Delaware
|
36-3352497
|
|
(State or Other Jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|
Incorporation or Organization)
|
1400 Toastmaster Drive, Elgin, Illinois
|
60120
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer x
|
Accelerated filer ¨
|
Non-accelerated filer ¨
|
Smaller reporting company ¨
|
DESCRIPTION
|
PAGE
|
|||
PART I. FINANCIAL INFORMATION
|
||||
Item 1.
|
Condensed Consolidated Financial Statements (unaudited)
|
|||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
1
|
|||
July 2, 2011 and January 1, 2011
|
||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
2 | |||
July 2, 2011 and July 3, 2010
|
||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
3 | |||
July 2, 2011 and July 3, 2010
|
||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
4 | |||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
22
|
||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
32
|
||
Item 4.
|
Controls and Procedures
|
35
|
||
PART II. OTHER INFORMATION
|
||||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
36
|
||
Item 6.
|
Exhibits
|
37
|
|
July 2, 2011
|
January 1, 2011
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 21,389 | $ | 7,656 | ||||
Accounts receivable, net of reserve for doubtful accounts of $8,302 and $7,975
|
130,737 | 112,049 | ||||||
Inventories, net
|
122,114 | 106,463 | ||||||
Prepaid expenses and other
|
11,325 | 11,971 | ||||||
Current deferred taxes
|
25,813 | 25,520 | ||||||
Total current assets
|
311,378 | 263,659 | ||||||
Property, plant and equipment, net of accumulated depreciation of $51,326 and $47,355
|
57,142 | 43,656 | ||||||
Goodwill
|
426,708 | 369,989 | ||||||
Other intangibles
|
216,966 | 189,254 | ||||||
Other assets
|
6,892 | 6,614 | ||||||
Total assets
|
$ | 1,019,086 | $ | 873,172 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current maturities of long-term debt
|
$ | 7,033 | $ | 5,097 | ||||
Accounts payable
|
55,773 | 52,945 | ||||||
Accrued expenses
|
119,830 | 125,810 | ||||||
Total current liabilities
|
182,636 | 183,852 | ||||||
Long-term debt
|
302,411 | 208,920 | ||||||
Long-term deferred tax liability
|
26,497 | 11,858 | ||||||
Other non-current liabilities
|
45,410 | 43,629 | ||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued
|
— | — | ||||||
Common stock, $0.01 par value; 47,500,000 shares authorized; 23,094,964 and 22,691,821 shares issued in 2011 and 2010, respectively
|
138 | 137 | ||||||
Paid-in capital
|
187,147 | 179,575 | ||||||
Treasury stock at cost; 4,347,360 and 4,233,810 shares in 2011 and 2010, respectively
|
(120,472 | ) | (111,019 | ) | ||||
Retained earnings
|
397,707 | 360,254 | ||||||
Accumulated other comprehensive income
|
(2,388 | ) | (4,034 | ) | ||||
Total stockholders' equity
|
462,132 | 424,913 | ||||||
Total liabilities and stockholders' equity
|
$ | 1,019,086 | $ | 873,172 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||
Net sales
|
$ | 210,855 | $ | 173,412 | $ | 393,427 | $ | 334,095 | ||||||||
Cost of sales
|
125,518 | 103,988 | 236,260 | 201,198 | ||||||||||||
Gross profit
|
85,337 | 69,424 | 157,167 | 132,897 | ||||||||||||
Selling expenses
|
21,569 | 19,036 | 42,137 | 36,661 | ||||||||||||
General and administrative expenses
|
28,520 | 20,659 | 48,418 | 40,072 | ||||||||||||
Income from operations
|
35,248 | 29,729 | 66,612 | 56,164 | ||||||||||||
Net interest expense and deferred financing amortization
|
2,119 | 2,246 | 4,179 | 4,721 | ||||||||||||
Other expense, net
|
1,608 | 220 | 1,446 | 564 | ||||||||||||
Earnings before income taxes
|
31,521 | 27,263 | 60,987 | 50,879 | ||||||||||||
Provision for income taxes
|
11,893 | 9,754 | 23,534 | 19,608 | ||||||||||||
Net earnings
|
$ | 19,628 | $ | 17,509 | $ | 37,453 | $ | 31,271 | ||||||||
Net earnings per share:
|
||||||||||||||||
Basic
|
$ | 1.09 | $ | 0.98 | $ | 2.08 | $ | 1.76 | ||||||||
Diluted
|
$ | 1.06 | $ | 0.96 | $ | 2.02 | $ | 1.71 | ||||||||
Weighted average number of shares
|
||||||||||||||||
Basic
|
18,052 | 17,863 | 17,976 | 17,808 | ||||||||||||
Dilutive equity awards1
|
527 | 459 | 536 | 461 | ||||||||||||
Diluted
|
18,579 | 18,322 | 18,512 | 18,269 |
Six Months Ended
|
||||||||
Jul 2, 2011
|
Jul 3, 2010
|
|||||||
Cash flows from operating activities- | ||||||||
Net earnings
|
$ | 37,453 | $ | 31,271 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
9,333 | 7,807 | ||||||
Deferred taxes
|
(600 | ) | (1,761 | ) | ||||
Non-cash share-based compensation
|
7,349 | 7,372 | ||||||
Unrealized (gain) loss on derivative financial instruments
|
(3 | ) | 11 | |||||
Changes in assets and liabilities, net of acquisitions
|
||||||||
Accounts receivable, net | (7,104 | (17,562 | ) | |||||
Inventories, net
|
(7,628 | ) | (486 | ) | ||||
Prepaid expenses and other assets
|
1,161 | (796 | ) | |||||
Accounts payable
|
(5,638 | ) | 6,721 | |||||
Accrued expenses and other liabilities
|
(4,601 | ) | (507 | ) | ||||
Net cash provided by operating activities
|
29,722 | 32,070 | ||||||
Cash flows from investing activities-
|
||||||||
Net additions to property and equipment
|
(3,151 | ) | (2,405 | ) | ||||
Acquisition of Giga
|
(1,603 | ) | (1,621 | ) | ||||
Acquisition of CookTek
|
(86 | ) | (1,000 | ) | ||||
Acquisition of Cozzini
|
(2,000 | ) | — | |||||
Acquisition of Beech, net of cash acquired
|
(12,959 | ) | — | |||||
Acquisition of Lincat, net of cash acquired
|
(82,130 | ) | — | |||||
Net cash (used in) investing activities
|
(101,929 | ) | (5,026 | ) | ||||
Cash flows from financing activities-
|
||||||||
Net proceeds (repayments) under revolving credit facilities
|
93,400 | (25,150 | ) | |||||
Net proceeds (repayments) under foreign bank loan
|
1,327 | (246 | ) | |||||
Repurchase of treasury stock
|
(9,453 | ) | (3,035 | ) | ||||
Debt issuance costs
|
(373 | ) | — | |||||
Net proceeds from stock issuances
|
224 | 565 | ||||||
Net cash provided by (used in) financing activities
|
85,125 | (27,866 | ) | |||||
Effect of exchange rates on cash and cash equivalents
|
815 | (169 | ) | |||||
Changes in cash and cash equivalents-
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
13,733 | (991 | ) | |||||
Cash and cash equivalents at beginning of year
|
7,656 | 8,363 | ||||||
Cash and cash equivalents at end of the six-month period
|
$ | 21,389 | $ | 7,372 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$ | 3,839 | $ | 4,210 | ||||
Income tax payments
|
$ | 11,304 | $ | 17,689 |
