Discontinued Operations

3 Months Ended

Apr. 02, 2022

Discontinued Operations (see Note B )

Note B - Discontinued Operations

Note B – Discontinued Operations

In the second quarter of 2021, the Company determined that the companies included in our former Diversified Products segment no longer fit with our long-term strategy and the Company initiated the process of selling the companies within the Diversified Products segment.  Selling the companies within this segment will allow management to focus on our core capabilities and offerings.

The former Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualify for discontinued operations.  As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented.  Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

On November 3, 2021, the Company sold its Greenwald Industries, Inc. division (“Greenwald”).  Greenwald, located in Chester, CT, is an OEM manufacturer offering a range of payment solutions from coin-vending products to smart card systems and payment applications.

On November 22, 2021, the Company sold its Frazer & Jones Company division (“Frazer & Jones”).  Frazer & Jones is a ductile and malleable iron foundry located in Syracuse, NY.  Eastern has exited the mining business to focus on our three core businesses.

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

	Three Months Ended
	April 2, 2022			April 3, 2021
	(unaudited)			(unaudited)
Net sales	$	2,367,226		$	11,324,442
Cost of products sold		(1,603,762	)		(9,904,720	)
Gross margin		763,464			1,419,722
Selling and administrative expenses		(257,060	)		(1,032,827	)
Operating income		506,404			386,895
Interest expense		(35,217	)		(175,714	)
Income from discontinued operations before income taxes		471,187			211,181
Income tax expense		(126,867	)		(49,712	)
Income from discontinued operations, net of tax	$	344,320		$	161,469

The following table represents the assets and liabilities from discontinued operations:

	April 2, 2022		January 1, 2022
	(unaudited)
Cash	$	128,548	$	434,126
Accounts receivable		1,112,294		1,153,274
Inventory		2,539,551		1,258,032
Prepaid expenses		43,293		59,850
Property, plant and equipment, net		571,260		591,920
Right of use assets		276,969		24,697
Total assets of discontinued operations¹	$	4,671,915	$	3,521,899
Accounts payable	$	566,653	$	167,794
Accrued compensation and other accrued expenses		382,795		388,499
Current portion of lease liability		92,323		24,697
Other long-term liabilities		184,646		-
Total liabilities of discontinued operations¹	$	1,226,417	$	580,990

¹ The total assets and liabilities of discontinued operations are classified as current in the April 2, 2022 and 

   January 1, 2022 balance sheets, as we expect to sell the discontinued operations and collect proceeds within one year.