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 April 3, 2010
 
 or
  ̈
              Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
 
 Commission
File No. 1-9973
 
 THE MIDDLEBY
CORPORATION
 (Exact
Name of Registrant as Specified in its Charter)
 
 Delaware
                  
                  36-3352497(State
      or Other Jurisdiction of
                  
                  (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)
 
 1400 Toastmaster Drive, Elgin,
      Illinois
                  
                  60120(Address
      of Principal Executive Offices)
                  
                  (Zip
      Code)
 
 Registrant's
      Telephone No., including Area Code
                (847)
741-3300
 
 Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 YesxNo ̈
 
 Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).
 YesxNo ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See the definitions of “accelerated filer, large accelerated
filer and smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 Large
accelerated filer x     Accelerated
filer  ̈    Non-accelerated
filer  ̈    Smaller
reporting company  ̈
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes  ̈No  x
 
 As of May
7, 2010, there were 18,562,737 shares of the registrant's common stock
outstanding.
  
  THE MIDDLEBY CORPORATION AND
SUBSIDIARIES
 
 QUARTER ENDED APRIL 3,
2010
 
 INDEX
 
 DESCRIPTION
                                            
                                            
                                            PAGEPART
      I.  FINANCIAL INFORMATIONItem
      1.
                                            Condensed
      Consolidated Financial Statements (unaudited)CONDENSED
      CONSOLIDATED BALANCE SHEETS
                                            
                                            1April
      3, 2010 and January 2, 2010CONDENSED
      CONSOLIDATED STATEMENTSOF EARNINGS
                                            
                                            2April
      3, 2010 and April 4, 2009CONDENSED
      CONSOLIDATED STATEMENTSOF CASH FLOWS
                                            
                                            3April
      3, 2010 and April 4, 2009NOTES
      TO CONDENSED CONSOLIDATEDFINANCIAL
      STATEMENTS
                                            
                                            4Item
      2.
                                            Management's
      Discussion and Analysis of Financial Conditionand
      Results of Operations
                                            
                                            21Item
      3.
                                            Quantitative
      and Qualitative Disclosures About Market Risk
                                            
                                            29Item
      4.
                                            Controls
      and Procedures
                                            
                                            32PART
      II. OTHER INFORMATIONItem
      2.
                                            Unregistered
      Sales of Equity Securities and Use of Proceeds
                                            
                                            33Item
      6.
                                            Exhibits
                                            
                                            34
  
  PART I.  FINANCIAL
INFORMATION
  Item
1.   Condensed Consolidated Financial Statements
 
 THE MIDDLEBY CORPORATION AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
BALANCE SHEETS
 (Amounts
In Thousands, Except Share Data)
 (Unaudited)
 
 April 3, 2010
                                    
                                    
                                    January 2, 2010ASSETSCurrent
      assets:Cash
      and cash equivalents
                                    
                                    $
                                    8,295
                                    
                                    
                                    $
                                    8,363Accounts
      receivable, net of reserve for doubtful accounts of $6,614 and
      $6,596
                                    
                                    
                                    83,735
                                    
                                    
                                    
                                    78,897Inventories,
      net
                                    
                                    
                                    89,328
                                    
                                    
                                    
                                    90,640Prepaid
      expenses and other
                                    
                                    
                                    8,672
                                    
                                    
                                    
                                    9,914Prepaid
      taxes
                                    
                                    
                                    —
                                    
                                    
                                    
                                    5,873Current
      deferred taxes
                                    
                                    
                                    23,609
                                    
                                    
                                    
                                    23,339Total
      current assets
                                    
                                    
                                    213,639
                                    
                                    
                                    
                                    217,026Property,
      plant and equipment, net of accumulated depreciation of $46,379 and
      $44,988
                                    
                                    
                                    47,371
                                    
                                    
                                    
                                    47,340Goodwill
                                    
                                    
                                    358,035
                                    
                                    
                                    
                                    358,506Other
      intangibles
                                    
                                    
                                    187,073
                                    
                                    
                                    
                                    189,572Other
      assets
                                    
                                    
                                    4,542
                                    
                                    
                                    
                                    3,902Total
      assets
                                    
                                    $
                                    810,660
                                    
                                    
                                    $
                                    816,346LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Current
      maturities of long-term debt
                                    
                                    $
                                    7,015
                                    
                                    
                                    $
                                    7,517Accounts
      payable
                                    
                                    
                                    39,041
                                    
                                    
                                    
                                    38,580Accrued
      expenses
                                    
                                    
                                    82,871
                                    
                                    
                                    
                                    100,259Total
      current liabilities
                                    
                                    
                                    128,927
                                    
                                    
                                    
                                    146,356Long-term
      debt
                                    
                                    
                                    263,961
                                    
                                    
                                    
                                    268,124Long-term
      deferred tax liability
                                    
                                    
                                    14,375
                                    
                                    
                                    
                                    14,187Other
      non-current liabilities
                                    
                                    
                                    44,124
                                    
                                    
                                    
                                    45,024Stockholders'
      equity:Preferred
      stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none
      issued
                                    
                                    
                                    —
                                    
                                    
                                    
                                    —Common
      stock, $0.01 par value; 47,500,000 shares authorized; 22,632,650 and
      22,622,650 shares issued in 2010 and 2009, respectively
                                    
                                    
                                    136
                                    
                                    
                                    
                                    136Paid-in
      capital
                                    
                                    
                                    165,503
                                    
                                    
                                    
                                    162,001Treasury
      stock at cost; 4,069,913 shares in 2010 and 2009
                                    
                                    
                                    (102,000
                                    )
                                    
                                    
                                    (102,000
                                    )Retained
      earnings
                                    
                                    
                                    301,149
                                    
                                    
                                    
                                    287,387Accumulated
      other comprehensive income
                                    
                                    
                                    (5,515
                                    )
                                    
                                    
                                    (4,869
                                    )Total
      stockholders' equity
                                    
                                    
                                    359,273
                                    
                                    
                                    
                                    342,655Total
      liabilities and stockholders' equity
                                    
                                    $
                                    810,660
                                    
                                    
                                    $
                                    816,346
 
 See
accompanying notes
  1
 
 THE MIDDLEBY CORPORATION AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
 (In
Thousands, Except Per Share Data)
 (Unaudited)
 
 Three Months EndedApr 3, 2010
                            
                            
                            April 4, 2009Net
      sales
                            
                            $
                            160,683
                            
                            
                            $
                            181,546Cost
      of sales
                            
                            
                            97,210
                            
                            
                            
                            112,776Gross
      profit
                            
                            
                            63,473
                            
                            
                            
                            68,770Selling
      expenses
                            
                            
                            17,625
                            
                            
                            
                            16,306General
      and administrative expenses
                            
                            
                            19,413
                            
                            
                            
                            24,373Income
      from operations
                            
                            
                            26,435
                            
                            
                            
                            28,091Net
      interest expense and deferred financing amortization
                            
                            
                            2,475
                            
                            
                            
                            3,146Other
      expense, net
                            
                            
                            344
                            
                            
                            
                            284Earnings
      before income taxes
                            
                            
                            23,616
                            
                            
                            
                            24,661Provision
      for income taxes
                            
                            
                            9,854
                            
                            
                            
                            10,594Net
      earnings
                            
                            $
                            13,762
                            
                            
                            $
                            14,067Net
      earnings per share:Basic
                            
                            $
                            0.78
                            
                            
                            $
                            0.80Diluted
                            
                            $
                            0.74
                            
                            
                            $
                            0.77Weighted
      average number of sharesBasic
                            
                            
                            17,754
                            
                            
                            
                            17,584Dilutive stock options1
                            
                            
                            962
                            
                            
                            
                            586Diluted
                            
                            
                            18,716
                            
                            
                            
                            18,170
 
 1
                There
      were no anti-dilutive stock options excluded from common stock equivalents
      for any period presented.
 
