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 July 4, 2009





or


 ̈
      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 ý No  o





Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).


Yes oNoo





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 the definitions of “accelerated filer, large accelerated
filer and smaller reporting company” in Rule 12b-2 of the Exchange
Act.


Large
      accelerated filer ý
            Accelerated
      filer o
            Non-accelerated
      filer o
            Smaller
      reporting company o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo  ý





As of
August 7, 2009, there were 18,533,037 shares of the registrant's common stock
outstanding.








THE MIDDLEBY CORPORATION AND
SUBSIDIARIES





QUARTER ENDED JULY 4,
2009





INDEX





DESCRIPTION
                                      
                                      PAGEPART
      I.  FINANCIAL INFORMATIONItem
      1.
                                      
                                      Condensed
      Consolidated Financial Statements (unaudited)CONDENSED
      CONSOLIDATED BALANCE SHEETS
                                        July
      4, 2009 and January 3, 2009
                                      
                                      1CONDENSED
      CONSOLIDATED STATEMENTS OF EARNINGS
                                        July
      4, 2009 and June 28, 2008
                                      
                                      2CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        July
      4, 2009 and June 28, 2008
                                      
                                      3NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                      
                                      4Item
      2.
                                      
                                      Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                      
                                      25Item
      3.
                                      
                                      Quantitative
      and Qualitative Disclosures About Market Risk
                                      
                                      36Item
      4.
                                      
                                      Controls
      and Procedures
                                      
                                      39PART
      II. OTHER INFORMATIONItem
      2.
                                      
                                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                                      
                                      40Item
      4.
                                      
                                      Submission
      of Matters to a Vote of Security Holders
                                      
                                      40Item
      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)





Jul 4, 2009
                      
                      
                      Jan 3, 2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                      
                      $
                      8,033
                      
                      
                      $
                      6,144Accounts
      receivable, net of reserve for doubtful accounts of $7,661 and
      $6,598
                      
                      
                      81,351
                      
                      
                      
                      85,969Inventories,
      net
                      
                      
                      95,349
                      
                      
                      
                      91,551Prepaid
      expenses and other
                      
                      
                      6,778
                      
                      
                      
                      7,646Current
      deferred taxes
                      
                      
                      29,957
                      
                      
                      
                      18,387Total
      current assets
                      
                      
                      221,468
                      
                      
                      
                      209,697Property,
      plant and equipment, net of accumulated depreciation of $43,174 and
      $40,370
                      
                      
                      46,980
                      
                      
                      
                      44,757Goodwill
                      
                      
                      361,064
                      
                      
                      
                      266,663Other
      intangibles
                      
                      
                      188,668
                      
                      
                      
                      125,501Other
      assets
                      
                      
                      2,877
                      
                      
                      
                      3,314Total
      assets
                      
                      $
                      821,057
                      
                      
                      $
                      649,932LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Current
      maturities of long-term debt
                      
                      $
                      5,980
                      
                      
                      $
                      6,377Accounts
      payable
                      
                      
                      35,747
                      
                      
                      
                      32,543Accrued
      expenses
                      
                      
                      119,033
                      
                      
                      
                      102,579Total
      current liabilities
                      
                      
                      160,760
                      
                      
                      
                      141,499Long-term
      debt
                      
                      
                      315,079
                      
                      
                      
                      228,323Long-term
      deferred tax liability
                      
                      
                      12,123
                      
                      
                      
                      33,687Other
      non-current liabilities
                      
                      
                      30,825
                      
                      
                      
                      23,029Stockholders'
      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; 22,602,950 and
      21,068,556 shares issued in 2009 and 2008, respectively
                      
                      
                      135
                      
                      
                      
                      120Paid-in
      capital
                      
                      
                      156,842
                      
                      
                      
                      107,305Treasury
      stock at cost; 4,069,913 and 4,074,713 shares in 2009 and 2008,
      respectively
                      
                      
                      (102,000
                      )
                      
                      
                      (102,000
                      )Retained
      earnings
                      
                      
                      254,012
                      
                      
                      
                      226,231Accumulated
      other comprehensive income
                      
                      
                      (6,719
                      )
                      
                      
                      (8,262
                      )Total
      stockholders' equity
                      
                      
                      302,270
                      
                      
                      
                      223,394Total
      liabilities and stockholders' equity
                      
                      $
                      821,057
                      
                      
                      $
                      649,932





See
accompanying notes


1


THE MIDDLEBY CORPORATION AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS


(In
Thousands, Except Per Share Data)


(Unaudited)





Three Months Ended
                
                
                Six Months EndedJul 4, 2009
                
                
                Jun 28, 2008
                
                
                Jul 4, 2009
                
                
                Jun 28, 2008Net
      sales
                
                $
                158,601
                
                
                $
                173,513
                
                
                $
                340,147
                
                
                $
                334,396Cost
      of sales
                
                
                97,261
                
                
                
                106,505
                
                
                
                210,037
                
                
                
                208,486Gross
      profit
                
                
                61,340
                
                
                
                67,008
                
                
                
                130,110
                
                
                
                125,910Selling
      expenses
                
                
                16,668
                
                
                
                16,676
                
                
                
                32,974
                
                
                
                32,921General
      and administrative expenses
                
                
                17,727
                
                
                
                17,840
                
                
                
                42,100
                
                
                
                34,481Income
      from operations
                
                
                26,945
                
                
                
                32,492
                
                
                
                55,036
                
                
                
                58,508Net
      interest expense and deferred financing amortization
                
                
                2,857
                
                
                
                3,039
                
                
                
                6,003
                
                
                
                6,742Other
      expense, net
                
                
                460
                
                
                
                561
                
                
                
                744
                
                
                
                948Earnings
      before income taxes
                
                
                23,628
                
                
                
                28,892
                
                
                
                48,289
                
                
                
                50,818Provision
      for income taxes
                
                
                9,914
                
                
                
                11,775
                
                
                
                20,508
                
                
                
                20,520Net
      earnings
                
                $
                13,714
                
                
                $
                17,117
                
                
                $
                27,781
                
                
                $
                30,298Net
      earnings per share:Basic
                
                $
                0.78
                
                
                $
                1.07
                
                
                $
                1.58
                
                
                $
                1.89Diluted
                
                $
                0.74
                
                
                $
                0.99
                
                
                $
                1.51
                
                
                $
                1.76Weighted
      average number of sharesBasic
                
                
                17,584
                
                
                
                15,990
                
                
                
                17,584
                
                
                
                16,022Dilutive
      stock options1
                
                
                1,051
                
                
                
                1,254
                
                
                
                819
                
                
                
                1,184Diluted
                
                
                18,635
                
                
                
                17,244
                
                
                
                18,403
                
                
                
                17,206





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)





Six Months EndedJul 4, 2009
                
                
                Jun 28, 2008Cash
      flows from operating activities-Net
      earnings
                
                $
                27,781
                
                
                $
                30,298Adjustments
      to reconcile net earnings to cash provided by operating
      activities:Depreciation
      and amortization
                
                
                8,075
                
                
                
                6,862Deferred
      taxes
                
                
                (87
                )
                
                
                2,551Non-cash
      share-based compensation
                
                
                5,488
                
                
                
                5,480Unrealized
      loss on derivative financial instruments
                
                
                15
                
                
                
                193Changes
      in assets and liabilities, net of acquisitionsAccounts
      receivable, net
                
                
                19,368
                
                
                
                (9,250
                )Inventories,
      net
                
                
                9,714
                
                
                
                (2,329
                )Prepaid
      expenses and other assets
                
                
                1,398
                
                
                
                17,275Accounts
      payable
                
                
                (6,633
                )
                
                
                5,621Accrued
      expenses and other liabilities
                
                
                (17,965
                )
                
                
                (13,665
                )Net
      cash provided by operating activities
                
                
                47,154
                
                
                
                43,036Cash
      flows from investing activities-Net
      additions to property and equipment
                
                
                (3,970
                )
                
                
                (2,743
                )Acqusition
      of Star
                
                
                -
                
                
                
                (188,241
                )Acquisition
      of Giga
                
                
                -
                
                
                
                (9,918
                )Acquisition
      of Frifri
                
                
                -
                
                
                
                (3,050
                )Acquisition
      of TurboChef, net of cash acquired
                
                
                (116,129
                )Acquisition
      of CookTek
                
                
                (8,000
                )
                
                
                -Acquisition
      of Anets
                
                
                (3,358
                )
                
                
                -Net
      cash (used in) investing activities
                
                
                (131,457
                )
                
                
                (203,952
                )Cash
      flows from financing activities-Net
      proceeds under revolving credit facilities
                
                
                86,650
                
                
                
                172,249Net
      payments under foreign bank loan
                
                
                (377
                )
                
                
                668Debt
      issuance costs
                
                
                -
                
                
                
                (205
                )Repurchase
      of treasury stock
                
                
                -
                
                
                
                (12,359
                )Net
      proceeds from stock issuances
                
                
                18
                
                
                
                51Net
      cash provided by financing activities
                
                
                86,291
                
                
                
                160,404Effect
      of exchange rates on cash and cash equivalents
                
                
                (99
                )
                
                
                97Changes
      in cash and cash equivalents-Net
      increase (decrease) in cash and cash equivalents
                
                
                1,889
                
                
                
                (414
                )Cash
      and cash equivalents at beginning of year
                
                
                6,144
                
                
                
                7,463Cash
      and cash equivalents at end of quarter
                
                $
                8,033
                
                
                $
                7,049Supplemental
      disclosure of cash flow information:Interest
      paid
                
                $
                5,618
                
                
                $
                5,821Income
      tax payments
                
                $
                12,388
                
                
                $
                5,860Non-cash
      investing and  financing activities:Stock
      issuance related to the acquisition of TurboChef
                
                $
                44,048
                
                
                $
                —Contingent
      consideration related to the acquisition of CooktTek
                
                $
                7,360
                
                
                $
                —





See
accompanying notes




3




THE MIDDLEBY CORPORATION AND
SUBSIDIARIES





NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS





July 4,
2009


(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 2008 Form 10-K.





