**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 June 30, 2007**
 
 or
 oTransition
        Report
        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
        1934
 
 Commission
        File No. 1-9973
 
 **THE
        MIDDLEBY CORPORATION**
 (Exact
        Name of Registrant as Specified in its Charter)
   **Delaware**
              
              **36-3352497**(State
                  or Other Jurisdiction of
              
              (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 is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange
        Act.
 Large
        accelerated filer o Accelerated
        filer ý Non-accelerated
        filer o
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).  Yes o No ý
 
 
 As
        of
        August 3, 2007, there were 16,590,696 shares of the registrant's common
        stock outstanding.
  
  **THE
        MIDDLEBY CORPORATION AND SUBSIDIARIES**
 
 **QUARTER
        ENDED JUNE 30, 2007**
 
 INDEX
 DESCRIPTION
                
                PAGEPART
                    I. FINANCIAL INFORMATIONItem
                    1.
                
                
                
                Condensed
                    Consolidated Financial Statements (unaudited)CONDENSED
                    CONSOLIDATED BALANCE SHEETS
                
                
                1June
                    30, 2007 and December 30, 2006CONDENSED
                    CONSOLIDATED STATEMENTS OF EARNINGS
                
                
                2June
                    30, 2007 and July 1, 2006CONDENSED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                
                
                3June
                    30, 2007 and July 1, 2006NOTES
                    TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                
                
                4Item
                    2.
                
                
                
                
                Management's
                    Discussion and Analysis of Financial Condition and Results of
                    Operations
                
                
                18Item
                    3.
                
                
                
                
                Quantitative
                    and Qualitative Disclosures About Market Risk
                
                
                28Item
                    4.
                
                
                
                
                Controls
                    and Procedures
                
                
                31PART
                    II. OTHER INFORMATIONItem
                    1A.
                
                
                
                
                Risk
                    Factors
                
                
                32Item
                    2.
                
                
                
                
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                
                
                32Item
                    4.
                
                
                
                
                Submission
                      of Matters to a Vote of Security Holders
                
                
                32Item
                    6.
                
                
                
                
                Exhibits
                
                
                33
  
  **PART
        I. FINANCIAL INFORMATION**
  **Item
        1. Condensed Consolidated Financial Statements**
 
 **THE
        MIDDLEBY CORPORATION AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **(In
        Thousands, Except Share Amounts)**
 **(Unaudited)**
 
 **ASSETS**
              
              Jun.
                  30, 2007
              
              Dec.
                  30, 2006Current
                  assets:Cash
                  and cash equivalents
              
              $
              5,791
              
              $
              3,534Accounts
                  receivable, net of reserve fordoubtful
                  accounts of $5,834 and $5,101
              
              
              56,343
              
              
              51,580Inventories,
                  net
              
              
              58,679
              
              
              47,292Prepaid
                  expenses and other
              
              
              2,536
              
              
              3,289Prepaid
                  taxes
              
              
              342
              
              
              1,129Current
                  deferred taxes
              
              
              10,851
              
              
              10,851Total
                  current assets
              
              
              134,542
              
              
              117,675Property,
                  plant and equipment, net ofaccumulated
                  depreciation of $38,712 and $37,006
              
              
              32,124
              
              
              28,534Goodwill
              
              
              110,942
              
              
              101,258Other
                  intangibles
              
              
              36,200
              
              
              35,306Other
                  assets
              
              
              2,113
              
              
              2,249Total
                  assets
              
              $
              315,921
              
              $
              285,022**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Current
                  maturities of long-term debt
              
              $
              16,572
              
              $
              16,838Accounts
                  payable
              
              
              24,122
              
              
              19,689Accrued
                  expenses
              
              
              59,114
              
              
              69,636Total
                  current liabilities
              
              
              99,808
              
              
              106,163Long-term
                  debt
              
              
              68,856
              
              
              65,964Long-term
                  deferred tax liability
              
              
              3,749
              
              
              5,867Other
                  non-current liabilities
              
              
              14,059
              
              
              6,455Stockholders'
                  equity:Preferred
                  stock, $0.01 par value; nonvoting; 2,000,000 shares authorized;
                  none
                  issued
              
              
              --
              
              
              --Common
                  stock, $0.005 par value; 47,500,000 shares authorized; 20,445,740
                  and
                  19,760,490 shares issued in 2007 and 2006, respectively
              
              
              118
              
              
              117Paid-in
                  capital
              
              
              80,774
              
              
              73,743Treasury
                  stock at cost; 3,855,044shares
                  in 2007 and 2006, respectively
              
              
              (89,641
              )
              
              (89,641
              )Retained
                  earnings
              
              
              137,584
              
              
              115,917Accumulated
                  other comprehensive income
              
              
              614
              
              
              437Total
                  stockholders' equity
              
              
              129,449
              
              
              100,573Total
                  liabilities and stockholders' equity
              
              $
              315,921
              
              $
              285,022
  See
        accompanying notes
 1
  **THE
        MIDDLEBY CORPORATION AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF EARNINGS**
 **(In
        Thousands, Except Per Share Amounts)**
 **(** **Unaudited** **)**
  **Three
                  Months Ended**
              
              
              **Six
                  Months Ended****Jun.
                  30, 2007**
              
              
              **Jul.
                  1, 2006**
              
              
              **Jun.
                  30, 2007**
              
              
              **Jul.
                  1, 2006****Net
                  sales**
              
              **$**
              **113,248**
              
              **$**
              **104,849**
              
              **$**
              **218,943**
              
              **$**
              **201,598****Cost
                  of sales**
              
              
              **68,362**
              
              
              **63,122**
              
              
              **132,952**
              
              
              **124,347****Gross
                  profit**
              
              
              **44,886**
              
              
              **41,727**
              
              
              **85,991**
              
              
              **77,251****Selling
                  expenses**
              
              
              **11,952**
              
              
              **10,767**
              
              
              **23,068**
              
              
              **20,892****General
                  and administrative expenses**
              
              
              **11,732**
              
              
              **10,681**
              
              
              **22,915**
              
              
              **20,932****Income
                  from operations**
              
              
              **21,202**
              
              
              **20,279**
              
              
              **40,008**
              
              
              **35,427****Net
                  interest expense and deferred financing amortization**
              
              
              **1,273**
              
              
              **2,031**
              
              
              **2,517**
              
              
              **3,827****Other
                  (income) expense, net**
              
              
              **(630**
              **)**
              
              **165**
              
              
              **(737**
              **)**
              
              **72****Earnings
                  before income taxes**
              
              
              **20,559**
              
              
              **18,083**
              
              
              **38,228**
              
              
              **31,528****Provision
                  for income taxes**
              
              
              **7,977**
              
              
              **6,993**
              
              
              **14,926**
              
              
              **12,387****Net
                  earnings**
              
              **$**
              **12,582**
              
              **$**
              **11,090**
              
              **$**
              **23,302**
              
              **$**
              **19,141****Net
                  earnings per share:****Basic**
              
              **$**
              **0.80**
              
              **$**
              **0.73**
              
              **$**
              **1.50**
              
              **$**
              **1.26****Diluted**
              
              **$**
              **0.75**
              
              **$**
              **0.67**
              
              **$**
              **1.39**
              
              **$**
              **1.16****Weighted
                  average number of shares****Basic**
              
              
              **15,641**
              
              
              **15,246**
              
              
              **15,576**
              
              
              **15,240****Dilutive
                  stock options****1,2**
              
              
              **1,234**
              
              
              **1,282**
              
              
              **1,232**
              
              
              **1,282****Diluted**
              
              
              **16,875**
              
              
              **16,528**
              
              
              **16,808**
              
              
              **16,522**
  1  There
          were
          no anti-dilutive stock options excluded from common stock equivalents for
          the
          three and six month periods ended June 30, 2007.
 2 There
          were
          7,000 anti-dilutive stock options excluded from common stock equivalents
          in the
          three and six months ended July 1, 2006.
 
 See
          accompanying notes
 2
  **THE
        MIDDLEBY CORPORATION AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(In
        Thousands)**
 **(** **Unaudited** **)**
  **Six
                    Months Ended****Jun.
                    30, 2007**
                
                **Jul.1,
                    2006****Cash
                    flows from operating activities-****Net
                    earnings**
                
                **$**
                **23,302**
                
                **$**
                **19,141****Adjustments
                    to reconcile net earnings to cash **provided
                    by operating activities:******Depreciation
                    and amortization**
                
                
                **2,747**
                
                
                **2,433****Deferred
                    taxes**
                
                
                **32**
                
                
                **(244**
                **)****Non-cash
                    share-based compensation**
                
                
                **3,261**
                
                
                **2,320****Cash
                    effects of changes in -****Accounts
                    receivable, net**
                
                
                **1,489**
                
                
                **(9,258**
                **)****Inventories,
                    net**
                
                
                **(2,771**
                **)**
                
                **(2,668**
                **)****Prepaid
                    expenses and other assets**
                
                
                **1,529**
                
                
                **1,342****Accounts
                    payable**
                
                
                **1,019**
                
                
                **2,149****Accrued
                    expenses and other liabilities**
                
                
                **(8,201**
                **)**
                
                **(1,456**
                **)****Net
                    cash provided by (used in) operating activities**
                
                
                **22,407**
                
                
                **13,759****Cash
                    flows from investing activities-****Net
                    additions to property and equipment**
                
                
                **(1,069**
                **)**
                
                **(882**
                **)****Acquisition
                    of Alkar**
                
                
                **--**
                
                
                **(1,500**
                **)****Acquisition
                    of Jade**
                
                
                **(7,391**
                **)**
                
                **--****Acquisition
                    of Carter Hoffmann**
                
                
                **(15,928**
                **)**
                
                **--****Net
                    cash (used in) investing activities**
                
                
                **(24,388**
                **)**
                
                **(2,382**
                **)****Cash
                    flows from financing activities-****Net
                    p****roceeds
                    (repayments) under revolving credit facilities**
                
