**UNITED
      STATES**





**SECURITIES
      AND EXCHANGE COMMISSION**





**Washington,
      D.C. 20549**





FORM
      10-Q




(Mark
      One)


xQuarterly
      Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934





**For
      the quarterly period ended March 31, 2007**





or


oTransition
      Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934





Commission
      File No. 1-9973





**THE
      MIDDLEBY CORPORATION**


(Exact
      Name of Registrant as Specified in its Charter)




**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)





Registrant's
      Telephone No., including Area Code  **(847)
      741-3300**





Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes
x  No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large
                  accelerated filero
              Accelerated
                  filerx
              Non-accelerated
                  filero




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes o  No x








As
      of May
      4, 2007, there were 7,982,823 shares of the registrant's common stock
      outstanding.








**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**





**QUARTER
      ENDED MARCH 31, 2007**








INDEX


DESCRIPTION
              PAGEPART
                  I. FINANCIAL INFORMATIONItem1.Condensed
                  Consolidated Financial Statements (unaudited)CONDENSED
                  CONSOLIDATED BALANCE SHEETS
              2March
                  31, 2007 and December 30, 2006CONDENSED
                  CONSOLIDATED STATEMENTS OF EARNINGS
              3March
                  31, 2007 and April 1, 2006CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
              4March
                  31, 2007 and April 1, 2006NOTES
                  TO CONDENSED CONSOLIDATEDFINANCIAL
                  STATEMENTS
              5Item2.Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              17Item3.Quantitative
                  and Qualitative Disclosures About Market Risk
              24Item4.Controls
                  and Procedures
              27PART
                  II. OTHER INFORMATIONItem1A.Risk
                  Factors
              28Item2.Unregistered
                  Sales of Equity Securities and Use of Proceeds
              28Item6.Exhibits
              29









**PART
      I. FINANCIAL INFORMATION**


**Item
      1. Condensed Consolidated Financial Statements**





**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      Thousands, Except Share Amounts)**


**(Unaudited)**





**ASSETS**
              
              Mar.
                  31, 2007
              
              Dec.
                  30, 2006Current
                  assets:Cash
                  and cash equivalents
              
              $
              4,053
              
              $
              3,534Accounts
                  receivable, net of reserve for
                doubtful
                  accounts of $4,883 and $5,101
              
              
              53,749
              
              
              51,580Inventories,
                  net
              
              
              52,146
              
              
              47,292Prepaid
                  expenses and other
              
              
              1,831
              
              
              3,289Prepaid
                  taxes
              
              
              3,193
              
              
              1,129Current
                  deferred taxes
              
              
              10,061
              
              
              10,851Total
                  current assets
              
              
              125,033
              
              
              117,675Property,
                  plant and equipment, net of
                accumulated
                  depreciation of $37,814 and $37,006
              
              
              28,275
              
              
              28,534Goodwill
              
              
              101,247
              
              
              101,258Other
                  intangibles
              
              
              34,963
              
              
              35,306Other
                  assets
              
              
              2,055
              
              
              2,249Total
                  assets
              
              $
              291,573
              
              $
              285,022**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Current
                  maturities of long-term debt
              
              $
              16,347
              
              $
              16,838Accounts
                  payable
              
              
              20,618
              
              
              19,689Accrued
                  expenses
              
              
              52,899
              
              
              69,636Total
                  current liabilities
              
              
              89,864
              
              
              106,163Long-term
                  debt
              
              
              71,134
              
              
              65,964Long-term
                  deferred tax liability
              
              
              2,665
              
              
              5,867Other
                  non-current liabilities
              
              
              13,764
              
              
              6,455Stockholders'
                  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
              
              
              117Paid-in
                  capital
              
              
              78,335
              
              
              73,743Treasury
                  stock at cost; 3,855,044
                shares
                  in 2007 and 2006, respectively
              
              
              (89,641
              )
              
              (89,641
              )Retained
                  earnings
              
              
              125,002
              
              
              115,917Accumulated
                  other comprehensive income
              
              
              333
              
              
              437Total
                  stockholders' equity
              
              
              114,146
              
              
              100,573Total
                  liabilities and stockholders' equity
              
              $
              291,573
              
              $
              285,022





See
        accompanying notes


2




**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF EARNINGS**


**(In
      Thousands, Except Per Share Amounts)**


**(** **Unaudited** **)**




**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 options****1**
              
              
              **615**
              
              
              **650****Diluted**
              
              
              **8,370**
              
              
              **8,268**
  1  There
        were no anti-dilutive stock options excluded from common stock equivalents
        for
        any period presented.
  See
        accompanying notes


3


**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(In
      Thousands)**


**(** **Unaudited** **)**


**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**




See
      accompanying notes




4


**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**





**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**March
      31, 2007**


**(** **Unaudited** **)**





**1)**
            **Summary
                of Significant Accounting
                Policies**





**A)**  **Basis
      of Presentation**





The
      condensed consolidated financial statements have been prepared by The Middleby
      Corporation (the "company"), 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 2006 Form 10-K.





In
      the
      opinion of management, the financial statements contain all adjustments
      necessary to present fairly the financial position of the company as of March
      31, 2007 and December 30, 2006, and the results of operations for the three
      months ended March 31, 2007 and April 1, 2006 and cash flows for the three
      months ended March 31, 2007 and April 1, 2006.





**B)**  **Share-Based
      Compensation**





Share-based
      compensation expense is calculated by estimating the fair value of performance
      based stock awards and stock options at the time of grant and amortized over
      the
      stock options’ vesting period. Share-based compensation expense was $1.3 million
      and $1.1 million for the first quarter of 2007 and 2006, respectively.





In
      March
      2007, the company issued 158,500 performance based stock awards with a total
      value of $13.2 million.  The awards vest and will be expensed over a period
      of seven years.  The amount of expense recognized and included in the first
      quarter relating to these awards amounted to $0.2 million.