1)
|
Summary of Significant Accounting Policies
|
B)
|
Non-Cash Share-Based Compensation
|
|
C)
|
Income Tax Contingencies
|
United States – federal
|
2008 - 2010
|
United States – states
|
2003 - 2010
|
Brazil
|
2010
|
Canada
|
2009 - 2010
|
China
|
2002 - 2010
|
Denmark
|
2006 - 2010
|
Italy
|
2008 - 2010
|
Mexico
|
2005 - 2010
|
Philippines
|
2006 - 2010
|
South Korea
|
2005 - 2010
|
Spain
|
2007 - 2010
|
Taiwan
|
2007 - 2010
|
United Kingdom
|
2007 - 2010
|
Fair Value
|
Fair Value
|
Fair Value
|
||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
As of July 2, 2011
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||
None
|
— | — | — | $ | — | |||||||||||
Financial Liabilities:
|
||||||||||||||||
Interest rate swaps
|
— | $ | 2,526 | — | $ | 2,526 | ||||||||||
Contingent consideration
|
— | — | $ | 3,215 | $ | 3,215 | ||||||||||
As of January 1, 2011
|
||||||||||||||||
Financial Assets:
|
||||||||||||||||
None
|
— | — | — | $ | — | |||||||||||
Financial Liabilities:
|
||||||||||||||||
Interest rate swaps
|
— | $ | 2,196 | — | $ | 2,196 | ||||||||||
Contingent consideration
|
— | — | $ | 5,579 | $ | 5,579 |
2)
|
Acquisitions and Purchase Accounting
|
(as initially reported)
|
Measurement Period
|
(as adjusted)
|
||||||||||
Jul 13, 2010
|
Adjustments
|
Jul 13, 2010
|
||||||||||
Cash
|
$ | 247 | $ | — | $ | 247 | ||||||
Current assets
|
1,949 | (316 | ) | 1,633 | ||||||||
Goodwill
|
2,502 | (296 | ) | 2,206 | ||||||||
Other intangibles
|
1,653 | — | 1,653 | |||||||||
Current liabilities
|
(1,497 | ) | 612 | (885 | ) | |||||||
Net assets acquired and liabilities assumed
|
$ | 4,854 | $ | — | $ | 4,854 |
|
(as initially reported)
|
Measurement Period
|
(as adjusted)
|
|||||||||
Sep 21, 2010
|
Adjustments
|
Sep 21, 2010
|
||||||||||
Cash
|
$ | 557 | $ | 30 | $ | 587 | ||||||
Current assets
|
13,601 | 130 | 13,731 | |||||||||
Property, plant and equipment
|
863 | (30 | ) | 833 | ||||||||
Goodwill
|
9,601 | (1,644 | ) | 7,957 | ||||||||
Other intangibles
|
6,691 | 1,120 | 7,811 | |||||||||
Other assets
|
636 | 71 | 707 | |||||||||
Current liabilities
|
(11,859 | ) | 9 | (11,850 | ) | |||||||
Consideration paid at closing
|
$ | 20,090 | $ | (314 | ) | $ | 19,776 | |||||
Contingent consideration
|
2,000 | — | 2,000 | |||||||||
Net assets acquired and liabilities assumed
|
$ | 22,090 | $ | (314 | ) | $ | 21,776 |
Apr 12, 2011
|
||||
Cash
|
$ | 525 | ||
Current assets
|
1,145 | |||
Property, plant and equipment
|
57 | |||
Goodwill
|
11,433 | |||
Other intangibles
|
2,317 | |||
Current liabilities
|
(1,100 | ) | ||
Other non-current liabilities
|
(893 | ) | ||
Net assets acquired and liabilities assumed
|
$ | 13,484 |
May 27, 2011
|
||||
Cash
|
$ | 12,392 | ||
Current assets
|
16,992 | |||
Property, plant and equipment
|
14,368 | |||
Goodwill
|
45,765 | |||
Other intangibles
|
31,343 | |||
Current liabilities
|
(10,924 | ) | ||
Other non-current liabilities
|
(15,414 | ) | ||
Net assets acquired and liabilities assumed
|
$ | 94,522 |
3)
|
Litigation Matters
|
4)
|
Recently Issued Accounting Standards
|
5)
|
Other Comprehensive Income
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||
Net earnings
|
$ | 19,628 | $ | 17,509 | $ | 37,453 | $ | 31,271 | ||||||||
Currency translation adjustment
|
1,285 | (1,597 | ) | 1,844 | (2,306 | ) | ||||||||||
Unrealized gain/(loss) on interest rate swaps, net of tax
|
(272 | ) | 5 | (198 | ) | 68 | ||||||||||
Comprehensive income
|
$ | 20,641 | $ | 15,917 | $ | 39,099 | $ | 29,033 |
6)
|
Inventories
|
Jul 2, 2011
|
Jan 1, 2011
|
|||||||
(in thousands)
|
||||||||
Raw materials and parts
|
$ | 69,137 | $ | 60,452 | ||||
Work-in-process
|
13,262 | 12,292 | ||||||
Finished goods
|
39,428 | 33,432 | ||||||
121,827 | 106,176 | |||||||
LIFO reserve
|
287 | 287 | ||||||
$ | 122,114 | $ | 106,463 |
7)
|
Goodwill
|
Commercial
|
Food
|
|||||||||||
Foodservice
|
Processing
|
Total
|
||||||||||
Balance as of January 1, 2011
|
$ | 330,501 | $ | 39,488 | $ | 369,989 | ||||||
Goodwill acquired during the year
|
57,198 | — | 57,198 | |||||||||
Adjustments to prior year acquisitions
|
— | (5 | ) | (5 | ) | |||||||
Foreign exchange rate effect
|
(151 | ) | (323 | ) | (474 | ) | ||||||
Balance as of July 2, 2011
|
$ | 387,548 | $ | 39,160 | $ | 426,708 |
8)
|
Accrued Expenses
|
|
Accrued expenses consist of the following:
|
Jul 2, 2011
|
Jan 1, 2011
|
|||||||
(in thousands)
|
||||||||
Accrued payroll and related expenses
|
$ | 26,913 | $ | 32,625 | ||||
Accrued warranty
|
15,100 | 14,468 | ||||||
Accrued customer rebates
|
11,739 | 18,086 | ||||||
Accrued product liability and workers compensation
|
10,442 | 9,711 | ||||||
Advanced customer deposits
|
10,067 | 13,357 | ||||||
Accrued agent commission
|
7,546 | 7,824 | ||||||
Accrued professional services
|
6,400 | 5,944 | ||||||
Other accrued expenses
|
31,623 | 23,795 | ||||||
$ | 119,830 | $ | 125,810 |
9)
|
Warranty Costs
|
Six Months Ended
|
||||
Jul 2, 2011
|
||||
(in thousands)
|
||||
Beginning balance
|
$ | 14,468 | ||
Warranty reserve related to acquisitions
|
1,204 | |||
Warranty expense
|
10,867 | |||
Warranty claims
|
(11,439 | ) | ||
Ending balance
|
$ | 15,100 |
10)
|
Financing Arrangements
|
Jul 2, 2011
|
Jan 1, 2011
|
|||||||
(in thousands)
|
||||||||
Senior secured revolving credit line
|
$ | 300,650 | $ | 207,250 | ||||
Foreign loans
|
8,794 | 6,767 | ||||||
Total debt
|
$ | 309,444 | $ | 214,017 | ||||
Less: Current maturities of long-term debt
|
7,033 | 5,097 | ||||||
Long-term debt
|
$ | 302,411 | $ | 208,920 |
July 2, 2011
|
January 1, 2011
|
|||||||||||||||
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
|||||||||||||
Total debt
|
$ | 309,444 | $ | 304,862 | $ | 214,017 | $ | 209,808 |
Fixed
|
||||||||||
Notional
|
Interest
|
Effective
|
Maturity
|
|||||||
Amount
|
Rate
|
Date
|
Date
|
|||||||
|
||||||||||
$ | 10,000,000 | 3.460 | % |
09/08/08
|
09/06/11
|
|||||
25,000,000 | 3.670 | % |
11/23/08
|
09/23/11
|
||||||
15,000,000 | 1.220 | % |
11/23/09
|
11/23/11
|
||||||
20,000,000 | 1.800 | % |
11/23/09
|
11/23/12
|
||||||
20,000,000 | 1.560 | % |
03/11/10
|
12/11/12
|
||||||
10,000,000 | 1.120 | % |
03/11/10
|
03/11/12
|
||||||
15,000,000 | 0.950 | % |
08/06/10
|
12/06/12
|
||||||
25,000,000 | 1.610 | % |
02/23/11
|
02/24/14
|
||||||
25,000,000 | 2.520 | % |
02/23/11
|
02/23/16
|
11)
|
Financial Instruments
|
Sell
|
Purchase
|
Maturity
|
||
15,000,000 British Pounds