                
                **10,900**
                
                
                **(5,750**
                **)****(Repayments)
                    under senior secured bank notes**
                
                
                **(7,500**
                **)**
                
                **(6,250**
                **)****(Repayments)
                    under foreign bank loan**
                
                
                **(904**
                **)**
                
                **(101**
                **)****(Repayments)
                    under note agreement**
                
                
                **--**
                
                
                **(149**
                **)****Net
                    proceeds from stock issuances**
                
                
                **1,687**
                
                
                **59****Net
                    cash provided by (used in) financing activities**
                
                
                **4,183**
                
                
                **(12,191**
                **)****Effect
                    of exchange rates on cash and cash equivalents**
                
                
                **55**
                
                
                **62****Changes
                    in cash and cash equivalents-****Net
                    increase (decrease) in cash and cash equivalents**
                
                
                **2,257**
                
                
                **(752**
                **)****Cash
                    and cash equivalents at beginning of year**
                
                
                **3,534**
                
                
                **3,908****Cash
                    and cash equivalents at end of quarter**
                
                **$**
                **5,791**
                
                **$**
                **3,156****Supplemental
                    disclosure of cash flow information:****Interest
                    paid**
                
                **$**
                **2,518**
                
                **$**
                **3,313****Income
                    tax payments**
                
                **$**
                **13,449**
                
                **$**
                **5,700**
  
 See
        accompanying notes
  3
  **THE
        MIDDLEBY CORPORATION AND SUBSIDIARIES**
 
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **June
        30, 2007**
 **(** **Unaudited** **)**
 
 **1)**
              **Summary
                  of Significant Accounting
                  Policies**
 
 **A)**  **Basis
        of Presentation**
 
 The
        condensed consolidated financial statements have been prepared by The Middleby
        Corporation (the "company"), pursuant to the rules and regulations of the
        Securities and Exchange Commission. The financial statements are unaudited
        and
        certain information and footnote disclosures normally included in financial
        statements prepared in accordance with accounting principles generally accepted
        in the United States of America have been condensed or omitted pursuant to
        such
        rules and regulations, although the company believes that the disclosures
        are
        adequate to make the information not misleading. These financial statements
        should be read in conjunction with the financial statements and related notes
        contained in the company's 2006 Form 10-K.
 
 In
        the
        opinion of management, the financial statements contain all adjustments
        necessary to present fairly the financial position of the company as of June
        30,
        2007 and December 30, 2006, and the results of operations for the six months
        ended June 30, 2007 and July 1, 2006 and cash flows for the six months ended
        June 30, 2007 and July 1, 2006.
   **B)**  **Share-Based
        Compensation**
 
 Share-based
        compensation expense is calculated by estimating the fair value of market
        based
        stock awards and stock options at the time of grant and amortized over the
        stock
        options’ vesting period. Share-based compensation expense was $1.9 million and
        $1.2 million for the second quarter of 2007 and 2006, respectively. Share-based
        compensation was $3.3 million and $2.3 million for the six month periods
        ended
        June 30, 2007 and July 1, 2006, respectively.
 
 
 **C)**  **Income
        Tax Contingencies**
 
 In
        July
        2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in
        Income Taxes” (“FIN 48”). This interpretation prescribes a comprehensive model
        for how a company should recognize, measure, present and disclose in its
        financial statements uncertain tax positions that the company has taken or
        expects to take on a tax return. FIN 48 states that a tax benefit from an
        uncertain tax position may be recognized only if it is “more likely than not”
that the position is sustainable, based on its technical merits. The tax
        benefit
        of a qualifying position is the largest amount of tax benefit that is greater
        than 50% likely of being realized upon settlement with a taxing authority
        having
        full knowledge of all relevant information. A tax benefit from an uncertain
        position was previously recognized if it was probable of being sustained.
        Under
        FIN 48, the liability for unrecognized tax benefits is classified as non-current
        unless the liability is expected to be settled in cash within 12 months of
        the
        reporting date. FIN 48 is effective as of the beginning of the first fiscal
        year
        beginning after December 15, 2006. The company adopted the provisions of
        FIN 48
        on the first day of fiscal 2007 (December 31, 2006), as required.
 
 4
 
 The
        following table indicates the effect of the application of FIN 48 on individual
        line items in the Consolidated Balance Sheet as of the adoption date (dollars
        in
        thousands).
  Before
                
                
                
                AfterFIN
                    48
                
                Adjustment
                
                FIN
                    48Accrued
                    liabilities
                
                $
                69,636
                
                $
                (5,395
                )
                $
                64,241Other
                    non-current liabilities
                
                $
                6,455
                
                $
                7,030
                
                $
                13,485Retained
                    earnings
                
                $
                115,917
                
                $
                (1,635
                )
                $
                114,282
  
 The
        company operates in multiple taxing jurisdictions, both within the United
        States
        and outside of the United States, and faces audits from various tax authorities
        regarding transfer pricing, the deductibility of certain expenses, intercompany
        transactions as well as other matters. As of the adoption date, the total
        amount
        of liability for unrecognized tax benefits related to federal, state and
        foreign
        taxes was approximately $5.7 million (of which the entire amount would impact
        the effective tax rate if recognized) plus approximately $0.5 million of
        accrued
        interest and $0.8 million of penalties. As of June 30, 2007, the corresponding
        balance of liability for unrecognized tax benefits is approximately $5.6
        million
        plus approximately $0.6 million of accrued interest and $0.8 million of
        penalties. The company recognizes interest and penalties accrued related
        to
        unrecognized tax benefits in income tax expense, which is consistent with
        reporting in prior periods.
 
 The
        company is not currently under examination in any tax jurisdiction; however
        it
        remains subject to examination until the statute of limitations expires for
        the
        respective tax jurisdiction. Within specific countries, the company and its
        operating subsidiaries may be subject to audit by various tax authorities
        and
        may be subject to different statute of limitations expiration dates. A summary
        of the tax years that remain subject to examination in the company’s major tax
        jurisdictions are:
  United
                    States - federal
                
                
                2003
                    - 2006United
                    States - states
                
                
                2002
                    - 2006China
                
                
                2006Denmark
                
                
                2006Mexico
                
                
                2006Philippines
                
                
                2004
                    - 2006South
                    Korea
                
                
                2004
                    - 2006Spain
                
                
                2003
                    - 2006Taiwan
                
                
                2005
                    - 2006United
                    Kingdom
                
                
                2006
 
 The
        company does not anticipate that total unrecognized tax benefits will
        significantly change due to the settlement of audits and the expiration of
        statute of limitations prior to June 30, 2008.
 
 5
  **2)**
              **Purchase
                  Accounting**
 
 *Houno*
 
 On
        August
        31, 2006, the company acquired the stock of Houno A/S (“Houno”) located in
        Denmark for $4.9 million in cash. The company also assumed $3.7 million of
        debt
        included as part of the net assets of Houno.
 
 The
        company has accounted for this business combination using the purchase method
        to
        record a new cost basis for the assets acquired and liabilities assumed.
        The
        difference between the purchase price and the fair value of the assets acquired
        and liabilities assumed has been recorded as goodwill in the financial
        statements. The allocation of the purchase price to the assets, liabilities
        and
        intangible assets is under review and is subject to change based upon
        finalization of the valuation of the assets and liabilities acquired.
 
 The
        preliminary allocation of cash paid for the Houno acquisition is summarized
        as
        follows (in thousands):
  Aug.
                    31, 2006
                
                Adjustments
                
                Dec.
                    30, 2006Current
                    assets
                
                $
                4,325
                
                $
                --
                
                $
                4,325Property,
                    plant and equipment
                
                
                4,371
                
                
                --
                
                
                4,371Goodwill
                
                
                1,287
                
                
                199
                
                
                1,486Other
                    intangibles
                
                
                1,139
                
                
                (199
                )
                
                940Other
                    assets
                
                
                92
                
                
                --
                
                
                92Current
                    liabilities
                
                
                (3,061
                )
                
                --
                
                
                (3,061
                )Long-term
                    debt
                
                
                (2,858
                )
                
                --
                
                
                (2,858
                )Long-term
                    deferred tax liability
                
                
                (356
                )
                
                --
                
                
                (356
                )Total
                    cash paid
                
                $
                4,939
                
                $
                --
                
                $
                4,939
  The
        goodwill is subject to the nonamortization provisions of SFAS No. 142 from
        the
        date of acquisition. Other intangibles also includes $0.1 million allocated
        to
        backlog and $0.8 million allocated to developed technology which are amortized
        over periods of 1 month and 5 years, respectively. Goodwill and other
        intangibles of Houno are allocated to the Commercial Foodservice Equipment
        Group
        for segment reporting purposes. These assets are not deductible for tax
        purposes.
 
 *Jade*
 
 On
        April
        1, 2007, the company completed its acquisition of the assets and operations
        of
        Jade Products Company (“Jade”), a leading manufacturer of commercial and
        residential cooking equipment from Maytag Corporation ("Maytag") for an
        aggregate purchase price of $7.4 million in cash. The purchase price is subject
        to adjustment based upon a working capital provision within the purchase
        agreement.
 
 The
        company has accounted for this business combination using the purchase method
        to
        record a new cost basis for the assets acquired and liabilities assumed.
        The
        difference between the purchase price and the fair value of the assets acquired
        and liabilities assumed has been recorded as goodwill in the financial
        statements. The allocation of the purchase price to the assets, liabilities
        and
        intangible assets is under review and is subject to change based upon
        finalization of the valuation of the assets and liabilities acquired.
 
 6
  The
        preliminary allocation of cash paid for the Jade acquisition is summarized
        as
        follows (in thousands):
  Apr.
                    1, 2007Current
                    assets
                
                $
                6,727Property,
                    plant and equipment
                
                
                2,029Goodwill
                
                
                250Other
                    intangibles
                
                
                1,590Current
                    liabilities
                
                
                (3,206
                )Total
                    cash paid
                
                $
                7,391
  The
        goodwill and $1.4 million of other intangibles associated with the Jade
        acquisition, which are comprised of the tradename, are subject to the
        non-amortization provisions of SFAS No. 142 from the date of acquisition.
        Other
        intangibles of $0.2 million allocated to customer relationships are to be
        amortized over a periods of 10 years. Goodwill and other intangibles of Jade
        are
        allocated to the Commercial Foodservice Equipment Group for segment reporting
        purposes. These assets are expected to be deductible for tax
        purposes.
 
 *Carter
        Hoffmann*
 
 On
        June
        29, 2007, the company completed its acquisition of the assets and operations
        of
        Carter Hoffmann (“Carter Hoffmann”), a leading manufacturer of commercial
        cooking and warming equipment from Carrier Commercial Refrigeration
        Inc., a
        subsidiary of Carrier Corporation, which is a unit of United Technologies
        Corporation, for
        an
        aggregate purchase price of $15.9 million in cash. The purchase price is
        subject
        to adjustment based upon a working capital provision within the purchase
        agreement.
 