**C)**  **Income
      Tax Contingencies**





In
      July
      2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in
      Income Taxes” (“FIN 48”). This interpretation prescribes a comprehensive model
      for how a company should recognize, measure, present and disclose in its
      financial statements uncertain tax positions that the company has taken or
      expects to take on a tax return. FIN 48 states that a tax benefit from an
      uncertain tax position may be recognized only if it is “more likely than not”
that the position is sustainable, based on its technical merits. The tax benefit
      of a qualifying position is the largest amount of tax benefit that is greater
      than 50% likely of being realized upon settlement with a taxing authority having
      full knowledge of all relevant information. A tax benefit from an uncertain
      position was previously recognized if it was probable of being sustained. Under
      FIN 48, the liability for unrecognized tax benefits is classified as non-current
      unless the liability is expected to be settled in cash within 12 months of
      the
      reporting date. FIN 48 is effective as of the beginning of the first fiscal
      year
      beginning after December 15, 2006. The company adopted the provisions of FIN
      48
      on the first day of fiscal 2007 (December 31, 2006), as required.




5




The
      following table indicates the effect of the application of FIN 48 on individual
      line items in the Consolidated Balance Sheet as of the adoption
      date (dollars in thousands).


Before
                  FIN 48
              
              Adjustment
              
              After
                  FIN 48Accrued
                  liabilities
              
              $
              69,636
              
              $
              (5,395
              )
              $
              64,241Other
                  non-current liabilities
              
              $
              6,455
              
              $
              7,030
              
              $
              13,485Retained
                  earnings
              
              $
              115,917
              
              $
              (1,635
              )
              $
              114,282





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
      regarding transfer pricing, the deductibility of certain expenses, intercompany
      transactions as well as other matters. As of the adoption date, the
      total amount of liability for unrecognized tax benefits related to federal,
      state and foreign taxes was approximately $5.7 million (of which the entire
      amount would impact the effective tax rate if recognized) plus approximately
      $0.5 million of accrued interest and $0.8 million of penalties. As of March
      31,
      2007, the corresponding balance of liability for unrecognized tax benefits
      is
      approximately $5.7 million plus approximately $0.6 million of accrued interest
      and $0.8 million of penalties. The company recognizes interest and penalties
      accrued related to unrecognized tax benefits in income tax expense, which is
      consistent with reporting in prior periods.





The
      company is not currently under examination in any tax jurisdiction, however
      it
      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:


United
                  States - federal
              
              
              2003
                  - 2006United
                  States - states
              
              
              2002
                  - 2006China
              
              
              2006Denmark
              
              
              2006Mexico
              
              
              2006Philippines
              
              
              2004
                  - 2006South
                  Korea
              
              
              2004
                  - 2006Spain
              
              
              2003
                  - 2006Taiwan
              
              
              2005
                  - 2006United
                  Kingdom
              
              
              2006




The
      company does not anticipate that total unrecognized tax benefits will
      significantly change due to the settlement of audits and the expiration of
      statute of limitations prior to March 30, 2008.





6





**2)**
            **Purchase
                Accounting**




*Houno*





On
      August
      31, 2006, the company acquired the stock of Houno A/S (“Houno”) located in
      Denmark for $4.9 million in cash. The company also assumed $3.7 million of
      debt
      included as part of the net assets of Houno.





The
      company has accounted for this business combination 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 allocation of the purchase price to the assets, liabilities
      and
      intangible assets is under review and is subject to change based upon
      finalization of the valuation of the assets and liabilities acquired.




The
      preliminary allocation of cash paid for the Houno acquisition is summarized
      as
      follows (in thousands):


Aug.
                  31, 2006
              
              Adjustments
              
              Dec.
                  30, 2006Current
                  assets
              
              $
              4,325
              
              $
              --
              
              $
              4,325Property,
                  plant and equipment
              
              
              4,371
              
              
              --
              
              
              4,371Goodwill
              
              
              1,287
              
              
              199
              
              
              1,486Other
                  intangibles
              
              
              1,139
              
              
              (199
              )
              
              940Other
                  assets
              
              
              92
              
              
              --
              
              
              92Current
                  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





The
      goodwill is subject to the nonamortization provisions of SFAS No. 142 from
      the
      date of acquisition. Other intangibles also includes $0.1 million allocated
      to
      backlog and $1.0 million allocated to developed technology which are amortized
      over periods of 1 month and 5 years, respectively. Goodwill and other
      intangibles of Houno are allocated to the Commercial Foodservice Equipment
      Group
      for segment reporting purposes. These assets are not deductible for tax
      purposes.








**3)**
            **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 reserve 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 of the company.





7




**4)**
            **Recently
                Issued Accounting
                Standards**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles and expands disclosures about fair
      value measurements. This statement does not require any new fair value
      measurements. This statement is effective for interim reporting periods in
      fiscal years beginning after November 15, 2007. The company will apply this
      guidance prospectively. The company is continuing its process of determining
      what impact the application of this guidance will have on the company's
      financial position, results of operations or cash flows.





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87, 88, 106, and 132(R)”. One provision of SFAS No. 158 requires the
      measurement of the company’s defined benefit plan’s assets and its obligation to
      determine the funded status be made as of the end of the fiscal year. This
      provision of SFAS No. 158 is effective for fiscal years ending after December
      15, 2008. The company does not anticipate that the impact from the adoption
      of
      this provision of SFAS No. 158 will be significant to its financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an amendment of FASB
      Statement No. 115. This statement permits entities to choose to measure many
      financial instruments and certain other items at fair value. This statement
      is
      effective for fiscal years beginning after November 15, 2007. The company will
      apply this guidance prospectively.








**5)**
            **Other
                Comprehensive Income**





The
      company reports changes in equity during a period, except those resulting from
      investment by owners and distribution to owners, in accordance with SFAS No.
      130, "Reporting Comprehensive Income."





Components
      of other comprehensive income were as follows (in thousands):


Three
                  Months EndedMar.
                  31, 2007
              
              Apr.
                  1, 2006Net
                  earnings
              
              $
              10,720
              
              $
              8,051Currency
                  translation adjustment
              
              
              32
              
              
              (54
              )Unrecognized
                  pension benefit cost
              
              
              -
              
              
              -Unrealized
                  (loss) gain on interest rate swaps
              
              
              (136
              )
              
              152Comprehensive
                  income
              
              $
              10,616
              
              $
              8,149





Accumulated
      other comprehensive income is comprised of minimum pension liability of $(1.0)
      million, net of taxes of $(0.7) million, as of March 31, 2007 and December
      30,
      2006, foreign currency translation adjustments of $0.9 million as of March
      31,
      2007 and December 30, 2006 and an unrealized gain on interest rate swaps of
      $0.5
      million, net of taxes of $0.3 million, as of March 31, 2007 and $0.6 million,
      net of taxes of $0.4 million as of December 30, 2006.





