x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 36-3352497 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
1400 Toastmaster Drive, Elgin, Illinois | 60120 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | (847) 741-3300 |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o |
Smaller reporting company o | Emerging growth company o |
DESCRIPTION | PAGE | |
PART I. FINANCIAL INFORMATION | ||
Item 1. | ||
CONDENSED CONSOLIDATED BALANCE SHEETS JULY 1, 2017 and DECEMBER 31, 2016 | ||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME JULY 1, 2017 and JULY 2, 2016 | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS JULY 1, 2017 and JULY 2, 2016 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 2. | ||
Item 6. |
ASSETS | Jul 1, 2017 | Dec 31, 2016 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 64,873 | $ | 68,485 | |||
Accounts receivable, net of reserve for doubtful accounts of $12,399 and $12,600 | 327,148 | 325,868 | |||||
Inventories, net | 421,934 | 368,243 | |||||
Prepaid expenses and other | 50,798 | 42,704 | |||||
Prepaid taxes | 19,566 | 6,399 | |||||
Total current assets | 884,319 | 811,699 | |||||
Property, plant and equipment, net of accumulated depreciation of $128,408 and $119,435 | 264,786 | 221,571 | |||||
Goodwill | 1,134,994 | 1,092,722 | |||||
Other intangibles, net of amortization of $186,606 and $168,369 | 774,976 | 696,171 | |||||
Long-term deferred tax assets | 46,876 | 51,699 | |||||
Other assets | 34,584 | 43,274 | |||||
Total assets | $ | 3,140,535 | $ | 2,917,136 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 4,860 | $ | 5,883 | |||
Accounts payable | 148,913 | 146,921 | |||||
Accrued expenses | 290,855 | 335,605 | |||||
Total current liabilities | 444,628 | 488,409 | |||||
Long-term debt | 798,414 | 726,243 | |||||
Long-term deferred tax liability | 102,621 | 77,760 | |||||
Accrued pension benefits | 323,795 | 322,988 | |||||
Other non-current liabilities | 43,517 | 36,418 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued | — | — | |||||
Common stock, $0.01 par value; 95,000,000 shares authorized; 62,693,417 and 62,445,315 shares issued in 2017 and 2016, respectively | 145 | 144 | |||||
Paid-in capital | 374,121 | 355,287 | |||||
Treasury stock, at cost; 5,082,646 and 4,905,549 shares in 2017 and 2016, respectively | (229,925 | ) | (205,280 | ) | |||
Retained earnings | 1,547,761 | 1,399,490 | |||||
Accumulated other comprehensive loss | (264,542 | ) | (284,323 | ) | |||
Total stockholders' equity | 1,427,560 | 1,265,318 | |||||
Total liabilities and stockholders' equity | $ | 3,140,535 | $ | 2,917,136 |
Three Months Ended | Six Months Ended | ||||||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||||||
Net sales | $ | 579,343 | $ | 580,456 | $ | 1,109,640 | $ | 1,096,811 | |||||||
Cost of sales | 344,735 | 346,954 | 665,582 | 666,536 | |||||||||||
Gross profit | 234,608 | 233,502 | 444,058 | 430,275 | |||||||||||
Selling, general and administrative expenses | 113,020 | 115,199 | 219,666 | 224,991 | |||||||||||
Restructuring expenses | 11,494 | 6,390 | 13,219 | 6,996 | |||||||||||
Gain on sale of plant | (12,042 | ) | — | (12,042 | ) | — | |||||||||
Income from operations | 122,136 | 111,913 | 223,215 | 198,288 | |||||||||||
Interest expense and deferred financing amortization, net | 5,702 | 6,059 | 11,507 | 11,335 | |||||||||||
Other expense (income), net | 302 | (3,838 | ) | 2,169 | (4,638 | ) | |||||||||
Earnings before income taxes | 116,132 | 109,692 | 209,539 | 191,591 | |||||||||||
Provision for income taxes | 38,563 | 36,801 | 61,268 | 64,162 | |||||||||||
Net earnings | $ | 77,569 | $ | 72,891 | $ | 148,271 | $ | 127,429 | |||||||
Net earnings per share: | |||||||||||||||
Basic | $ | 1.35 | $ | 1.28 | $ | 2.59 | $ | 2.23 | |||||||
Diluted | $ | 1.35 | $ | 1.28 | $ | 2.59 | $ | 2.23 | |||||||
Weighted average number of shares | |||||||||||||||
Basic | 57,299 | 57,022 | 57,201 | 57,037 | |||||||||||
Dilutive common stock equivalents1 | — | — | — | — | |||||||||||
Diluted | 57,299 | 57,022 | 57,201 | 57,037 | |||||||||||
Comprehensive income | $ | 88,542 | $ | 54,388 | $ | 168,052 | $ | 112,187 |
Six Months Ended | |||||||
Jul 1, 2017 | Jul 2, 2016 | ||||||
Cash flows from operating activities-- | |||||||
Net earnings | $ | 148,271 | $ | 127,429 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities-- | |||||||
Depreciation and amortization | 32,315 | 31,240 | |||||
Non-cash share-based compensation | 6,505 | 11,160 | |||||
Deferred income taxes | 17,579 | 8,593 | |||||
Gain on sale of plant | (12,042 | ) | — | ||||
Impairment of equipment | 2,929 | — | |||||
Changes in assets and liabilities, net of acquisitions | |||||||
Accounts receivable, net | 17,257 | (16,745 | ) | ||||
Inventories, net | (25,607 | ) | (23,358 | ) | |||
Prepaid expenses and other assets | (17,442 | ) | (8,575 | ) | |||
Accounts payable | (10,832 | ) | 36 | ||||
Accrued expenses and other liabilities | (72,897 | ) | (34,098 | ) | |||
Net cash provided by operating activities | 86,036 | 95,682 | |||||
Cash flows from investing activities-- | |||||||
Additions to property, plant and equipment | (31,708 | ) | (13,108 | ) | |||
Proceeds on sale of plant | 14,278 | — | |||||
Acquisitions, net of cash acquired | (119,262 | ) | (212,024 | ) | |||
Net cash used in investing activities | (136,692 | ) | (225,132 | ) | |||
Cash flows from financing activities-- | |||||||
Net proceeds under Credit Facility | 70,548 | 128,500 | |||||
Net (repayments) proceeds under international credit facilities | (1,130 | ) | 26,165 | ||||
Net (repayments) under other debt arrangement | (17 | ) | (17 | ) | |||
Repurchase of treasury stock | (24,645 | ) | (4,418 | ) | |||
Excess tax (detriment) related to share-based compensation | — | (833 | ) | ||||
Net cash provided by financing activities | 44,756 | 149,397 | |||||
Effect of exchange rates on cash and cash equivalents | 2,288 | (1,444 | ) | ||||
Changes in cash and cash equivalents-- | |||||||
Net (decrease) increase in cash and cash equivalents | (3,612 | ) | 18,503 | ||||
Cash and cash equivalents at beginning of year | 68,485 | 55,528 | |||||
Cash and cash equivalents at end of period | $ | 64,873 | $ | 74,031 | |||
Non-cash investing and financing activities: | |||||||
Stock issuance related to the acquisition of CVP Systems | $ | 12,330 | $ | — |
1) | Summary of Significant Accounting Policies |
A) | Basis of Presentation |
B) | Non-Cash Share-Based Compensation |
C) | Income Taxes |
United States - federal | 2012 – 2016 |
United States - states | 2007 – 2016 |
Australia | 2012 – 2016 |
Brazil | 2012 – 2016 |
Canada | 2007 – 2016 |
China | 2007 – 2016 |
Czech Republic | 2014 – 2016 |
Denmark | 2012 – 2016 |
Estonia | 2013 – 2016 |
France | 2014 – 2016 |
Germany | 2014 – 2016 |
India | 2013 – 2016 |
Ireland | 2010 – 2016 |
Italy | 2012 – 2016 |
Luxembourg | 2012 – 2016 |
Mexico | 2011 – 2016 |
Netherlands | 2005 – 2016 |
Philippines | 2014 – 2016 |
Poland | 2011 – 2016 |
Romania | 2007 – 2016 |
Spain | 2012 – 2016 |
Sweden | 2010 – 2016 |
Switzerland | 2008 – 2016 |
Taiwan | 2012 – 2012 |
United Kingdom | 2015 – 2016 |
D) | Fair Value Measures |
Fair Value Level 1 | Fair Value Level 2 | Fair Value Level 3 | Total | ||||||||||||
As of July 1, 2017 | |||||||||||||||
Financial Assets: | |||||||||||||||
Interest rate swaps | $ | — | $ | 7,894 | $ | — | $ | 7,894 | |||||||
Financial Liabilities: | |||||||||||||||
Interest rate swaps | $ | — | $ | 3 | $ | — | $ | 3 | |||||||
Contingent consideration | $ | — | $ | — | $ | 4,108 | $ | 4,108 | |||||||
As of December 31, 2016 | |||||||||||||||
Financial Assets: | |||||||||||||||
Interest rate swaps | $ | — | $ | 8,842 | $ | — | $ | 8,842 | |||||||
Financial Liabilities: | |||||||||||||||
Interest rate swaps | $ | — | $ | 100 | $ | — | $ | 100 | |||||||
Contingent consideration | $ | — | $ | — | $ | 6,612 | $ | 6,612 |
2) | Acquisitions and Purchase Accounting |
(as initially reported) May 20, 2016 | Measurement Period Adjustments | (as adjusted) May 20, 2016 | |||||||||
Current assets | $ | 746 | (65 | ) | 681 | ||||||
Goodwill | 1,816 | 183 | 1,999 | ||||||||
Current liabilities | (934 | ) | (62 | ) | (996 | ) | |||||
Other non-current liabilities | (628 | ) | (56 | ) | (684 | ) | |||||
Consideration paid at closing | $ | 1,000 | $ | — | $ | 1,000 | |||||
Deferred payments | 1,559 | 118 | 1,677 | ||||||||
Net assets acquired and liabilities assumed | $ | 2,559 | $ | 118 | $ | 2,677 |
(as initially reported) May 31, 2016 | Measurement Period Adjustments | (as adjusted) May 31, 2016 | |||||||||
Cash | $ | 22,620 | $ | 2,888 | $ | 25,508 | |||||
Current assets | 41,602 | (2,249 | ) | 39,353 | |||||||
Property, plant and equipment | 19,868 | 8,598 | 28,466 | ||||||||
Goodwill | 76,220 | (35,656 | ) | 40,564 | |||||||
Other intangibles | 82,450 | 41,810 | 124,260 | ||||||||
Other assets | 1,358 | 170 | 1,528 | ||||||||
Current liabilities | (11,779 | ) | (10,801 | ) | (22,580 | ) | |||||
Other non-current liabilities | (616 | ) | (4,064 | ) | (4,680 | ) | |||||
Net assets acquired and liabilities assumed | $ | 231,723 | $ | 696 | $ | 232,419 |
(as initially reported) May 1, 2017 | |||
Cash | $ | 2,514 | |
Current assets | 8,594 | ||
Property, plant and equipment | 656 | ||
Goodwill | 7,289 | ||
Other intangibles | 4,900 | ||
Current liabilities | (4,424 | ) | |
Long term deferred tax liability | (1,840 | ) | |
Net assets acquired and liabilities assumed | $ | 17,689 |
(as initially reported) June 30, 2017 | |||
Cash | $ | 621 | |
Current assets | 5,973 | ||
Property, plant and equipment | 238 | ||
Goodwill | 20,297 | ||
Other intangibles | 8,700 | ||
Current liabilities | (1,532 | ) | |
