations.The Company has incurre
148、d and maycontinue to incur significant costs relating to compliance with these laws and regulations,including costs related to updating certainbusiness practices and systems and ensuring continued compliance and any changes to laws,regulations or enforcement couldexpose the Company to additional cos
149、ts and liability.Any security breaches for which the Company is,or is perceived to be,responsible,in whole or in part,or any actual or perceivedviolations of data privacy laws and regulations,could subject the Company to legal claims or legal proceedings,includingregulatory investigations,which coul
150、d harm the Companys reputation and result in significant litigation costs and damage awardsor settlement amounts.Any imposition of liability,particularly liability that is not covered by insurance or is in excess of insurancecoverage,could materially harm our operating results and financial conditio
151、n.Security breaches also could cause the Company tolose current and potential customers,which could have an adverse effect on the Companys business.Moreover,the Company maybe required to expend significant financial and other resources to further protect against security breaches or to rectify probl
152、emscaused by any security breach.102025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm12/86Table of Contents Litigation,Compliance and Regulatory Risks Delays in,or disagreements with the Companys independent registered public accounting firm regardi
153、ng,the Companysevaluation of its internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 could have amaterial adverse effect on the market price of the Companys stock or its borrowing ability.In addition,future changes inoperating conditions could result in inad
154、equate 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 withSection 404 of the Sarbanes-Oxley Act of 2002.Section 404 requires the Company to include in its Annual Report on Form 10-Kmanagemen
155、ts assessment of the effectiveness of the Companys internal control over financial reporting as of the end of the fiscalperiod for which the Company is filing the report.This report must also include disclosure of any material weaknesses in internalcontrol over financial reporting that the Company h
156、as identified.Additionally,the Companys independent registered publicaccounting firm is required to issue a report on the Companys internal control over financial reporting and their evaluation of theoperating effectiveness of the Companys internal control over financial reporting.The Companys asses
157、sment requires it to makesubjective judgments,and the independent registered public accounting firm may not agree with the Companys assessment.If theCompany or its independent registered public accounting firm were unable to complete the assessments within the periodprescribed by Section 404 and thu
158、s be unable to conclude that the internal control over financial reporting is effective,investorscould lose confidence in the Companys reported financial information,which could have an adverse effect on the market price ofthe Companys common stock or impact the Companys borrowing ability.In additio
159、n,changes in operating conditions andchanges 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 the Comp
160、anysfinancial condition.The Companys operations and properties are subject to laws and regulations relating to environmental protection,including airemissions,water discharges,waste management and workplace safety.These laws and regulations can result in the imposition ofsubstantial fines and sancti
161、ons for violations and could require the installation of pollution control equipment or operationalchanges to limit pollution emissions and/or decrease the likelihood of accidental hazardous substance releases.The Company mustconform its operations and properties to these laws and adapt to regulator
162、y requirements in the countries in which the Companysbusinesses operate as these requirements change.The Company uses and generates hazardous substances and wastes in its operations and,as a result,could be subject to potentiallymaterial liabilities relating to the investigation and clean-up of cont
163、aminated properties and to claims alleging personal injury.TheCompany has experienced,and expects to continue to experience,costs relating to compliance with environmental laws andregulations.In connection with the Companys acquisitions,the Company may assume significant environmental liabilities,so
164、meof which it may not be aware of at the time of acquisition.In addition,new laws and regulations,stricter enforcement of existinglaws and regulations,the discovery of previously unknown contamination or the imposition of new clean-up requirements couldrequire the Company to incur costs or become th
165、e basis for new or increased liabilities that could have a material adverse effect onour business,financial condition,and results of operations.Natural disasters,changes in climate,geo-political events,and public health crises,including pandemics and epidemics,andany related Company or government po
166、licies 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 asCompany or government policies adopted or actions taken as a result of such events,could materially adversely affect our
167、 businessand financial performance.The occurrence of one or more natural disasters,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 or otherwi
168、se,severe changes in climate,geo-political events,such as war,civil unrest orterrorist attacks,or public health crises in a country in which we operate or in which our suppliers are located could result in loss ofhuman life,significant property and equipment damage,environmental pollution,or reputat
169、ional harm and could adversely affectour operations and financial performance.Our business and operations may be disrupted if we do not respond,or are perceived notto respond,in an appropriate manner to any of these hazards and risks or any other major crisis or if we are unable to efficientlyrestor
170、e or replace affected operational components and capacity.Countermeasures to address global health crises,epidemics orpandemics may result in reduced demand for our products;disruptions to our supply chain,the global economy or financial orcommodity markets;disruptions in our contractual arrangement