In the
opinion of management, the financial statements contain all adjustments
necessary to present fairly the financial position of the company as of July 4,
2009 and January 3, 2009, and the results of operations for the six months ended
July 4, 2009 and June 28, 2008 and cash flows for the six months ended July 4,
2009 and June 28, 2008.





Events
that occurred after July 4, 2009, up until the filing of this Form 10-Q on
August 13, 2009 were considered in the preparation of these condensed
consolidated financial statements.





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
$2.8 million and $3.1 million for the the three months ended July 4, 2009 and
June 28, 2008 respectively.  Non-cash share-based compensation was
$5.4 million and $5.5 million for the six month periods ended July 4, 2009 and
June 28, 2008, respectively.





C)
            Income
      Tax Contingencies





On
December 31, 2006, the company adopted the provisions of FASB 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.





4


As of
January 3, 2009, the total amount of liability for unrecognized tax benefits was
approximately $10.4 million (of which the entire amount would impact the
effective tax rate if recognized) plus approximately $1.4 million of accrued
interest and $1.8 million of penalties. As of July 4, 2009, there were no
significant changes in the total amount of liability for unrecognized tax
benefit. It is reasonably possible that the amounts of unrecognized tax benefits
associated with state, federal and foreign tax positions may decrease over the
next twelve months due to expiration of a statute or completion of an audit.
While a reasonable range of the amount cannot be determined, the company
believes such decrease would not be material.





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
                
                2007
      - 2008United
      States – states
                
                2002
      - 2008China
                
                2002
      - 2008Denmark
                
                2006
      - 2008Mexico
                
                2005
      - 2008Philippines
                
                2006
      - 2008South
      Korea
                
                2005
      - 2008Spain
                
                2007
      - 2008Taiwan
                
                2007
      - 2008United
      Kingdom
                
                2007
      - 2008





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” delayed 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 adoption of FSP
No. 157-2 did not have a material impact on the company’s financial position,
results of operations or cash flows.


5





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 and liabilities that are measured at fair value are
categorized using the fair value hierarchy at July 4, 2009 are as follows (in
thousands):





Fair Value
                    
                    
                    Fair Value
                    
                    
                    Fair ValueLevel 1
                    
                    
                    Level 2
                    
                    
                    Level 3
                    
                    
                    TotalFinancial
      Assets:None
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Financial
      Liabilities:Interest
      rate swaps
                    
                    
                    —
                    
                    
                    $
                    4,787
                    
                    
                    
                    —
                    
                    
                    $
                    4,787Contingent
      consideration
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    7,360
                    
                    
                    $
                    7,360





The
contingent consideration relates to an earnout provision recorded in conjunction
with the acquisition of CookTek LLC.  See Note 2 for more
information.





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. As the company did not elect the fair value option, the
adoption of SFAS No. 159 did not have a material impact on the company’s
financial position, results of operations and cash flows for the six months
ended July 4, 2009.





2)
            Acquisitions
      and Purchase Accounting





The
company operates in a highly fragmented industry and has completed numerous
acquisitions over the past several years as a component of its growth
strategy.  The company has acquired industry leading brands and
technologies to position itself as  a leader in the commercial
foodservice equipment and food processing equipment industries.





The
company has accounted for all business combinations using the purchase method to
record a new cost basis for the assets acquired and liabilities
assumed.  The difference between the purchase price and the fair value
of the assets acquired and liabilities assumed has been recorded as goodwill in
the financial statements.  The results of operations of each
acquisition are reflected in the consolidated financial statements of the
company from the date of acquisition.


6


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





Dec 31, 2007Cash
                    
                    $
                    376Current
      assets
                    
                    
                    28,959Property,
      plant and equipment
                    
                    
                    8,225Goodwill
                    
                    
                    118,772Other
      intangibles
                    
                    
                    75,150Other
      assets
                    
                    
                    71Current
      liabilities
                    
                    
                    (12,041
                    )Deferred
      tax liabilities
                    
                    
                    (25,863
                    )Other
      non-current liabilities
                    
                    
                    (3,797
                    )Total
      cash paid
                    
                    $
                    189,852





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.





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, 2007Net
      sales
                      
                      $
                      592,513Net
      earnings
                      
                      $
                      51,769Net
      earnings per share:Basic
                      
                      $
                      3.30Diluted
                      
                      $
                      3.06





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 incurred to integrate Star.


7





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 $3.3 million is also due the
seller ratably over a three year period.





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





Apr 22, 2008
                  
                  
                  Measurement Period
                  
                  
                  April 22, 2008(as initially reported)
                  
                  
                  Adjustments
                  
                  
                  (as adjusted)Cash
                  
                  $
                  222
                  
                  
                  $
                  (5
                  )
                  
                  $
                  217Current
      assets
                  
                  
                  14,645
                  
                  
                  
                  (2,203
                  )
                  
                  
                  12,442Property,
      plant and equipment
                  
                  
                  628
                  
                  
                  
                  —
                  
                  
                  
                  628Goodwill
                  
                  
                  10,135
                  
                  
                  
                  339
                  
                  
                  
                  10,474Other
      intangibles
                  
                  
                  3,330
                  
                  
                  
                  1,912
                  
                  
                  
                  5,242Other
      assets
                  
                  
                  473
                  
                  
                  
                  —
                  
                  
                  
                  473Current
      maturities of long-term debt
                  
                  
                  (5,105
                  )
                  
                  
                  —
                  
                  
                  
                  (5,105
                  )Current
      liabilities
                  
                  
                  (8,757
                  )
                  
                  
                  1,883
                  
                  
                  
                  (6,874
                  )Other
      non-current liabilities
                  
                  
                  (5,431
                  )
                  
                  
                  (1,916
                  )
                  
                  
                  (7,347
                  )Total
      cash paid
                  
                  $
                  10,140
                  
                  
                  $
                  10
                  
                  
                  $
                  10,150





The
goodwill and $3.7 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of SFAS No. 142.  Other
intangibles also includes $0.2 million allocated to backlog and $1.3 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 final
allocation of cash paid for the Frifri acquisition is summarized as follows (in
thousands):





Apr
      23, 2008
                  
                  
                  Measurement
      Period
                  
                  
                  April
      23, 2008(as initially reported)
                  
                  
                  Adjustments
                  
                  
                  (as adjusted)Cash
                  
                  $
                  469
                  
                  
                  $
                  194
                  
                  
                  $
                  663Current
      assets
                  
                  
                  4,263
                  
                  
                  
                  813
                  
                  
                  
                  5,076Property,
      plant and equipment
                  
                  
                  460
                  
                  
                  
                  (62
                  )
                  
                  
                  398Goodwill
                  
                  
                  1,155
                  
                  
                  
                  2,418
                  
                  
                  
                  3,573Current
      liabilities
                  
                  
                  (2,828
                  )
                  
                  
                  (3,354
                  )
                  
                  
                  (6,182
                  )Total
      cash paid
                  
                  $
                  3,519
                  
                  
                  $
                  9
                  
                  
                  $
                  3,528





8


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
January 5 , 2009, the company acquired the stock of TurboChef Technologies, Inc.
(“TurboChef”), a leading manufacturer of speed-cook ovens for an aggregate
purchase price of $160.3 million including $116.1 million in cash and 1,539,668
shares of Middleby common stock valued at $44.0 million.





The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed. Measurement period adjustments reflect new information
obtained about facts and circumstances that existed as of the acquisition date
(in thousands):.





Jan
      5, 2009
                  
                  
                  Measurement
      Period
                  
                  
                  Jan
      5, 2009(as initially reported)
                  
                  
                  Adjustments
                  
                  
                  (as adjusted)Cash
                  
                  $
                  10,146
                  
                  
                  $
                  -
                  
                  
                  $
                  10,146Current
      assets
                  
                  
                  23,979
                  
                  
                  
                  (524
                  )
                  
                  
                  23,455Current
      deferred tax asset
                  
                  
                  11,449
                  
                  
                  
                  (373
                  )
                  
                  
                  11,076Property,
      plant and equipment
                  
                  
                  4,155
                  
                  
                  
                  (2,835
                  )
                  
                  
                  1,320Goodwill
                  
                  
                  66,821
                  
                  
                  
                  9,999
                  
                  
                  
                  76,820Other
      intangibles
                  
                  
                  72,516
                  
                  
                  
                  (9,466
                  )
                  
                  
                  63,050Deferred
      tax asset
                  
                  
                  18,588
                  
                  
                  
                  3,383
                  
                  
                  
                  21,971Current
      liabilities
                  
                  
                  (36,615
                  )
                  
                  
                  (132
                  )
                  
                  
                  (36,747
                  )Other
      non-current liabilities
                  
                  
                  (768
                  )
                  
                  
                  —
                  
                  
                  
                  (768
                  )Total
      cash paid
                  
                  $
                  170,271
                  
                  
                  $
                  52
                  
                  
                  $
                  170,323





The
current and long term deferred tax assets amounted to $11.1 million and $22.0
million, respectively.  These net assets are comprised of $42.3
million related to federal and state net operating loss carry forwards, $12.6
million of assets arising from the difference between the book and tax basis of
tangible asset and liability accounts, net of $21.8 million of deferred tax
liabilities related to the difference between the book and tax basis of
identifiable intangible assets.





The
goodwill and $49.8 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, $3.9 million
allocated to developed technology and $8.9 million allocated to customer
relationships which are to be amortized over periods of 3 months, 5 years and 5
years, respectively.  Goodwill and other intangibles of TurboChef are
allocated to the Commercial Foodservice Equipment Group for segment reporting
purposes. These
assets generally are not expected to be deductible for tax
purposes.