 See
accompanying notes
  2
  THE MIDDLEBY CORPORATION AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (In
Thousands)
 (Unaudited)
 
 Three Months EndedApr 3, 2010
                      
                      
                      Apr 4, 2009Cash
      flows from operating activities-Net earnings
                      
                      $
                      13,762
                      
                      
                      $
                      14,067Adjustments
      to reconcile net earnings to cashprovided by operating activities:Depreciation
      and amortization
                      
                      
                      3,916
                      
                      
                      
                      5,205Deferred
      taxes
                      
                      
                      (83
                      )
                      
                      
                      (269
                      )Non-cash
      share-based compensation
                      
                      
                      3,234
                      
                      
                      
                      2,725Unrealized
      (gain) loss on derivative financial instruments
                      
                      
                      (7
                      )
                      
                      
                      48Changes
      in assets and liabilities, net of acquisitionsAccounts
      receivable, net
                      
                      
                      (5,588
                      )
                      
                      
                      (8,668
                      )Inventories,
      net
                      
                      
                      552
                      
                      
                      
                      5,562Prepaid
      expenses and other assets
                      
                      
                      6,435
                      
                      
                      
                      542Accounts
      payable
                      
                      
                      741
                      
                      
                      
                      5,559Accrued
      expenses and other liabilities
                      
                      
                      (16,156
                      )
                      
                      
                      (14,880
                      )Net
      cash provided by operating activities
                      
                      
                      6,806
                      
                      
                      
                      9,891Cash
      flows from investing activities-Net
      additions to property and equipment
                      
                      
                      (1,401
                      )
                      
                      
                      (1,870
                      )Acquisition
      of Giga
                      
                      
                      (1,621
                      )
                      
                      
                      —Acquisition
      of TurboChef, net of cash acquired
                      
                      
                      —
                      
                      
                      
                      (116,078
                      )Net
      cash (used in) investing activities
                      
                      
                      (3,022
                      )
                      
                      
                      (117,948
                      )Cash
      flows from financing activities-Net
      (repayments) proceeds under revolving credit facilities
                      
                      
                      (4,800
                      )
                      
                      
                      112,250Net
      proceeds (repayments) under foreign bank loan
                      
                      
                      514
                      
                      
                      
                      (505
                      )Net
      proceeds from stock issuances
                      
                      
                      270
                      
                      
                      
                      —Net
      cash (used in) provided by financing activities
                      
                      
                      (4,016
                      )
                      
                      
                      111,745Effect
      of exchange rates on cash and cash equivalents
                      
                      
                      164
                      
                      
                      
                      (983
                      )Changes
      in cash and cash equivalents-Net
      (decrease) increase in cash and cash equivalents
                      
                      
                      (68
                      )
                      
                      
                      2,705Cash
      and cash equivalents at beginning of year
                      
                      
                      8,363
                      
                      
                      
                      6,144Cash
      and cash equivalents at end of quarter
                      
                      $
                      8,295
                      
                      
                      $
                      8,849Supplemental
      disclosure of cash flow information:Interest
      paid
                      
                      $
                      2,475
                      
                      
                      $
                      2,699Income
      tax payments
                      
                      $
                      2,156
                      
                      
                      $
                      2,055Non-cash
      financing activities:Stock
      issuance related to the acquisition of TurboChef
                      
                      $
                      —
                      
                      
                      $
                      44,048
 
 See
accompanying notes
  3
 
 THE MIDDLEBY CORPORATION AND
SUBSIDIARIES
 
 NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
 
 April 3,
2010
 (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 2009 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 April 3,
2010 and January 2, 2010, and the results of operations for the three months
ended April 3, 2010 and April 4, 2009 and cash flows for the three months ended
April 3, 2010 and April 4, 2009.
 
 The
company evaluated subsequent events through the filing date of these financial
statements.
 
 B)
              Non-Cash
      Share-Based Compensation
 
 The
company estimates the fair value of market-based stock awards and stock options
at the time of grant and recognizes compensation cost over the vesting period of
the awards and options.  Non-cash share-based compensation expense was
$3.2 million and $2.7 million for the first quarter of 2010 and 2009,
respectively.
 
 C)
              Income
      Tax Contingencies
 
 On
December 31, 2006, the company adopted the provisions of Accounting Standards
Codification (“ASC”) 740 “Income Taxes”. 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. ASC 740 states that a tax benefit
from an uncertain tax position may be recognized only if it is “more likely than
not” that the position is sustainable, based on its technical merits. The tax
benefit of a qualifying position is the largest amount of tax benefit that is
greater than 50% likely of being realized upon settlement with a taxing
authority having full knowledge of all relevant information.
  4
 
 As of
January 2, 2010, the total amount of liability for unrecognized tax benefits
related to federal, state and foreign taxes was approximately $20.3 million (of
which $12.9 would impact the effective tax rate if recognized) plus
approximately $2.0 million of accrued interest and $2.2 million of penalties. As
of April 3, 2010, there were no significant changes in the total amount of
liability for unrecognized tax benefits. It is reasonably possible that the
amounts of unrecognized tax benefits associated with state, federal and foreign
tax positions may decrease over the next twelve months due to expiration of a
statute or completion of an audit. While a reasonable range of the amount cannot
be determined, the company believes such decrease would not be
material.
 
 The
company operates in multiple taxing jurisdictions; both within the United States
and outside of the United States, and faces audits from various tax authorities.
The company remains subject to examination until the statute of limitations
expires for the respective tax jurisdiction. Within specific countries, the
company and its operating subsidiaries may be subject to audit by various tax
authorities and may be subject to different statute of limitations expiration
dates. A summary of the tax years that remain subject to examination in the
company’s major tax jurisdictions are:
 
 United
      States – federal
                            
                            
                            2007
      - 2009United
      States – states
                            
                            
                            2002
      - 2009China
                            
                            
                            2002
      - 2009Canada
                            
                            2009Denmark
                            
                            
                            2006
      - 2009Italy
                            
                            
                            2008
      - 2009Mexico
                            
                            
                            2005
      - 2009Philippines
                            
                            
                            2006
      - 2009South
      Korea
                            
                            
                            2005 - 2009Spain
                            
                            
                            2007
      - 2009Taiwan
                            
                            
                            2007
      - 2009United
      Kingdom
                            
                            
                            2007
      - 2009
 
 D)
              Fair
      Value Measures
 
 On
December 30, 2007 (first day of fiscal year 2008), the company adopted the
provisions of ASC 820 “Fair Value Measurements and Disclosures”.  This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosure about fair
value measurements.
  5
 
 ASC 820
defines fair value as the price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal most advantageous market
for the asset or liability in an orderly transaction between market participants
on the measurement date.  ASC 820 establishes a fair value hierarchy,
which prioritizes the inputs used in measuring fair value into the following
levels:
 
 Level 1 –
Quoted prices in active markets for identical assets or liabilities
 Level 2 –
Inputs, other than quoted prices in active markets, that are observable either
directly or indirectly.
 Level 3 –
Unobservable inputs based on our own assumptions.
 
 The
company’s financial assets that are measured at fair value are categorized using
the fair value hierarchy at April 3, 2010 are as follows (in
thousands):
 
 Fair Value
                    
                    
                    Fair Value
                    
                    
                    Fair ValueLevel 1
                    
                    
                    Level 2
                    
                    
                    Level 3
                    
                    
                    TotalFinancial
      Assets:None
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    —Financial
      Liabilities:Interest
      rate swaps
                    
                    
                    —
                    
                    
                    
                    2,844
                    
                    
                    
                    —
                    
                    
                    $
                    2,844Contingent
      consideration
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    4,134
                    
                    
                    $
                    4,134
 
 The
contingent consideration relates to an earnout provision recorded in conjunction
with the acquisition of CookTek LLC.  See Note 2 for more
information.
 
 As of
April 3, 2010, certain fixed assets were measured at fair value on a
nonrecurring basis as the result of a plant consolidation initiative in
2009.  The fixed assets were valued using measurements classified as Level
2.
 
 2)
              Acquisitions
      and Purchase Accounting
 
 The
company operates in a highly fragmented industry and has completed numerous
acquisitions over the past several years as a component of its growth
strategy.  The company has acquired industry leading brands and
technologies to position itself as a leader in the commercial foodservice
equipment and food processing equipment industries.
 
 The
company has accounted for all business combinations using the purchase method to
record a new cost basis for the assets acquired and liabilities
assumed.  The difference between the purchase price and the fair value
of the assets acquired and liabilities assumed has been recorded as goodwill in
the financial statements.  The results of operations are reflected in
the consolidated financial statements of the company from the date of
acquisition.
  6
 
 CookTek
 
 On April
26, 2009, the company completed its acquisition of substantially all of the
assets and operations of CookTek LLC (“CookTek”),the leading
manufacturer of induction cooking and warming systems for a purchase price of
$8.0 million in cash.  An additional deferred payment of $1.0 million
is also due to the seller on the first anniversary of the acquisition.
Additional contingent payments are also payable over the course of four years
upon the achievement of certain sales targets.
 