171、s with our service providers,suppliers and other counterparties;orfailures 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 and adversely imp
172、act our financialcondition,results of operations,cash flows or liquidity position.Further,our insurance may not be adequate to compensate us forall resulting losses described above,and the cost to obtain adequate coverage may increase for us in the future or may not beavailable.2025/5/19 14:11eml_10
173、k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm13/86112025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm14/86Table of Contents The Company is from time to time subject to litigation,which could have a material impact
174、 on the Companys business,financial condition,or results of operations.From time to time,the Companys operations are parties to or targets of lawsuits,claims,investigations,and proceedings,includingproduct liability,personal injury,patent,and intellectual property,commercial,contract,and environment
175、al and employmentmatters,which are defended and settled in the ordinary course of business.Any litigation to which the Company may be subjectcould have a material adverse effect on its business,financial condition,or results of operations.See Item 3 Legal Proceedings ofthis Form 10-K for a discussio
176、n 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 and those of other foreignjurisdictions in which the Company has business operations.These laws are complex
177、,evolving,and subject to interpretation by thetaxpayer and the relevant governmental taxing authorities.The Companys future annual and quarterly tax rates could be affected by numerous factors,including changes in the(1)applicabletax laws;(2)composition of earnings in countries with differing tax ra
178、tes;or(3)recoverability of our deferred tax assets andliabilities.Due to the pace of legislative changes,any substantial changes in tax policies or legislative initiatives may materiallyand adversely affect our business,the taxes we are required to pay,our financial position,and results of operation
179、s.For example,beginning in 2022,the U.S.Tax Cuts and Jobs Act of 2017 eliminated the existing option to deduct research and developmentexpenditures and requires taxpayers to amortize them over five years pursuant to IRC Section 174.This requirement is expected toreduce our cash flow.Further,in Augus
180、t 2022,the United States enacted the Inflation Reduction Act of 2022(the“IRA”)whichincludes a new 15%corporate minimum tax as well as a 1%excise tax on fair value of corporate stock repurchases made afterDecember 31,2022.The IRA could have a negative impact on our tax position.Many countries and org
181、anizations such as theOrganization for Economic Cooperation and Development(the“OECD”)are also actively considering changes to existing tax lawsor have proposed or enacted new laws that could increase our tax obligations in countries where we do business or cause us tochange the way we operate our b
182、usiness.Any of these developments or changes in federal,state,or international tax laws or taxrulings could adversely affect our effective tax rate and our results of operations.For example,the OECD has released guidancecovering various topics,including country-by-country reporting and an initiative
183、 that aims to standardize and modernize global taxpolicy.The guidance has also established a global minimum tax of 15%,which is being or may be implemented in variousjurisdictions.Depending on the final form of legislation and the jurisdictions which enact it,there may be significant taxconsequences
184、 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.countries that are extraterritorial ordisproportionately affect U.S.companies(which may include taxes imposed unde
185、r the OECD guidance)and legislation has beenintroduced that would increase U.S.tax rates on non-U.S.companies and investors if their home jurisdictions imposediscriminatory or extraterritorial taxes on U.S.companies,but we cannot predict whether such protective measures or legislationwill be adopted
186、 or what,if any,responsive measures may be adopted by non-U.S.countries.We continue to monitor the effects ofthe IRA,the OECD guidelines and other regulatory developments on our financial conditions,operating results,and income taxrate.Significant judgment and interpretation are required in determin
187、ing the Companys worldwide provision for income taxes.In theordinary course of business,transactions arise where the ultimate tax determination is uncertain.Although the Company believesthat our tax estimates are reasonable,the outcome of tax audits and any related litigation could be materially dif
188、ferent from thatwhich is reflected in historical income tax provisions and accruals.Based on the status of a given tax audit or related litigation,amaterial effect on the Companys income tax provision or net income may result during the period or periods from the initialrecognition of a particular m
189、atter in the Companys reported financial results to the final closure of that tax audit or settlement ofrelated litigation when the ultimate tax and related cash flow is known with certainty.New or existing U.S.or foreign laws and regulations could subject the Company to claims or otherwise impact t
190、heCompanys business,financial condition,or results 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 costly tocomply with,can result in negative publicity and diversion of management time and effort,and can subject
191、 the Company to claimsor other remedies.These laws,regulations,rules,and policies could relate to any of an array of issues including,but not limited to,data privacy and security,environmental,tax,intellectual property,trade secrets,product liability,contracts,antitrust,employment,securities,import/
192、export,and unfair competition.These laws and regulations may differ in different jurisdictions and are subject tochange,including as a result of changes to regulatory,legislative and enforcement priorities with changes in U.S.presidentialadministration,and regulatory actions that non-U.S.countries m
193、ay take in response to such changes.The cost of maintainingcompliance under multiple and changing regulatory regimes,and expenditures that may be required to comply with new laws andregulations,may adversely affect the Companys business,financial condition,and results of operations.In the event that
