|   | [X] | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-----|--------------------------------------------------------------------------------------|

|   | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|----------------|------------------------------------------------------------------------------------------|

| Connecticut                     | 06-0330020          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

| 112 Bridge Street, Naugatuck, Connecticut | 06770      |
|-------------------------------------------|------------|
| (Address of principal executive offices)  | (Zip Code) |

|     Large accelerated filer [  ]                                             | Accelerated filer [X]                    |
|------------------------------------------------------------------------------------------------------------|------------------------------------------|
|     Non-accelerated filer [  ] (Do not check if a smaller reporting company) | Smaller reporting company [  ] |

----

|     |                                                                            | Page           |
|----------|---------------------------------------------------------------------------------|----------------|
|     | Table of Contents                                                               |   2. |
|     |                                                                            |           |
|     | Safe Harbor Statement                                                           |   3. |
|     |                                                                            |           |
| PART I   |                                                                            |           |
| Item 1.  | Business                                                                        |   4. |
|     |                                                                            |           |
| Item 1A. | Risk Factors                                                                    |   7. |
|     |                                                                            |           |
| Item 1B. | Unresolved Staff Comments                                                       | 10.            |
|     |                                                                            |           |
| Item 2.  | Properties                                                                      | 10.            |
|     |                                                                            |           |
| Item 3.  | Legal Proceedings                                                               | 11.            |
|     |                                                                            |           |
| Item 4.  | (Removed and Reserved)                                                          | 11.            |
|     |                                                                            |           |
| PART II  |                                                                            |           |
| Item 5.  | Market for Registrant’s Common Equity, Related                            |           |
|     |    Stockholder Matters and Issuer Purchases of Equity Securities | 12.            |
|     |                                                                            |           |
| Item 6.  | Selected Financial Data                                                         | 14.            |
|     |                                                                            |           |
| Item 7.  | Management’s Discussion and Analysis of Financial                         |           |
|     |    Condition and Results of Operations                           | 14.            |
|     |                                                                            |           |
| Item 7A. | Quantitative and Qualitative Disclosures                                        |           |
|     |    About Market Risk                                             | 26.            |
|     |                                                                            |           |
| Item 8.  | Financial Statements and Supplementary Data                                     | 28.            |
|     |                                                                            |           |
| Item 9.  | Changes in and Disagreements with Accountants on                                |           |
|     |    Accounting and Financial Disclosure                           | 58.            |
|     |                                                                            |           |
| Item 9A. | Controls and Procedures                                                         | 58.            |
|     |                                                                            |           |
| Item 9B. | Other Information                                                               | 60.            |
|     |                                                                            |           |
| PART III |                                                                            |           |
| Item 10. | Directors, Executive Officers and Corporate Governance                          | 60.            |
|     |                                                                            |           |
| Item 11. | Executive Compensation                                                          | 60.            |
|     |                                                                            |           |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management                  |           |
|     |    and Related Stockholder Matters                               | 61.            |
|     |                                                                            |           |
| Item 13. | Certain Relationships and Related Transactions, and Director                    |           |
|     |    Independence                                                  | 61.            |
|     |                                                                            |           |
| Item 14. | Principal Accounting Fees and Services                                          | 61.            |
|     |                                                                            |           |
| PART IV  |                                                                            |           |
| Item 15. | Exhibits, Financial Statement Schedules                                         | 61.            |
|     |                                                                            |           |
|     | Signatures                                                                      | 64.            |
|     |                                                                            |           |
|     | Exhibit Index                                                                   | 65.            |

----

----

| ITEM 1 | BUSINESS |
|--------|----------|

----

----

----

| ITEM 1A | RISK FACTORS |
|---------|--------------|

----

----

----

| ITEM 1B | UNRESOLVED STAFF COMMENTS |
|---------|---------------------------|

| ITEM 2 | PROPERTIES |
|--------|------------|

----

| ITEM 3 | LEGAL PROCEEDINGS |
|--------|-------------------|

| ITEM 4 | (REMOVED AND RESERVED) |
|--------|------------------------|

----

| ITEM 5 | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|--------|--------------------------------------------------------------------------------------------------------------------|

|    | 2010         |   |        | 2009   |
|---------|--------------|--------|-------------|--------|
|    | Market Price |   |        |   | Market Price |   |
| Quarter | High         | Low    | Dividend    |   | Quarter | High | Low |  Dividend |
| First   | $14.02       | $10.90 | $.09        |   | First | $12.43 | $8.11 | $.09 |
| Second  | 16.57        | 12.08  | .09         |   | Second | 17.48 | 10.35 | .09 |
| Third   | 17.75        | 13.09  | .09         |   | Third | 18.42 | 15.30 | .09 |
| Fourth  | 19.56        | 15.45  |  .25 # |   | Fourth | 17.57 | 11.14 |  .09 |

| Equity Compensation Plan Information                       |
|------------------------------------------------------------|
| Plan category                                              | Number of securities to be issued upon exercise of outstanding options, warrants and rights |   | Weighted-average exercise price of outstanding options, warrants and rights |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|                                                       | (a) |   | (b) |   | (c) |
| Equity compensation plans approved by security holders     |       80,0001 |   |  $12.47 |   |   500,0002 |
| Equity compensation plans not approved by security holders |            - |   |     - |   |        - |
| Total                                                      |     80,000 |   | $12.47 |   | 500,000 |

----

|                         | Dec. 05 | Dec. 06 | Dec. 07 | Dec. 08 | Dec. 09 | Dec. 10 |
|------------------------------|---------|---------|---------|---------|---------|---------|
| The Eastern Company          | $100    | $153    | $146    | $70     | $112    | $155    |
| Wilshire 5000                | $100    | $116    | $122    | $77     | $98     | $115    |
| S&P Industrial Machinery | $100    | $114    | $138    | $83     | $116    | $158    |

|   | Copyright© 2011 Standard & Poor's, a division of The McGraw-Hill Companies Inc. All rights reserved. (www.researchdatagroup.com/S&P.htm) |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 6 | SELECTED FINANCIAL DATA |
|--------|-------------------------|

|                                        |            2010 |            2009 |            2008 |            2007 |            2006 |
|---------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|
| INCOME STATEMENT ITEMS (in thousands)       |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| Net sales                                   | $  130,130                                                   | $  112,665                                                   | $  135,878                                                   | $  156,281                                                   | $  138,465                                                   |
| Cost of products sold                       | 103,458                                                                | 92,031                                                                 | 110,415                                                                | 120,343                                                                | 103,882                                                                |
| Depreciation and amortization               | 3,943                                                                  | 4,103                                                                  | 4,128                                                                  | 4,370                                                                  | 3,746                                                                  |
| Interest expense                            | 266                                                                    | 1,728                                                                  | 1,064                                                                  | 1,289                                                                  | 1,098                                                                  |
| Income before income taxes                  | 8,248                                                                  | 1,902                                                                  | 6,043                                                                  | 14,845                                                                 | 14,846                                                                 |
| Income taxes                                | 2,705                                                                  | 865                                                                    | 1,538                                                                  | 4,765                                                                  | 5,187                                                                  |
| Net income                                  | 5,543                                                                  | 1,036                                                                  | 4,505                                                                  | 10,081                                                                 | 9,659                                                                  |
| Dividends                                   | 3,182                                                                  | 2,155                                                                  | 1,938                                                                  | 1,802                                                                  | 1,715                                                                  |
|                                        |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| BALANCE SHEET ITEMS (in thousands)          |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| Inventories                                 | $    28,190                                        | $    24,520                                        | $    30,797                                        | $    30,491                                        | $    28,043                                        |
| Working capital                             | 48,262                                                                 | 44,280                                                                 | 48,745                                                                 | 47,028                                                                 | 35,546                                                                 |
| Property, plant and equipment, net          | 24,464                                                                 | 22,974                                                                 | 23,911                                                                 | 25,234                                                                 | 25,816                                                                 |
| Total assets                                | 102,353                                                                | 100,872                                                                | 106,017                                                                | 108,352                                                                | 103,485                                                                |
| Shareholders’ equity                  | 70,044                                                                 | 66,597                                                                 | 62,482                                                                 | 70,817                                                                 | 54,391                                                                 |
| Capital expenditures                        | 4,733                                                                  | 2,226                                                                  | 2,331                                                                  | 2,868                                                                  | 6,722                                                                  |
| Long-term obligations, less current portion | 3,750                                                                  | 4,286                                                                  | 11,429                                                                 | 14,383                                                                 | 17,507                                                                 |
|                                        |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| PER SHARE DATA                              |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| Net income per share                        |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
|    Basic                     | $         .91             | $         .17             | $         .77             | $       1.79                        | $       1.76                        |
|    Diluted                   | .90                                                                    | .17                                                                    | .73                                                                    | 1.68                                                                   | 1.67                                                                   |
| Dividends #                                 | .52                                                                    | .36                                                                    | .33                                                                    | .32                                                                    | .31                                                                    |
| Shareholders’ equity (Basic)          | 11.47                                                                  | 11.13                                                                  | 10.63                                                                  | 12.58                                                                  | 9.94                                                                   |
|                                        |                                                                   |                                                                   |                                                                   |                                                                   |                                                                   |
| Average shares outstanding:                 | Basic                                                                  | 6,104,711                                                              | 5,985,640                                                              | 5,875,140                                                              | 5,631,073                                                              | 5,474,137 |
|                                        | Diluted                                                                | 6,192,019                                                              | 6,241,780                                                              | 6,159,563                                                              | 5,989,754                                                              | 5,768,108 |

| ITEM 7 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------|---------------------------------------------------------------------------------------------|

|   | Summary |
|--------|---------|

----

|   Fourth Quarter 2010 Compared to Fourth Quarter 2009 |   |
|------------------------------------------------------------|--------|

|                               |   | 2010 Fourth Quarter |     |
|------------------------------------|--------|---------------------|----------|
|                               |   | Industrial          | Security | Metal |   |   |   |
|                               |   | Hardware            | Products | Products | Total |   |
| Net sales                          |   | 100.0               | %        | 100.0 | % | 100.0 | % | 100.0 | % |
| Cost of products sold              |   | 78.4                | %        | 73.1 | % | 90.9 | % | 79.2 | % |
| Gross margin                       |   | 21.6                | %        | 26.9 | % | 9.1 | % | 20.8 | % |
|                               |   |                |     |   |   |   |   |   |   |
| Selling and administrative expense |   | 13.4                | %        | 17.4 | % | 7.4 | % | 13.5 | % |
| Operating profit                   |   | 8.2                 | %        | 9.5 | % | 1.7 | % | 7.3 | % |
|                               |   |                |     |   |   |   |   |   |   |   |
|                               |   | 2009 Fourth Quarter |     |
|                               |   | Industrial          | Security | Metal |   |   |   |
|                               |   | Hardware            | Products | Products | Total |   |
| Net sales                          |   | 100.0               | %        | 100.0 | % | 100.0 | % | 100.0 | % |
| Cost of products sold              |   | 71.6                | %        | 74.9 | % | 107.4 | % | 79.2 | % |
| Gross margin                       |   | 28.4                | %        | 25.1 | % | -7.4 | % | 20.8 | % |
|                               |   |                |     |   |   |   |   |   |   |
| Selling and administrative expense |   | 14.9                | %        | 18.3 | % | 8.6 | % | 15.0 | % |
| Operating profit                   |   | 13.5                | %        | 6.8 | % | -16.0 | % | 5.8 | % |

|                                |   | Industrial |            | Security |   | Metal                 |   |   |                                        |
|-------------------------------------|--------|------------|-----------------|----------|--------|-----------------------|--------|--------|---------------------------------------------|
|                                |   | Hardware   |            | Products |   | Products              |   | Total  |                                        |
| Net sales                           |   | $          | 1,488           |     | $      | 1,343                 |   | $      | 1,794                                       |   | $ | 4,625 |   |
| Volume                              |   |       | 5.2             | %        |   | 10.3                  | %      |   | 29.5                                        | % |   | 11.4 | % |
| Prices                              |   |       | 0.9             | %        |   | 1.8                   | %      |   | 6.0                                         | % |   | 2.1 | % |
| New Products                        |   |       |   5.3 | %        |   |    1.5 | %      |   |        - | % |   |    3.0 | % |
|                                |   |       | 11.4            | %        |   | 13.6                  | %      |   | 35.5                                        | % |   | 16.5 | % |
|                                |   |       |            |     |   |                  |   |   |                                        |   |   |   |   |
| Cost of products sold               |   | $          |  2,050     |     | $      | 797                   |   | $      |  797                                   |   | $ |  3,644 |   |
|                                |   |       | 21.9            | %        |   | 10.8                  | %      |   | 14.7                                        | % |   | 16.4 | % |
|                                |   |       |            |     |   |                  |   |   |                                        |   |   |   |   |
| Gross margin                        |   | $          | (562            | )        | $      | 546                   |   | $      | 997                                         |   | $ |  981 |   |
|                                |   |       | -15.1           | %        |   | 22.0                  | %      |   | 267.0                                       | % |   | 16.9 | % |
|                                |   |       |            |     |   |                  |   |   |                                        |   |   |   |   |
| Selling and administrative expenses |   | $          |  19        |     | $      |  144             |   | $      | 70                                          |   | $ |  233 |   |
|                                |   |       | 1.0             | %        |   | 7.9                   | %      |   | 16.0                                        | % |   | 5.5 | % |
|                                |   |       |            |     |   |                  |   |   |                                        |   |   |   |   |
| Operating profit                    |   | $          |  (581      | )        | $      | 402                   |   | $      |  927                                   |   | $ |  748 |   |
|                                |   |       | -32.9           | %        |   | 60.3                  | %      |   | 114.1                                       | % |   | 46.1 | % |