8




**6)**
            **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 $16.5 million at March 31, 2007
      and $16.9 million at December 30, 2006 and represented approximately 32% and
      36%
      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 March 31, 2007 and December
      30,
      2006 are as follows:


Mar.
                  31, 2007
              
              Dec.
                  30, 2006(in
                  thousands)Raw
                  materials and parts
              
              $
              16,081
              
              $
              15,795Work-in-process
              
              
              7,321
              
              
              6,642Finished
                  goods
              
              
              29,416
              
              
              25,12752,819
              
              
              47,564LIFO
                  adjustment
              
              
              (672
              )
              
              (272
              )$
              52,146
              
              $
              47,292




**7)**
            **Accrued
                Expenses**





Accrued
      expenses consist of the following:


Mar.
                  31, 2007
              
              Dec,
                  30, 2006(in
                  thousands)Accrued
                  warranty
              
              $
              11,334
              
              $
              11,292Accrued
                  payroll and related expenses
              
              
              10,040
              
              
              16,564Accrued
                  customer rebates
              
              
              6,090
              
              
              13,119Advanced
                  customer deposits
              
              
              5,236
              
              
              3,615Accrued
                  product liability and workers comp
              
              
              4,544
              
              
              4,361Other
                  accrued expenses
              
              
              15,655
              
              
              20,685$
              52,899
              
              $
              69,636
  9





**8)**
            **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, 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:


Three
                  Months Ended
                Mar.
                  31, 2007(in
                  thousands)Beginning
                  balance
              
              $
              11,292Warranty
                  expense
              
              
              2,591Warranty
                  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
              
              $
              30,100Senior
                  secured bank term loans
              
              
              43,750
              
              
              47,500Foreign
                  loan
              
              
              4,181
              
              
              5,202Total
                  debt
              
              $
              87,481
              
              $
              82,802Less:
                  Current maturities of long-term debt
              
              
              16,347
              
              
              16,838Long-term
                  debt
              
              $
              71,134
              
              $
              65,964





During
      the fourth quarter of 2005, the company amended its senior secured credit
      facility. Terms of the agreement currently provide for $43.8 million of term
      loans and $130.0 million of availability under a revolving credit line. As
      of
      March 31, 2007, the company had $83.3 million outstanding under its senior
      banking facility, including $39.6 million of borrowings under the revolving
      credit line. The company also had $3.8 million in outstanding letters of credit,
      which reduced the borrowing availability under the revolving credit
      line.





Borrowings
      under the senior secured credit facility are assessed at an interest rate of
      1.00% above LIBOR for long-term borrowings or at the higher of the Prime rate
      and the Federal Funds Rate for short term borrowings. At March 31, 2007, the
      average interest rate on the senior debt amounted to 6.54%. The interest rates
      on borrowings under the senior bank facility may be adjusted quarterly based
      on
      the company’s defined 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 0.20% as of March 31, 2007.





10





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.  As of March 31, 2007, these facilities
      amounted to $4.1 million in US dollars, including $1.2 million outstanding
      under
      a revolving credit facility, $2.1 million of a term loan and $0.8 million of
      a
      long term mortgage note.  The interest rate on the revolving credit
      facility is assessed at 1.25% above Euro LIBOR, which amounted to 5.40% on
      March
      31, 2007. The term loan matures in 2013 and the interest rate is assessed at
      5.0%.  The long-term mortgage note matures in March 2023 and is assessed
      interest at a fixed rate of 5.19%.





In
      December 2005, the company entered into a $3.2 million U.S. dollar secured
      term
      loan at its subsidiary in Spain. This term loan amortizes in equal monthly
      installments over a four-year period ending December 31, 2009. As of March
      31,
      2007, the company had $0.1 million of borrowing remaining under this loan.
      Borrowings under this facility are assessed at an interest rate of 0.45% above
      LIBOR. At March 31, 2007 the interest rate on this loan was 5.77%.





The
      company has historically entered into interest rate swap agreements to
      effectively fix the interest rate on its outstanding debt. In January 2005,
      the
      company entered into an interest rate swap agreement for a notional amount
      of
      $70.0 million. This agreement swaps one-month LIBOR for a fixed rate of 3.78%.
      The notional amount amortizes consistent with the repayment schedule of the
      company's term loan maturing November 2009. The unamortized notional amount
      of
      this swap as of March 31, 2007 was $43.8 million. In January 2006, the company
      entered into an interest rate swap agreement for a notional amount of $10.0
      million maturing on December 21, 2009. This agreement swaps one-month LIBOR
      for
      a fixed rate of 5.03%.





The
      terms
      of the senior secured credit facility limit the paying of dividends, capital
      expenditures and leases, and require, among other things, certain ratios of
      indebtedness and fixed charge coverage. 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. At March
      31, 2007, the company was in compliance with all covenants pursuant to its
      borrowing agreements.





**10)**
            **Financial
                Instruments**





In
      June
      1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments
      and
      Hedging Activities". SFAS No. 133, as amended, establishes accounting and
      reporting standards for derivative instruments. The statement 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 the derivative does qualify as a hedge
      under SFAS No. 133, 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.





11




*Foreign
      Exchange* :
      The
      company has entered into derivative instruments, principally forward contracts
      to reduce exposures pertaining to fluctuations in foreign exchange rates. As
      of
      March 31, 2007 the company had no forward contracts outstanding.





*Interest
      Rate* : In
      January 2005, the company entered into an interest rate swap with a notional
      amount of $70.0 million to fix the interest rate applicable to certain of its
      variable-rate debt. The notional amount of the swap amortizes consistent with
      the repayment schedule of the company's senior term loan maturing in November
      2009. As of March 31, 2007, the unamortized balance of the interest rate swap
      was $43.8 million. The agreement swaps one-month LIBOR for a fixed rate of
      3.78%
      and is in effect through November 2009. The company designated the swap as
      a
      cash flow hedge at its inception and all changes in the fair value of the swap
      are recognized in accumulated other comprehensive income. As of March 31, 2007,
      the fair value of this instrument was $0.7 million. The change in fair value
      of
      this swap agreement in the first three months of 2007 was a loss of $0.2
      million, net of $0.1 million of taxes.