194、 theCompany fails to comply with or violates applicable U.S.or foreign laws or regulations or customer policies,the Company couldbe subject to civil or criminal claims or proceedings that may result in monetary fines,penalties or other costs against the Company2025/5/19 14:11eml_10k.htmhttps:/www.se
195、c.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm15/86or its employees,which may adversely affect the Companys operating results,financial condition,customer relations and ability toconduct its business.122025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/00016549542
196、5002610/eml_10k.htm16/86Table of Contents Risks Related to Our Indebtedness Indebtedness may affect 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 inthe Credit Agreement,
197、the Company may incur additional indebtedness in the future,including indebtedness incurred to financeacquisitions.The level of indebtedness and servicing costs associated with that indebtedness could have important effects on ouroperation and business strategy.For example,the indebtedness could:Pla
198、ce the Company at a competitive disadvantage relative to the Companys competitors,some of which have lower debtservice obligations and greater financial resources;Limit the Companys ability to borrow additional funds;Limit the Companys ability to complete future acquisitions;Limit the Companys abili
199、ty to pay dividends;Limit the Companys ability to make capital expenditures;and Increase the 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 satisfyother de
200、bt obligations will depend upon future operating performance,which may be affected by factors beyond the Companyscontrol.In addition,there can be no assurance that future borrowings or the issuance of equity would be available to the Companyon favorable terms for the payment or refinancing of the Co
201、mpanys debt.If the Company were unable to service its indebtedness,the business,financial condition,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 maintaincomplian
202、ce with specified financial ratios.The Companys ability to meet the financial covenants or requirements in the CreditAgreement may be affected by events beyond our control,and the Company may not be able to satisfy such covenants andrequirements.The Credit Agreement also contains several restrictive
203、 covenants that could adversely affect the Companys ability to operate itsbusiness.These covenants 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 per
204、son or entity;Pay dividends,make distributions,or repurchase equity;Engage in certain transactions 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 inour C
205、redit Agreement could result in an event of default under the Credit Agreement.Upon the occurrence of an event of defaultunder the Credit Agreement and/or the expiration of any grace periods,the lenders could elect to declare all amounts outstandingunder our credit facility,together with accrued int
206、erest,to be immediately due and payable.If this were to occur,the Companysassets may not be sufficient to fully repay the amounts due under our credit facility or the Companys other indebtedness.132025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm17
207、/86Table 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 Companysfinancial condition and operating results.Global economic conditions have impacted in the past and may in the future im
208、pact the Companys results.For example,volatileeconomic conditions that resulted from the COVID-19 pandemic led to economic slowdowns that caused contractions in some orall the markets we serve,and these impacts may recur in the future.This has led to and may continue to lead to decreased demandfor t
209、he Companys products,which in turn has negatively impacted,and may continue to negatively impact,the Companysfinancial condition and operating results.Other macroeconomic factors also remain dynamic,and any causes of market sizecontraction,and overall economic slowdowns could reduce the Companys sal
210、es or erode operating margin,in either case reducingearnings.Economic conditions or changes in asset returns interest rates could increase our pension plan funding obligations andreduce our profitability.In addition,pension plan funded status,the ratio of plan assets over plan liabilities,is largely
211、 influenced by current marketconditions.To the extent asset returns and interest rates,which are used to discount future plan benefits,change from priormeasurement periods,the plans funded ratio has the potential to change significantly.Declines in interest rates and projected ratesof return could r
212、equire 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,which has in the past required andcould in the future require a significant charge to earnings be recognized.
213、Under accounting principles generally accepted in the United States,goodwill and indefinite-lived intangible assets are notamortized but are reviewed for impairment at least annually.Future operating results used in the assumptions,such as sales orprofit forecasts,may not materialize,and the Company
214、 has been and could in the future be required to record a significant chargeto earnings in the financial statements during the period in which any impairment is determined,resulting in an unfavorable impacton our results of operations.The Company may not be able to reach acceptable terms for contrac
215、ts negotiated with its labor unions and be subject towork stoppages or disruption of production.During 2025,union contracts covering approximately 35%of the Companys total workforce are expected to expire.The Companyhas been successful in negotiating new contracts over the years but cannot guarantee
216、 that will continue and the Company has,in thepast experienced,and could in the future experience,temporary work stoppages during negotiation of such contracts.Failure tonegotiate new union contracts,or any work stoppage that is prolonged,could result in the disruption of production,inability todeli
217、ver product,or several unforeseen circumstances,any of which could have an unfavorable material impact on the Companysresults of operations or financial condition.The Company may need additional capital in the future,which may not be available on acceptable terms,if at all.From time to time,the Comp