 The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed. Measurement period adjustments reflect new information
obtained about facts and circumstances that existed as of the acquisition date
(in thousands):
 
 (as initially reported)
                    
                    
                    Measurement Period
                    
                    
                    (as adjusted)Apr 26, 2009
                    
                    
                    Adjustments
                    
                    
                    Apr 26, 2009Current
      assets
                    
                    $
                    2,595
                    
                    
                    $
                    (12
                    )
                    
                    $
                    2,583Property,
      plant and equipment
                    
                    
                    152
                    
                    
                    
                    —
                    
                    
                    
                    152Goodwill
                    
                    
                    11,544
                    
                    
                    
                    (5,649
                    )
                    
                    
                    5,895Other
      intangibles
                    
                    
                    3,622
                    
                    
                    
                    3,000
                    
                    
                    
                    6,622Current
      liabilities
                    
                    
                    (3,428
                    )
                    
                    
                    165
                    
                    
                    
                    (3,263
                    )Other
      non-current liabilities
                    
                    
                    (6,485
                    )
                    
                    
                    2,496
                    
                    
                    
                    (3,989
                    )Total
      cash paid
                    
                    $
                    8,000
                    
                    
                    $
                    —
                    
                    
                    $
                    8,000Deferred
      cash payment
                    
                    
                    1,000
                    
                    
                    
                    —
                    
                    
                    
                    1,000Contingent
      consideration
                    
                    
                    7,360
                    
                    
                    
                    (2,660
                    )
                    
                    
                    4,700Net
      assets acquired and liabilities assumed
                    
                    $
                    16,360
                    
                    
                    $
                    (2,660
                    )
                    
                    $
                    13,700
 
 The
CookTek purchase agreement included an earnout provision providing for
contingent payments due to the sellers to the extent certain financial targets
are exceeded.  The earnout amounts are payable in the four consecutive
years subsequent to the acquisition date if CookTek is to exceed certain sales
targets for each of those years.  The earnout payment will amount to
10% of the sales in excess of the target for each of the respective
years.  There is no cap on the potential earnout payment, however, the
company’s estimated probable range of the contingent consideration is between $0
and $10 million.  The contractual obligation associated with the
contingent earnout provision recognized on the acquisition date is $4.7 million.  This
amount was determined based on an income approach.
  The
goodwill and $3.5 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350.  Other
intangibles also includes less than $0.1 million allocated to backlog, $0.7
million allocated to developed technology and $2.4 million allocated to customer
relationships which are to be amortized over periods of 3 months, 6 years and 5
years, respectively.  Goodwill and other intangibles of CookTek are
allocated to the Commercial Foodservice Equipment Group for segment reporting
purposes. These assets are expected to be deductible for tax
purposes.
  7
 
 The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to complete the purchase price allocation as
soon as practicable but no later than one year from the acquisition
date.
 
 Anets
 
 On April
30, 2009, the company completed its acquisition of substantially all of the
assets and operations of Anetsberger Brothers, Inc. (“Anets”), a leading
manufacturer of griddles, fryers and dough rollers, for a purchase price of $3.4
million. An additional deferred payment of $0.5 million is due to the seller
upon the achievement of certain transition objectives.
 
 The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed (in thousands):
 
 Apr 30, 2009Current
      assets
                    
                    $
                    2,210Goodwill
                    
                    
                    3,320Other
      intangibles
                    
                    
                    1,085Current
      liabilities
                    
                    
                    (3,107
                    )Other
      non-current liabilities
                    
                    
                    (150
                    )Total
      cash paid
                    
                    $
                    3,358Deferred
      cash payment
                    
                    
                    500Net
      assets acquired and liabilities assumed
                    
                    $
                    3,858
 
 The
goodwill and $0.9 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350.  Other
intangibles also includes less than $0.1 million allocated to developed
technology and $0.2 million allocated to customer relationships which are to be
amortized over periods of 3 years and 3 years, respectively.  Goodwill
and other intangibles of Anets are allocated to the Commercial Foodservice
Equipment Group for segment reporting purposes. These assets are expected to be
deductible for tax purposes.
  The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to complete the purchase price allocation as
soon as practicable but no later than one year from the acquisition
date.
  8
 
 Doyon
 
 On
December 14, 2009, the company completed its acquisition of Doyon Equipment,
Inc., a leading Canadian manufacturer of baking ovens for the commercial
foodservice industry, for a purchase price of approximately $5.8
million.   The purchase price is subject to adjustment based upon
a working capital provision within the purchase agreement.
 
 The
following estimated fair values of assets acquired and liabilities assumed are
provisional and are based on the information that was available as of
the acquisition date to estimate the fair value of assets acquired and
liabilities assumed (in thousands):
 
 Dec 14, 2009Current
      assets
                    
                    $
                    5,034Property,
      Plant and Equipment
                    
                    
                    1,876Goodwill
                    
                    
                    191Intangibles
                    
                    
                    2,355Current
      maturities of long-term debt
                    
                    
                    (285
                    )Current
      liabilities
                    
                    
                    (2,105
                    )Long-term
      debt
                    
                    
                    (1,081
                    )Other
      non-current liabilities
                    
                    
                    (166
                    )Total
      cash paid
                    
                    $
                    5,819
 
 The
goodwill and $1.5 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350.  Other
intangibles also includes $0.6 million allocated to developed technology and
$0.3 million allocated to customer relationships which are to be amortized over
periods of 6 years and 5 years, respectively.  Goodwill and other
intangibles of Doyon are allocated to the Commercial Foodservice Equipment Group
for segment reporting purposes. These assets are not expected to be deductible
for tax purposes.
 
 The
company believes that information gathered to date provides a reasonable basis
for estimating the fair values of assets acquired and liabilities assumed but
the company is waiting for additional information necessary to finalize those
fair values.  Thus, the provisional measurements of fair value set
forth above are subject to change.  Such changes are not expected to
be significant. The company expects to finalize the valuation of intangible
assets and to complete the purchase price allocation as soon as practicable but
no later than one year from the acquisition date.
  9
 
 3)
              Litigation
      Matters
 
 From time
to time, the company is subject to proceedings, lawsuits and other claims
related to products, suppliers, employees, customers and competitors. The
company maintains insurance to partially cover product liability, workers
compensation, property and casualty, and general liability matters.  The
company is required to assess the likelihood of any adverse judgments or
outcomes to these matters as well as potential ranges of probable losses. 
A determination of the amount of accrual required, if any, for these
contingencies is made after assessment of each matter and the related insurance
coverage.  The reserve requirement may change in the future due to new
developments or changes in approach such as a change in settlement strategy in
dealing with these matters.  The company does not believe that any pending
litigation will have a material adverse effect on its financial condition,
results of operations or cash flows of the company.
 
 4)
              Recently
      Issued Accounting Standards
 
 In
January 2010, the Financial Accounting Standards Board (“FASB”) issued ASU
No. 2010-06, Fair Value Measurements and Disclosures (Topic 820),
“Improving Disclosures about Fair Value Measurements” (“ASU No. 2010-06”).
ASU 2010-06 requires new disclosures about significant transfers in and out of
Level 1 and Level 2 fair value measurements and the reasons for such transfers
and in the reconciliation for Level 3 fair value measurements, to disclose
separately information about purchases, sales, issuances and settlements. The
company adopted the provisions of ASU No. 2010-06 on January 3, 2010,
except for disclosures about purchases, sales, issuances and settlements in the
reconciliation for Level 3 fair value measurements. These disclosures will be
effective for financial statements issued for fiscal years beginning after
December 15, 2010. The adoption of ASU No. 2010-06 “Improving Disclosures
about Fair Value Measurements” did not have a material impact on the company’s
financial position, results of operations or cash flows.
 
 5)
              Other
      Comprehensive Income
 
 The
company reports changes in equity during a period, except those resulting from
investments by owners and distributions to owners, in accordance with ASC 220,
"Comprehensive Income."
 