|
16,767,000 Euro Dollars
|
July 8, 2011
|
||
14,000,000 British Pounds
|
15,648,000 Euro Dollars
|
July 8, 2011
|
Condensed Consolidated
|
|||||||||
Balance Sheet Presentation
|
Jul 2, 2011
|
Jan 1, 2011
|
|||||||
Fair value
|
Other non-current liabilities
|
$ | (2,526 | ) | $ | (2,186 | ) |
Three Months Ended
|
Six Months Ended
|
||||||||||||||||
Presentation of Gain/(loss)
|
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||
Gain/(loss) recognized in other comprehensive income
|
Other comprehensive income
|
$ | (1,286 | ) | $ | (886 | ) | $ | (1,920 | ) | $ | (1,761 | ) | ||||
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)
|
Interest expense
|
$ | (787 | ) | $ | (921 | ) | $ | (1,577 | ) | $ | (1,911 | ) | ||||
Gain/(loss) recognized in income (ineffective portion)
|
Other expense
|
$ | (37 | ) | $ | (18 | ) | $ | 3 | $ | (11 | ) |
12)
|
Segment Information
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||||||||||||||||||
Sales
|
Percent
|
Sales
|
Percent
|
Sales
|
Percent
|
Sales
|
Percent
|
|||||||||||||||||||||||||
Business Divisions:
|
||||||||||||||||||||||||||||||||
Commercial Foodservice
|
$ | 178,271 | 84.5 | $ | 153,418 | 88.5 | $ | 332,004 | 84.4 | $ | 293,955 | 88.0 | ||||||||||||||||||||
Food Processing
|
32,584 | 15.5 | 19,994 | 11.5 | 61,423 | 15.6 | 40,140 | 12.0 | ||||||||||||||||||||||||
Total
|
$ | 210,855 | 100.0 | % | $ | 173,412 | 100.0 | % | $ | 393,427 | 100.0 | % | $ | 334,095 | 100.0 | % |
Commercial
|
Food
|
Corporate
|
||||||||||||||
Foodservice
|
Processing
|
and Other(2)
|
Total
|
|||||||||||||
Three months ended July 2, 2011
|
||||||||||||||||
Net sales
|
$ | 178,271 | $ | 32,584 | $ | — | $ | 210,855 | ||||||||
Income from operations
|
43,408 | 6,435 | (14,595 | ) | 35,248 | |||||||||||
Depreciation and amortization expense
|
4,568 | 550 | 168 | 5,286 | ||||||||||||
Net capital expenditures
|
1,261 | 113 | 74 | 1,448 | ||||||||||||
Six months ended July 2, 2011
|
||||||||||||||||
Net sales
|
$ | 332,004 | $ | 61,423 | $ | — | $ | 393,427 | ||||||||
Income from operations
|
79,243 | 11,222 | (23,853 | ) | 66,612 | |||||||||||
Depreciation and amortization expense
|
7,891 | 1,101 | 341 | 9,333 | ||||||||||||
Net capital expenditures
|
2,794 | 139 | 218 | 3,151 | ||||||||||||
Total assets
|
857,058 | 98,793 | 63,235 | 1,019,086 | ||||||||||||
Long-lived assets
|
617,454 | 56,659 | 33,595 | 707,708 | ||||||||||||
Three months ended July 3, 2010
|
||||||||||||||||
Net sales
|
$ | 153,418 | $ | 19,994 | $ | — | $ | 173,412 | ||||||||
Income from operations
|
37,705 | 3,664 | (11,640 | ) | 29,729 | |||||||||||
Depreciation and amortization expense
|
3,381 | 354 | 156 | 3,891 | ||||||||||||
Net capital expenditures
|
753 | 40 | 211 | 1,004 | ||||||||||||
Six months ended July 3, 2010
|
||||||||||||||||
Net sales
|
$ | 293,955 | $ | 40,140 | $ | — | $ | 334,095 | ||||||||
Income from operations
|
69,040 | 8,036 | (20,912 | ) | 56,164 | |||||||||||
Depreciation and amortization expense
|
6,783 | 712 | 312 | 7,807 | ||||||||||||
Net capital expenditures
|
2,092 | 102 | 211 | 2,405 | ||||||||||||
Total assets
|
702,588 | 74,070 | 47,199 | 823,857 | ||||||||||||
Long-lived assets
|
519,969 | 43,106 | 27,415 | 590,490 |
|
(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.
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||
United States and Canada
|
$ | 581,134 | $ | 565,691 | ||||
Asia
|
15,442 | 1,874 | ||||||
Europe and Middle East
|
110,245 | 22,738 | ||||||
Latin America
|
887 | 187 | ||||||
Total international
|
$ | 126,574 | $ | 24,799 | ||||
$ | 707,708 | $ | 590,490 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||
United States and Canada
|
$ | 155,549 | $ | 140,336 | $ | 296,180 | $ | 269,265 | ||||||||
Asia
|
13,528 | 8,308 | 23,824 | 17,221 | ||||||||||||
Europe and Middle East
|
31,710 | 20,415 | 53,620 | 39,240 | ||||||||||||
Latin America
|
10,068 | 4,353 | 19,803 | 8,369 | ||||||||||||
Total international
|
$ | 55,306 | $ | 33,076 | $ | 97,247 | $ | 64,830 | ||||||||
$ | 210,855 | $ | 173,412 | $ | 393,427 | $ | 334,095 |
13)
|
Employee Retirement Plans
|
14)
|
Subsequent Events
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||||||||||||||||||
Sales
|
Percent
|
Sales
|
Percent
|
Sales
|
Percent
|
Sales
|
Percent
|
|||||||||||||||||||||||||
Business Divisions:
|
||||||||||||||||||||||||||||||||
Commercial Foodservice
|
$ | 178,271 | 84.5 | $ | 153,418 | 88.5 | $ | 332,004 | 84.4 | $ | 293,955 | 88.0 | ||||||||||||||||||||
Food Processing
|
32,584 | 15.5 | 19,994 | 11.5 | 61,423 | 15.6 | 40,140 | 12.0 | ||||||||||||||||||||||||
Total
|
$ | 210,855 | 100.0 | % | $ | 173,412 | 100.0 | % | $ | 393,427 | 100.0 | % | $ | 334,095 | 100.0 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Jul 2, 2011
|
Jul 3, 2010
|
Jul 2, 2011
|
Jul 3, 2010
|
|||||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales
|
59.5 | 60.0 | 60.1 | 60.2 | ||||||||||||
Gross profit
|
40.5 | 40.0 | 39.9 | 39.8 | ||||||||||||
Selling, general and administrative expenses
|
23.8 | 22.9 | 23.0 | 23.0 | ||||||||||||
Income from operations
|
16.7 | 17.1 | 16.9 | 16.8 | ||||||||||||
Net interest expense and deferred financing amortization
|
1.0 | 1.3 | 1.1 | 1.4 | ||||||||||||
Other expense, net
|
0.8 | 0.1 | 0.3 | 0.2 | ||||||||||||
Earnings before income taxes
|
14.9 | 15.7 | 15.5 | 15.2 | ||||||||||||
Provision for income taxes
|
5.6 | 5.6 | 6.0 | 5.8 | ||||||||||||
Net earnings
|
9.3 | % | 10.1 | % | 9.5 | % | 9.4 | % |
|
·
|
Net sales at the Commercial Foodservice Equipment Group amounted to $178.3 million in the second quarter of 2011 as compared to $153.4 million in the prior year quarter. Net sales resulting from the acquisitions of PerfectFry, Beech and Lincat, which were acquired on July 13, 2010, April 12, 2011 and May 27, 2011, respectively, accounted for an increase of $7.6 million during the second quarter of 2011. Excluding the impact of these acquisitions, net sales of Commercial Foodservice Equipment increased $17.3 million in the second quarter of 2011. The improvement in net sales reflects an improvement in market conditions as commercial restaurant customers increased their spending on replacement of equipment. Additionally, net sales reflects increased market penetration resulting from new product introductions and increased sales activities focused on major restaurant chain accounts and the emerging markets.