218、any has historically relied on outside financing to fund expanded operations,capital expenditureprograms and acquisitions.The Company may require additional capital in the future to fund operations or strategic opportunities.The Company cannot be assured that additional financing will be available o
219、n favorable terms,or at all.In addition,the terms ofavailable financing may place limits on the Companys financial and operating flexibility.If the Company is unable to obtainsufficient capital in the future,the Company may not be able to expand or acquire complementary businesses and may not be abl
220、eto continue to develop new products or otherwise respond to changing business conditions or competitive pressures.142025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm18/86Table of Contents The Companys stock price may become highly volatile,and inv
221、estors may not be able to sell their shares at their desiredprices,or at all.The Companys stock price may change dramatically when buyers seeking to purchase shares of the Companys common stockexceed the shares available on the market,or when there are no buyers to purchase shares of the Companys co
222、mmon stock whenshareholders are trying to sell their shares.The Companys common stock has historically been“thinly”traded,meaning that thenumber of persons interested in purchasing shares of Company common stock at prevailing prices at any given time may berelatively small.This may contribute to pri
223、ce volatility,as the trading of relatively small quantities of shares by our shareholdersmay disproportionately influence share price and may prevent investors from selling their shares at or above their purchase price ifthere is not sufficient demand for the shares at the time of sale.The Company d
224、epends on key management,sales and marketing and technical personnel,the loss of whom could harm itsbusiness.The Company depends on key management and technical personnel.The loss of one or more key employees could materially andadversely affect the Company.The Companys success also depends on its a
225、bility to attract and retain highly qualified technical,sales and marketing andmanagement personnel necessary for the maintenance and expansion of its activities.The Company faces strong competition forsuch personnel and may not be able to attract or retain such personnel.In addition,when the Compan
226、y experiences periods withlittle 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 theCompanys profits
227、 decrease,or if the Companys total compensation package is not viewed as competitive,the Companys abilityto attract,retain and motivate executives and key employees could be weakened.The failure to successfully hire and retainexecutives and key employees or the loss of any executives and key employe
228、es could have a significant impact on our operations.Deterioration in the creditworthiness of several major customers could have a material impact on the Companys business,financial condition,or results of operations.Included as a significant asset on the Companys balance sheet are accounts receivab
229、le from our customers.If several largecustomers become insolvent or are otherwise unable to pay for products or become unwilling or unable to make payments in atimely manner,it could have an unfavorable material impact on the Companys results of operations or financial condition.Although the Company
230、 is not dependent on any one customer,deterioration in several large customers at the same time could havean unfavorable material impact on the Companys results of operations or financial condition.One customer represented 14%oftotal accounts receivable as of December 28,2024 and one customer repres
231、ented 12%of total accounts receivable as of December30,2023.The Companys operating results may fluctuate,which makes the results of operations difficult to predict and could causethe results to fall short of expectations.The Companys operating results may fluctuate because of several factors,includi
232、ng those described above,many of which areoutside 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 future performance.Quarterly,year to date,and annual costs andexpense
233、s as a percentage of revenues may differ significantly from historical or projected levels.Future operating results may fallbelow expectations.These types of events could cause the Companys stock price to drop.ITEM 1B UNRESOLVED STAFF COMMENTS None.ITEM 1C CYBERSECURITY The Companys Board recognizes
234、 the critical importance of maintaining the trust and confidence of our customers,clients,businesspartners and employees.The Board is actively involved in oversight of the Companys risk management program,andcybersecurity represents a key component of the Companys overall approach to enterprise risk
235、 management(“ERM”).TheCompanys cybersecurity policies,standards,processes,and practices are fully integrated into the Companys ERM program andare based on recognized frameworks established by the National Institute of Standards and Technology,the InternationalOrganization for Standardization and oth
236、er applicable industry standards.In general,the Company seeks to address cybersecurityrisks through a comprehensive,cross-functional approach that is focused on preserving the confidentiality,security,and availability2025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425
237、002610/eml_10k.htm19/86of the information that the Company collects and stores by identifying,preventing,and mitigating cybersecurity threats andeffectively responding to cybersecurity incidents when they occur.152025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/0001654954250026
238、10/eml_10k.htm20/86Table 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 thefollowing key areas:Governance:As discussed in more detail under the heading“Governance,”the Boards oversight of
239、cybersecurity riskmanagement is supported by the Audit Committee of the Board(the“Audit Committee”),which regularly interacts with theCompanys ERM function,the Companys Director of Information Technology&Cybersecurity,and other members ofmanagement and relevant management committees and councils,inc
240、luding managements Cybersecurity Council.Collaborative Approach:The Company has implemented a comprehensive,cross-functional approach to identifying,preventingand mitigating cybersecurity threats and incidents,while also implementing controls and procedures that are designed to providefor the prompt
