**UNITED
      STATES**





**SECURITIES
      AND EXCHANGE COMMISSION**





**Washington,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      One)


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





**For
      the quarterly period ended September 27, 2008**





or




o Transition 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
            
            (I.R.S.
                Employer Identification No.)Incorporation
                or Organization)





**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, a non-accelerated filer or a smaller reporting company.
      See
      definition of “accelerated filer, large accelerated filer and smaller reporting
      company” in Rule 12b-2 of the Exchange Act.


Large
                accelerated filerx
            Accelerated
                filero
            Non
                accelerated filero
            Smaller
                reporting companyo





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
      October 31, 2008, there were 16,993,843 shares of the registrant's common stock
      outstanding.





**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**





**QUARTER
      ENDED SEPTEMBER 27, 2008**





INDEX





DESCRIPTION
            
            PAGEPART
                I. FINANCIAL INFORMATIONItem
                1.
            Condensed
                Consolidated Financial Statements (unaudited)CONDENSED
                CONSOLIDATED BALANCE SHEETS
              September
                27, 2008 and December 29, 2007
            
            1CONDENSED
                CONSOLIDATED STATEMENTS OF EARNINGS
              September
                27, 2008 and September 29, 2007
            
            2CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS
              September
                27, 2008 and September 29, 2007
            
            3NOTES
                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            
            4Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            24Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            34Item
                4.
            Controls
                and Procedures
            
            37PART
                II. OTHER INFORMATIONItem
                1A.
            Risk
                Factors
            
            38Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            41Item
                6.
            Exhibits
            
            42





**PART
      I. FINANCIAL INFORMATION**


**Item
      1. Condensed Consolidated Financial Statements**





**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


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


**(Unaudited)**





Sep.
                27, 2008
            
            Dec.
                29, 2007**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            7,027
            
            $
            7,463Accounts
                receivable, net of reserve for doubtful accounts of $7,684 and
                $5,818
            
            
            91,633
            
            
            73,090Inventories,
                net
            
            
            94,360
            
            
            66,438Prepaid
                expenses and other
            
            
            9,697
            
            
            10,341Prepaid
                taxes
            
            
            7,627
            
            
            17,986Current
                deferred taxes
            
            
            14,788
            
            
            11,095Total
                current assets
            
            
            225,132
            
            
            186,413Property,
                plant and equipment, net of accumulated depreciation of $43,046 and
                $41,114
            
            
            44,562
            
            
            36,774Goodwill
            
            
            248,779
            
            
            134,800Other
                intangibles
            
            
            125,726
            
            
            52,581Other
                assets
            
            
            3,836
            
            
            3,079Total
                assets
            
            $
            648,035
            
            $
            413,647**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Current
                maturities of long-term debt
            
            $
            7,803
            
            $
            2,683Accounts
                payable
            
            
            34,377
            
            
            26,576Accrued
                expenses
            
            
            98,535
            
            
            95,581Total
                current liabilities
            
            
            140,715
            
            
            124,840Long-term
                debt
            
            
            249,850
            
            
            93,514Long-term
                deferred tax liability
            
            
            20,856
            
            
            2,568Other
                non-current liabilities
            
            
            18,847
            
            
            9,813Stockholders'
                equity:Preferred
                stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none
                issued
            
            
            —
            
            
            —Common
                stock, $0.01 par value; 47,500,000 shares authorized; 21,068,556
                and
                20,732,836 shares issued in 2008 and 2007, respectively
            
            
            120
            
            
            120Paid-in
                capital
            
            
            106,739
            
            
            104,782Treasury
                stock at cost; 4,074,713 and 3,855,044 shares in 2008 and 2007,
                respectively
            
            
            (102,000
            )
            
            (89,641
            )Retained
                earnings
            
            
            213,484
            
            
            166,896Accumulated
                other comprehensive income
            
            
            (576
            )
            
            755Total
                stockholders' equity
            
            
            217,767
            
            
            182,912Total
                liabilities and stockholders' equity
            
            $
            648,035
            
            $
            413,647





See
      accompanying notes


1


**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF EARNINGS**


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


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





**Three Months Ended**
            
            **Nine Months Ended****Sep. 27, 2008**
            
            **Sep. 29, 2007**
            
            **Sep. 27, 2008**
            
            **Sep. 29, 2007****Net
                sales**
            
            **$**
            **166,472**
            
            **$**
            **135,996**
            
            **$**
            **500,868**
            
            **$**
            **354,939****Cost
                of sales**
            
            
            **101,735**
            
            
            **84,600**
            
            
            **310,221**
            
            
            **217,552****Gross
                profit**
            
            
            **64,737**
            
            
            **51,396**
            
            
            **190,647**
            
            
            **137,387****Selling
                expenses**
            
            
            **16,822**
            
            
            **13,507**
            
            
            **49,743**
            
            
            **36,575****General
                and administrative expenses**
            
            
            **16,962**
            
            
            **12,465**
            
            
            **51,443**
            
            
            **35,380****Income
                from operations**
            
            
            **30,953**
            
            
            **25,424**
            
            
            **89,461**
            
            
            **65,432****Net
                interest expense and deferred financing
                amortization**
            
            
            **3,168**
            
            
            **1,621**
            
            
            **9,910**
            
            
            **4,138****Other
                expense (income), net**
            
            
            **850**
            
            
            **(316**
            **)**
            
            **1,798**
            
            
            **(1,053**
            **)****Earnings
                before income taxes**
            
            
            **26,935**
            
            
            **24,119**
            
            
            **77,753**
            
            
            **62,347****Provision
                for income taxes**
            
            
            **10,645**
            
            
            **10,063**
            
            
            **31,165**
            
            
            **24,989****Net
                earnings**
            
            **$**
            **16,290**
            
            **$**
            **14,056**
            
            **$**
            **46,588**
            
            **$**
            **37,358****Net
                earnings per share:****Basic**
            
            **$**
            **1.02**
            
            **$**
            **0.89**
            
            **$**
            **2.91**
            
            **$**
            **2.39****Diluted**
            
            **$**
            **0.96**
            
            **$**
            **0.83**
            
            **$**
            **2.72**
            
            **$**
            **2.22****Weighted
                average number of shares****Basic**
            
            
            **15,911**
            
            
            **15,743**
            
            
            **15,985**
            
            
            **15,632****Dilutive
                stock options****1**
            
            
            **1,106**
            
            
            **1,191**
            
            
            **1,158**
            
            
            **1,225****Diluted**
            
            
            **17,017**
            
            
            **16,934**
            
            
            **17,143**
            
            
            **16,857**





1
            There
                were no anti-dilutive stock options excluded from common stock equivalents
                for any period presented.





See
      accompanying notes


2


**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(In
      Thousands)**


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





**Nine Months Ended****Sep. 27, 2008**
            
            **Sep. 29, 2007****Cash flows
                from operating activities-****Net
                earnings**
            
            **$**
            **46,588**
            
            **$**
            **37,358****Adjustments
                to reconcile net earnings to cash provided by operating
                activities:****Depreciation
                and amortization**
            
            
            **10,256**
            
            
            **4,850****Deferred
                taxes**
            
            
            **2,593**
            
            
            **1,417****Non-cash
                share-based compensation**
            
            
            **8,421**
            
            
            **5,540****Unrealized
                loss on derivative financial instruments**
            
            
            **169**
            
            
            **—****Changes
                in assets and liabilities, net of acquisitions****Accounts
                receivable, net**
            
            
            **100**
            
            
            **(5,674**
            **)****Inventories,
                net**
            
            
            **(7,022**
            **)**
            
            **(2,992**
            **)****Prepaid
                expenses and other assets**
            
            
            **13,243**
            
            
            **(4,576**
            **)****Accounts
                payable**
            
            
            **(2,108**
            **)**
            
            **6,866****Accrued
                expenses and other liabilities**
            
            
            **(8,248**
            **)**
            
            **3,195****Net
                cash provided by operating activities**
            
            
            **63,992**
            
            
            **45,984****Cash
                flows from investing activities-****Net
                additions to property and equipment**
            
            
            **(3,408**
            **)**
            
            **(1,689**
            **)****Acquisition
                of Houno**
            
            
            **—**
            
            
            **(179**
            **)****Acquisition
                of Jade**
            
            
            **—**
            
            
            **(7,779**
            **)****Acquisition
                of Carter-Hoffmann**
            
            
            **(167**
            **)**
            
            **(16,152**
            **)****Acquisition
                of MP Equipment**
            
            
            **(3,000**
            **)**
            
            **(15,193**
            **)****Acquisition
                of Wells Bloomfield**
            
            
            **(317**
            **)**
            
            **(28,803**
            **)****Acquisition
                of Star**
            
            
            **(188,241**
            **)**
            
            **—****Acquisition
                of Giga**
            
            
            **(9,918**
            **)**
            
            **—****Acquisition
                of Frifri**
            
            
            **(3,050**
            **)**
            
            **—****Net
                cash (used in) investing activities**
            
            
            **(208,101**
            **)**
            
            **(69,795**
            **)****Cash
                flows from financing activities-****Net
                proceeds under revolving credit facilities**
            
            
            **156,450**
            
            
            **36,750****Repayments
                under senior secured bank notes**
            
            
            **—**
            
            
            **(11,250**
            **)****Net
                proceeds (payments) under foreign bank loan**
            
            
            **525**
            
            
            **(822**
            **)****Debt
                issuance costs**
            
            
            **(1,002**
            **)**
            
            **—****Purchase
                of treasury stock**
            
            
            **(12,359**
            **)**
            
            **—****Net
                proceeds from stock issuances**
            
            
            **270**
            
            
            **3,121****Net
                cash provided by financing activities**
            
            
            **143,884**
            
            
            **27,799****Effect
                of exchange rates on cash and cash equivalents**
            
            
            **(211**
            **)**
            
            **94****Changes
                in cash and cash equivalents-****Net
                (decrease) increase in cash and cash equivalents**
            
            
            **(436**
            **)**
            
            **4,082****Cash
                and cash equivalents at beginning of year**
            
            
            **7,463**
            
            
            **3,534****Cash
                and cash equivalents at end of quarter**
            
            **$**
            **7,027**
            
            **$**
            **7,616****Supplemental
                disclosure of cash flow information:****Interest
                paid**
            
            **$**
            **8,524**
            
            **$**
            **3,844****Income
                tax payments**
            
            **$**
            **19,582**
            
            **$**
            **24,815**





See
      accompanying notes


3


**THE
      MIDDLEBY CORPORATION AND SUBSIDIARIES**





**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**September
      27, 2008**


**(** **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 2007 Form 10-K/A.





In
      the
      opinion of management, the financial statements contain all adjustments
      necessary to present fairly the financial position of the company as of
      September 27, 2008 and December 29, 2007, and the results of operations for
      the
      three and nine months ended September 27, 2008 and September 29, 2007 and cash
      flows for the nine months ended September 27, 2008 and September 29, 2007.





Subsequent
      to the issuance of the company’s condensed consolidated financial statements for
      the fiscal period ended March 29, 2008, the company determined that purchase
      accounting methodology had been improperly applied as it related to the
      calculation of deferred tax assets and liabilities for certain acquisitions,
      including Nu-Vu Foodservice Systems, Jade Products Company, Carter-Hoffman,
      MP
      Equipment, and Wells Bloomfield. Specifically, in each of these acquisitions,
      the company allocated a portion of the purchase price to deferred tax assets
      to
      reflect the expected tax benefit to be realized from the future amortization
      of
      goodwill deductible for tax purposes. This restatement had no impact on the
      company’s condensed consolidated statements of earnings or cash flows for the
      three month period ended March 29, 2008.