 Components
of other comprehensive income were as follows (in thousands):
 
 Three Months EndedApr 3, 2010
                          
                          
                          April 4, 2009Net
      earnings
                          
                          $
                          13,762
                          
                          
                          $
                          14,067Currency
      translation adjustment
                          
                          
                          (709
                          )
                          
                          
                          (744
                          )Unrealized
      gain oninterest rate swaps, net of tax
                          
                          
                          63
                          
                          
                          
                          223Comprehensive
      income
                          
                          $
                          13,116
                          
                          
                          $
                          13,546
 
 Accumulated
other comprehensive income is comprised of unrecognized pension benefit costs of
$2.3 million net of taxes of $0.6 million as of April 3, 2010 and January 2,
2010, foreign currency translation adjustments of $1.8 million as of April 3,
2010 and $1.1 million as of January 2, 2010 and an unrealized loss on interest
rate swaps of $1.5 million, net of taxes of $1.0 million as of April 3, 2010 and
January 2, 2010 respectively.
  10
 
 6)
              Inventories
 
 Inventories
are composed of material, labor and overhead and are stated at the lower of cost
or market.  Costs for inventory at two of the company's manufacturing
facilities have been determined using the last-in, first-out ("LIFO")
method.  These inventories under the LIFO method amounted to $16.4
million at April 3, 2010 and $15.6 million at January 2, 2010 and represented
approximately 18% and 17% 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 April 3, 2010 and January 2, 2010 are as
follows:
  Apr 3, 2010
                    
                    
                    Jan 2, 2010(in thousands)Raw
      materials and parts
                    
                    $
                    51,001
                    
                    
                    $
                    51,071Work-in-process
                    
                    
                    14,085
                    
                    
                    
                    13,629Finished
      goods
                    
                    
                    25,033
                    
                    
                    
                    26,73190,119
                    
                    
                    
                    91,431LIFO
      adjustment
                    
                    
                    (791
                    )
                    
                    
                    (791
                    )$
                    89,328
                    
                    
                    $
                    90,640
 
 7)
              Goodwill
 
 Changes
in the carrying amount of goodwill for the three months ended April 3, 2010 are
as follows (in thousands):
 
 Commercial
                    
                    
                    Food
                    
                    
                    InternationalFoodservice
                    
                    
                    Processing
                    
                    
                    Distribution
                    
                    
                    TotalBalance
      as of January 2, 2010
                    
                    $
                    326,980
                    
                    
                    $
                    31,526
                    
                    
                    $
                    —
                    
                    
                    $
                    358,506Goodwill
      acquired during the year
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Adjustments
      to prior year acquisitions
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Exchange
      effect
                    
                    
                    (471
                    )
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (471
                    )Balance
      as of April 3, 2010
                    
                    $
                    326,509
                    
                    
                    $
                    31,526
                    
                    
                    $
                    —
                    
                    
                    $
                    358,035
 
 8)
              Accrued
      Expenses
 
 Accrued
expenses consist of the following:
 
 Apr 3, 2010
                    
                    
                    Jan 2, 2010(in
      thousands)Accrued
      payroll and related expenses
                    
                    $
                    15,341
                    
                    
                    $
                    19,988Accrued
      warranty
                    
                    
                    14,421
                    
                    
                    
                    14,265Advance
      customer deposits
                    
                    
                    10,137
                    
                    
                    
                    14,066Accrued
      product liability and workers comp
                    
                    
                    10,129
                    
                    
                    
                    9,877Accrued
      customer rebates
                    
                    
                    6,569
                    
                    
                    
                    12,980Accrued
      professional services
                    
                    
                    4,226
                    
                    
                    
                    4,931Other
      accrued expenses
                    
                    
                    22,048
                    
                    
                    
                    24,152$
                    82,871
                    
                    
                    $
                    100,259
  11
  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:
 
 Three Months EndedApril 3, 2010(in thousands)Beginning
      balance
                    
                    $
                    14,265Warranty
      expense
                    
                    
                    5,970Warranty
      claims
                    
                    
                    (5,814
                    )Ending
      balance
                    
                    $
                    14,421
 
 10)
              Financing
      Arrangements
 
 Apr 3, 2010
                    
                    
                    Jan 2, 2010(in thousands)Senior
      secured revolving credit line
                    
                    $
                    261,100
                    
                    
                    $
                    265,900Foreign
      loan
                    
                    
                    9,876
                    
                    
                    
                    9,741Total
      debt
                    
                    $
                    270,976
                    
                    
                    $
                    275,641Less:  Current
      maturities of long-term debt
                    
                    
                    7,015
                    
                    
                    
                    7,517Long-term
      debt
                    
                    $
                    263,961
                    
                    
                    $
                    268,124
 
 Terms of
the company’s senior credit agreement provide for $497.8 million of availability
under a revolving credit line.  As of April 3, 2010, the company had
$261.1 million of borrowings outstanding under this facility.  The
company also has $7.8 million in outstanding letters of credit, which reduces
the borrowing availability under the revolving credit line.  Remaining
borrowing availability under this facility, which is also reduced by the
company’s foreign borrowings, was $219.0 million at April 3, 2010.
 
 At April
3, 2010, 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.  At April 3, 2010 the
average interest rate on the senior debt amounted to 1.31%. 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 April 3,
2010.
  12
 
 In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On April 3, 2010 these facilities amounted to
$3.9 million in U.S. dollars, including $2.0 million outstanding under a
revolving credit facility and $1.9 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 3.80% on April 3, 2010. The term loan matures in 2013 and the
interest rate is assessed at 5.05%.
 
 In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings denominated in Euro.  On April 3, 2010 these
facilities amounted to $4.5 million in U.S. dollars.  The interest rate on
the credit facilities is tied to six-month Euro LIBOR. At April 3, 2010, the
average interest rate on these facilities was approximately 4.0%. The facilities
mature in April of 2015.
 
 In
December 2009, the company completed its acquisition of Doyon in
Canada.  This acquisition was funded in part with locally established
debt facilities with borrowings denominated in Canadian dollars.  On
April 3, 2010, these facilities amounted to $1.5 million U.S.
dollars.  The borrowings under these facilities are collateralized by
the assets of the company.  The interest rate on these credit
facilities is assessed at 0.75% above the prime rate.  At April 3,
2010, the average interest rate on these facilities amounted to 3.0% and
3.7%.  These facilities mature in 2017.
 
 The
company’s debt is reflected on the balance sheet at cost. Based on current
market conditions, the company believes its interest rate margins on its
existing debt are below the rate available in the market, which causes the fair
value of debt to fall below the carrying value.  The company believes
the current interest rate margin is approximately 1.0% below current market
rates.  However, as the interest rate margin is based upon numerous
factors, including but not limited to the credit rating of the borrower, the
duration of the loan, the structure and restrictions under the debt agreement,
current lending policies of the counterparty, and the company’s relationships
with its lenders, there is no readily available market data to ascertain the
current market rate for an equivalent debt instrument.  As a result,
the current interest rate margin is based upon the company’s best estimate based
upon discussions with its lenders.
  13
 
 The
company estimated the fair value of its loans by calculating the upfront cash
payment a market participant would require to assume the company’s
obligations.  The upfront cash payment is the amount that a market
participant would be able to lend at April 3, 2010 to achieve sufficient cash
inflows to cover the cash outflows under the company’s senior revolving credit
facility assuming the facility was outstanding in its entirety until
maturity.  Since the company maintains its borrowings under a
revolving credit facility and there is no predetermined borrowing or repayment
schedule, for purposes of this calculation the company calculated the fair value
of its obligations assuming the current amount of debt at the end of the period
was outstanding until the maturity of the company’s senior revolving credit
facility in December 2012.  Although borrowings could be materially
greater or less than the current amount of borrowings outstanding at the end of
the period, it is not practical to estimate the amounts that may be outstanding
during future periods.  The fair value of the company’s senior debt
obligations as estimated by the company based upon its assumptions is
approximately $263.7 million at April 3, 2010, as compared to the carrying value
of $270.9 million.
 
 The
carrying value and estimated aggregate fair value, based primarily on market
prices, of debt is as follows (dollars in thousands):
  April 3, 2010
                      
                      
                      January 2, 2010Carrying Value
                      
                      
                      Fair Value
                      
                      
                      Carrying Value
                      
                      
                      Fair ValueTotal
      debt
                      
                      $
                      270,976
                      
                      
                      $
                      263,689
                      
                      
                      $
                      275,641
                      
                      
                      $
                      267,632
 
 The
company believes that its current capital resources, including cash and cash
equivalents, cash generated from operations, funds available from its revolving
credit facility and access to the credit and capital markets will be sufficient
to finance its operations, debt service obligations, capital expenditures,
product development and integration expenditures for the foreseeable
future.
 
