Delaware
|
36-3352497
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer Identification No.)
|
1400
Toastmaster Drive, Elgin, Illinois
|
60120
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
DESCRIPTION
|
PAGE
|
PART
I. FINANCIAL INFORMATION
|
|
Item 1. Condensed
Consolidated Financial Statements (unaudited)
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
2
|
March
31, 2007 and December 30, 2006
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
|
3
|
March
31, 2007 and April 1, 2006
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
4
|
March
31, 2007 and April 1, 2006
|
|
NOTES
TO CONDENSED CONSOLIDATED
|
|
FINANCIAL
STATEMENTS
|
5
|
Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
17
|
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
|
24
|
Item 4. Controls
and Procedures
|
27
|
PART
II. OTHER INFORMATION
|
|
Item 1 A. Risk
Factors
|
28
|
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
|
28
|
|
|
Item 6. Exhibits
|
29
|
ASSETS
|
Mar.
31, 2007
|
Dec.
30, 2006
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,053
|
$
|
3,534
|
|||
Accounts
receivable, net of reserve for
doubtful
accounts of $4,883 and $5,101
|
53,749
|
51,580
|
|||||
Inventories,
net
|
52,146
|
47,292
|
|||||
Prepaid
expenses and other
|
1,831
|
3,289
|
|||||
Prepaid
taxes
|
3,193
|
1,129
|
|||||
Current
deferred taxes
|
10,061
|
10,851
|
|||||
Total
current assets
|
125,033
|
117,675
|
|||||
Property,
plant and equipment, net of
accumulated
depreciation of $37,814 and $37,006
|
28,275
|
28,534
|
|||||
Goodwill
|
101,247
|
101,258
|
|||||
Other
intangibles
|
34,963
|
35,306
|
|||||
Other
assets
|
2,055
|
2,249
|
|||||
Total
assets
|
$
|
291,573
|
$
|
285,022
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Current
maturities of long-term debt
|
$
|
16,347
|
$
|
16,838
|
|||
Accounts
payable
|
20,618
|
19,689
|
|||||
Accrued
expenses
|
52,899
|
69,636
|
|||||
Total
current liabilities
|
89,864
|
106,163
|
|||||
Long-term
debt
|
71,134
|
65,964
|
|||||
Long-term
deferred tax liability
|
2,665
|
5,867
|
|||||
Other
non-current liabilities
|
13,764
|
6,455
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $0.01 par value; nonvoting; 2,000,000 shares authorized;
none
issued
|
--
|
--
|
|||||
Common
stock, $0.01 par value; 20,000,000 shares authorized; 11,832,867
and
11,807,767 shares issued in 2007 and 2006, respectively
|
117
|
117
|
|||||
Paid-in
capital
|
78,335
|
73,743
|
|||||
Treasury
stock at cost; 3,855,044
shares
in 2007 and 2006, respectively
|
(89,641
|
)
|
(89,641
|
)
|
|||
Retained
earnings
|
125,002
|
115,917
|
|||||
Accumulated
other comprehensive income
|
333
|
437
|
|||||
Total
stockholders' equity
|
114,146
|
100,573
|
|||||
Total
liabilities and stockholders' equity
|
$
|
291,573
|
$
|
285,022
|
Three
Months Ended
|
|||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||
Net
sales
|
$
|
105,695
|
$
|
96,749
|
|||
Cost
of sales
|
64,590
|
61,225
|
|||||
Gross
profit
|
41,105
|
35,524
|
|||||
Selling
and distribution expenses
|
11,116
|
10,125
|
|||||
General
and administrative expenses
|
11,183
|
10,251
|
|||||
Income
from operations
|
18,806
|
15,148
|
|||||
Interest