9





During
the first quarter ended April 4, 2009, the company recorded a preliminary
estimate of the intangible assets acquired in conjunction with the TurboChef
acquisition.  The company also recorded intangible amortization
expense related to those assets in its results of operations for the quarter
ended April 4, 2009.   The final valuation of intangible assets
acquired was completed during the second quarter ended July 4,
2009.  Therefore, the company adjusted the intangible amortization
expense in its second quarter results of operations on a year to date basis.
This adjustment did not have a material impact on the company’s results of
operations.




The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to complete the purchase price allocation as
soon as practicable but no later than one year from the acquisition
date.





Results
of Operations





The
following unaudited results of operations for the three and six months ended
July 4, 2009, reflect the operations of TurboChef on a stand-alone basis (in
thousands):





Three Months Ended
                    Jul 4, 2009
                  
                  
                  Six Months Ended
                    Jul 4, 2009Net
      sales
                  
                  $
                  19,474
                  
                  
                  $
                  42,330Income
      from operations
                  
                  $
                  4,000
                  
                  
                  $
                  5,553





Pro
forma Financial Information





The
following unaudited pro forma results of operations for the three and six months
ended June 28, 2008 assumes the TurboChef acquisition was completed on December
30, 2007.  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.





Three Months Ended
                    Jun 28, 2008
                  
                  
                  Six Months Ended
                    Jun 28, 2008Net
      sales
                  
                  $
                  194,612
                  
                  
                  $
                  379,889Net
      earnings
                  
                  
                  13,805
                  
                  
                  
                  19,897Net
      earnings per share:Basic
                  
                  
                  0.78
                  
                  
                  
                  1.13Diluted
                  
                  
                  0.74
                  
                  
                  
                  1.06





The
supplemental pro forma financial information presented above has been prepared
for comparative purposes and is not necessarily indicative of either the results
of operations that would have occurred had the acquisition of TurboChef been
effective on December 30, 2007 nor are they indicative of any future
results.  Also, the pro forma financial information does not reflect the
costs which the company has incurred or may incur to integrate
TurboChef.


10





CookTek





On April
26, 2009, the company completed its acquisition of substantially all of the
assets and operations of CookTek LLC (“CookTek”),the leading
manufacturer of induction cooking and warming systems for a purchase price of
$8.0 million in cash.  An additional deferred payment of $1.0 million
is also due to the seller on the first anniversary of the acquisition.
Additional contingent payments are also payable over the course of four years
upon the achievement of certain sales targets.





The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed. Measurement period adjustments reflect new information
obtained about facts and circumstances that existed as of the acquisition date
(in thousands):.





Apr 26, 2009Current
      assets
                              
                              $
                              2,595Property,
      plant and equipment
                              
                              
                              152Goodwill
                              
                              
                              11,544Other
      intangibles
                              
                              
                              3,622Current
      liabilities
                              
                              
                              (3,428
                              )Other
      non-current liabilities
                              
                              
                              (6,485
                              )Total
      cash paid
                              
                              $
                              8,000Deferred
      cash payment
                              
                              
                              1,000Contingent
      consideration
                              
                              
                              7,360Net
      assets acquired and liabilities assumed
                              
                              $
                              16,360





The
CookTek purchase agreement included an earnout provision providing for
contingent payments due to the sellers to the extent certain financial targets
are exceeded.  The earnout amounts are payable in the four consecutive
years subsequent to the acquisition date if CookTek is to exceed certain sales
targets for each of those years.  The earnout payment will amount to
10% of the sales in excess of the target for each of the respective
years.  There is no cap on the potential earnout payment, however, the
company’s estimated probable range of the contingent consideration is between $0
and $15 million.  The fair value of the contractual obligation
associated with the contingent earnout provision recognized on the acquisition
date is $7.4 million.  This
amount was determined based on an income approach.  The fair value
measurement is based upon significant inputs not observable in the market and
thus represents a Level 3 measurement as defined in SFAS 157.





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 less than $ 0.1 million allocated to backlog, $0.9
million allocated to developed technology and $0.5 million allocated to customer
relationships which are to be amortized over periods of 3 month, 6 years and 5
years, respectively.  Goodwill and other intangibles of CookTek are
allocated to the Commercial Foodservice Equipment Group for segment reporting
purposes. These assets are expected to be deductible for tax
purposes.


11




The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to finalize the valuation of intangible
assets and complete the purchase price allocation as soon as practicable but no
later than one year from the acquisition date.





Anets





On April
30, 2009, the company completed its acquisition of substantially all of the
assets and operations of Anetsberger Brothers, Inc. (“Anets”),a leading
manufacturer of griddles, fryers and dough rollers, for a purchase price of $3.5
million. An additional deferred payment of $0.5 million is due to the seller
upon the achievement of certain transition objectives.





The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed. Measurement period adjustments reflect new information
obtained about facts and circumstances that existed as of the acquisition date
(in thousands):





Apr 30, 2009Current
      assets
                                      
                                      $
                                      2,210Goodwill
                                      
                                      
                                      3,320Other
      intangibles
                                      
                                      
                                      1,085Current
      liabilities
                                      
                                      
                                      (3,107
                                      )Other
      non-current liabilities
                                      
                                      
                                      (150
                                      )Total
      cash paid
                                      
                                      $
                                      3,358Deferred
      cash payment
                                      
                                      
                                      500Net
      assets acquired and liabilities assumed
                                      
                                      $
                                      3,858





The
goodwill and $0.9 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of SFAS No. 142.  Other
intangibles also includes less than $0.1 million allocated to developed
technology and $0.2 million allocated to customer relationships which are to be
amortized over periods of 3 years and 3 years, respectively.  Goodwill
and other intangibles of Anets are allocated to the Commercial Foodservice
Equipment Group for segment reporting purposes. These assets are expected to be
deductible for tax purposes.




The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to complete the purchase price allocation as
soon as practicable but no later than one year from the acquisition
date.


12





3)
            Litigation
      Matters





From time
to time, the company is subject to proceedings, lawsuits and other claims
related to products, suppliers, employees, customers and competitors. The
company maintains insurance to partially cover product liability, workers
compensation, property and casualty, and general liability matters.  The
company is required to assess the likelihood of any adverse judgments or
outcomes to these matters as well as potential ranges of probable losses. 
A determination of the amount of accrual required, if any, for these
contingencies is made after assessment of each matter and the related insurance
coverage.  The reserve requirement may change in the future due to new
developments or changes in approach such as a change in settlement strategy in
dealing with these matters.  The company does not believe that any pending
litigation will have a material adverse effect on its financial condition,
results of operations or cash flows of the company.





4)
            Recently
      Issued Accounting Standards





In
December 2007, the FASB 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 adopted this statement on January 5, 2009,
including the acquisition of TurboChef.  Accordingly, the company has
applied the principles of SFAS No. 141R in valuing this acquisition.
 Middleby shares of common stock which were issued in conjunction with this
transaction, were valued using the share price at the time of closing to
determine the value of the purchase price.  Additionally, the company
incurred approximately $4.6 million in transaction related expenses which were
recorded as a deferred acquisition cost reported as an asset on the balance
sheet on January 3, 2009.  In accordance with SFAS No. 141R, the company
has applied a retrospective application and appropriately reflected the expense
incurred in 2008  as a reduction in retained earnings in accordance
with FASB Statement No. 154, “Accounting Changes and Error Corrections,” on
reporting a change in accounting principle.





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 adoption
of SFAS No. 160 did not have a material impact on the company’s financial
position, results of operations or cash flows.


13





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.





In
December 2008, the FASB issued FASB Staff Position, or FSP,
No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan
Assets.” This FSP amends SFAS 132(R), “Employer’s Disclosures about Pensions and
Other Postretirement Benefits,” to require additional disclosures about assets
held in an employer’s defined benefit pension or other postretirement plan. This
FSP replaces the requirement to disclose the percentage of the fair value of
total plan assets for each major category of plan assets, such as equity
securities, debt securities, real estate and all other assets, with the fair
value of each major asset category as of each annual reporting date for which a
financial statement is presented. It also amends SFAS No. 132(R) to require
disclosure of the level within the fair value hierarchy in which each major
category of plan assets falls, using the guidance in SFAS No. 157, “Fair
Value Measurements.” This FSP is applicable to employers that are subject to the
disclosure requirements of SFAS No. 132(R) and is generally effective for
fiscal years ending after December 15, 2009. The company will comply with
the disclosure provisions of this FSP after its effective date.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events.” The objective of this
statement is to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This statement defines the period
after the balance sheet during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events occurring after the balances sheet date in its financial
statements and required disclosures. This statement is effective for interim or
annual financial periods ending after June 15, 2009.  The company has
complied with the disclosure requirements of SFAS No. 165. The adoption of SFAS
No. 165 did not have a material impact on the company’s financial position,
results of operations or cash flows.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles.” This statement
replaces SFAS No. 162 and sets forth a new authoritative guidance for U.S.
generally accepted accounting principles “GAAP” applicable to nongovernmental
entities.  SFAS No. 168 will modify the GAAP hierarchy established
under SFAS No. 162 to include only two levels of GAAP: authoritative and
nonauthoritative. This statement is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. The company will
comply with the reporting requirements of SFAS No. 168 as of the effective
date.