**B)**  **Non-
      Cash** **Share-Based
      Compensation**





The
      company estimates the fair value of market-based stock awards and stock options
      at the time of grant and recognizes compensation cost over the vesting period
      of
      the awards and options. Non-cash share-based compensation expense was $2.9
      million and $2.2 million for the third quarter of 2008 and 2007, respectively.
      Non-cash share-based compensation expense was $8.4 million and $5.5 million
      for
      the nine-month periods ended September 27, 2008 and September 29, 2007,
      respectively.


4





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





In
      July
      2006, the Financial Accounting Standards Board, (“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
      was 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 as required.





As
      of
      December 29, 2007, the total amount of liability for unrecognized tax benefits
      related to federal, state and foreign taxes was approximately $7.7 million
      plus
      approximately $1.0 million of accrued interest and $1.3 million of penalties.
      As
      of September 27, 2008, the corresponding balance of liability for unrecognized
      tax benefits was approximately $9.6 million plus approximately $1.6 million
      of
      accrued interest and $1.3 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.





During
      the second quarter of 2008 the U.S. Internal Revenue Service completed an audit
      of the company’s 2005 and 2006 federal income tax returns.  Results of
      these audits have been considered in the company’s evaluation of the reserve
      requirements under FIN 48.  The company does not anticipate that total
      unrecognized tax benefits will significantly change due to any settlement of
      audits and the expiration of statute of limitations within the next twelve
      months.





The
      company operates in multiple taxing jurisdictions; both within the United States
      and outside of the United States, and faces audits from various tax authorities.
      The company remains subject to examination until the statute of limitations
      expires for the respective tax jurisdiction. Within specific countries, the
      company and its operating subsidiaries may be subject to audit by various tax
      authorities and may be subject to different statute of limitations expiration
      dates. A summary of the tax years that remain subject to examination in the
      company’s major tax jurisdictions are:





United
                States – federal
            
            
            2007United
                States – states
            
            
            2002
                - 2007China
            
            
            2006
                - 2007Denmark
            
            
            2006
                - 2007Mexico
            
            
            2006
                - 2007Philippines
            
            
            2004
                - 2007South
                Korea
            
            
            2004
                - 2007Spain
            
            
            2005
                - 2007Taiwan
            
            
            2005
                - 2007United
                Kingdom
            
            
            2006
                - 2007


5


**D)**  **Fair
      Value Measures**





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“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 disclosure about fair value measurements.
      This
      statement is effective for interim reporting periods in fiscal years beginning
      after November 15, 2007. The company adopted SFAS No. 157 on December 30, 2007
      (first day of fiscal year 2008).





FASB
      Staff Position No. FAS 157-2, “Effective Date of FASB Statement
      No. 157” delays the effective date of the application of SFAS No. 157
      to fiscal years beginning after November 15, 2008 for all nonfinancial
      assets and nonfinancial liabilities that are recognized or disclosed at fair
      value in the financial statements on a non-recurring basis. The company adopted
      SFAS No. 157 with the exception of the application of the statement to
      non-recurring nonfinancial assets and liabilities. Non-recurring nonfinancial
      assets and nonfinancial liabilities for which the company has not applied the
      provisions of SFAS No. 157 primarily include those measured at fair value
      in goodwill and long-lived asset impairment testing, those initially measured
      at
      fair value in a business combination, and nonfinancial liabilities for exit
      or
      disposal activities .





SFAS
      No.
      157 defines fair value as the price that would be received for an asset or
      paid
      to transfer a liability (an exit price) in the principal most advantageous
      market for the asset or liability in an orderly transaction between market
      participants on the measurement date. SFAS No. 157 establishes a fair value
      hierarchy, which prioritizes the inputs used in measuring fair value into the
      following levels:





Level
      1 –
Quoted prices in active markets for identical assets or liabilities


Level
      2 –
Inputs, other than quoted prices in active markets, that are observable either
      directly or indirectly.


Level
      3 –
Unobservable inputs based on our own assumptions.





The
      company’s financial assets that are measured at fair value on a recurring basis
      are categorized using the fair value hierarchy at September 27, 2008 are as
      follows (in thousands):





Fair Value
            
            Fair Value
            
            Fair ValueLevel 1
            
            Level 2
            
            Level 3
            
            TotalFinancial
                Assets:None
            
            
            —
            
            
            —
            
            
            —
            
            
            —Financial
                Liabilities:Interest
                rate swaps
            
            
            —
            
            
            12
            
            
            —
            
            
            12





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. Upon adoption,
      the
      company has elected to not apply SFAS No. 159 to measure selected financial
      instruments and certain other items; therefore, there was no impact to the
      financial statements upon adoption. Subsequent to the initial adoption of SFAS
      No. 159, the company has not made any elections during the three and nine months
      ended September 27, 2008.


6


**2)**
            **Acquisitions
                and Purchase Accounting**





*Jade*





On
      April
      1, 2007, the company completed its acquisition of the assets and operations
      of
      Jade Products Company (“Jade”), a leading manufacturer of commercial and
      residential cooking equipment from Maytag Corporation ("Maytag") for an
      aggregate purchase price of $7.4 million in cash plus transaction costs.





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
      final
      allocation of cash paid for the Jade acquisition is summarized as follows (in
      thousands):





Apr. 1, 2007
            
            Adjustments
            
            Sep. 27, 2008Current
                assets
            
            $
            6,727
            
            $
            (2,357
            )
            $
            4,370Property,
                plant and equipment
            
            
            2,029
            
            
            —
            
            
            2,029Goodwill
            
            
            250
            
            
            2,858
            
            
            3,108Other
                intangibles
            
            
            1,590
            
            
            —
            
            
            1,590Current
                liabilities
            
            
            (3,205
            )
            
            (50
            )
            
            (3,255
            )Total
                cash paid
            
            $
            7,391
            
            $
            451
            
            $
            7,842





The
      goodwill and other intangibles of $1.4 million associated with the trade name,
      are subject to the non-amortization provisions of SFAS No. 142, "Goodwill and
      Other Intangible Assets", from the date of acquisition. Other intangibles of
      $0.2 million allocated to customer relationships are to be amortized over a
      period of 10 years. Goodwill and other intangibles of Jade are allocated to
      the
      Commercial Foodservice Equipment Group for segment reporting purposes. These
      assets are expected to be deductible for tax purposes.





*Carter-Hoffmann*





On
      June
      29, 2007, the company completed its acquisition of the assets and operations
      of
      Carter-Hoffmann (“Carter-Hoffmann”), a leading manufacturer of commercial
      cooking and warming equipment, from Carrier Commercial Refrigeration
      Inc., a
      subsidiary of Carrier Corporation, which is a unit of United Technologies
      Corporation, for
      an
      aggregate purchase price of $15.9 million in cash plus transaction costs.





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.


7


The
      final
      allocation of cash paid for the Carter-Hoffmann acquisition is summarized as
      follows (in thousands):





Jun. 29, 2007
            
            Adjustments
            
            Sep. 27, 2008Current
                assets
            
            $
            7,912
            
            $
            (2,125
            )
            $
            5,787Property,
                plant and equipment
            
            
            2,264
            
            
            —
            
            
            2,264Goodwill
            
            
            9,452
            
            
            (1,254
            )
            
            8,198Other
                intangibles
            
            
            —
            
            
            3,910
            
            
            3,910Current
                liabilities
            
            
            (3,646
            )
            
            (50
            )
            
            (3,696
            )Other
                non-current liabilities
            
            
            (54
            )
            
            —
            
            
            (54
            )Total
                cash paid
            
            $
            15,928
            
            $
            481
            
            $
            16,409





The
      goodwill and $2.3 million of other intangibles associated with the trade name
      are subject to the non-amortization provisions of SFAS No. 142. Other
      intangibles also includes $1.6 million allocated to customer relationships
      are
      to be amortized over a period of 4 years. Goodwill and other intangibles of
      Carter-Hoffmann are allocated to the Commercial Foodservice Equipment Group
      for
      segment reporting purposes. These assets are expected to be deductible for
      tax
      purposes.








*MP
      Equipment*





On
      July
      2, 2007, the company completed its acquisition of the assets and operations
      of
      MP Equipment (“MP Equipment”), a leading manufacturer of food processing
      equipment for a purchase price of $15.0 million in cash plus transaction costs.
      During the quarter ended September 27, 2008, additional payments amounting
      to
      $3.0 million were made to the sellers pursuant to the agreement upon the
      business reaching certain profit targets.





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
      final
      allocation of cash paid for the MP Equipment acquisition is summarized as
      follows (in thousands):





Jul. 2, 2007
            
            Adjustments
            
            Sep. 27, 2008Current
                assets
            
            $
            5,315
            
            $
            —
            
            $
            5,315Property,
                plant and equipment
            
            
            297
            
            
            (152
            )
            
            145Goodwill
            
            
            9,290
            
            
            2,044
            
            
            11,334Other
                intangibles
            
            
            6,420
            
            
            (770
            )
            
            5,650Other
                assets
            
            
            16
            
            
            —
            
            
            16Current
                liabilities
            
            
            (4,018
            )
            
            (46
            )
            
            (4,064
            )Other
                non-current liabilities
            
            
            (2,127
            )
            
            2,000
            
            
            (127
            )Total
                cash paid
            
            $
            15,193
            
            $
            3,076
            
            $
            18,269


8


The
      goodwill and $3.3 million of other intangibles associated with the trade name
      are subject to the non-amortization provisions of SFAS No. 142. Other
      intangibles also includes $0.3 million allocated to backlog, $0.3 million
      allocated to developed technology and $1.8 million allocated to customer
      relationships which are to be amortized over periods of 6 months, 5 years and
      5
      years, respectively. Goodwill and other intangibles of MP Equipment are
      allocated to the Food Processing Equipment Group for segment reporting purposes.
      These assets are expected to be deductible for tax purposes.





*Wells
      Bloomfield*





On
      August
      3, 2007, the company completed its acquisition of the assets and operations
      of
      Wells Bloomfield (“Wells Bloomfield”), a leading manufacturer of commercial
      cooking and beverage equipment from Carrier Commercial Refrigeration
      Inc., a
      subsidiary of Carrier Corporation, which is a unit of United Technologies
      Corporation, for
      an
      aggregate purchase price of $28.4 million in cash plus transaction costs.





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
      final
      allocation of cash paid for the Wells Bloomfield acquisition is summarized
      as
      follows (in thousands):





Aug. 3, 2007
            
            Adjustments
            
            Sep. 27, 2008Cash
            
            $
            2
            
            $
            —
            
            $
            2Current
                assets
            
            
            15,133
            
            
            (838
            )
            
            14,295Property,
                plant and equipment
            
            
            3,961
            
            
            (87
            )
            
            3,874Goodwill
            
            
            5,835
            
            
            3,135
            
            
            8,970Other
                intangibles
            
            
            8,130
            
            
            (200
            )
            
            7,930Other
                assets
            
            
            21
            
            
            —
            
            
            21Current
                liabilities
            
            
            (4,277
            )
            
            (1,587
            )
            
            (5,864
            )Total
                cash paid
            
            $
            28,805
            
            $
            423
            
            $
            29,228





The
      goodwill and $5.5 million of other intangibles associated with the trade name
      are subject to the non-amortization provisions of SFAS No. 142. Other
      intangibles of $2.4 million allocated to customer relationships are to be
      amortized over a period of 4 years. Goodwill and other intangibles of Wells
      Bloomfield are allocated to the Commercial Foodservice Equipment Group for
      segment reporting purposes. These assets are expected to be deductible for
      tax
      purposes.