Long term deferred tax liability | (3,168 | ) | |
Net assets acquired and liabilities assumed | $ | 31,129 |
(as initially reported) June 30, 2017 | |||
Cash | $ | 4,569 | |
Current assets | 22,686 | ||
Property, plant and equipment | 9,128 | ||
Other assets | 1,170 | ||
Goodwill | 33,785 | ||
Other intangibles | 34,175 | ||
Current liabilities | (11,782 | ) | |
Long term deferred tax liability | (7,751 | ) | |
Other non-current liabilities | (42 | ) | |
Net assets acquired and liabilities assumed | $ | 85,938 |
Six Months Ended | |||||||
July 1, 2017 | July 2, 2016 | ||||||
Net sales | $ | 1,153,875 | $ | 1,212,108 | |||
Net earnings | 150,513 | 133,583 | |||||
Net earnings per share: | |||||||
Basic | 2.63 | 2.34 | |||||
Diluted | 2.63 | 2.34 |
3) | Litigation Matters |
4) | Recently Issued Accounting Standards |
5) | Other Comprehensive Income |
Currency Translation Adjustment | Pension Benefit Costs | Unrealized Gain/(Loss) Interest Rate Swap | Total | ||||||||||||
Balance as of December 31, 2016 | $ | (116,411 | ) | $ | (173,394 | ) | $ | 5,482 | $ | (284,323 | ) | ||||
Other comprehensive income before reclassification | 29,456 | (9,174 | ) | 305 | 20,587 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | (806 | ) | (806 | ) | |||||||||
Net current-period other comprehensive income | $ | 29,456 | $ | (9,174 | ) | $ | (501 | ) | $ | 19,781 | |||||
Balance as of July 1, 2017 | $ | (86,955 | ) | $ | (182,568 | ) | $ | 4,981 | $ | (264,542 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||||||
Net earnings | $ | 77,569 | $ | 72,891 | $ | 148,271 | $ | 127,429 | |||||||
Currency translation adjustment | 18,621 | (19,579 | ) | 29,456 | (19,975 | ) | |||||||||
Pension liability adjustment, net of tax | (6,647 | ) | 1,078 | (9,174 | ) | 4,856 | |||||||||
Unrealized gain on interest rate swaps, net of tax | (1,001 | ) | (2 | ) | (501 | ) | (123 | ) | |||||||
Comprehensive income | $ | 88,542 | $ | 54,388 | $ | 168,052 | $ | 112,187 |
6) | Inventories |
Jul 1, 2017 | Dec 31, 2016 | ||||||
(in thousands) | |||||||
Raw materials and parts | $ | 187,077 | $ | 154,647 | |||
Work-in-process | 38,556 | 35,975 | |||||
Finished goods | 196,301 | 177,621 | |||||
$ | 421,934 | $ | 368,243 |
7) | Goodwill |
Commercial Foodservice | Food Processing | Residential Kitchen | Total | ||||||||||||
Balance as of December 31, 2016 | $ | 542,090 | $ | 134,680 | $ | 415,952 | $ | 1,092,722 | |||||||
Goodwill acquired during the year | $ | 33,785 | $ | 27,586 | $ | — | $ | 61,371 | |||||||
Measurement period adjustments to goodwill acquired in prior year | (36,408 | ) | 41 | — | (36,367 | ) | |||||||||
Exchange effect | 4,124 | 2,660 | 10,484 | 17,268 | |||||||||||
Balance as of July 1, 2017 | $ | 543,591 | $ | 164,967 | $ | 426,436 | $ | 1,134,994 |
8) | Intangibles |
July 1, 2017 | December 31, 2016 | ||||||||||||||||||
Estimated Weighted Avg Remaining Life | Gross Carrying Amount | Accumulated Amortization | Estimated Weighted Avg Remaining Life | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||
Amortized intangible assets: | |||||||||||||||||||
Customer lists | 7.3 | $ | 301,082 | $ | (153,598 | ) | 5.5 | $ | 251,025 | $ | (136,895 | ) | |||||||
Backlog | 0.3 | 16,285 | (15,276 | ) | 0.0 | 13,550 | (13,550 | ) | |||||||||||
Developed technology | 4.1 | 21,640 | (17,732 | ) | 4.8 | 24,874 | (17,924 | ) | |||||||||||
$ | 339,007 | $ | (186,606 | ) | $ | 289,449 | $ | (168,369 | ) | ||||||||||
Indefinite-lived assets: | |||||||||||||||||||
Trademarks and tradenames | $ | 622,575 | $ | 575,091 |
2017 | $ | 33,436 | |
2018 | 28,033 | ||
2019 | 23,873 | ||
2020 | 21,282 | ||
2021 | 18,572 | ||
Thereafter | 27,205 | ||
$ | 152,401 |
9) | Accrued Expenses |
Jul 1, 2017 | Dec 31, 2016 | ||||||
(in thousands) | |||||||
Accrued payroll and related expenses | $ | 62,232 | $ | 74,505 | |||
Accrued warranty | 48,965 | 40,851 | |||||
Advanced customer deposits | 40,394 | 41,735 | |||||
Accrued customer rebates | 29,972 | 49,923 | |||||
Accrued professional fees | 13,460 | 16,605 | |||||
Accrued sales and other tax | 13,093 | 13,565 | |||||
Accrued agent commission | 11,644 | 12,834 | |||||
Accrued product liability and workers compensation | 11,557 | 11,417 | |||||
Product recall | 6,154 | 7,003 | |||||
Restructuring | 3,945 | 2,295 | |||||
Other accrued expenses | 49,439 | 64,872 | |||||
$ | 290,855 | $ | 335,605 |
10) | Warranty Costs |
Six Months Ended | |||
Jul 1, 2017 | |||
(in thousands) | |||
Balance as of December 31, 2016 | $ | 40,851 | |
Warranty reserve related to acquisitions | 6,288 | ||
Warranty expense | 27,611 | ||
Warranty claims | (25,785 | ) | |
Balance as of July 1, 2017 | $ | 48,965 |
11) | Financing Arrangements |
Jul 1, 2017 | Dec 31, 2016 | ||||||
(in thousands) | |||||||
Credit Facility | $ | 797,647 | $ | 725,500 | |||
Other international credit facilities | 5,432 | 6,413 | |||||
Other debt arrangement | 195 | 213 | |||||
Total debt | $ | 803,274 | $ | 732,126 | |||
Less: Current maturities of long-term debt | 4,860 | 5,883 | |||||
Long-term debt | $ | 798,414 | $ | 726,243 |
Jul 1, 2017 | Dec 31, 2016 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Total debt | $ | 803,274 | $ | 803,274 | $ | 732,126 | $ | 732,126 |
12) | Financial Instruments |
Condensed Consolidated Balance Sheet Presentation | Jul 1, 2017 | Dec 31, 2016 | |||||||
Fair value | Other assets | $ | 7,894 | $ | 8,842 | ||||
Fair value | Accrued expenses | $ | (3 | ) | $ | (100 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||||
Presentation of Gain/(loss) | Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | |||||||||||||
Gain/(loss) recognized in accumulated other comprehensive income | Other comprehensive income | $ | (1,955 | ) | $ | (211 | ) | $ | (1,643 | ) | $ | (730 | ) | ||||
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion) | Interest expense | $ | (284 | ) | $ | (208 | ) | $ | (806 | ) | $ | (525 | ) | ||||
Gain/(loss) recognized in income (ineffective portion) | Other expense | $ | (8 | ) | $ | (4 | ) | $ | (15 | ) | $ | 7 |
13) | Segment Information |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||||||||||||||||||
Sales | Percent | Sales | Percent | Sales | Percent | Sales | Percent | ||||||||||||||||||||
Business Segments: | |||||||||||||||||||||||||||
Commercial Foodservice | $ | 333,753 | 57.6 | % | $ | 321,028 | 55.3 | % | $ | 646,002 | 58.2 | % | $ | 600,014 | 54.7 | % | |||||||||||
Food Processing | 92,368 | 15.9 | 83,475 | 14.4 | 169,644 | 15.3 | 162,111 | 14.8 | |||||||||||||||||||
Residential Kitchen | 153,222 | 26.5 | 175,953 | 30.3 | 293,994 | 26.5 | 334,686 | 30.5 | |||||||||||||||||||
Total | $ | 579,343 | 100.0 | % | $ | 580,456 | 100.0 | % | $ | 1,109,640 | 100.0 | % | $ | 1,096,811 | 100.0 | % |
Commercial Foodservice | Food Processing | Residential Kitchen | Corporate and Other(2) | Total | |||||||||||||||
Three Months Ended July 1, 2017 | |||||||||||||||||||
Net sales | $ | 333,753 | $ | 92,368 | $ | 153,222 | $ | — | $ | 579,343 | |||||||||
Income (loss) from operations | 95,007 | 24,199 | 22,006 | (19,076 | ) | 122,136 | |||||||||||||
Depreciation and amortization expense | 8,496 | 1,657 | 7,627 | 478 | 18,258 | ||||||||||||||
Net capital expenditures | 20,764 | 1,308 | 1,661 | (301 | ) | 23,432 | |||||||||||||
Six Months Ended July 1, 2017 | |||||||||||||||||||
Net sales | $ | 646,002 | $ | 169,644 | $ | 293,994 | $ | — | $ | 1,109,640 | |||||||||
Income (loss) from operations | 175,548 | 42,188 | 40,918 | (35,439 | ) | 223,215 | |||||||||||||
Depreciation and amortization expense | 13,478 | 3,044 | 14,834 | 959 | 32,315 | ||||||||||||||
Net capital expenditures | 26,749 | 1,946 | 2,943 | 70 | 31,708 | ||||||||||||||
Total assets | $ | 1,495,316 | $ | 393,674 | $ | 1,205,676 | $ | 45,869 | $ | 3,140,535 | |||||||||
Three Months Ended July 2, 2016 | |||||||||||||||||||
Net sales | $ | 321,028 | $ | 83,475 | $ | 175,953 | $ | — | $ | 580,456 | |||||||||
Income (loss) from operations | 93,732 | 19,186 | 22,364 | (23,369 | ) | 111,913 | |||||||||||||
Depreciation and amortization expense | 5,575 | 1,520 | 8,238 | 977 | 16,310 | ||||||||||||||
Net capital expenditures | 3,322 | 884 | 1,078 | 131 | 5,415 | ||||||||||||||
Six Months Ended July 2, 2016 | |||||||||||||||||||
Net sales | $ | 600,014 | $ | 162,111 | $ | 334,686 | $ | — | $ | 1,096,811 | |||||||||
Income (loss) from operations | 170,301 | 37,049 | 32,215 | (41,277 | ) | 198,288 | |||||||||||||
Depreciation and amortization expense | 9,946 | 2,958 | 16,942 | 1,394 | 31,240 | ||||||||||||||
Net capital expenditures | 7,506 | 2,682 | 2,789 | 131 | 13,108 | ||||||||||||||
Total assets | $ | 1,367,664 | $ | 321,694 | $ | 1,195,379 | $ | 46,933 | $ | 2,931,670 | |||||||||
Jul 1, 2017 | Jul 2, 2016 | ||||||
United States and Canada | $ | 202,789 | $ | 170,854 | |||
Asia | 15,370 | 15,582 | |||||
Europe and Middle East | 127,053 | 64,199 | |||||
Latin America | 1,034 | 1,151 | |||||
Total international | $ | 143,457 | $ | 80,932 | |||
$ | 346,246 | $ | 251,786 |
Three Months Ended | Six Months Ended | ||||||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||||||
United States and Canada | $ | 394,004 | $ | 381,369 | $ | 754,105 | $ | 707,310 | |||||||
Asia | 44,873 | 43,796 | 87,565 | 81,590 | |||||||||||
Europe and Middle East | 115,063 | 134,484 | 223,767 | 271,088 | |||||||||||
Latin America | 25,403 | 20,807 | 44,203 | 36,823 | |||||||||||
Total international | $ | 185,339 | $ | 199,087 | $ | 355,535 | $ | 389,501 | |||||||
$ | 579,343 | $ | 580,456 | $ | 1,109,640 | $ | 1,096,811 |
14) | Employee Retirement Plans |
(a) | Pension Plans |
Three Months Ended | Six Months Ended | |||||||||||||||
July 1, 2017 | July 2, 2016 | July 1, 2017 | July 2, 2016 | |||||||||||||