In
      January 2006, the company entered into another interest rate swap with a
      notional amount of $10.0 million to fix the interest rate applicable to certain
      of its variable-rate debt. The agreement swaps one-month LIBOR for a fixed
      rate
      of 5.03% and is in effect through December 2009. The company designated the
      swap
      a cash flow hedge at is inception and all changes in fair value of the swap
      are
      recognized in accumulated other comprehensive income. As of March 31, 2007,
      the
      fair value of this instrument was less than $0.1 million. The change in fair
      value of this swap agreement in the first three months of 2007 was a gain of
      less than $0.1 million.








**11)**
            **Segment
                Information**





The
      company operates in three reportable operating segments defined by management
      reporting structure and operating activities.





The
      commercial foodservice equipment business group manufactures cooking equipment
      for the restaurant and institutional kitchen industry. This business division
      has manufacturing facilities in Illinois, Michigan, New Hampshire, North
      Carolina, Vermont, Denmark and the Philippines. This division supports four
      major product groups, including conveyor oven equipment, core cooking equipment,
      counterline cooking equipment, and international specialty equipment. Principal
      product lines of the conveyor oven product group include Middleby Marshall
      ovens, Blodgett ovens and CTX ovens. Principal product lines of the core cooking
      equipment product group include the Southbend product line of ranges, steamers,
      convection ovens, broilers and steam cooking equipment, the Blodgett product
      line of ranges, convection ovens and combi ovens, the Houno product line of
      combi-ovens and baking ovens, the Nu-Vu product line of baking ovens and
      proofers, MagiKitch'n charbroilers and catering equipment and the Pitco
      Frialator product line of fryers. The counterline cooking and warming equipment
      product group includes toasters, hot food servers, foodwarmers and griddles
      distributed under the Toastmaster brand name. The international specialty
      equipment product group is primarily comprised of food preparation tables,
      undercounter refrigeration systems, ventilation systems and component parts
      for
      the U.S. manufacturing operations.





The
      industrial foodservice equipment business group manufactures cooking and
      packaging equipment for the food processing industry. This business division
      has
      manufacturing in Lodi, Wisconsin. Its principal products include batch ovens,
      conveyorized ovens and continuous process ovens sold under the Alkar brand
      name
      and food packaging machinery sold under the RapidPak brandname.





12




The
      International Distribution Division provides integrated sales, export
      management, distribution and installation services through its operations in
      China, India, Lebanon, Mexico, the Philippines, Russia, South Korea, Spain,
      Sweden, Taiwan and the United Kingdom. The division sells the company’s product
      lines and certain non-competing complementary product lines throughout the
      world. For a local country distributor or dealer, the company is able to provide
      a centralized source of foodservice equipment with complete export management
      and product support services.





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)**


Three
                  Months EndedMar.
                  31, 2007
              
              Apr.
                  1, 2006Sales
              
              Percent
              
              Sales
              
              PercentBusiness
                  Divisions:Commercial
                  Foodservice:Core
                  cooking equipment
              
              $
              67,642
              
              
              64.0
              
              $
              59,939
              
              
              61.9Conveyor
                  oven equipment
              
              
              18,492
              
              
              17.5
              
              
              14,003
              
              
              14.5Counterline
                  cooking equipment
              
              
              1,584
              
              
              1.5
              
              
              3,253
              
              
              3.4International
                  specialty
                equipment
              
              
              2,821
              
              
              2.7
              
              
              2,565
              
              
              2.6Commercial
                  Foodservice
              
              
              90,539
              
              
              85.7
              
              
              79,760
              
              
              82.4International
                  Distribution
                Division
                  (1)
              
              
              13,576
              
              
              12.8
              
              
              13,443
              
              
              13.9Industrial
                  Foodservice
              
              
              12,196
              
              
              11.5
              
              
              13,691
              
              
              14.2Intercompany
                  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.*





13




The
      following table summarizes the results of operations for the company's business
      segments (1) (in
      thousands):


CommercialFoodservice
              
              IndustrialFoodservice
              
              InternationalDistribution
              
              Corporateand Other(2)
              
              Eliminations(3)
              
              Total**Three
                  months ended March 31, 2007**Net
                  sales
              
              $
              90,539
              
              $
              12,196
              
              $
              13,576
              
              $
              --
              
              $
              (10,616
              )
              $
              105,695Operating
                  income
              
              
              21,788
              
              
              2,400
              
              
              846
              
              
              (6,282
              )
              
              54
              
              
              18,806Depreciation
                  expense
              
              
              695
              
              
              127
              
              
              43
              
              
              36
              
              
              --
              
              
              901Net
                  capital expenditures
              
              
              520
              
              
              6
              
              
              11
              
              
              61
              
              
              --
              
              
              598Total
                  assets
              
              
              217,440
              
              
              49,241
              
              
              29,430
              
              
              1,985
              
              
              (6,523
              )
              
              291,573Long-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
              )
              $
              96,749Operating
                  income
              
              
              19,729
              
              
              625
              
              
              917
              
              
              (6,074
              )
              
              (49
              )
              
              15,148Depreciation
                  expense
              
              
              683
              
              
              171
              
              
              35
              
              
              4
              
              
              --
              
              
              893Net
                  capital expenditures
              
              
              209
              
              
              30
              
              
              6
              
              
              256
              
              
              --
              
              
              501Total
                  assets
              
              
              196,724
              
              
              44,150
              
              
              26,250
              
              
              4,597
              
              
              (6,038
              )
              
              265,683Long-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 .*






Net
      sales
      by major geographic region, including those sales from the Commercial
      Foodservice Equipment Group direct to international customers, were as follows
      (in thousands):