9


*Star*





On
      December 31, 2007, the company acquired the stock of New Star International
      Holdings, Inc. and subsidiaries (“Star”), a leading manufacturer of commercial
      cooking equipment for an aggregate purchase price of $188.4 million in cash
      plus
      transaction costs.





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 Star acquisition is summarized
      as
      follows (in thousands):





Dec.
                31, 2007
            
            Adjustments
            
            Sep.
                27, 2008Cash
            
            $
            376
            
            $
            —
            
            $
            376Current
                assets
            
            
            27,783
            
            
            —
            
            
            27,783Property,
                plant and equipment
            
            
            8,225
            
            
            —
            
            
            8,225Goodwill
            
            
            101,365
            
            
            350
            
            
            101,715Other
                intangibles
            
            
            75,150
            
            
            —
            
            
            75,150Other
                assets
            
            
            71
            
            
            —
            
            
            71Current
                liabilities
            
            
            (10,205
            )
            
            (164
            )
            
            (10,369
            )Deferred
                tax liabilities
            
            
            (8,837
            )
            
            —
            
            
            (8,837
            )Other
                non-current liabilities
            
            
            (4.295
            )
            
            —
            
            
            (4,295
            )Total
                cash paid
            
            $
            189,633
            
            $
            186
            
            $
            189,819





The
      goodwill and $47.0 million of other intangibles associated with the trade name
      are subject to the non-amortization provisions of SFAS No. 142. Other
      intangibles also includes $0.4 million allocated to backlog, $3.8 million
      allocated to developed technology and $24.0 million allocated to customer
      relationships which are to be amortized over periods of 1 month, 7 years and
      7
      years, respectively. Goodwill and other intangibles of Star are allocated to
      the
      Commercial Foodservice Equipment Group for segment reporting purposes. These
      assets are not expected to be deductible for tax purposes.


10


*Pro
      forma Financial Information*





The
      following unaudited pro forma results of operations for the year ended December
      29, 2007, assumes the Star acquisition was completed on December 31, 2006. 
The pro forma results include adjustments to reflect additional interest expense
      to fund the acquisition, amortization of intangibles associated with the
      acquisition, and the effects of adjustments made to the carrying value of
      certain assets.





December 29, 2007
            
            December 30, 2006Net
                sales
            
            $
            592,513
            
            $
            487,283Net
                earnings
            
            $
            51,769
            
            $
            40,672Net
                earnings per share:Basic
            
            $
            3.30
            
            $
            2.66Diluted
            
            $
            3.06
            
            $
            2.46





The
      pro
      forma financial information presented above is not necessarily indicative of
      either the results of operations that would have occurred had the acquisition
      of
      Star, been effective on December 31, 2006 or of future operations of the
      company.  Also, the pro forma financial information does not reflect the
      costs which the company has or may incur to integrate Star.





*Giga*





On
      April
      22, 2008, the company acquired the stock of Giga
      Grandi Cucine S.r.l. (“Giga”) ,
      a
      leading European
      manufacturer of ranges, ovens and steam cooking equipment for a purchase price
      of $9.7 million in cash plus transaction costs. The company also assumed $5.1
      million of debt included as part of the net assets of Giga .
      An
      additional deferred payment of $5.4 million is also due the seller ratably
      over
      a three year period. The purchase price is subject to adjustment based upon
      a
      working capital provision within the purchase agreement.





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 Giga acquisition is summarized
      as
      follows (in thousands):





Apr. 22, 2008
            
            Adjustments
            
            Sep. 27, 2008Cash
            
            $
            222
            
            $
            —
            
            $
            222Current
                assets
            
            
            14,645
            
            
            —
            
            
            14,645Property,
                plant and equipment
            
            
            628
            
            
            —
            
            
            628Goodwill
            
            
            10,135
            
            
            25
            
            
            10,160Other
                intangibles
            
            
            3,330
            
            
            —
            
            
            3,330Other
                assets
            
            
            473
            
            
            —
            
            
            473Current
                maturities of long-term debt
            
            
            (5,105
            )
            
            —
            
            
            (5,105
            )Current
                liabilities
            
            
            (8,757
            )
            
            —
            
            
            (8,757
            )Other
                non-current liabilities
            
            
            (5,431
            )
            
            —
            
            
            (5,431
            )Total
                cash paid
            
            $
            10,140
            
            $
            25
            
            $
            10,165


11


The
      goodwill and $2.4 million of other intangibles associated with the trade name
      are subject to the non-amortization provisions of SFAS No. 142. Other
      intangibles also includes $0.1 million allocated to backlog and $0.8 million
      allocated to customer relationships, which are to be amortized over periods
      of 3
      months and 4 to 10 years, respectively. Goodwill and other intangibles of Giga
      are allocated to the Commercial Foodservice Equipment Group for segment
      reporting purposes. These assets are not expected to be deductible for tax
      purposes.





*Frifri*





On
      April
      23, 2008, the company acquired the assets of FriFri
      aro SA (“FriFri”) ,
      a
      leading European
      supplier of frying systems for an aggregate purchase price of $3.4 million
      plus
      transaction costs .
      The
      purchase price is subject to adjustment based upon a working capital provision
      within the purchase agreement.





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 Frifri acquisition is summarized
      as
      follows (in thousands):





Apr. 23, 2008
            
            Adjustments
            
            Sep. 27, 2008Cash
            
            $
            469
            
            $
            —
            
            $
            469Current
                assets
            
            
            4,263
            
            
            127
            
            
            4,390Property,
                plant and equipment
            
            
            460
            
            
            —
            
            
            460Goodwill
            
            
            1,155
            
            
            (147
            )
            
            1,008Current
                liabilities
            
            
            (2,828
            )
            
            29
            
            
            (2,799
            )Total
                cash paid
            
            $
            3,519
            
            $
            9
            
            $
            3,528





The
      goodwill is subject to the non-amortization provisions of SFAS No. 142. Goodwill
      of Frifri is allocated to the Commercial Foodservice Equipment Group for segment
      reporting purposes. These assets are not expected to be deductible for tax
      purposes.




TurboChef


On
        August
        12, 2008, the company announced that it had agreed to acquire TurboChef
        Technologies, Inc. (“TurboChef”). At the effective time of the Merger (the
“Effective Time”), each issued and outstanding share of TurboChef’s common stock
        will be automatically converted into the right to receive 0.0486 shares (the
        “Exchange Ratio”) of the common stock of Middleby (“Middleby Common Stock”) and
        $3.67 in cash (the “Cash Consideration”, and together with Middleby Common
        Stock, the “Merger Consideration”) for a total value of $6.47 based on
        Middleby’s closing stock price of $57.60 on August 11, 2008, the last trading
        date prior to the announcement of the contemplated transaction. Consummation
        of
        the Merger is subject to various conditions, including the approval of
        TurboChef’s stockholders and other customary closing
        conditions.


12


**3)**
            **Stock
                Split**





On
      May 3,
      2007, the company’s Board of Directors authorized a two-for-one split of the
      company’s common stock in the form of a stock dividend. The stock dividend was
      paid on June 15, 2007 to company shareholders of record as of June 1, 2007.
      The
      company’s common stock began trading on a split-adjusted basis on June 18, 2007.
      All references in the accompanying condensed consolidated financial statements
      and notes thereto to net earnings per share and the number of shares have been
      adjusted to reflect this stock split.





**4)**
            **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.





**5)**
            **Recently
                Issued Accounting
                Standards**


In
        December 2007, the FAS issued SFAS No. 141R, “Business Combinations”. This
        statement provides companies with principles and requirements on how an acquirer
        recognizes and measures in its financial statements the identifiable assets
        acquired, liabilities assumed, and any noncontrolling interest in the acquiree
        as well as the recognition and measurement of goodwill acquired in a business
        combination. This statement also requires certain disclosures to enable users
        of
        the financial statements to evaluate the nature and financial effects of
        the
        business combination. Acquisition costs associated with the business combination
        will generally be expensed as incurred. This statement is effective for business
        combinations occurring in fiscal years beginning after December 15, 2008.
        Early adoption of FASB Statement No. 141R is not permitted. The company is
        evaluating the impact the application of this guidance will have on the
        company’s financial position, results of operations and cash flows. The company
        will adopt this statement for acquisitions consummated after the statement’s
        effective date.
  In
        December 2007, the FASB issued SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements – an amendment of
        ARB No. 51”. This statement amends ARB 51 to establish accounting and reporting
        standards for the noncontrolling interest (minority interest) in a subsidiary
        and for the deconsolidation of a subsidiary. Upon its adoption, effective
        as of
        the beginning of the company’s 2009 fiscal year, noncontrolling interests will
        be classified as equity in the company’s financial statements and income and
        comprehensive income attributed to the noncontrolling interest will be included
        in the company’s income and comprehensive income. The provisions of this
        standard must be applied retrospectively upon adoption. The company does
        not
        anticipate that the adoption of SFAS No. 160 will have a material impact
        on its
        financial statements.


13


In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities—an amendment of FASB Statement No. 133.” This statement
      amends SFAS No. 133 to require enhanced disclosures about an entity’s derivative
      and hedging activities. This Statement is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15, 2008,
      with early application encouraged. The company is evaluating the impact the
      application of this guidance will have on the company’s financial position,
      results of operations and cash flows.





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” This statement identifies the sources of accounting
      principles and the framework for selecting the principles to be used in the
      preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. This statement directs the hierarchy to the entity, rather
      than the independent auditors, as the entity is responsible for selecting
      accounting principles for financial statements that are presented in conformity
      with generally accepted accounting principles. This statement is effective
      60
      days following the SEC’s approval of the Public Company Accounting Oversight
      Board amendments to remove the hierarchy of generally accepted accounting
      principles from the auditing standards. The company does not anticipate that
      the
      adoption of SFAS No. 162 will have a material impact on its financial
      statements.





**6)**
            **Other
                Comprehensive Income**





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





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





Three Months Ended
            
            Nine Months EndedSep. 27, 2008
            
            Sep. 29, 2007
            
            Sep. 27, 2008
            
            Sep. 29, 2007Net
                earnings
            
            $
            16,290
            
            $
            14,056
            
            $
            46,588
            
            $
            37,358Currency
                translation adjustment
            
            
            (2,556
            )
            
            320
            
            
            (1,571
            )
            
            596Unrealized
                gain on interest rate swaps, net of tax
            
            
            20
            
            
            (202
            )
            
            240
            
            
            (301
            )Comprehensive
                income
            
            $
            13,754
            
            $
            14,174
            
            $
            45,257
            
            $
            37,653





Accumulated
      other comprehensive income is comprised of unrecognized pension benefit costs
      of
      $(0.9) million, net of taxes of $(0.6) million as of September 27, 2008 and
      December 29, 2007, foreign currency translation adjustments of $0.1 million
      as
      of September 27, 2008 and $1.7 million as of December 29, 2007, and an
      unrealized gain on interest rate swaps of $0.2 million, net of taxes of $0.4
      million, as of September 27, 2008.


