EXHIBIT 99

Letter to Our Shareholders:

Our company  performed very well in 2006,  delivering  record sales and profits.
Sales grew by a solid 27%, increasing to $138 million from $109 million in 2005.
Net income more than  doubled,  rising to $9.7 million from $4.4  million.  This
level of earnings represents a 21% return on investment for the year as compared
to a 10% return in 2005.

We are also pleased that year-to-year quarterly sales comparisons were favorable
throughout  2006.  By the  end of the  year,  we had  completed  17  consecutive
quarters  in which  sales  surpassed  their  year-earlier  levels.  Based on our
improved  backlog--$38 million at the end of 2006 compared to $17 million at the
end of 2005--we anticipate that this trend will continue into 2007.

Our  gross  margin  and  operating  cash flow  improved  as well.  Gross  margin
increased to 25% from 23% in 2005,  while  operating  cash flow  increased to $8
million from $5 million.

Several factors contributed to last year's excellent performance, including lean
manufacturing  techniques  that  improved our  productivity;  continued  product
innovation; and a strengthened supply chain that enabled us to successfully meet
our  commitments.  But the most  significant  factor was a $31 million  military
contract awarded to the Company.  The contract called for our Eberhard  division
to design and  manufacture  door  latching  systems  for a project  to  retrofit
military  Humvees  with  improved  armor.  This  military  business   especially
benefited our fourth-quarter results.

Other noteworthy events of 2006 included the following.

     --   In April of 2006,  we announced a 9% ($.01 per share)  increase in our
          regular   quarterly  stock  dividend.   The  increase   reflected  our
          confidence  in the  Company's  continuing  success and our desire that
          shareholders  participate  in that  success.  Eastern has made regular
          dividend  payments  for the last 66 years.  The  dividend  of $.08 per
          share paid in December 2006 was our 265th consecutive payment.

     --   As another sign of our confidence in the Company, in September of 2006
          we announced a stock split whereby our shareholders  would receive one
          additional  share of common stock for every two shares they owned.  We
          believed  that the stock  split would bring our share price to a level
          that  would  be  attractive  to  individual  investors;   improve  the
          liquidity  of our stock;  and  increase  the  shareholder  base of the
          Company.

     --   Also in  September,  we acquired  the assets and business of The Royal
          Lock  Corporation,  based in Wauconda,  Ill. We are  integrating  this
          business  into  our  Illinois  Lock  division,  which  is  part of the
          Security  Products  segment.  The acquisition will expand our range of
          lock and hardware  products and broaden our marketing and distribution
          capabilities. The full impact of this acquisition will be reflected in
          our 2007 operating results.

     --   In November of 2006, we purchased the assets of Summit  Manufacturing,
          Inc., based in Newington,  CT. Through the purchase we acquired a line
          of latches sold primarily to the major appliance market.  This product
          will enable our  Greenwald  division to extend its reach into  markets
          beyond commercial laundry, which the division currently serves.


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Segment Results

The Industrial Hardware Group had an extremely  successful year, even apart from
the  favorable  impact of the  military  contract.  Sales  increased  40% to $75
million from $54 million in 2005,  while  operating  earnings  increased 151% to
$13.1 million from $5.2 million.  New and improved products were responsible for
all of the sales increase.

We received our first orders under the military  contract in September 2006. The
awarding of this contract was a significant tribute to the engineering expertise
of the Eberhard  division,  since the  contract  called for the design of a very
complex door latching system.  We congratulate the men and women of the Eberhard
division  not only for  their  expertise  but also for  being  able to meet this
contract's very demanding  production  requirements and delivery schedules.  The
contract  will  be  fulfilled  in  April  2007,  but we are  seeking  additional
opportunities to supply custom latching and locking  mechanisms for use on other
military vehicles.

The Security  Products Group turned in mixed  results.  Sales grew by 13% to $50
million from $44 million in 2005.  However,  operating  profits  decreased 1% to
$4.5 million from $4.6 million. Prices for raw materials such as zinc, stainless
steel and brass  increased  significantly  during the year, but the  competitive
nature of this business prevented us from raising the prices of our products. As
a result, our margins were adversely affected.