----

----

----

|                               |   | Industrial | Security | Metal    |   |   |
|------------------------------------|--------|------------|----------|----------|--------|--------|
|                               |   | Hardware   | Products | Products | Total  |
|                               |   | 2010       |
| Net sales                          |   | 100.0      | %        | 100.0    | %      | 100.0  | % | 100.0 | % |
| Cost of products sold              |   | 76.4       | %        | 75.6     | %      | 92.8   | % | 79.5 | % |
| Gross margin                       |   | 23.6       | %        | 24.4     | %      | 7.2    | % | 20.5 | % |
|                               |   |       |     |     |   |   |   |   |   |
| Selling and administrative expense |   |  14.6 | %        | 17.0     | %      | 7.3    | % | 14.0 | % |
| Operating profit                   |   |  9.0  | %        | 7.4      | %      | -0.1   | % | 6.5 | % |
|                               |   |       |     |     |   |   |   |   |   |
|                               |   | 2009       |
| Net sales                          |   | 100.0      | %        | 100.0    | %      | 100.0  | % | 100.0 | % |
| Cost of products sold              |   | 75.6       | %        | 78.2     | %      | 103.7  | % | 81.7 | % |
| Gross margin                       |   | 24.4       | %        | 21.8     | %      | -3.7   | % | 18.3 | % |
|                               |   |       |     |     |   |   |   |   |   |
| Selling and administrative expense |   |  15.2 | %        | 18.1     | %      | 8.8    | % | 15.1 | % |
| Operating profit                   |   |  9.2  | %        | 3.7      | %      | -12.5  | % | 3.2 | % |

|                                |   | Industrial |                  | Security |   | Metal                       |   |   |                                  |
|-------------------------------------|--------|------------|-----------------------|----------|--------|-----------------------------|--------|--------|---------------------------------------|
|                                |   | Hardware   |                  | Products |   | Products                    |   | Total  |                                  |
| Net sales                           |   | $          | 7,573                 |     | $      | 3,876                       |   | $      | 6,016                                 |   | $ | 17,465 |   |
| Volume                              |   |       | 7.5                   | %        |   | 6.5                         | %      |   | 21.2                                  | % |   | 9.7 | % |
| Prices                              |   |       | -0.3                  | %        |   | 1.7                         | %      |   | 7.8                                   | % |   | 1.9 | % |
| New Products                        |   |       |    8.0 | %        |   |     1.0 | %      |   |       - | % |   |    3.9 | % |
|                                |   |       | 15.2                  | %        |   | 9.2                         | %      |   | 29.0                                  | % |   | 15.5 | % |
|                                |   |       |                  |     |   |                        |   |   |                                  |   |   |   |   |
| Cost of products sold               |   | $          | 6,248                 |     | $      | 1,864                       |   | $      | 3,315                                 |   | $ | 11,427 |   |
|                                |   |       | 16.6                  | %        |   | 5.7                         | %      |   | 15.4                                  | % |   | 12.4 | % |
|                                |   |       |                  |     |   |                        |   |   |                                  |   |   |   |   |
| Gross margin                        |   | $          | 1,325                 |     | $      | 2,012                       |   | $      |  2,701                           |   | $ | 6,038 |   |
|                                |   |       | 10.8                  | %        |   | 21.9                        | %      |   | 352.7                                 | % |   | 29.3 | % |
|                                |   |       |                  |     |   |                        |   |   |                                  |   |   |   |   |
| Selling and administrative expenses |   | $          | 795                   |     | $      | 174                         |   | $      | 136                                   |   | $ | 1,105 |   |
|                                |   |       | 10.5                  | %        |   | 2.3                         | %      |   | 7.5                                   | % |   | 6.5 | % |
|                                |   |       |                  |     |   |                        |   |   |                                  |   |   |   |   |
| Operating profit                    |   | $          |  530             |     | $      | 1,838                       |   | $      |  2,565                           |   | $ | 4,933 |   |
|                                |   |       | 11.5                  | %        |   | 119.3                       | %      |   | 99.4                                  | % |   | 137.8 | % |

----

----

|             |   | Total  |        |
|------------------|--------|--------|-------------|
| Interest expense |   | $      | (1,462      | ) |
|             |   |   | -84.6       | % |
|             |   |   |        |   |
| Other income     |   | $      | (48         | ) |
|             |   |   | -94.1       | % |
|             |   |   |        |   |
| Income taxes     |   | $      |  1,840 |   |
|             |   |   | 212.7       | % |

|                               |   | Industrial | Security | Metal    |   |   |
|------------------------------------|--------|------------|----------|----------|--------|--------|
|                               |   | Hardware   | Products | Products | Total  |
|                               |   | 2009       |
| Net sales                          |   | 100.0      | %        | 100.0    | %      | 100.0  | % | 100.0 | % |
| Cost of products sold              |   | 75.6       | %        | 78.2     | %      | 103.7  | % | 81.7 | % |
| Gross margin                       |   | 24.4       | %        | 21.8     | %      | -3.7   | % | 18.3 | % |
|                               |   |       |     |     |   |   |   |   |   |
| Selling and administrative expense |   |  15.2 | %        | 18.1     | %      | 8.8    | % | 15.1 | % |
| Operating profit                   |   |  9.2  | %        | 3.7      | %      | -12.5  | % | 3.2 | % |
|                               |   |       |     |     |   |   |   |   |   |
|                               |   | 2008       |
| Net sales                          |   | 100.0      | %        | 100.0    | %      | 100.0  | % | 100.0 | % |
| Cost of products sold              |   | 77.8       | %        | 77.0     | %      | 102.7  | % | 81.3 | % |
| Gross margin                       |   | 22.2       | %        | 23.0     | %      | -2.7   | % | 18.7 | % |
|                               |   |       |     |     |   |   |   |   |   |
| Selling and administrative expense |   |  13.5 | %        | 15.7     | %      | 8.1    | % | 13.5 | % |
| Operating profit                   |   |  8.7  | %        | 7.3      | %      | -10.8  | % | 5.2 | % |

----

|                                |   | Industrial |                   | Security |   | Metal                       |   |   |                        |
|-------------------------------------|--------|------------|------------------------|----------|--------|-----------------------------|--------|--------|-----------------------------|
|                                |   | Hardware   |                   | Products |   | Products                    |   | Total  |                        |
| Net sales                           |   | $          | (10,086                | )        | $      | (13,186                     | )      | $      | 59                          |   | $ | (23,213 | ) |
| Volume                              |   |       | -29.8                  | %        |   | -29.4                       | %      |   | -4.9                        | % |   | -25.9 | % |
| Prices                              |   |       | 0.9                    | %        |   | 4.8                         | %      |   | 2.9                         | % |   | 2.8 | % |
| New Products                        |   |       |    12.1 | %        |   |     0.7 | %      |   |     2.3 | % |   |    6.0 | % |
|                                |   |       | -16.8                  | %        |   | -23.9                       | %      |   | 0.3                         | % |   | -17.1 | % |
|                                |   |       |                   |     |   |                        |   |   |                        |   |   |   |   |
| Cost of products sold               |   | $          | (8,979                 | )        | $      | (9,661                      | )      | $      | 256                         |   | $ | (18,384 | ) |
|                                |   |       | -19.2                  | %        |   | -22.7                       | %      |   | 1.2                         | % |   | -16.7 | % |
|                                |   |       |                   |     |   |                        |   |   |                        |   |   |   |   |
| Gross margin                        |   | $          | (1,107                 | )        | $      | (3,525                      | )      | $      |  (197                  | ) | $ | (4,829 | ) |
|                                |   |       | -8.3                   | %        |   | -27.8                       | %      |   | -34.6                       | % |   | -19.0 | % |
|                                |   |       |                   |     |   |                        |   |   |                        |   |   |   |   |
| Selling and administrative expenses |   | $          | (488                   | )        | $      | (1,033                      | )      | $      | 144                         |   | $ | (1,377 | ) |
|                                |   |       | -6.0                   | %        |   | -11.9                       | %      |   | 8.6                         | % |   | -7.5 | % |
|                                |   |       |                   |     |   |                        |   |   |                        |   |   |   |   |
| Operating profit                    |   | $          |  (619             | )        | $      | (2,492                      | )      | $      |  (341                  | ) | $ | (3,452 | ) |
|                                |   |       | -11.8                  | %        |   | -61.8                       | %      |   | -15.2                       | % |   | -49.1 | % |

----

|             |   | Total  |       |
|------------------|--------|--------|------------|
| Interest expense |   | $      | 664        |   |
|             |   |   | 62.5       | % |
|             |   |   |       |   |
| Other income     |   | $      | (25        | ) |
|             |   |   | -33.3      | % |
|             |   |   |       |   |
| Income taxes     |   | $      |  (673 | ) |
|             |   |   | -43.8      | % |

----

|                                             |   | 2010      |   | 2009      |   | 2008      |   |
|--------------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|
| Current ratio                                    |   |  4.9 |   |  3.9 |   |  4.8 |   |
| Average days’ sales in accounts receivable |   |  47  |   |  51  |   |  52  |   |
| Inventory turnover                               |   |  3.7 |   |  3.8 |   |  3.6 |   |
| Ratio of working capital to sales                |   | 37.1      | %      | 39.3      | %      | 35.9      | %      |
| Total debt to shareholders’ equity         |   | 6.4       | %      | 17.2      | %      | 21.9      | %      |

|                                                                                                        |   | 2010       |   | 2009       |   | 2008       |   |
|-------------------------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|
| Cash and cash equivalents                                                                                   | $      | 12.2       | $      | 16.7       | $      |  9.0  |   |
| Working capital                                                                                             |   |  48.3 |   |  44.3 |   |  48.7 |   |
| Net cash provided by operating activities                                                                   |   |  9.5  |   |  13.3 |   |  7.6  |   |
| Change in working capital impact on net cash    (used)/provided by operating activities |   |  (0.8 | )      |  7.6  |   |  (1.5 | )      |
| Net cash used in investing activities                                                                       |   | (4.7       | )      | (2.2       | )      | (2.4       | )      |
| Net cash used in financing activities                                                                       |   | (9.4       | )      | (3.4       | )      | (4.2       | )      |