241、 and appropriate internal reporting of certain cybersecurity incidents,either in the form of a single unauthorizedoccurrence or a series of unauthorized occurrences,so that decisions regarding the public disclosure and reporting of such incidentscan be made by management in a timely manner.Technical
242、 Safeguards:The Company deploys technical safeguards that are designed to protect the Companys informationsystems from cybersecurity threats,including firewalls,intrusion prevention and detection systems,anti-malware functionality andaccess controls,which are evaluated and improved through vulnerabi
243、lity assessments and cybersecurity threat intelligence.Incident Response and Recovery Planning:The Company has established and maintains comprehensive incident response andrecovery plans intended to fully and timely address the Companys response to a cybersecurity incident,and such plans are testeda
244、nd evaluated on a regular basis.Third-Party Risk Management:The Company maintains a comprehensive,risk-based approach to identifying and overseeingcybersecurity risks presented by third parties,including vendors,service providers and other external users of the Companyssystems,as well as the systems
245、 of third parties that could adversely impact our business in the event of a cybersecurity incidentaffecting those third-party systems.Education and Awareness:The Company provides regular,mandatory training for personnel regarding cybersecurity threats toequip the Companys personnel with effective t
246、ools to proactively address cybersecurity threats and prevent incursions,and tocommunicate the Companys evolving information security policies,standards,processes,and practices.Our awareness programincludes assessment of our personnels preparedness through regular phishing e-mail alerts,highlighted
247、banners that warn aboutexternal senders,and tests administered to help the Companys personnel interrogate,navigate around,and avoid clickingsuspicious and unfamiliar links from unknown senders.The Company engages in the periodic assessment and testing of the Companys policies,standards,processes,and
248、 practices thatare designed to address cybersecurity threats and incidents.These efforts include a wide range of activities,including audits,assessments,tabletop exercises,threat modeling,vulnerability testing and other exercises focused on evaluating the effectivenessof our cybersecurity measures a
249、nd planning.The Company engages third parties to perform assessments on our cybersecuritymeasures,including information security maturity assessments,audits and independent reviews of our information security controlenvironment and operating effectiveness.The results of such assessments,audits and r
250、eviews are reported to the Audit Committeeand the Board,and the Company adjusts its cybersecurity policies,standards,processes,and practices as appropriate based on theinformation provided by these assessments,audits,and reviews.162025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/3110
251、7/000165495425002610/eml_10k.htm21/86Table of Contents Governance The Board,in coordination with the Audit Committee,oversees the Companys ERM process,including the management of risksarising from cybersecurity threats.The Board and the Audit Committee each receive regular presentations and reports
252、oncybersecurity risks,which address a wide range of topics including recent developments,evolving standards,vulnerabilityassessments,third-party and independent reviews,the threat environment,technological trends,and information securityconsiderations arising with respect to the Companys peers and t
253、hird parties.The Board and the Audit Committee also receiveprompt and timely information regarding any cybersecurity incident that meets established reporting thresholds,or thatmanagement otherwise deems to be significant,as well as ongoing updates regarding any such incident until it has been fully
254、addressed.On an annual basis,the Board and the Audit Committee discuss the Companys approach to cybersecurity riskmanagement with the members of managements Cybersecurity Council,which includes the Companys Chief Executive Officer(“CEO”),Chief Financial Officer(“CFO”),Director of Risk,and Director o
255、f Information Technology&Cybersecurity.The Cybersecurity Council,in coordination with the Companys outside legal counsel,works collaboratively across the Companyto implement a program designed to protect the Companys information systems from cybersecurity threats and to promptlyrespond to any cybers
256、ecurity incidents in accordance with the Companys incident response and recovery plans.To facilitate thesuccess of the Companys cybersecurity risk management program,multidisciplinary teams throughout the Company are deployedto address cybersecurity threats and to respond to cybersecurity incidents.
257、Through ongoing communications with these teams,theDirector of Information Technology&Cybersecurity and the Cybersecurity Council monitor the prevention,detection,mitigationand remediation of cybersecurity threats and incidents in real time and report such threats and incidents to the Audit Committe
258、ewhen appropriate.The Director of Information Technology&Cybersecurity has served in various roles in information technology and informationsecurity for over 25 years,including the design and management of operational and cybersecurity activities of two large publiccompanies.The Director of Informat
259、ion Technology&Cybersecurity holds undergraduate and graduate degrees in computerscience and is certified in National Institute of Standards and Technology(“NIST”),Cybersecurity Maturity Model Certification(“CMMC”),Cybersecurity and Infrastructure Security(“CIS”),and General Data Protection Regulati
260、on(“GDPR”).TheCompanys CEO and CFO each hold undergraduate and graduate degrees in their respective fields,and each has over 20 years ofexperience managing risks at the Company and at similar companies,including risks arising from cybersecurity threats.Cybersecurity threats,including as a result of
261、previous cybersecurity incidents,have not materially affected and are not reasonablylikely to materially affect the Company,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 Shelton,Connect