expense and deferred financing amortization, net
|
1,244
|
1,796
|
|||||
Other
(income), net
|
(107
|
)
|
(93
|
)
|
|||
Earnings
before income taxes
|
17,669
|
13,445
|
|||||
Provision
for income taxes
|
6,949
|
5,394
|
|||||
Net
earnings
|
$
|
10,720
|
$
|
8,051
|
|||
Net
earnings per share:
|
|||||||
Basic
|
$
|
1.38
|
$
|
1.06
|
|||
Diluted
|
$
|
1.28
|
$
|
0.97
|
|||
Weighted
average number of shares
|
|||||||
Basic
|
7,755
|
7,618
|
|||||
Dilutive
stock options1
|
615
|
650
|
|||||
Diluted
|
8,370
|
8,268
|
Three
Months Ended
|
|||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||
Cash
flows from operating activities-
|
|||||||
Net
earnings
|
$
|
10,720
|
$
|
8,051
|
|||
Adjustments
to reconcile net earnings to cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
1,318
|
1,256
|
|||||
Deferred
taxes
|
25
|
(629
|
)
|
||||
Non-cash
share-based compensation
|
1,322
|
1,098
|
|||||
Cash
effects of changes in -
|
|||||||
Accounts
receivable, net
|
(2,121
|
)
|
(2,823
|
)
|
|||
Inventories,
net
|
(4,823
|
)
|
(2,270
|
)
|
|||
Prepaid
expenses and other assets
|
(697
|
)
|
3,882
|
||||
Accounts
payable
|
907
|
3,233
|
|||||
Accrued
expenses and other liabilities
|
(11,086
|
)
|
(10,699
|
)
|
|||
|
|||||||
Net
cash (used in) provided by operating activities
|
(4,435
|
)
|
1,099
|
||||
|
|||||||
Cash
flows from investing activities-
Net
additions to property and equipment
|
(598
|
)
|
(501
|
)
|
|||
Net
cash (used in) investing activities
|
(598
|
)
|
(501
|
)
|
|||
|
|||||||
Cash
flows from financing activities-
Net
proceeds under revolving credit facilities
|
9,450
|
2,350
|
|||||
(Repayments)
under senior secured bank notes
|
(3,750
|
)
|
(3,125
|
)
|
|||
(Repayments)
under foreign bank loan
|
(1,077
|
)
|
(204
|
)
|
|||
(Repayments)
under note agreement
|
--
|
(76
|
)
|
||||
Net
proceeds from stock issuances
|
925
|
50
|
|||||
|
|||||||
Net
cash provided by (used in) financing activities
|
5,548
|
(1,005
|
)
|
||||
|
|||||||
Effect
of exchange rates on cash and cash equivalents
|
4
|
9
|
|||||
|
|||||||
Changes
in cash and cash equivalents-
|
|||||||
|
|||||||
Net
increase (decrease) in cash and cash equivalents
|
519
|
(398
|
)
|
||||
|
|||||||
Cash
and cash equivalents at beginning of year
|
3,534
|
3,908
|
|||||
|
|||||||
Cash
and cash equivalents at end of quarter
|
$
|
4,053
|
$
|
3,510
|
|||
|
|||||||
Supplemental
disclosure of cash flow information:
|
|||||||
Interest
paid
|
$
|
1,038
|
$
|
1,598
|
|||
Income
tax payments
|
$
|
4,411
|
$
|
1,873
|
1)
|
Summary
of Significant Accounting
Policies
|
Before
FIN 48
|
Adjustment
|
After
FIN 48
|
||||||||
Accrued
liabilities
|
$
|
69,636
|
$
|
(5,395
|
)
|
$
|
64,241
|
|||
Other
non-current liabilities
|
$
|
6,455
|
$
|
7,030
|
$
|
13,485
|
||||
Retained
earnings
|
$
|
115,917
|
$
|
(1,635
|
)
|
$
|
114,282
|
United
States - federal
|
2003
- 2006
|
|||
United
States - states
|
2002
- 2006
|
|||
China
|
2006
|
|||
Denmark
|
2006
|
|||
Mexico
|
2006
|
|||
Philippines
|
2004
- 2006
|
|||
South
Korea
|
2004
- 2006
|
|||
Spain
|
2003
- 2006
|
|||
Taiwan
|
2005
- 2006
|
|||
United
Kingdom
|
2006
|
2) |
Purchase
Accounting
|
Aug.
31, 2006
|
Adjustments
|
Dec.