14





5)
            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
                  
                  
                  Six Months EndedJul 4, 2009
                  
                  
                  Jun 28, 2008
                  
                  
                  Jul 4, 2009
                  
                  
                  Jun 28, 2008Net
      earnings
                  
                  $
                  13,714
                  
                  
                  $
                  17,117
                  
                  
                  $
                  27,781
                  
                  
                  
                  30,298Currency
      translation adjustment
                  
                  
                  1,712
                  
                  
                  
                  74
                  
                  
                  
                  968
                  
                  
                  
                  919Unrealized
      gain/(loss) on interest rate swaps, net of tax
                  
                  
                  352
                  
                  
                  
                  764
                  
                  
                  
                  575
                  
                  
                  
                  220Comprehensive
      income
                  
                  $
                  15,778
                  
                  
                  $
                  17,955
                  
                  
                  $
                  29,324
                  
                  
                  $
                  31,437





Accumulated
other comprehensive income is comprised of unrecognized pension benefit costs of
$2.5 million net of taxes of $1.1 million as of July 4, 2009 and January 3,
2009, foreign currency translation adjustments of $1.6 million as of July 4,
2009 and $2.5 million as of January 3, 2009 and an unrealized loss on interest
rate swaps of $2.6 million, net of taxes of $1.7 million and $3.2 million, net
of taxes of $2.1 million, as of July 4, 2009 and January 3, 2009
respectively.





6)
            Inventories





Inventories
are composed of material, labor and overhead and are stated at the lower of cost
or market.  Costs for inventory at two of the company's manufacturing
facilities have been determined using the last-in, first-out ("LIFO")
method.  These inventories under the LIFO method amounted to $16.6
million at July 4, 2009 and $22.5 million at January 3, 2009 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 July 4, 2009 and January 3, 2009 are as
follows:




Jul 4, 2009
                  
                  
                  Jan 3, 2009(in thousands)Raw
      materials and parts
                  
                  $
                  43,238
                  
                  
                  $
                  36,375Work-in-process
                  
                  
                  16,486
                  
                  
                  
                  21,075Finished
      goods
                  
                  
                  36,193
                  
                  
                  
                  34,66895,916
                  
                  
                  
                  92,118LIFO
      adjustment
                  
                  
                  (567
                  )
                  
                  
                  (567
                  )$
                  95,349
                  
                  
                  $
                  91,551


15





7)
            Accrued
      Expenses





Accrued
      expenses consist of the following:





Jul 4, 2009
                  
                  
                  Jan 3, 2009(in thousands)Accrued
      payroll and related expenses
                  
                  $
                  21,077
                  
                  
                  $
                  23,294Accrued
      warranty
                  
                  
                  15,278
                  
                  
                  
                  12,595Advance
      customer deposits
                  
                  
                  10,451
                  
                  
                  
                  4,449Accrued
      customer rebates
                  
                  
                  8,759
                  
                  
                  
                  13,960Accrued
      product liability and workers comp
                  
                  
                  9,110
                  
                  
                  
                  8,577Accrued
      professional services
                  
                  
                  5,579
                  
                  
                  
                  5,283Other
      accrued expenses
                  
                  
                  48,779
                  
                  
                  
                  34,421$
                  119,033
                  
                  
                  $
                  102,579





8)
            Warranty
      Costs





In the
normal course of business the company issues product warranties for specific
product lines and provides for the estimated future warranty cost in the period
in which the sale is recorded.  The estimate of warranty cost is based on
contract terms and historical warranty loss experience that is periodically
adjusted for recent actual experience. Because warranty estimates are forecasts
that are based on the best available information, claims costs may differ from
amounts provided. Adjustments to initial obligations for warranties are made as
changes in the obligations become reasonably estimable.





A
rollforward of the warranty reserve is as follows:





Six Months EndedJul 4, 2009(in thousands)Beginning
      balance
                  
                  $
                  12,595Warranty
      reserve related to acquisitions
                  
                  
                  2,414Warranty
      expense
                  
                  
                  13,127Warranty
      claims
                  
                  
                  (12,858
                  )Ending
      balance
                  
                  $
                  15,278


16


9)
              Financing
      Arrangements




Jul 4, 2009
                        
                        
                        Jan 3, 2009(in
      thousands)Senior
      secured revolving credit line
                        
                        $
                        313,000
                        
                        
                        $
                        226,350Foreign
      loan
                        
                        
                        8,059
                        
                        
                        
                        8,350Total
      debt
                        
                        $
                        321,059
                        
                        
                        $
                        234,700Less:  Current
      maturities of long-term debt
                        
                        
                        5,980
                        
                        
                        
                        6,377Long-term
      debt
                        
                        $
                        315,079
                        
                        
                        $
                        228,323





During
the fourth quarter of 2007 the company entered into a new senior secured credit
facility that matures in December 2012.  This agreement was later
amended in August 2008 to provide for the acquisition of TurboChef. Terms of the
senior credit agreement provide for $497.5 million of availability under a
revolving credit line.  As of July 4, 2009, the company had $313.0
million of borrowings outstanding under this facility.  The company
also has $6.1 million in outstanding letters of credit, which reduces the
borrowing availability under the revolving credit line.  Remaining
borrowing availability under this facility, which is also reduced by the
company’s foreign borrowings, was $170.4 million at July 4, 2009.





Borrowings
under the senior secured credit facility are assessed at an interest rate of
1.25% above LIBOR for long-term borrowings or at the higher of the Prime rate
and the Federal Funds Rate.  At July 4, 2009 the average interest rate
on the senior debt amounted to 1.60%. 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 July 4, 2009.





In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On July 4, 2009 these facilities amounted to
$4.0 million in U.S. dollars, including $2.0 million outstanding under a
revolving credit facility and $2.0 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 4.65% on July 4, 2009. The term loan matures in 2013 and the
interest rate is assessed at 6.14%.





In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings denominated in Euro.  On July 4, 2009 these
facilities amounted to $4.0 million in U.S. 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.


17




In April
2009, the FASB issued FASB Staff Position (“FSP”) No. 107-1 and APB 28-1,
“Interim Disclosures about Fair Value of Financial Instruments” (“FSP No.
107-1”), which requires disclosures of fair value for any financial instruments
not currently reflected at fair value on the balance sheet for all interim
periods. This statement is effective for interim financial periods ending after
June 15, 2009.  The company has complied with the disclosure
requirements of this FSP after its effective date.  As FSP No. 107-1
relates to disclosure requirements, the adoption of this statement did not
have a material impact on the company’s financial position, results of
operations or cash flows.
  The
company’s debt is reflected on the balance sheet at cost. Based on current
market conditions, the company believes its interest rate margins on its
existing debt are below the rate available in the market, which causes the fair
value of debt to fall below the carrying value.  The company believes
the current interest rate margin is approximately 1.0% below current market
rates.  However, as the interest rate margin is based upon numerous
factors, including but not limited to the credit rating of the borrower, the
duration of the loan, the structure and restrictions under the debt agreement,
current lending policies of the counterparty, and the company’s relationships
with its lenders, there is no readily available market data to ascertain the
current market rate for an equivalent debt instrument.  As a result,
the current interest rate margin is based upon the company’s best estimate based
upon discussions with its lenders.
  The
company estimated the fair value of its loans by calculating the upfront cash
payment a market participant would require to assume the company’s
obligations.  The upfront cash payment is the amount that a market
participant would be able to lend at July 4, 2009 to achieve sufficient cash
inflows to cover the cash outflows under the company’s senior revolving credit
facility assuming the facility was outstanding in its entirety until
maturity.  Since the company maintains its borrowings under a
revolving credit facility and there is no predetermined borrowing or repayment
schedule, for purposes of this calculation the company calculated the fair value
of its obligations assuming the current amount of debt at the end of the period
was outstanding until the maturity of the company’s senior revolving credit
facility in December 2012.  Although borrowings could be materially
greater or less than the current amount of borrowings outstanding at the end of
the period, it is not practical to estimate the amounts that may be outstanding
during future periods.  The fair value of the company’s senior debt
obligations as estimated by the company based upon its assumptions is
approximately $310.2 million at July 4, 2009, as compared to the carrying value
of $321.1 million.
 
 The
carrying value and estimated aggregate fair value, based primarily on market
prices, of debt is as follows (dollars in thousands):
  July 4, 2009
                      
                      
                      January 3, 2009Carrying Value
                      
                      
                      Fair Value
                      
                      
                      Carrying Value
                      
                      
                      Fair ValueTotal
      debt
                      
                      $
                      321,059
                      
                      
                      $
                      310,229
                      
                      
                      $
                      234,700
                      
                      
                      $
                      226,486


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.


18


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 July 4, 2009 the company
had the following interest rate swaps in effect:
 
 FixedNotional
                          
                          Interest
                          
                          Effective
                          
                          MaturityAmount
                          
                          Rate
                          
                          Date
                          
                          Date$  25,000,000
                          
                          
                          3.67
                          %
                          9/26/2008
                          
                          9/01/2011$  25,000,000
                          
                          
                          3.35
                          %
                          1/14/2008
                          
                          1/14/2010$  20,000,000
                          
                          
                          2.80
                          %
                          9/08/2008
                          
                          9/06/2009$  20,000,000
                          
                          
                          3.35
                          %
                          6/10/2008
                          
                          6/10/2010$  15,000,000
                          
                          
                          3.13
                          %
                          9/08/2008
                          
                          9/06/2010$  10,000,000
                          
                          
                          2.78
                          %
                          2/06/2008
                          
                          2/06/2010$  10,000,000
                          
                          
                          3.03
                          %
                          2/06/2008
                          
                          2/06/2011$  10,000,000
                          
                          
                          3.46
                          %
                          9/08/2008
                          
                          9/06/2011$  10,000,000
                          
                          
                          5.03
                          %
                          3/03/2006
                          
                          12/21/2009$  10,000,000
                          
                          
                          2.92
                          %
                          2/01/2008
                          
                          2/01/2010$  10,000,000
                          
                          
                          3.59
                          %
                          6/10/2008
                          
                          6/10/2011




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 July 4, 2009, the company was in compliance with all
covenants pursuant to its borrowing agreements.