|
|
·
|
Net sales for the Food Processing Equipment Group amounted to $32.6 million in the second quarter of 2011 as compared to $20.0 million in the prior year quarter. Net sales resulting from the Cozzini acquisition, which was acquired on September 21, 2010, accounted for an increase of $12.9 million. Excluding the impact of this acquisition, net sales of Food Processing Equipment decreased by $0.3 million due to timing of customer orders.
|
|
·
|
Improved margins at certain of the newly acquired operating companies which have improved due to acquisition integration initiatives including costs savings from plant consolidations.
|
|
·
|
The benefit of increased sales volumes, partially offset by;
|
|
·
|
The impact of rising material costs.
|
|
·
|
Net sales at the Commercial Foodservice Equipment Group for the six-month period ended July 2, 2011 amounted to $332.0 million as compared to $294.0 million for the six month period ended July 3, 2010. Net sales resulting from the acquisitions of PerfectFry, Beech and Lincat, which were acquired on July 13, 2010, April 12, 2011 and May 27, 2011, respectively, accounted for an increase of $8.4 million during the six-month period ended July 2, 2011. Excluding the impact of this acquisition, net sales of Commercial Foodservice Equipment for the six-month period ended July 2, 2011 increased $29.6 million as compared to the six-month period ended July 3, 2010. The improvement in net sales reflects an improvement in market conditions as commercial restaurant customers increased their spending on replacement of equipment. Additionally, net sales reflects increased market penetration resulting from new product introductions and increased sales activities focused on major restaurant chain accounts and the emerging markets.
|
|
·
|
Net sales for the Food Processing Equipment Group amounted to $61.4 million in the six-month period ended July 2, 2011 as compared to $40.1 million in the prior year period. Net sales resulting from the Cozzini acquisition, which was acquired on September 21, 2010 accounted for an increase of $22.2 million. Excluding the impact of this acquisition, net sales of Food Processing Equipment decreased by $0.9 million due to timing of customer orders.
|
|
·
|
The benefit of increased sales volumes.
|
|
·
|
Improved margins at certain of the newly acquired operating companies which have improved due to acquisition integration initiatives including costs savings from plant consolidations, partially offset by;
|
|
·
|
The impact of rising material costs.
|
Amounts
|
|
Total
|
||||||||||||||||||
Due to
|
|
|
Idle
|
Contractual
|
||||||||||||||||
Sellers From
|
Long-term
|
Operating
|
Facility
|
Cash
|
||||||||||||||||
Acquisitions
|
Debt
|
Leases
|
Leases
|
Obligations
|
||||||||||||||||
Less than 1 year
|
$ | 1,007 | $ | 7,033 | $ | 3,968 | $ | 584 | $ | 12,592 | ||||||||||
1-3 years
|
2,208 | 300,910 | 4,389 | 734 | 308,241 | |||||||||||||||
3-5 years
|
- | 286 | 1,632 | 323 | 2,241 | |||||||||||||||
After 5 years
|
- | 1,215 | 1,379 | - | 2,594 | |||||||||||||||
$ | 3,215 | $ | 309,444 | $ | 11,368 | $ | 1,641 | $ |
325,668
|
Fixed
|
Variable
|
|||||||
Rate
|
Rate
|
|||||||
Twelve Month Period Ending
|
Debt
|
Debt
|
||||||
(in thousands)
|
||||||||
July 2, 2012
|
$ | — | $ | 7,033 | ||||
July 2, 2013
|
— | 300,778 | ||||||
July 2, 2014
|
— | 132 | ||||||
July 2, 2015
|
— | 139 | ||||||
July 2, 2016 and thereafter
|
— | 1,362 | ||||||
$ | — | $ | 309,444 |
Fixed
|
|||||||||||
Notional
|
Interest
|
Effective
|
Maturity
|
||||||||
Amount
|
Rate
|
Date
|
Date
|
||||||||
$ | 10,000,000 | 3.460 | % |
09/08/08
|
09/06/11
|
||||||
25,000,000 | 3.670 | % |
11/23/08
|
09/23/11
|
|||||||
15,000,000 | 1.220 | % |
11/23/09
|
11/23/11
|
|||||||
20,000,000 | 1.800 | % |
11/23/09
|
11/23/12
|
|||||||
20,000,000 | 1.560 | % |
03/11/10
|
12/11/12
|
|||||||
10,000,000 | 1.120 | % |
03/11/10
|
03/11/12
|
|||||||
15,000,000 | 0.950 | % |
08/06/10
|
12/06/12
|
|||||||
25,000,000 | 1.610 | % |
02/23/11
|
02/24/14
|
|||||||
25,000,000 | 2.520 | % |
02/23/11
|
02/23/16
|
Sell
|
Purchase
|
Maturity
|
||
15,000,000 British Pounds
|
16,767,000 Euro Dollars
|
July 8, 2011
|
||
14,000,000 British Pounds
|
|
15,648,000 Euro Dollars
|
|
July 8, 2011
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
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
|
|||||||||||||
April 3 to April 30, 2011
|
— | — | — | 349,885 | ||||||||||||
May 1 to May 28, 2011
|
— | — | — | 349,885 | ||||||||||||
May 29, 2011 to July 2, 2011
|
— | — | — | 349,885 | ||||||||||||
Quarter ended July 2, 2011
|
— | — | — | 349,885 |
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 2, 2011, filed on August 11, 2011, 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 11, 2011
|
By:
|
/s/ Timothy J. FitzGerald
|
|
Timothy J. FitzGerald
|
||||
Vice President,
|
||||
Chief Financial Officer
|
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.
|
Date: August 11, 2011
|
|
/s/ Selim A. Bassoul
|
|
Selim A. Bassoul
|
|
Chairman, President and
|
|
Chief Executive Officer of The Middleby Corporation
|
1.
|
I have reviewed this 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
|
Financial Instruments - Additional Information (Detail)
|
6 Months Ended | |||
---|---|---|---|---|
Jul. 02, 2011
USD ($)
|
Jul. 02, 2011
Foreign Exchange Forward
USD ($)
|
Jul. 02, 2011
Foreign Exchange Forward
Currency, British Pound Sterling
GBP (£)
|
Jul. 02, 2011
Foreign Exchange Forward
Currency, Euro
EUR (€)
|
|
Derivative [Line Items] | ||||
Forward contracts to sell British Pounds | £ 29,000,000 | |||
Forward contracts to purchase Euro Dollars | 32,400,000 | |||
Fair value of the forward contracts | 400,000 | |||
Fair value of interest rate swaps | (2,500,000) | |||
Change in fair value of interest rate swaps | $ (300,000) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Accounts receivable, reserve for doubtful accounts | $ 8,302 | $ 7,975 |
Property, plant and equipment, accumulated depreciation | $ 51,326 | $ 47,355 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 47,500,000 | 47,500,000 |
Common stock, shares issued | 23,094,964 | 22,691,821 |
Treasury stock, shares | 4,347,360 | 4,233,810 |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
Jul. 03, 2010
|
Jul. 02, 2011
|
Jul. 03, 2010
|
|||||||||
Net sales | $ 210,855 | [1] | $ 173,412 | [1] | $ 393,427 | [1] | $ 334,095 | [1] | ||||
Cost of sales | 125,518 | 103,988 | 236,260 | 201,198 | ||||||||
Gross profit | 85,337 | 69,424 | 157,167 | 132,897 | ||||||||
Selling expenses | 21,569 | 19,036 | 42,137 | 36,661 | ||||||||
General and administrative expenses | 28,520 | 20,659 | 48,418 | 40,072 | ||||||||
Income from operations | 35,248 | [1] | 29,729 | [1] | 66,612 | [1] | 56,164 | [1] | ||||
Net interest expense and deferred financing amortization | 2,119 | 2,246 | 4,179 | 4,721 | ||||||||
Other expense, net | 1,608 | 220 | 1,446 | 564 | ||||||||
Earnings before income taxes | 31,521 | 27,263 | 60,987 | 50,879 | ||||||||
Provision for income taxes | 11,893 | 9,754 | 23,534 | 19,608 | ||||||||
Net earnings | $ 19,628 | $ 17,509 | $ 37,453 | $ 31,271 | ||||||||
Net earnings per share: | ||||||||||||
Basic | $ 1.09 | $ 0.98 | $ 2.08 | $ 1.76 | ||||||||
Diluted | $ 1.06 | $ 0.96 | $ 2.02 | $ 1.71 | ||||||||
Weighted average number of shares | ||||||||||||
Basic | 18,052 | 17,863 | 17,976 | 17,808 | ||||||||
Dilutive equity awards | 527 | [2] | 459 | [2] | 536 | [2] | 461 | [2] | ||||
Diluted | 18,579 | 18,322 | 18,512 | 18,269 | ||||||||
|
Impact on Earnings from Interest Rate Swaps (Detail) (Interest Rate Swap, USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2011
|
Jul. 03, 2010
|
Jul. 02, 2011
|
Jul. 03, 2010
|
|
Other Comprehensive Income
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain/(loss) recognized in other comprehensive income | $ (1,286) | $ (886) | $ (1,920) | $ (1,761) |
Interest Expense
