Discontinued Operations

6 Months Ended

Jul. 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.  We believe that 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						Six Months Ended
	July 2, 2022			July 3, 2021			July 2, 2022			July 3, 2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	2,473,201		$	13,693,457		$	4,840,427		$	25,017,899
Cost of products sold		(1,683,295	)		(11,139,886	)		(3,287,057	)		(21,044,606	)
Gross margin		789,906			2,553,571			1,553,370			3,973,293
Selling, general and administrative expenses		(289,497	)		(1,280,570	)		(546,557	)		(2,313,397	)
Restructuring costs					(10,583,078	)					(10,583,078	)
Operating income (loss)		500,409			(9,310,077	)		1,006,813			(8,923,182	)
Interest expense		(40,846	)		(144,715	)		(76,064	)		(320,429	)
Gain (Loss) from discontinued operations before income taxes		459,563			(9,454,792	)		930,749			(9,243,611	)
Income tax (expense) benefit		(123,737	)		2,225,658			(250,604	)		2,175,946
Income (loss) from discontinued operations, net of tax	$	335,826		$	(7,229,134	)	$	680,145		$	(7,067,665	)

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

	July 2, 2022		January 1, 2022
	(unaudited)
Cash	$	84,186	$	434,126
Accounts receivable		1,097,596		1,153,274
Inventory		3,031,820		1,258,032
Prepaid expenses		24,022		59,850
Property, plant and equipment, net		550,601		591,920
Right of use assets		255,438		24,697
Total assets of discontinued operations¹	$	5,043,663	$	3,521,899
Accounts payable	$	409,295	$	167,794
Accrued compensation and other accrued expenses		433,023		388,499
Current portion of lease liability		92,887		24,697
Other long-term liabilities		162,552		-
Total liabilities of discontinued operations¹	$	1,097,757	$	580,990

¹ The total assets and liabilities of discontinued operations are presented as current in the July 2, 2022 and January 1, 2022 balance sheets as we expect to sell the discontinued operations and collect proceeds within one year of the applicable balance sheet date.