14


**7)**
            **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 $16.8 million at September 27,
      2008 and $16.4 million at December 29, 2007 and represented approximately 17%
      and 25% 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 September 27, 2008 and
      December 29, 2007 are as follows:




Sep. 27, 2008
            
            Dec. 29, 2007(in thousands)Raw
                materials and parts
            
            $
            36,473
            
            $
            25,047Work-in-process
            
            
            21,782
            
            
            11,033Finished
                goods
            
            
            37,485
            
            
            30,66995,740
            
            
            66,749LIFO
                adjustment
            
            
            (1,380
            )
            
            (311
            )$
            94,360
            
            $
            66,438





**8)**
            **Accrued
                Expenses**





Accrued
      expenses consist of the following:





Sep.
                27, 2008
            
            Dec,
                29, 2007(in
                thousands)Accrued
                payroll and related expenses
            
            $
            20,874
            
            $
            21,448Accrued
                warranty
            
            
            13,190
            
            
            12,276Accrued
                customer rebates
            
            
            12,768
            
            
            16,326Accrued
                product liability and workers comp
            
            
            10,121
            
            
            6,978Advance
                customer deposits
            
            
            8,009
            
            
            7,971Accrued
                commission
            
            
            5,214
            
            
            4,265Other
                accrued expenses
            
            
            28,360
            
            
            26,317$
            98,536
            
            $
            95,581


15


**9)**
            **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:





Nine Months EndedSep. 27, 2008(in thousands)Beginning
                balance
            
            $
            12,276Warranty
                reserve related to acquisitions
            
            
            1,442Warranty
                expense
            
            
            10,943Warranty
                claims
            
            
            (11,471
            )Ending
                balance
            
            $
            13,190





**10)**
            **Financing
                Arrangements**





Sep. 27, 2008
            
            Dec. 29, 2007(in thousands)Senior
                secured revolving credit line
            
            $
            247,800
            
            $
            91,350Foreign
                loan
            
            
            9,853
            
            
            4,847Total
                debt
            
            $
            257,653
            
            $
            96,197Less:
                Current maturities of long-term debt
            
            
            7,803
            
            
            2,683Long-term
                debt
            
            $
            249,850
            
            $
            93,514





During
      the third quarter of 2008 the company amended its senior secured credit
      facility. The
      original agreement provided for $450.0 million of availability under a revolving
      credit line. The amendment currently provides for $497.5 million of availability
      under a revolving credit line. As
      of
      September 27, 2008, the company had $247.8 million of borrowings outstanding
      under this facility. The company also has $5.6 million in outstanding letters
      of
      credit, which reduces the borrowing availability under the revolving credit
      line.





Borrowings
      under the senior secured credit facility are assessed at an interest rate at
      1.25% above LIBOR for long-term borrowings or at the higher of the Prime rate
      and the Federal Funds Rate. At September 27, 2008 the average interest rate
      on
      the senior debt amounted to 3.87%. 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 0.25% as of
      September 27, 2008.


16


In
      August
      2006, the company completed its acquisition of Houno A/S in Denmark. This
      acquisition was funded in part with locally established debt facilities with
      borrowings in Danish Krone.  On September 27, 2008 these facilities
      amounted to $4.7 million in US dollars, including $2.5 million outstanding
      under
      a revolving credit facility and $2.2 million of a term loan.  The interest
      rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
      which amounted to 6.5% on September 27, 2008. The term loan matures in 2013
      and
      the interest rate is assessed at 6.4%.





In
      April
      2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
      Italy. This acquisition was funded in part with locally established debt
      facilities with borrowings in denominated in Euro.  On September 27, 2008
      these facilities amounted to $5.2 million in US dollars.  The borrowings
      under these facilities are collateralized by the receivables of the
      company.  The interest rate on the credit facilities is tied to six month
      Euro LIBOR. The facilities mature in April of 2015.




The
        company believes that its current capital resources, including cash and cash
        equivalents, cash generated from operations, funds available from its revolving
        credit facility and access to the credit and capital markets will be sufficient
        to finance its operations, debt service obligations, capital expenditures,
        product development and integration expenditures for the foreseeable
        future.
 The
        company has historically entered into interest rate swap agreements to
        effectively fix the interest rate on its outstanding debt. The agreements
        swap
        one-month LIBOR for fixed rates. As of September 27, 2008 the company had
        the
        following interest rate swaps in effect:





**Fixed****Notional**
            
            **Interest**
            
            **Effective**
            
            **Maturity****Amount**
            
            **Rate**
            
            **Date**
            
            **Date**$
                10,000,000
            
            
            5.030
            %
            
            3/3/2006
            
            
            12/21/2009$ 10,000,000
            
            
            2.520
            %
            
            2/19/2008
            
            
            2/19/2009$ 20,000,000
            
            
            2.635
            %
            
            2/6/2008
            
            
            2/6/2009$ 25,000,000
            
            
            3.350
            %
            
            1/14/2008
            
            
            1/14/2010$ 10,000,000
            
            
            2.920
            %
            
            2/1/2008
            
            
            2/1/2010$ 10,000,000
            
            
            2.785
            %
            
            2/6/2008
            
            
            2/8/2010$ 10,000,000
            
            
            3.033
            %
            
            2/6/2008
            
            
            2/7/2011$ 10,000,000
            
            
            2.820
            %
            
            2/1/2008
            
            
            2/1/2009$ 10,000,000
            
            
            3.590
            %
            
            6/10/2008
            
            
            6/10/2011$ 20,000,000
            
            
            3.350
            %
            
            6/10/2008
            
            
            6/10/2010$ 10,000,000
            
            
            3.460
            %
            
            9/8/2008
            
            
            9/6/2011$
                15,000,000
            
            
            3.130
            %
            
            9/8/2008
            
            
            9/7/2010$
                20,000,000
            
            
            2.800
            %
            
            9/8/2008
            
            
            9/8/2009$ 25,000,000
            
            
            3.670
            %
            
            9/26/2008
            
            
            9/23/2011





The
      terms
      of the senior secured credit facility limit the paying of dividends, capital
      expenditures and leases, and require, among other things, ratios of indebtedness
      of 3.5 debt to earnings before interest, taxes, depreciation and amortization
      (“EBITDA”) and fixed charge coverage of 1.25 EBITDA to fixed charges. The credit
      agreement also provides that if a material adverse change in the company’s
      business operations or conditions occurs, the lender could declare an event
      of
      default. Under terms of the agreement a material adverse effect is defined
      as
      (a) a material adverse change in, or a material adverse effect upon, the
      operations, business properties, condition (financial and otherwise) or
      prospects of the company and its subsidiaries taken as a whole; (b) a material
      impairment of the ability of the company to perform under the loan agreements
      and to avoid any event of default; or (c) a material adverse effect upon the
      legality, validity, binding effect or enforceability against the company of
      any
      loan document. A material adverse effect is determined on a subjective basis
      by
      the company's creditors. The credit facility is secured by the capital stock
      of
      the company’s domestic subsidiaries, 65% of the capital stock of the company’s
      foreign subsidiaries and substantially all other assets of the company. At
      September 27, 2008, the company was in compliance with all covenants pursuant
      to
      its borrowing agreements.




17




**11)**
            **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.





*Foreign
      Exchange* :
      The
      company has entered into derivative instruments, principally forward contracts
      to reduce exposures pertaining to fluctuations in foreign exchange rates. As
      of
      September 27, 2008, the company had no forward contracts
      outstanding.





*Interest
      Rate:* The
      company has entered into interest rate swaps to fix the interest rate applicable
      to certain of its variable-rate debt. The agreements swap one-month LIBOR for
      a
      fixed rates. The company has designated these swaps as cash flow hedges and
      all
      changes in fair value of the swaps are recognized in accumulated other
      comprehensive income. As of September 27, 2008, the fair value of these
      instruments was less than $0.1 million. The change in fair value of these swap
      agreements in the first nine months of 2008 was a gain of $0.8 million, net
      of
      taxes.





**Fixed**
            
            
            
            
            
            
            
            **Changes****Notional**
            
            **Interest**
            
            **Effective**
            
            **Maturity**
            
            **Fair Value**
            
            **In Fair Value****Amount**
            
            **Rate**
            
            **Date**
            
            **Date**
            
            **Sep. 27, 2008**
            
            **(net of taxes)**$
                10,000,000
            
            
            5.030
            %
            
            3/03/2006
            
            
            12/21/2009
            
            $
            (234,000
            )
            $
            137,0001$ 10,000,000
            
            
            2.520
            %
            
            2/19/2008
            
            
            2/19/2009
            
            $
            32,000
            
            $
            36,000$ 20,000,000
            
            
            2.635
            %
            
            2/6/2008
            
            
            2/6/2009
            
            $
            49,000
            
            $
            69,000$ 25,000,000
            
            
            3.350
            %
            
            1/14/2008
            
            
            1/14/2010
            
            $
            (91,000
            )
            $
            224,000$ 10,000,000
            
            
            2.920
            %
            
            2/1/2008
            
            
            2/1/2010
            
            $
            30,000
            
            $
            82,000$ 10,000,000
            
            
            2.785
            %
            
            2/6/2008
            
            
            2/8/2010
            
            $
            22,000
            
            $
            42,000$ 10,000,000
            
            
            3.033
            %
            
            2/6/2008
            
            
            2/7/2011
            
            $
            49,000
            
            $
            78,000$ 10,000,000
            
            
            2.820
            %
            
            2/1/2008
            
            
            2/1/2009
            
            $
            92,000
            
            $
            115,000$ 10,000,000
            
            
            3.590
            %
            
            6/10/2008
            
            
            6/10/2011
            
            $
            (8,000
            )
            $
            16,000$ 20,000,000
            
            
            3.350
            %
            
            6/10/2008
            
            
            6/10/2010
            
            $
            (39,000
            )
            $
            (28,000
            )$ 10,000,000
            
            
            3.460
            %
            
            9/8/2008
            
            
            9/6/2011
            
            $
            41,000
            
            $
            24,000$
                15,000,000
            
            
            3.130
            %
            
            9/8/2008
            
            
            9/7/2010
            
            $
            42,000
            
            $
            25,000$ 20,000,000
            
            
            2.800
            %
            
            9/8/2008
            
            
            9/8/2009
            
            $
            52,000
            
            $
            31,000$ 25,000,000
            
            
            3.670
            %
            
            9/26/2008
            
            
            9/23/2011
            
            $
            (49,000
            )
            $
            (30,000
            )





1
            Previous
                to the fiscal quarter ended March 29, 2008, this swap had not been
                designated as an effective cash flow hedge. The swap was designated
                as an
                effective cash flow hedge during the quarter ended March 29, 2008.
                In
                accordance with SFAS No. 133, the net reduction of $0.2 million in
                the
                fair value of this swap prior to the designation date has been recorded
                as
                a loss in earnings for the first quarter
                2008.




18





**12)**
            **Segment
                Information**





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





The
      Commercial Foodservice Equipment Group manufactures cooking equipment for the
      restaurant and institutional kitchen industry. This business segment has
      manufacturing facilities in California, Illinois, Michigan, Missouri, Nevada,
      New Hampshire, North Carolina, Tennessee, Vermont, Denmark, Italy, the
      Philippines and Switzerland. The
      Commercial Foodservice Equipment Group manufactures conveyor ovens, convection
      ovens, fryers, ranges, toasters, combi ovens, steamers, broilers, deck ovens,
      baking ovens, proofers, beverage systems and beverage dispensing equipment,
      counter-top cooking and warming equipment. This business segment’s principal
      product lines include Middleby Marshall® and CTX® conveyor oven equipment,
      Blodgett® convection ovens, conveyor ovens, deck oven equipment, Blodgett Combi®
cooking equipment, Blodgett Range® ranges, Nu-Vu® baking ovens and proofers,
      Pitco Frialator® fryer equipment, Southbend® ranges, convection ovens and
      heavy-duty cooking equipment, Toastmaster® toasters and counterline cooking and
      warming equipment, Jade Range® ranges and ovens, Carter Hoffmann® warming,
      holding and transporting equipment, Bloomfield® beverage systems and beverage
      dispensing equipment, Wells® convection
      ovens, counterline cooking equipment and ventless cooking systems, Star®
light duty cooking equipment, Holman® toasting equipment, Lang® ovens and
      ranges, Houno® combi-ovens and baking ovens, Giga® ranges, ovens and steam
      equipment, Frifri® frying systems and MagiKitch'n® charbroilers and catering
      equipment.