30, 2006
|
||||||||
Current
assets
|
$
|
4,325
|
$
|
--
|
$
|
4,325
|
||||
Property,
plant and equipment
|
4,371
|
--
|
4,371
|
|||||||
Goodwill
|
1,287
|
199
|
1,486
|
|||||||
Other
intangibles
|
1,139
|
(199
|
)
|
940
|
||||||
Other
assets
|
92
|
--
|
92
|
|||||||
Current
liabilities
|
(3,061
|
)
|
--
|
(3,061
|
)
|
|||||
Long-term
debt
|
(2,858
|
)
|
--
|
(2,858
|
)
|
|||||
Long-term
deferred tax liability
|
(356
|
)
|
--
|
(356
|
)
|
|||||
Total
cash paid
|
$
|
4,939
|
$
|
--
|
$
|
4,939
|
3)
|
Litigation
Matters
|
4)
|
Recently
Issued Accounting
Standards
|
5) |
Other
Comprehensive Income
|
Three
Months Ended
|
|||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||
Net
earnings
|
$
|
10,720
|
$
|
8,051
|
|||
Currency
translation adjustment
|
32
|
(54
|
)
|
||||
Unrecognized
pension benefit cost
|
-
|
-
|
|||||
Unrealized
(loss) gain on interest rate swaps
|
(136
|
)
|
152
|
||||
|
|||||||
Comprehensive
income
|
$
|
10,616
|
$
|
8,149
|
6)
|
Inventories
|
Mar.
31, 2007
|
Dec.
30, 2006
|
||||||
(in
thousands)
|
|||||||
Raw
materials and parts
|
$
|
16,081
|
$
|
15,795
|
|||
Work-in-process
|
7,321
|
6,642
|
|||||
Finished
goods
|
29,416
|
25,127
|
|||||
52,819
|
47,564
|
||||||
LIFO
adjustment
|
(672
|
)
|
(272
|
)
|
|||
$
|
52,146
|
$
|
47,292
|
7) |
Accrued
Expenses
|
Mar.
31, 2007
|
Dec,
30, 2006
|
||||||
(in
thousands)
|
|||||||
Accrued
warranty
|
$
|
11,334
|
$
|
11,292
|
|||
Accrued
payroll and related expenses
|
10,040
|
16,564
|
|||||
Accrued
customer rebates
|
6,090
|
13,119
|
|||||
Advanced
customer deposits
|
5,236
|
3,615
|
|||||
Accrued
product liability and workers comp
|
4,544
|
4,361
|
|||||
Other
accrued expenses
|
15,655
|
20,685
|
|||||
$
|
52,899
|
$
|
69,636
|
8) |
Warranty
Costs
|
Three
Months Ended
Mar.
31, 2007
|
||||
(in
thousands)
|
||||
Beginning
balance
|
$
|
11,292
|
||
Warranty
expense
|
2,591
|
|||
Warranty
claims
|
(2,549
|
)
|
||
Ending
balance
|
$
|
11,334
|
9) |
Financing
Arrangements
|
Mar.
31, 2007
|
Dec.
30, 2006
|
||||||
(in
thousands)
|
|||||||
Senior
secured revolving credit line
|
$
|
39,550
|
$
|
30,100
|
|||
Senior
secured bank term loans
|
43,750
|
47,500
|
|||||
Foreign
loan
|
4,181
|
5,202
|
|||||
Total
debt
|
$
|
87,481
|
$
|
82,802
|
|||
Less:
Current maturities of long-term debt
|
16,347
|
16,838
|
|||||
Long-term
debt
|
$
|
71,134
|
$
|
65,964
|
10) |
Financial
Instruments
|
11) |
Segment
Information
|
Three
Months Ended
|
|||||||||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||||||||
Sales
|
Percent
|
Sales
|
Percent
|
||||||||||
Business
Divisions:
|
|||||||||||||
Commercial
Foodservice:
|
|||||||||||||
Core
cooking equipment
|
$
|
67,642
|
64.0
|
$
|
59,939
|
61.9
|
|||||||
Conveyor
oven equipment
|
18,492
|
17.5
|
14,003
|
14.5
|
|||||||||
Counterline
cooking equipment
|
1,584
|
1.5
|
3,253
|
3.4
|
|||||||||
International
specialty
equipment
|
2,821
|
2.7
|
2,565
|
2.6
|
|||||||||
Commercial
Foodservice
|
90,539
|
85.7
|
79,760
|
82.4
|
|||||||||
International
Distribution
Division
(1)
|
13,576
|
12.8
|
13,443
|
13.9
|
|||||||||
Industrial
Foodservice
|
12,196
|
11.5
|
13,691
|
14.2
|
|||||||||
Intercompany
sales (2)
|
(10,616
|
)
|
(10.0
|
)
|
(10,145
|
)
|
(10.5
|
)
|
|||||
Total
|
$
|
105,695
|
100.0
|
%
|
$
|
96,749
|
100.0
|
%
|
(1) |
Consists
of sales of products manufactured by Middleby and products
manufactured
by third parties.