----

----

|                                                  |   |        |         | Payments due by period |   |
|-------------------------------------------------------|--------|-------------|--------------|------------------------|--------|
|                                                  |   |  Total |         | Less than 1 Year       |   | 1-3 Years |   | 3-5 Years |   | More than 5 Years |   |
| Long-term debt obligations                            |   | $           | 4,464        |                   | $      | 714 |   | $ | 1,429 |   | $ | 1,429 |   | $ | 892 |   |
| Estimated interest on long-term debt                  |   |        |  676    |                   |   | 187 |   |   |  304 |   |   |  159 |   |   |  26 |   |
| Operating lease obligations                           |   |        |  2,201  |                   |   |  1,062 |   |   |  1,114 |   |   |  25 |   |   |  -- |   |
| Estimated contributions to pension plans              |   |        |  14,013 |                   |   |  1,283 |   |   | 4,215 |   |   |  4,215 |   |   |  4,300 |   |
| Estimated post retirement benefitsother than pensions |   |        |  1,461  |                   |   |  151 |   |   | 323 |   |   | 349 |   |   | 638 |   |
| Total                                                 |   | $           | 22,815       |                   | $      | 3,397 |   | $ | 7,385 |   | $ | 6,177 |   | $ | 5,856 |   |

----

| ITEM 7A | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

----

----

| ITEM 8 | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|--------|---------------------------------------------|

|                                                                          |   | January 1 |        | January 2 |   |
|-------------------------------------------------------------------------------|--------|-----------|-------------|-----------|--------|
|                                                                          |   | 2011      |        | 2010      |   |
| ASSETS                                                                        |   |      |        |      |   |   |   |
| Current Assets                                                                |   |      |        |      |   |   |   |
| Cash and cash equivalents                                                     |   | $         | 12,224,608  |      | $      | 16,746,673 |   |
| Accounts receivable, less allowances of $519,000 in 2010 and $392,000 in 2009 |   |      | 16,424,766  |      |   | 15,326,416 |   |
|                                                                          |   |      |        |      |   |   |   |
| Inventories:                                                                  |   |      |        |      |   |   |   |
| Raw materials and component parts                                             |   |      | 8,090,149   |      |   | 7,837,854 |   |
| Work in process                                                               |   |      | 5,298,939   |      |   | 4,367,851 |   |
| Finished goods                                                                |   |      | 14,801,087  |      |   | 12,314,584 |   |
|                                                                          |   |      | 28,190,175  |      |   | 24,520,289 |   |
|                                                                          |   |      |        |      |   |   |   |
| Prepaid expenses and other assets                                             |   |      | 2,652,132   |      |   | 2,037,745 |   |
| Deferred income taxes                                                         |   |      | 1,141,744   |      |   | 1,129,898 |   |
| Total Current Assets                                                          |   |      | 60,633,425  |      |   | 59,761,021 |   |
|                                                                          |   |      |        |      |   |   |   |
| Property, Plant and Equipment                                                 |   |      |        |      |   |   |   |
| Land                                                                          |   |      | 1,152,972   |      |   | 1,134,743 |   |
| Buildings                                                                     |   |      | 13,898,789  |      |   | 13,790,853 |   |
| Machinery and equipment                                                       |   |      | 38,276,592  |      |   | 35,413,406 |   |
| Accumulated depreciation                                                      |   |      | (28,864,317 | )         |   | (27,365,369 | ) |
|                                                                          |   |      | 24,464,036  |      |   | 22,973,633 |   |
|                                                                          |   |      |        |      |   |   |   |
| Other Assets                                                                  |   |      |        |      |   |   |   |
| Goodwill                                                                      |   |      | 13,933,990  |      |   | 13,869,005 |   |
| Trademarks                                                                    |   |      | 150,751     |      |   | 151,341 |   |
| Patents, technology and other intangibles net of accumulated amortization     |   |      | 2,259,235   |      |   | 2,796,698 |   |
| Deferred income taxes                                                         |   |      | 912,043     |      |   | 1,283,323 |   |
| Prepaid pension cost                                                          |   |      | —     |      |   | 36,838 |   |
|                                                                          |   |      | 17,256,019  |      |   | 18,137,205 |   |
|                                                                          |   | $         | 102,353,480 |      | $      | 100,871,859 |   |

----

|                                                                    |   | January 1 |        | January 2 |   |
|-------------------------------------------------------------------------|--------|-----------|-------------|-----------|--------|
|                                                                    |   | 2011      |        | 2010      |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                              |   |      |        |      |   |   |   |
| Current Liabilities                                                     |   |      |        |      |   |   |   |
| Accounts payable                                                        |   | $         | 7,518,969   |      | $      | 5,335,317 |   |
| Accrued compensation                                                    |   |      | 2,997,126   |      |   | 1,811,236 |   |
| Other accrued expenses                                                  |   |      | 1,141,514   |      |   | 1,191,360 |   |
| Current portion of long-term debt                                       |   |      | 714,286     |      |   | 7,142,858 |   |
| Total Current Liabilities                                               |   |      | 12,371,895  |      |   | 15,480,771 |   |
|                                                                    |   |      |        |      |   |   |   |
| Other long-term liabilities                                             |   |      | 713,202     |      |   | 1,077,247 |   |
| Long-term debt, less current portion                                    |   |      | 3,750,000   |      |   | 4,285,713 |   |
| Accrued postretirement benefits                                         |   |      | 1,461,371   |      |   | 1,341,498 |   |
| Accrued pension cost                                                    |   |      | 14,013,269  |      |   | 12,089,326 |   |
|                                                                    |   |      |        |      |   |   |   |
| Commitments and contingencies (See Note 4)                              |   |      |        |      |   |   |   |
|                                                                    |   |      |        |      |   |   |   |
| Shareholders’ Equity                                              |   |      |        |      |   |   |   |
| Voting Preferred Stock, no par value:                                   |   |      |        |      |   |   |   |
| Authorized and unissued: 1,000,000 shares                               |   |      |        |      |   |   |   |
| Nonvoting Preferred Stock, no par value:                                |   |      |        |      |   |   |   |
| Authorized and unissued: 1,000,000 shares                               |   |      |        |      |   |   |   |
| Common Stock, no par value:                                             |   |      |        |      |   |   |   |
| Authorized: 50,000,000 shares                                           |   |      |        |      |   |   |   |
| Issued: 8,852,762 shares in 2010 and 8,709,384 shares in 2009           |   |      | 27,717,318  |      |   | 26,236,477 |   |
| Treasury Stock: 2,694,729 shares in 2010 and 2,644,215 shares in 2009   |   |      | (19,105,723 | )         |   | (18,375,416 | ) |
| Retained earnings                                                       |   |      | 69,919,619  |      |   | 67,558,201 |   |
|                                                                    |   |      |        |      |   |   |   |
| Accumulated other comprehensive income (loss):                          |   |      |        |      |   |   |   |
| Foreign currency translation                                            |   |      | 2,448,675   |      |   | 1,696,013 |   |
| Unrecognized net pension and postretirement benefit costs, net of taxes |   |      | (10,936,146 | )         |   | (10,517,971 | ) |
|                                                                    |   |      | (8,487,471  | )         |   | (8,821,958 | ) |
| Total Shareholders’ Equity                                        |   |      | 70,043,743  |      |   | 66,597,304 |   |
|                                                                    |   | $         | 102,353,480 |      | $      | 100,871,859 |   |

----

|                                |   |      |         | Year ended |   |        |   |
|-------------------------------------|--------|-----------|--------------|------------|--------|-------------|--------|
|                                |   | January 1 |         | January 2  |   | January 3   |   |
|                                |   | 2011      |         | 2010       |   | 2009        |   |
| Net sales                           |   | $         | 130,130,360  |       | $      | 112,665,464 |   | $ | 135,878,490 |   |
| Cost of products sold               |   |      | (103,458,137 | )          |   | (92,031,078 | )      |   | (110,415,392 | ) |
| Gross margin                        |   |      | 26,672,223   |       |   | 20,634,386  |   |   | 25,463,098 |   |
|                                |   |      |         |       |   |        |   |   |   |   |
| Selling and administrative expenses |   |      | (18,160,504  | )          |   | (17,055,610 | )      |   | (18,432,700 | ) |
| Operating profit                    |   |      | 8,511,719    |       |   | 3,578,776   |   |   | 7,030,398 |   |
|                                |   |      |         |       |   |        |   |   |   |   |
| Interest expense                    |   |      | (266,297     | )          |   | (1,727,980  | )      |   | (1,063,607 | ) |
| Other income                        |   |      | 2,996        |       |   | 50,733      |   |   | 76,057 |   |
| Income before income taxes          |   |      | 8,248,418    |       |   | 1,901,529   |   |   | 6,042,848 |   |
|                                |   |      |         |       |   |        |   |   |   |   |
| Income taxes                        |   |      | 2,705,413    |       |   | 865,122     |   |   | 1,538,225 |   |
| Net income                          |   | $         | 5,543,005    |       | $      | 1,036,407   |   | $ | 4,504,623 |   |
| Earnings per Share:                 |   |      |         |       |   |        |   |   |   |   |
| Basic                               |   | $         | 0.91         |       | $      | 0.17        |   | $ | 0.77 |   |
|                                |   |      |         |       |   |        |   |   |   |   |
| Diluted                             |   | $         | 0.90         |       | $      | 0.17        |   | $ | 0.73 |   |

|                                                                                                                                                       |   |      |      | Year ended |   |      |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|------------|--------|-----------|--------|
|                                                                                                                                                       |   | January 1 |      | January 2  |   | January 3 |   |
|                                                                                                                                                       |   | 2011      |      | 2010       |   | 2009      |   |
| Net income                                                                                                                                                 |   | $         | 5,543,005 |       | $      | 1,036,407 |   | $ | 4,504,623 |   |
| Other comprehensive income/(loss) -                                                                                                                        |   |      |      |       |   |      |   |   |   |   |
| Change in foreign currency translation                                                                                                                     |   |      | 752,662   |       |   | 1,031,023 |   |   | (1,735,278 | ) |
| Change in fair value of derivative financial instruments, net of income tax (expense)/benefit of ($72,200) in 2009 and $204,866 in 2008                    |   |      | —   |       |   | 130,298   |   |   | (387,041 | ) |
| Reclassification adjustment for termination of derivative financial instrument, net of income tax expense of $340,991                                      |   |      | —   |       |   | 626,359   |   |   | — |   |
| Change in pension and postretirement benefit costs, net of income taxes benefit/(expense) of $227,018 in 2010, ($1,341,658) in 2009 and $5,581,644 in 2008 |   |      | (418,175  | )          |   | 2,426,568 |   |   | (10,306,221 | ) |
|                                                                                                                                                       |   |      | 334,487   |       |   | 4,214,248 |   |   | (12,428,540 | ) |
| Comprehensive income/(loss)                                                                                                                                |   | $         | 5,877,492 |       | $      | 5,250,655 |   | $ | (7,923,917 | ) |