The
      Food
      Processing Equipment Group manufactures cooking and packaging equipment for
      the
      food processing industry. This business segment has manufacturing facilities
      in
      Georgia and Wisconsin. Its principal products include Alkar ® batch
      ovens, conveyorized ovens and continuous process ovens, RapidPak ® food
      packaging machinery and MP Equipment ® breading, battering, mixing, forming, and slicing equipment.





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.




19




**Net
      Sales Summary**


**(dollars
      in thousands)**





Three Months Ended
            
            Nine Months EndedSep. 27, 2008
            
            Sep. 29, 2007
            
            Sep. 27, 2008
            
            Sep. 29, 2007Sales
            
            Percent
            
            Sales
            
            Percent
            
            Sales
            
            Percent
            
            Sales
            
            PercentBusiness
                Divisions:Commercial
                Foodservice
            
            $
            138,327
            
            
            83.1
            
            $
            109,667
            
            
            80.6
            
            $
            419,212
            
            
            83.7
            
            $
            290,597
            
            
            81.9Food
                Processing
            
            
            21,079
            
            
            12.7
            
            
            20,780
            
            
            15.3
            
            
            61,435
            
            
            12.3
            
            
            46,329
            
            
            13.0International
                Distribution(1)
            
            
            16,162
            
            
            9.7
            
            
            15,059
            
            
            11.1
            
            
            47,380
            
            
            9.4
            
            
            43,156
            
            
            12.2Intercompany
                sales (2)
            
            
            (9,096
            )
            
            (5.5
            )
            
            (9,510
            )
            
            (7.0
            )
            
            (27,159
            )
            
            (5.4
            )
            
            (25,143
            )
            
            (7.1
            )Total
            
            $
            166,472
            
            
            100.0
            %
            $
            135,996
            
            
            100.0
            %
            $
            500,868
            
            
            100.0
            %
            $
            354,939
            
            
            100.0
            %





*(1)*
              *Consists
                  of sales of products manufactured by Middleby and products* *manufactured by third parties.*





*(2)*
              *Represents
                  the elimination of sales from the Commercial Foodservice Equipment
                  Group
                  to the International Distribution Division*




20




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





Commercial
            
            Food
            
            International
            
            CorporateFoodservice
            
            Processing
            
            Distribution
            
            and Other(2)
            
            Eliminations(3)
            
            Total**Three
                months ended September 27, 2008**Net
                sales
            
            $
            138,327
            
            $
            21,079
            
            $
            16,162
            
            $
            —
            
            $
            (9,096
            )
            $
            166,472Operating
                income
            
            
            34,068
            
            
            4,189
            
            
            1,341
            
            
            (9,102
            )
            
            457
            
            
            30,953Depreciation
                expense
            
            
            1,281
            
            
            98
            
            
            53
            
            
            39
            
            
            —
            
            
            1,471Net
                capital expenditures
            
            
            678
            
            
            12
            
            
            (40
            )
            
            15
            
            
            —
            
            
            665**Nine
                months ended September 27, 2008**Net
                sales
            
            $
            419,212
            
            $
            61,435
            
            $
            47,380
            
            $
            —
            
            $
            (27,159
            )
            $
            500,868Operating
                income
            
            
            102,272
            
            
            10,275
            
            
            3,507
            
            
            (27,251
            )
            
            658
            
            
            89,461Depreciation
                expense
            
            
            3,926
            
            
            305
            
            
            152
            
            
            111
            
            
            —
            
            
            4,494Net
                capital expenditures
            
            
            3,122
            
            
            88
            
            
            161
            
            
            37
            
            
            —
            
            
            3,408Total
                assets
            
            
            527,204
            
            
            71,495
            
            
            27,780
            
            
            30,774
            
            
            (9,218
            )
            
            648,035Long-lived
                assets(4)
            
            
            367,426
            
            
            43,656
            
            
            649
            
            
            11,172
            
            
            —
            
            
            422,903**Three
                months ended September 29, 2007**Net
                sales
            
            $
            109,667
            
            $
            20,780
            
            $
            15,059
            
            $
            —
            
            $
            (9,510
            )
            $
            135,996Operating
                income
            
            
            25,155
            
            
            4,009
            
            
            1,245
            
            
            (5,267
            )
            
            282
            
            
            25,424Depreciation
                expense
            
            
            898
            
            
            131
            
            
            41
            
            
            36
            
            
            —
            
            
            1,106Net
                capital expenditures
            
            
            508
            
            
            53
            
            
            52
            
            
            7
            
            
            —
            
            
            620**Nine
                months ended September 29, 2007**Net
                sales
            
            $
            290,597
            
            $
            46,329
            
            $
            43,156
            
            $
            —
            
            $
            (25,143
            )
            $
            354.939Operating
                income
            
            
            69,234
            
            
            10,026
            
            
            3,227
            
            
            (17,748
            )
            
            693
            
            
            65,432Depreciation
                expense
            
            
            2,401
            
            
            381
            
            
            125
            
            
            109
            
            
            —
            
            
            3,016Net
                capital expenditures
            
            
            1,436
            
            
            65
            
            
            107
            
            
            81
            
            
            —
            
            
            1,689Total
                assets
            
            
            280,999
            
            
            73,931
            
            
            28,741
            
            
            11,741
            
            
            (8,116
            )
            
            387,296Long-lived
                assets(4)
            
            
            166,241
            
            
            43,948
            
            
            456
            
            
            10,430
            
            
            —
            
            
            221,075





*(1)*
                *Non-operating
                    expenses are not allocated to the operating segments. Non-operating
                    expenses consist of interest expense**and deferred financing
                    amortization, foreign exchange gains and losses and other income
                    and
                    expense items outside of**income from
                    operations.*





*(2)*
            *Includes
                corporate and other general company assets and
                operations.*





*(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 $1,848 and $1,937 in
                third
                quarter 2008 and 2007, respectively, assets located in Denmark which
                amounted to $2,402 and $1,645 in third quarter 2008 and 2007,
                respectively, assets located in Italy which amounted to $14,906 in
                third
                quarter of 2008 and assets located in Switzerland which amounted
                to $1,229
                in third quarter 2008.*





21




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 Ended
            
            Nine Months EndedSep. 27, 2008
            
            Sep. 29, 2007
            
            Sep. 27, 2008
            
            Sep. 29, 2007United
                States and Canada
            
            $
            133,923
            
            $
            109,291
            
            $
            405,495
            
            $
            286,832Asia
            
            
            9,242
            
            
            10,003
            
            
            25,752
            
            
            21,645Europe
                and Middle East
            
            
            18,672
            
            
            11,994
            
            
            55,532
            
            
            35,266Latin
                America
            
            
            4,635
            
            
            4,708
            
            
            14,089
            
            
            11,196Net
                sales
            
            $
            166,472
            
            $
            135,996
            
            $
            500,868
            
            $
            354,939





**13)**
            **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 September 30, 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. There are no contributions expected
      to
      be made in 2008. 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.





22





**14)**
            **Treasury
                Stock**





In
      July
      1998, the company’s Board of Directors adopted a stock repurchase program that
      authorized the purchase of common shares in open market purchases. As of
      September 27, 2008, 1,167,868 shares had been purchased under the 1998 stock
      repurchase program.





23





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





**Informational
      Notes**





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 2007 Annual Report on Form 10-K/A and Item 1A of this
      Form 10-Q.




The
      economic outlook for 2009 is extremely uncertain at this time, with substantial
      turmoil in financial markets and unprecedented government intervention around
      the world. As a global business, the company's operating results are
      impacted by the health of the North American, European, Asian and Latin American
      economies. While the response by governments and central banks around the world
      may restore global liquidity, the depth and duration of economic decline and
      the
      timing and strength of the recovery are very uncertain.





On
      August
      12, 2008, the company announced that it had agreed to acquire TurboChef
      Technologies, Inc. (“TurboChef”). At the effective time of the Merger (the
      "Effective Time"), each issued and outstanding share of TurboChef's common
      stock
      will be automatically converted into the right to receive 0.0486 shares (the
      "Exchange Ratio") of the common stock of Middleby ("Middleby Common Stock")
      and
      $3.67 in cash (the "Cash Consideration", and together with Middleby Common
      Stock, the "Merger Consideration") for a total value of $6.47 based on
      Middleby's closing stock price of $57.60 on August 11, 2008, the last trading
      date prior to the announcement of the contemplated transaction. Consummation
      of
      the Merger is subject to various conditions, including the approval of
      TurboChef's stockholders and other customary closing conditions.





24




**Net
      Sales Summary**


**(dollars
      in thousands)**





Three Months Ended
            
            Nine Months EndedSep. 27, 2008
            
            Sep. 29, 2007
            
            Sep. 27, 2008
            
            Sep. 29, 2007Sales
            
            Percent
            
            Sales
            
            Percent
            
            Sales
            
            Percent
            
            Sales
            
            PercentBusiness Divisions:Commercial
                Foodservice
            
            $
            138,327
            
            
            83.1
            
            $
            109,667
            
            
            80.6
            
            $
            419,212
            
            
            83.7
            
            $
            290,597
            
            
            81.9Food
                Processing
            
            
            21,079
            
            
            12.7
            
            
            20,780
            
            
            15.3
            
            
            61,435
            
            
            12.3
            
            
            46,329
            
            
            13.0International
                Distribution(1)
            
            
            16,162
            
            
            9.7
            
            
            15,059
            
            
            11.1
            
            
            47,380
            
            
            9.4
            
            
            43,156
            
            
            12.2Intercompany
                sales (2)
            
            
            (9,096
            )
            
            (5.5
            )
            
            (9,510
            )
            
            (7.0
            )
            
            (27,159
            )
            
            (5.4
            )
            
            (25,143
            )
            
            (7.1
            )Total
            
            $
            166,472
            
            
            100.0
            %
            $
            135,996
            
            
            100.0
            %
            $
            500,868
            
            
            100.0
            %
            $
            354,939
            
            
            100.0
            %





*(1)*
            *Consists
                of sales of products manufactured by Middleby and products* *manufactured by third parties.*





*(2)*
            *Represents
                the elimination of sales**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 Ended
            
            Nine Months EndedSep. 27, 2008
            
            Sep. 29, 2007
            
            Sep. 27, 2008
            
            Sep. 29, 2007Net sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            61.1
            
            
            62.2
            
            
            61.9
            
            
            61.3Gross
                profit
            
            
            38.9
            
            
            37.8
            
            
            38.1
            
            
            38.7Selling,
                general and administrative expenses
            
            
            20.3
            
            
            19.1
            
            
            20.2
            
            
            20.3Income
                from operations
            
            
            18.6
            
            
            18.7
            
            
            17.9
            
            
            18.4Net
                interest expense and deferred financing amortization
            
            
            1.9
            
            
            1.2
            
            
            2.0
            
            
            1.2Other
                (income) expense, net
            
            
            0.5
            
            
            (0.2
            )
            
            0.4
            
            
            (0.3
            )Earnings
                before income taxes
            
            
            16.2
            
            
            17.7
            
            
            15.5
            
            
            17.5Provision
                for income taxes
            
            
            6.4
            
            
            7.4
            
            
            6.2
            
            
            7.0Net
                earnings
            
            
            9.8
            %
            
            10.3
            %
            
            9.3
            %
            
            10.5
            %




25




**Three
      Months Ended September 27, 2008 Compared to Three Months Ended** **September
      29, 2007**





**NET
      SALES** ***.***  Net
      sales
      for the third quarter of fiscal 2008 were $166.5 million as compared to $136.0
      million in the third quarter of 2007.