|
(2) |
Represents
the elimination of sales amongst the Commercial Foodservice Equipment
Group and from
the Commercial Foodservice Equipment Group to the International
Distribution Division.
|
Commercial
Foodservice
|
Industrial
Foodservice
|
International
Distribution
|
Corporate
and Other(2)
|
Eliminations(3)
|
Total
|
||||||||||||||
Three
months ended March 31, 2007
|
|||||||||||||||||||
Net
sales
|
$
|
90,539
|
$
|
12,196
|
$
|
13,576
|
$
|
--
|
$
|
(10,616
|
)
|
$
|
105,695
|
||||||
Operating
income
|
21,788
|
2,400
|
846
|
(6,282
|
)
|
54
|
18,806
|
||||||||||||
Depreciation
expense
|
695
|
127
|
43
|
36
|
--
|
901
|
|||||||||||||
Net
capital expenditures
|
520
|
6
|
11
|
61
|
--
|
598
|
|||||||||||||
Total
assets
|
217,440
|
49,241
|
29,430
|
1,985
|
(6,523
|
)
|
291,573
|
||||||||||||
Long-lived
assets(4)
|
129,492
|
27,736
|
433
|
8,878
|
--
|
166,540
|
|||||||||||||
Three
months ended April 1, 2006
|
|||||||||||||||||||
Net
sales
|
$
|
79,654
|
$
|
13,691
|
$
|
13,443
|
$
|
--
|
$
|
(10,039
|
)
|
$
|
96,749
|
||||||
Operating
income
|
19,729
|
625
|
917
|
(6,074
|
)
|
(49
|
)
|
15,148
|
|||||||||||
Depreciation
expense
|
683
|
171
|
35
|
4
|
--
|
893
|
|||||||||||||
Net
capital expenditures
|
209
|
30
|
6
|
256
|
--
|
501
|
|||||||||||||
Total
assets
|
196,724
|
44,150
|
26,250
|
4,597
|
(6,038
|
)
|
265,683
|
||||||||||||
Long-lived
assets(4)
|
129,484
|
26,478
|
360
|
5,493
|
--
|
161,815
|
(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
expenses items outside of income from
operations.
|
(2) |
Includes
corporate and other general company assets and
operations.
|
(3) |
Includes
elimination of intercompany sales, profit in inventory and intercompany
receivables. Intercompany sale transactions
are predominantly from the Commercial Foodservice Equipment
Group to the International Distribution
Division.
|
(4) |
Long-lived
assets of the Commercial Foodservice Equipment Group includes assets
located in the Philippines which amounted to $1,975 and
$2,060 in 2007 and 2006, respectively and assets located in Denmark
which
amounted to $1,042 in 2007 .
|
Three
Months Ended
|
|||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||
United
States and Canada
|
$
|
86,032
|
$
|
79,103
|
|||
Asia
|
5,473
|
6,147
|
|||||
Europe
and Middle East
|
10,777
|
7,753
|
|||||
Latin
America
|
3,413
|
3,746
|
|||||
Net
sales
|
$
|
105,695
|
$
|
96,749
|
12) |
Employee
Retirement Plans
|
13) |
Subsequent
Events
|
Three
Months Ended
|
|||||||||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||||||||
Sales
|
Percent
|
Sales
|
Percent
|
||||||||||
Business
Divisions:
|
|||||||||||||
Commercial
Foodservice:
|
|||||||||||||
Core
cooking equipment
|
$
|
67,642
|
64.0
|
$
|
59,939
|
61.9
|
|||||||
Conveyor
oven equipment
|
18,492
|
17.5
|
14,003
|
14.5
|
|||||||||
Counterline
cooking equipment
|
1,584
|
1.5
|
3,253
|
3.4
|
|||||||||
International
specialty
equipment
|
2,821
|
2.7
|
2,565
|
2.6
|
|||||||||
Commercial
Foodservice
|
90,539
|
85.7
|
79,760
|
82.4
|
|||||||||
International
Distribution
Division
(1)
|
13,576
|
12.8
|
13,443
|
13.9
|
|||||||||
Industrial
Foodservice
|
12,196
|
11.5
|
13,691
|
14.2
|
|||||||||
Intercompany
sales (2)
|
(10,616
|
)
|
(10.0
|
)
|
(10,145
|
)
|
(10.5
|
)
|
|||||
Total
|
$
|
105,695
|
100.0
|
%
|
$
|
96,749
|
100.0
|
%
|
Three
Months Ended
|
|||||||
Mar.