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion) | (787) | (921) | (1,577) | (1,911) |
Other Expense
|
||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain recognized in income (ineffective portion) | $ (37) | $ (18) | $ 3 | $ (11) |
Other Comprehensive Income (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) | Components
of other comprehensive income were as follows (in
thousands):
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jul. 02, 2011
|
Aug. 05, 2011
|
|
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 02, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | MIDD | |
Entity Registrant Name | MIDDLEBY CORP | |
Entity Central Index Key | 0000769520 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 18,747,604 |
Carrying Value and Estimated Aggregate Fair Value of Debt (Detail) (USD $)
In Thousands |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Debt Disclosure [Line Items] | ||
Carrying Value | $ 309,444 | $ 214,017 |
Fair Value | $ 304,862 | $ 209,808 |
Accrued Expenses (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities |
|
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Goodwill
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
Changes
in the carrying amount of goodwill for the six months ended July 2,
2011 are as follows (in thousands):
|
Warranty Costs (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Product Warranty Table Disclosure | A
rollforward of the warranty reserve is as follows:
|
Changes in the Carrying Amount of Goodwill (Detail) (USD $)
In Thousands |
6 Months Ended |
---|---|
Jul. 02, 2011
|
|
Goodwill [Line Items] | |
Balance as of January 1, 2011 | $ 369,989 |
Goodwill acquired during the year | 57,198 |
Adjustments to prior year acquisitions | (5) |
Foreign exchange rate effect | (474) |
Balance as of July 2, 2011 | 426,708 |
Commercial Foodservice Equipment Group
|
|
Goodwill [Line Items] | |
Balance as of January 1, 2011 | 330,501 |
Goodwill acquired during the year | 57,198 |
Foreign exchange rate effect | (151) |
Balance as of July 2, 2011 | 387,548 |
Food Processing Group
|
|
Goodwill [Line Items] | |
Balance as of January 1, 2011 | 39,488 |
Adjustments to prior year acquisitions | (5) |
Foreign exchange rate effect | (323) |
Balance as of July 2, 2011 | $ 39,160 |
Estimated Fair Values of Assets Acquired and Liabilities Assumed for the Lincat Group Acquisition (Detail) (Lincat, USD $)
In Thousands |
May 27, 2011
|
---|---|
Lincat
|
|
Business Acquisition [Line Items] | |
Cash | $ 12,392 |
Current assets | 16,992 |
Property, plant and equipment | 14,368 |
Goodwill | 45,765 |
Other intangibles | 31,343 |
Current liabilities | (10,924) |
Other non-current liabilities | (15,414) |
Net assets acquired and liabilities assumed | $ 94,522 |
Goodwill (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Schedule of Goodwill | Changes
in the carrying amount of goodwill for the six months ended July 2,
2011 are as follows (in thousands):
|
Segment Information
|
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Segment Information |
The
company operates in two 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, Tennessee, Texas, Vermont, Australia,
China, Denmark, Italy, the Philippines 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, griddles, charbroilers, catering
equipment, fryers, toasters, hot food servers, foodwarming
equipment, griddles, coffee and beverage dispensing equipment and
kitchen processing and ventilation equipment. These
products are sold and marketed under the brand names: Anets, Beech,
Blodgett, Blodgett Combi, Blodgett Range, Bloomfield, Britannia,
CTX, Carter-Hoffmann, CookTek, Doyon, Frifri, Giga, Holman, Houno,
IMC, Jade, Lang, Lincat, MagiKitch’n, Middleby Marshall,
Nu-Vu, PerfectFry, Pitco, Southbend, Star, Toastmaster, TurboChef
and Wells.
The
Food Processing Equipment Group manufactures preparation, cooking,
packaging and food safety equipment for the food processing
industry. This business division has manufacturing
operations in Illinois, Iowa, Wisconsin and Mexico. Its
principal products include batch ovens, belt ovens and conveyorized
cooking systems sold under the Alkar brand name; grinding and
slicing equipment and food suspension, reduction and emulstion
systems sold under the Cozzini brand name; breading, battering,
mixing, slicing and forming equipment sold under the MP Equipment
brand name and packaging and food safety equipment sold under the
RapidPak brand name.
The
accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The chief
decision maker evaluates individual segment performance based on
operating income. Management believes that intersegment
sales are made at established arms-length transfer
prices.
Net Sales
Summary
(dollars in thousands)
The following table summarizes the results of operations for the
company's business segments(1)(in
thousands):
Long-lived
assets by major geographic region are as follows (in
thousands):
Net
sales by major geographic region were as follows (in
thousands):
|
Litigation Matters
|
6 Months Ended | ||
---|---|---|---|
Jul. 02, 2011
|
|||
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 accrual requirement 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 adverse effect on its financial
condition, results of operations or cash flows.
|
Estimated Fair Values of Assets Acquired and Liabilities Assumed for the PerfectFry Acquisition (Detail) (PerfectFry, USD $)
In Thousands |
Jul. 13, 2010
|
---|---|
Business Acquisition [Line Items] | |
Cash | $ 247 |
Current assets | 1,633 |
Goodwill | 2,206 |
Other intangibles | 1,653 |
Current liabilities | (885) |
Net assets acquired and liabilities assumed | 4,854 |
as initially reported
|
|
Business Acquisition [Line Items] | |
Cash | 247 |
Current assets | 1,949 |
Goodwill | 2,502 |
Other intangibles | 1,653 |
Current liabilities | (1,497) |
Net assets acquired and liabilities assumed | 4,854 |
Measurement Period Adjustments
|
|
Business Acquisition [Line Items] | |
Current assets | (316) |
Goodwill | (296) |
Current liabilities | $ 612 |
Warranty Costs
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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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:
|
Subsequent Events
|
6 Months Ended | ||
---|---|---|---|
Jul. 02, 2011
|
|||
Subsequent Events |
On
July 5, 2011, the company completed its acquisition of Danfotech
Inc. (“Danfotech”), a manufacturer of meat presses and
defrosting equipment for the food processing industry, for
approximately $5.6 million.
On
July 22, 2011, the company completed its acquisition of
Maurer-Atmos (“Maurer”), a manufacturer of batch and
continuous ovens for the food processing industry, for
approximately $4.0 million.
On
August 1, 2011, the company completed its acquisition of Auto-Bake
Proprietary Limited (“Auto-Bake”), a manufacturer of
automated baking ovens for the food processing industry, for
approximately $22.6 million.
|
Financing Arrangements
|
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Jul. 02, 2011
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Financing Arrangements |
During
the second quarter of 2011, the company exercised a provision under
its current credit facility that allowed the company to increase
the amount of availability under the revolving credit line by
approximately $102.0 million. Terms of the
company’s senior credit agreement provide for $600.0 million
of availability under a revolving credit line. As of
July 2, 2011, the company had $300.7 million of borrowings
outstanding under this facility. The company also had
$4.9 million in outstanding letters of credit as of July 2, 2011,
which reduces the borrowing availability under the revolving credit
line. Remaining borrowing availability under this
facility, which is also reduced by the company’s foreign
borrowings, was $285.6 million at July 2, 2011.