Three
                  Months EndedMar.
                  31, 2007
              
              Apr.
                  1, 2006United
                  States and Canada
              
              $
              86,032
              
              $
              79,103Asia
              
              
              5,473
              
              
              6,147Europe
                  and Middle East
              
              
              10,777
              
              
              7,753Latin
                  America
              
              
              3,413
              
              
              3,746Net
                  sales
              
              $
              105,695
              
              $
              96,749




14




**12)**
            **Employee
                Retirement Plans**





*(a)*  *Pension
      Plans*





The
      company maintains a non-contributory defined benefit plan for its union
      employees at the Elgin, Illinois facility. Benefits are determined based upon
      retirement age and years of service with the company. This defined benefit
      plan
      was frozen on April 30, 2002 and no further benefits accrue to the participants
      beyond this date. Plan participants will receive or continue to receive payments
      for benefits earned on or prior to April 30, 2002 upon reaching retirement
      age.
      The 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. The plan provides for an annual benefit upon a change in control
      of
      the company or retirement from the Board of Directors at age 70, equal to 100%
      of the director’s last annual retainer, payable for a number of years equal to
      the director’s years of service up to a maximum of 10 years.





Contributions
      under the union plan are funded in accordance with provisions of The Employee
      Retirement Income Security Act of 1974. Expected contributions to be made in
      2007 are $183,000, of which $46,000 was funded during the three-month period
      ended March 31, 2007. Contributions to the directors' plan are based upon actual
      retirement benefits as they retire.





*(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.





15





**13)**
            **Subsequent
                Events**





On
      April
      2, 2007, subsequent to the end of the first quarter of 2007, the company
      completed its acquisition of the assets and operations of Jade Products Company.
      Jade Products Company is a manufacturer of commercial and residential
      cooking equipment. The acquisition had no effect on the company’s financial
      statements for the first quarter of 2007.





On
      May 3,
      2007, subsequent to the end of the first quarter of 2007, the company’s
      stockholders approved an amendment to the company’s restated certificate of
      incorporation that increased the number of authorized common shares from
      20.0 million to 47.5 million and the company announced that its board of
      directors had approved a 2-for-1 stock split on its common stock in the
      form of a stock dividend payable on June 15, 2007 to holders of record as of
      the
      close of business on June 1, 2007. The stock split had no effect on the
      company’s financial statements for the first quarter of 2007.





On
      May 3,
      2007, subsequent to the end of the first quarter of 2007, the stockholders
      of
      the company approved the company's 2007 Stock Incentive Plan ("2007 Plan").
       The 2007 Plan permits the grant of up to 100,000 shares (subject to
      adjustment as provided for in the 2007 Plan) of any or all of the following
      types of awards: (1) stock options, including incentive stock options, (2)
      stock
      appreciation rights (“SARs”), in tandem with stock options or free-standing, (3)
      restricted stock, and (4) performance based stock.  The company's Board of
      Directors previously adopted the 2007 Plan subject to stockholder approval.
      In
      conjunction with approval of the 2007 Plan, on May 3, 2007, a total of 98,500
      performance based stock grants were made and issued partly under the 2007 Plan
      and partly under the previously existing 1998 Stock Inventive
      Plan.


16


**Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations.**





**Informational
      Note**





This
      report contains forward-looking statements subject to the safe harbor created
      by
      the Private Securities Litigation Reform Act of 1995. The company cautions
      readers that these projections are based upon future results or events and
      are
      highly dependent upon a variety of important factors which could cause such
      results or events to differ materially from any forward-looking statements
      which
      may be deemed to have been made in this report, or which are otherwise made
      by
      or on behalf of the company. Such factors include, but are not limited to,
      volatility in earnings resulting from goodwill impairment losses which may
      occur
      irregularly and in varying amounts; variability in financing costs; quarterly
      variations in operating results; dependence on key customers; international
      exposure; foreign exchange and political risks affecting international sales;
      ability to protect trademarks, copyrights and other intellectual property;
      changing market conditions; the impact of competitive products and pricing;
      the
      timely development and market acceptance of the company’s products; the
      availability and cost of raw materials; and other risks detailed herein and
      from
      time-to-time in the company’s Securities and Exchange Commission filings,
      including the company’s 2006 Annual Report on Form 10-K.




17




**Net
      Sales Summary**


**(dollars
      in thousands)**


Three
                  Months EndedMar.
                  31, 2007
              
              Apr.
                  1, 2006Sales
              
              Percent
              
              Sales
              
              PercentBusiness
                  Divisions:Commercial
                  Foodservice:Core
                  cooking equipment
              
              $
              67,642
              
              
              64.0
              
              $
              59,939
              
              
              61.9Conveyor
                  oven equipment
              
              
              18,492
              
              
              17.5
              
              
              14,003
              
              
              14.5Counterline
                  cooking equipment
              
              
              1,584
              
              
              1.5
              
              
              3,253
              
              
              3.4International
                  specialty
                equipment
              
              
              2,821
              
              
              2.7
              
              
              2,565
              
              
              2.6Commercial
                  Foodservice
              
              
              90,539
              
              
              85.7
              
              
              79,760
              
              
              82.4International
                  Distribution
                Division
                  (1)
              
              
              13,576
              
              
              12.8
              
              
              13,443
              
              
              13.9Industrial
                  Foodservice
              
              
              12,196
              
              
              11.5
              
              
              13,691
              
              
              14.2Intercompany
                  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.*








**Results
      of Operations**





The
      following table sets forth certain consolidated statements of earnings items
      as
      a percentage of net sales for the periods.




Three
                  Months EndedMar.
                  31, 2007
              
              Apr.
                  1, 2006Net
                  sales
              
              
              100.0
              %
              
              100.0
              %Cost
                  of sales
              
              
              61.1
              
              
              63.3Gross
                  profit
              
              
              38.9
              
              
              36.7Selling,
                  general and administrative expenses
              
              
              21.1
              
              
              21.1Income
                  from operations
              
              
              17.8
              
              
              15.6Interest
                  expense and deferred financing amortization, net
              
              
              1.2
              
              
              1.8Other
                  (income), net
              
              
              (0.1
              )
              
              (0.1
              )Earnings
                  before income taxes
              
              
              16.7
              
              
              13.9Provision
                  for income taxes
              
              
              6.6
              
              
              5.6Net
                  earnings
              
              
              10.1
              %
              
              8.3
              %


18





**Three
      Months Ended March 31, 2007 Compared to Three Months Ended**


**April
      1, 2006**





**NET
      SALES** ***.***  Net
      sales
      for the first quarter of fiscal 2007 were $105.7 million as compared to $96.7
      million in the first quarter of 2006.