----

|                                                                                                               |   | Common Shares |   | CommonStock |       | TreasuryShares |       | TreasuryStock |   | RetainedEarnings  |   | AccumulatedOtherComprehensiveIncome (Loss) |       | Shareholders’Equity |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|-------------|------------|----------------|------------|---------------|--------|-------------------|--------|--------------------------------------------|------------|---------------------------|--------|
|                                                                                                               |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   |   |   |   |   |   |
| Balances at December 29, 2007                                                                                      |   | 8,354,978     |   | $           | 22,173,795 |           | (2,545,379 | )             | $      |  (16,967,562 | )      | $                                          | 66,262,566 |                      | $      |  (651,531 | ) | $ | 70,817,268 |   |
| Net income                                                                                                         |   |          |   |        |       |           |       |          |   |              |   |                                       | 4,504,623  |                      |   |   |   |   | 4,504,623 |   |
| Cash dividends declared, $.33 per share                                                                            |   |          |   |        |       |           |       |          |   |              |   |                                       | (1,938,172 | )                         |   |   |   |   | (1,938,172 | ) |
| Currency translation adjustment                                                                                    |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | (1,735,278 | ) |   | (1,735,278 | ) |
| Change in pension and postretirement benefit costs, net of tax                                                     |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | (10,306,221 | ) |   | (10,306,221 | ) |
| Change in derivative financial instrument, net of tax                                                              |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | (387,041 | ) |   | (387,041 | ) |
| Effects of changing pension plan measurement date pursuant to ASC 715, net of tax                                  |   |          |   |        |       |           |       |          |   |              |   |                                       | (152,074   | )                         |   | 43,865 |   |   | (108,209 | ) |
| Purchase of Common Stock for treasury                                                                              |   |          |   |        |       |           | (42,955    | )             |   | (610,526          | )      |                                       |       |                      |   |   |   |   | (610,526 | ) |
| Issuance of Common Stock upon the exercise of stock options                                                        |   | 196,606       |   |        | 1,861,486  |           |       |          |   |              |   |                                       |       |                      |   |   |   |   |  1,861,486 |   |
| Tax benefit from exercise of non-qualified stock options and disqualifying dispositions of incentive stock options |   |          |   |        | 355,799    |           |       |          |   |              |   |                                       |       |                      |   |   |   |   |  355,799 |   |
| Cash payment for fractional shares resulting from exercise of stock options                                        |   |          |   |        | (4         | )              |       |          |   |              |   |                                       |       |                      |   |   |   |   | (4 | ) |
| Issuance of Common Stock for directors’ fees                                                                 |   | 1,769         |   |        | 27,840     |           |       |          |   |              |   |                                       |       |                      |   |   |   |   |  27,840 |   |
| Balances at January 3, 2009                                                                                        |   | 8,553,353     |   |        | 24,418,916 |           | (2,588,334 | )             |   |  (17,578,088 | )      |                                       | 68,676,943 |                      |   |  (13,036,206 | ) |   | 62,481,565 |   |
| Net income                                                                                                         |   |          |   |        |       |           |       |          |   |              |   |                                       | 1,036,407  |                      |   |   |   |   | 1,036,407 |   |
| Cash dividends declared, $.36 per share                                                                            |   |          |   |        |       |           |       |          |   |              |   |                                       | (2,155,149 | )                         |   |   |   |   | (2,155,149 | ) |
| Currency translation adjustment                                                                                    |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | 1,031,023 |   |   | 1,031,023 |   |
| Change in pension and postretirement benefit costs, net of tax                                                     |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | 2,426,568 |   |   | 2,426,568 |   |
| Change in derivative financial instrument, net of tax                                                              |   |          |   |        |       |           |       |          |   |              |   |                                       |       |                      |   | 130,298 |   |   | 130,298 |   |

----

|                                                                                                               |   | Common Shares |   | CommonStock |       | TreasuryShares |       | TreasuryStock |   | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome (Loss) |       | Shareholders’Equity |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|-------------|------------|----------------|------------|---------------|--------|------------------|--------|--------------------------------------------|------------|---------------------------|--------|
|                                                                                                               |   |          |   |        |       |           |       |          |   |             |   |                                       |       |                      |   |   |   |   |   |   |
| Termination of derivative financial instrument, net of tax                                                         |   |          |   |        |       |           |       |          |   |             |   |                                       |       |                      |   | 626,359 |   |   | 626,359 |   |
| Purchase of Common Stock for treasury                                                                              |   |          |   |        |       |           | (55,881    | )             |   | (797,328         | )      |                                       |       |                      |   |   |   |   | (797,328 | ) |
| Issuance of Common Stock upon the exercise of stock options                                                        |   | 153,421       |   |        | 1,584,042  |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 1,584,042 |   |
| Tax benefit from exercise of non-qualified stock options and disqualifying dispositions of incentive stock options |   |          |   |        | 202,767    |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 202,767 |   |
| Issuance of Common Stock for directors’ fees                                                                 |   | 2,610         |   |        | 30,752     |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 30,752 |   |
| Balances at January 2, 2010                                                                                        |   | 8,709,384     |   |        | 26,236,477 |           | (2,644,215 | )             |   | (18,375,416      | )      |                                       | 67,558,201 |                      |   | (8,821,958 | ) |   | 66,597,304 |   |
| Net income                                                                                                         |   |          |   |        |       |           |       |          |   |             |   |                                       | 5,543,005  |                      |   |   |   |   | 5,543,005 |   |
| Cash dividends declared, $.52 per share                                                                            |   |          |   |        |       |           |       |          |   |             |   |                                       | (3,181,587 | )                         |   |   |   |   | (3,181,587 | ) |
| Currency translation adjustment                                                                                    |   |          |   |        |       |           |       |          |   |             |   |                                       |       |                      |   | 752,662 |   |   | 752,662 |   |
| Change in pension and postretirement benefit costs, net of tax                                                     |   |          |   |        |       |           |       |          |   |             |   |                                       |       |                      |   | (418,175 | ) |   | (418,175 | ) |
| Purchase of Common Stock for treasury                                                                              |   |          |   |        |       |           | (50,514    | )             |   | (730,307         | )      |                                       |       |                      |   |   |   |   | (730,307 | ) |
| Issuance of Common Stock upon the exercise of stock options                                                        |   | 141,750       |   |        | 1,348,585  |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 1,348,585 |   |
| Tax benefit from exercise of non-qualified stock options and disqualifying dispositions of incentive stock options |   |          |   |        | 107,662    |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 107,662 |   |
| Issuance of Common Stock for directors’ fees                                                                 |   | 1,628         |   |        | 24,594     |           |       |          |   |             |   |                                       |       |                      |   |   |   |   | 24,594 |   |
| Balances at January 1, 2011                                                                                        |   | 8,852,762     |   | $           | 27,717,318 |           | (2,694,729 | )             | $      | (19,105,723      | )      | $                                          | 69,919,619 |                      | $      | (8,487,471 | ) | $ | 70,043,743 |   |

----

|                                                                                                              |   |      |        | Year ended |   |       |   |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------|-------------|------------|--------|------------|--------|
|                                                                                                              |   | January 1 |        | January 2  |   | January 3  |   |
|                                                                                                              |   | 2011      |        | 2010       |   | 2009       |   |
| Operating Activities                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Net income                                                                                                        |   | $         | 5,543,005   |       | $      | 1,036,407  |   | $ | 4,504,623 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                 |   |      |        |       |   |       |   |   |   |   |
| Depreciation and amortization                                                                                     |   |      | 3,942,639   |       |   | 4,103,317  |   |   | 4,128,312 |   |
| Loss on sale of equipment and other assets                                                                        |   |      | 113,026     |       |   | 5,644      |   |   | 7,003 |   |
| Provision for doubtful accounts                                                                                   |   |      | 177,186     |       |   | 320,716    |   |   | 132,988 |   |
| Deferred income taxes                                                                                             |   |      | 526,173     |       |   | 235,788    |   |   | 286,046 |   |
| Issuance of Common Stock for directors’ fees                                                                |   |      | 24,594      |       |   | 30,752     |   |   | 27,840 |   |
| Changes in operating assets and liabilities:                                                                      |   |      |        |       |   |       |   |   |   |   |
| Accounts receivable                                                                                               |   |      | (1,047,724  | )          |   | 1,573,393  |   |   | 1,467,368 |   |
| Inventories                                                                                                       |   |      | (3,400,662  | )          |   | 6,671,197  |   |   | (1,099,265 | ) |
| Prepaid expenses and other                                                                                        |   |      | (534,465    | )          |   | 361,028    |   |   | 272,933 |   |
| Prepaid pension cost                                                                                              |   |      | 1,491,944   |       |   | 791,059    |   |   | (130,905 | ) |
| Recoverable taxes receivable                                                                                      |   |      | —     |       |   | 1,313,628  |   |   | 100,288 |   |
| Other assets                                                                                                      |   |      | (140,918    | )          |   | (15,847    | )      |   | (111,295 | ) |
| Accounts payable                                                                                                  |   |      | 2,061,171   |       |   | (1,858,201 | )      |   | (911,386 | ) |
| Accrued compensation                                                                                              |   |      | 1,146,355   |       |   | (127,707   | )      |   | (634,707 | ) |
| Other accrued expenses                                                                                            |   |      | (401,052    | )          |   | (1,097,616 | )      |   | (426,618 | ) |
| Net cash provided by operating activities                                                                         |   |      | 9,501,272   |       |   | 13,343,558 |   |   | 7,613,225 |   |
|                                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Investing Activities                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Purchases of property, plant and equipment                                                                        |   |      | (4,733,244  | )          |   | (2,226,025 | )      |   | (2,331,341 | ) |
| Proceeds from sale of equipment and other assets                                                                  |   |      | 275         |       |   | —    |   |   | 13,246 |   |
| Business acquisitions                                                                                             |   |      | —     |       |   | —    |   |   | (128,325 | ) |
| Net cash used in investing activities                                                                             |   |      | (4,732,969  | )          |   | (2,226,025 | )      |   | (2,446,420 | ) |
|                                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Financing Activities                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Principal payments on long-term debt                                                                              |   |      | (11,964,286 | )          |   | (2,240,202 | )      |   | (3,838,029 | ) |
| Proceeds from issuance of long-term debt                                                                          |   |      | 5,000,000   |       |   | —    |   |   | — |   |
| Proceeds from sales of Common Stock                                                                               |   |      | 1,348,585   |       |   | 1,584,042  |   |   | 1,861,486 |   |
| Tax benefit from disqualifying disposition of incentive stock options and exercise of non-qualified stock options |   |      | 107,662     |       |   | 202,767    |   |   | 355,799 |   |
| Purchases of Common Stock for treasury                                                                            |   |      | (730,307    | )          |   | (797,328   | )      |   | (610,526 | ) |
| Cash payment for fractional shares resulting from exercise of stock options                                       |   |      | —     |       |   | —    |   |   | (4 | ) |
| Dividends paid                                                                                                    |   |      | (3,181,587  | )          |   | (2,155,149 | )      |   | (1,938,172 | ) |
| Net cash used in financing activities                                                                             |   |      | (9,419,933  | )          |   | (3,405,870 | )      |   | (4,169,446 | ) |
| Effect of exchange rate changes on cash                                                                           |   |      | 129,565     |       |   | 67,385     |   |   | (239,456 | ) |
| Net change in cash and cash equivalents                                                                           |   |      | (4,522,065  | )          |   | 7,779,048  |   |   | 757,903 |   |
|                                                                                                              |   |      |        |       |   |       |   |   |   |   |
| Cash and cash equivalents at beginning of year                                                                    |   |      | 16,746,673  |       |   | 8,967,625  |   |   | 8,209,722 |   |
| Cash and cash equivalents at end of year                                                                          |   | $         | 12,224,608  |       | $      | 16,746,673 |   | $ | 8,967,625 |   |

----

----

----

|                            |   |  IndustrialHardwareSegment |      |  SecurityProductsSegment |   |  MetalProductsSegment |   |    Total |    | Weighted-AverageAmortization Period (Years) |   |
|---------------------------------|--------|---------------------------------|-----------|-------------------------------|--------|----------------------------|--------|-------------------------|---------|---------------------------------------------|--------|
| 2010 Gross Amount:              |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Patents and developedtechnology |   | $                               | 2,746,918 |                          | $      | 1,016,936                  |   | $                       | 26,382  |                                        | $      | 3,790,236 |   | 16.0 |   |
| Customer relationships          |   |                            | 45,825    |                          |   | 1,921,811                  |   |                    | — |                                        |   | 1,967,636 |   |   5.0 |   |
| Non-compete agreements          |   |                            | 30,000    |                          |   | 90,735                     |   |                    | — |                                        |   | 120,735 |   |   5.0 |   |
| Total Gross Intangibles         |   | $                               | 2,822,743 |                          | $      | 3,029,482                  |   | $                       | 26,382  |                                        | $      | 5,878,607 |   | 11.9 |   |
|                            |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| 2010 AccumulatedAmortization:   |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Patents and developedtechnology |   | $                               | 1,416,034 |                          | $      | 417,801                    |   | $                       | 25,307  |                                        | $      | 1,859,142 |   |   |   |
| Customer relationships          |   |                            | 27,495    |                          |   | 1,630,581                  |   |                    | — |                                        |   | 1,658,076 |   |   |   |
| Non-compete agreements          |   |                            | 18,000    |                          |   | 84,154                     |   |                    | — |                                        |   | 102,154 |   |   |   |
| Total Gross Amortization        |   | $                               | 1,461,529 |                          | $      | 2,132,536                  |   | $                       | 25,307  |                                        | $      | 3,619,372 |   |   |   |
|                            |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Net 2010 per Balance Sheet      |   | $                               | 1,361,214 |                          | $      | 896,946                    |   | $                       | 1,075   |                                        | $      | 2,259,235 |   |   |   |
|                            |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| 2009 Gross Amount:              |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Patents and developedtechnology |   | $                               | 2,662,125 |                          | $      | 995,778                    |   | $                       | 45,679  |                                        | $      | 3,703,582 |   | 16.0 |   |
| Customer relationships          |   |                            | 45,825    |                          |   | 1,921,811                  |   |                    | — |                                        |   | 1,967,636 |   |   5.0 |   |
| Non-compete agreements          |   |                            | 30,000    |                          |   | 90,735                     |   |                    | — |                                        |   | 120,735 |   |   5.0 |   |
| Other                           |   |                            | —   |                          |   | 128,941                    |   |                    | — |                                        |   | 128,941 |   |   1.0 |   |
| Total Gross Intangibles         |   | $                               | 2,737,950 |                          | $      | 3,137,265                  |   | $                       | 45,679  |                                        | $      | 5,920,894 |   | 11.6 |   |
|                            |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| 2009 AccumulatedAmortization:   |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Patents and developedtechnology |   | $                               | 1,262,599 |                          | $      | 342,109                    |   | $                       | 41,996  |                                        | $      | 1,646,704 |   |   |   |
| Customer relationships          |   |                            | 18,330    |                          |   | 1,246,219                  |   |                    | — |                                        |   | 1,264,549 |   |   |   |
| Non-compete agreements          |   |                            | 12,000    |                          |   | 75,943                     |   |                    | — |                                        |   | 87,943 |   |   |   |
| Other                           |   |                            | —   |                          |   | 125,000                    |   |                    | — |                                        |   | 125,000 |   |   |   |
| Total Gross Amortization        |   | $                               | 1,292,929 |                          | $      | 1,789,271                  |   | $                       | 41,996  |                                        | $      | 3,124,196 |   |   |   |
|                            |   |                            |      |                          |   |                       |   |                    |    |                                        |   |   |   |   |   |
| Net 2009 per Balance Sheet      |   | $                               | 1,445,021 |                          | $      | 1,347,994                  |   | $                       | 3,683   |                                        | $      | 2,796,698 |   |   |   |