262、icut.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 propertieshave the necessary flexibility to cover any long-term expansion requirements.Company facilities include the following:Big 3 Prod
263、ucts in Centralia,Illinois owns 156,160 square feet of administrative and manufacturing space located in an industrialpark.The single-story building is steel frame with steel siding and roof.Big 3 Products in Dearborn,Michigan leases 86,250 square feet of building space.The building is made from ind
264、ustrial block.Approximately 6,000 square feet of office space 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 isindustrial block and metal frame.The current lease
265、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.Thebuilding is industrial block.Big 3 Precision in Kimball,Michigan leases 3,500 square feet of building space.The current lease is month-to-month.Ha
266、llink Moulds,a wholly owned subsidiary in Cambridge,Ontario,leases 15,000 square feet of building space.The building isindustrial block and metal frame.The current lease expires on February 1,2026,with the option to renew for an additional twenty-four months.172025/5/19 14:11eml_10k.htmhttps:/www.se
267、c.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm22/86Table of Contents Eberhard Manufacturing in Strongsville,Ohio owns 9.6 acres of land and a building containing 157,580 square feet,located in anindustrial park.The building is steel frame,is one-story and has curtain walls of brick,g
268、lass,and insulated steel panels.Thebuilding has two high bays,one of which houses two units of automated warehousing.Eberhard Manufacturing leases 8,551 square feet of office space in Arlington Heights,IL.The current lease expires on September1,2026.Eastern Industrial Ltd.,a wholly owned subsidiary
269、in Shanghai,China,leases brick and concrete buildings containingapproximately 47,500 square feet of space that are in both industrial and commercial areas.In 2022,Eastern Industrial,Ltd.entereda three-year lease,which expires on March 31,2025,and is intended to be renewed.The World Lock Co.Ltd.Subsi
270、diary leases 5,285 square feet of space in a building located in Taipei,Taiwan.The building is madefrom brick and concrete and is protected 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
271、 space in concrete buildings that are in anindustrial park in Dongguan,China.The current lease 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 includes17,000 square feet of office space and 81,000
272、 square feet of warehousing and distribution operations.The current lease expires onMay 31,2029.Velvac,Inc.leases 100,000 square feet of warehouse space in Pharr,TX.The current lease expires on April 15,2025 and isintended to be renewed.Velvac de Reynosa,S.De R.L De C.V.,a maquiladora wholly owned i
273、n Reynosa,Tamaulipas,Mexico,leases 225,000 square feetof building space located in an industrial park identified as Lots 2,3 and 4.The building is one level and is made from brick andconcrete.The current lease expires on April 15,2033.All owned properties are free and clear of any encumbrances.ITEM
274、3 LEGAL PROCEEDINGS The Company is party to various legal proceedings from time to time related to its normal business operations.Currently,theCompany is not involved in any material pending legal proceedings,and no such material proceedings are known to the Companyto be contemplated by governmental
275、 authorities.ITEM 4 MINE SAFETY DISCLOSURES Not applicable.182025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm23/86Table of Contents PART II ITEM 5 MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECUR
276、ITIES The Companys common stock is quoted on the NASDAQ Global Market under the symbol“EML.”The approximate number ofrecord holders of the Company common stock on December 28,2024 was 259.The Company expects to continue its policy of paying regular cash dividends,although there can be no assurance a
277、s to futuredividends because they are dependent on future earnings,capital requirements and financial conditions.During fiscal years 2024 and 2023,there were no sales by the Company of its securities that were not registered under theSecurities Act of 1933,as amended(the“Securities Act”).On August 2
278、1,2023,the Company announced that its Board had approved a new share repurchase program authorizing theCompany to repurchase up to 200,000 shares of the Companys common stock through August 20,2028.The Companys sharerepurchase program does not obligate it to acquire the Companys common stock at any
279、specific cost per share.Under thisprogram,shares may be repurchased in privately negotiated and/or open market transactions,including under plans complying withRule 10b5-1 under the Exchange Act.The Company made the following share repurchases during the fourth quarter of 2024,as set forth in the ta
280、ble below:Issuer Purchases of Equity SecuritiesPeriod Totalnumber of sharespurchased Averageprice paidper share Totalnumber ofsharespurchased aspart ofpubliclyannouncedplans orprograms Maximumnumber ofshares thatmay yet bepurchasedunder theplans orprograms (a)(b)(c)(d)September 29,2024 to November 2
281、,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 RESERVED 192025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm24/8
282、6Table of Contents ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS The Companys fiscal year ends on the Saturday nearest to December 31.Fiscal years 2024 and 2023 were each 52 weeks inlength.References in this Managements Discussion and Analysis of Financia
283、l 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 year2023”mean the fiscal year ended December 30,2023.References to the“fourth quarter of 2024”or the“fourth fiscal quarter of2024”mea
284、n the thirteen-week period from September 29,2024 to December 28,2024,and references to the“fourth quarter of2023”or the“fourth fiscal quarter of 2023”mean the thirteen-week period from October 1,2023 to December 30,2023.The following analysis excludes discontinued operations.Summary Net sales for 2
285、024 were$272.8 million compared to$258.9 million for 2023.Net income for 2024 was$13.2 million,or$2.13 perdiluted share,compared to$11.8 million,or$1.88 per diluted share,for 2023.Sales for the fourth quarter of 2024 were$66.7million compared to$63.8 million for the same period in 2023.Net income fo