 The
company has historically entered into interest rate swap agreements to
effectively fix the interest rate on its outstanding debt.  The
agreements swap one-month LIBOR for fixed rates. As of April 3, 2010 the company
had the following interest rate swaps in effect:
 
 FixedNotional
                          
                          Interest
                          
                          Effective
                          
                          MaturityAmount
                          
                          Rate
                          
                          Date
                          
                          Date15,000,000
                          
                          
                          1.220
                          %
                          11/23/09
                          
                          11/23/1120,000,000
                          
                          
                          1.800
                          %
                          11/23/09
                          
                          11/23/1225,000,000
                          
                          
                          3.670
                          %
                          09/23/08
                          
                          09/23/1110,000,000
                          
                          
                          3.460
                          %
                          09/08/08
                          
                          09/06/1115,000,000
                          
                          
                          3.130
                          %
                          09/08/08
                          
                          09/06/1010,000,000
                          
                          
                          3.032
                          %
                          02/06/08
                          
                          02/06/1120,000,000
                          
                          
                          1.560
                          %
                          03/11/10
                          
                          12/11/1210,000,000
                          
                          
                          1.120
                          %
                          03/11/10
                          
                          03/11/1210,000,000
                          
                          
                          3.590
                          %
                          06/10/08
                          
                          06/10/1120,000,000
                          
                          
                          3.350
                          %
                          06/10/08
                          
                          06/10/10
  14
 
 The terms
of the senior secured credit facility limit the paying of dividends, capital
expenditures and leases, and require, among other things, ratios of indebtedness
of 3.5 debt to earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and fixed charge coverage of 1.25 EBITDA to fixed charges. The credit
agreement also provides that if a material adverse change in the company’s
business operations or conditions occurs, the lender could declare an event of
default. Under terms of the agreement, a material adverse effect is defined as
(a) a material adverse change in, or a material adverse effect upon, the
operations, business properties, condition (financial and otherwise) or
prospects of the company and its subsidiaries taken as a whole; (b) a material
impairment of the ability of the company to perform under the loan agreements
and to avoid any event of default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the company of any
loan document. A material adverse effect is determined on a subjective basis by
the company's creditors.  The credit facility is secured by the
capital stock of the company’s domestic subsidiaries, 65% of the capital stock
of the company’s foreign subsidiaries and substantially all other assets of the
company.  At April 3, 2010, the company was in compliance with all
covenants pursuant to its borrowing agreements.
 
 11)
              Financial
      Instruments
 
 ASC 815
“Derivatives and Hedging” 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 ASC 815, 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
April 3, 2010, the company had no forward contracts
outstanding.
  15
 
 Interest Rate:  The
company has entered into interest rate swaps to fix the interest rate applicable
to certain of its variable-rate debt. The agreements swap one-month LIBOR for
fixed rates. The company has designated these swaps as cash flow hedges and all
changes in fair value of the swaps are recognized in accumulated other
comprehensive income.  As of April 3, 2010, the fair value of these
instruments was a loss of $2.9 million.  The change in fair value of
these swap agreements in the first three months of 2010 was a gain of $0.1
million, net of taxes.
 
 A summary
of the company’s interest rate swaps is as follows:
 
 Three months endedLocation
                        
                        Apr. 3, 2010
                        
                        
                        Apr. 4, 2009(amounts in thousands)Fair
      value
                        
                        Other
      non-current liabilities
                        
                        $
                        (2,844
                        )
                        
                        $
                        (5,406
                        )Gain/(loss)
      recognized in other comprehensive income
                        
                        Other
      comprehensive income
                        
                        $
                        (876
                        )
                        
                        $
                        (890
                        )Gain/(loss)
      reclassified from accumulated other comprehensive income (effective
      portion)
                        
                        Interest
      expense
                        
                        $
                        (991
                        )
                        
                        $
                        (1,163
                        )Gain
      recognized in income (ineffective portion)
                        
                        Other
      expense
                        
                        $
                        7
                        
                        
                        $
                        48
 
 Interest
rate swaps are subject to default risk to the extent the counterparty were
unable to satisfy their settlement obligations under the interest rate swap
agreements.  The company reviews the credit profile of the financial
institutions and assesses its creditworthiness prior to entering into the
interest rate swap agreement.  The interest rate swap agreements
typically contain provisions that allow the counterparty to require early
settlement in the event that the company becomes insolvent or is unable to
maintain compliance with its covenants under its existing debt
agreement.
 
 12)
              Segment
      Information
 
 The
company operates in three reportable operating segments defined by management
reporting structure and operating activities.
 
 The Commercial Foodservice Equipment
Group manufactures cooking equipment for the restaurant and institutional
kitchen industry.  This business segment has manufacturing facilities
in California, Illinois, Michigan, New Hampshire, North Carolina, Tennessee,
Texas, Vermont, Canada, China, Denmark, Italy and the
Philippines.  Principal product lines of this group include conveyor
ovens, ranges, steamers, convection ovens, combi-ovens, broilers and steam
cooking equipment, induction cooking systems, baking and proofing ovens,
griddles, charbroilers, catering equipment, fryers, toasters, hot food servers,
foodwarming equipment, griddles and coffee and beverage dispensing
equipment.  These products are sold and marketed under the brand
names: Anets, Blodgett, Blodgett Combi, Blodgett Range, Bloomfield, CTX,
Carter-Hoffmann, CookTek, Doyon, Frifri, Giga, Holman, Houno, Jade, Lang,
MagiKitch’n, Middleby Marshall, Nu-Vu, Pitco, Southbend, Star, Toastmaster,
TurboChef and Wells.
  16
 
 The Food
Processing Equipment Group manufactures preparation, cooking, packaging and food
safety equipment for the food processing industry.  This business
division has manufacturing operations in Wisconsin.  Its principal
products include batch ovens, belt ovens and conveyorized cooking systems sold
under the Alkar brand name, packaging and food safety equipment sold under the
RapidPak brand name and breading, battering, mixing, slicing and forming
equipment sold under the MP Equipment brand name.
 
 The
International Distribution Division provides product sales, distribution, export
management, integrated design, and installation services through its operations
in Australia, Belgium, China, France, Germany, India, Italy, Lebanon, Mexico,
the Philippines, Russia, Saudi Arabia, Singapore, South Korea, Spain, Sweden,
Taiwan, United Arab Emirates and the United Kingdom.  The division
sells the company’s product lines and certain non-competing complementary
product lines throughout the world.  For a local country distributor
or dealer, the company is able to provide a centralized source of foodservice
equipment with complete export management and product support
services.
 
 The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The chief decision maker evaluates
individual segment performance based on operating income.  Management
believes that intersegment sales are made at established arms-length transfer
prices.
 
 Net Sales
Summary
 (dollars
in thousands)
 
 Three Months EndedApr 3, 2010
                                    
                                    
                                    Apr 4, 2009Sales
                                    
                                    
                                    Percent
                                    
                                    
                                    Sales
                                    
                                    
                                    PercentBusiness Divisions:Commercial
      Foodservice
                                    
                                    $
                                    136,235
                                    
                                    
                                    
                                    84.8
                                    
                                    
                                    $
                                    163,529
                                    
                                    
                                    
                                    90.1Food
      Processing
                                    
                                    
                                    20,146
                                    
                                    
                                    
                                    12.5
                                    
                                    
                                    
                                    12,865
                                    
                                    
                                    
                                    7.1International
      Distribution(1)
                                    
                                    
                                    10,438
                                    
                                    
                                    
                                    6.5
                                    
                                    
                                    
                                    11,997
                                    
                                    
                                    
                                    6.6Intercompany
      sales (2)
                                    
                                    
                                    (6,136
                                    )
                                    
                                    
                                    (3.8
                                    )
                                    
                                    
                                    (6,845
                                    )
                                    
                                    
                                    (3.8
                                    )Total
                                    
                                    $
                                    160,683
                                    
                                    
                                    
                                    100.0
                                    %
                                    
                                    $
                                    181,546
                                    
                                    
                                    
                                    100.0
                                    %
 
 (1)
              Consists
      of sales of products manufactured by Middleby and products manufactured by
      third parties.
 