----

|              |   | IndustrialHardwareSegment |      | SecurityProductsSegment |   | MetalProductsSegment |   |   Total |    |
|-------------------|--------|---------------------------|-----------|-------------------------|--------|----------------------|--------|-------------------|---------|
| 2010              |   |                      |      |                    |   |                 |   |              |    |   |   |   |   |
| Beginning balance |   | $                         | 2,035,189 |                    | $      | 11,833,816           |   | $                 | — |   | $ | 13,869,005 |   |
| Foreign exchange  |   |                      | 64,985    |                    |   | —              |   |              | — |   |   | 64,985 |   |
| Ending balance    |   | $                         | 2,100,174 |                    | $      | 11,833,816           |   | $                 | — |   | $ | 13,933,990 |   |
|              |   |                      |      |                    |   |                 |   |              |    |   |   |   |   |
| 2009              |   |                      |      |                    |   |                 |   |              |    |   |   |   |   |
| Beginning balance |   | $                         | 1,866,540 |                    | $      | 11,833,816           |   | $                 | — |   | $ | 13,700,356 |   |
| Foreign exchange  |   |                      | 168,649   |                    |   | —              |   |              | — |   |   | 168,649 |   |
| Ending balance    |   | $                         | 2,035,189 |                    | $      | 11,833,816           |   | $                 | — |   | $ | 13,869,005 |   |

----

|                                       |   | 2010      |   | 2009      |   | 2008      |   |
|--------------------------------------------|--------|-----------|--------|-----------|--------|-----------|--------|
| Basic:                                     |   |      |   |      |   |      |   |
| Weighted average shares outstanding        |   | 6,104,711 |   | 5,985,640 |   | 5,875,140 |   |
|                                       |   |      |   |      |   |      |   |
| Diluted:                                   |   |      |   |      |   |      |   |
| Weighted average shares outstanding        |   | 6,104,711 |   | 5,985,640 |   | 5,875,140 |   |
| Dilutive stock options                     |   | 87,308    |   | 256,140   |   | 284,423   |   |
| Denominator for diluted earnings per share |   | 6,192,019 |   | 6,241,780 |   | 6,159,563 |   |

----

| Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestrictedassets or liabilities. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2 | Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, forsubstantially the full term of the asset or liability. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement andunobservable. |
|---------|-----------------------------------------------------------------------------------------------------------------------------|

----

----

|                 |   | 2010   |      | 2009   |   |
|----------------------|--------|--------|-----------|--------|--------|
| Term loan            |   | $      | 4,464,286 |   | $      | 11,428,571 |   |
| Less current portion |   |   | 714,286   |   |   | 7,142,858 |   |
|                 |   | $      | 3,750,000 |   | $      | 4,285,713 |   |

| 2011       |   | $      | 714,286   |   |
|------------|--------|--------|-----------|--------|
| 2012       |   |   | 714,286   |   |
| 2013       |   |   | 714,286   |   |
| 2014       |   |   | 892,857   |   |
| 2015       |   |   | 535,714   |   |
| Thereafter |   |   | 892,857   |   |
|       |   | $      | 4,464,286 |   |

----

|                             |   |   Shares |   | Weighted AverageExercise Price |     |
|----------------------------------|--------|--------------------|--------|--------------------------------|----------|
| Outstanding at December 29, 2007 |   | 663,000            |   |                           | $ 10.099 |   |
| Exercised                        |   | (196,606           | )      |                           | 9.468    |   |
| Cancelled                        |   | (28,394            | )      |                           | 9.330    |   |
| Outstanding at January 3, 2009   |   | 438,000            |   |                           | 10.432   |   |
| Exercised                        |   | (153,421           | )      |                           | 10.325   |   |
| Cancelled                        |   | (62,829            | )      |                           | 10.170   |   |
| Outstanding at January 2, 2010   |   | 221,750            |   |                           | 10.581   |   |
| Exercised                        |   | (141,750           | )      |                           | 9.514    |   |
| Outstanding at January 1, 2011   |   | 80,000             |   |                           | 12.471   |   |

| Options Outstanding and Exercisable  |   |
|--------------------------------------|--------|
|   Range of Exercise Prices |   |   | Outstanding and Exercisable as of January 1, 2011 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price |   |
| $9.46 – $10.20                 |   |   |  24,500 | 1.8 | $ | 9.959 |   |
| $13.58                               |   |   |  55,500 | 4.0 |   | 13.580 |   |
|                                 |   |   |  80,000 | 3.3 |   |  12.471 |   |

----

|                                  |   | 2010   |       | 2009   |   | 2008       |   |
|---------------------------------------|--------|--------|------------|--------|--------|------------|--------|
| Property, plant and equipment         |   | $      | 4,546,941  |   | $      | 3,984,625  |   | $ | 3,775,424 |   |
| Total deferred income tax liabilities |   |   | 4,546,941  |   |   | 3,984,625  |   |   | 3,775,424 |   |
|                                  |   |   |       |   |   |       |   |   |   |   |
| Other postretirement benefits         |   |   | (515,133   | )      |   | (472,878   | )      |   | (375,028 | ) |
| Inventories                           |   |   | (747,397   | )      |   | (688,253   | )      |   | (782,446 | ) |
| Allowance for doubtful accounts       |   |   | (126,593   | )      |   | (93,386    | )      |   | (79,714 | ) |
| Intangible assets                     |   |   | (429,749   | )      |   | (409,233   | )      |   | (302,576 | ) |
| Accrued compensation                  |   |   | (258,631   | )      |   | (294,464   | )      |   | (348,870 | ) |
| Interest rate swap obligation         |   |   | —    |   |   | —    |   |   | (413,190 | ) |
| Pensions                              |   |   | (4,338,664 | )      |   | (4,248,502 | )      |   | (5,116,289 | ) |
| Tax credits                           |   |   | —    |   |   | —    |   |   | (557,354 | ) |
| Other                                 |   |   | (184,561   | )      |   | (191,130   | )      |   | (180,490 | ) |
| Total deferred income tax assets      |   |   | (6,600,728 | )      |   | (6,397,846 | )      |   | (8,155,957 | ) |
| Net deferred income tax assets        |   | $      | (2,053,787 | )      | $      | (2,413,221 | )      | $ | (4,380,533 | ) |
|                                  |   |   |       |   |   |       |   |   |   |   |

|     |   | 2010   |            | 2009   |   | 2008           |   |
|----------|--------|--------|-----------------|--------|--------|----------------|--------|
| Domestic |   | $      | 6,173,597       |   | $      | 2,274,641      |   | $ | 4,901,283 |   |
| Foreign  |   |   |  2,074,821 |   |   |  (373,112 | )      |   |  1,141,565 |   |
|     |   | $      | 8,248,418       |   | $      | 1,901,529      |   | $ | 6,042,848 |   |

|      |   | 2010   |      | 2009   |   | 2008     |   |
|-----------|--------|--------|-----------|--------|--------|----------|--------|
| Current:  |   |   |      |   |   |     |   |   |   |   |
| Federal   |   | $      | 1,543,735 |   | $      | 505,005  |   | $ | 896,199 |   |
| Foreign   |   |   | 403,115   |   |   | (128,177 | )      |   | 198,634 |   |
| State     |   |   | 232,390   |   |   | 252,506  |   |   | 157,346 |   |
| Deferred: |   |   |      |   |   |     |   |   |   |   |
| Federal   |   |   | 497,815   |   |   | 264,227  |   |   | 352,450 |   |
| Foreign   |   |   | —   |   |   | —  |   |   | — |   |
| State     |   |   | 28,358    |   |   | (28,439  | )      |   | (66,404 | ) |
|      |   | $      | 2,705,413 |   | $      | 865,122  |   | $ | 1,538,225 |   |

----

|                                                    |   | 2010          | 2009   | 2008    |
|---------------------------------------------------------|--------|---------------|--------|---------|
|                                                    |   | Amount        |   | Percent | Amount |   | Percent | Amount |   | Percent |
| Income taxes using U.S. federal statutory rate          |   | $ 2,804,462   |   | 34      | % | $ 646,520 |   | 34 | % | $ 2,054,568 |   | 34 | % |
| State income taxes, net of federal benefit              |   |  153,535 |   | 2       |   |  149,893 |   | 8 |   |  53,898 |   | 1 |   |
| Impact of foreign subsidiaries on effective tax rate    |   | 38,813        |   | 1       |   | 173,415 |   | 9 |   | (379,009 | ) | (6 | ) |
| Impact of manufacturers deduction on effective tax rate |   | (176,847      | )      | (2      | ) | (68,174 | ) | (4 | ) | (95,620 | ) | (2 | ) |
| Other—net                                         |   | (114,550      | )      | (2      | ) | (36,532 | ) | (2 | ) | (95,612 | ) | (2 | ) |
|                                                    |   | $ 2,705,413   |   | 33      | % | $ 865,122 |   | 45 | % | $ 1,538,225 |   | 25 | % |

|                                                                  |   | 2010   |     | 2009   |   | 2008      |   |
|-----------------------------------------------------------------------|--------|--------|----------|--------|--------|-----------|--------|
|                                                                  |   |   |     |   |   |      |   |   |   |   |
| Balance at beginning of year                                          |   | $      | 791,540  |   | $      | 1,316,240 |   | $ | 1,527,813 |   |
| Decrease for tax positions taken during a prior period                |   |   | —  |   |   | (3,651    | )      |   | (37,014 | ) |
| Increases for positions taken during the current period               |   |   | 30,876   |   |   | 118,786   |   |   | 80,822 |   |
| Decreases relating to settlements                                     |   |   | (56,360  | )      |   | (408,000  | )      |   | (34,595 | ) |
| Decreases resulting from the expiration of the statute of limitations |   |   | (270,213 | )      |   | (231,835  | )      |   | (220,786 | ) |
| Balance at end of year                                                |   | $      | 495,843  |   | $      | 791,540   |   | $ | 1,316,240 |   |