 The
        company has accounted for this business combination using the purchase method
        to
        record a new cost basis for the assets acquired and liabilities assumed.
        The
        difference between the purchase price and the fair value of the assets acquired
        and liabilities assumed has been recorded as goodwill in the financial
        statements. The allocation of the purchase price to the assets, liabilities
        and
        intangible assets is under review and is subject to change based upon
        finalization of the valuation of the assets and liabilities acquired.
 
 The
        preliminary allocation of cash paid for the Carter Hoffmann acquisition is
        summarized as follows (in thousands):
  Jun.
                    29, 2007Current
                    assets
                
                $
                7,912Property,
                    plant and equipment
                
                
                2,264Goodwill
                
                
                9,452Current
                    liabilities
                
                
                (3,646
                )Other
                    non-current liabilities
                
                
                (54
                )Total
                    cash paid
                
                $
                15,928
 The
        goodwill associated with the Carter Hoffmann acquisition is subject to the
        non-amortization provisions of SFAS No. 142 from the date of acquisition.
        Goodwill and other intangibles of Carter Hoffmann are allocated to the
        Commercial Foodservice Equipment Group for segment reporting purposes. These
        assets are expected to be deductible for tax purposes.
 
 7
  **3)**
              **Stock
                  Split**
 
  On
        May 3,
        2007, the company’s Board of Directors authorized a two-for-one split of the
        company’s common stock in the form of a stock dividend. The stock dividend
        was paid on June 15, 2007 to company shareholders of record as of June 1,
        2007.
        The company’s common stock began trading on a split-adjusted basis on June 18,
        2007. All references in the accompanying consolidated condensed financial
        statements and notes thereto to net earnings per share and the number of
        shares
        have been adjusted to reflect this stock split.
  
 
 **4)**
              **Litigation
                  Matters**
 From
        time
        to time, the company is subject to proceedings, lawsuits and other claims
        related to products, suppliers, employees, customers and competitors. The
        company maintains insurance to partially cover product liability, workers
        compensation, property and casualty, and general liability matters.  The
        company is required to assess the likelihood of any adverse judgments or
        outcomes to these matters as well as potential ranges of probable losses. 
A determination of the amount of accrual required, if any, for these
        contingencies is made after assessment of each matter and the related insurance
        coverage.  The reserve requirement may change in the future due to new
        developments or changes in approach such as a change in settlement strategy
        in
        dealing with these matters.  The company does not believe that any pending
        litigation will have a material adverse effect on its financial condition,
        results of operations or cash flows of the company.
 
 
 **5)**
              **Recently
                  Issued Accounting
                  Standards**
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
        statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles and expands disclosures about
        fair
        value measurements. This statement does not require any new fair value
        measurements. This statement is effective for interim reporting periods in
        fiscal years beginning after November 15, 2007. The company will apply this
        guidance prospectively. The company is continuing its process of determining
        what impact the application of this guidance will have on the company's
        financial position, results of operations or cash flows.
 
 In
        September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
        No. 87, 88, 106, and 132(R)”. One provision of SFAS No. 158 requires the
        measurement of the company’s defined benefit plan’s assets and its obligation to
        determine the funded status be made as of the end of the fiscal year. This
        provision of SFAS No. 158 is effective for fiscal years ending after December
        15, 2008. The company does not anticipate that the impact from the adoption
        of
        this provision of SFAS No. 158 will be significant to its financial
        statements.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities - Including an amendment of FASB
        Statement No. 115. This statement permits entities to choose to measure many
        financial instruments and certain other items at fair value. This statement
        is
        effective for fiscal years beginning after November 15, 2007. The company
        will
        apply this guidance prospectively. The company is continuing its process
        of
        determining what impact the application of this guidance will have on the
        company's financial position, results of operations or cash flows.
 
 8
  **6)**
                **Other
                    Comprehensive Income**
 
 The
        company reports changes in equity during a period, except those resulting
        from
        investment by owners and distribution to owners, in accordance with SFAS
        No.
        130, "Reporting Comprehensive Income."
 
 Components
        of other comprehensive income were as follows (in thousands):
  Three
                    Months Ended
                
                Six
                    Months EndedJun.
                    30, 2007
                
                Jul.
                    1, 2006
                
                Jun.
                    30, 2007
                
                Jul.
                    1, 2006Net
                    earnings
                
                $
                12,582
                
                $
                11,090
                
                $
                23,302
                
                $
                19,141Currency
                    translation adjustment
                
                
                244
                
                
                318
                
                
                276
                
                
                264Unrecognized
                    pension benefit cost
                
                
                -
                
                
                -
                
                
                -
                
                
                -Unrealized
                      gain (loss) on interest rate swaps
                
                
                37
                
                
                58
                
                
                (99
                )
                
                210Comprehensive
                    income
                
                $
                12,863
                
                $
                11,466
                
                $
                23,479
                
                $
                19,615
   Accumulated
        other comprehensive income is comprised of minimum pension liability of $(1.0)
        million, net of taxes of $(0.7) million, as of June 30, 2007 and December
        30,
        2006, foreign currency translation adjustments of $1.1 million as of June
        30,
        2007 and $0.9 million as of December 30, 2006 and an unrealized gain on interest
        rate swaps of $0.5 million, net of taxes of $0.3 million, as of June 30,
        2007
        and $0.6 million, net of taxes of $0.4 million as of December 30,
        2006.
 
 
 **7)**
              **Inventories**
 
 Inventories
        are composed of material, labor and overhead and are stated at the lower
        of cost
        or market. Costs for inventory at two of the company's manufacturing facilities
        have been determined using the last-in, first-out ("LIFO") method. These
        inventories under the LIFO method amounted to $14.5 million at June 30, 2007
        and
        $16.9 million at December 30, 2006 and represented approximately 25% and
        36% of
        the total inventory in each respective period. Costs for all other inventory
        have been determined using the first-in, first-out ("FIFO") method. The company
        estimates reserves for inventory obsolescence and shrinkage based on its
        judgment of future realization. Inventories at June 30, 2007 and December
        30,
        2006 are as follows:
 Jun.
                      30, 2007
                
                Dec.
                    30, 2006(in
                    thousands)Raw
                    materials and parts
                
                $
                23,280
                
                $
                15,795Work-in-process
                
                
                9,515
                
                
                6,642Finished
                    goods
                
                
                26,906
                
                
                25,12759,701
                
                
                47,564LIFO
                    adjustment
                
                
                (1,022
                )
                
                (272
                )$
                58,679
                
                $
                47,292
  9
  **8)**
                **Accrued
                    Expenses**
 Accrued
        expenses consist of the following:
 Jun.
                    30, 2007
                
                Dec,
                    30, 2006(in
                    thousands)Accrued
                    payroll and related expenses
                
                $
                12,444
                
                $
                16,564Accrued
                    warranty
                
                
                12,182
                
                
                11,292Accrued
                    customer rebates
                
                
                8,900
                
                
                13,119Accrued
                    product liability and workers comp
                
                
                5,639
                
                
                4,361Accrued
                    commissions
                
                
                3,501
                
                
                2,471Accrued
                    professional services
                
                
                3,463
                
                
                2,523Advance
                    customer deposits
                
                
                2,546
                
                
                3,615Other
                    accrued expenses
                
                
                10,439
                
                
                15,691$
                59,114
                
                $
                69,636
   **9)**
                  **Warranty
                      Costs**
 In
        the
        normal course of business the company issues product warranties for specific
        product lines and provides for the estimated future warranty cost in the
        period
        in which the sale is recorded.  The estimate of warranty cost is based on
        contract terms and historical warranty loss experience that is periodically
        adjusted for recent actual experience. Because warranty estimates are forecasts
        that are based on the best available information, claims costs may differ
        from
        amounts provided. Adjustments to initial obligations for warranties are made
        as
        changes in the obligations become reasonably estimable.
 
 A
        rollforward of the warranty reserve is as follows:
  Six
                    Months EndedJun.
                    30, 2007(in
                    thousands)Beginning
                    balance
                
                $
                11,292Warranty
                    expense
                
                
                5,159Warranty
                    claims
                
                
                (4,269
                )Ending
                    balance
                
                $
                12,182
  10
  **10)**
                    **Financing
                        Arrangements**
 Jun.
                    30, 2007
                
                Dec.
                    30, 2006(in
                    thousands)Senior
                    secured revolving credit line
                
                $
                41,000
                
                $
                30,100Senior
                    secured bank term loans
                
                
                40,000
                
                
                47,500Foreign
                    loan
                
                
                4,428
                
                
                5,202Total
                    debt
                
                $
                85,428
                
                $
                82,802Less:
                    Current maturities of long-term debt
                
                
                16,572
                
                
                16,838Long-term
                    debt
                
                $
                68,856
                
                $
                65,964
 During
        the fourth quarter of 2005, the company amended its senior secured credit
        facility. Terms of the agreement currently provide for $40.0 million of term
        loans and $130.0 million of availability under a revolving credit line. As
        of
        June 30, 2007, the company had $81.0 million outstanding under its senior
        banking facility, including $41.0 million of borrowings under the revolving
        credit line. The company also had $3.6 million in outstanding letters of
        credit,
        which reduced the borrowing availability under the revolving credit
        line.
 
 Borrowings
        under the senior secured credit facility are assessed at an interest rate
        of
        1.0% above LIBOR for long-term borrowings or at the higher of the Prime rate
        and
        the Federal Funds Rate for short term borrowings. At June 30, 2007, the average
        interest rate on the senior debt amounted to 7.08%. The interest rates on
        borrowings under the senior bank facility may be adjusted quarterly based
        on the
        company’s defined indebtedness ratio on a rolling four-quarter basis.
        Additionally, a commitment fee, based upon the indebtedness ratio is charged
        on
        the unused portion of the revolving credit line. This variable commitment
        fee
        amounted to 0.20% as of June 30, 2007.
 