 (2)
              Represents
      the elimination of sales from the Commercial Foodservice Equipment Group
      to the InternationalDistribution
      Division
  17
  The
following table summarizes the results of operations for the company's business
segments(1)(in
thousands):
 
 Commercial
                    
                    
                    Food
                    
                    
                    International
                    
                    
                    CorporateFoodservice
                    
                    
                    Processing
                    
                    
                    Distribution
                    
                    
                    and Other(2)
                    
                    
                    Eliminations(3)
                    
                    
                    TotalThree
      months ended April 3, 2010Net
      sales
                    
                    $
                    136,235
                    
                    
                    $
                    20,146
                    
                    
                    $
                    10,438
                    
                    
                    $
                    —
                    
                    
                    $
                    (6,136
                    )
                    
                    $
                    160,683Operating
      income
                    
                    
                    30,480
                    
                    
                    
                    4,372
                    
                    
                    
                    855
                    
                    
                    
                    (9,272
                    )
                    
                    
                    —
                    
                    
                    
                    26,435Depreciation
      and amortization expense
                    
                    
                    3,395
                    
                    
                    
                    358
                    
                    
                    
                    38
                    
                    
                    
                    125
                    
                    
                    
                    —
                    
                    
                    
                    3,916Net
      capital expenditures
                    
                    
                    1,322
                    
                    
                    
                    62
                    
                    
                    
                    17
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    1,401Total
      assets
                    
                    
                    675,308
                    
                    
                    
                    68,880
                    
                    
                    
                    24,013
                    
                    
                    
                    47,957
                    
                    
                    
                    (5,498
                    )
                    
                    
                    810,660Long-lived
      assets
                    
                    
                    523,763
                    
                    
                    
                    43,445
                    
                    
                    
                    427
                    
                    
                    
                    29,386
                    
                    
                    
                    —
                    
                    
                    
                    597,021Three
      months ended April 4, 2009Net
      sales
                    
                    $
                    163,529
                    
                    
                    $
                    12,865
                    
                    
                    $
                    11,997
                    
                    
                    $
                    —
                    
                    
                    $
                    (6,845
                    )
                    
                    $
                    181,546Operating
      income
                    
                    
                    35,119
                    
                    
                    
                    1,673
                    
                    
                    
                    694
                    
                    
                    
                    (9,650
                    )
                    
                    
                    255
                    
                    
                    
                    28,091Depreciation
      and amortization expense
                    
                    
                    4,663
                    
                    
                    
                    348
                    
                    
                    
                    37
                    
                    
                    
                    157
                    
                    
                    
                    —
                    
                    
                    
                    5,205Net
      capital expenditures
                    
                    
                    1,549
                    
                    
                    
                    24
                    
                    
                    
                    59
                    
                    
                    
                    238
                    
                    
                    
                    —
                    
                    
                    
                    1,870Total
      assets
                    
                    
                    710,947
                    
                    
                    
                    66,724
                    
                    
                    
                    23,727
                    
                    
                    
                    36,717
                    
                    
                    
                    (6,135
                    )
                    
                    
                    831,980Long-lived
      assets
                    
                    
                    515,412
                    
                    
                    
                    43,135
                    
                    
                    
                    557
                    
                    
                    
                    22,269
                    
                    
                    
                    —
                    
                    
                    
                    581,373
 
 (1)
                Non-operating
      expenses are not allocated to the operating
      segments.  Non-operating expenses consist of interest expenseand
      deferred financing amortization, foreign exchange gains and losses and
      other income and expense items outside ofincome
      from operations.
 
 (2)
              Includes
      corporate and other general company assets and
  operations.
 
 (3)
              Includes
      elimination of intercompany sales, profit in inventory and intercompany
      receivables. Intercompany sale transactions arepredominantly
      from the Commercial Foodservice Equipment Group to the International
      Distribution Division.
 
 Long-lived
assets by major geographic region are as follows (in
thousands):
 
 Three Months EndedApr 3, 2010
                    
                    
                    Apr 4, 2009United
      States and Canada
                    
                    $
                    570,621
                    
                    
                    $
                    555,190Asia
                    
                    
                    1,916
                    
                    
                    
                    278Europe
      and Middle East
                    
                    
                    24,279
                    
                    
                    
                    25,692Latin
      America
                    
                    
                    205
                    
                    
                    
                    213Total
      international
                    
                    $
                    26,400
                    
                    
                    $
                    26,183$
                    597,021
                    
                    
                    $
                    581,373
  18




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 EndedApr 3, 2010
                                
                                
                                Apr 4, 2009United
      States and Canada
                                
                                $
                                128,929
                                
                                
                                $
                                158,532Asia
                                
                                
                                8,913
                                
                                
                                
                                5,307Europe
      and Middle East
                                
                                
                                18,825
                                
                                
                                
                                13,576Latin
      America
                                
                                
                                4,016
                                
                                
                                
                                4,131Total
      international
                                
                                $
                                31,754
                                
                                
                                $
                                23,014$
                                160,683
                                
                                
                                $
                                181,546





13)
            Employee
      Retirement Plans





(a)           Pension
Plans





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





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





The
company also maintains a retirement benefit agreement with its Chairman. The
retirement benefits are based upon a percentage of the Chairman’s final base
salary. Additionally, the company maintains a retirement plan for non-employee
directors participating on the Board of Directors prior to 2004. This plan is
not available to any new non-employee directors. The plan provides for an annual
benefit upon a change in control of the company or retirement from the Board of
Directors at age 70, equal to 100% of the director’s last annual retainer,
payable for a number of years equal to the director’s years of service up to a
maximum of 10 years.





In
March 2010, the Patient Protection and Affordable Care Act and a
reconciliation measure, the Health Care and Education Reconciliation Act of
2010, (collectively, the Act) were signed into law. The company is currently
evaluating other provisions of the Act to determine its potential impact, if
any, on health care benefit costs.


19


(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.





14)
            Subsequent
      Events





On May 5,
2010, the company announced that it had entered into an agreement to acquire the
net assets and operations of Perfect Fry Company LTD, a leading manufacturer of
ventless countertop frying units for the commercial foodservice industry. The
transaction is expected to close in June 2010.


20


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





Informational
Notes





This
report contains forward-looking statements subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995. The company cautions
readers that these projections are based upon future results or events and are
highly dependent upon a variety of important factors which could cause such
results or events to differ materially from any forward-looking statements which
may be deemed to have been made in this report, or which are otherwise made by
or on behalf of the company. Such factors include, but are not limited to,
volatility in earnings resulting from goodwill impairment losses which may occur
irregularly and in varying amounts; variability in financing costs; quarterly
variations in operating results; dependence on key customers; international
exposure; foreign exchange and political risks affecting international sales;
ability to protect trademarks, copyrights and other intellectual property;
changing market conditions; the impact of competitive products and pricing; the
timely development and market acceptance of the company’s products; the
availability and cost of raw materials; and other risks detailed herein and from
time-to-time in the company’s Securities and Exchange Commission filings,
including the company’s 2009 Annual Report on Form 10-K and Item 1A of this Form
10-Q.




The
economic outlook for 2010 continues to be uncertain at this time, with turmoil
in financial markets and unprecedented government intervention around the world.
As a global business, the company’s operating results are impacted by the health
of the North American, European, Asian and Latin American economies. While the
response by governments and central banks around the world may reduce volatility
in the markets, the depth and duration of economic impact and the timing and
strength of the recovery remain unpredictable.


21


Net Sales
Summary


(dollars
in thousands)





Three Months EndedApr. 3, 2010
                    
                    
                    Apr. 4, 2009Sales
                    
                    
                    Percent
                    
                    
                    Sales
                    
                    
                    PercentBusiness Divisions:Commercial
      Foodservice
                    
                    $
                    136,235
                    
                    
                    
                    84.8
                    
                    
                    $
                    163,529
                    
                    
                    
                    90.1Food
      Processing
                    
                    
                    20,146
                    
                    
                    
                    12.5
                    
                    
                    
                    12,865
                    
                    
                    
                    7.1International
      Distribution(1)
                    
                    
                    10,438
                    
                    
                    
                    6.5
                    
                    
                    
                    11,997
                    
                    
                    
                    6.6Intercompany
      sales (2)
                    
                    
                    (6,136
                    )
                    
                    
                    (3.8
                    )
                    
                    
                    (6,845
                    )
                    
                    
                    (3.8
                    )Total
                    
                    $
                    160,683
                    
                    
                    
                    100.0
                    %
                    
                    $
                    181,546
                    
                    
                    
                    100.0
                    %





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





(2)    Represents
the elimination of sales from the Commercial Foodservice Equipment Group to
the


International Distribution
Division.