At
July 2, 2011, borrowings under the senior secured credit facility
are assessed at an interest rate of 1.0% above LIBOR for long-term
borrowings or at the higher of the Prime rate and the Federal Funds
Rate. At July 2, 2011 the average interest rate on the
senior debt amounted to 1.23%. The interest rates on borrowings
under the senior secured credit facility may be adjusted quarterly
based on the company’s indebtedness ratio on a rolling
four-quarter basis. Additionally, a commitment fee based
upon the indebtedness ratio is charged on the unused portion of the
revolving credit line. This variable commitment fee
amounted to 0.2% as of July 2, 2011.
In
August 2006, the company completed its acquisition of Houno A/S in
Denmark. This acquisition was funded in part with locally
established debt facilities with borrowings in Danish Krone.
On July 2, 2011 these facilities amounted to $3.9 million in
U.S. dollars, including $2.0 million outstanding under a revolving
credit facility and $1.9 million of a term loan. The interest
rate on the revolving credit facility is assessed at 1.25% above
Euro LIBOR, which amounted to 3.9% on July 2, 2011. The term loan
matures in 2013 and the interest rate is assessed at
4.6%.
In
April 2008, the company completed its acquisition of Giga Grandi
Cucine S.r.l in Italy. This acquisition was funded in part with
locally established debt facilities with borrowings denominated in
Euro. On July 2, 2011 these facilities amounted to $4.9
million in U.S. dollars. The interest rate on the credit
facilities is tied to six-month Euro LIBOR. At July 2, 2011, the
average interest rate on these facilities was approximately 3.0%.
The facilities mature in April 2015.
The
company’s debt is reflected on the balance sheet at cost.
Based on current market conditions, the company believes its
interest rate margins on its existing debt are below the rate
available in the market, which causes the fair value of debt to
fall below the carrying value. The company believes the
current interest rate margin is approximately 1.0% below current
market rates. However, as the interest rate margin is
based upon numerous factors, including but not limited to the
credit rating of the borrower, the duration of the loan, the
structure and restrictions under the debt agreement, current
lending policies of the counterparty, and the company’s
relationships with its lenders, there is no readily available
market data to ascertain the current market rate for an equivalent
debt instrument. As a result, the current interest rate
margin is based upon the company’s best estimate based upon
discussions with its lenders.
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 at July 2, 2011 to achieve sufficient cash inflows to cover
the cash outflows under the company’s senior 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
senior revolving credit facility in December
2012. 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 fair value of
the company’s senior debt obligations as estimated by the
company based upon its assumptions is approximately $304.9 million
at July 2, 2011, as compared to the carrying value of $309.4
million.
The
carrying value and estimated aggregate fair value, based primarily
on market prices, of debt is as follows (in
thousands):
The
company believes that its current capital resources, including cash
and cash equivalents, cash generated from operations, funds
available from its revolving credit facility and access to the
credit and capital markets will be sufficient to finance its
operations, debt service obligations, capital expenditures, product
development and integration expenditures for the foreseeable
future.
The
company has historically entered into interest rate swap agreements
to effectively fix the interest rate on a portion of its
outstanding debt. The agreements swap one-month LIBOR
for fixed rates. As of July 2, 2011 the company had the following
interest rate swaps in effect:
The
terms of the senior secured credit facility limit the paying of
dividends, capital expenditures and leases, and require, among
other things, a maximum ratio of indebtedness to earnings before
interest, taxes, depreciation and amortization
(“EBITDA”) of 3.5 and a minimum EBITDA to fixed charges
ratio of 1.25. The credit agreement also provides that if a
material adverse change in the company’s business operations
or conditions occurs, the lender could declare an event of default.
Under terms of the agreement, a material adverse effect is defined
as (a) a material adverse change in, or a material adverse effect
upon, the operations, business properties, condition (financial and
otherwise) or prospects of the company and its subsidiaries taken
as a whole; (b) a material impairment of the ability of the company
to perform under the loan agreements and to avoid any event of
default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against the company of
any loan document. A material adverse effect is determined on a
subjective basis by the company's creditors. The credit
facility is secured by the capital stock of the company’s
domestic subsidiaries, 65% of the capital stock of the
company’s foreign subsidiaries and substantially all other
assets of the company. At July 2, 2011, the company was
in compliance with all covenants pursuant to its borrowing
agreements.
|
Accrued Expenses
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Accrued Expenses |
|
Summary of Fair Value of Interest Rate Swaps (Detail) (Interest Rate Swap, Other Noncurrent Liabilities, USD $)
In Thousands |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Interest Rate Swap | Other Noncurrent Liabilities
|
||
Derivatives, Fair Value [Line Items] | ||
Fair value | $ (2,526) | $ (2,186) |
Summary of Significant Accounting Policies
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Summary of Significant Accounting Policies |
A) 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 2010 Form
10-K. The company’s interim results are not
necessarily indicative of future full year results for the fiscal
year 2011.
In
the opinion of management, the financial statements contain all
adjustments necessary to present fairly the financial position of
the company as of July 2, 2011 and January 1, 2011, and the results
of operations for the three and six months ended July 2, 2011 and
July 3, 2010 and cash flows for the six months ended July 2, 2011
and July 3, 2010.
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
$5.3 million and $4.2 million for the second quarter periods ended
July 2, 2011 and July 3, 2010, respectively. Non-cash
share-based compensation expense was $7.3 million and $7.4 million
for the six month periods ended July 2, 2011 and July 3, 2010,
respectively.
As
of January 1, 2011, the total amount of liability for unrecognized
tax benefits related to federal, state and foreign taxes was
approximately $17.8 million (of which $15.9 million would impact
the effective tax rate if recognized) plus approximately $2.1
million of accrued interest and $2.4 million of accrued penalties.
The company recognizes interest and penalties accrued related to
unrecognized tax benefits in income tax expense. Interest of $0.1
million and ($0.1) million were recognized in the second quarter of
2011 and 2010, respectively. Penalties of $0.1 million were
recognized in both the second quarter of 2011 and
2010. As of July 2, 2011, there were no significant
changes in the total amount of liability for unrecognized tax
benefits.
Although
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 such
decrease will not be material to the financial
statements.
The
company operates in multiple taxing jurisdictions, both within the
United States and outside of the United States, and faces audits
from various tax authorities. The company remains subject to
examination until the statute of limitations expires for the
respective tax jurisdiction. Within specific countries,
the company and its operating subsidiaries may be subject to audit
by various tax authorities and may be subject to different statute
of limitations expiration dates. A summary of the tax years that
remain subject to examination in the company’s major tax
jurisdictions are:
D) Fair
Value Measures
Accounting
Standards Codification (“ASC”) 820 “Fair Value
Measurements and Disclosures,”
defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles and expands
disclosure about fair value measurements.
ASC
820 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 assets and liabilities that are measured
at fair value and are categorized using the fair value hierarchy
are as follows (in thousands):
The
remaining contingent consideration relates to earnout provisions
recorded in conjunction with the acquisition of CookTek
LLC.
|
Recently Issued Accounting Standards
|
6 Months Ended | ||
---|---|---|---|
Jul. 02, 2011
|
|||
Recently Issued Accounting Standards |
In
December 2010, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2010-29, “Business Combinations
(Topic 805).” ASU No. 2010-29 clarifies the
disclosures required for pro forma information for business
combinations. ASU No. 2010-29 specifies if comparative
financial statements are presented, revenue and earnings of a
combined entity should be disclosed as though the business
combination that occurred during the current year had occurred as
of the beginning of the comparable prior annual reporting period
only. The amendments in ASU 2010-29 are effective for
business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or
after December 15, 2010. The company adopted the
provisions of ASU No. 2010-29 on January 2,
2011. The adoption of ASU No. 2010-29 did not have any
impact on the company’s financial position, results of
operations or cash flows. As the company had no material
acquisitions during the six months ended July 2, 2011, there were
no disclosures required.
In
June 2011, the FASB issued ASU No. 2011-05,
“Presentation of Comprehensive Income,” which
eliminates the option to present the components of other
comprehensive income in the statement of changes in
stockholders’ equity. Instead, entities will have the option
to present the components of net income, the components of other
comprehensive income and total comprehensive income in a single
continuous statement or in two separate but consecutive statements.