10)
            Financial
      Instruments





SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" 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.





On
January 5, 2009, the company adopted SFAS No. 161 “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133”.  This statement expands the disclosure of financial
instruments.








19




Foreign Exchange: The company
has entered into derivative instruments, principally forward contracts to reduce
exposures pertaining to fluctuations in foreign exchange rates.  As of
July 4, 2009, 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  fixed rates. The company has designated these swaps as cash flow
hedges and all changes in fair value of the swaps are recognized in accumulated
other comprehensive income.  As of July 4, 2009, the fair value of
these instruments was a loss of $4.8 million.  The change in fair
value of these swap agreements in the first six months of 2009 was a gain of $
0.4 million, net of taxes.





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





Six Months EndedLocation
                          
                          Jul 4, 2009
                          
                          
                          Jun 28, 2008(amounts in thousands)Fair
      value
                          
                          Other
      liabilities
                          
                          $
                          (4,787
                          )
                          
                          $
                          (69
                          )Amount
      of gain/(loss) recognized in other comprehensive income
                          
                          Other
      comprehensive income
                          
                          $
                          575
                          
                          
                          $
                          (220
                          )Gain/(loss)
      reclassified from accumulated other comprehensive income (effective
      portion)
                          
                          Other
      comprehensive income
                          
                          $
                          —
                          
                          
                          $
                          —Gain/(loss)
      recognized in income (ineffective portion)
                          
                          Other
      expense
                          
                          $
                          (15
                          )
                          
                          $
                          (193
                          )





Interest
rate swaps are subject to default risk to the extent the counterparty were
unable to satisfy its settlement obligations under the interest rate swap
agreements.  The company reviews the credit profile of the financial
institutions that are counterparties to such swap agreements and assesses their
creditworthiness prior to entering into the interest rate swap
agreements.  The interest rate swap agreements typically contain
provisions that allow the counterparty to require early settlement in the event
that the company becomes insolvent or is unable to maintain compliance with its
covenants under its existing debt agreement.





11)
            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, Texas, Vermont, Denmark,
Italy, and the Philippines   Principal product lines of this
segment include baking ovens, broilers, catering equipment, charbroilers,
combi-ovens, coffee and beverage systems, convection ovens, conveyor ovens,
countertop cooking equipment, foodwarming equipment, fryers, griddles, hot food
servers, induction cooking and warming systems, ranges, speed cook ovens,
steamers and steam equipment, toasters and ventless cooking
systems.  These products are sold and marketed under the brand
names:  Anets, Blodgett, Blodgett Combi, Blodgett Range, Bloomfield,
CTX, Carter-Hoffmann, CookTek, Frifri, Giga, Holman, Houno, Jade, Lang,
MagiKitch’n, Middleby Marshall, Nu-Vu, Pitco, Southbend, Star, Toastmaster,
TurboChef and Wells.





20


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





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





The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The chief decision maker evaluates
individual segment performance based on operating income.  Management
believes that intersegment sales are made at established arms-length transfer
prices.




Net Sales
Summary


(dollars in
thousands)




Three Months Ended
                    
                    
                    Six Months EndedJul 4, 2009
                    
                    
                    Jun 28, 2008
                    
                    
                    Jul 4, 2009
                    
                    
                    Jun 28, 2008Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    PercentBusiness Divisions:Commercial
      Foodservice
                    
                    $
                    137,264
                    
                    
                    
                    86.5
                    
                    
                    $
                    146,869
                    
                    
                    
                    84.6
                    
                    
                    $
                    300,793
                    
                    
                    
                    88.4
                    
                    
                    $
                    280,885
                    
                    
                    
                    84.0Food
      Processing
                    
                    
                    15,673
                    
                    
                    
                    9.9
                    
                    
                    
                    20,468
                    
                    
                    
                    11.8
                    
                    
                    
                    28,538
                    
                    
                    
                    8.4
                    
                    
                    
                    40,356
                    
                    
                    
                    12.1International
      Distribution(1)
                    
                    
                    12,524
                    
                    
                    
                    7.9
                    
                    
                    
                    15,425
                    
                    
                    
                    8.9
                    
                    
                    
                    24,521
                    
                    
                    
                    7.2
                    
                    
                    
                    31,218
                    
                    
                    
                    9.3Intercompany
      sales (2)
                    
                    
                    (6,860
                    )
                    
                    
                    (4.3
                    )
                    
                    
                    (9,249
                    )
                    
                    
                    (5.3
                    )
                    
                    
                    (13,705
                    )
                    
                    
                    (4.0
                    )
                    
                    
                    (18,063
                    )
                    
                    
                    (5.4
                    )Total
                    
                    $
                    158,601
                    
                    
                    
                    100.0
                    %
                    
                    $
                    173,513
                    
                    
                    
                    100.0
                    %
                    
                    $
                    340,147
                    
                    
                    
                    100.0
                    %
                    
                    $
                    334,396
                    
                    
                    
                    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


21




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





Commercial
                      Foodservice
                    
                    
                    Food
                      Processing
                    
                    
                    International
                      Distribution
                    
                    
                    Corporate
                      and Other(2)
                    
                    
                    Eliminations(3)
                    
                    
                    TotalThree
      months ended July 4, 2009Net
      sales
                    
                    $
                    137,264
                    
                    
                    $
                    15,673
                    
                    
                    $
                    12,524
                    
                    
                    $
                    —
                    
                    
                    $
                    (6,860
                    )
                    
                    $
                    158,601Operating
      income
                    
                    
                    32,793
                    
                    
                    
                    2,170
                    
                    
                    
                    556
                    
                    
                    
                    (8,574
                    )
                    
                    
                    —
                    
                    
                    
                    26,945Depreciation
      and amortization expense
                    
                    
                    2,347
                    
                    
                    
                    313
                    
                    
                    
                    46
                    
                    
                    
                    164
                    
                    
                    
                    —
                    
                    
                    
                    2,870Net
      capital expenditures
                    
                    
                    1,886
                    
                    
                    
                    -
                    
                    
                    
                    94
                    
                    
                    
                    120
                    
                    
                    
                    —
                    
                    
                    
                    2,100Six
      months ended July 4, 2009Net
      sales
                    
                    $
                    300,793
                    
                    
                    $
                    28,538
                    
                    
                    $
                    24,521
                    
                    
                    $
                    —
                    
                    
                    $
                    (13,705
                    )
                    
                    $
                    340,147Operating
      income
                    
                    
                    67,912
                    
                    
                    
                    3,843
                    
                    
                    
                    1,250
                    
                    
                    
                    (18,224
                    )
                    
                    
                    255
                    
                    
                    
                    55,036Depreciation
      and amortization expense
                    
                    
                    7,010
                    
                    
                    
                    661
                    
                    
                    
                    83
                    
                    
                    
                    321
                    
                    
                    
                    —
                    
                    
                    
                    8,075Net
      capital expenditures
                    
                    
                    3,435
                    
                    
                    
                    24
                    
                    
                    
                    153
                    
                    
                    
                    358
                    
                    
                    
                    —
                    
                    
                    
                    3,970Total
      assets
                    
                    
                    699,866
                    
                    
                    
                    64,667
                    
                    
                    
                    25,387
                    
                    
                    
                    37,272
                    
                    
                    
                    (6,135
                    )
                    
                    
                    821,057Long-lived
      assets
                    
                    
                    544,249
                    
                    
                    
                    42,739
                    
                    
                    
                    537
                    
                    
                    
                    12,064
                    
                    
                    
                    —
                    
                    
                    
                    599,589Three
      months ended June 28, 2008Net
      sales
                    
                    $
                    146,869
                    
                    
                    $
                    20,468
                    
                    
                    $
                    15,425
                    
                    
                    $
                    —
                    
                    
                    $
                    (9,249
                    )
                    
                    $
                    173,513Operating
      income
                    
                    
                    37,657
                    
                    
                    
                    3,297
                    
                    
                    
                    1,092
                    
                    
                    
                    (9,707
                    )
                    
                    
                    153
                    
                    
                    
                    32,492Depreciation
      and amortization expense
                    
                    
                    2,786
                    
                    
                    
                    416
                    
                    
                    
                    47
                    
                    
                    
                    80
                    
                    
                    
                    —
                    
                    
                    
                    3,329Net
      capital expenditures
                    
                    
                    545
                    
                    
                    
                    25
                    
                    
                    
                    49
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    619Six
      months ended June 28, 2008Net
      sales
                    
                    $
                    280,885
                    
                    
                    $
                    40,356
                    
                    
                    $
                    31,218
                    
                    
                    $
                    —
                    
                    
                    $
                    (18,063
                    )
                    
                    $
                    334,396Operating
      income
                    
                    
                    68,204
                    
                    
                    
                    6,086
                    
                    
                    
                    2,166
                    
                    
                    
                    (18,149
                    )
                    
                    
                    201
                    
                    
                    
                    58,508Depreciation
      and amortization expense
                    
                    
                    5,674
                    
                    
                    
                    832
                    
                    
                    
                    99
                    
                    
                    
                    257
                    
                    
                    
                    —
                    
                    
                    
                    6,862Net
      capital expenditures
                    
                    
                    2,444
                    
                    
                    
                    76
                    
                    
                    
                    201
                    
                    
                    
                    22
                    
                    
                    
                    —
                    
                    
                    
                    2,743Total
      assets
                    
                    
                    535,556
                    
                    
                    
                    74,047
                    
                    
                    
                    30,805
                    
                    
                    
                    24,810
                    
                    
                    
                    (8,475
                    )
                    
                    
                    656,743Long-lived
      assets
                    
                    
                    370,046
                    
                    
                    
                    37,618
                    
                    
                    
                    724
                    
                    
                    
                    16,228
                    
                    
                    
                    —
                    
                    
                    
                    424,616





(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 arepredominantly
      from the Commercial Foodservice Equipment Group to the International
      Distribution Division.