Net
      sales
      at the Commercial Foodservice Equipment Group amounted to $90.5 million in
      the
      first quarter of 2007 as compared to $79.8 million in the prior year quarter.





·
            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.





Net
      sales
      at the International Distribution Division increased by $0.2 million to $13.6
      million, reflecting higher sales in Europe offset by a decline in Latin America.





Net
      sales
      for the Industrial Foodservice Equipment Group decreased by $1.5 million to
      $12.2 million from $13.7 million in the prior year quarter due to acquisition
      integration initiatives put in place to eliminate low margin and unprofitable
      sales.








**GROSS
      PROFIT** ***.***  Gross
      profit increased to $41.1 million from $35.5 million in the prior year period,
      reflecting the impact of higher sales volumes. The gross margin rate was 38.9%
      in the quarter as compared to 36.7% in the prior year quarter. The net increase
      in the gross margin rate reflects:








·
            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.





19





**SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES** ***.***  Combined
      selling, general, and administrative expenses increased from $20.4 million
      in
      the first quarter of 2006 to $22.3 million in the first quarter of 2007. As
      a
      percentage of net sales, operating expenses amounted to 21.1% in the first
      quarter of 2006, which was consistent with the first quarter of 2006.
      Selling expenses increased from $10.1 million to $11.1 million, reflecting
      $0.6
      million of increased selling costs related to the higher sales volumes and
      $0.4
      million of incremental costs associated with the acquisition of Houno, completed
      in August 2006. General and administrative expenses increased from $10.3 million
      to $11.2 million. General and administrative expenses reflects $0.6 million
      of
      costs associated with the acquired Houno operations and $0.6 million of
      increased employee incentive related costs.





**NON-OPERATING
      EXPENSES.** Interest
      and deferred financing amortization costs decreased from $1.8 million in the
      first quarter of 2006 to $1.2 million in the first quarter of 2007, as the
      benefit of lower debt balances were offset in part by higher interest rates.
      Other income of $0.1 million in the first quarter of 2007 remained
      consistent with the prior year first quarter.





**INCOME
      TAXES** ***.***  A
      tax
      provision of $6.9 million, at an effective rate of 39%, was recorded during
      the
      first quarter of 2007 as compared to a $5.4 million provision at a 40%
      effective rate in the prior year quarter.








**Financial
      Condition and Liquidity**





During
      the three months ended March 31, 2007, cash and cash equivalents increased
      by
      $0.5 million to $4.0 million at March 31, 2007 from $3.5 million at December
      30,
      2006. Net borrowings increased from $82.8 million at December 30, 2006 to $87.4
      million at March 31, 2007.





**OPERATING
      ACTIVITIES** ***.***  Net
      cash
      used in operating activities after changes in assets and liabilities was $4.5
      million as compared to net cash provided by operating activities of $1.1
      million in the prior year period.





During
      the three months ended March 31, 2007, working capital levels increased due
      to
      the higher sales volumes and increased seasonal working capital needs. The
      changes in working capital included a $2.1 million increase in accounts
      receivable, a $4.8 million increase in inventory and a $0.9 million increase
      in
      accounts payable. Accrued expenses and other liabilities decreased by $11.1
      million as a result of the company’s funding of its 2006 customer
      rebate programs and employee incentive compensation programs during the first
      quarter of 2007.





**INVESTING
      ACTIVITIES** ***.***  During
      the three months ended March 31, 2007, net cash used in investing activities
      was
      $0.6 million, which was associated with additions and upgrades of
      production and marketing equipment.





**FINANCING
      ACTIVITIES.** Net
      cash
      flows provided by financing activities were $5.6 million during the three months
      ending March 31, 2007. The net increase in debt includes $9.5 million in
      borrowings under the revolving credit facility, $3.8 million of repayments
      of
      the company’s term loan and $1.1 million of repayments of foreign bank loans.
      The company also received $0.9 million of net proceeds from the exercise of
      employee stock options.





20




At
      March
      31, 2007, the company was in compliance with all covenants pursuant to its
      borrowing agreements. Management believes that future cash flows from operating
      activities and borrowing availability under the revolving credit facility will
      provide the company with sufficient financial resources to meet its anticipated
      requirements for working capital, capital expenditures and debt amortization
      for
      the foreseeable future.








**Recently
      Issued Accounting Standards**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles and expands disclosures about fair
      value measurements. This statement does not require any new fair value
      measurements. This statement is effective for interim reporting periods in
      fiscal years beginning after November 15, 2007. The company will apply this
      guidance prospectively. The company is continuing its process of determining
      what impact the application of this guidance will have on the company's
      financial position, results of operations or cash flows.





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87, 88, 106, and 132(R)”. One provision of SFAS No. 158 requires the
      measurement of the company’s defined benefit plan’s assets and its obligation to
      determine the funded status be made as of the end of the fiscal year. This
      provision of SFAS No. 158 is effective for fiscal years ending after December
      15, 2008. The company does not anticipate that the impact from the adoption
      of
      this provision of SFAS No. 158 will be significant to its financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an amendment of FASB
      Statement No. 115. This statement permits entities to choose to measure many
      financial instruments and certain other items at fair value. This statement
      is
      effective for fiscal years beginning after November 15, 2007. The company will
      apply this guidance prospectively.








**Critical
      Accounting Policies and Estimates**





Management's
      discussion and analysis of financial condition and results of operations are
      based upon the company's consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires the
      company to make estimates and judgments that affect the reported amounts of
      assets, liabilities, revenues and expenses as well as related disclosures.
      On an
      ongoing basis, the company evaluates its estimates and judgments based on
      historical experience and various other factors that are believed to be
      reasonable under the circumstances. Actual results may differ from these
      estimates under different assumptions or conditions.