The guidance does not change the items reported in other
comprehensive income or when an item of other comprehensive income
is reclassified to net income. This ASU is effective for fiscal
years, and interim periods within those years, beginning after
December 15, 2011, and will be applied retrospectively. As
this guidance only revises the presentation of comprehensive
income, the adoption of this guidance is not expected to affect the
company’s financial position, results of operations or
cash flows.
In
May 2011, the FASB issued ASU No. 2011-04, “Amendments
to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRSs.” This update provides
clarification on existing fair value measurement requirements,
amends existing guidance primarily related to fair value
measurements for financial instruments, and requires enhanced
disclosures on fair value measurements. The additional disclosures
are specific to Level 3 fair value measurements, transfers between
Level 1 and Level 2 of the fair value hierarchy, financial
instruments not measured at fair value and use of an asset measured
or disclosed at fair value differing from its highest and best use.
This ASU is effective for interim and annual periods beginning
after December 15, 2011, and will be applied prospectively.
The adoption of this guidance is not expected to affect the
company’s financial position, results of operations or cash
flows.
|
Other Comprehensive Income - Additional Information (Detail) (USD $)
In Millions |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive income, unrecognized pension benefit costs | $ 2.5 | $ 2.5 |
Accumulated other comprehensive income, foreign currency translation adjustments | 1.4 | 0.5 |
Accumulated other comprehensive income, unrealized loss on interest rate swaps | $ 1.3 | $ 1.1 |
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2011
|
Jul. 03, 2010
|
Jul. 02, 2011
|
Jul. 03, 2010
|
Jan. 01, 2011
|
|
Significant Accounting Policies [Line Items] | |||||
Non-cash share-based compensation expense | $ 5,300,000 | $ 4,200,000 | $ 7,349,000 | $ 7,372,000 | |
Unrecognized tax benefits related to federal, state and foreign taxes | 17,800,000 | ||||
Unrecognized tax benefits related to federal, state and foreign taxes of which would impact the effective tax rate if recognized | 15,900,000 | ||||
Unrecognized tax benefits, accrued interest | 2,100,000 | ||||
Unrecognized tax benefits, penalties | 2,400,000 | ||||
Unrecognized tax benefits, interest recognized | 100,000 | (100,000) | |||
Unrecognized tax benefits, penalties recognized | $ 100,000 | $ 100,000 |
Subsequent Events - Additional Information (Detail) (Acquisition, USD $)
In Millions |
6 Months Ended |
---|---|
Jul. 02, 2011
|
|
Danfotech
|
|
Subsequent Event [Line Items] | |
Subsequent Events date | Jul. 05, 2011 |
Acquisition of business, price | $ 5.6 |
Maurer
|
|
Subsequent Event [Line Items] | |
Subsequent Events date | Jul. 22, 2011 |
Acquisition of business, price | 4.0 |
Auto-Bake
|
|
Subsequent Event [Line Items] | |
Subsequent Events date | Aug. 01, 2011 |
Acquisition of business, price | $ 22.6 |
Forward and Option Purchase Contracts Outstanding (Detail) (Foreign Exchange Forward)
|
6 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 02, 2011
Currency, British Pound Sterling
GBP (£)
|
Jul. 02, 2011
Currency, British Pound Sterling
Derivative Instrument 1
GBP (£)
|
Jul. 02, 2011
Currency, British Pound Sterling
Derivative Instrument 2
GBP (£)
|
Jul. 02, 2011
Currency, Euro
EUR (€)
|
Jul. 02, 2011
Currency, Euro
Derivative Instrument 1
EUR (€)
|
Jul. 02, 2011
Currency, Euro
Derivative Instrument 2
EUR (€)
|
|
Derivative [Line Items] | ||||||
Forward contracts to sell British Pounds | £ 29,000,000 | £ 15,000,000 | £ 14,000,000 | |||
Maturity | Jul. 08, 2011 | Jul. 08, 2011 | Jul. 08, 2011 | Jul. 08, 2011 | ||
Forward contracts to purchase Euro Dollars | € 32,400,000 | € 16,767,000 | € 15,648,000 |
Other Comprehensive Income
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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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."
Components
of other comprehensive income were as follows (in
thousands):
Accumulated
other comprehensive income is comprised of unrecognized pension
benefit costs of $2.5 million, net of taxes as of July 2, 2011 and
January 1, 2011, cumulative foreign currency translation gains of
$1.4 million as of July 2, 2011 and losses of $0.5 million as of
January 1, 2011 and an unrealized loss on interest rate swaps of
$1.3 million and $1.1 million, net of taxes as of July 2, 2011 and
January 1, 2011.
|
Inventories (Detail) (USD $)
In Thousands |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Schedule of Inventory [Line Items] | ||
Raw materials and parts | $ 69,137 | $ 60,452 |
Work-in-process | 13,262 | 12,292 |
Finished goods | 39,428 | 33,432 |
Inventory, Gross, Total | 121,827 | 106,176 |
LIFO reserve | 287 | 287 |
Inventories, net | $ 122,114 | $ 106,463 |
Financing Arrangements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
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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, based primarily
on market prices, of debt is as follows (in
thousands):
|
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Schedule of Interest Rate Derivatives | As
of July 2, 2011 the company had the following interest rate swaps
in effect:
|
Inventories - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Inventory Disclosure [Line Items] | ||
Inventory under the LIFO method | $ 18.9 | $ 17.5 |
Percentage of LIFO inventory to total inventory | 15.00% | 16.00% |
Segment Information (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Net Sales Summary by Segment |
Net Sales
Summary
(dollars in thousands)
|
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Schedule of Segment Reporting Information, by Segment, Table |
The following table summarizes the results of operations for the
company's business segments(1)(in
thousands):
|
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Schedule of Entity-Wide Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | Long-lived
assets by major geographic region are as follows (in
thousands):
|
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Schedule of Entity-Wide Information, Revenue from External Customers by Products and Services | Net
sales by major geographic region were as follows (in
thousands):
|
Employee Retirement Plans
|
6 Months Ended | ||
---|---|---|---|
Jul. 02, 2011
|
|||
Employee Retirement Plans |
(a) Pension
Plans
The
company maintains a non-contributory defined benefit plan for its
employees at the Smithville, Tennessee facility, which was acquired
as part of the New Star International Holdings, Inc.
(“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 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 employees
participating in the defined benefit plan were enrolled in a newly
established 401K savings plan on July 1, 2002, further described
below.
The
company also maintains a retirement benefit agreement with its
Chairman. The retirement benefits are based upon a percentage of
the Chairman’s final base salary. Additionally, the company
maintains a retirement plan for non-employee directors who served
on the Board of Directors prior to 2004. In November
2010, the Board of Directors approved a revision to the
directors’ compensation program that resulted in the plan
being frozen and the benefits being distributed to the plan
participants. Benefit distributions were made in December 2010 and
January 2011. As of July 2, 2011, there were no longer any
participants in the plan for non-employee directors. This plan is
not available to any new non-employee directors.
(b) 401K
Savings Plans
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 makes profit
sharing contributions to the various plans in accordance with the
requirements of the plan. Profit sharing
contributions for the Elgin Union 401K savings plans are made in
accordance with the agreement.