Net Periodic Pension Benefit: | ||||||||||||||||
Service cost | $ | 996 | $ | 888 | $ | 1,960 | $ | 1,777 | ||||||||
Interest cost | 8,017 | 10,654 | 15,781 | 21,324 | ||||||||||||
Expected return on assets | (17,323 | ) | (17,579 | ) | (34,097 | ) | (35,249 | ) | ||||||||
Amortization of net loss (gain) | 743 | — | 1,463 | — | ||||||||||||
Pension settlement | (49 | ) | — | (97 | ) | — | ||||||||||
$ | (7,616 | ) | $ | (6,037 | ) | $ | (14,990 | ) | $ | (12,148 | ) |
(b) | Defined Contribution Plans |
15) | Restructuring |
Severance/Benefits | Facilities/Operations | Other | Total | |||||||||||||
Balance as of December 31, 2016 | $ | 5,145 | $ | 2,032 | $ | 69 | $ | 7,246 | ||||||||
Expenses | 5,825 | 4,919 | 286 | 11,030 | ||||||||||||
Exchange | 391 | 268 | 6 | 665 | ||||||||||||
Payments/Utilization | (3,212 | ) | (3,996 | ) | (276 | ) | (7,484 | ) | ||||||||
Balance as of July 1, 2017 | $ | 8,149 | $ | 3,223 | $ | 85 | $ | 11,457 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||||||||||||||||||
Sales | Percent | Sales | Percent | Sales | Percent | Sales | Percent | ||||||||||||||||||||
Business Segments: | |||||||||||||||||||||||||||
Commercial Foodservice | $ | 333,753 | 57.6 | % | $ | 321,028 | 55.3 | % | $ | 646,002 | 58.2 | % | $ | 600,014 | 54.7 | % | |||||||||||
Food Processing | 92,368 | 15.9 | 83,475 | 14.4 | 169,644 | 15.3 | 162,111 | 14.8 | |||||||||||||||||||
Residential Kitchen | 153,222 | 26.5 | 175,953 | 30.3 | 293,994 | 26.5 | 334,686 | 30.5 | |||||||||||||||||||
Total | $ | 579,343 | 100.0 | % | $ | 580,456 | 100.0 | % | $ | 1,109,640 | 100.0 | % | $ | 1,096,811 | 100.0 | % |
Three Months Ended | Six Months Ended | ||||||||||
Jul 1, 2017 | Jul 2, 2016 | Jul 1, 2017 | Jul 2, 2016 | ||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of sales | 59.5 | 59.8 | 60.0 | 60.8 | |||||||
Gross profit | 40.5 | 40.2 | 40.0 | 39.2 | |||||||
Selling, general and administrative expenses | 19.5 | 19.8 | 19.8 | 20.5 | |||||||
Restructuring expenses | 2.0 | 1.1 | 1.2 | 0.7 | |||||||
Gain on sale of plant | (2.1 | ) | — | (1.1 | ) | — | |||||
Income from operations | 21.1 | 19.3 | 20.1 | 18.0 | |||||||
Interest expense and deferred financing amortization, net | 1.0 | 1.0 | 1.0 | 1.0 | |||||||
Other expense (income), net | 0.1 | (0.6 | ) | 0.2 | (0.4 | ) | |||||
Earnings before income taxes | 20.0 | 18.9 | 18.9 | 17.4 | |||||||
Provision for income taxes | 6.7 | 6.3 | 5.5 | 5.8 | |||||||
Net earnings | 13.3 | % | 12.6 | % | 13.4 | % | 11.6 | % |
• | Net sales of the Commercial Foodservice Equipment Group increased by $12.8 million, or 4.0%, to $333.8 million in the three months period ended July 1, 2017, as compared to $321.0 million in the prior year quarter. Net sales resulting from the acquisition of Follett, which was acquired on May 31, 2016, accounted for an increase of $27.0 million during the three months period ended July 1, 2017. Excluding the impact of this acquisition, net sales of the Commercial Foodservice Equipment Group decreased $14.2 million, or 4.4%, as compared to the prior year quarter. Excluding the impact of foreign exchange and acquisition, net sales decreased 3.3% at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales increase of $13.3 million, or 6.1%, to $230.8 million, as compared to $217.5 million in the prior year quarter. This includes an increase of $23.7 million from the recent acquisition. Excluding the acquisition, the net decrease in sales was $10.4 million, or 4.8%. The domestic sales reduction reflects lower sales to restaurant chains in comparison to the prior year. International sales decreased $0.5 million, or 0.5%, to $103.0 million, as compared to $103.5 million in the prior year quarter. This includes an increase of $3.3 million from the recent acquisition offset by a reduction of $3.6 million due to the unfavorable impact of exchange rates. |
• | Net sales of the Food Processing Equipment Group increased by $8.9 million, or 10.7%, to $92.4 million in the three months period ended July 1, 2017, as compared to $83.5 million in the prior year quarter. Net sales resulting from the acquisition of Burford, which was acquired on May 1, 2017, accounted for an increase of $2.2 million during the three months period ended July 1, 2017. Excluding the impact of this acquisition, net sales of the Food Processing Equipment Group increased $6.7 million, or 8.0%, as compared to the prior year quarter. Excluding the impact of foreign exchange and acquisition, net sales increased 8.5% at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $6.7 million, or 10.5%, to $70.7 million, as compared to $64.0 million in the prior year quarter. This includes an increase of $1.8 million from the recent acquisition. International sales increased $2.2 million, or 11.3%, to $21.7 million, as compared to $19.5 million in the prior year quarter. This includes an increase of $0.4 million from the recent acquisition offset by a reduction of $0.4 million due to the unfavorable impact of exchange rates. |
• | Net sales of the Residential Kitchen Equipment Group decreased by $22.8 million, or 13.0%, to $153.2 million in three months period ended July 1, 2017, as compared to $176.0 million in the prior year quarter. Excluding the impact of foreign exchange, net sales of the Residential Kitchen Equipment Group decreased 9.1%, as compared to the prior year quarter. This decrease is net of price increases, which are estimated to have added 2.0% to net sales in comparison to the prior year. Domestically, the company realized a sales decrease of $7.3 million, or 7.3%, to $92.6 million, as compared to $99.9 million in the prior year quarter. International sales decreased $15.4 million, or 20.3% to $60.6 million, as compared to $76.0 million in the prior year quarter. This includes $6.7 million of unfavorable impact of exchange rates. The sales decrease reflects the impact of product rationalization at the AGA Group in connection with prior year acquisition integration initiatives. Sales also continue to be affected by the 2015 recall of certain Viking products manufactured prior to 2013 and Middleby's acquisition of Viking. |
• | Gross profit at the Commercial Foodservice Equipment Group decreased by $3.0 million, or 2.1%, to $137.4 million in three months period ended July 1, 2017, as compared to $140.4 million in the prior year quarter. Gross profit from the acquisition of Follett accounted for approximately $9.5 million of the increase in gross profit during the period. Excluding the recent acquisition, gross profit decreased by approximately $12.5 million due to lower sales volume and product mix in comparison to prior year quarter. The impact of foreign exchange rates reduced gross profit by approximately $1.0 million. The gross margin rate decreased to 41.2% as compared to 43.7% in the prior year quarter due to lower margins at Follett. |
• | Gross profit at the Food Processing Equipment Group increased by $6.3 million, or 19.6%, to $38.4 million in the three months period ended July 1, 2017, as compared to $32.1 million in the prior year quarter. Gross profit from the acquisition of Burford accounted for approximately $0.5 million of the increase in gross profit during the period. The impact of foreign exchange rates reduced gross profit by approximately $0.6 million. The gross margin rate increased to 41.6% as compared to 38.4% in the prior year quarter, reflecting the impact of higher sales volume and more favorable sales mix . |
• | Gross profit at the Residential Kitchen Equipment Group decreased by $1.6 million, or 2.6%, to $60.9 million in the three months period ended July 1, 2017, as compared to $62.5 million in the prior year quarter. The impact of foreign exchange rates reduced gross profit by approximately $2.4 million. The gross margin rate increased to 39.8% as compared to 35.5% in the prior year quarter, due to the impact of improved margins at the AGA Group, Uline and Lynx as a result of cost reduction and acquisition integration initiatives. |
• | Net sales of the Commercial Foodservice Equipment Group increased by $46.0 million, or 7.7%, to $646.0 million in the six months period ended July 1, 2017, as compared to $600.0 million in the prior year period. Net sales resulting from the acquisition of Follett, which was acquired on May 31, 2016, accounted for an increase of $71.6 million during the six months period ended July 1, 2017. Excluding the impact of this acquisition, net sales of the Commercial Foodservice Equipment Group decreased $25.6 million, or 4.3%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisition, net sales decreased 3.0% at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales increase of $46.2 million, or 11.5%, to $448.3 million, as compared to $402.1 million in the prior year period. This includes an increase of $63.8 million from recent acquisition. Excluding the acquisition, the net decrease in domestic sales was $17.6 million, or 4.4%. Domestic sales reflect the impact of several large rollouts with major restaurant chain customers in the prior year period. International sales decreased $0.2 million, or 0.1%, to $197.7 million, as compared to $197.9 million in the prior year period. This includes an increase of $7.8 million from the recent acquisitions, offset by $7.8 million related to the unfavorable impact of exchange rates. |