----

| 2011   |   | $      | 1,061,807 |   |
|--------|--------|--------|-----------|--------|
| 2012   |   |   | 978,217   |   |
| 2013   |   |   | 135,989   |   |
| 2014   |   |   | 24,914    |   |
| 2015   |   |   | —   |   |
|   |   | $      | 2,200,927 |   |

|                               |   | 15 Months |       | 3 Months |   | 12 Months |   |
|------------------------------------|--------|-----------|------------|----------|--------|-----------|--------|
| Service cost                       |   | $         | 2,324,033  |     | $      | 446,701   |   | $ | 1,877,332 |   |
| Interest cost                      |   |      | 3,352,940  |     |   | 667,863   |   |   | 2,685,077 |   |
| Expected return on plan assets     |   |      | (4,740,175 | )        |   | (948,035  | )      |   | (3,792,140 | ) |
| Amortization of prior service cost |   |      | 260,052    |     |   | 52,010    |   |   | 208,042 |   |
| Amortization of the net loss       |   |      | 82,890     |     |   | 16,578    |   |   | 66,312 |   |
| Net periodic benefit cost          |   | $         | 1,279,740  |     | $      | 235,117   |   | $ | 1,044,623 |   |

----

|                               |   | 2010   |       | 2009   |   | 2008       |   |
|------------------------------------|--------|--------|------------|--------|--------|------------|--------|
| Service cost                       |   | $      | 2,223,762  |   | $      | 2,205,931  |   | $ | 1,877,332 |   |
| Interest cost                      |   |   | 2,908,962  |   |   | 2,829,233  |   |   | 2,685,077 |   |
| Expected return on plan assets     |   |   | (3,598,504 | )      |   | (4,054,864 | )      |   | (3,792,140 | ) |
| Amortization of prior service cost |   |   | 204,569    |   |   | 208,043    |   |   | 208,042 |   |
| Amortization of the net loss       |   |   | 1,096,556  |   |   | 2,523,903  |   |   | 66,312 |   |
| Net periodic benefit cost          |   | $      | 2,835,345  |   | $      | 3,712,246  |   | $ | 1,044,623 |   |

|                           | 2010                    | 2009                    | 2008                    |
|--------------------------------|-------------------------|-------------------------|-------------------------|
| Discount rate                  |    5.85% |    6.25% |    6.25% |
| Expected return on plan assets |    8.5%  |    8.5%  |    8.5%  |
| Rate of compensation increase  |    4.25% |    4.25% |    4.25% |

|                               |   | 2010   |    | 2009   |   | 2008    |   |
|------------------------------------|--------|--------|---------|--------|--------|---------|--------|
| Service cost                       |   | $      | 110,786 |   | $      | 135,963 |   | $ | 127,470 |   |
| Interest cost                      |   |   | 134,977 |   |   | 132,513 |   |   | 124,244 |   |
| Expected return on plan assets     |   |   | (59,327 | )      |   | (61,598 | )      |   | (90,203 | ) |
| Amortization of prior service cost |   |   | (23,888 | )      |   | (23,889 | )      |   | (23,886 | ) |
| Amortization of the net loss       |   |   | (52,650 | )      |   | (52,568 | )      |   | (33,560 | ) |
| Net periodic benefit cost          |   | $      | 109,898 |   | $      | 130,421 |   | $ | 104,065 |   |

|                           | 2010                    | 2009                    | 2008                    |
|--------------------------------|-------------------------|-------------------------|-------------------------|
| Discount rate                  |    5.85% |    6.25% |    6.25% |
| Expected return on plan assets |    8.5%  |    8.5%  |    8.5%  |

|                                                              |   | Pension Benefit | Postretirement Benefit |
|-------------------------------------------------------------------|--------|-----------------|------------------------|
|                                                              |   | 2010            |                   | 2009 |   | 2010 |   | 2009 |   |
| Benefit obligation at beginning of year                           |   | $               | 51,537,642             |   | $ | 47,154,975 |   | $ | 2,456,052 |   | $ | 2,190,254 |   |
| Change due to availability of final actual assets and census data |   |            | —                |   |   | — |   |   | (75,345 | ) |   | — |   |
| Service cost                                                      |   |            | 2,223,762              |   |   | 2,205,931 |   |   | 110,786 |   |   | 135,963 |   |
| Interest cost                                                     |   |            | 2,908,962              |   |   | 2,828,090 |   |   | 134,977 |   |   | 132,513 |   |
| Actuarial loss                                                    |   |            | 2,572,412              |   |   | 1,469,762 |   |   | 169,789 |   |   | 131,233 |   |
| Benefits paid                                                     |   |            | (2,262,866             | ) |   | (2,121,116 | ) |   | (166,653 | ) |   | (133,911 | ) |
| Benefit obligation at end of year                                 |   | $               | 56,979,912             |   | $ | 51,537,642 |   | $ | 2,629,606 |   | $ | 2,456,052 |   |

----

|                                                              |   | Pension Benefit | Postretirement Benefit |
|-------------------------------------------------------------------|--------|-----------------|------------------------|
|                                                              |   | 2010            |                   | 2009 |   | 2010 |   | 2009 |   |
| Fair value of plan assets at beginning of year                    |   | $               | 39,485,154             |   | $ | 31,843,051 |   | $ | 1,114,554 |   | $ | 1,127,535 |   |
| Change due to availability of final actual assets and census data |   |            |  —          |   |   |  — |   |   | (5,646 | ) |   | (74,579 | ) |
| Actual return on plan assets                                      |   |            | 4,400,550              |   |   | 6,843,175 |   |   | 59,327 |   |   | 61,598 |   |
| Employer contributions                                            |   |            | 1,343,805              |   |   | 2,920,044 |   |   | 166,653 |   |   | 133,911 |   |
| Benefits paid                                                     |   |            | (2,262,866             | ) |   | (2,121,116 | ) |   | (166,653 | ) |   | (133,911 | ) |
| Fair value of plan assets at end of year                          |   | $               | 42,966,643             |   | $ | 39,485,154 |   | $ | 1,168,235 |   | $ | 1,114,554 |   |

|                                       |   | Pension Benefit | Postretirement Benefit |
|--------------------------------------------|--------|-----------------|------------------------|
| Funded Status                              |   | 2010            |                   | 2009 |   | 2010 |   | 2009 |   |
| Prepaid benefit cost                       |   | $               | —                |   | $ | 36,838 |   | $ | — |   | $ | — |   |
| Accrued benefit liability                  |   |            | (14,013,269            | ) |   | (12,089,326 | ) |   | (1,461,371 | ) |   | (1,341,498 | ) |
| Net amount recognized in the balance sheet |   | $               | (14,013,269            | ) | $ | (12,052,488 | ) | $ | (1,461,371 | ) | $ | (1,341,498 | ) |

|                        |   | Pension Benefit | Postretirement Benefit |
|-----------------------------|--------|-----------------|------------------------|
|                        |   | 2010            |                   | 2009 |   | 2010 |   | 2009 |   |
| Net (loss) gain             |   | $               |  (16,804,456      | ) | $ |  (14,698,133 | ) | $ | 252,370 |   | $ | 405,110 |   |
| Prior service (cost) credit |   |            | (521,932               | ) |   | (2,159,014 | ) |   | 183,173 |   |   | 207,061 |   |
|                        |   | $               | (17,326,388            | ) | $ | (16,857,147 | ) | $ | 435,543 |   | $ | 612,171 |   |

|                                                              |   | Pension Benefit | Postretirement Benefit |
|-------------------------------------------------------------------|--------|-----------------|------------------------|
|                                                              |   | 2010            |                   | 2009 |   | 2010 |   | 2009 |   |
| Balance at beginning of period                                    |   | $               | (16,857,147            | ) | $ | (20,907,642 | ) | $ | 612,171 |   | $ | 894,440 |   |
| Change due to availability of final actual assets and census data |   |            |  —          |   |   |  — |   |   | 69,699 |   |   | (74,579 | ) |
| Charged to net periodic benefit cost                              |   |            |                   |   |   |   |   |   |   |   |   |   |   |
| Prior service cost                                                |   |            | 204,569                |   |   | 208,043 |   |   | (23,888 | ) |   | (23,889 | ) |
| Net (gain) loss                                                   |   |            | 1,096,556              |   |   | 2,523,903 |   |   | (52,650 | ) |   | (52,568 | ) |
| Other changes                                                     |   |            |                   |   |   |   |   |   |   |   |   |   |   |
| Liability (gains) losses                                          |   |            | (1,770,366             | ) |   | 1,318,549 |   |   | (169,789 | ) |   | (131,233 | ) |
| Balance at end of period                                          |   | $               | (17,326,388            | ) | $ | (16,857,147 | ) | $ | 435,543 |   | $ | 612,171 |   |

|                           |   | 2010       | 2009 |
|--------------------------------|--------|------------|------|
| Discount rate                  |   |  5.35 | %    |  5.85 | % |
| Expected return on plan assets |   |  8.5  | %    |  8.5 | % |
| Rate of compensation increase  |   |  4.25 | %    |  4.25 | % |

----

|                                               |   | 2010   |        | 2009   |   |
|----------------------------------------------------|--------|--------|-------------|--------|--------|
| Number of plans                                    |   |   | 6           |   |   | 5 |   |
| Projected benefit obligation                       |   | $      | 56,979,912  |   | $      | 49,640,510 |   |
| Accumulated benefit obligation                     |   |   | 50,458,011  |   |   | 46,456,805 |   |
| Fair value of plan assets                          |   |   | 42,966,643  |   |   | 37,551,184 |   |
| Net amount recognized in accrued benefit liability |   |   | (14,013,269 | )      |   | (12,089,326 | ) |

|                             |   | Level 1 |      | Level 2 |   | Level 3   |   | Total  |    |
|----------------------------------|--------|---------|-----------|---------|--------|-----------|--------|--------|---------|
| Cash and Equivalents:            |   |    |      |    |   |      |   |   |    |   |   |   |   |
| Common/collective trust funds    |   | $       | —   |    | $      | 184,050   |   | $      | — |   | $ | 184,050 |   |
| Equities:                        |   |    |      |    |   |      |   |   |    |   |   |   |   |
| The Eastern Company Common Stock |   |    | 3,456,188 |    |   | —   |   |   | — |   |   | 3,456,188 |   |
| Common/collective trust funds    |   |    |      |    |   |      |   |   |    |   |   |   |   |
| U.S. Large Cap (a)               |   |    | —   |    |   | 5,361,742 |   |   | — |   |   | 5,361,742 |   |
| U.S. Small Cap (b)               |   |    | —   |    |   | 3,143,701 |   |   | — |   |   | 3,143,701 |   |
| Concentrated Equity (c)          |   |    | —   |    |   | 3,859,253 |   |   | — |   |   | 3,859,253 |   |
| International Large Cap (d)      |   |    | —   |    |   | 6,370,317 |   |   | — |   |   | 6,370,317 |   |
| Emerging Market (e)              |   |    | —   |    |   | 2,285,271 |   |   | — |   |   | 2,285,271 |   |