 In
        August
        2006, the company completed its acquisition of Houno A/S in Denmark.  This
        acquisition was funded in part with locally established debt facilities with
        borrowings in Danish Krone.  As of June 30, 2007, these facilities amounted
        to $4.4 million in US dollars, including $1.5 million outstanding under a
        revolving credit facility, $2.1 million of a term loan and $0.8 million of
        a
        long term mortgage note.  The interest rate on the revolving credit
        facility is assessed at 1.25% above Euro LIBOR, which amounted to 5.8% on
        June
        30, 2007. The term loan matures in 2013 and the interest rate is assessed
        at
        5.62%. The long-term mortgage note matures in March 2023 and is assessed
        interest at a fixed rate of 5.19%.
 
 In
        December 2005, the company entered into a $3.2 million U.S. dollar secured
        term
        loan at its subsidiary in Spain. This term loan amortizes in equal monthly
        installments over a four-year period ending December 31, 2009. As of June
        30,
        2007, the company had fully repaid the borrowings under this loan.
  11
  The
        company has historically entered into interest rate swap agreements to
        effectively fix the interest rate on its outstanding debt. In January 2005,
        the
        company entered into an interest rate swap agreement for a notional amount
        of
        $70.0 million. This agreement swaps one-month LIBOR for a fixed rate of 3.78%.
        The notional amount amortizes consistent with the repayment schedule of the
        company's term loan maturing November 2009. The unamortized notional amount
        of
        this swap as of June 30, 2007 was $40.0 million. In January 2006, the company
        entered into an interest rate swap agreement for a notional amount of $10.0
        million maturing on December 21, 2009. This agreement swaps one-month LIBOR
        for
        a fixed rate of 5.03%.
 
 The
        terms
        of the senior secured credit facility limit the paying of dividends, capital
        expenditures and leases, and require, among other things, certain ratios
        of
        indebtedness and fixed charge coverage. The credit agreement also provides
        that
        if a material adverse change in the company’s business operations or conditions
        occurs, the lender could declare an event of default. Under terms of the
        agreement a material adverse effect is defined as (a) a material adverse
        change
        in, or a material adverse effect upon, the operations, business properties,
        condition (financial and otherwise) or prospects of the company and its
        subsidiaries taken as a whole; (b) a material impairment of the ability of
        the
        company to perform under the loan agreements and to avoid any event of default;
        or (c) a material adverse effect upon the legality, validity, binding effect
        or
        enforceability against the company of any loan document. A material adverse
        effect is determined on a subjective basis by the company's creditors. At
        June
        30, 2007, the company was in compliance with all covenants pursuant to its
        borrowing agreements.
  **11)**
                      **Financial
                          Instruments**
 In
        June
        1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments
        and
        Hedging Activities". SFAS No. 133, as amended, establishes accounting and
        reporting standards for derivative instruments. The statement requires an
        entity
        to recognize all derivatives as either assets or liabilities and measure
        those
        instruments at fair value. Derivatives that do not qualify as a hedge must
        be
        adjusted to fair value in earnings. If the derivative does qualify as a hedge
        under SFAS No. 133, changes in the fair value will either be offset against
        the
        change in fair value of the hedged assets, liabilities or firm commitments
        or
        recognized in other accumulated comprehensive income until the hedged item
        is
        recognized in earnings. The ineffective portion of a hedge's change in fair
        value will be immediately recognized in earnings.
 
 *Foreign
        Exchange* :
        The
        company has entered into derivative instruments, principally forward contracts
        to reduce exposures pertaining to fluctuations in foreign exchange rates.
        As of
        June 30, 2007 the company had no forward contracts outstanding.
 
 *Interest
        Rate* : In
        January 2005, the company entered into an interest rate swap with a notional
        amount of $70.0 million to fix the interest rate applicable to certain of
        its
        variable-rate debt. The notional amount of the swap amortizes consistent
        with
        the repayment schedule of the company's senior term loan maturing in November
        2009. As of June 30, 2007, the unamortized balance of the interest rate swap
        was
        $40.0 million. The agreement swaps one-month LIBOR for a fixed rate of 3.78%
        and
        is in effect through November 2009. The company designated the swap as a
        cash
        flow hedge at its inception and all changes in the fair value of the swap
        are
        recognized in accumulated other comprehensive income. As of June 30, 2007,
        the
        fair value of this instrument was $0.8 million. The change in fair value
        of this
        swap agreement in the first six months of 2007 was a gain of less than $0.1
        million, net of taxes.
 
 12
  In
        January 2006, the company entered into another interest rate swap with a
        notional amount of $10.0 million to fix the interest rate applicable to certain
        of its variable-rate debt. The agreement swaps one-month LIBOR for a fixed
        rate
        of 5.03% and is in effect through December 2009. The company designated the
        swap
        a cash flow hedge at is inception and all changes in fair value of the swap
        are
        recognized in accumulated other comprehensive income. As of June 30, 2007,
        the
        fair value of this instrument was less than $0.1 million. The fair value
        of this
        swap agreement in the first six months of 2007 did not materially change.
   **12)**
                        **Segment
                            Information**
 The
        company operates in three reportable operating segments defined by management
        reporting structure and operating activities.
 
 The
        Commercial Foodservice Equipment business group manufactures cooking equipment
        for the restaurant and institutional kitchen industry. This business segment
        has
        manufacturing facilities in California, Illinois, Michigan, New Hampshire,
        North
        Carolina, Vermont, Denmark and the Philippines. The
        Commercial Foodservice Equipment group manufactures conveyor ovens, convection
        ovens, fryers, ranges, toasters, combi ovens, steamers, broilers, deck ovens,
        baking ovens, proofers and counter-top cooking and warming equipment. This
        business segment’s principal product lines include Middleby Marshall® and CTX®
conveyor oven equipment, Blodgett® convection ovens, conveyor ovens, deck oven
        equipment, Blodgett Combi® cooking equipment, Blodgett Range® ranges, Nu-Vu®
baking ovens and proofers, Pitco Frialator® fryer equipment, Southbend® ranges,
        convection ovens and heavy-duty cooking equipment, Toastmaster® toasters and
        counterline cooking and warming equipment, Jade Range® ranges and ovens, Carter
        Hoffmann® warming, holding and transporting equipment, Houno® combi-ovens and
        baking ovens and MagiKitch'n® charbroilers and catering equipment.
 
 The
        Food
        Processing Equipment business group manufactures cooking and packaging equipment
        for the food processing industry. This business segment has a manufacturing
        facility in Wisconsin. Its principal products include Alkar ® batch
        ovens, conveyorized ovens and continuous process ovens and RapidPak ® food
        packaging machinery.
  The
        International Distribution Division provides integrated sales, export
        management, distribution and installation services through its operations
        in
        China, India, Lebanon, Mexico, the Philippines, Russia, South Korea, Spain,
        Sweden, Taiwan and the United Kingdom. The division sells the company’s product
        lines and certain non-competing complementary product lines throughout the
        world. For a local country distributor or dealer, the company is able to
        provide
        a centralized source of foodservice equipment with complete export management
        and product support services.
 
 The
        accounting policies of the segments are the same as those described in the
        summary of significant accounting policies. The chief decision maker evaluates
        individual segment performance based on operating income. Management believes
        that intersegment sales are made at established arms-length transfer
        prices.
 
 13
 
 **Net
        Sales Summary**
 **(dollars
        in thousands)**
  Three
                  Months Ended
              
              Six
                  Months EndedJun.
                  30, 2007
              
              Jul.
                  1, 2006
              
              Jun.
                  30, 2007
              
              Jul.
                  1, 2006Sales
              
              Percent
              
              Sales
              
              Percent
              
              Sales
              
              Percent
              
              Sales
              
              PercentBusiness
                  Divisions:Commercial
                  Foodservice
              
              
              93,108
              
              
              82.2
              
              
              85,284
              
              
              81.3
              
              
              183,647
              
              
              83.9
              
              
              165,044
              
              
              81.9International
                  Distribution(1)
              
              
              14,521
              
              
              12.8
              
              
              14,136
              
              
              13.5
              
              
              28,097
              
              
              12.8
              
              
              27,579
              
              
              13.7Food
                  Processing
              
              
              13,353
              
              
              11.8
              
              
              14,829
              
              
              14.2
              
              
              25,549
              
              
              11.7
              
              
              28,520
              
              
              14.1Intercompany
                  sales (2)
              
              
              (7,734
              )
              
              (6.8
              )
              
              (9,400
              )
              
              (9.0
              )
              
              (18,350
              )
              
              (8.4
              )
              
              (19,545
              )
              
              (9.7
              )Total
              
              $
              113,248
              
              
              100.0
              %
              $
              104,849
              
              
              100.0
              %
              $
              218,943
              
              
              100.0
              %
              $
              201,598
              
              
              100.0
              %
  *(1)*
              *Consists
                  of sales of products manufactured by Middleby and products**manufactured
                  by third parties.*
 
 *(2)*
              *Represents
                  the elimination of sales amongst the Commercial Foodservice Equipment
                  Group and from the Commercial Foodservice Equipment*
                *Group
                  to the International Distribution Division.*
  14
 The
        following table summarizes the results of operations for the company's business
        segments (1) (in
        thousands):
  Commercial
                
                International
                
                Food
                
                CorporateFoodservice
                
                Distribution
                
                Processing
                
                and
                    Other(2)
                
                Eliminations(3)
                
                Total**Three
                    months ended June 30, 2007**Net
                    sales
                
                $
                93,108
                
                $
                14,521
                
                $
                13,353
                
                $
                --
                
                $
                (7,734
                )
                $
                113,248Operating
                    income
                
                
                22,291
                
                
                1,136
                
                
                3,617
                
                
                (6,199
                )
                
                357
                
                
                21,202Depreciation
                    expense
                
                
                808
                
                
                40
                
                
                124
                
                
                37
                
                
                --
                
                
                1,009Net
                    capital expenditures
                
                
                408
                
                
                44
                
                
                6
                
                
                13
                
                
                --
                
                
                471**Six
                    months ended June 30, 2007**Net
                    sales
                
                $
                183,647
                
                $
                28,097
                
                $
                25,549
                
                $
                --
                
                $
                (18,350
                )
                $
                218,943Operating
                    income
                
                
                44,079
                
                
                1,982
                
                
                6,017
                
                
                (12,481
                )
                
                411
                
                
                40,008Depreciation
                    expense
                
                
                1,503
                
                
                83
                
                
                251
                
                
                73
                
                
                --
                
                
                1,910Net
                    capital expenditures
                
                
                928
                
                
                55
                
                
                12
                
                
                74
                
                
                --
                
                
                1,069Total
                    assets
                
                
                245,757
                
                
                26,883
                
                
                44,858
                
                
                6,775
                
                
                (8,352
                )
                