|
Long-Lived Assets by Major Geographic Region (Detail) (USD $)
In Thousands |
Jul. 02, 2011
|
Jul. 03, 2010
|
||||
---|---|---|---|---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | $ 707,708 | [1] | $ 590,490 | [1] | ||
United States And Canada
|
||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | 581,134 | 565,691 | ||||
Asia
|
||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | 15,442 | 1,874 | ||||
Europe and Middle East
|
||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | 110,245 | 22,738 | ||||
Latin America
|
||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | 887 | 187 | ||||
Total International
|
||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Long-lived assets | $ 126,574 | $ 24,799 | ||||
|
Inventories
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 02, 2011
|
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Inventories |
Inventories
are composed of material, labor and overhead and are stated at the
lower of cost or market. Costs for inventory at two of
the company's manufacturing facilities have been determined using
the last-in, first-out ("LIFO") method. These
inventories under the LIFO method amounted to $18.9 million at July
2, 2011 and $17.5 million at January 1, 2011 and represented
approximately 15% and 16% of the total inventory in each respective
period. Costs for all other 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 2, 2011 and January 1,
2011 are as follows:
|
Summary of Significant Accounting Policies (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Summary of Income Tax Examinations | A
summary of the tax years that remain subject to examination in the
company’s major tax jurisdictions are:
|
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The
company’s financial assets and liabilities that are measured
at fair value and are categorized using the fair value hierarchy
are as follows (in thousands):
|
Components of Other Comprehensive Income (Detail) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2011
|
Jul. 03, 2010
|
Jul. 02, 2011
|
Jul. 03, 2010
|
|
Net earnings | $ 19,628 | $ 17,509 | $ 37,453 | $ 31,271 |
Currency translation adjustment | 1,285 | (1,597) | 1,844 | (2,306) |
Unrealized gain/(loss) on interest rate swaps, net of tax | (272) | 5 | (198) | 68 |
Comprehensive income | $ 20,641 | $ 15,917 | $ 39,099 | $ 29,033 |
Financial Instruments (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Foreign Exchange Transaction | As
of July 2, 2011, the fair value of the forward contracts was a gain
of $0.4 million.
|
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The
following tables summarize 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):
|
Acquisitions and Purchase Accounting (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Cozzini
|
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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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PerfectFry
|
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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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Beech
|
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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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Lincat
|
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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):
|
Accrued Expenses (Detail) (USD $)
In Thousands |
Jul. 02, 2011
|
Jan. 01, 2011
|
---|---|---|
Schedule of Accrued Liabilities [Line Items] | ||
Accrued payroll and related expenses | $ 26,913 | $ 32,625 |
Accrued warranty | 15,100 | 14,468 |
Accrued customer rebates | 11,739 | 18,086 |
Accrued product liability and workers compensation | 10,442 | 9,711 |
Advanced customer deposits | 10,067 | 13,357 |
Accrued agent commission | 7,546 | 7,824 |
Accrued professional services | 6,400 | 5,944 |
Other accrued expenses | 31,623 | 23,795 |
Accrued Liabilities, Current, Total | $ 119,830 | $ 125,810 |
Inventories (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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Schedule of Inventory, Current | Inventories
at July 2, 2011 and January 1, 2011 are as follows:
|
Acquisitions and Purchase Accounting
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
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Acquisitions and Purchase Accounting |
The
company operates in a highly fragmented industry and has completed
numerous acquisitions over the past several years as a component of
its growth strategy. The company has acquired industry
leading brands and technologies to position itself as a leader in
the commercial foodservice equipment and food processing equipment
industries.
The
company has accounted for all business combinations using the
purchase method to record a new cost basis for the assets acquired
and liabilities assumed. The difference between the
purchase price and the fair value of the assets acquired and
liabilities assumed has been recorded as goodwill in the financial
statements. The results of operations are reflected in
the consolidated financial statements of the company from the date
of acquisition.
PerfectFry
On
July 13, 2010, the company completed its acquisition of
substantially all of the assets and operations of PerfectFry
Company LTD (“PerfectFry”), a leading manufacturer of
ventless countertop frying units for the commercial foodservice
industry for a purchase price of approximately $4.9
million.
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):
The
goodwill and $1.2 million of other intangibles associated with the
trade name are subject to the non-amortization provisions of ASC
350 “Intangibles
- Goodwill and Other”. Other
intangibles also include $0.1 million allocated to developed
technology and $0.3 million allocated to customer relationships
which are to be amortized over a period of 5
years. Goodwill and other intangibles of PerfectFry are
allocated to the Commercial Foodservice Equipment Group for segment
reporting purposes. These assets are expected to be deductible for
tax purposes.
The
company believes that information gathered to date provides a
reasonable basis for estimating the fair values of assets acquired
and liabilities assumed but the company is waiting for additional
information necessary to finalize those fair
values. Thus, the provisional measurements of fair value
set forth above are subject to change. Such changes are
not expected to be significant. The company expects to complete the
purchase price allocation as soon as practicable but no later than
one year from the acquisition date.
Cozzini
On
September 21, 2010, the company completed its acquisition of the
food processing equipment business of Cozzini, Inc.
(“Cozzini”), a leading manufacturer of equipment
solutions for the food processing industry, for an aggregate
purchase price of approximately $19.2 million, net of cash
acquired, including $17.4 million in cash and 34,263 shares of
Middleby common stock valued at $1.8 million. An
additional contingent payment of $2.0 million was made in the first
quarter of 2011 upon the achievement of certain sales targets.
During the second quarter of 2011, the company finalized the
working capital provision resulting in no additional
payments.
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):
The
goodwill and $3.6 million of other intangibles associated with the
trade name are subject to the non-amortization provisions of ASC
350. Other intangibles also include $2.7 million
allocated to customer relationships and $1.4 million allocated to
backlog which are to be amortized over the periods of 4 years and 3
months respectively. Goodwill and other intangibles of
Cozzini are allocated to the Food Processing Group for segment
reporting purposes. These assets are expected to be deductible for
tax purposes.
The
company believes that information gathered to date provides a
reasonable basis for estimating the fair values of assets acquired
and liabilities assumed but the company is waiting for additional
information necessary to finalize those fair
values. Thus, the provisional measurements of fair value
set forth above are subject to change. Such changes are
not expected to be significant. The company expects to complete the
purchase price allocation as soon as practicable but no later than
one year from the acquisition date.
Beech
On
April 12, 2011, the company completed its acquisition of all of the
capital stock of J.W. Beech Pty. Ltd. together with its subsidiary,
Beech Ovens Pty. Ltd. (“Beech”), a leading manufacturer
of stone hearth ovens for the commercial foodservice industry for a
purchase price of approximately $13.5 million.
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):
The
goodwill and $2.0 million of other intangibles associated with the
trade name are subject to the non-amortization provisions of ASC
350. Other intangibles also includes $0.2 million
allocated to backlog which is to be amortized over a periods of 3
months. Goodwill and other intangibles of Beech are
allocated to the Commercial Foodservice Equipment Group for segment
reporting purposes. These assets are not expected to be deductible
for tax purposes.
The
company believes that information gathered to date provides a
reasonable basis for estimating the fair values of assets acquired
and liabilities assumed but the company is waiting for additional
information necessary to finalize those fair
values. Thus, the provisional measurements of fair value
set forth above are subject to change. Such changes are
not expected to be significant. The company expects to complete the
purchase price allocation as soon as practicable but no later than
one year from the acquisition date.
Lincat
Group
On
May 27, 2011, the company completed its acquisition of Lincat Group
PLC (“Lincat”), a leading manufacturer of ranges,
ovens, and counterline equipment for the commercial foodservice
industry for a purchase price of approximately $94.5
million.
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):
The
goodwill and $16.6 million of other intangibles associated with the
trade name are subject to the non-amortization provisions of ASC
350. Other intangibles also includes $14.1 million
allocated to customer relationships and $0.7 million allocated to
backlog, which are to be amortized over periods of 6 years and 1
months, respectively. Goodwill and other intangibles of
Lincat are allocated to the Commercial Foodservice Equipment Group
for segment reporting purposes. These assets are expected to be
deductible for tax purposes.
The
company believes that information gathered to date provides a
reasonable basis for estimating the fair values of assets acquired
and liabilities assumed but the company is waiting for additional
information necessary to finalize those fair
values. Thus, the provisional measurements of fair value
set forth above are subject to change. The company
expects to complete the purchase price allocation as soon as
practicable but no later than one year from the acquisition
date.
|
Financial Instruments
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2011
|
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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 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 has entered into derivative
instruments, principally forward contracts to reduce exposures
pertaining to fluctuations in foreign exchange rates. As
of July 2, 2011, the company had forward contracts to sell $29.0
million British Pounds for $32.4 million Euro dollars which mature
in the next fiscal quarter. As of July 2, 2011, the fair value of
the forward contracts was a gain of $0.4 million.
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 2,
2011, the fair value of these instruments was a loss of $2.5
million. The change in fair value of these swap
agreements in the first six months of 2011 was a loss of $0.3
million, net of taxes.
The
following tables summarize 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 and
assesses its creditworthiness prior to entering into the interest
rate swap agreements. 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.
|
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