----

|                           |   | Level 1 |      | Level 2 |   | Level 3    |   | Total  |    |
|--------------------------------|--------|---------|-----------|---------|--------|------------|--------|--------|---------|
|  Fixed Income:            |   |    |      |    |   |       |   |   |    |   |   |   |   |
| Common/collective trust funds  |   |    |      |    |   |       |   |   |    |   |   |   |   |
| Intermediate Bond (f)          |   |    | —   |    |   | 12,748,576 |   |   | — |   |   | 12,748,576 |   |
| Long Duration Fixed Income (g) |   |    | —   |    |   | 2,490,014  |   |   | — |   |   | 2,490,014 |   |
| Long Duration Fixed Credit (h) |   |    | —   |    |   | 1,043,684  |   |   | — |   |   | 1,043,684 |   |
| Insurance contracts            |   |    | —   |    |   | 2,023,847  |   |   | — |   |   | 2,023,847 |   |
| Total                          |   | $       | 3,456,188 |    | $      | 39,510,455 |   | $      | — |   | $ | 42,966,643 |   |

| (a) | The investment objective of the large cap fund is to outperform the Russell 1000® Index.  The fund is designed to provide for long-term growth of capital by utilizing a diversified group of quantitative investment strategies that seek to identify securities that have exposure to factors that the underlying advisors’ research have found to be predictive of future excess returns.  The advisors’ portfolios are quantitatively structured to gain exposure to these predictive characteristics while minimizing unintended risk exposures.                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | The small cap fund has an objective to outperform the Russell 2500® Index  The fund is designed to achieve consistency by combining advisors whose complementary disciplined processes employ distinct methods for identifying small capitalization U.S. stocks with strong return potential.  Advisors in the fund use a wide range of criteria and disciplines in their stock selection, focusing on factors such as: undervalued or under-researched companies, special situations, emerging growth, asset plays or turnarounds.                                                                                           |
| (c) | The investment objective of the concentrated equity fund is to outperform the Russell 1000® Index.  The fund is designed to achieve this by combining strategies with different payoffs over different phases of an economic and stock market cycle.  To help achieve this objective, multiple advisors and strategies are employed to reduce “scenario risk.”  These multiple strategies are in the form of multiple investment styles (e.g., growth, market oriented, and value), multiple sub-styles, and different ways of identifying undervalued securities.                                      |
| (d) | The international fund has an investment objective of outperforming the MCSI Europe, Australia and Far East Index – net (EAFE).  The fund is designed to provide the potential for long-term growth of capital by utilizing a diversified group of investment advisors that the Trustee’s manager research indicates will outperform over a full market cycle.  The investment advisors’ portfolios are combined to form a fund that emphasizes their strengths while minimizing unintended risk exposures                                                                                                       |
| (e) | The emerging market fund seeks to outperform the MCSI Emerging Market Index.  The fund is designed to provide the potential for long-term growth of capital by utilizing a diversified market group of investment advisors that the Trustee’s manager research indicates will outperform over a full market cycle.  The fund combines advisors who use distinctly different approaches to generate alpha in a complementary manner.  This potentially mitigates some of the advisors’ style, sector and capitalization bets, and instead emphasizes their stock picking and country selection capabilities.  |

----

| (f) | Fixed income common fund investments have an investment objective of outperforming the Barclays Capital U.S. Aggregate Bond Index over a full market cycle.  The fund is designed to provide current income, and as a secondary objective, capital appreciation through a variety of diversified strategies including sector rotation, modest interest rate timing, security selection and tactical use of high yield and emerging market bonds.  The portfolio diversification provides protection against a single security or class of securities having a disproportionate impact on aggregate performance.  To help achieve the objective, the fund is actively managed by multiple advisors who use a variety of investment strategies to create a broad market exposure.  The fund’s advisors have distinct but complementary investment styles.  These advisors generally have similar universes of investable securities but have different areas of specialization and expertise within intermediate duration securities.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (g) | The long duration fixed income fund seeks to outperform the Barclays Capital U.S. Long Government/Credit Index over a full market cycle.  This fund is designed to provide current income, and as a secondary objective, capital appreciation through diversified strategies including sector rotation, modest interest rate timing, security selection and tactical use of high yield and emerging market bonds.  The fund will generally be used in combination with other bond funds, with the goal of reducing the mismatch between a plan’s assets and liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (h) | The long duration fixed credit fund seeks to outperform the Barclays Capital Long Credit Index over a full market cycle.  The fund seeks to provide current income, and as a secondary objective, capital appreciation through diversified strategies including sector rotation, modest interest rate timing, security selection and tactical use of high yield and emerging market bonds.  The fund will generally be used in combination with other bond funds, with the goal of reducing the mismatch between a plan’s assets and liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                |   | Level 1 |    | Level 2 |   | Level 3 |   | Total  |      |
|---------------------|--------|---------|---------|---------|--------|---------|--------|--------|-----------|
| Fixed Income:       |   |    |    |    |   |    |   |   |      |   |   |   |   |
| Insurance contracts |   | $       | — |    | $      | — |   | $      | 1,168,235 |   | $ | 1,168,235 |   |
| Total               |   | $       | — |    | $      | — |   | $      | 1,168,235 |   | $ | 1,168,235 |   |

----

|                                                              |   | 2010   |      |
|-------------------------------------------------------------------|--------|--------|-----------|
| Fair value of Level 3 assets at beginning of year                 |   | $      | 1,114,554 |   |
| Change due to availability of final actual assets and census data |   |   | (5,646    | ) |
| Actual return on plan assets                                      |   |   | 59,327    |   |
| Employer contributions                                            |   |   | 166,653   |   |
| Benefits paid                                                     |   |   | (166,653  | ) |
| Fair value of Level 3 assets at end of year                       |   | $      | 1,168,235 |   |

|                                                    |   | 1-Percentage Point |
|---------------------------------------------------------|--------|--------------------|
|                                                    |   | Increase           |   | Decrease |
| Effect on total of service and interest cost components |   | $                  | 37,769 |   | $ |  (30,999 | ) |
|                                                    |   |               |   |   |   |   |   |
| Effect on postretirement benefit obligation             |   | $                  | 366,926 |   | $ | (304,318 | ) |

|                                     |   | 2010   |        | 2009   |   | 2008        |   |
|------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|
| Revenue:Sales to unaffiliated customers: |   |   |        |   |   |        |   |   |   |   |
| Industrial Hardware                      |   | $      | 57,527,864  |   | $      | 49,954,491  |   | $ | 60,041,074 |   |
| Security Products                        |   |   | 45,873,391  |   |   | 41,997,872  |   |   | 55,183,759 |   |
| Metal Products                           |   |   | 26,729,105  |   |   | 20,713,101  |   |   | 20,653,657 |   |
|                                     |   | $      | 130,130,360 |   | $      | 112,665,464 |   | $ | 135,878,490 |   |

----

|                   |   | 2010   |      | 2009   |   | 2008      |   |
|------------------------|--------|--------|-----------|--------|--------|-----------|--------|
| Inter-segment Revenue: |   |   |      |   |   |      |   |   |   |   |
| Industrial Hardware    |   | $      | 318,094   |   | $      | 215,742   |   | $ | 614,803 |   |
| Security Products      |   |   | 2,789,443 |   |   | 1,327,968 |   |   | 2,964,334 |   |
| Metal Products         |   |   | 413,408   |   |   | 800,477   |   |   | 607,302 |   |
|                   |   | $      | 3,520,945 |   | $      | 2,344,187 |   | $ | 4,186,439 |   |

| Income Before Income Taxes: |   |   |        |   |   |        |   |   |        |   |
|-----------------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| Industrial Hardware         |   | $      | 5,148,116   |   | $      | 4,618,072   |   | $      | 5,236,924   |   |
| Security Products           |   |   | 3,378,489   |   |   | 1,540,694   |   |   | 4,032,771   |   |
| Metal Products              |   |   | (14,886     | )      |   | (2,579,990  | )      |   | (2,239,297  | )      |
| Operating Profit            |   |   | 8,511,719   |   |   | 3,578,776   |   |   | 7,030,398   |   |
| Interest expense            |   |   | (266,297    | )      |   | (1,727,980  | )      |   | (1,063,607  | )      |
| Other income                |   |   | 2,996       |   |   | 50,733      |   |   | 34,747      |   |
|                        |   | $      | 8,248,418   |   | $      | 1,901,529   |   | $      | 6,001,538   |   |
|                        |   |   |        |   |   |        |   |   |        |   |
| Geographic Information:     |   |   |        |   |   |        |   |   |        |   |
| Net Sales:                  |   |   |        |   |   |        |   |   |        |   |
| United States               |   | $      | 106,141,008 |   | $      | 99,636,783  |   | $      | 112,171,233 |   |
| Foreign                     |   |   | 23,989,352  |   |   | 13,028,681  |   |   | 23,707,257  |   |
|                        |   | $      | 130,130,360 |   | $      | 112,665,464 |   | $      | 135,878,490 |   |

| Identifiable Assets: |   |   |        |   |   |        |   |   |        |   |
|----------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| United States        |   | $      | 84,804,542  |   | $      | 85,455,482  |   | $      | 90,479,681  |   |
| Foreign              |   |   | 17,548,938  |   |   | 15,416,377  |   |   | 15,537,287  |   |
|                 |   | $      | 102,353,480 |   | $      | 100,871,859 |   | $      | 106,016,968 |   |
|                 |   |   |        |   |   |        |   |   |        |   |
| Industrial Hardware  |   | $      | 29,491,572  |   | $      | 25,000,814  |   | $      | 27,744,552  |   |
| Security Products    |   |   | 42,375,361  |   |   | 43,812,116  |   |   | 48,155,676  |   |
| Metal Products       |   |   | 15,392,848  |   |   | 12,555,735  |   |   | 16,185,279  |   |
|                 |   |   | 87,259,781  |   |   | 81,368,665  |   |   | 92,085,507  |   |
| General corporate    |   |   | 15,093,699  |   |   | 19,503,194  |   |   | 13,931,461  |   |
|                 |   | $      | 102,353,480 |   | $      | 100,871,859 |   | $      | 106,016,968 |   |

| Depreciation and Amortization: |   |   |      |   |   |      |   |   |      |   |
|--------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Industrial Hardware            |   | $      | 1,748,612 |   | $      | 1,763,500 |   | $      | 1,786,227 |   |
| Security Products              |   |   | 1,297,471 |   |   | 1,413,291 |   |   | 1,418,508 |   |
| Metal Products                 |   |   | 896,556   |   |   | 926,526   |   |   | 923,577   |   |
|                           |   | $      | 3,942,639 |   | $      | 4,103,317 |   | $      | 4,128,312 |   |

----

|                            |   | 2010   |      | 2009   |   | 2008      |   |
|---------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
| Capital Expenditures:           |   |   |      |   |   |      |   |   |   |   |
| Industrial Hardware             |   | $      | 1,589,771 |   | $      | 1,307,927 |   | $ | 1,174,762 |   |
| Security Products               |   |   | 597,822   |   |   | 353,539   |   |   | 406,113 |   |
| Metal Products                  |   |   | 2,438,557 |   |   | 526,601   |   |   | 633,525 |   |
|                            |   |   | 4,626,150 |   |   | 2,188,067 |   |   | 2,214,400 |   |
| Currency translation adjustment |   |   | (20,536   | )      |   | (17,186   | )      |   | 18,865 |   |
| General corporate               |   |   | 127,630   |   |   | 55,144    |   |   | 98,076 |   |
|                            |   | $      | 4,733,244 |   | $      | 2,226,025 |   | $ | 2,331,341 |   |

----

----

|                                                             |   |   |       |   |   | 2010       |   |   |       |   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|
|                                                             |   | First  |       | Second |   | Third      |   | Fourth |       | Year   |   |
| Net sales                                                        |   | $      | 30,954,555 |   | $      | 32,577,665 |   | $      | 33,958,681 |   | $      | 32,639,459 |   | $ | 130,130,360 |   |
| Gross margin                                                     |   |   | 6,058,975  |   |   | 6,898,345  |   |   | 6,918,522  |   |   | 6,796,381 |   |   | 26,672,223 |   |
| Selling and administrative     expenses |   |   | 4,432,801  |   |   | 4,623,095  |   |   | 4,680,232  |   |   | 4,424,376 |   |   | 18,160,504 |   |
| Net income                                                       |   |   | 1,009,660  |   |   | 1,410,869  |   |   | 1,489,748  |   |   | 1,632,728 |   |   | 5,543,005 |   |
|                                                             |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Net income per share:                                            |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Basic                                                            |   | $      | .17        |   | $      | .23        |   | $      | .24        |   | $      | .27 |   | $ | .91 |   |
| Diluted                                                          |   | $      | .16        |   | $      | .23        |   | $      | .24        |   | $      | .26 |   | $ | .90 |   |
|                                                             |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Weighted average shares outstanding:                             |   |   |       |   |   |       |   |   |       |   |   |   |   |
| Basic                                                            |   |   | 6,065,256  |   |   | 6,074,700  |   |   | 6,131,401  |   |   | 6,147,473 |   |   | 6,104,711 |   |
| Diluted                                                          |   |   | 6,190,327  |   |   | 6,165,369  |   |   | 6,208,219  |   |   | 6,204,147 |   |   | 6,192,019 |   |

|                                                             |   |   |       |   |   | 2009       |   |   |       |   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|
|                                                             |   | First  |       | Second |   | Third      |   | Fourth |       | Year   |   |
| Net sales                                                        |   | $      | 28,432,473 |   | $      | 28,087,629 |   | $      | 28,131,092 |   | $      | 28,014,270 |   | $ | 112,665,464 |   |
| Gross margin                                                     |   |   | 3,420,085  |   |   | 5,676,766  |   |   | 5,722,051  |   |   | 5,815,484 |   |   | 20,634,386 |   |
| Selling and administrative     expenses |   |   | 4,388,863  |   |   | 4,103,087  |   |   | 4,371,875  |   |   | 4,191,785 |   |   | 17,055,610 |   |
| Net (loss)/income                                                |   |   | (1,082,530 | )      |   | 842,382    |   |   | 907,377    |   |   | 369,178 |   |   | 1,036,407 |   |
|                                                             |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Net (loss)/income per share:                                     |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Basic                                                            |   | $      | (.18       | )      | $      | .14        |   | $      | .15        |   | $      | .06 |   | $ | .17 |   |
| Diluted                                                          |   | $      | (.18       | )      | $      | .13        |   | $      | .15        |   | $      | .06 |   | $ | .17 |   |
|                                                             |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Weighted average shares outstanding:                             |   |   |       |   |   |       |   |   |       |   |   |   |   |
| Basic                                                            |   |   | 5,965,751  |   |   | 5,967,826  |   |   | 5,991,345  |   |   | 6,017,708 |   |   | 5,985,640 |   |
| Diluted                                                          |   |   | 5,965,751  |   |   | 6,268,805  |   |   | 6,206,823  |   |   | 6,177,192 |   |   | 6,241,780 |   |

|  Fiscal 2010 and 2009 consisted of four 13 week quarters totaling 52 weeks for each year. |   |
|------------------------------------------------------------------------------------------------|--------|