                315,921Long-lived
                    assets(4)
                
                
                144,465
                
                
                433
                
                
                30,491
                
                
                5,990
                
                
                --
                
                
                181,379**Three
                    months ended July 1, 2006**Net
                    sales
                
                $
                85,284
                
                $
                14,136
                
                $
                14,829
                
                $
                --
                
                $
                (9,400
                )
                $
                104,849Operating
                    income
                
                
                22,444
                
                
                947
                
                
                1,939
                
                
                (4,405
                )
                
                (646
                )
                
                20,279Depreciation
                    expense
                
                
                680
                
                
                35
                
                
                105
                
                
                (6
                )
                
                --
                
                
                814Net
                    capital expenditures
                
                
                234
                
                
                42
                
                
                65
                
                
                43
                
                
                --
                
                
                384**Six
                    months ended July 1, 2006**Net
                    sales
                
                $
                165,044
                
                $
                27,579
                
                $
                28,520
                
                $
                --
                
                $
                (19,545
                )
                $
                201,598Operating
                    income
                
                
                42,173
                
                
                1,864
                
                
                2,564
                
                
                (10,479
                )
                
                (695
                )
                
                35,427Depreciation
                    expense
                
                
                1,363
                
                
                70
                
                
                276
                
                
                (2
                )
                
                --
                
                
                1,707Net
                    capital expenditures
                
                
                443
                
                
                48
                
                
                95
                
                
                299
                
                
                --
                
                
                885Total
                    assets
                
                
                200,875
                
                
                27,756
                
                
                47,056
                
                
                4,815
                
                
                (6,363
                )
                
                274,139Long-lived
                    assets(4)
                
                
                129,035
                
                
                334
                
                
                26,213
                
                
                5,713
                
                
                --
                
                
                161,297
  *(1)*
                *Non-operating
                    expenses are not allocated to the operating segments. Non-operating
                    expenses consist of interest expense *and
                    deferred financing amortization, gains foreign exchange gains
                    and losses
                    and other income and**expenses
                    items outside of income from
                    operations.**
  *(2)*
                *Includes
                    corporate and other general company assets and
                    operations.*
  *(3)*
                *Includes
                    elimination of intercompany sales, profit in inventory and intercompany
                    receivables.**Intercompany
                    sale transactions are**predominantly
                    from the Commercial Foodservice Equipment Group to the International
                    Distribution Division.*
  *(4)*
                *Long-lived
                    assets of the Commercial Foodservice Equipment Group includes
                    assets
                    located in the Philippines which amounted to $1,969**and
                    $2,039 in 2007 and 2006, respectively and assets located in Denmark
                    which
                    amounted to $781 in 2007
                    .*
 
 15
  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 EndedJun.
                  30, 2007
              
              Jul.
                  1, 2006
              
              Jun.
                  30, 2007
              
              Jul.
                  1, 2006United
                  States and Canada
              
              $
              91,509
              
              $
              85,664
              
              $
              177,541
              
              $
              164,767Asia
              
              
              6,169
              
              
              7,409
              
              
              11,642
              
              
              13,556Europe
                  and Middle East
              
              
              12,495
              
              
              6,989
              
              
              23,272
              
              
              14,742Latin
                  America
              
              
              3,075
              
              
              4,787
              
              
              6,488
              
              
              8,533Net
                  sales
              
              $
              113,248
              
              $
              104,849
              
              $
              218,943
              
              $
              201,598
  **13)**
                          **Employee
                              Retirement
                              Plans**
 *(a)*  *Pension
        Plans*
 
 The
        company maintains a non-contributory defined benefit plan for its union
        employees at the Elgin, Illinois facility. Benefits are determined based
        upon
        retirement age and years of service with the company. This defined benefit
        plan
        was frozen on April 30, 2002 and no further benefits accrue to the participants
        beyond this date. Plan participants will receive or continue to receive payments
        for benefits earned on or prior to April 30, 2002 upon reaching retirement
        age.
        The employees participating in the defined benefit plan were enrolled in
        a newly
        established 401K savings plan on July 1, 2002, further described below.
 
 The
        company also maintains a retirement benefit agreement with its Chairman.
        The
        retirement benefits are based upon a percentage of the Chairman’s final base
        salary. Additionally, the company maintains a retirement plan for non-employee
        directors. The plan provides for an annual benefit upon a change in control
        of
        the company or retirement from the Board of Directors at age 70, equal to
        100%
        of the director’s last annual retainer, payable for a number of years equal to
        the director’s years of service up to a maximum of 10 years.
 
 Contributions
        under the union plan are funded in accordance with provisions of The Employee
        Retirement Income Security Act of 1974. Expected contributions to be made
        in
        2007 are $183,000, of which $46,000 was funded during the six-month period
        ended
        June 30, 2007. Contributions to the directors' plan are based upon actual
        retirement benefits as they retire.
 
 *(b)*  *401K
        Savings Plans*
 
 The
        company maintains two separate defined contribution 401K savings plans covering
        all employees in the United States. These two plans separately cover the
        union
        employees at the Elgin, Illinois facility and all other remaining union and
        non-union employees in the United States. The company makes profit sharing
        contributions to the various plans in accordance with the requirements of
        the
        plan. Profit sharing contributions for the Elgin Union 401K savings plans
        are
        made in accordance with the agreement.
  16
 **14)**
                            **Subsequent
                                Events**
 On
        July
        2, 2007, subsequent to the end of the second quarter of 2007, the company
        completed its acquisition of the assets and operations of MP Equipment Company
        for $15 million in cash. MP Equipment Company is a manufacturer of food
        processing equipment with approximately $20 million in annual revenues. The
        acquisition had no effect on the company’s financial statements for the second
        quarter of 2007.
  On
        July
        30, 2007, subsequent to the end of the 2007 second quarter, the company
        announced that it entered into a new collective bargaining agreement with
        its
        unionized workforce at its Elgin, Illinois manufacturing facility, ending
        a work
        stoppage at this facility that began on May 17, 2007 after the unionized
        workforce failed to ratify a final contract proposal of its expired collective
        bargaining agreement.  The new contract included a ratification
        bonus and a voluntary retirement program offered to the union employees,
        which
        the company anticipates will result in one time payments of approximately
        $2.0
        million to be incurred during the third quarter of 2007.
  On
          August
          3, 2007, subsequent to the end of the second quarter of 2007, the company
          completed it acquisition of the assets and operations of Wells Bloomfield
          Company for $29 million in cash. Wells Bloomfield is a manufacturer of
          cooking
          equipment and beverage equipment with approximately $50 million in annual
          revenues. The acquisition had no effect on the company’s financial statements
          for the second quarter of 2007.
 17
  **Item
        2. Management's Discussion and Analysis of Financial Condition and Results
        of
        Operations.**
 
 **Informational
        Note**
 
 This
        report contains forward-looking statements subject to the safe harbor created
        by
        the Private Securities Litigation Reform Act of 1995. The company cautions
        readers that these projections are based upon future results or events and
        are
        highly dependent upon a variety of important factors which could cause such
        results or events to differ materially from any forward-looking statements
        which
        may be deemed to have been made in this report, or which are otherwise made
        by
        or on behalf of the company. Such factors include, but are not limited to,
        volatility in earnings resulting from goodwill impairment losses which may
        occur
        irregularly and in varying amounts; variability in financing costs; quarterly
        variations in operating results; dependence on key customers; international
        exposure; foreign exchange and political risks affecting international sales;
        ability to protect trademarks, copyrights and other intellectual property;
        changing market conditions; the impact of competitive products and pricing;
        the
        timely development and market acceptance of the company’s products; the
        availability and cost of raw materials; and other risks detailed herein and
        from
        time-to-time in the company’s Securities and Exchange Commission filings,
        including the company’s 2006 Annual Report on Form 10-K.
  18
 
 **Net
        Sales Summary**
 **(dollars
        in thousands)**
 Three
                  Months Ended
              
              Six
                  Months EndedJun.
                  30, 2007
              
              Jul.
                  1, 2006
              
              Jun.
                  30, 2007
              
              Jul.
                  1, 2006Sales
              
              Percent
              
              Sales
              
              Percent
              
              Sales
              
              Percent
              
              Sales
              
              PercentBusiness
                  Divisions:Commercial
                  Foodservice
              
              
              93,108
              
              
              82.2
              
              
              85,284
              
              
              81.3
              
              
              183,647
              
              
              83.9
              
              
              165,044
              
              
              81.9International
                  Distribution(1)
              
              
              14,521
              
              
              12.8
              
              
              14,136
              
              
              13.5
              
              
              28,097
              
              
              12.8
              
              
              27,579
              
              
              13.7Food
                  Processing
              
              
              13,353
              
              
              11.8
              
              
              14,829
              
              
              14.2
              
              
              25,549
              
              
              11.7
              
              
              28,520
              
              
              14.1Intercompany
                  sales (2)
              
              
              (7,734
              )
              
              (6.8
              )
              
              (9,400
              )
              
              (9.0
              )
              
              (18,350
              )
              
              (8.4
              )
              
              (19,545
              )
              
              (9.7
              )Total
              
              $
              113,248
              
              
              100.0
              %
              $
              104,849
              
              
              100.0
              %
              $
              218,943
              
              
              100.0
              %
              $
              201,598
              
              
              100.0
              %
  *(1)*
              *Consists
                  of sales of products manufactured by Middleby and products**manufactured
                  by third parties.*
 
 *(2)*
              *Represents
                  the elimination of sales amongst the Commercial Foodservice Equipment
                  Group and from the Commercial Foodservice Equipment Group to the
                  International Distribution Division.*
   **Results
        of Operations**
 
 The
        following table sets forth certain consolidated statements of earnings items
        as
        a percentage of net sales for the periods.
  Three
                  Months Ended
              
              Six
                  Months EndedJun.
                  30, 2007
              
              Jul.
                  1, 2006
              
              Jun.
                  30, 2007
              
              Jul.
                  1, 2006Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %Cost
                  of sales
              
              
              60.4
              
              
              60.2
              
              
              60.7
              
              
              61.7Gross
                  profit
              
              
              39.6
              
              
              39.8
              
              
              39.3
              
              
              38.3Selling,
                  general and administrative expenses
              
              
              20.9
              
              
              20.5
              
              
              21.0
              
              
              20.7Income
                  from operations
              
              
              18.7
              
              
              19.3
              
              
              18.3
              
              
              17.6Net
                  interest expense and deferred financing amortization
              
              
              1.1
              
              
              1.9
              
              
              1.1
              
              
              2.0Other
                  (income) expense, net
              
              
              (0.5
              )
              
              0.2
              
              
              (0.2
              )
              
              -Earnings
                  before income taxes
              
              
              18.1
              
              
              17.2
              
              
              17.4
              
              
              15.6Provision
                  for income taxes
              
              
              7.0
              
              
              6.6
              
              
              6.8
              
              
              6.1Net
                  earnings
              
              
              11.1
              %
              
              10.6
              %
              
              10.6
              %
              
              9.5
              %
  19
 
 **Three
        Months Ended June 30, 2007 Compared to Three Months Ended** **July
        1, 2006**
 
 **NET
        SALES** ***.***  Net
        sales
        for the second quarter of fiscal 2007 were $113.2 million as compared to
        $104.9
        million in the second quarter of 2006.
 