Net
      sales
      at the Commercial Foodservice Equipment Group amounted to $138.3 million in
      the
      third quarter of 2008 as compared to $109.7 million in the prior year quarter.





Net
      sales
      from the acquisitions of Star, Giga and Frifri, which were acquired on December
      31, 2007, April 22, 2008 and April 23, 2008, respectively, accounted for an
      increase of $32.4 million during the third quarter of 2008. Excluding the impact
      of acquisitions, net sales of commercial foodservice equipment decreased $2.2
      million due to a sudden drop in orders late in the third quarter that was caused
      by the disruption in the financial markets.





Net
      sales
      for the Food Processing Equipment Group amounted to $21.1 million in the third
      quarter of 2008 as compared to $20.8 million in the prior year quarter. Net
      sales of food processing equipment increased due to increased sales of new
      products .





Net
      sales
      at the International Distribution Division increased by $1.1 million to $16.2
      million or 7%, reflecting higher sales in Asia, Europe and Latin America.
      Increased international sales reflect increased business with restaurant chains
      and increased pricing competitiveness driven by the weakened US dollar.


.


**GROSS
      PROFIT** ***.***  Gross
      profit increased to $64.7 million in the third quarter of 2008 from $51.4
      million in the prior year period, reflecting the impact of higher sales volumes.
      The gross margin rate was 38.9% in the third quarter of 2008 as compared to
      37.8% in the prior year quarter. The net increase in the gross margin rate
      reflects:





·
            Improved
                  margins at certain of the newly acquired operating companies which
                  are in
                  continuing the process of being integrated within the
                  company.


·
            Higher
                margins associated with new product
                sales.





·
            The
                adverse impact of steel costs which have risen significantly from
                the
                prior year quarter.





26





**SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES** ***.***  Combined
      selling, general, and administrative expenses increased from $26.0 million
      in
      the third quarter of 2007 to $33.8 million in the third quarter of 2008. As
      a
      percentage of net sales, operating expenses decreased from 19.1% in the third
      quarter of 2007 to 20.3% in the third quarter of 2008. Selling expenses
      increased from $13.5 million in the third quarter of 2007 to $16.8 million
      in
      the third quarter of 2008, reflecting $3.1 million of incremental costs
      associated with the acquisitions of Star completed on December 31, 2007, Giga
      completed on April 22, 2008 and Frifri completed on April 23, 2008. General
      and
      administrative expenses increased from $12.5 million in the third quarter of
      2007 to $17.0 million in the third quarter of 2008. General and administrative
      expenses reflect $2.2 million of costs associated with the acquired operations
      of Star, Giga and Frifri. Increased general and administrative costs also
      include increased non-cash stock compensation costs which increased by $0.7
      million from the prior year third quarter.





**NON-OPERATING
      EXPENSES.** Interest
      and deferred financing amortization costs increased to $3.2 million in the
      third
      quarter of 2008 as compared to $1.6 million in the third quarter of 2007, due
      to
      increased borrowings resulting from recent acquisitions. Other expense was
      $0.8
      million in the third quarter of 2008, which primarily consisted of foreign
      exchange losses, as compared to other income of $0.3 million in the prior year
      third quarter.





**INCOME
      TAXES** ***.***  A
      tax
      provision of $10.6 million, at an effective rate of 40%, was recorded during
      the
      third quarter of 2008, as compared to a $10.1 million provision at a 42%
      effective rate in the prior year quarter.





**Nine
      Months Ended September 29, 2008 Compared to Nine Months Ended September 29,
      2007**





**NET
      SALES** ***.***  Net
      sales
      for the nine-month period ended September 27, 2008 were $500.9 million as
      compared to $354.9 million in the nine-month period ended September 29, 2007.





Net
      sales
      at the Commercial Foodservice Equipment Group amounted to $419.2 million in
      the
      nine-month period ended September 27, 2008 as compared to $290.5 million in
      the
      nine-month period ended September 29, 2007.





Net
      sales
      from the acquisitions of Jade, Carter-Hoffmann, Wells Bloomfield, Star, Giga
      and
      Frifri, which were acquired on April 1, 2007, June 29, 2007, August 3, 2007,
      December 31, 2007, April 22, 2008 and April 23, 2008, respectively, accounted
      for an increase of $130.1 million during the first nine months of 2008.
      Excluding the impact of acquisitions, net sales of commercial foodservice
      equipment decreased $2.5 million for the nine-month period ended September
      27,
      2008 compared to the nine-month period ended September 29, 2007.





Net
      sales
      for the Food Processing Equipment Group increased by $15.1 million to $61.4
      million for the nine-month period ended September 27, 2008 from $46.3 million
      in
      the nine-month period ended September 29, 2007. Excluding the impact of
      acquisitions, net sales of food processing equipment decreased $6.6 million
      due
      to delayed customer purchases as a result of economic uncertainties and
      quarterly variations  which
      occur as a result of the timing of large orders .




27




Net
      sales
      at the International Distribution Division increased from $43.2 for the
      nine-month period ended September 29, 2007 to $47.4 million for the nine-month
      period ended September 27, 2008, reflecting higher sales in Latin America and
      Asia, which more than offset a decline in sales in Europe, which had strong
      sales in the prior year due to an oven rollout with a major restaurant chain
      customer. International sales benefited from expansion of the U.S. chains
      overseas and increased business with local and regional restaurant chains in
      developing markets.





**GROSS
      PROFIT** ***.***  Gross
      profit increased to $190.6 million for the nine-month period ended September
      27,
      2008 from $137.4 million in the nine-month period, ended September 29, 2007,
      reflecting the impact of higher sales volumes. The gross margin rate was 38.1%
      for the nine-month period ended September 27, 2008 compared to 38.7% for the
      nine-month period ended September 29, 2007. The net decrease in the gross margin
      rate reflects:


·
              Inventory
                  step-up charges of $2.0 million related to the acquisitions of
                  Star, Giga
                  and Frifri.
 
 ·
              The
                  adverse impact of steel costs which have risen significantly from
                  the
                  prior year.
 
 ·
              Lower
                  margins at certain of the newly acquired operating companies which
                  are in
                  the process of being integrated within the
                  company.





**SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES** ***.***  Combined
      selling, general, and administrative expenses increased from $72.0 million
      in
      the nine-month period ended September 29, 2007 to $101.2 million in the
      nine-month period ended September 27, 2008. As a percentage of net sales,
      operating expenses decreased from 20.3% in the nine-month period ended September
      29, 2007, to 20.2% in the nine-month period ended September 27, 2008, reflecting
      greater leverage on higher sales volumes. Selling expenses increased from $36.6
      million in the nine-month period ended September 29, 2007, to $49.7 million
      in
      the nine-month period ended September 27, 2008, reflecting $13.7 million of
      increased costs associated with the acquired operations of Jade,
      Carter-Hoffmann, MP Equipment, Wells Bloomfield, Star, Giga and Frifri. General
      and administrative expenses increased from $35.4 million in the nine-month
      period ended September 29, 2007, to $51.4 million in the nine-month period
      ended
      September 27, 2008, which includes increased costs of $11.9 million associated
      with the acquired operations of Jade, Carter-Hoffmann, MP Equipment, Wells
      Bloomfield, Star, Giga and Frifri. Increased general and administrative costs
      also include increased non-cash compensation costs which increased by $2.9
      million from the prior year nine month period.




**NON-OPERATING
      EXPENSES.** Interest
      and deferred financing amortization costs increased to $9.9 million for the
      nine-month period ended September 27, 2008 from $4.1 million in the prior year
      period, as a result of higher debt balances. Other expense was $1.8 million
      for
      the nine-month period ended September 27, 2008, which primarily consisted of
      foreign exchange losses, compared to other income of $1.1 million for the
      nine-month period ended September 29, 2007.





**INCOME
      TAXES** ***.***  A
      tax
      provision of $31.2 million, at an effective rate of 40%, was recorded for the
      first nine months of 2008 as compared to a $25.0 million provision at a 40%
      effective rate in the prior year period.




28




**Financial
      Condition and Liquidity**





During
      the nine months ended September 27, 2008, cash and cash equivalents decreased
      by
      $0.5 million to $7.0 million at September 27, 2008 from $7.5 million at December
      29, 2007. Net borrowings increased from $96.2 million at December 29, 2007
      to
      $257.7 million at September 27, 2008.





**OPERATING
      ACTIVITIES** ***.***  Net
      cash
      provided by operating activities was $64.0 million for the nine-month period
      ended September 27, 2008 compared to $46.0 million for the nine-month period
      ended September 29, 2007.





During
      the nine months ended September 27, 2008, working capital levels changed due
      to
      normal business fluctuations, including the impact of increased seasonal working
      capital needs. The changes in working capital included a $0.1 million decrease
      in accounts receivable, a $7.0 million increase in inventory, and a $2.1 million
      decrease in accounts payable. Prepaid and other assets decreased $13.2 million
      primarily due to the utilization and refund of prepaid tax balances during
      the
      first nine months of 2008. Accrued expenses and other non-current liabilities
      also decreased by $8.2 million, reflecting second quarter payout of customer
      rebates and incentive compensation in the first half of 2008 related to prior
      year programs.





**INVESTING
      ACTIVITIES** ***.***  During
      the nine months ended September 27, 2008, net cash used in investing activities
      amounted to $208.1 million. This includes cash utilized to complete the
      acquisitions of Star, Giga and Frifri for $188.2 million, $9.9 million and
      $3.1
      million respectively, $1.2 million to purchase a manufacturing facility for
      Carter-Hoffmann and $2.2 million of capital expenditures associated with
      additions and upgrades of production equipment.





**FINANCING
      ACTIVITIES.** Net
      cash
      flows provided by financing activities were $143.9 million during the nine
      months ended September 27, 2008. The net increase in debt includes $156.5
      million in borrowings under the company’s $497.5 million revolving credit
      facility utilized to fund the company’s investing activities and the repurchase
      of $12.4 million of Middleby common shares.





At
      September 27, 2008, 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.




29




**Recently
      Issued Accounting Standards**





In
      December 2007, the FAS issued SFAS No. 141R, “Business Combinations”. This
      statement provides companies with principles and requirements on how an acquirer
      recognizes and measures in its financial statements the identifiable assets
      acquired, liabilities assumed, and any noncontrolling interest in the acquiree
      as well as the recognition and measurement of goodwill acquired in a business
      combination. This statement also requires certain disclosures to enable users
      of
      the financial statements to evaluate the nature and financial effects of the
      business combination. Acquisition costs associated with the business combination
      will generally be expensed as incurred. This statement is effective for business
      combinations occurring in fiscal years beginning after December 15, 2008.
      Early adoption of FASB Statement No. 141R is not permitted. The company is
      evaluating the impact the application of this guidance will have on the
      company’s financial position, results of operations and cash flows. The company
      will adopt this statement for acquisitions consummated after the statement’s
      effective date.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51”. This statement
      amends ARB 51 to establish accounting and reporting standards for the
      noncontrolling interest (minority interest) in a subsidiary and for the
      deconsolidation of a subsidiary. Upon its adoption, effective as of the
      beginning of the company’s 2009 fiscal year, noncontrolling interests will be
      classified as equity in the company’s financial statements and income and
      comprehensive income attributed to the noncontrolling interest will be included
      in the company’s income and comprehensive income. The provisions of this
      standard must be applied retrospectively upon adoption. The company does not
      anticipate that the adoption of SFAS No. 160 will have a material impact on
      its
      financial statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities—an amendment of FASB Statement No. 133.” This statement
      amends SFAS No. 133 to require enhanced disclosures about an entity’s derivative
      and hedging activities. This Statement is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15, 2008,
      with early application encouraged. The company is evaluating the impact the
      application of this guidance will have on the company’s financial position,
      results of operations and cash flows.