286、r 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,primarilydue to an increase of$13.7 million i
287、n backlog at Velvac related to the launch of new mirror programs for Class 8 trucks,partiallyoffset by a decrease of$1.7 million in backlog for returnable packaging products at Big 3 Products.Critical Accounting Estimates The preparation of financial statements in accordance with accounting principl
288、es generally accepted in the United States(“U.S.GAAP”)requires management to make judgments,estimates and assumptions regarding uncertainties that affect the reportedamounts of assets and liabilities,the disclosure of contingent assets and liabilities and the reported amounts of revenues andexpenses
289、.Areas of uncertainty that require judgments,estimates and assumptions include items such as the allowance for doubtfulaccounts;inventory accounting;the testing of goodwill and other intangible assets for impairment;and pensions and otherpostretirement benefits.Management uses historical experience
290、and all available information to make its estimates andassumptions,but actual results will inevitably differ from the estimates and assumptions that are used to prepare the Companysfinancial statements at any given time.Despite these inherent limitations,management believes that Managements Discussi
291、on andAnalysis of Financial Condition and Results of Operations and the financial statements and related footnotes provide a meaningfuland fair presentation of the Companys financial position and results of operations.Management believes that the application of these estimates and assumptions on a c
292、onsistent basis enables the Company to providethe users of the financial statements with useful and reliable information about the Companys operating results and financialcondition.Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting
293、 from the inability of its customers tomake required payments.The Company reviews the collectability of its receivables on an ongoing basis,considering a combinationof factors that require judgment and estimates,including among others,our customers access to capital,customers willingness,orability t
294、o pay,customer payment patterns,general economic conditions and geopolitical trends,and our ongoing relationship withour customers.The Company reviews potential problems,such as past due accounts,a bankruptcy filing or deterioration in thecustomers financial condition,to ensure that the Company has
295、adequately accrued for potential loss.Accounts are considered pastdue based on when payment was originally due.If a customers situation changes,such as a bankruptcy or a change in itscreditworthiness,or there is a change in the current economic climate,the Company may modify its estimate of the allo
296、wance fordoubtful accounts.The Company will write off accounts receivable after reasonable collection efforts have been made and theaccounts are deemed uncollectible.If our estimates and assumptions as to collectability were materially incorrect,or if any of oursignificant customers were to develop
297、unexpected and immediate financial problems that would prevent payment of amounts due tous,and our allowance for doubtful accounts were inadequate,this could result in an unexpected loss in profitability.202025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_
298、10k.htm25/86Table of Contents As of December 28,2024 and December 30,2023,the Companys allowance for doubtful accounts total was$0.5 million and$0.5million,respectively.As of December 28,2024,and December 30,2023,the Companys bad debt expense was$0.1 million and$0.1 million,respectively.Inventory In
299、ventories are valued at the lower of cost or net realizable value.Cost is determined by the last-in,first-out(“LIFO”)method atEberhard while Big 3 Precision and Velvac are valued using a first-in,first-out(“FIFO”)method.Accordingly,a LIFO valuationreserve is calculated using the dollar value link ch
300、ain method.We review the net realizable value of inventory in detail on an ongoing basis,considering deterioration,obsolescence,estimatedfuture demand,current market conditions,and other factors.Based on these assessments,we provide for an inventory reserve in theperiod in which an impairment is ide
301、ntified.The reserve fluctuates with market conditions,design cycles,and other economicfactors and could vary significantly,whether favorably or unfavorably,from actual results due to,among other things,unanticipated changes in economic conditions,customer demand,or the competitive landscape.The inve
302、ntory reserve for excess or obsolete inventory reduced the Companys inventory valuation by$1.9 million and$1.9million as of December 28,2024 and December 30,2023,respectively.Goodwill and Other Intangible Assets Intangible assets with finite useful lives are generally amortized on a straight-line ba
303、sis over the periods benefited.Goodwill andother intangible assets with indefinite useful lives are not amortized.The Company performs annual qualitative assessments ongoodwill and other intangible assets as of the end of each fiscal year by comparing the estimated fair value of each reporting unitw
304、ith its carrying amount.Additionally,the Company performs an interim analysis if events or circumstances indicate it is morelikely 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
305、unexpected loss of market share,significant adverse changes in the markets in whichthe Company operates,or unexpected business disruptions.If the carrying amount of a reporting unit exceeds its estimated fairvalue,the Company records an impairment loss based on the difference between fair value and
306、carrying amount not to exceed theassociated carrying amount of goodwill.Determining the 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 financialperformance,(
307、v)other relevant entity-specific events,and(vi)events affecting a reporting unit.The values assigned to the keyassumptions represent managements assessment of future trends in the relevant industry and have been based on historical datafrom both external and internal sources.In the third quarter of
308、2024,a goodwill impairment of approximately$12.1 million was recognized in discontinued operationswhen classifying Big 3 Mold as held for sale.The Company performed its annual qualitative assessment as of the end of each of fiscal 2024 and 2023 on the carrying value ofgoodwill and determined that it