 Net
        sales
        at the Commercial Foodservice Equipment Group amounted to $93.1 million in
        the
        second quarter of 2007 as compared to $85.3 million in the prior year quarter.
 
 Net
        sales
        from the acquisition of Houno and Jade Range, which were acquired on
        August 31, 2006 and April 1, 2007, respectively, accounted for an
        increase of $7.2 million during the second quarter of 2007.
 
 Net
        sales
        of conveyor ovens were $3.6 million lower than the prior year second quarter
        due
        to a work stoppage that occurred at the Elgin, Illinois production facility
        that
        began on May 17, 2007 after the unionized workforce failed to ratify a final
        contract proposal of an expired collective bargaining agreement.  On July
        30, 2007 subsequent to the end of the second quarter the company announced
        it
        had entered into a new collective bargaining agreement with its Elgin, Illinois
        unionized workforce bringing an end to the work stoppage.
 
 Excluding
        the impact of acquisitions and the sales of conveyor ovens impacted by the
        work
        stoppage, net sales of commercial foodservice equipment increased $4.2 million
        driven by increased sales of combi-ovens, convection ovens, and ranges,
        reflecting the impact of new product introductions and price
        increases.
 
 
 Net
        sales
        at the International Distribution Division increased by $0.4 million to $14.5
        million, reflecting higher sales in Europe partially offset by a decline
        in
        Latin America.
 
 Net
        sales
        for the Food Processing Equipment Group decreased by $1.4 million to $13.4
        million in the second quarter of 2007 from $14.8 million in the prior year
        quarter due to acquisition integration initiatives put in place to eliminate
        low
        margin and unprofitable sales.
 
 
 **GROSS
        PROFIT** ***.***  Gross
        profit increased to $44.9 million in the second quarter of 2007 from $41.7
        million in the prior year period, reflecting the impact of higher sales volumes.
        The gross margin rate was 39.6% in the second quarter of 2007 as compared
        to 39.8% in the prior year quarter. The net decrease in the gross margin
        rate
        reflects:
 
 
 ·
              Lower
                  margins at the Elgin, Illinois manufacturing facility which was
                  adversely
                  impacted by the work stoppage.
 
 ·
              The
                  adverse impact of steel costs which have risen significantly from
                  the
                  prior year quarter.
 
 ·
              Improved
                  margins at the Food Processing Equipment Group, which was acquired
                  in
                  December 2005, resulting from cost reduction initiatives and elimination
                  of unprofitable sales.
 
 ·
              Increased
                  sales volumes that benefited manufacturing efficiencies and provided
                  for
                  greater leverage of fixed manufacturing
                  costs.
 
 ·
              Higher
                  margins associated with new product
                  sales.
 
 20
 
 **SELLING,
        GENERAL AND ADMINISTRATIVE EXPENSES** ***.***  Combined
        selling, general, and administrative expenses increased from $21.4 million
        in
        the second quarter of 2006 to $23.7 million in the second quarter of 2007.
        As a
        percentage of net sales, operating expenses increased from 20.5% in the second
        quarter of 2006 to 20.9% in the second quarter of 2007. Selling expenses
        increased from $10.8 million in the second quarter of 2006 to $12.0 million
        in
        the second quarter of 2007, reflecting $1.1 million of incremental costs
        associated with the acquisition of Houno, completed in August 2006 and the
        acquisition of Jade completed on April 1, 2007. General and administrative
        expenses increased from $10.7 million in the second quarter of 2006 to $11.7
        million in the second quarter of 2007. General and administrative expenses
        reflects $1.0 million of costs associated with the acquired Houno and Jade
        operations.
 
 **NON-OPERATING
        EXPENSES.** Interest
        and deferred financing amortization costs decreased from $2.0 million in
        the
        second quarter of 2006 to $1.3 million in the second quarter of 2007, as
        the
        benefit of lower debt balances was offset in part by higher interest rates.
        Other income of $0.6 million in the second quarter of 2007 compared favorably
        to
        other expense of $0.2 million in the prior year second quarter. Other income
        in
        the second quarter of 2007 included a $0.4 million gain from an insurance
        settlement, a $0.3 million foreign currency exchange gain and $0.2 million
        of
        expense associated with environmental exposures.
 
 **INCOME
        TAXES** ***.***  A
        tax
        provision of $8.0 million, at an effective rate of 39%, was recorded during
        the
        second quarter of 2007, as compared to a $7.0 million provision at a 39%
        effective rate in the prior year quarter.
 
 
 **Six
        Months Ended June 30, 2007 Compared to Six Months Ended July 1,
        2006**
 
 **NET
        SALES** ***.***  Net
        sales
        for the six-month period ended June 30, 2007 were $218.9 million as compared
        to
        $201.1 million in the six-month period ended July 1, 2006.
 
 Net
        sales
        at the Commercial Foodservice Equipment Group amounted to $183.6 million
        in the
        six-month period ended June 30, 2007 as compared to $165.0 million in the
        six-month period ended July 1, 2006.
 
 Net
        sales
        from the acquisition of Houno and Jade Range, which were acquired on August
        31,
        2006 and April 1, 2007, respectively, accounted for an increase of $10.8
        million
        during the first six months of 2007.
 
 Net
        sales
        of conveyor ovens which had increased $4.5 million in the first quarter of
        2007
        as compared to the 2006 first quarter due to increased sales of new product,
        decreased $3.6 million in the second quarter as compared to the 2006 second
        quarter due to a work stoppage that occurred at the Elgin, Illinois production
        facility that began on May 17, 2007 after the unionized workforce failed
        to
        ratify a final contract proposal of an expired collective bargaining
        agreement.  On July 30, 2007, subsequent to the end of the second quarter
        the company announced it had entered into a new collective bargaining agreement
        with its Elgin, Illinois unionized workforce bringing an end to the work
        stoppage.
 
 21
  Excluding
        the impact of acquisitions and the sales of conveyor ovens impacted by the
        work
        stoppage, net sales of commercial foodservice equipment increased $5.0 million
        for
        the six-month period ended June 30, 2007 compared to the six month period
        ended
        July 1, 2006. The net increase includes increased sales of combi-ovens,
        convection ovens, fryers and ranges, reflecting the impact of new product
        introductions and price increases.  This net increase was offset in part by
        reduced counterline equipment sales which were affected by a disruption in
        business resulting from a relocation of production operations from the company’s
        facility in Elgin, Illinois to its Michigan manufacturing operation, which
        began in the fourth quarter of 2006 and was completed in the first quarter
        of
        2007.
 
 Net
        sales
        at the International Distribution Division increased from $27.6 million
for
        the six-month period ended July 1, 2006to $28.1 million for
        the
        six-month period ended June 30, 2007, reflecting higher sales in Latin
        America and Asia, which more than offset a decline in sales in Europe, which
        had
        strong sales in the prior year due to an oven rollout with a major restaurant
        chain customer. International sales benefited from expansion of the U.S.
        chains
        overseas and increased business with local and regional restaurant chains
        in
        developing markets.
 
 Net
        sales
        for the Food Processing Equipment Group decreased by $3.0 million to $25.5
        million for
        the
        six-month period ended June 30, 2007from $28.5 million for
        the
        six-month period ended July 1, 2006,due to acquisition integration
        initiatives put in place to eliminate low margin and unprofitable
        sales.
 
 
 **GROSS
        PROFIT** ***.***  Gross
        profit increased to $86.0 million for
        the
        six-month period ended June 30, 2007from $77.3 million for
        the
        six-month period ended July 1, 2006, reflecting the impact of higher
        sales volumes. The gross margin rate was 39.3% for
        the
        six-month period ended June 30, 2007 as compared to 38.3% for the
        six-month period ended July 1, 2006. The net increase in the gross margin
        rate
        reflects:
 
 
 ·
              Lower
                  margins at the Elgin, Illinois manufacturing facility which was
                  adversely
                  impacted by the work stoppage.
 
 ·
              The
                  adverse impact of steel costs which have risen significantly from
                  the
                  prior year quarter.
 
 ·
              Improved
                  margins at the Food Processing Equipment Group, which was acquired
                  in
                  December 2005, resulting from cost reduction initiatives and elimination
                  of unprofitable sales.
 
 ·
              Increased
                  sales volumes that benefited manufacturing efficiencies and provided
                  for
                  greater leverage of fixed manufacturing
                  costs.
 
 ·
              Higher
                  margins associated with new product
                  sales.
 