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” This statement identifies the sources of accounting
      principles and the framework for selecting the principles to be used in the
      preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. This statement directs the hierarchy to the entity, rather
      than the independent auditors, as the entity is responsible for selecting
      accounting principles for financial statements that are presented in conformity
      with generally accepted accounting principles. This statement is effective
      60
      days following the SEC’s approval of the Public Company Accounting Oversight
      Board amendments to remove the hierarchy of generally accepted accounting
      principles from the auditing standards. The company does not anticipate that
      the
      adoption of SFAS No. 162 will have a material impact on its financial
      statements.





30





**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.





*Revenue
      Recognition:* ****** The
      company recognizes revenue on the sale of its products when risk of loss has
      passed to the customer, which occurs at the time of shipment, and collectibility
      is reasonably assured. The sale prices of the products sold are fixed and
      determinable at the time of shipment. Sales are reported net of sales returns,
      sales incentives and cash discounts based on prior experience and other
      quantitative and qualitative factors.





At
      the
      Food Processing Equipment Group, the company enters into long-term sales
      contracts for certain products. Revenue under these long-term sales contracts
      is
      recognized using the percentage of completion method prescribed by Statement
      of
      Position No. 81-1 due to the length of time to fully manufacture and assemble
      the equipment. The company measures revenue recognized based on the ratio of
      actual labor hours incurred in relation to the total estimated labor hours
      to be
      incurred related to the contract. Because estimated labor hours to complete
      a
      project are based upon forecasts using the best available information, the
      actual hours may differ from original estimates. The percentage of completion
      method of accounting for these contracts most accurately reflects the status
      of
      these uncompleted contracts in the company's financial statements and most
      accurately measures the matching of revenues with expenses. At the time a loss
      on a contract becomes known, the amount of the estimated loss is recognized
      in
      the consolidated financial statements.





*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.





31





*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.  The
      company initially recognizes the financial statement effects of a tax position
      when it more likely than not, based on the technical merits, that the position
      will be sustained upon examination. For tax positions that meet the
      more-likely-than-not recognition threshold, the company initially and
      subsequently measures its tax positions as the largest amount of tax benefit
      that is greater than 50 percent likely of being realized upon effective
      settlement with the taxing authority. As part of the company's calculation
      of
      the provision for taxes, the company has recorded liabilities on various tax
      positions that are currently under audit by the taxing authorities. The
      liabilities may change in the future upon effective settlement of the tax
      positions.





32





**Contractual
      Obligations**





The
      company's contractual cash payment obligations as of September 27, 2008 are
      set
      forth below (in thousands):





TotalDeferred
            
            
            
            
            
            Idle
            
            ContractualAcquisition
            
            Long-term
            
            Operating
            
            Facility
            
            CashCosts
            
            Debt
            
            Leases
            
            Leases
            
            ObligationsLess
                than 1 year
            
            $
            —
            
            $
            7,803
            
            $
            2,429
            
            $
            358
            
            $
            10,5901-3
                years
            
            
            4,935
            
            
            440
            
            
            2,588
            
            
            848
            
            
            8,8113-5
                years
            
            
            —
            
            
            249,410
            
            
            507
            
            
            892
            
            
            250,809After
                5 years
            
            
            —
            
            
            —
            
            
            32
            
            
            819
            
            
            851$
            4,935
            
            $
            257,653
            
            $
            5,556
            
            $
            2,917
            
            $
            271,061





The
      company has an obligation to make $4.9 million of purchase price payments to
      the
      sellers of Giga Grandi Cucine that were deferred in conjunction with the
      acquisition.





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 $5.6 million in outstanding letters of credit, which expire on
      September 27, 2009 to secure potential obligations under insurance
      programs.





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 June 2015. This facility has been
      subleased. The obligation presented above does not reflect any anticipated
      sublease income from the facilities.





Under
      terms of the TurboChef merger agreement, upon closing of the transaction, the
      company has an obligation to pay the stockholders of TurboChef a combination
      of
      $3.67 in cash and 0.0486 shares of Middleby common stock per TurboChef share.
      The implied value per TurboChef share is $6.47 based on the closing price of
      Middleby’s common stock as of August 11, 2008. The transaction is subject to a
      number of closing conditions.





The
      projected benefit obligation of the company’s defined benefit plans exceeded the
      plans’ assets by $4.6 million at the end of 2007 as compared to $3.5 million at
      the end of 2006. The unfunded benefit obligations were comprised of a $0.6
      million under funding of the company's union plan and $4.0 million of under
      funding of the company's director plans. The company does not expect to
      contribute to the director plans in 2008. The company made minimum contributions
      required by the Employee Retirement Income Security Act of 1974 (“ERISA”) of
      $0.1 million in 2007 to the company's union plan. The company does not expect
      to
      make contributions in 2008 to the union plan.





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




33




**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.





Fixed
            
            VariableRate
            
            RateTwelve
                Month Period Ending
            
            Debt
            
            Debt(in
                thousands)September
                27, 2009
            
            $
            —
            
            $
            7,803September
                27, 2010
            
            
            —
            
            
            220September
                27, 2011
            
            
            —
            
            
            220September
                27, 2012
            
            
            —
            
            
            220September
                27, 2013
            
            
            —
            
            
            249,190$
            —
            
            $
            257,653





During
      the third quarter of 2008 the company amended its senior secured credit
      facility. The
      original agreement provided for $450.0 million of availability under a revolving
      credit line. The amendment currently provides for $497.5 million of availability
      under a revolving credit line. As
      of
      September 27, 2008, the company had $247.8 million of borrowings outstanding
      under this facility. The company also has $5.6 million in outstanding letters
      of
      credit, which reduces the borrowing availability under the revolving credit
      line.





Borrowings
      under the senior secured credit facility are assessed at an interest rate at
      1.25% above LIBOR for long-term borrowings or at the higher of the Prime rate
      and the Federal Funds Rate. At September 27, 2008 the average interest rate
      on
      the senior debt amounted to 3.87%. 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 0.25% as of
      September 27, 2008.





In
      August
      2006, the company completed its acquisition of Houno A/S in Denmark. This
      acquisition was funded in part with locally established debt facilities with
      borrowings in Danish Krone.  On September 27, 2008 these facilities
      amounted to $4.7 million in US dollars, including $2.5 million outstanding
      under
      a revolving credit facility and $2.2 million of a term loan.  The interest
      rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
      which amounted to 6.5% on September 27, 2008. The term loan matures in 2013
      and
      the interest rate is assessed at 6.4%.





In
      April
      2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
      Italy. This acquisition was funded in part with locally established debt
      facilities with borrowings in denominated in Euro.  On September 27, 2008
      these facilities amounted to $5.2 million in US dollars.  The borrowings
      under these facilities are collateralized by the receivables of the
      company.  The interest rate on the credit facilities is tied to six-month
      Euro LIBOR. The facilities mature in April of 2015.




The
        company believes that its current capital resources, including cash and cash
        equivalents, cash generated from operations, funds available from its revolving
        credit facility and access to the credit and capital markets will be sufficient
        to finance its operations, debt service obligations, capital expenditures,
        product development and integration expenditures for the foreseeable
        future.





34





The
      company has historically entered into interest rate swap agreements to
      effectively fix the interest rate on its outstanding debt. The agreements swap
      one-month LIBOR for fixed rates. As of September 27, 2008 the company had the
      following interest rate swaps in effect:





**Fixed****Notional**
            
            **Interest**
            
            **Effective**
            
            **Maturity****Amount**
            
            **Rate**
            
            **Date**
            
            **Date**$
            10,000,000
            
            
            5.030
            %
            
            3/3/2006
            
            
            12/21/2009$
            10,000,000
            
            
            2.520
            %
            
            2/19/2008
            
            
            2/19/2009$
            20,000,000
            
            
            2.635
            %
            
            2/6/2008
            
            
            2/6/2009$
            25,000,000
            
            
            3.350
            %
            
            1/14/2008
            
            
            1/14/2010$
            10,000,000
            
            
            2.920
            %
            
            2/1/2008
            
            
            2/1/2010$
            10,000,000
            
            
            2.785
            %
            
            2/6/2008
            
            
            2/8/2010$
            10,000,000
            
            
            3.033
            %
            
            2/6/2008
            
            
            2/7/2011$
            10,000,000
            
            
            2.820
            %
            
            2/1/2008
            
            
            2/1/2009$
            10,000,000
            
            
            3.590
            %
            
            6/10/2008
            
            
            6/10/2011$
            20,000,000
            
            
            3.350
            %
            
            6/10/2008
            
            
            6/10/2010$
            10,000,000
            
            
            3.460
            %
            
            9/8/2008
            
            
            9/6/2011$
            15,000,000
            
            
            3.130
            %
            
            9/8/2008
            
            
            9/7/2010$
            20,000,000
            
            
            2.800
            %
            
            9/8/2008
            
            
            9/8/2009$
            25,000,000
            
            
            3.670
            %
            
            9/26/2008
            
            
            9/23/2011





The
      terms
      of the senior secured credit facility limit the paying of dividends, capital
      expenditures and leases, and require, among other things, ratios of indebtedness
      of 3.5 debt to earnings before interest, taxes, depreciation and amortization
      (“EBITDA”) and fixed charge coverage of 1.25 EBITDA to fixed charges. The credit
      agreement also provides that if a material adverse change in the company’s
      business operations or conditions occurs, the lender could declare an event
      of
      default. Under terms of the agreement a material adverse effect is defined
      as
      (a) a material adverse change in, or a material adverse effect upon, the
      operations, business properties, condition (financial and otherwise) or
      prospects of the company and its subsidiaries taken as a whole; (b) a material
      impairment of the ability of the company to perform under the loan agreements
      and to avoid any event of default; or (c) a material adverse effect upon the
      legality, validity, binding effect or enforceability against the company of
      any
      loan document. A material adverse effect is determined on a subjective basis
      by
      the company's creditors. The credit facility is secured by the capital stock
      of
      the company’s domestic subsidiaries, 65% of the capital stock of the company’s
      foreign subsidiaries and substantially all other assets of the company. At
      September 27, 2008, the company was in compliance with all covenants pursuant
      to
      its borrowing agreements.




35




**Financing
      Derivative Instruments**





The
      company has entered into interest rate swaps to fix the interest rate applicable
      to certain of its variable-rate debt. The agreements swap one-month LIBOR for
      a
      fixed rates The company has designated these swaps as cash flow hedges and
      all
      changes in fair value of the swaps are recognized in accumulated other
      comprehensive income. As of September 27, 2008, the fair value of these
      instruments was less than $0.1 million. The change in fair value of these swap
      agreements in the first nine months of 2008 was a gain of $0.8 million, net
      of
      taxes.