• | Net sales of the Food Processing Equipment Group increased by $7.5 million, or 4.6%, to $169.6 million in the six months period ended July 1, 2017, as compared to $162.1 million in the prior year period. Net sales from the acquisition of Burford, which was acquired on May 1, 2017, accounted for an increase of $2.2 million during the six months period ended July 1, 2017. Excluding the impact of this acquisition, net sales of the Food Processing Equipment Group increased $5.3 million, or 3.3%. Excluding the impact of foreign exchange and acquisition, net sales increased 3.9% at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $9.3 million, or 7.6%, to $131.8 million, as compared to $122.5 million in the prior year period. This includes an increase of $1.8 million from the recent acquisition. International sales decreased $1.8 million, or 4.5%, to $37.8 million, as compared to $39.6 million in the prior year period. This includes an increase of $0.4 million from the recent acquisition offset by $1.1 million related to the unfavorable impact of exchange rates. |
• | Net sales of the Residential Kitchen Equipment Group decreased by $40.7 million, or 12.2%, to $294.0 million in the six months period ended July 1, 2017, as compared to $334.7 million in the prior year period. Excluding the impact of foreign exchange, net sales decreased 7.6% at the Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of $8.7 million, or 4.8%, to $174.0 million, as compared to $182.7 million in the prior year period. International sales decreased $32.0 million, or 21.1%, to $120.0 million, as compared to $152.0 million in the prior year quarter, including a reduction of $15.2 million related to the unfavorable impact of exchange rates. The sales decrease reflects the impact of product rationalization at the AGA Group in connection with prior year acquisition integration initiatives. Sales also continue to be affected by the 2015 recall of certain Viking products manufactured prior to 2013 and Middleby's acquisition of Viking. |
• | Gross profit at the Commercial Foodservice Equipment Group increased by $8.8 million, or 3.4%, to $265.1 million in the six months period ended July 1, 2017, as compared to $256.3 million in the prior year period. Gross profit from the acquisition of Follett accounted for approximately $26.5 million of the increase in gross profit during the period. Excluding the recent acquisitions, gross profit decreased by approximately $17.7 million due to lower sales volume and product mix in comparison to prior year period. The impact of foreign exchange rates reduced gross profit by approximately $2.1 million. The gross margin rate decreased to 41.0%, as compared to 42.7% in the prior year period, due to lower margins at Follett |
• | Gross profit at the Food Processing Equipment Group increased by $5.3 million, or 8.3%, to $68.9 million in the six months period ended July 1, 2017, as compared to $63.6 million in the prior year period. Gross profit from the acquisition of Burford accounted for approximately $0.5 million of the increase in gross profit during the period. Excluding the recent acquisition, gross profit increased by approximately $4.8 million on higher sales volume. The impact of foreign exchange rates reduced gross profit by approximately $1.1 million. The gross profit margin rate increased to 40.6%, as compared to 39.2% in the prior year period. The increase in the gross margin rate reflects higher sales volume and favorable sales mix. |
• | Gross profit at the Residential Kitchen Equipment Group increased by $1.0 million, or 0.9%, to $112.9 million in the six months period ended July 1, 2017, as compared to $111.9 million in the prior year period. The impact of foreign exchange rates reduced gross profit by approximately $5.6 million. The gross margin rate increased to 38.4%, as compared to 33.4% in the prior year period, due to the impact of improved margins at the AGA Group, Uline and Lynx as a result of cost reduction and acquisition integration initiatives. |
Twelve Month Period Ending | Variable Rate Debt | |||
July 1, 2018 | $ | 4,860 | ||
July 1, 2019 | 298 | |||
July 1, 2020 | 123 | |||
July 1, 2021 | 123 | |||
July 1, 2022 and thereafter | 797,870 | |||
$ | 803,274 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan or Program | Maximum Number of Shares that May Yet be Purchased Under the Plan or Program (1) | |||||||||
April 2 to April 29, 2017 | — | $ | — | — | 2,389,665 | |||||||
April 30 to May 27, 2017 | — | — | — | 2,389,665 | ||||||||
May 28 to July 1, 2017 | — | — | — | 2,389,665 | ||||||||
Quarter ended July 1, 2017 | — | $ | — | — | 2,389,665 |
Exhibits – The following exhibits are filed herewith: | |
Exhibit 31.1 – | Rule 13a-14(a)/15d -14(a) Certification of the Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
Exhibit 31.2 – | Rule 13a-14(a)/15d -14(a) Certification of the Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
Exhibit 32.1 – | Certification by the Principal Executive Officer of The Middleby Corporation Pursuant to Rule 13A-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002(18 U.S.C. 1350). |
Exhibit 32.2 – | Certification by the Principal Financial Officer of The Middleby Corporation Pursuant to Rule 13A-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002(18 U.S.C. 1350). |
Exhibit 101 – | Financial statements on Form 10-Q for the quarter ended July 1, 2017, filed on August 10, 2017, formatted in Extensive Business Reporting Language (XBRL); (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of earnings, (iii) condensed statements of cash flows, (iv) notes to the condensed consolidated financial statements. |
THE MIDDLEBY CORPORATION | ||||
(Registrant) | ||||
Date: | August 10, 2017 | By: | /s/ Timothy J. FitzGerald | |
Timothy J. FitzGerald | ||||
Vice President, | ||||
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of The Middleby Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
/s/ Selim A. Bassoul |
Selim A. Bassoul |
Chairman, President and |
Chief Executive Officer of The Middleby Corporation |
1. | I have reviewed this Quarterly Report on Form 10-Q of The Middleby Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
/s/ Timothy J. FitzGerald |
Timothy J. FitzGerald |
Chief Financial Officer of The Middleby Corporation |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Registrant. |
/s/ Selim A. Bassoul |
Selim A. Bassoul |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Registrant. |
/s/ Timothy J. FitzGerald |
Timothy J. FitzGerald |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Aug. 04, 2017 |
|
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 01, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | Middleby Corp | |
Entity Central Index Key | 0000769520 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 57,610,771 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Accounts receivable, reserve for doubtful accounts | $ 9,175 | $ 9,091 |
Property, plant and equipment, accumulated depreciation | $ 85,836 | $ 82,998 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 62,189,296 | 62,088,592 |
Treasury stock, shares | 4,862,264 | 4,816,912 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
|||||||
Net sales | [1] | $ 579,343 | $ 580,456 | $ 1,109,640 | $ 1,096,811 | |||||
Cost of sales | 344,735 | 346,954 | 665,582 | 666,536 | ||||||
Gross profit | 234,608 | 233,502 | 444,058 | 430,275 | ||||||
Selling, General and Administrative Expense | 113,020 | 115,199 | 219,666 | 224,991 | ||||||
Restructuring Charges | 11,494 | 6,390 | 13,219 | 6,996 | ||||||
Gain (Loss) on Disposition of Assets | (12,042) | 0 | (12,042) | 0 | ||||||
Income from operations | 122,136 | [1] | 111,913 | [1] | 223,215 | 198,288 | ||||
Net interest expense and deferred financing amortization, net | 5,702 | 6,059 | 11,507 | 11,335 | ||||||
Other (income) expense, net | 302 | (3,838) | 2,169 | (4,638) | ||||||
Earnings before income taxes | 116,132 | 109,692 | 209,539 | 191,591 | ||||||
Provision for income taxes | 38,563 | 36,801 | 61,268 | 64,162 | ||||||
Net earnings | $ 77,569 | $ 72,891 | $ 148,271 | $ 127,429 | ||||||
Net earnings per share: | ||||||||||
Basic (in usd per share) | $ 1.35 | $ 1.28 | $ 2.59 | $ 2.23 | ||||||
Diluted (in usd per share) | $ 1.35 | $ 1.28 | $ 2.59 | $ 2.23 | ||||||
Weighted average number of shares | ||||||||||
Basic (in shares) | 57,299 | 57,022 | 57,201 | 57,037 | ||||||
Dilutive common stock equivalents (in shares) | 0 | [2] | 0 | [2] | 0 | 0 | ||||
Diluted (in shares) | 57,299 | 57,022 | 57,201 | 57,037 | ||||||
Comprehensive income | $ 88,542 | $ 54,388 | $ 168,052 | $ 112,187 | ||||||
|
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies
The condensed consolidated financial statements have been prepared by The Middleby Corporation (the "company" or “Middleby”), pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements are unaudited and certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the company believes that the disclosures are adequate to make the information not misleading. These financial statements should be read in conjunction with the financial statements and related notes contained in the company's 2016 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year 2017. In the opinion of management, the financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of the company as of July 1, 2017 and December 31, 2016, the results of operations for the three and six months ended July 1, 2017 and July 2, 2016 and cash flows for the six months ended July 1, 2017 and July 2, 2016. Certain prior year amounts have been reclassified to be consistent with current year presentation, including combining selling and distribution expenses with general and administrative expenses. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, warranty reserves, insurance reserves, income tax reserves, non-cash share-based compensation and post-retirement obligations. Actual results could differ from the company's estimates.