 22
 
 **SELLING,
        GENERAL AND ADMINISTRATIVE EXPENSES** ***.***  Combined
        selling, general, and administrative expenses increased from $41.8 million
        in
        the six-month period ended July 1, 2006 to $46.0 million in the six-month
        period
        ended June 30, 2007. As a percentage of net sales, operating expenses increased
        from 20.7% in the six-month period ended July 1, 2006, to 21.0% in the six-month
        period ended June 30, 2007 reflecting greater leverage on higher sales volumes.
        Selling expenses increased from $20.9 million in
        the
        six-month period ended July 1, 2006 to $23.1 million in
        the
        six-month period ended June 30, 2007, reflecting $1.5 million of
        increased costs associated with the newly acquired Houno and Jade operations
        and
        $0.7 million higher commission costs associated with the increased sales
        volumes. General and administrative expenses increased from $20.9 million
in
        the
        six-month period ended July 1, 2006 to $22.9 million in
        the
        six-month period ended June 30, 2007,which includes increased costs of
        $1.6 million associated with the newly acquired Houno and Jade operations.
        General and administrative expenses also includes increased employee incentive
        performance costs.
  **NON-OPERATING
        EXPENSES.** Interest
        and deferred financing amortization costs decreased to $2.5 million for the
        six-month period ended June 30, 2007 from $3.8 million for the prior year
        period, as the benefit of lower debt balances were offset in part by higher
        interest rates. Other income was $0.7 million in
        the
        six-month period ended June 30, 2007, which primarily consisted of
        foreign exchange gains, compared to other expense of $0.1 million in
        the
        six-month period ended July 1, 2006.
 
 **INCOME
        TAXES** ***.***  A
        tax
        provision of $14.9 million, at an effective rate of 39%, was recorded for
        the
        first six months of 2007 as compared to a $12.4 million provision at a 39%
        effective rate in the prior year period.
 
 
 **Financial
        Condition and Liquidity**
 
 During
        the six months ended June 30, 2007, cash and cash equivalents increased by
        $2.3
        million to $5.8 million at June 30, 2007 from $3.5 million at December 30,
        2006.
        Net borrowings increased from $82.8 million at December 30, 2006 to $85.4
        million at June 30, 2007.
 
 **OPERATING
        ACTIVITIES** ***.***  Net
        cash
        provided operating activities was $22.4 million for
        the
        six-month period ended June 30, 2007as compared to $13.8 million for
        the
        six-month period ended July 1, 2006.
 
 During
        the six months ended June 30, 2007, working capital levels increased due
        to the
        higher sales volumes and increased seasonal working capital needs. The changes
        in working capital included a $2.8 million increase in inventory and a $8.2
        million decrease in accrued expenses and non-current liabilities as a result
        of
        the company’s funding of its 2006 customer rebate programs and employee
        incentive compensation programs during the second quarter of 2007.
 
 **INVESTING
        ACTIVITIES** ***.***  During
        the six months ended June 30, 2007, net cash used in investing activities
        amounted to $24.4 million. This includes $15.9 million associated with the
        acquisition of Carter Hoffmann, $7.4 million associated with the Jade
        acquisition and $1.1 million of capital expenditures associated with additions
        and upgrades of production and marketing equipment.
 
 **FINANCING
        ACTIVITIES.** Net
        cash
        flows provided by financing activities were $4.2 million during the six months
        ended June 30, 2007. The net increase in debt includes $10.9 million in
        borrowings under the revolving credit facility, $7.5 million of repayments
        of
        the company’s term loan and $0.9 million of repayments of foreign bank loans.
        The company also received $1.7 million of net proceeds from the exercise
        of
        employee stock options.
 
 23
  Subsequent
        to end of the second quarter of 2007, the company completed acquisitions
        of MP
        Equipment Company and Wells Bloomfield for $44.0 million in cash.
 
 At
        June
        30, 2007, the company was in compliance with all covenants pursuant to its
        borrowing agreements. Management believes that future cash flows from operating
        activities and borrowing availability under the revolving credit facility
        will
        provide the company with sufficient financial resources to meet its anticipated
        requirements for working capital, capital expenditures and debt amortization
        for
        the foreseeable future.
 
 
 **Recently
        Issued Accounting Standards**
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. This
        statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles and expands disclosures about
        fair
        value measurements. This statement does not require any new fair value
        measurements. This statement is effective for interim reporting periods in
        fiscal years beginning after November 15, 2007. The company will apply this
        guidance prospectively. The company is continuing its process of determining
        what impact the application of this guidance will have on the company's
        financial position, results of operations or cash flows.
 
 In
        September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
        No. 87, 88, 106, and 132(R)”. One provision of SFAS No. 158 requires the
        measurement of the company’s defined benefit plan’s assets and its obligation to
        determine the funded status be made as of the end of the fiscal year. This
        provision of SFAS No. 158 is effective for fiscal years ending after December
        15, 2008. The company does not anticipate that the impact from the adoption
        of
        this provision of SFAS No. 158 will be significant to its financial
        statements.
  In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities - Including an amendment of FASB
        Statement No. 115. This statement permits entities to choose to measure many
        financial instruments and certain other items at fair value. This statement
        is
        effective for fiscal years beginning after November 15, 2007. The company
        will
        apply this guidance prospectively. The company is continuing its process
        of
        determining what impact the application of this guidance will have on the
        company's financial position, results of operations or cash flows.
  24
  **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.
 
 *Property
        and equipment:*  Property
        and equipment are depreciated or amortized on a straight-line basis over
        their
        useful lives based on management's estimates of the period over which the
        assets
        will be utilized to benefit the operations of the company. The useful lives
        are
        estimated based on historical experience with similar assets, taking into
        account anticipated technological or other changes.  The company
        periodically reviews these lives relative to physical factors, economic factors
        and industry trends. If there are changes in the planned use of property
        and
        equipment or if technological changes were to occur more rapidly than
        anticipated, the useful lives assigned to these assets may need to be shortened,
        resulting in the recognition of increased depreciation and amortization expense
        in future periods.
 
 *Long-lived
        assets:*  Long-lived
        assets (including goodwill and other intangibles) are reviewed for impairment
        annually and whenever events or changes in circumstances indicate that the
        carrying amount of an asset may not be recoverable. In assessing the
        recoverability of the company's long-lived assets, the company considers
        changes
        in economic conditions and makes assumptions regarding estimated future cash
        flows and other factors.  Estimates of future cash flows are judgments
        based on the company's experience and knowledge of operations.  These
        estimates can be significantly impacted by many factors including changes
        in
        global and local business and economic conditions, operating costs, inflation,
        competition, and consumer and demographic trends.  If the company's
        estimates or the underlying assumptions change in the future, the company
        may be
        required to record impairment charges.
 
 *Warranty:*  In
        the
        normal course of business the company issues product warranties for specific
        product lines and provides for the estimated future warranty cost in the
        period
        in which the sale is recorded.  The estimate of warranty cost is based on
        contract terms and historical warranty loss experience that is periodically
        adjusted for recent actual experience. Because warranty estimates are forecasts
        that are based on the best available information, claims costs may differ
        from
        amounts provided. Adjustments to initial obligations for warranties are made
        as
        changes in the obligations become reasonably estimable.
 
 *Litigation:*  From
        time
        to time, the company is subject to proceedings, lawsuits and other claims
        related to products, suppliers, employees, customers and competitors. The
        company maintains insurance to partially cover product liability, workers
        compensation, property and casualty, and general liability matters.  The
        company is required to assess the likelihood of any adverse judgments or
        outcomes to these matters as well as potential ranges of probable losses. 
A determination of the amount of accrual required, if any, for these
        contingencies is made after assessment of each matter and the related insurance
        coverage.  The reserve requirements may change in the future due to new
        developments or changes in approach such as a change in settlement strategy
        in
        dealing with these matters.  The company does not believe that any pending
        litigation will have a material adverse effect on its financial condition
        or
        results of operations.
  25
  *Income
        taxes:*  The
        company operates in numerous foreign and domestic taxing jurisdictions where
        it
        is subject to various types of tax, including sales tax and income tax. 
The company's tax filings are subject to audits and adjustments. Because
        of the
        nature of the company’s operations, the nature of the audit items can be
        complex, and the objectives of the government auditors can result in a tax
        on
        the same transaction or income in more than one state or country.  As part
        of the company's calculation of the provision for taxes, the company establishes
        reserves for the amount that it expects to incur as a result of audits. The
        reserves may change in the future due to new developments related to the
        various
        tax matters.
 
 
 **Contractual
        Obligations**
 
 The
        company's contractual cash payment obligations as of June 30, 2007 are set
        forth
        below (in thousands):
  TotalIdle
                
                ContractualLong-term
                
                Operating
                
                Facility
                
                CashDebt
                
                Leases
                
                Leases
                
                ObligationsLess
                    than 1 year
                
                $
                16,572
                
                $
                1,866
                
                $
                359
                
                $
                18,7971-3
                    years
                
                
                66,207
                
                
                2,868
                
                
                742
                
                
                69,8173-5
                    years
                
                
                111
                
                
                284
                
                
                878
                
                
                1,273After
                    5 years
                
                
                2,538
                
                
                --
                
                
                1,401
                
                
                3,939$
                85,428
                
                $
                5,018
                
                $
                3,380
                
                $
                93,826
  Idle
        facility leases consists of an obligation for a manufacturing location that
        was
        exited in conjunction with the company's manufacturing consolidation efforts.
        This lease obligation continues through December 2014. This facility has
        been
        subleased. The obligation presented above does not reflect any anticipated
        sublease income from the facilities.
 
 The
        projected benefit obligation of the company’s defined benefit plans exceeded the
        plans’ assets by $3.5 million at the end of 2006 as compared to $2.4 million at
        the end of 2005. The unfunded benefit obligations were comprised of a $0.7
        million under funding of the company's union plan and $2.8 million of under
        funding of the company's director plans. The company does not expect to
        contribute to the director plans in 2007. The company made minimum contributions
        required by the Employee Retirement Income Security Act of 1974 (“ERISA”) of
        $0.2 million in 2006 to the company's union plan. The company expects to
        continue to make minimum contributions of $0.2 million in 2007 to the union
        plan
        as required by ERISA.
 
 The
        company has $3.6 million in outstanding letters of credit, which expire on
        March
        31, 2008 with an automatic one-year renewal, to secure potential obligations
        under insurance programs.
 
 The
        company places purchase orders with its suppliers in the ordinary course
        of
        business. These purchase orders are generally to fulfill short-term
        manufacturing requirements of less than 90 days and most are cancelable with
        a
        restocking penalty. The company has no long-term purchase contracts or minimum
        purchase obligations with any supplier.
 
 26
  The
        company has contractual obligations under its various debt agreements to
        make
        interest payments. These amounts are subject to the level of borrowings in
        future periods and the interest rate for the applicable periods, and therefore
        the amounts of these payments is not determinable.
 