21





*Property
      and equipment:*  Property
      and equipment are depreciated or amortized on a straight-line basis over their
      useful lives based on management's estimates of the period over which the assets
      will be utilized to benefit the operations of the company. The useful lives
      are
      estimated based on historical experience with similar assets, taking into
      account anticipated technological or other changes.  The company
      periodically reviews these lives relative to physical factors, economic factors
      and industry trends. If there are changes in the planned use of property and
      equipment or if technological changes were to occur more rapidly than
      anticipated, the useful lives assigned to these assets may need to be shortened,
      resulting in the recognition of increased depreciation and amortization expense
      in future periods.





*Long-lived
      assets:*  Long-lived
      assets (including goodwill and other intangibles) are reviewed for impairment
      annually and whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable. In assessing the
      recoverability of the company's long-lived assets, the company considers changes
      in economic conditions and makes assumptions regarding estimated future cash
      flows and other factors.  Estimates of future cash flows are judgments
      based on the company's experience and knowledge of operations.  These
      estimates can be significantly impacted by many factors including changes in
      global and local business and economic conditions, operating costs, inflation,
      competition, and consumer and demographic trends.  If the company's
      estimates or the underlying assumptions change in the future, the company may
      be
      required to record impairment charges.





*Warranty:*  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, claims costs may differ from
      amounts provided. Adjustments to initial obligations for warranties are made
      as
      changes in the obligations become reasonably estimable.





*Litigation:*  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 reserve requirements 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 or
      results of operations.





*Income
      taxes:*  The
      company operates in numerous foreign and domestic taxing jurisdictions where
      it
      is subject to various types of tax, including sales tax and income tax. 
The company's tax filings are subject to audits and adjustments. Because of
      the
      nature of the company’s operations, the nature of the audit items can be
      complex, and the objectives of the government auditors can result in a tax
      on
      the same transaction or income in more than one state or country.  As part
      of the company's calculation of the provision for taxes, the company establishes
      reserves for the amount that it expects to incur as a result of audits. The
      reserves may change in the future due to new developments related to the various
      tax matters.





22




**Contractual
      Obligations**





The
      company's contractual cash payment obligations as of March 31, 2007 are set
      forth below (in thousands):


Long-term
                Debt
              
              Operating
                Leases
              
              Idle
                Facility
                Leases
              
              Total
                Contractual
                Cash
                ObligationsLess
                  than 1 year
              
              $
              16,347
              
              $
              917
              
              $
              345
              
              $
              17,6091-3
                  years
              
              
              68,507
              
              
              1,435
              
              
              718
              
              
              70,6603-5
                  years
              
              
              222
              
              
              380
              
              
              875
              
              
              1,477After
                  5 years
              
              
              2,405
              
              
              --
              
              
              1,513
              
              
              3,918$
              87,481
              
              $
              2,732
              
              $
              3,451
              
              $
              93,664





Idle
      facility leases consists of an obligation for a manufacturing location that
      was
      exited in conjunction with the company's manufacturing consolidation efforts.
      This lease obligation continues through December 2014. This facility has been
      subleased. The obligation presented above does not reflect any anticipated
      sublease income from the facilities.





The
      projected benefit obligation of the company’s defined benefit plans
      exceeded the plans’ assets by $3.5 million at the end of 2006 as compared to
      $2.4 million at the end of 2005. The unfunded benefit obligations were comprised
      of a $0.7 million under funding of the company's union plan and $2.8 million
      of
      under funding of the company's director plans. The company does not expect
      to
      contribute to the director plans in 2007. The company made minimum contributions
      required by the Employee Retirement Income Security Act of 1974 (“ERISA”) of
      $0.2 million in 2006 to the company's union plan. The company expects to
      continue to make minimum contributions of $0.2 million in 2007 to the union
      plan
      as required by ERISA.





The
      company has $3.8 million in outstanding letters of credit, which expire on
      March
      31, 2008 with an automatic one-year renewal, to secure potential obligations
      under insurance programs.





The
      company places purchase orders with its suppliers in the ordinary course of
      business. These purchase orders are generally to fulfill short-term
      manufacturing requirements of less than 90 days and most are cancelable with
      a
      restocking penalty. The company has no long-term purchase contracts or minimum
      purchase obligations with any supplier.





The
      company has contractual obligations under its various debt agreements to make
      interest payments. These amounts are subject to the level of borrowings in
      future periods and the interest rate for the applicable periods, and therefore
      the amounts of these payments is not determinable.





The
      company has no activities, obligations or exposures associated with off-balance
      sheet arrangements.





23





**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market**  **Risk**





**Interest
      Rate Risk**





The
      company is exposed to market risk related to changes in interest rates. The
      following table summarizes the maturity of the company’s debt
      obligations.


Twelve
                  Month Period Ending
              
              Fixed
                  RateDebt
              
              Variable
                  Rate Debt(in
                  thousands)March
                  31, 2008
              
              $
              --
              
              $
              16,347March
                  31, 2009
              
              
              --
              
              
              17,601March
                  31, 2010
              
              
              --
              
              
              50,906March
                  31, 2011
              
              
              --
              
              
              111March
                  31, 2012
              
              
              1,697
              
              
              819$
              1,697
              
              $
              85,784







During
      the fourth quarter of 2005, the company amended its senior secured credit
      facility. Terms of the agreement currently provide for $43.8 million of term
      loans and $130.0 million of availability under a revolving credit line. As
      of
      March 31, 2007, the company had $83.3 million outstanding under its senior
      banking facility, including $39.6 million of borrowings under the revolving
      credit line. The company also had $3.8 million in outstanding letters of credit,
      which reduced the borrowing availability under the revolving credit
      line.





Borrowings
      under the senior secured credit facility are assessed at an interest rate of
      1.00% above LIBOR for long-term borrowings or at the higher of the Prime rate
      and the Federal Funds Rate for short-term borrowings. At March 31, 2007, the
      average interest rate on the senior debt amounted to 6.54%. The interest rates
      on borrowings under the senior bank facility may be adjusted quarterly based
      on
      the company’s defined 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 0.20% as of March 31, 2007.