The company estimates the fair value of market-based stock awards and stock options at the time of grant and recognizes compensation cost over the vesting period of the awards and options. Non-cash share-based compensation expense was $3.0 million and $6.2 million for the second quarter periods ended July 1, 2017 and July 2, 2016, respectively. Non-cash share-based compensation expense was $6.5 million and $11.2 million for the six months ended July 1, 2017 and July 2, 2016, respectively. During the first quarter ended April 1, 2017, the company issued restricted shares under its 2011 Stock Incentive Plan. These amounts are contingent on the attainment of certain performance objectives. The aggregate grant-date fair value of these awards was $9.6 million, based on the closing share price of the company's stock at the date of the grant.
As of December 31, 2016, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $20.3 million (of which $20 million would impact the effective tax rate if recognized) plus approximately $2.7 million of accrued interest and $4.9 million of penalties. The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of July 1, 2017, the company recognized a tax expense of $2.7 million for unrecognized tax benefits related to current year tax exposures. It is reasonably possible that the amounts of unrecognized tax benefits associated with state, federal and foreign tax positions may decrease over the next twelve months due to expiration of a statute or completion of an audit. The company believes that it is reasonably possible that approximately $2.4 million of its remaining unrecognized tax benefits may be recognized over the next twelve months as a result of lapses of statutes of limitations. The effective rate for the six months period ended July 1, 2017 was 29.2% as compared to 33.5% for the six months period ended July 2, 2016. The tax rate in the six months period ended July 1, 2017 was favorably impacted by a tax benefit from the adoption of ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting," which resulted in the recognition of excess tax benefits from share-based payments to be recognized as income tax benefit in the condensed consolidated statement of comprehensive income. A summary of the tax years that remain subject to examination in the company’s major tax jurisdictions are:
ASC 820 "Fair Value Measurements and Disclosures" defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 – Unobservable inputs based on our own assumptions. The company’s financial liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):
The contingent consideration as of July 1, 2017 relates to the earnout provisions recorded in conjunction with the acquisitions of Desmon and Induc. The contingent consideration as of December 31, 2016 relates to the earnout provisions recorded in conjunction with the acquisitions of PES, Desmon, Goldstein Eswood and Induc. The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase agreements. On a quarterly basis the company assesses the projected results for each of the acquired businesses in comparison to the earnout targets and adjusts the liability accordingly. During the six months ended July 1, 2017 the change in contingent consideration is primarily related to payments on earnout provisions. E) Consolidated Statements of Cash Flows Cash paid for interest was $11.3 million and $10.3 million for the six months ended July 1, 2017 and July 2, 2016, respectively. Cash payments totaling $75.1 million and $53.6 million were made for income taxes for the six months ended July 1, 2017 and July 2, 2016, respectively. |
Litigation Matters |
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Notes To Financial Statements [Abstract] | |
Litigation Matters | Litigation Matters From time to time, the company is subject to proceedings, lawsuits and other claims related to products, suppliers, employees, customers and competitors. The company maintains insurance to partially cover product liability, workers compensation, property and casualty, and general liability matters. The company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after assessment of each matter and the related insurance coverage. The required accrual may change in the future due to new developments or changes in approach such as a change in settlement strategy in dealing with these matters. The company does not believe that any pending litigation will have a material effect on its financial condition, results of operations or cash flows. |
Recently Issued Accounting Standards |
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Notes To Financial Statements [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the Financial Accounts Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This update amends the current guidance on revenue recognition related to contracts with customers. Under ASU No. 2014-09, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In early 2016, the FASB issued additional updates: ASU No. 2016-10, 2016-11 and 2016-12. These updates provide further guidance and clarification on specific items within the previously issued update. In July 2015, the FASB decided to delay the effective date of the new revenue standard to be effective for interim and annual periods beginning on or after December 15, 2017 for public companies. The guidance can be applied using one of two retrospective application methods. The company established a global steering committee with a project plan to analyze the impact of this standard. The company has begun surveying the businesses within each reporting segment, identifying the various revenue streams, initiating contract reviews and reviewing current accounting policies and practices to identify potential differences that would result from the application of the standard. The company will adopt this standard, as required, for fiscal year 2018 and expects to use the modified retrospective approach, with the cumulative effect, if any, recognized in the opening balance of retained earnings. The company is continuing to evaluate the impact the application of these ASU's will have, if any, on the company's financial position, results of operations or cash flows. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which is intended to simplify the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in first-out and the retail inventory method. Application of the standard, which should be applied prospectively, is required for the annual and interim periods beginning after December 15, 2016. Early adoption is permitted. We adopted this guidance on January 1, 2017 and it did not have an impact on the company's financial position, results of operations or cash flows. In November 2015, the FASB issued ASU 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes". The amendments in ASU 2015-17 simplify the accounting for, and presentation of, deferred taxes by eliminating the need to separately classify the current amount of deferred tax assets or liabilities. Instead, aggregated deferred tax assets and liabilities are classified and reported as non-current assets or liabilities. The update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2016. The company early adopted ASU 2015-17 effective April 3, 2016 on a prospective basis. Adoption of this ASU resulted in a reclassification of the company's net current deferred tax asset to the net non-current deferred tax liability in the company's Consolidated Balance Sheet as of July 2, 2016. No prior periods were retrospectively adjusted. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". The amendments under this pronouncement will change the way all leases with a duration of one year of more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or capital lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2018. The company is currently evaluating the impact this standard will have on its policies and procedures pertaining to its existing and future lease arrangements, disclosure requirements and on the company's financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships". The amendments in ASU 2016-05 clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of the hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this update may be applied on either a prospective basis or a modified retrospective basis. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2016. We adopted this guidance on January 1, 2017 and it did not have an impact on the company's financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting". The amendments in ASU-09 simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2016. The company adopted ASU No. 2016-09 effective January 1, 2017 on a prospective basis. The adoption of this guidance resulted in the recognition of excess tax benefits in the company's provision for income taxes within the Condensed Consolidated Statements of Comprehensive Income rather than paid-in-capital of approximately $7.9 million for the six months period ended July 1, 2017. Additionally, the company's Condensed Consolidated Statement of Cash Flows now presents excess tax benefits as an operating activity rather than a financing activity. In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". The amendments in ASU-15 address eight specific cash flow classification issues to reduce current and potential future diversity in practice. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. The company is evaluating the impact the application of this ASU will have, if any, on the company's cash flows. In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory". The amendments in ASU-16 prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer other than inventory until the asset has been sold to an outside party. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. The company is evaluating the impact the application of this ASU will have, if any, on the company's financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in ASU-01 clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. The company does not expect the adoption of this ASU to have a material impact on its financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in ASU-04 simplify the subsequent measurement of goodwill, by removing the second step of the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This ASU is effective for annual reporting periods, and interim reporting periods, beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. The company does not expect the adoption of this ASU to have a material impact on its financial position, results of operations or cash flows. In March 2017, the FASB issued ASU No. 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". The amendments in ASU-07 require that an employer report the service costs component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic pension cost and net periodic postretirement benefit cost to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. Early adoption is permitted. Net income will not change as a result of the adoption of this standard. The company is currently evaluating the remaining impacts the ASU will have on its condensed consolidated financial statements. |
Other Comprehensive Income |
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Other Comprehensive Income |
The company reports changes in equity during a period, except those resulting from investments by owners and distributions to owners, in accordance with ASC 220, "Comprehensive Income". Changes in accumulated other comprehensive income(1) were as follows (in thousands):
(1) As of July 1, 2017 pension and interest rate swap amounts are net of tax of $(39.9) million and $3.3 million, respectively. Components of other comprehensive income were as follows (in thousands):
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Inventories |
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Inventories | Inventories Inventories are composed of material, labor and overhead and are stated at the lower of cost or market. Costs for inventory have been determined using the first-in, first-out ("FIFO") method. The company estimates reserves for inventory obsolescence and shrinkage based on its judgment of future realization. Inventories at July 1, 2017 and December 31, 2016 are as follows:
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Goodwill |
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Goodwill | Goodwill Changes in the carrying amount of goodwill for the six months ended July 1, 2017 are as follows (in thousands):
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Accrued Expenses |
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Accrued Expenses | Accrued Expenses Accrued expenses consist of the following:
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Warranty Costs |
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Warranty Costs | Warranty Costs In the normal course of business the company issues product warranties for specific product lines and provides for the estimated future warranty cost in the period in which the sale is recorded. The estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Because warranty estimates are forecasts that are based on the best available information, actual claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable. A rollforward of the warranty reserve is as follows:
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Financing Arrangements | Financing Arrangements