 The
        company has no activities, obligations or exposures associated with off-balance
        sheet arrangements.
  27
  **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)June
                    30, 2008
                
                $
                --
                
                $
                16,572June
                    30, 2009
                
                
                --
                
                
                16,976June
                    30, 2010
                
                
                --
                
                
                49,231June
                    30, 2011
                
                
                --
                
                
                111June
                    30, 2012
                
                
                1,719
                
                
                819$
                1,719
                
                $
                83,709
   During
        the fourth quarter of 2005, the company amended its senior secured credit
        facility. Terms of the agreement currently provide for $40.0 million of term
        loans and $130.0 million of availability under a revolving credit line. As
        of
        June 30, 2007, the company had $81.0 million outstanding under its senior
        banking facility, including $41.0 million of borrowings under the revolving
        credit line. The company also had $3.6 million in outstanding letters of
        credit,
        which reduced the borrowing availability under the revolving credit
        line.
 
 Borrowings
        under the senior secured credit facility are assessed at an interest rate
        of
        1.00% above LIBOR for long-term borrowings or at the higher of the Prime
        rate
        and the Federal Funds Rate for short-term borrowings. At June 30, 2007, the
        average interest rate on the senior debt amounted to 7.08%. The interest
        rates
        on borrowings under the senior bank facility may be adjusted quarterly based
        on
        the company’s defined indebtedness ratio on a rolling four-quarter basis.
        Additionally, a commitment fee, based upon the indebtedness ratio is charged
        on
        the unused portion of the revolving credit line. This variable commitment
        fee
        amounted to 0.20% as of June 30, 2007.
 
 In
        August
        2006, the company completed its acquisition of Houno A/S in Denmark.  This
        acquisition was funded in part with locally established debt facilities with
        borrowings in Danish Krone.  As of June 30, 2007 these facilities amounted
        to $4.4 million in US dollars, including $1.5 million outstanding under a
        revolving credit facility, $2.1 million of a term loan and $0.8 million of
        a
        long term mortgage note.  The interest rate on the revolving credit
        facility is assessed at 1.25% above Euro LIBOR, which amounted to 5.8% on
        June
        30, 2007. The term loan matures in 2013 and the interest rate is assessed
        at
        5.62%.  The long-term mortgage note matures in March 2023 and is assessed
        interest at a fixed rate of 5.19%.
 
 In
        December 2005, the company entered into a $3.2 million U.S. Dollar secured
        term
        loan at its subsidiary in Spain. This loan amortizes in equal monthly
        installments over a four year period ending December 31, 2009. As of June
        30,
        2007, the company had fully repaid the borrowings remaining under this loan.
  28
  The
        company has historically entered into interest rate swap agreements to
        effectively fix the interest rate on its outstanding debt. In January 2005,
        the
        company entered into an interest rate swap agreement for a notional amount
        of
        $70.0 million. This agreement swaps one-month LIBOR for a fixed rate of 3.78%.
        The notional amount amortizes consistent with the repayment schedule of the
        company's term loan maturing November 2009. The unamortized notational amount
        of
        this swap as of June 30, 2007 was $40.0 million. In January 2006, the company
        entered into an interest rate swap for a notional amount of $10.0 million
        maturing on December 31, 2009. This agreement swaps one-month LIBOR for a
        fixed
        rate of 5.03%.
 
 The
        terms
        of the senior secured credit facility limit the paying of dividends, capital
        expenditures and leases, and require, among other things, certain ratios
        of
        indebtedness and fixed charge coverage. The credit agreement also provides
        that
        if a material adverse change in the company’s business operations or conditions
        occurs, the lender could declare an event of default. Under terms of the
        agreement a material adverse effect is defined as (a) a material adverse
        change
        in, or a material adverse effect upon, the operations, business properties,
        condition (financial and otherwise) or prospects of the company and its
        subsidiaries taken as a whole; (b) a material impairment of the ability of
        the
        company to perform under the loan agreements and to avoid any event of default;
        or (c) a material adverse effect upon the legality, validity, binding effect
        or
        enforceability against the company of any loan document. A material adverse
        effect is determined on a subjective basis by the company's creditors. At
        June
        30, 2007, the company was in compliance with all covenants pursuant to its
        borrowing agreements.
 
 
 **Financing
        Derivative Instruments**
 
 In
        January 2005, the company entered into an interest rate swap with a notional
        amount of $70.0 million to fix the interest rate applicable to certain of
        its
        variable-rate debt. The notional amount of the swap amortizes consistent
        with
        the repayment schedule of the company's senior term loan maturing in November
        2009. The agreement swaps one-month LIBOR for a fixed rate of 3.78% and is
        in
        effect through November 2009. The interest rate swap has been designated
        a cash
        flow hedge, and in accordance with SFAS No. 133 the changes in fair value
        are
        recorded as a component of accumulated other comprehensive income. As of
        June
        30, 2007, the fair value of this instrument was $0.8 million. The change
        in fair
        value of this swap agreement in the first six months of 2007 was a loss of
        $0.2
        million, net of $0.1 million of taxes. In January 2006, the company entered
        into
        an interest rate swap agreement for a notional amount of $10.0 million maturing
        on December 21, 2009. This agreement swaps one month LIBOR for a fixed rate
        of
        5.03%. The interest rate swap has been designated a cash flow hedge, and
        in
        accordance with SFAS No. 133 the changes in fair value are recorded as a
        component of accumulated other comprehensive income. As of June 30, 2007,
        the
        fair value of this instrument was less than $0.1 million. The change in fair
        value of this swap agreement in the first six months of 2007 was a gain of
        less
        than $0.1 million.
  29
  **Foreign
        Exchange Derivative Financial Instruments**
 
 The
        company uses foreign currency forward purchase and sale contracts with terms
        of
        less than one year, to hedge its exposure to changes in foreign currency
        exchange rates. The company’s primary hedging activities are to mitigate its
        exposure to changes in exchange rates on intercompany and third party trade
        receivables and payables. The company does not currently enter into derivative
        financial instruments for speculative purposes. In managing its foreign currency
        exposures, the company identifies and aggregates naturally occurring offsetting
        positions and then hedges residual balance sheet exposures. There was no
        forward
        contract outstanding at the end of the quarter.
  30
  **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
        June 30, 2007, the company carried out an evaluation, under the supervision
        and
        with the participation of the company's management, including the company's
        Chief Executive Officer and Chief Financial Officer, of the effectiveness
        of the
        design and operation of the company's disclosure controls and procedures.
        Based
        on the foregoing, the company's Chief Executive Officer and Chief Financial
        Officer concluded that the  company's
        disclosure controls and procedures were effective as of the end of this
        period.
  During
        the quarter ended June 30, 2007, there has been no change in the company's
        internal control over financial reporting that has materially affected, or
        is
        reasonably likely to materially affect, the company's internal control over
        financial reporting.
  31
  **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 June 30, 2007, except as
        follows:
 
 **Item
        1A. Risk Factors**
 
 There
        have been no material changes in the risk factors as set forth in the company's
        2006 Annual Report on Form 10-K.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds**
 
 *Issuer
        Purchases of Equity Securities*
 
 In
        July
        1998, the company's Board of Directors adopted a stock repurchase program
        that
        authorized the purchase of common shares in open market purchases. As of
        June 30, 2007, 952,999 shares had been purchased under the 1998 stock repurchase
        program. As of June 30, 2007, 1,694,002 shares are authorized for purchase
        under
        the stock repurchase program.  No shares were repurchased by the company
        during the six month period ended June 30, 2007.
 **Item
          4. Submission****of****Matters to a Vote****of****Security
          Holders**
  On
          May 3,
          2007, the company held its 2007 Annual Meeting of Stockholders. The following
          persons were elected as directors to hold office until the 2008 Annual
          Meeting
          of Stockholders: Selim A. Bassoul, Robert B. Lamb, Ryan Levenson, John
          R. Miller
          III, Gordon O'Brien, Philip G. Putnam, Sabin C. Streeter and Robert L.
          Yohe, The
          number of shares cast for, withheld and abstained with respect to each
          of the
          nominees were as follows:
  Nominee
                
                For
                
                Withheld
                
                AbstainedBassoul
                
                
                5,006,660
                
                
                2.425,394
                
                
                0Lamb
                
                
                7,306,180
                
                
                125,874
                
                
                0Levenson
                
                
                7,278,329
                
                
                153,725
                
                
                0Miller
                
                
                7,203,755
                
                
                228,229
                
                
                0O'Brien
                
                
                7.278,579
                
                
                153,475
                
                
                0Putnam
                
                
                7.231.579
                
                
                200,475
                
                
                0Streeter
                
                
                7,231,796
                
                
                200,258
                
                
                0Yohe
                
                
                7,210,855
                
                
                221,199
                
                
                0
  The
          stockholders voted to approve the ratification of the selection of Deloitte
          and
          Touche LLP as independent auditors for the company for the fiscal year
          ending
          December 29, 2007. 7,306,660 shares were cast for such election, 125,394
          shares
          were cast against such election, and 570,714 shares abstained.
 
 The
          stockholders voted to approve an amendment to the Restated Certificate
          of
          Incorporation. 7,080,731 shares were cast for election. 341,873 shares
          were cast
          against such election, and 9,450 shares abstained.
 
 The
          stockholders voted to approve the 2007 Stock Incentive Plan. 7,097,348
          shares
          were cast for election, 330,188 shares were cast against such election,
          and
          4,518 shares abstained.
 32
  **Item
        6. Exhibits**
 
 Exhibits
        - The following exhibits are filed herewith:
 
 Exhibit
        31.1 - Rule 13a-14(a)/15d -14(a) Certification of the Chief Executive Officer
        as
        adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  Exhibit
        31.2 - Rule 13a-14(a)/15d -14(a) Certification of the Chief Financial Officer
        as
        adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 Exhibit
        32.1 - Certification by the Principal Executive Officer of The Middleby Corporation
        Pursuant to Rule 13A-14(b) under the Exchange Act and Section 906 of the
        Sarbanes-Oxley Act of 2002(18 U.S.C. 1350).
  Exhibit
        32.2 - Certification by the Principal Financial Officer of The Middleby Corporation
        Pursuant to Rule 13A-14(b) under the Exchange Act and Section 906 of the
        Sarbanes-Oxley Act of 2002(18 U.S.C. 1350).
  33
  **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
                9, 2007___________
              By:
              /s/
                Timothy J. FitzGeraldTimothy
                  J. FitzGerald
                Vice
                  President,
                Chief
                  Financial Officer
  34