Results of
Operations





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





Three Months EndedApr 3, 2010
                  
                  
                  Apr 4, 2009Net
      sales
                  
                  
                  100.0
                  %
                  
                  
                  100.0
                  %Cost
      of sales
                  
                  
                  60.5
                  
                  
                  
                  62.1Gross
      profit
                  
                  
                  39.5
                  
                  
                  
                  37.9Selling,
      general and administrative expenses
                  
                  
                  23.0
                  
                  
                  
                  22.4Income
      from operations
                  
                  
                  16.5
                  
                  
                  
                  15.5Net
      interest expense and deferred financing amortization
                  
                  
                  1.6
                  
                  
                  
                  1.7Other
      expense, net
                  
                  
                  0.2
                  
                  
                  
                  0.2Earnings
      before income taxes
                  
                  
                  14.7
                  
                  
                  
                  13.6Provision
      for income taxes
                  
                  
                  6.1
                  
                  
                  
                  5.8Net
      earnings
                  
                  
                  8.6
                  %
                  
                  
                  7.8
                  %


22


Three Months Ended April 3,
2010 Compared to Three Months Ended April 4,
2009





NET
SALES.Net sales for the first
quarter of fiscal 2010 were $160.7 million as compared to $181.5 million in the
first quarter of 2009.





Net sales
at the Commercial Foodservice Equipment Group amounted to $136.2 million in the
first quarter of 2010 as compared to $163.5 million in the prior year
quarter.





Net sales
from the acquisitions of CookTek, Anets and Doyon which were acquired on April
26, 2009, April 30, 2009 and December 14, 2009, respectively accounted for an
increase of $7.1 million during the first quarter of 2010. Excluding the impact
of acquisitions, net sales of commercial foodservice equipment decreased $35.3
million, primarily as a result of a large order to a major restaurant chain that
occurred in the prior year and was not repeated in 2010.





Net sales
for the Food Processing Equipment Group amounted to $20.1 million in the first
quarter of 2010 as compared to $12.9 million in the prior year quarter. Net
sales of food processing equipment increased as economic conditions improved in
comparison to the 2009 first quarter and capital spending budgets of food
processors increased.




GROSS
PROFIT.Gross profit decreased to
$63.5 million in the first quarter of 2010 from $68.8 million in the prior year
period, reflecting the impact of lower sales volumes. The gross margin rate was
39.5 % in the first quarter of 2010 as compared to 37.9% in the prior year
quarter. The net increase in the gross margin rate reflects:





·
            Cost
      reduction initiatives that were instituted in 2009 due to economic
      conditions.





·
            Improved
      margins at certain of the newly acquired operating companies which have
      improved due to acquisition integration initiatives including cost savings
      from plant consolidations.





·
            Reduced
      material costs associated with supply chain
  initiatives.





SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.Combined selling, general,
and administrative expenses decreased from $40.7 million in the first quarter of
2009 to $37.0 million in the first quarter of 2010. As a percentage of net
sales, operating expenses increased from 22.4% in the first quarter of 2009 to
23.0% in the first quarter of 2010. Selling expenses increased from $16.3
million in the first quarter of 2009 to $17.6 million in the first quarter of
2010. Selling expenses reflect increased costs of $0.7 million associated the
acquisitions of Cooktek, Anets and Doyon and increased costs of $0.6 million
related to compensation expenses offset by reduced costs of $0.3 million
associated with commission expense due to lower sales and lower commission
rates. General and administrative expenses decreased from $24.4 million in the
first quarter of 2009 to $19.4 million in the first quarter of 2010. General and
administrative expenses reflect a decrease of $2.3 million of costs related to
manufacturing consolidation initiatives in the first quarter of 2009, a decrease
of $1.0 million associated with pension costs and a decrease of $0.7 million
associated with professional fees offset by $0.7 million of increased costs in
2010 associated with the acquired operations of CookTek, Anets and Doyon and
$0.7 million associated with increased incentive based
compensation.


23





NON-OPERATING
EXPENSES.Interest and deferred financing amortization costs decreased to
$2.5 million in the first quarter of 2010 as compared to $3.1 million in the
first quarter of 2009, due to lower interest rates on lower average debt
balances. Other expense of $0.3 million in the first quarter of 2010 remained
consistent with the first quarter of 2009. Other expense consists primarily of
foreign exchange losses.





INCOME
TAXES.A tax provision of $9.9
million, at an effective rate of 42%, was recorded during the first quarter of
2010, as compared to a $10.6 million provision at a 43% effective rate in the
prior year quarter.





Financial Condition and
Liquidity





During
the three months ended April 3, 2010, cash and cash equivalents decreased by
$0.1 million to $8.3 million at April 3, 2010 from $8.4 million at January 2,
2010. Net borrowings decreased from $275.6 million at January 2, 2010 to $271.0
million at April 3, 2010.





OPERATING
ACTIVITIES.Net cash provided by
operating activities was $6.8 million for the three month period ended April 3,
2010 compared to $9.9 million for the three-month period ended April 4,
2009.





During
the three months ended April 3, 2010, working capital levels changed due to
normal business fluctuations, including the impact of increased seasonal working
capital needs. These changes in working capital levels included a $5.6 million
increase in accounts receivable, a $0.6 million decrease in inventory and a $0.7
million increase in accounts payable. Prepaid and other assets decreased $6.4
million primarily associated with the utilization of prepaid tax balances in the
first quarter of 2010. Accrued expenses and other non-current liabilities also
decreased by $16.2 million primarily due to the payment of 2009 annual rebate
and incentive compensation programs in the first quarter of 2010.





INVESTING
ACTIVITIES.During the three months
ended April 3, 2010, net cash used in investing activities amounted to $3.0
million. This includes $1.4 million of capital expenditures associated with
additions and upgrades of production equipment and $1.6 million associated with
deferred payments to the sellers of Giga.





FINANCING
ACTIVITIES.Net cash flows used by financing activities were $4.0 million
during the three months ended April 3, 2010. The net decrease in debt includes
$4.8 million in repayments under the company’s $497.8 million revolving credit
facility utilized to fund the company’s investing activities.





At April
3, 2010, 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.


24





Recently Issued Accounting
Standards





In
January 2010, the Financial Accounting Standards Board (“FASB”) issued ASU
No. 2010-06, Fair Value Measurements and Disclosures (Topic 820),
“Improving Disclosures about Fair Value Measurements” (“ASU No. 2010-06”).
ASU 2010-06 requires new disclosures about significant transfers in and out of
Level 1 and Level 2 fair value measurements and the reasons for such transfers
and in the reconciliation for Level 3 fair value measurements, to disclose
separately information about purchases, sales, issuances and settlements. The
company adopted the provisions of ASU No. 2010-06 on January 3, 2010,
except for disclosures about purchases, sales, issuances and settlements in the
reconciliation for Level 3 fair value measurements. These disclosures will be
effective for financial statements issued for fiscal years beginning after
December 15, 2010. The adoption of ASU No. 2010-06 “Improving Disclosures
about Fair Value Measurements” did not have a material impact on the company’s
financial position, results of operations or cash flows.





Critical Accounting Policies
and Estimates





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





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





At the
Food Processing Equipment Group, the company enters into long-term sales
contracts for certain products. Revenue under these long-term sales contracts is
recognized using the percentage of completion method prescribed by ASC
605-25-25 “Percentage of Completion Method of Recognizing Revenue under
Construction Contracts”due to the length of time to fully manufacture
and assemble the equipment. The company measures revenue recognized based on the
ratio of actual labor hours incurred in relation to the total estimated labor
hours to be incurred related to the contract. Because estimated labor hours to
complete a project are based upon forecasts using the best available
information, the actual hours may differ from original estimates. The percentage
of completion method of accounting for these contracts most accurately reflects
the status of these uncompleted contracts in the company's financial statements
and most accurately measures the matching of revenues with expenses. At the time
a loss on a contract becomes known, the amount of the estimated loss is
recognized in the consolidated financial statements.