31, 2007
|
Apr.
1, 2006
|
||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of sales
|
61.1
|
63.3
|
|||||
Gross
profit
|
38.9
|
36.7
|
|||||
Selling,
general and administrative expenses
|
21.1
|
21.1
|
|||||
Income
from operations
|
17.8
|
15.6
|
|||||
Interest
expense and deferred financing amortization, net
|
1.2
|
1.8
|
|||||
Other
(income), net
|
(0.1
|
)
|
(0.1
|
)
|
|||
Earnings
before income taxes
|
16.7
|
13.9
|
|||||
Provision
for income taxes
|
6.6
|
5.6
|
|||||
Net
earnings
|
10.1
|
%
|
8.3
|
%
|
· |
Core
cooking equipment sales increased by $7.7 million to $67.6 million
from
$59.9 million, primarily due to increased fryer, combi-oven, and
cooking
range sales resulting from increased purchases from major and regional
chain customers due to new store openings and increased replacement
business. Sales in the first quarter of 2007 also reflect the impact
of
the acquisition of Houno completed in August 2006, which amounted
to $3.6
million of sales.
|
· |
Conveyor
oven equipment sales increased $4.5 million to $18.5 million from
$14.0
million in the prior year quarter due to increased sales of the new
Middleby Marshall “WOW” oven.
|
· |
Counterline
cooking equipment sales decreased to $1.6 million from $3.3 million
in the
prior year quarter due to a disruption in business resulting from
a
relocation of production operations from the company’s facility
in Illinois to its Michigan manufacturing operation.
|
· |
International
specialty equipment sales increased to $2.8 million compared to $2.6
million in the prior year quarter.
|
· |
Improved
margins at the Industrial Foodservice Group, which was acquired in
December 2005, resulting from cost reduction initiatives and elimination
of unprofitable sales.
|
· |
Increased
sales volumes that benefited manufacturing efficiencies and provided
for
greater leverage of fixed manufacturing
costs.
|
· |
Higher
margins associated with new product
sales.
|
· |
The
adverse impact of steel costs which have risen significantly from
the
prior year quarter.
|
Long-term
Debt
|
Operating
Leases
|
|
Idle
Facility
Leases
|
|
Total
Contractual
Cash
Obligations
|
||||||||
Less
than 1 year
|
$
|
16,347
|
$
|
917
|
$
|
345
|
$
|
17,609
|
|||||
1-3
years
|
68,507
|
1,435
|
718
|
70,660
|
|||||||||
3-5
years
|
222
|
380
|
875
|
1,477
|
|||||||||
After
5 years
|
2,405
|
--
|
1,513
|
3,918
|
|||||||||
$
|
87,481
|
$
|
2,732
|
$
|
3,451
|
$
|
93,664
|
Twelve
Month Period Ending
|
Fixed
Rate
Debt |
Variable
Rate Debt
|
|||||
(in
thousands)
|
|||||||
March
31, 2008
|
$
|
--
|
$
|
16,347
|
|||
March
31, 2009
|
--
|
17,601
|
|||||
March
31, 2010
|
--
|
50,906
|
|||||
March
31, 2011
|
--
|
111
|
|||||
March
31, 2012
|
1,697
|
819
|
|||||
$
|
1,697
|
$
|
85,784
|
THE
MIDDLEBY CORPORATION
(Registrant)
|
||
|
|
|
Date: May 10, 2007 | By: | /s/ Timothy J. FitzGerald |
Timothy J. FitzGerald |
||
Vice
President, Chief Financial Officer |