On July 28, 2016, the company entered into an amended and restated five-year $2.5 billion multi-currency senior secured revolving credit agreement (the "Credit Facility"), with the potential under certain circumstances to increase the amount of the Credit Facility to $3.0 billion. As of July 1, 2017, the company had $797.6 million of borrowings outstanding under the Credit Facility, including $766.5 million of borrowings in U.S. Dollars and $31.1 million of borrowings denominated in British Pounds. The company also had $9.1 million in outstanding letters of credit as of July 1, 2017, which reduces the borrowing availability under the Credit Facility. Remaining borrowing availability under this facility was $1.7 billion at July 1, 2017. At July 1, 2017, borrowings under the Credit Facility accrued interest at a rate of 1.13% above LIBOR per annum or 0.13% above the highest of the prime rate, the federal funds rate plus 0.50% and one month LIBOR plus 1.00%. The average interest rate per annum on the debt under the Credit Facility was equal to 2.58% for the period. The interest rates on borrowings under the Credit Facility may be adjusted quarterly based on the company’s funded debtless unrestricted cash to pro forma EBITDA (the “Leverage Ratio”) on a rolling four-quarter basis. Additionally, a commitment fee based upon the Leverage Ratio is charged on the unused portion of the commitments under the Credit Facility. This variable commitment fee was equal to 0.150% per annum as of July 1, 2017. In addition, the company has other international credit facilities to fund working capital needs outside the United States and the United Kingdom. At July 1, 2017, these foreign credit facilities amounted to $5.4 million in U.S. dollars with a weighted average per annum interest rate of approximately 8.05%. The company’s debt is reflected on the balance sheet at cost. The company believes its interest rate margins on its existing debt are consistent with current market conditions and therefore the carrying value of debt reflects the fair value. The interest rate margin is based on the company's Leverage Ratio. The company estimated the fair value of its loans by calculating the upfront cash payment a market participant would require to assume the company’s obligations. The upfront cash payment is the amount that a market participant would be able to lend to achieve sufficient cash inflows to cover the cash outflows under the company’s senior secured revolving credit facility assuming the facility was outstanding in its entirety until maturity. Since the company maintains its borrowings under a revolving credit facility and there is no predetermined borrowing or repayment schedule, for purposes of this calculation the company calculated the fair value of its obligations assuming the current amount of debt at the end of the period was outstanding until the maturity of the company’s Credit Facility in July 2021. Although borrowings could be materially greater or less than the current amount of borrowings outstanding at the end of the period, it is not practical to estimate the amounts that may be outstanding during future periods. The carrying value and estimated aggregate fair value, a level 2 measurement, based primarily on market prices, of debt is as follows (in thousands):
The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the Credit Facility. At July 1, 2017, the company had outstanding floating-to-fixed interest rate swaps totaling $85.0 million notional amount carrying an average interest rate of 0.98% maturing in less than 12 months and $324.0 million notional amount carrying an average interest rate of 1.30% that mature in more than 12 months but less than 84 months. . The company believes that its current capital resources, including cash and cash equivalents, cash expected to be generated from operations, funds available from its current lenders and access to the credit and capital markets will be sufficient to finance its operations, debt service obligations, capital expenditures, product development and expenditures for the foreseeable future. The terms of the Credit Facility limit the ability of the company and its subsidiaries to, with certain exceptions: incur indebtedness; grant liens; engage in certain mergers, consolidations, acquisitions and dispositions; make restricted payments; enter into certain transactions with affiliates; and requires, among other things, the company to satisfy certain financial covenants: (i) a minimum Interest Coverage Ratio (as defined in the Credit Facility) of 3.00 to 1.00 and (ii) a maximum Leverage Ratio of Funded Debtless Unrestricted Cash to Pro Forma EBIDTA (each as defined in the Credit Facility) of 3.50 to 1.00, which may be adjusted to 4.00 to 1.00 for a four consecutive fiscal quarter period in connection with certain qualified acquisitions, subject to the terms and conditions contained in the Credit Facility. The Credit Facility is secured by substantially all of the assets of Middleby Marshall, the company and the company's domestic subsidiaries and is unconditionally guaranteed by, subject to certain exceptions, the company and certain of the company's direct and indirect material foreign and domestic subsidiaries. The Credit Facility contains certain customary events of default, including, but not limited to, the failure to make required payments; bankruptcy and other insolvency events; the failure to perform certain covenants; the material breach of a representation or warranty; non-payment of certain other indebtedness; the entry of undischarged judgments against the company or any subsidiary for the payment of material uninsured amounts; the invalidity of the company guarantee or any subsidiary guaranty; and a change of control of the company. At July 1, 2017, the company was in compliance with all covenants pursuant to its borrowing agreements. |
Financial Instruments |
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Financial Instruments | Financial Instruments ASC 815 “Derivatives and Hedging” requires an entity to recognize all derivatives as either assets or liabilities and measure those instruments at fair value. Derivatives that do not qualify as a hedge must be adjusted to fair value in earnings. If a derivative does qualify as a hedge under ASC 815, changes in the fair value will either be offset against the change in the fair value of the hedged assets, liabilities or firm commitments or recognized in other accumulated comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a hedge's change in fair value will be immediately recognized in earnings. Foreign Exchange: The company uses foreign currency forward and option purchase and sales contracts with terms of less than one year to hedge its exposure to changes in foreign currency exchange rates. The company’s primary hedging activities are to mitigate its exposure to changes in exchange rates on intercompany and third party trade receivables and payables. The company does not currently enter into derivative financial instruments for speculative purposes. In managing its foreign currency exposures, the company identifies and aggregates naturally occurring offsetting positions and then hedges residual balance sheet exposures. The fair value of the forward and option contracts was a loss of $2.8 million at the end of the second quarter of 2017. Interest Rate: The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. The agreements swap one-month LIBOR for fixed rates. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. As of July 1, 2017, the fair value of these instruments was an asset of $7.9 million. The change in fair value of these swap agreements in the first six months of 2017 was a loss of $1.0 million, net of taxes. The following table summarizes the company’s fair value of interest rate swaps (in thousands):
The impact on earnings from interest rate swaps was as follows (in thousands):
Interest rate swaps are subject to default risk to the extent the counterparties are unable to satisfy their settlement obligations under the interest rate swap agreements. The company reviews the credit profile of the financial institutions that are counterparties to such swap agreements and assesses their creditworthiness prior to entering into the interest rate swap agreements and throughout the term. The interest rate swap agreements typically contain provisions that allow the counterparty to require early settlement in the event that the company becomes insolvent or is unable to maintain compliance with its covenants under its existing debt agreements. |
Segment Information |
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Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The company operates in three reportable operating segments defined by management reporting structure and operating activities. The Commercial Foodservice Equipment Group manufactures, sells, and distributes cooking equipment for the restaurant and institutional kitchen industry. This business segment has manufacturing facilities in California, Illinois, Michigan, New Hampshire, North Carolina, Pennsylvania, Tennessee, Texas, Vermont, Washington, Australia, China, Denmark, Estonia, Italy, the Philippines, Poland, Sweden and the United Kingdom. Principal product lines of this group include conveyor ovens, ranges, steamers, convection ovens, combi-ovens, broilers and steam cooking equipment, induction cooking systems, baking and proofing ovens, charbroilers, catering equipment, fryers, toasters, hot food servers, food warming equipment, griddles, coffee and beverage dispensing equipment, professional refrigerators, coldrooms, ice machines, freezers and kitchen processing and ventilation equipment. These products are sold and marketed under the brand names: Anets, Bear Varimixer, Beech, Blodgett, Blodgett Combi, Blodgett Range, Bloomfield, Britannia, CTX, Carter-Hoffmann, Celfrost, Concordia, CookTek, Desmon, Doyon, Eswood, Follett, Frifri, Giga, Goldstein, Holman, Houno, IMC, Induc, Jade, Lang, Lincat, MagiKitch’n, Market Forge, Marsal, Middleby Marshall, MPC, Nieco, Nu-Vu, PerfectFry, Pitco, Southbend, Star, Sveba Dahlen, Toastmaster, TurboChef, Wells and Wunder-Bar. The Food Processing Equipment Group manufactures preparation, cooking, packaging, food handling and food safety equipment for the food processing industry. This business segment has manufacturing operations in Georgia, Illinois, Iowa, North Carolina, Oklahoma, Texas, Virginia, Wisconsin, France, Germany and the United Kingdom. Principal product lines of this group include batch ovens, belt ovens, continuous processing ovens, frying systems, automated thermal processing systems, automated loading and unloading systems, meat presses, breading, battering, mixing, seeding, water cutting systems, forming, grinding and slicing equipment, food suspension, reduction and emulsion systems, defrosting equipment, packaging and food safety equipment. These products are sold and marketed under the brand names: Alkar, Armor Inox, Auto-Bake, Baker Thermal Solutions, Burford, Cozzini, CVP Systems, Danfotech, Drake, Glimek, Maurer-Atmos, MP Equipment, RapidPak, Spooner Vicars, Stewart Systems and Thurne. The Residential Kitchen Equipment Group manufactures, sells and distributes kitchen equipment for the residential market. This business segment has manufacturing facilities in California, Michigan, Mississippi, Wisconsin, France, Ireland, Romania, and the United Kingdom. Principal product lines of this group include ranges, cookers, ovens, refrigerators, dishwashers, microwaves, cooktops and outdoor equipment. These products are sold and marketed under the brand names of AGA, AGA Cookshop, Brigade, Fired Earth, Grange, Heartland, La Cornue, Leisure Sinks, Lynx, Marvel, Mercury, Rangemaster, Rayburn, Redfyre, Sedona, Stanley, TurboChef, U-Line and Viking. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The chief operating decision maker evaluates individual segment performance based on operating income. Net Sales Summary (dollars in thousands)
The following table summarizes the results of operations for the company's business segments(1) (in thousands):
(1)Non-operating expenses are not allocated to the operating segments. Non-operating expenses consist of interest expense and deferred financing amortization, foreign exchange gains and losses and other income and expense items outside of income from operations. (2)Includes corporate and other general company assets and operations. Geographic Information Long-lived assets, not including goodwill and other intangibles (in thousands):
Net sales (in thousands):
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Employee Retirement Plans |
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Employee Retirement Plans | Employee Retirement Plans
U.S. Plans: The company maintains a non-contributory defined benefit plan for its union employees at the Elgin, Illinois facility. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2002, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 30, 2002 upon reaching retirement age. The company maintains a non-contributory defined benefit plan for its employees at the Smithville, Tennessee facility, which was acquired as part of the Star acquisition. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 1, 2008, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 1, 2008 upon reaching retirement age. The company also maintains a retirement benefit agreement with its Chairman ("Chairman Plan"). The retirement benefits are based upon a percentage of the Chairman’s final base salary. Non-U.S. Plans: The company maintains a defined benefit plan for its employees at the Wrexham, the United Kingdom facility, which was acquired as part of the Lincat acquisition. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2010 prior to Middleby’s acquisition of the company. No further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 30, 2010 upon reaching retirement age. The company maintains several pension plans related to AGA and its subsidiaries (collectively, the "AGA Group"), the most significant being the Aga Rangemaster Group Pension Scheme, which covers the majority of employees in the United Kingdom. Membership in the plan on a defined benefit basis of pension provision was closed to new entrants in 2001. The plan became open to new entrants on a defined contribution basis of pension provision in 2002, but was generally closed to new entrants on this basis during 2014. The other, much smaller, defined benefit pension plans operating within the AGA Group cover employees in France, Ireland and the United Kingdom. All pension plan assets are held in separate trust funds although the net defined benefit pension obligations are included in the company's consolidated balance sheet. The following table summarizes the company's net periodic pension benefit related to the AGA Group pension plans (in thousands):
The pension costs for all other plans of the company were not material during the period.