----

|   | Report of Fiondella, Milone and LaSaracina LLP, Independent Registered Public Accounting Firm |
|--------|-----------------------------------------------------------------------------------------------|

|  Glastonbury, Connecticut |
|--------------------------------|
| March 11, 2011                 |   |

----

|   | Report of UHY LLP, Independent Registered Public Accounting Firm |
|--------|------------------------------------------------------------------|

|   | The Board of Directors |
|--------|------------------------|

|   | The Eastern Company |
|--------|---------------------|

|   | /s/ UHY LLP |
|--------|-------------|

|   | Hartford, Connecticut |
|--------|-----------------------|

|   | March 11, 2009 |
|--------|----------------|

----

| ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|--------|--------------------------------------------------------------------------------------|

| ITEM 9A | CONTROLS AND PROCEDURES |
|---------|-------------------------|

----

|   | /s/ Fiondella, Milone & LaSaracina LLP |
|--------|--------------------------------------------|

|   | March 11, 2011 |
|--------|----------------|

----

| ITEM 9B | OTHER INFORMATION |
|---------|-------------------|

| ITEM 10 | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|---------|--------------------------------------------------------|

| ITEM 11 | EXECUTIVE COMPENSATION |
|---------|------------------------|

----

| ITEM 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|---------|------------------------------------------------------------------------------------------------|

| (a) | Information concerning security ownership of certain beneficial owners is incorporated herein by reference to the Proxy Statement to be filed with the SEC pursuant to Regulation 14A not later than 120 days after January 1, 2011, under the caption “Security Ownership of Certain Beneficial Shareholders”. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Information concerning security ownership of management is incorporated herein by reference to the Proxy Statement to be filed with the SEC pursuant to Regulation 14A not later than 120 days after January 1, 2011, under the captions “Item No. 1 – Election of Directors”, “Security Ownership of Certain Beneficial Shareholders”, “Executive Compensation”, “Stock Options”, “Options Exercised in Fiscal 2010”, and “Outstanding Equity Awards at Fiscal 2010 Year-End”. See also the equity compensation plan information in Item 5 of this Annual Report on Form 10-K. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Changes in Control |
|-----|--------------------|

| ITEM 13 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
|---------|---------------------------------------------------------------------------|

| ITEM 14 | PRINCIPAL ACCOUNTING FEES AND SERVICES |
|---------|----------------------------------------|

| ITEM 15 | EXHIBITS, FINANCIAL STATEMENT SCHEDULE |
|---------|----------------------------------------|

|   | (1) | Financial statements |
|--------|-----|----------------------|

|                                       Consolidated Balance Sheets – January 1, 2011 and January 2, 2010 | 28. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|   | Consolidated Statements of Income — Fiscal years ended January 1, 2011, |
|--------|-------------------------------------------------------------------------------|

|                                       January 2, 2010 and January 3, 2009 | 30. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|   | Consolidated Statements of Comprehensive Income (Loss) — Fiscal years ended |
|--------|-----------------------------------------------------------------------------------|

|                                       January 1, 2011, January 2, 2010 and January 3, 2009 | 30. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|   | Consolidated Statements of Shareholders’ Equity — Fiscal years ended |
|--------|----------------------------------------------------------------------------------|

|                                       January 1, 2011, January 2, 2010 and January 3, 2009 | 31. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|   | Consolidated Statements of Cash Flows—Fiscal years ended January 1, 2011, |
|--------|---------------------------------------------------------------------------------|

|                                       January 2, 2010 and January 3, 2009 | 33. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|                                       Notes to Consolidated Financial Statements | 34. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

----

|                                       Accounting Firm | 56. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|                                       Report of UHY LLP, Independent Registered Public Accounting Firm | 57. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|                                       Schedule II — Valuation and qualifying accounts | 63. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|

|   | (b) | Exhibits Required by Item 601 of Regulation S-K |
|--------|-----|-------------------------------------------------|

|   | Exhibits are as set forth in the “Exhibit Index” which appears on pages 65 through 66. Also refer to the following Form 8-K’s filed by the Company. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | None. |
|--------|-----|-------|

----

| COL. A                                                                                                           | COL. B                                   | COL. C                                | COL. D                                     | COL. E                     |
|------------------------------------------------------------------------------------------------------------------|------------------------------------------|---------------------------------------|--------------------------------------------|----------------------------|
|                                                                                                             |                                     | ADDITIONS                             |                                       |                       |
| Description                                                                                                      | Balance at Beginningof  Period | (1) Charged to Costsand Expenses | (2) Charged to OtherAccounts-Describe | Deductions –Describe | Balance at Endof Period |
|  Fiscal year ended January 1, 2011:Deducted from asset accounts:  Allowance for doubtful accounts | $392,000                                 | $177,186                              |                                       | $50,186  (a)     | $519,000 |
|                                                                                                             |                                     |                                  |                                       |                       |   |
| Fiscal year ended January 2, 2010:Deducted from asset accounts:  Allowance for doubtful accounts       | $328,000                                 | $320,716                              |                                       | $256,716  (a)    | $392,000 |
|                                                                                                             |                                     |                                  |                                       |                       |   |
| Fiscal year ended January 3, 2009:Deducted from asset accounts:  Allowance for doubtful accounts       | $342,000                                 | $132,988                              |                                       | $146,988  (a)    | $328,000 |

----

| Dated: March 11, 2011 | THE EASTERN COMPANY                                                                       |
|-----------------------|-------------------------------------------------------------------------------------------|
|                  |                                                                                      |
|                  | By /s/ John L. Sullivan IIIJohn L. Sullivan IIIVice President and Chief Financial Officer |

| /s/ Leonard F. LeganzaLeonard F. LeganzaChairman, Presidentand Chief Executive Officer | March 11, 2011 |
|----------------------------------------------------------------------------------------|----------------|
|                                                                                   |           |
| /s/ John L. Sullivan IIIJohn L. Sullivan IIIVice President and Chief Financial Officer | March 11, 2011 |
|                                                                                   |           |
| /s/ Kenneth R. SapackKenneth R. SapackChief Accounting Officer                         | March 11, 2011 |
|                                                                                   |           |
| /s/ John W. EveretsJohn W. EveretsDirector                                             | March 11, 2011 |
|                                                                                   |           |
| /s/ Charles W. HenryCharles W. HenryDirector                                           | March 11, 2011 |
|                                                                                   |           |
| /s/ David C. RobinsonDavid C. RobinsonDirector                                         | March 11, 2011 |
|                                                                                   |           |
| /s/ Donald S. Tuttle IIIDonald S. Tuttle IIIDirector                                   | March 11, 2011 |

----

|   | (3) | Restated Certificate of Incorporation dated August 14, 1991 is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 1991 and the Registrant’s Form 8-K filed on February 13, 1991. Amended and restated bylaws dated July 29, 1996 is incorporated by reference to the Registrant’s Form 8-K filed on July 29, 1996. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Rights Agreement entered into between the Registrant and American Stock Transfer & Trust Company dated as of July 23, 2008 and Letter to all shareholders of the Registrant, dated June 23, 2008 together with Press Release dated June 23, 2008 describing the issuance of a Purchase Rights dividend distribution are incorporated by reference to the Registrant’s Form 8-K filed on July 23, 2008. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (10)   (a) | The Eastern Company 1995 Executive Stock Incentive Plan effective as of April 26, 1995 incorporated by reference to the Registrant’s Form S-8 filed on February 7, 1997. |
|--------|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | The Eastern Company Directors Fee Program effective as of October 1, 1996 incorporated by reference to the Registrant’s Form S-8 filed on February 7, 1997, as amended by Amendment No.1 and Amendment No. 2 are incorporated by reference to the Registrant’s Form 10-K filed on March 29, 2000 and Amendment No. 3 is incorporated by reference to the Registrant’s Form 10-K filed on March 22, 2004. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Supplemental Retirement Plan dated September 9, 1998 with Leonard F. Leganza is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended January 2, 1999, as amended by amendment incorporated by reference to the Registrant’s Current Report on Form 8-K dated December 14, 2007. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | The Eastern Company 2000 Executive Stock Incentive Plan effective July 2000 is incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 30, 2000. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | The Eastern Company 2010 Executive Stock Incentive Plan effective April 28, 2010 is incorporated by reference to the Registrant’s Form S-8 filed on September 2, 2010. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | Employment Agreement dated February 22, 2005 with Leonard F. Leganza is incorporated by reference to the Registrant’s Current Report on Form 8-K dated February 22, 2005, as amended by amendments incorporated by reference to the Registrant’s Current Report on Form 8-K dated October 25, 2007, Current Report on Form 8-K dated December 14, 2007, Current Report on Form 8-K dated October 22, 2008, Current Report on Form 8-K dated October 22, 2009 and Current Report on Form 8-K dated October 28, 2010. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (g) | The Eastern Company 2011 Executive Incentive Program is incorporated by reference to the Registrant’s Current Report on Form 8-K dated February 10, 2011. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (14) | The Eastern Company Code of Business Conduct and Ethics is incorporated by reference. The Eastern Company Code of Business Conduct and Ethics is available free of charge on the Company’s Internet website at http://www.easterncompany.com under the section labeled “Corporate Governance”. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (21) | List of subsidiaries as follows: |
|--------|------|----------------------------------|

|   | Eberhard Hardware Mfg. Ltd., a private corporation organized under the laws of the Province of Ontario, Canada. |
|--------|-----------------------------------------------------------------------------------------------------------------|

|   | Canadian Commercial Vehicles Corporation, a private corporation organized under the laws of the Province of British Columbia, Canada. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | Eastern Industrial Ltd., a private corporation organized under the laws of the Peoples Republic of China. |
|--------|-----------------------------------------------------------------------------------------------------------|

|   | World Lock Co. Ltd., a private corporation organized under the laws of Taiwan (The Republic of China). |
|--------|--------------------------------------------------------------------------------------------------------|

|   | Sesamee Mexicana, Subsidiary, a private corporation organized under the laws of Mexico. |
|--------|-----------------------------------------------------------------------------------------|

|   | World Security Industries Co. Ltd., a private corporation organized under the laws of Hong Kong. |
|--------|--------------------------------------------------------------------------------------------------|

|   | (23) | Consents of independent registered public accounting firms attached hereto on pages 67 and 68. |
|--------|------|------------------------------------------------------------------------------------------------|

|   | (31) | Certifications required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (32) | Certifications pursuant to Rule 13a-14(b) and 18 USC 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------|

|   | (99) | Letter to our shareholders from the Annual Report 2011 is attached on page 72. |
|--------|------|--------------------------------------------------------------------------------|