22





Long-lived
assets by major geographic region are as follows (in thousands):





Jul 4, 2009
                        
                        
                        Jun 28, 2008United
      States and Canada
                        
                        $
                        563,645
                        
                        
                        $
                        401,819Asia
                        
                        
                        1,998
                        
                        
                        
                        1,874Europe
      and Middle East
                        
                        
                        26,369
                        
                        
                        
                        20,923Latin
      America
                        
                        
                        217
                        
                        
                        
                        —Total
      international
                        
                        
                        28,584
                        
                        
                        
                        22,797$
                        592,229
                        
                        
                        $
                        424,616





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
                              
                              
                              Six Months EndedJul 4, 2009
                              
                              
                              Jun 28, 2008
                              
                              
                              Jul 4, 2009
                              
                              
                              Jun 28, 2008United
      States and Canada
                              
                              $
                              134,100
                              
                              
                              $
                              138,619
                              
                              
                              $
                              292,632
                              
                              
                              $
                              271,572Asia
                              
                              
                              5,339
                              
                              
                              
                              9,358
                              
                              
                              
                              10,646
                              
                              
                              
                              16,510Europe
      and Middle East
                              
                              
                              15,777
                              
                              
                              
                              20,489
                              
                              
                              
                              29,353
                              
                              
                              
                              36,860Latin
      America
                              
                              
                              3,385
                              
                              
                              
                              5,047
                              
                              
                              
                              7,516
                              
                              
                              
                              9,454Net
      sales
                              
                              $
                              158,601
                              
                              
                              $
                              173,513
                              
                              
                              $
                              340,147
                              
                              
                              $
                              334,396





12)
            Employee
      Retirement Plans





(a)           Pension
Plans





The
company maintains a non-contributory defined benefit plan for its employees at
Smithville, Tennessee facility, which was acquired as part of the Star
acquisition. Benefits are determined based upon retirement age and years of
service with the company.  This defined benefit plan was frozen on
April 1, 2008 and no further benefits accrue to the participants beyond this
date.  Plan participants will receive or continue to receive payments
for benefits earned on or prior to April 1, 2008 upon reaching retirement
age.





The
company maintains a non-contributory defined benefit plan for its union
employees at the Elgin, Illinois facility. Benefits are determined based upon
retirement age and years of service with the company.  This defined
benefit plan was frozen on April 30, 2002 and no further benefits accrue to the
participants beyond this date.  Plan participants will receive or
continue to receive payments for benefits earned on or prior to April 30, 2002
upon reaching retirement age.  The employees participating in the
defined benefit plan were enrolled in a newly established 401K savings plan on
July 1, 2002, further described below.





23


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 participating on the Board of Directors prior to 2004.  This
plan is not available to any new 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.





(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.





13)
            Restructuring





During
the first quarter the company made the decision and took action to close one of
its manufacturing facilities and transfer production to another of the company’s
manufacturing facilities.  The company anticipates this initiative
will be fully complete by the 2009 third quarter.  The company
recorded expense included within general and administrative expenses in the
condensed consolidated statements of earnings in the first six months of 2009
for severance and employee benefits associated with this
initiative.  These costs are summarized as follows (in
thousands):





Employee-related
      severance and benefit costs incurred
                  
                  $
                  2,300Payments
                  
                  
                  (189
                  )Balance
      July 4, 2009
                  
                  $
                  2,111


24





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 2008 Annual Report on Form 10-K 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.


25





Net Sales
Summary


(dollars in
thousands)





Three
      Months Ended
                    
                    
                    Six
      Months EndedJul
      4, 2009
                    
                    
                    Jun
      28, 2008
                    
                    
                    Jul
      4, 2009
                    
                    
                    Jun
      28, 2008Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    PercentBusiness
      Divisions:Commercial
      Foodservice
                    
                    $
                    137,264
                    
                    
                    
                    86.5
                    
                    
                    $
                    146,869
                    
                    
                    
                    84.6
                    
                    
                    $
                    300,793
                    
                    
                    
                    88.4
                    
                    
                    $
                    280,885
                    
                    
                    
                    84.0Food
      Processing
                    
                    
                    15,673
                    
                    
                    
                    9.9
                    
                    
                    
                    20,468
                    
                    
                    
                    11.8
                    
                    
                    
                    28,538
                    
                    
                    
                    8.4
                    
                    
                    
                    40,356
                    
                    
                    
                    12.1International
      Distribution(1)
                    
                    
                    12,524
                    
                    
                    
                    7.9
                    
                    
                    
                    15,425
                    
                    
                    
                    8.9
                    
                    
                    
                    24,521
                    
                    
                    
                    7.2
                    
                    
                    
                    31,218
                    
                    
                    
                    9.3Intercompany
      sales (2)
                    
                    
                    (6,860
                    )
                    
                    
                    (4.3
                    )
                    
                    
                    (9,249
                    )
                    
                    
                    (5.3
                    )
                    
                    
                    (13,705
                    )
                    
                    
                    (4.0
                    )
                    
                    
                    (18,063
                    )
                    
                    
                    (5.4
                    )Total
                    
                    $
                    158,601
                    
                    
                    
                    100.0
                    %
                    
                    $
                    173,513
                    
                    
                    
                    100.0
                    %
                    
                    $
                    340,147
                    
                    
                    
                    100.0
                    %
                    
                    $
                    334,396
                    
                    
                    
                    100.0
                    %





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





(2)
            Represents the elimination of
      salesfrom 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
                  
                  
                  Six Months EndedJul 4, 2009
                  
                  
                  Jun 28, 2008
                  
                  
                  Jul 4, 2009
                  
                  
                  Jun 28, 2008Net
      sales
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %Cost
      of sales
                  
                  
                  61.3
                  
                  
                  
                  61.4
                  
                  
                  
                  61.7
                  
                  
                  
                  62.3Gross
      profit
                  
                  
                  38.7
                  
                  
                  
                  38.6
                  
                  
                  
                  38.3
                  
                  
                  
                  37.7Selling,
      general and administrative expenses
                  
                  
                  21.7
                  
                  
                  
                  19.9
                  
                  
                  
                  22.1
                  
                  
                  
                  20.2Income
      from operations
                  
                  
                  17.0
                  
                  
                  
                  18.7
                  
                  
                  
                  16.2
                  
                  
                  
                  17.5Net
      interest expense and deferred financing amortization
                  
                  
                  1.8
                  
                  
                  
                  1.8
                  
                  
                  
                  1.8
                  
                  
                  
                  2.0Other 
      expense, net
                  
                  
                  0.3
                  
                  
                  
                  0.2
                  
                  
                  
                  0.2
                  
                  
                  
                  0.3Earnings
      before income taxes
                  
                  
                  14.9
                  
                  
                  
                  16.7
                  
                  
                  
                  14.2
                  
                  
                  
                  15.2Provision
      for income taxes
                  
                  
                  6.3
                  
                  
                  
                  6.8
                  
                  
                  
                  6.0
                  
                  
                  
                  6.1Net
      earnings
                  
                  
                  8.6
                  %
                  
                  
                  9.9
                  %
                  
                  
                  8.2
                  %
                  
                  
                  9.1
                  %


26


Three Months Ended July 4,
2009 Compared to Three Months Ended June 28,
2008





NET
SALES.Net sales for the second
quarter of fiscal 2009 were $158.6 million as compared to $173.5 million in the
second quarter of 2008.





·
            Net
      sales at the Commercial Foodservice Equipment Group amounted to $137.3
      million in the second quarter of 2009 as compared to $146.9 million in the
      prior year quarter.  Net sales from the acquisitions of TurboChef,
      which was acquired on January 5, 2009, CookTek, which was acquired on
      April 26, 2009, and Anets, which was acquired on April 30, 2009, accounted
      for an increase of $21.8 million during the second quarter of 2009. 
      Excluding the impact of acquisitions, net sales of commercial foodservice
      equipment decreased $31.4 million.





·
            Net
      sales for the Food Processing Equipment Group amounted to $15.7 million in
      the second quarter of 2009 as compared to $20.5 million in the prior year
      quarter.





·
            Net
      sales at the International Distribution Division during the second quarter
      of 2009 decreased by $2.9 million to $12.5 million reflecting lower sales
      in Asia, Europe and Latin America.





Sales at
all three business segments continued to be impacted by the global
recession.  Chain restaurant customers continue to have lower restaurant
openings.  Additionally, restaurant operators and food processing customers
have deferred the replacement and upgrade of equipment given the current
economic conditions.





GROSS
PROFIT.Gross profit decreased to
$61.3 million in the second quarter of 2009 from $67.0 million in the prior year
period, reflecting the impact of lower sales volumes.  The gross margin
rate was 38.7% in the second quarter of 2009 as compared to 38.6% in the prior
year quarter.  The net change in the gross margin rate
reflects:





·
            Improved
      margins at certain of the newly acquired operating companies which have
      improved due to acquisition integration
  initiatives.





·
            Reduced
      material costs associated with steel pricess and other supply chain
      initiatives.





·
            The
      adverse impact of lower sales
volumes.





SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.Combined selling, general,
and administrative expenses decreased slightly from $34.5 million in the second
quarter of 2008 to $34.4 million in the second quarter of 2009.  As a
percentage of net sales, operating expenses increased from 19.9% in the second
quarter of 2008 to 21.7% in the second quarter of 2009. Selling expenses
remained the same at $16.7 million in the second quarter of 2009.  Selling
expenses reflect increased costs of $2.9 million associated the acquisitions of
TurboChef, CookTek and Anets offset by reduced costs of $1.7 million associated
with commission expense due to lower sales and lower commission rates. General
and administrative expenses decreased from $17.8 million in the second quarter
of 2008 to $17.7 million in the second quarter of 2009.  General and
administrative expenses reflect $2.1 million of costs associated with the
acquired operations of TurboChef, CookTek and Anets offset by lower incentive
based compensation and other expenses.