While we are pleased with the segment's  overall sales  performance  in 2006, it
was somewhat  constrained by a decrease in our sales of drop meters, meter cases
and smart card systems for the  commercial  laundry  industry.  The decrease was
partly due to the merger of  Whirlpool  and Maytag  during 2006.  Following  the
merger,  the companies began to rationalize their product line offerings for the
commercial  laundry  industry,  in some cases  delaying  the  completion  of new
product  design and the release of new orders for  delivery  of the  products we
sell to them. In the coming year, we expect our sales and earnings to improve as
we integrate the products added through our Royal Lock and Summit  Manufacturing
acquisitions.  We do not expect to incur any  additional  overhead  expenses  in
connection with those acquisitions.

The Metal Products Group achieved a 19% increase in sales, but again experienced
an operating loss.  Sales grew to $13 million from $11 million in 2005. The 2006
operating loss of $1.8 million was comparable to the 2005 result.

In previous  reports to you, I had  discussed  our  restructuring  plans for our
Metal Products facility. The primary goal of that restructuring was to enable us
to cast  greater  quantities  of ductile  iron in addition to casting  malleable
iron. We would then be in a stronger position to execute our sales and marketing
plans for ductile iron.

In making the required  modifications,  we experienced some "bumps in the road,"
such as equipment  glitches and learning curves. But the project has essentially
been  completed,  and we  expect  to see more  positive  results  from the Metal
Products  Group in 2007.  In addition,  we continue to firmly  believe that coal
will play a dominant role in meeting  global energy  requirements.  Sales of our
proprietary  roof anchors for the mining  industry  could  benefit  greatly from
increasing underground coal mining activity worldwide.


Outlook

In all of our  operating  units,  we will  continue to confront the challenge of
improving or at least maintaining our operating profit margins,  particularly in
the face of global competition.  We have achieved higher levels of efficiency by
applying a variety of techniques and disciplines in our manufacturing processes.
However,  in many instances,  we have found it necessary to outsource product to
our World Lock and World  Security  subsidiaries  in Taiwan and Hong Kong and to
our  Eastern   Industrial   subsidiary  in  Shanghai.   We  have  also  utilized
non-affiliated  Asian  sources.  Despite  the  need  to  outsource  many  of our
requirements,  we have been able to maintain our levels of employment and skills
in the United States. We expect these conditions to continue.

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Looking ahead, I believe that we are in a good  competitive  position and strong
financial  condition,  and these advantages will enable us to sustain profitable
growth.

In the  area of  corporate  governance,  regulatory  agencies  and  professional
organizations in 2006 spent  considerable  time studying and discussing  Section
404 of the Sarbanes-Oxley Act. Section 404 requires publicly traded companies to
document,  test and assess their internal  financial  controls.  The discussions
mainly dealt with providing compliance relief to "smaller companies" in order to
alleviate the extensive effort and expenditure  involved in reaching  compliance
with Section 404.

We had hoped that such compliance relief might be coming our way. However, based
on the current  regulations  and our current  market  capitalization,  we are no
longer considered a smaller company as that term was defined.  Therefore, we are
continuing with our compliance  efforts.  To date, the Company has completed the
required  documentation and has proceeded to perform  preliminary testing of its
internal controls. Further testing will occur during 2007.

We expect to be subject to full compliance with Section 404 requirements for the
2007  fiscal  year.  This  means  that our 2007 Form 10-K must  incorporate  the
mandated  disclosures,  including  management's  evaluation of internal controls
over  financial   reporting,   and  our  independent  public  accounting  firm's
certification of those controls.

The enclosed 10-K report contains the detailed and audited  financial reports of
the Company for 2006. I urge all of you to read it.

I thank our  shareholders  for their support and  confidence,  our employees for
their dedication and hard work, and our directors for their wise counsel.


/s/Leonard F. Leganza
---------------------
Leoanrd F. Leganza
Chairman, President and Chief Executive Officer



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