The company maintains two separate defined contribution 401K savings plans covering all employees in the United States. These two plans separately cover the union employees at the Elgin, Illinois facility and all other remaining union and non-union employees in the United States. The company also maintains defined contribution plans for its U.K. based employees. |
Acquisition Integration Initiatives |
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Acquisition Integration Initiatives |
Commercial Foodservice Equipment Group: During the fiscal year 2017, the company undertook cost reduction initiatives related to the entire Commercial Foodservice Equipment Group. This action, which is not material to the company's operations, resulted in a charge of $2.0 million in the three and six months ended July 1, 2017, primarily for severance related to headcount reductions and consolidation of manufacturing operations. These expenses are reflected in restructuring expenses in the consolidated statements of comprehensive income. The company estimates that these restructuring initiatives will result in future cost savings of approximately $10.0 million annually, beginning in fiscal year 2018 and the restructuring costs in the future are not expected to be significant related to these actions. . Food Processing Equipment Group: During the fiscal year 2017, the company undertook cost reduction initiatives related to the entire Food Processing Equipment Group. This action, which is not material to the company's operations, resulted in a charge of $0.2 million in the three and six months ended July 1, 2017, primarily for severance related to headcount reductions and is reflected in restructuring expenses in the consolidated statements of comprehensive income. The company estimates that these restructuring initiatives will result in future cost savings of approximately $4.0 million annually, beginning in fiscal year 2018 and no significant future costs related to this action are expected. Residential Kitchen Equipment Group: During fiscal years 2015 and 2016, the company undertook acquisition integration initiatives related to the AGA Group within the Residential Kitchen Equipment Group. These initiatives included organizational restructuring and headcount reductions, consolidation and disposition of certain facilities and business operations. The company recorded additional expense of $9.3 million and $11.0 million in the three and six months ended July 1, 2017, respectively, primarily related to the AGA Group. The initiatives primarily included additional headcount reductions and impairment of equipment in conjunction of the disposition of certain facilities and business operations. This expense is reflected in restructuring expenses in the consolidated statements of comprehensive income. The cumulative expenses incurred to date for these initiatives is approximately $38.7 million. The company estimated that these restructuring initiatives in 2017 will result in future cost savings of approximately $20.0 million annually, beginning in fiscal year 2018, primarily related to compensation and facility costs. The company anticipates that all severance obligations for the Residential Kitchen Equipment Group will be satisfied by the end of fiscal of 2018. The lease obligations extend through November 2018.
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Summary of Significant Accounting Policies (Policies) |
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Basis of Presentation |
The condensed consolidated financial statements have been prepared by The Middleby Corporation (the "company" or “Middleby”), pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements are unaudited and certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the company believes that the disclosures are adequate to make the information not misleading. These financial statements should be read in conjunction with the financial statements and related notes contained in the company's 2016 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year 2017. In the opinion of management, the financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of the company as of July 1, 2017 and December 31, 2016, the results of operations for the three and six months ended July 1, 2017 and July 2, 2016 and cash flows for the six months ended July 1, 2017 and July 2, 2016. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, warranty reserves, insurance reserves, income tax reserves, non-cash share-based compensation and post-retirement obligations. Actual results could differ from the company's estimates. |
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Non-Cash Share-Based Compensation |
The company estimates the fair value of market-based stock awards and stock options at the time of grant and recognizes compensation cost over the vesting period of the awards and options. Non-cash share-based compensation expense was $3.0 million and $6.2 million for the second quarter periods ended July 1, 2017 and July 2, 2016, respectively. |
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Income Tax Contingencies |
As of December 31, 2016, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $20.3 million (of which $20 million would impact the effective tax rate if recognized) plus approximately $2.7 million of accrued interest and $4.9 million of penalties. The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of July 1, 2017, the company recognized a tax expense of $2.7 million for unrecognized tax benefits related to current year tax exposures. It is reasonably possible that the amounts of unrecognized tax benefits associated with state, federal and foreign tax positions may decrease over the next twelve months due to expiration of a statute or completion of an audit. The company believes that it is reasonably possible that approximately $2.4 million of its remaining unrecognized tax benefits may be recognized over the next twelve months as a result of lapses of statutes of limitations. The effective rate for the six months period ended July 1, 2017 was 29.2% as compared to 33.5% for the six months period ended July 2, 2016. The tax rate in the six months period ended July 1, 2017 was favorably impacted by a tax benefit from the adoption of ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting," which resulted in the recognition of excess tax benefits from share-based payments to be recognized as income tax benefit in the condensed consolidated statement of comprehensive income. A summary of the tax years that remain subject to examination in the company’s major tax jurisdictions are:
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Fair Value Measures |
ASC 820 "Fair Value Measurements and Disclosures" defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 – Unobservable inputs based on our own assumptions. The company’s financial liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):
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Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Income Tax Examinations | The effective rate for the six months period ended July 1, 2017 was 29.2% as compared to 33.5% for the six months period ended July 2, 2016. The tax rate in the six months period ended July 1, 2017 was favorably impacted by a |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The company’s financial liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):
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Acquisitions and Purchase Accounting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information [Table Text Block] | The following pro forma results include adjustments to reflect additional interest expense to fund the acquisitions, amortization of intangibles associated with the acquisitions, and the effects of adjustments made to the carrying value of certain assets (in thousands, except per share data):
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Follett [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The final allocation of cash paid for the Follett acquisition is summarized as follows (in thousands):
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Emico [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The final allocation of cash paid for the Emico acquisition is summarized as follows (in thousands):
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Burford [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
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CVP [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
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Sveba Dahlen [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
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Other Comprehensive Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block] | Changes in accumulated other comprehensive income(1) were as follows (in thousands):
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Schedule of Comprehensive Income (Loss) | Components of other comprehensive income were as follows (in thousands):
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Inventories at July 1, 2017 and December 31, 2016 are as follows:
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Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill for the six months ended July 1, 2017 are as follows (in thousands):
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Accrued Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued expenses consist of the following:
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Warranty Costs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||
Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Product Warranty Table Disclosure | A rollforward of the warranty reserve is as follows:
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Financing Arrangements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments |
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Carrying Value And Fair Value Of Long Term Debt, Disclosure | The carrying value and estimated aggregate fair value, a level 2 measurement, based primarily on market prices, of debt is as follows (in thousands):
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Schedule of Interest Rate Derivatives | , the company had outstanding floating-to-fixed interest rate swaps totaling $85.0 million notional amount carrying an average interest rate of 0.98% maturing in less than 12 months and $324.0 million notional amount carrying an average interest rate of 1.30% that mature in more than 12 months but less than 84 months. . |
Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Exchange Transaction | The fair value of the forward and option contracts was a loss of $2.8 million at the end of the second quarter of 2017. |
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table summarizes the company’s fair value of interest rate swaps (in thousands):
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The impact on earnings from interest rate swaps was as follows (in thousands):
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Segment Information (Tables) |
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Notes To Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales Summary By Segment | Net Sales Summary (dollars in thousands)