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.  As of March 31, 2007 these facilities amounted
      to $4.1 million in US dollars, including $1.2 million outstanding under a
      revolving credit facility, $2.1 million of a term loan and $0.8 million of
      a
      long term mortgage note.  The interest rate on the revolving credit
      facility is assessed at 1.25% above Euro LIBOR, which amounted to 5.40% on
      March
      31, 2007. The term loan matures in 2013 and the interest rate is assessed at
      5.0%.  The long-term mortgage note matures in March 2023 and is assessed
      interest at a fixed rate of 5.19%.





In
      December 2005, the company entered into a $3.2 million U.S. Dollar secured
      term
      loan at its subsidiary in Spain. This loan amortizes in equal monthly
      installments over a four year period ending December 31, 2009. As of March
      31,
      2007, the company had $0.1 million of borrowings remaining under this loan.
      Borrowings under this facility are assessed an interest rate of 0.45% above
      LIBOR. At March 31, 2007 the interest rate was 5.77%.





24




The
      company has historically entered into interest rate swap agreements to
      effectively fix the interest rate on its outstanding debt. In January 2005,
      the
      company entered into an interest rate swap agreement for a notional amount
      of
      $70.0 million. This agreement swaps one-month LIBOR for a fixed rate of 3.78%.
      The notional amount amortizes consistent with the repayment schedule of the
      company's term loan maturing November 2009. The unamortized notational amount
      of
      this swap as of March 31, 2007 was $43.8 million. In January 2006, the company
      entered into an interest rate swap for a notional amount of $10.0 million
      maturing on December 31, 2009. This agreement swaps one-month LIBOR for a fixed
      rate of 5.03%.





The
      terms
      of the senior secured credit facility limit the paying of dividends, capital
      expenditures and leases, and require, among other things, certain ratios of
      indebtedness and fixed charge coverage. 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. At March
      31, 2007, the company was in compliance with all covenants pursuant to its
      borrowing agreements.








**Financing
      Derivative Instruments**





In
      January 2005, the company entered into an interest rate swap with a notional
      amount of $70.0 million to fix the interest rate applicable to certain of its
      variable-rate debt. The notional amount of the swap amortizes consistent with
      the repayment schedule of the company's senior term loan maturing in November
      2009. The agreement swaps one-month LIBOR for a fixed rate of 3.78% and is
      in
      effect through November 2009. The interest rate swap has been designated a
      cash
      flow hedge, and in accordance with SFAS No. 133 the changes in fair value are
      recorded as a component of accumulated other comprehensive income. As of March
      31, 2007, the fair value of this instrument was $0.7 million. The change in
      fair
      value of this swap agreement in the first three months of 2007 was a loss of
      $0.2 million, net of $0.1 million of taxes. In January 2006, the company entered
      into an interest rate swap agreement for a notional amount of $10.0 million
      maturing on December 21, 2009. This agreement swaps one month LIBOR for a fixed
      rate of 5.03%. The interest rate swap has been designated a cash flow hedge,
      and
      in accordance with SFAS No. 133 the changes in fair value are recorded as a
      component of accumulated other comprehensive income. As of March 31, 2007,
      the
      fair value of this instrument was less than $0.1 million. The change in fair
      value of this swap agreement in the first three months of 2006 was a gain of
      less than $0.1 million.





25




**Foreign
      Exchange Derivative Financial Instruments**





The
      company uses foreign currency forward purchase and sale contracts with terms
      of
      less than one year, to hedge its exposure to changes in foreign currency
      exchange rates. The company’s primary hedging activities are to mitigate its
      exposure to changes in exchange rates on intercompany and third party trade
      receivables and payables. The company does not currently enter into derivative
      financial instruments for speculative purposes. In managing its foreign currency
      exposures, the company identifies and aggregates naturally occurring offsetting
      positions and then hedges residual balance sheet exposures. There was no forward
      contract outstanding at the end of the quarter.




26




**Item
      4. Controls and Procedures**





The
      company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in the company's Exchange Act reports
      is recorded, processed, summarized and reported within the time periods
      specified in the SEC's rules and forms, and that such information is accumulated
      and communicated to the company's management, including its Chief Executive
      Officer and Chief Financial Officer, as appropriate, to allow timely decisions
      regarding required disclosure.





As
      of
      March 31, 2007, the company carried out an evaluation, under the supervision
      and
      with the participation of the company's management, including the company's
      Chief Executive Officer and Chief Financial Officer, of the effectiveness of
      the
      design and operation of the company's disclosure controls and procedures. Based
      on the foregoing, the company's Chief Executive Officer and Chief Financial
      Officer concluded that the  company's
      disclosure controls and procedures were effective as of the end of this
      period.




During
      the quarter ended March 31, 2007, there has been no change in the company's
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, the company's internal control over
      financial reporting.





27




**PART
      II. OTHER INFORMATION**





The
      company was not required to report the information pursuant to Items 1 through
      6
      of Part II of Form 10-Q for the three months ended March 31, 2007, except as
      follows:





**Item
      1A. Risk Factors**





There
      have been no material changes in the risk factors as set forth in the company's
      2006 Annual Report on Form 10-K.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




*Issuer
      Purchases of Equity Securities*





In
      July
      1998, the company's Board of Directors adopted a stock repurchase program and
      subsequently authorized the purchase of up to 1,800,000 common shares in open
      market purchases. As of March 31, 2007, 952,999 shares had been purchased under
      the 1998 stock repurchase program. No shares were repurchased by the company
      during the three month period ended March 31, 2007.





28





**Item
      6. Exhibits**





Exhibits
      - The following exhibits are filed herewith:




Exhibit
        3.1 - Restated Certificate of Incorporation of the Middleby Corporation
        (effective as of May 13, 2005, incorporated by reference to the Company's
        Form
        8-K, Exhibit 3.1, dated April 29, 2005, filed on May 17, 2005).
  Exhibit
        3.2 - Certificate of Amendment to the Company's Restated Certificate of
        Incorporation (incorporated by reference to the Company's Form 8-K, filed
        on May
        3, 2007).


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).




29


**SIGNATURE**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




THE
                MIDDLEBY CORPORATION
              (Registrant)Date: May
              10, 2007
            By:
            /s/ Timothy
              J. FitzGeraldTimothy
              J. FitzGeraldVice
              President,Chief Financial Officer


30