309、 is more likely than not that no impairment of goodwill existed as of such dates.See Note 3 Accounting Policies Goodwill,in Item 8,Financial Statements and Supplementary Data,of this Form 10-K for more detail.Pension and Other Postretirement Benefits The amounts recognized in the consolidated financ
310、ial statements related to pension and other postretirement benefits aredetermined from actuarial valuations.Inherent in these valuations are assumptions about such factors as expected return on planassets,discount rates at which liabilities could be settled,rate of increase in future compensation le
311、vels,mortality rates,and trendsin health insurance costs.These assumptions are reviewed annually and updated as required.In accordance with U.S.GAAP,actualresults that differ from the assumptions are accumulated and amortized over future periods and,therefore,affect the expenserecognized and obligat
312、ions recorded in future periods.The discount rate used is based on a single equivalent discount rate derived with the assistance of our actuaries by matchingexpected future benefit payments in each year to the corresponding spot rates from the FTSE Pension Liability Yield Curve,comprised of high qua
313、lity(rated AA or better)corporate bonds.The Company calculates its service and interest costs in futureyears 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 C
314、ompanys actuarial firms.We consider theCompanys historical experience with pension fund asset performance,the current and expected allocation of our plan assets andexpected long-term rates of return.The long-term rate-of-return assumption used for determining net periodic pension expense was7.5%for
315、both 2024 and 2023.The Company reviews the long-term rate of return each year.212025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm26/86Table of Contents Future actual pension income and expenses will depend on future investment performance,changes i
316、n future discount rates andvarious other factors related to the population of participants in the Companys pension plans.The Company expects to make cash contributions of approximately$2,900,000 and$42,000 to our pension and otherpostretirement plans,respectively,in 2025.In connection with our pensi
317、on and other postretirement benefits,the Company reported income of$3.0 million and$1.6 million(net of tax)on its Consolidated Statement of Comprehensive Income for fiscal years 2024 and 2023,respectively.The main factordriving this income was the change in the discount rate during the applicable pe
318、riod.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 assets 7.5%7.5%Rate of compensation increase 0.0%0.0%Assumptions used to determine net periodic other postretireme
319、nt 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 assumptions had the following effect on the net periodic pension and other postretirement costs recorded in Oth
320、erComprehensive Income as follows:Year ended December28,December30,2024 2023 Discount rate$4,531,239$(1,829,210)Additional recognition due to significant event -Asset gain or(loss)(2,149,183)2,396,043 Amortization of:Unrecognized gain or(loss)1,231,188 1,303,879 Unrecognized prior service cost 4,241
321、 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 investing a portion of the assets in long-term bonds to better match the impact of changes in interest rates on itsassets
322、 and liabilities and thus reduce volatility in Other Comprehensive Income.Please refer to Note 10 Retirement Benefit Plansin Item 8,Financial Statements and Supplementary Data of this Form 10-K for additional disclosures concerning the Companyspension and other postretirement benefit plans.222025/5/
323、19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm27/86Table 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 consolidated s
324、tatements of incomefrom continuing operations as a percentage of net sales for the Companys continuing operations.The Companys continuingoperations include(1)Big 3 Products;(2)Eberhard;and(3)Velvac.Three Months Ended December28,2024 December30,2023 Net Sales 100.0%100.0%Cost of Products Sold 77.0%73
325、.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.Salesincreases were due to hi
326、gher demand for returnable transport packaging products,partially offset by lower demand for truckaccessories and truck mirror assemblies.Net sales of existing products increased 2.8%while price increases and new productsincreased net sales by 1.7%in the fourth quarter of 2024 when compared to sales
327、 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.Theincrease in cost of products sold is primarily attributable to highe
328、r sales volume and a favorable adjustment to the LIFO reserve inthe 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 fourthquarter.The decrease is primarily due
329、 to higher material costs in the fourth quarter of 2024 and a favorable adjustment to the LIFOreserve in the fourth quarter of 2023 that did not reoccur in the fourth quarter of 2024.Product development expenses decreased$0.2 million,or 14%,in the fourth quarter of 2024 compared to the corresponding
330、period in 2023 as we continue to invest in new 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 to 2.1%for the corresponding period in 2023.Selling and administrative expenses in the fourth quarter
331、of 2024 increased 11.0%compared to the fourth quarter of 2023.As apercentage of net sales,selling and administrative costs were 16.8%for the fourth quarter of 2024 compared to 15.8%for thecorresponding period in 2023.The increase was primarily the result of increased payroll-related expenses,legal a
332、nd professionalexpenses,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 dilutedshare,in 2023.232025/5/19 14:11eml_10k.htmhttps:/www.sec.gov/Archives/edgar/data/31107/000165495425002610/eml_10k.htm28/86Table of Content
333、s Fiscal Year 2024 Compared to Fiscal Year 2023 The following table shows,for fiscal year 2024 and fiscal year 2023,selected line items from the consolidated statements ofincome as a percentage of net sales for the Companys operations.The Companys continuing operations include(1)Big 3Products;(2)Eberhard;and(3)Velvac.Fiscal Year Ended December28,2024 December30,2023 Net Sales 100.0%100.0%Cost of P
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