27





NON-OPERATING
EXPENSES.Interest and deferred financing amortization costs
decreased to $2.8 million in the second quarter of 2009 as compared to $3.0
million in the second quarter of 2008, due to lower interest rates on increased
borrowings resulting from recent acquisitions.  Other expense was $0.5
million in the second quarter of 2009, which primarily consisted of foreign
exchange losses, as compared to $0.6 million in the prior year second
quarter.





INCOME
TAXES.A tax provision of $9.9
million, at an effective rate of 42%, was recorded during the second quarter of
2009, as compared to a $11.8 million provision at a 41% effective rate in the
prior year quarter.





Six Months Ended July 4,
2009 Compared to Six Months Ended June 28,
2008





NET
SALES.Net sales for the
six-month period ended July 4, 2009 were $340.1 million as compared to $334.4
million in the six-month period ended June 28, 2008.





·
            Net
      sales at the Commercial Foodservice Equipment Group for the six-month
      period ended July 4, 2009 amounted to $300.8 million as compared to $280.9
      million for the six-month period ended June 28, 2008. Net sales from the
      acquisitions of TurboChef, which was acquired on January 5, 2009, CookTek,
      which was acquired on April 26, 2009 and Anets, which was acquired on
      April 30, 2009 accounted for an increase of $44.7 million during the
      second quarter of 2009.  Excluding the impact of acquisitions, net
      sales of commercial foodservice equipment for the six-month period ended
      July 4, 2009 decreased by $24.8 million as compared to the six-month
      period ended June 28, 2008.   Sales of the Commercial
      Foodservice Equipment Group were impacted by reduced restaurant openings
      and deferred purchases to replace and upgrade existing equipment. 
      This decline was offset in part by a large equipment rollout with a major
      chain customer to support a new menu
item.





·
            Net
      sales for the Food Processing Equipment Group amounted to $28.5 million in
      the six-month period ended July 4, 2009 as compared to $40.4 million in
      the prior year period.  Net sales of food processing equipment
      continued to be impacted by the adverse economic
    conditions.





·
            Net
      sales at the International Distribution Division for the six-month period
      ended July 4, 2009 decreased by $6.7 million to $24.5 million or 21.5%,
      reflecting lower sales in Asia, Europe and Latin America.  Sales
      continue to be affected by adverse economic conditions internationally and
      reduced store openings by the U.S. chains in the international
      markets.


28





GROSS
PROFIT.Gross profit increased to
$130.1 million in the six-month period ended July 4, 2009 from $125.9 million in
the six-month period ended June 28, 2008, reflecting the impact of higher sales
volumes.  The gross margin rate was 38.3% in the six-month period ended
July 4, 2009 as compared to 37.7% in the six-month period ended June 28,
2008.  The net increase in the gross margin rate reflects:





·
            Improved
      margins at certain of the newly acquired operating companies which have
      improved due to acquisition integration
  initiatives.





·
            Reduced
      material costs associated with steel prices and other supply chain
      initiatives.





·
            The
      adverse impact of lower sales
volumes.





SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.Combined selling, general,
and administrative expenses increased from $67.4 million in the six–month period
ended June 28, 2008 to $75.1 million in the six-month period ended July 4,
2009.  As a percentage of net sales, operating expenses increased from
20.2% to 22.1% in the six-month period ended July 4, 2009. Selling expenses
increased slightly from $32.9 million in the six-month period ended June 28,
2008 to $33.0 million in the six month period ended July 4, 2009.  Selling
expenses reflect increased costs of $5.9 million associated the acquisitions of
TurboChef, CookTek and Anets offset in part by reduced costs of $4.1 million
associated with commission expense due to lower sales and lower commission
rates. General and administrative expenses increased from $34.5 million in the
six-month period ended June 28, 2008 to $42.1 million in the six-month period
ended June 28, 2008.  General and administrative expenses reflect $5.7
million of costs associated with the acquired operations of TurboChef, CookTek
and Anets and $2.4 million associated with the closure and consolidation of a
manufacturing facility.





NON-OPERATING
EXPENSES.Interest and deferred financing amortization costs
decreased to $6.0 million in the six-month period ended July 4, 2009 as compared
to $6.7 million in the six-month period ended June 28, 2008, due to lower
interest rates on increased borrowings resulting from recent acquisitions. 
Other expense was $0.7 million in the six-month period ended July 4, 2009, which
primarily consisted of foreign exchange losses, as compared to $0.9 million in
the six-month period ended June 28, 2008.





INCOME
TAXES.A tax provision of $20.5
million, at an effective rate of 42%, was recorded during the six-month period
ended July 4, 2009, as compared to a $20.5 million provision at a 40% effective
rate in the six-month period ended June 28, 2008.


29





Financial Condition and
Liquidity





During
the six months ended July 4, 2009, cash and cash equivalents increased by $1.9
million to $8.0 million at July 4, 2009  from $6.1 million at January 3,
2009.  Net borrowings increased from $234.7 million at January 3, 2009 to
$321.1 million at July 4, 2009.





OPERATING
ACTIVITIES.Net cash provided by
operating activities was $47.2 million for the six month period ended July 4,
2009 compared to $43.0 million for the six-month period ended June 28,
2008.





During
the six months ended July 4, 2009, changes in working capital included a $19.4
million decrease in accounts receivable, a $9.7 million decrease in inventory,
and a $6.6 million decrease in accounts payable.  These changes in working
capital reflect the completion and collection of payment related to a large
chain customer order that was completed during the first half of the year. 
Prepaid and other assets decreased $1.4 million. Accrued expenses and other
non-current liabilities also decreased by $18.0 million reflecting the payment
of transaction costs associated with the TurboChef acquisition and obligations
under prior year sales rebate and incentive compensation program.





INVESTING
ACTIVITIES.During the six months
ended July 4, 2009, net cash used in investing activities amounted to $131.5
million.  This includes cash utilized to complete the acquisitions of
TurboChef of $116.1 million, CookTek of $8.0 million, Anets of $3.4 million and
$4.0 million of capital expenditures associated with additions and upgrades of
production equipment.





FINANCING
ACTIVITIES.Net cash flows provided by financing activities were
$86 million during the six months ended July 4, 2009.  The net increase in
debt includes $ 86.7 million in net borrowings under the company’s $497.5
million revolving credit facility utilized to fund the company’s investing
activities.





At July
4, 2009, 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.


30





Recently Issued Accounting
Standards





In
December 2007, the FASB 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 adopted this statement on January 5, 2009,
including the acquisition of TurboChef.  Accordingly, the company has
applied the principles of SFAS No. 141R in valuing this acquisition.
 Middleby shares of common stock which were issued in conjunction with this
transaction, were valued using the share price at the time of closing to
determine the value of the purchase price.  Additionally, the company
incurred approximately $4.6 million in transaction related expenses which were
recorded as a deferred acquisition cost reported as an asset on the balance
sheet on January 3, 2009.  In accordance with SFAS No. 141R, the company
has applied a retrospective application and appropriately reflected the expense
incurred in 2008 as a reduction in retained earnings in accordance with FASB
Statement No. 154, “Accounting Changes and Error Corrections,” on reporting a
change in accounting principle.





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.  Adoption of SFAS
No. 160 did not have a material impact on the company’s financial position,
results of operations or cash flows.





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 has
complied with the disclosure requirements of SFAS No. 161.





In
December 2008, the FASB issued FASB Staff Position, or FSP, No. 132(R)-1,
“Employers’ Disclosures about Postretirement Benefit Plan Assets.” This FSP
amends SFAS 132(R), “Employer’s Disclosures about Pensions and Other
Postretirement Benefits,” to require additional disclosures about assets held in
an employer’s defined benefit pension or other postretirement plan. This FSP
replaces the requirement to disclose the percentage of the fair value of total
plan assets for each major category of plan assets, such as equity securities,
debt securities, real estate and all other assets, with the fair value of each
major asset category as of each annual reporting date for which a financial
statement is presented. It also amends SFAS No. 132(R) to require
disclosure of the level within the fair value hierarchy in which each major
category of plan assets falls, using the guidance in SFAS No. 157, “Fair
Value Measurements.” This FSP is applicable to employers that are subject to the
disclosure requirements of SFAS No. 132(R) and is generally effective for
fiscal years ending after December 15, 2009. The company will comply with
the disclosure provisions of this FSP after its effective date.


31





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events.” The objective of this
statement is to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This statement defines the period
after the balance sheet during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events occurring after the balances sheet date in its financial
statements and required disclosures. This statement is effective for interim or
annual financial periods ending after June 15, 2009.  The company has
complied with the disclosure requirements of SFAS No. 165. The adoption of SFAS
No. 165 did not have a material impact on the company’s financial position,
results of operations or cash flows.





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles.” This statement
replaces SFAS No. 162 and sets forth a new authoritative guidance for U.S.
generally accepted accounting principles (“GAAP”) applicable to nongovernmental
entities.  SFAS No. 168 will modify the GAAP hierarchy established under
SFAS No.162 to include only two levels of GAAP: authoritative and
nonauthoritative. This statement is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. The company will
comply with the reporting requirements of SFAS No. 168 as of the effective
date.





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.


32





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.





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.


33





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.