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Schedule of Segment Reporting Information, by Segment | The following table summarizes the results of operations for the company's business segments(1) (in thousands):
(1)Non-operating expenses are not allocated to the operating segments. Non-operating expenses consist of interest expense and deferred financing amortization, foreign exchange gains and losses and other income and expense items outside of income from operations. (2)Includes corporate and other general company assets and operations. |
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Schedule of Entity-Wide Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | Long-lived assets, not including goodwill and other intangibles (in thousands):
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Schedule of Entity-Wide Information, Revenue from External Customers by Products and Services | Net sales (in thousands):
|
Acquisition Integration Initiatives Acquisition Integration Initiatives (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Kitchen [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities Disclosure [Text Block] |
|
Income Taxes (Details) |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 29.20% | 33.50% |
Acquisitions and Purchase Accounting Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Net of Cash Acquired | $ 119,262 | $ 212,024 |
Acquisitions and Purchase Accounting Acquisitions and Purchase Accounting - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Business Combinations [Abstract] | ||
Business Acquisition, Pro Forma Revenue | $ 1,153,875 | $ 1,212,108 |
Business Acquisition, Pro Forma Net Income (Loss) | $ 150,513 | $ 133,583 |
Business Acquisition, Pro Forma Earnings Per Share, Basic | $ 2.63 | $ 2.34 |
Business Acquisition, Pro Forma Earnings Per Share, Diluted | $ 2.63 | $ 2.34 |
Recently Issued Accounting Standards Excess Tax Benefit (Details) $ in Millions |
6 Months Ended |
---|---|
Jul. 01, 2017
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Excess tax benefits recognized | $ 7.9 |
Other Comprehensive Income Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Net earnings | $ 77,569 | $ 72,891 | $ 148,271 | $ 127,429 |
Currency Translation Adjustment | 18,621 | (19,579) | 29,456 | (19,975) |
Pension liability adjustment, net of tax | (6,647) | 1,078 | (9,174) | 4,856 |
Unrealized gain on interest rate swaps, net of tax | (1,001) | (2) | (501) | (123) |
Comprehensive income | $ 88,542 | $ 54,388 | $ 168,052 | $ 112,187 |
Inventories Inventories (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and parts | $ 187,077 | $ 154,647 |
Work-in-process | 38,556 | 35,975 |
Finished goods | 196,301 | 177,621 |
Inventory, Gross, Total | $ 421,934 | $ 368,243 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure Accrued Expenses [Abstract] | ||
Accrued payroll and related expenses | $ 62,232 | $ 74,505 |
Standard Product Warranty Accrual, Current | 48,965 | 40,851 |
Advanced customer deposits | 40,394 | 41,735 |
Accrued warranty | 48,965 | 40,851 |
Product Liability Contingency, Loss Exposure in Excess of Accrual, High Estimate | 6,154 | 7,003 |
Accured Restructuring Liabilities, Current | 3,945 | 2,295 |
Accrued customer rebates | 29,972 | 49,923 |
Accrued Product Liability And Workers Compensation Liability Current | 11,557 | 11,417 |
Accrued agent commission | 11,644 | 12,834 |
Accrued professional services | 13,460 | 16,605 |
Sales and Excise Tax Payable, Current | 13,093 | 13,565 |
Other accrued expenses | 49,439 | 64,872 |
Accrued expenses | $ 290,855 | $ 335,605 |
Rollforward of Warranty Reserve (Details) $ in Thousands |
6 Months Ended |
---|---|
Jul. 01, 2017
USD ($)
| |
Disclosure Rollforward Of Warranty Reserve [Abstract] | |
Standard and Extended Product Warranty Accrual, Additions from Business Acquisition | $ 6,288 |
Beginning balance | 40,851 |
Warranty expense | 27,611 |
Warranty claims | (25,785) |
Ending balance | $ 48,965 |
Long-Term Debt (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Line Items] | ||
Line of Credit Facility, Potential Additional Borrowing Capacity | $ 3,000,000 | |
Senior secured revolving credit line | 797,647 | $ 725,500 |
Other Long-term Debt | 195 | 213 |
Total debt | 803,274 | 732,126 |
Less: Current maturities of long-term debt | 4,860 | 5,883 |
Long-term debt | 798,414 | 726,243 |
Line of Credit Facility, Outstanding Amount, USD Borrowings | 766,500 | |
Line of Credit Facility, Amount Outstanding, GBP Borrowings | 31,100 | |
Foreign | ||
Debt Disclosure [Line Items] | ||
Foreign loans | $ 5,432 | $ 6,413 |
Carrying Value and Estimated Aggregate Fair Value of Debt (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Disclosure Carrying Value And Estimated Aggregate Fair Value Of Debt [Abstract] | ||
Carrying Value | $ 803,274 | $ 732,126 |
Fair Value | $ 803,274 | $ 732,126 |
Interest Rate Swaps in Effect (Details) $ in Millions |
Jul. 01, 2017
USD ($)
|
---|---|
Debt Disclosure [Line Items] | |
Derivative Notional Amount, Current | $ 85.0 |
Derivative Fixed Interest Rate, Current | 0.98% |
Fixed Interest Rate | 1.30% |
Derivative, Notional Amount | $ 324.0 |
Summary of Fair Value of Interest Rate Swaps (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Dec. 31, 2016 |
---|---|---|
Interest Rate Swap [Member] | Other Noncurrent Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value | $ (3) | $ (100) |
Impact on Earnings from Interest Rate Swaps (Details) - Interest Rate Swap [Member] - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Other Comprehensive Income | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain/(loss) recognized in accumulated other comprehensive income | $ (1,955) | $ (211) | $ (1,643) | $ (730) |
Interest Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion) | (284) | (208) | (806) | (525) |
Other Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain/(loss) recognized in income (ineffective portion) | $ (8) | $ (4) | $ (15) | $ 7 |
Financial Instruments Additional Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Dec. 31, 2016 |
|
Derivative [Line Items] | ||
Fair value of interest rate swaps liability | $ 7,900 | |
Maximum | ||
Derivative [Line Items] | ||
Loss in fair value of interest rate swaps | 1,000 | |
Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Derivative, Fair Value, Net | (2,800) | |
Other Noncurrent Assets [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Interest Rate Fair Value Hedge Asset at Fair Value | $ 7,894 | $ 8,842 |
Net Sales Summary (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
|||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | [1] | $ 579,343 | $ 580,456 | $ 1,109,640 | $ 1,096,811 | |||
Percent | 100.00% | 100.00% | 100.00% | 100.00% | ||||
Commercial Foodservice Equipment Group [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | $ 333,753 | [1] | $ 321,028 | [1] | $ 646,002 | $ 600,014 | ||
Percent | 57.60% | 55.30% | 58.20% | 54.70% | ||||
Food Processing Group [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | $ 92,368 | [1] | $ 83,475 | [1] | $ 169,644 | $ 162,111 | ||
Percent | 15.90% | 14.40% | 15.30% | 14.80% | ||||
Residential Kitchen [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net sales | $ 153,222 | [1] | $ 175,953 | [1] | $ 293,994 | $ 334,686 | ||
Percent | 26.50% | 30.30% | 26.50% | 30.50% | ||||
|
Summary of Results of Operations for Business Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
Dec. 31, 2016 |
Sep. 27, 2014 |
|||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | [1] | $ 579,343 | $ 580,456 | $ 1,109,640 | $ 1,096,811 | |||||||
Income from operations | 122,136 | [1] | 111,913 | [1] | 223,215 | 198,288 | ||||||
Depreciation and amortization expense | 18,258 | [1] | 16,310 | [1] | 32,315 | 31,240 | ||||||
Net capital expenditures | 23,432 | [1] | 5,415 | [1] | 31,708 | 13,108 | ||||||
Total assets | 3,140,535 | 3,140,535 | $ 2,917,136 | $ 2,931,670 | ||||||||
Commercial Foodservice Equipment Group [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 333,753 | [1] | 321,028 | [1] | 646,002 | 600,014 | ||||||
Income from operations | 95,007 | [1] | 93,732 | [1] | 175,548 | 170,301 | ||||||
Depreciation and amortization expense | 8,496 | [1] | 5,575 | [1] | 13,478 | 9,946 | ||||||
Net capital expenditures | 20,764 | [1] | 3,322 | [1] | 26,749 | 7,506 | ||||||
Total assets | 1,495,316 | 1,495,316 | 1,367,664 | |||||||||
Food Processing Group [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 92,368 | [1] | 83,475 | [1] | 169,644 | 162,111 | ||||||
Income from operations | 24,199 | [1] | 19,186 | [1] | 42,188 | 37,049 | ||||||
Depreciation and amortization expense | 1,657 | [1] | 1,520 | [1] | 3,044 | 2,958 | ||||||
Net capital expenditures | 1,308 | [1] | 884 | [1] | 1,946 | 2,682 | ||||||
Total assets | 393,674 | 393,674 | 321,694 | |||||||||
Residential Kitchen [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 153,222 | [1] | 175,953 | [1] | 293,994 | 334,686 | ||||||
Income from operations | 22,006 | [1] | 22,364 | [1] | 40,918 | 32,215 | ||||||
Depreciation and amortization expense | 7,627 | [1] | 8,238 | [1] | 14,834 | 16,942 | ||||||
Net capital expenditures | 1,661 | [1] | 1,078 | [1] | 2,943 | 2,789 | ||||||
Total assets | 1,205,676 | 1,205,676 | 1,195,379 | |||||||||
Corporate and Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Net sales | 0 | [1],[2] | 0 | [1],[2] | 0 | 0 | ||||||
Income from operations | (19,076) | [1],[2] | (23,369) | [1],[2] | (35,439) | (41,277) | ||||||
Depreciation and amortization expense | 478 | [1],[2] | 977 | [1],[2] | 959 | 1,394 | ||||||
Net capital expenditures | (301) | [1],[2] | $ 131 | [1],[2] | 70 | $ 131 | ||||||
Total assets | $ 45,869 | $ 45,869 | $ 46,933 | |||||||||
|
Long-Lived Assets by Major Geographic Region (Details) - USD ($) $ in Thousands |
Jul. 01, 2017 |
Apr. 04, 2015 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 346,246 | $ 251,786 |
United States and Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 202,789 | 170,854 |
Asia | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 15,370 | 15,582 |
Europe and Middle East | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 127,053 | 64,199 |
Latin America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 1,034 | 1,151 |
Total International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 143,457 | $ 80,932 |
Net Sales by Major Geographic Region (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
Jul. 01, 2017 |
Jul. 02, 2016 |
|||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | [1] | $ 579,343 | $ 580,456 | $ 1,109,640 | $ 1,096,811 | |
United States and Canada | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | 394,004 | 381,369 | 754,105 | 707,310 | ||
Asia | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | 44,873 | 43,796 | 87,565 | 81,590 | ||
Europe and Middle East | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | 115,063 | 134,484 | 223,767 | 271,088 | ||
Latin America | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | 25,403 | 20,807 | 44,203 | 36,823 | ||
Total International | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | $ 185,339 | $ 199,087 | $ 355,535 | $ 389,501 | ||
|
Sub Event (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2017 |
Jul. 02, 2016 |
|
Subsequent Event [Line Items] | ||
Business Acquisition, Pro Forma Revenue | $ 1,153,875 | $ 1,212,108 |
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