A
      summary
      of the company’s interest rate swaps is as follows:





**Fixed**
            
            
            
            
            
            
            
            **Changes****Notional**
            
            **Interest**
            
            **Effective**
            
            **Maturity**
            
            **Fair Value**
            
            **In Fair Value****Amount**
            
            **Rate**
            
            **Date**
            
            **Date**
            
            **Sep. 27, 2008**
            
            **(net of taxes)**$
            10,000,000
            
            
            5.030
            %
            
            3/03/2006
            
            
            12/21/2009
            
            $
            (234,000
            )
            $
            137,000
            1$
            10,000,000
            
            
            2.520
            %
            
            2/19/2008
            
            
            2/19/2009
            
            $
            32,000
            
            $
            36,000$
            20,000,000
            
            
            2.635
            %
            
            2/6/2008
            
            
            2/6/2009
            
            $
            49,000
            
            $
            69,000$
            25,000,000
            
            
            3.350
            %
            
            1/14/2008
            
            
            1/14/2010
            
            $
            (91,000
            )
            $
            224,000$
            10,000,000
            
            
            2.920
            %
            
            2/1/2008
            
            
            2/1/2010
            
            $
            30,000
            
            $
            82,000$
            10,000,000
            
            
            2.785
            %
            
            2/6/2008
            
            
            2/8/2010
            
            $
            22,000
            
            $
            42,000$
            10,000,000
            
            
            3.033
            %
            
            2/6/2008
            
            
            2/7/2011
            
            $
            49,000
            
            $
            78,000$
            10,000,000
            
            
            2.820
            %
            
            2/1/2008
            
            
            2/1/2009
            
            $
            92,000
            
            $
            115,000$
            10,000,000
            
            
            3.590
            %
            
            6/10/2008
            
            
            6/10/2011
            
            $
            (8,000
            )
            $
            16,000$
            20,000,000
            
            
            3.350
            %
            
            6/10/2008
            
            
            6/10/2010
            
            $
            (39,000
            )
            $
            (28,000
            )$
            10,000,000
            
            
            3.460
            %
            
            9/8/2008
            
            
            9/6/2011
            
            $
            41,000
            
            $
            24,000$
            15,000,000
            
            
            3.130
            %
            
            9/8/2008
            
            
            9/7/2010
            
            $
            42,000
            
            $
            25,000$
            20,000,000
            
            
            2.800
            %
            
            9/8/2008
            
            
            9/8/2009
            
            $
            52,000
            
            $
            31,000$
            20,000,000
            
            
            3.670
            %
            
            9/26/2008
            
            
            9/23/2011
            
            $
            (49,000
            )
            $
            (30,000
            )




1
            Previous
                to the fiscal quarter ended March 29, 2008, this swap had not been
                designated as an effective cash flow hedge. The swap was designated
                as an
                effective cash flow hedge during the quarter ended March 29, 2008.
                In
                accordance with SFAS No. 133, the net reduction of $0.2 million in
                the
                fair value of this swap prior to the designation date has been recorded
                as
                a loss in earnings for the first quarter
                2008.





**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 were no
      forward contracts outstanding at the end of the quarter.





36




**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
      September 27, 2008, 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 September 27, 2008, 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.





37





**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 September 27, 2008, except
      as
      follows:





**Item
      1A. Risk Factors**





**Risks
      Related to the company’s acquisition of TurboChef**





**Although
      TurboChef and Middleby expect that the merger will result in benefits to the
      combined company, the combined company may not realize those benefits because
      of
      various factors** *.*




TurboChef
      and Middleby believe that the merger will result in the diversification of
      revenue streams and the expansion of marketing opportunities and efficiencies
      for the combined company. Realizing the benefits anticipated from the merger
      will depend, in part, on several factors, including:




·
            retaining
                and attracting key employees;





·
            successfully
                implementing cross-promotional and other future marketing initiatives,
                products and services directed at Middleby's customer base;
                and





·
            improving
                the overall performance of the TurboChef business.**





Middleby
      and TurboChef have operated and, until the completion of the merger, will
      continue to operate independently. It is possible that the integration process
      could result in the loss of key employees, as well as the disruption of each
      company’s ongoing business. Any or all of those occurrences could adversely
      affect Middleby’s ability to maintain relationships with customers and employees
      after the merger or to achieve the anticipated benefits of the merger.
      Integration efforts between the two companies will also divert management
      attention and resources. These integration matters could have an adverse effect
      on each of Middleby and TurboChef.





38





**TurboChef
      and Middleby will be subject to business uncertainties and contractual
      restrictions while the merger is pending** *.*




Uncertainty
      about the merger and diversion of management attention could harm TurboChef,
      Middleby or the combined company, whether or not the merger is completed. In
      response to the announcement of the merger, existing or prospective customers,
      suppliers, distributors and retailers of TurboChef or Middleby may delay or
      defer their purchasing or other decisions concerning TurboChef or Middleby,
      or
      they may seek to change their existing business relationship. In addition,
      as a
      result of the merger, current and prospective employees could experience
      uncertainty about their future with TurboChef or Middleby or the combined
      company. The success of the merger will depend in part on the retention of
      personnel critical to the business and operation of the combined company and
      the
      uncertainties discussed above may impair each company's ability to retain,
      recruit or motivate key personnel. The closing of the merger will also require
      a
      significant amount of time and attention from management. In addition, the
      pendency of the merger could exacerbate the diversion of management resources
      from other transactions or activities that TurboChef or Middleby may undertake.
      The diversion of management attention away from ongoing operations could
      adversely affect ongoing operations and business relationships. The merger
      agreement also restricts TurboChef from making certain acquisitions and taking
      other specified actions until the merger occurs. These restrictions may prevent
      TurboChef from pursuing attractive business opportunities that may arise prior
      to the closing of the merger.





**The
      issuance of shares of Middleby common stock to TurboChef stockholders in the
      merger will initially have a negative impact on the earnings per share of the
      combined company** *.*




If
      the
      merger is completed, TurboChef and Middleby expect that up to approximately
      1.525 million shares of Middleby common stock will be issued to TurboChef
      stockholders (based on the number of outstanding shares of TurboChef common
      stock on August 12, 2008, and issuable pursuant to the exercise of all
      outstanding options, settlement of restricted stock units, and cancellation
      of
      exchange rights to purchase shares of TurboChef common stock on August 12,
      2008). The companies expect that the merger will initially result in lower
      earnings per share than would have been earned by Middleby in the absence of
      the
      merger. Based on the expected number of shares of Middleby common stock to
      be
      issued to TurboChef stockholders in the merger, TurboChef stockholders will
      own
      approximately 8% of the then outstanding shares of Middleby common stock on
      a
      fully diluted basis (including options) immediately after the merger. Middleby
      expects that over time the merger will yield benefits to the combined company
      such that the merger will ultimately be accretive to earnings per share on
      a
      generally accepted accounting principles (“ GAAP ”) basis. However, there can be
      no assurance that the increase in earnings per share on a GAAP basis expected
      over time will be achieved or that stockholders of either company will realize
      a
      benefit from the merger commensurate with the ownership dilution they will
      experience in connection with the merger. In order to achieve increases in
      earnings per share on a GAAP basis as a result of the merger, the combined
      company will, among other things, need to effectively continue the successful
      operations of TurboChef and Middleby after the merger, develop successful
      marketing initiatives, products and services and improve the overall performance
      of the TurboChef business.





39




**The
        company’s substantial leverage following the TurboChef merger could adversely
        affect its ability to raise additional capital to fund operations, limit
        its
        ability to react to changes in the economy or the company’s industry and prevent
        the company from satisfying its debt obligations.**
 
 Following
        the TurboChef merger, the combined company will have a substantial amount
        of
        indebtedness. As of September 30, 2008, Middleby had $257.7 million outstanding
        indebtedness for borrowed money.  In addition, Middleby expects to incur
        incremental borrowings under its existing revolving credit facility in order
        to
        finance the cash portion of the merger consideration. After giving effect
        to the
        merger, the pro forma indebtedness of the combined company as of September
        30,
        2008 is estimated to be approximately $390.0 million. This substantial
        indebtedness could have important consequences on the combined company’s
        business and financial condition. For example:
  ·
              if
                  Middleby fails to meet payment obligations or otherwise defaults
                  under the
                  agreements governing its indebtedness, the lenders under those
                  agreements
                  will have the right to accelerate the indebtedness and exercise
                  other
                  rights and remedies against the combined company;
 
 ·
              Middleby
                  will be required to dedicate a substantial portion of its cash
                  flow from
                  operations to payments on its debt, thereby reducing funds available
                  for
                  working capital, capital expenditures, dividends, acquisitions
                  and other
                  purposes;
 
 ·
              Middleby’s
                  ability to obtain additional financing to fund future working capital,
                  capital expenditures, additional acquisitions and other general
                  corporate
                  requirements could be limited;
 
 ·
              Middleby
                  will experience increased vulnerability to, and limited flexibility
                  in
                  planning for, changes to its business and adverse economic and
                  industry
                  conditions;
 
 ·
              Middleby’s
                  credit rating could be adversely affected;
 
 ·
              Middleby
                  could be placed at a competitive disadvantage relative to other
                  companies
                  with less indebtedness; and
 
 ·
              Middleby’s
                  ability to apply excess cash flows of Middleby or proceeds from
                  certain
                  types of securities offerings, asset sales and other transactions
                  to
                  purposes other than the repayment of debt could be limited.
 
 Under
        the
        terms of the company’s credit facilities, the company will be permitted to incur
        additional indebtedness subject to certain conditions, and the risks described
        above may be increased if the company incurs additional
        indebtedness.


**Risks
      Related to Current Market Events**





**Economic
      conditions may cause a decline in business and consumer spending which could
      adversely affect the comapny's business and financial
      performance.**





The
      company's operating results are impacted by the health of the North
      American, European, Asian and Latin American economies. The
      company's business and financial performance, including collection
      of its accounts receivable, may be adversely affected by the current and
      future economic conditions that cause a decline in business and consumer
      spending, including a reduction in the availability of credit, decreased growth
      by its existing customers, customers electing to delay the replacement of
      aging equipment, higher energy costs, rising interest rates, financial market
      volatility, recession and acts of terrorism. Additionally, the
      company may experience difficulties in scaling its operations to economic
      pressures in the U.S. and International markets.





40





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





*Issuer
      Purchases of Equity Securities*





Total
              Number of
              Shares
              Purchased
            
            Average
              Price Paid
              per Share
            
            Total Number
              of Shares
              Purchased as
              Part of Publicly
              Announced
              Plan or
              Program
            
            Maximum
              Number of
              Shares that May
              Yet be
              Purchased
              Under the Plan
              or ProgramJune 29, 2008 to July
                25, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            632,132July
                26, 2008 to August 26, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            632,132August
                27, 2008 to September 27, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            632,132Quarter
                ended September 27, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            632,132





In
      July
      1998, the company's Board of Directors adopted a stock repurchase program that
      authorized the purchase of common shares in open market purchases. As of
      September 27, 2008, 1,167,868 shares had been purchased under the 1998 stock
      repurchase program.





41





**Item
      6. Exhibits**


Exhibits
              –
              The
                  following exhibits are filed herewith:Exhibit
                  31.1
              –
              Rule
                  13a-14(a)/15d -14(a) Certification of the Chief Executive Officer
                  as
                  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit
                  31.2
              –
              Rule
                  13a-14(a)/15d -14(a) Certification of the Chief Financial Officer
                  as
                  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.Exhibit
                  32.1
              –
              Certification
                  by the Principal Executive Officer of The Middleby Corporation
                  Pursuant to
                  Rule 13A-14(b) under the Exchange Act and Section 906 of the
                  Sarbanes-Oxley Act of 2002(18 U.S.C. 1350).Exhibit
                  32.2
              –
              Certification
                  by the Principal Financial Officer of The Middleby Corporation
                  Pursuant to
                  Rule 13A-14(b) under the Exchange Act and Section 906 of the
                  Sarbanes-Oxley Act of 2002(18 U.S.C.
                  1350).




42


**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
            November 6, 2008
            
            By:
            /s/ Timothy J. FitzGeraldTimothy
                J. FitzGeraldVice
                President,Chief
                Financial Officer





43