Contractual
Obligations





The
company's contractual cash payment obligations as of July 4, 2009 are set forth
below (in thousands):





Amounts
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    TotalDue
      Sellers
                    
                    
                    
                    
                    
                    
                    
                    
                    Idle
                    
                    
                    ContractualFrom
                    
                    
                    Long-term
                    
                    
                    Operating
                    
                    
                    Facility
                    
                    
                    CashAcquisitions
                    
                    
                    Debt
                    
                    
                    Leases
                    
                    
                    Leases
                    
                    
                    ObligationsLess
      than 1 year
                    
                    $
                    2,465
                    
                    
                    $
                    5,980
                    
                    
                    $
                    3,874
                    
                    
                    $
                    431
                    
                    
                    $
                    12,7501-3
      years
                    
                    
                    5,156
                    
                    
                    
                    428
                    
                    
                    
                    5,175
                    
                    
                    
                    855
                    
                    
                    
                    11,6143-5
      years
                    
                    
                    3,025
                    
                    
                    
                    313,428
                    
                    
                    
                    957
                    
                    
                    
                    879
                    
                    
                    
                    318,289After
      5 years
                    
                    
                    —
                    
                    
                    
                    1,223
                    
                    
                    
                    —
                    
                    
                    
                    506
                    
                    
                    
                    1,728$
                    10,646
                    
                    
                    $
                    321,059
                    
                    
                    $
                    10,006
                    
                    
                    $
                    2,671
                    
                    
                    $
                    344,381





The
company has an obligation to make $3.3 million of purchase price payments to the
sellers of Giga that were deferred in conjunction with the acquisition. The
company has an obligation to make certain contingent consideration payments to
the sellers of CookTek. The fair value amount of these payments was $7.4 million
as of July 4, 2009.


34





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 $6.1 million in outstanding letters of credit, which expire on April
4, 2010, 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 through July 2009.  The obligation presented
above does not reflect any anticipated sublease income from the
facilities.





The
projected benefit obligation of the company’s defined benefit plans exceeded the
plans’ assets by $9.5 million at the end of 2008 as compared to $4.6 million at
the end of 2007.  The unfunded benefit obligations were comprised of a $3.4
million under funding of the company’s Smithville plan, which was acquired as
part of the Star acquisition, a $1.0 million under funding of the company's
union plan and $5.1 million of under funding of the company's director
plans.  The company does not expect to contribute to the director plans in
2009.  The company expects to continue to make minimum contributions to the
Smithville and Elgin plans as required by ERISA, which are expected to be $0.3
million and $0.1 million, respectively in 2009.





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.


35





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)July
      4, 2010
                  
                  $
                  —
                  
                  
                  $
                  5,980July
      4, 2011
                  
                  
                  —
                  
                  
                  
                  214July
      4, 2012
                  
                  
                  —
                  
                  
                  
                  214July
      4, 2013
                  
                  
                  —
                  
                  
                  
                  313,214July
      4, 2014 and thereafter
                  
                  
                  —
                  
                  
                  
                  1,437$
                  —
                  
                  
                  $
                  321,059





During
the fourth quarter of 2007 the company entered into a new senior secured credit
facility that matures on December 2012. This agreement was later amended in
August 2008 to provide for the acquisition of TurboChef. Terms of the senior
credit agreement provide for $497.5 million of availability under a revolving
credit line.  As of July 4, 2009, the company had $313.0 million of
borrowings outstanding under this facility.  The company also has $6.1
million in outstanding letters of credit, which reduces the borrowing
availability under the revolving credit line.  Remaining borrowing
availability under this facility, which is also reduced by the company’s foreign
borrowings, was $170.4 million at July 4, 2009.





Borrowings
under the senior secured credit facility are assessed at an interest rate 1.25%
above LIBOR for long-term borrowings or at the higher of the Prime rate and the
Federal Funds Rate.  At July 4, 2009 the average interest rate on the
senior debt amounted to 1.60%. 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 July 4, 2009.





In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On July 4, 2009 these facilities amounted to
$4.0 million in U.S. dollars, including $2.0 million outstanding under a
revolving credit facility and $2.0 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 4.65% on July 4, 2009. The term loan matures in 2013 and the
interest rate is assessed at 6.14%.


36





In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings  denominated in Euro.  On July 4, 2009
these facilities amounted to $4.0 million in U.S. 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 July 4, 2009 the company had the
following interest rate swaps in effect:





FixedNotional
                                              
                                              Interest
                                              
                                              Effective
                                              
                                              MaturityAmount
                                              
                                              Rate
                                              
                                              Date
                                              
                                              Date$
                                              25,000,000
                                              
                                              
                                              3.67
                                              %
                                              9/26/2008
                                              
                                              9/01/2011$
                                              25,000,000
                                              
                                              
                                              3.35
                                              %
                                              1/14/2008
                                              
                                              1/14/2010$
                                              20,000,000
                                              
                                              
                                              2.80
                                              %
                                              9/08/2008
                                              
                                              9/06/2009$
                                              20,000,000
                                              
                                              
                                              3.35
                                              %
                                              6/10/2008
                                              
                                              6/10/2010$
                                              15,000,000
                                              
                                              
                                              3.13
                                              %
                                              9/08/2008
                                              
                                              9/06/2010$
                                              10,000,000
                                              
                                              
                                              2.78
                                              %
                                              2/06/2008
                                              
                                              2/06/2010$
                                              10,000,000
                                              
                                              
                                              3.03
                                              %
                                              2/06/2008
                                              
                                              2/06/2011$
                                              10,000,000
                                              
                                              
                                              3.46
                                              %
                                              9/08/2008
                                              
                                              9/06/2011$
                                              10,000,000
                                              
                                              
                                              5.03
                                              %
                                              3/03/2006
                                              
                                              12/21/2009$
                                              10,000,000
                                              
                                              
                                              2.92
                                              %
                                              2/01/2008
                                              
                                              2/01/2010$
                                              10,000,000
                                              
                                              
                                              3.59
                                              %
                                              6/10/2008
                                              
                                              6/10/2011


37





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 July 4, 2009, the company was in compliance with all covenants
pursuant to its borrowing agreements.





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 July 4, 2009, the fair value of these
instruments was a loss of $4.8 million.  The change in fair value of these
swap agreements in the first six months of 2009 was a gain of $0.4 million, net
of taxes.





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 ended July 4,
2009.


38





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
July 4, 2009, 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 thecompany's disclosure
controls and procedures were effective as of the end of this
period.





During
the quarter ended July 4, 2009, 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.


39





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 six months ended July 4, 2009, except as
follows:





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 ProgramApril
      5 to May 2, 2009
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                627,332May
      3, 2009 to May 30, 2009
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                627,332May
      31, 2009 to July 4, 2009
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                627,332Quarter
      ended July 4, 2009
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                627,332





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
July 4, 2009, 1,172,668 shares had been purchased under the 1998 stock
repurchase program.





Item
4.  Submission of Matters to a Vote of Security Holders





At the
company’s annual meeting of stockholders held on May 7, 2009, the company’s
stockholders approved proposals to: (i) elect eight directors to hold office
until the company’s 2010 annual meeting, (ii) ratify the selection of Deloitte
& Touche LLP as the independent public accountants of the company for the
current fiscal year ending January 2, 2010, (iii) approve performance goals
under the company’s 2007 Stock Incentive Plan and (iv) approve an amendment to
the company’s 2007 Stock Incentive Plan.  The voting results were as
follows:





i)
            Election
      of Directors





Nominee
                  
                  For
                  
                  
                  Withheld
                  
                  
                  AbstainedBassoul
                  
                  
                  13,097,207
                  
                  
                  
                  3,293,450
                  
                  
                  
                  0Lamb
                  
                  
                  15,945,487
                  
                  
                  
                  1,075,170
                  
                  
                  
                  0Levenson
                  
                  
                  15,841,645
                  
                  
                  
                  1,179,012
                  
                  
                  
                  0Miller
                  
                  
                  16,302,733
                  
                  
                  
                  717,924
                  
                  
                  
                  0O'Brien
                  
                  
                  16,465,339
                  
                  
                  
                  555,318
                  
                  
                  
                  0Putnam
                  
                  
                  15,788,375
                  
                  
                  
                  1,232,282
                  
                  
                  
                  0Streeter
                  
                  
                  15,784,069
                  
                  
                  
                  1,231,588
                  
                  
                  
                  0Yohe
                  
                  
                  16,303,611
                  
                  
                  
                  717,046
                  
                  
                  
                  0





ii)
            Ratification
      of Selection of Independent Public
Accountants





For
                  
                  Withheld
                  
                  
                  Abstained16,320,337
                  
                  
                  666,825
                  
                  
                  
                  33,495


40





iii)
            Approval
      of performance goals under the 2007 Stock Incentive
  Plan





For
                    
                    Withheld
                    
                    
                    Abstained
                    
                    
                    Broker Non-Votes13,467,297
                    
                    
                    399,438
                    
                    
                    
                    40,449
                    
                    
                    
                    3,113,473





iv)
            Approval
      of an amendment to the 2007 Stock Incentive
Plan





For
                  
                  Withheld
                  
                  
                  Abstained
                  
                  
                  Broker Non-Votes10,772,121
                  
                  
                  3,098,936
                  
                  
                  
                  36,127
                  
                  
                  
                  3,113,473


41





Item
6.  Exhibits





Exhibits
– The following exhibits are filed herewith:





Exhibit
      10.1*-
              The
      Middleby Corporation 2007 Stock Incentive Plan, as amended (incorporated
      by reference to Exhibit 10.1 to the company’s Current Report on Form 8-K
      filed May 13, 2009.





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).





* 
Designates management contract or compensation plan.




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
                                August 13, 2009
                                
                                By:
                                /s/  Timothy J.
    FitzGeraldTimothy
      J. FitzGeraldVice
      President,Chief
      Financial
Officer


43





EXHIBIT
INDEX





Exhibit
      10.1*-
              The
      Middleby Corporation 2007 Stock Incentive Plan, as amended (incorporated
      by reference to Exhibit 10.1 to the company’s Current Report on Form 8-K
      filed May 13, 2009.





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).





* 
Designates management contract or compensation plan.


44