25


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.


26





Income
taxes:The
company operates in numerous foreign and domestic taxing jurisdictions where it
is subject to various types of tax, including sales tax and income tax. 
The company's tax filings are subject to audits and adjustments. Because of the
nature of the company’s operations, the nature of the audit items can be
complex, and the objectives of the government auditors can result in a tax on
the same transaction or income in more than one state or country.  The
company initially recognizes the financial statement effects of a tax position
when it is more likely than not, based on the technical merits, that the
position will be sustained upon examination. For tax positions that meet the
more-likely-than-not recognition threshold, the company initially and
subsequently measures its tax positions as the largest amount of tax benefit
that is greater than 50 percent likely of being realized upon effective
settlement with the taxing authority. As part of the company's calculation of
the provision for taxes, the company has recorded liabilities on various tax
positions that are currently under audit by the taxing authorities. The
liabilities may change in the future upon effective settlement of the tax
positions.





Contractual
Obligations





The
company's contractual cash payment obligations as of April 3, 2010 are set forth
below (in thousands):





Amounts
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    TotalDue Sellers
                    
                    
                    
                    
                    
                    
                    
                    
                    Idle
                    
                    
                    ContractualFrom
                    
                    
                    Long-term
                    
                    
                    Operating
                    
                    
                    Facility
                    
                    
                    CashAcquisitions
                    
                    
                    Debt
                    
                    
                    Leases
                    
                    
                    Leases
                    
                    
                    ObligationsLess
      than 1 year
                    
                    $
                    2,983
                    
                    
                    $
                    7,015
                    
                    
                    $
                    3,611
                    
                    
                    $
                    742
                    
                    
                    $
                    14,3511-3
      years
                    
                    
                    5,032
                    
                    
                    
                    261,970
                    
                    
                    
                    5,900
                    
                    
                    
                    1,248
                    
                    
                    
                    274,1503-5
      years
                    
                    
                    252
                    
                    
                    
                    464
                    
                    
                    
                    2,437
                    
                    
                    
                    734
                    
                    
                    
                    3,887After
      5 years
                    
                    
                    —
                    
                    
                    
                    1,527
                    
                    
                    
                    67
                    
                    
                    
                    183
                    
                    
                    
                    1,777$
                    8,267
                    
                    
                    $
                    270,976
                    
                    
                    $
                    12,015
                    
                    
                    $
                    2,907
                    
                    
                    $
                    294,165





The
company has obligations to make $8.3 million of purchase price payments to the
sellers of Giga and CookTek that were deferred in conjunction with the
acquisitions.





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 $7.8 million in outstanding letters of credit, which expire on April
4, 2010 to secure potential obligations under insurance programs.





Idle
facility leases consists of obligations for manufacturing locations that were
exited in conjunction with the company's manufacturing consolidation efforts.
These lease obligations continue through June 2015. The obligations presented
above do not reflect any anticipated sublease income from the
facilities.


27


The
projected benefit obligation of the company’s defined benefit plans exceeded the
plans’ assets by $10.4 million at the end of 2009 as compared to $9.5 million at
the end of 2008.  The unfunded benefit obligations were comprised of a $3.3
million under funding of the company’s Smithville plan, which was acquired as
part of the Star acquisition, $0.9 million under funding of the company's union
plan and $6.2 million of under funding of the company's director plans. 
The company does not expect to contribute to the director plans in 2010. 
The company expects to continue to make minimum contributions to the Smithville
and Elgin plan as required by ERISA, which are expected to be $0.3 million and
$0.1 million, respectively in 2010.





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





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


28





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)April
      3, 2010
                  
                  $
                  —
                  
                  
                  $
                  7,015April
      3, 2011
                  
                  
                  —
                  
                  
                  
                  435April
      3, 2012
                  
                  
                  —
                  
                  
                  
                  261,535April
      3, 2013
                  
                  
                  —
                  
                  
                  
                  347April
      3, 2014 and thereafter
                  
                  
                  —
                  
                  
                  
                  1,644$
                  —
                  
                  
                  $
                  270,976





Terms of
the company’s senior credit agreement provide for $497.8 million of availability
under a revolving credit line. As of April 3, 2010, the company had $261.1
million of borrowings outstanding under this facility. The company also has $7.8
million in outstanding letters of credit, which reduces the borrowing
availability under the revolving credit line. Remaining borrowing availability
under this facility, which is also reduced by the company’s foreign borrowings,
was $219.9 million at April 3, 2010.





At April
3, 2010, borrowings under the senior secured credit facility are assessed at an
interest rate 1.0% above LIBOR for long-term borrowings or at the higher of the
Prime rate and the Federal Funds Rate. At April 3, 2010 the average interest
rate on the senior debt amounted to 1.31%. 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 April 3, 2010.





In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On April 3, 2010 these facilities amounted to
$3.9 million in U.S. dollars, including $2.0 million outstanding under a
revolving credit facility and $1.9 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 3.80% on April 3, 2010. The term loan matures in 2013 and the
interest rate is assessed at 5.05%.





In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings denominated in Euro.  On April 3, 2010 these
facilities amounted to $4.5 million in U.S. dollars.  The interest rate on
the credit facilities is tied to six-month Euro LIBOR. At April 3, 2010, the
average interest rate on these facilities was approximately 4.0%. The facilities
mature in April of 2015.


29


In
December 2009, the company completed its acquisition of Doyon in Canada. This
acquisition was funded in part with locally established debt facilities with
borrowings denominated in Canadian dollars. On April 3, 2010, these facilities
amounted to $1.5 million U.S. dollars. The borrowings under these facilities are
collateralized by the assets of the company. The interest rate on these credit
facilities is assessed at 0.75% above the prime rate. At April 3, 2010, the
average interest rate on these facilities amounted to 3.0% and 3.7%. These
facilities mature in 2017.





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





The
company has historically entered into interest rate swap agreements to
effectively fix the interest rate on its outstanding debt. The agreements swap
one-month LIBOR for fixed rates. As of April 3, 2010 the company had the
following interest rate swaps in effect:





FixedNotional
                              
                              Interest
                              
                              
                              Effective
                              
                              MaturityAmount
                              
                              Rate
                              
                              
                              Date
                              
                              Date15,000,000
                              
                              
                              1.220
                              %
                              
                              11/23/09
                              
                              11/23/1120,000,000
                              
                              
                              1.800
                              %
                              
                              11/23/09
                              
                              11/23/1225,000,000
                              
                              
                              3.670
                              %
                              
                              09/23/08
                              
                              09/23/1110,000,000
                              
                              
                              3.460
                              %
                              
                              09/08/08
                              
                              09/06/1115,000,000
                              
                              
                              3.130
                              %
                              
                              09/08/08
                              
                              09/06/1010,000,000
                              
                              
                              3.032
                              %
                              
                              02/06/08
                              
                              02/06/1120,000,000
                              
                              
                              1.560
                              %
                              
                              03/11/10
                              
                              12/11/1210,000,000
                              
                              
                              1.120
                              %
                              
                              03/11/10
                              
                              03/11/1210,000,000
                              
                              
                              3.590
                              %
                              
                              06/10/08
                              
                              06/10/1120,000,000
                              
                              
                              3.350
                              %
                              
                              06/10/08
                              
                              06/10/10





The terms
of the senior secured credit facility limit the paying of dividends, capital
expenditures and leases, and require, among other things, a maximum ratio of
indebtedness of 3.5 debt to earnings before interest, taxes, depreciation and
amortization (“EBITDA”) and a minimum fixed charge coverage of 1.25 EBITDA to
fixed charges. The credit agreement also provides that if a material adverse
change in the company’s business operations or conditions occurs, the lender
could declare an event of default. Under terms of the agreement a material
adverse effect is defined as (a) a material adverse change in, or a material
adverse effect upon, the operations, business properties, condition (financial
and otherwise) or prospects of the company and its subsidiaries taken as a
whole; (b) a material impairment of the ability of the company to perform under
the loan agreements and to avoid any event of default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against the
company of any loan document. A material adverse effect is determined on a
subjective basis by the company's creditors. The credit facility is secured by
the capital stock of the company’s domestic subsidiaries, 65% of the capital
stock of the company’s foreign subsidiaries and substantially all other assets
of the company. At April 3, 2010, the company was in compliance with all
covenants pursuant to its borrowing agreements.


30





Financing Derivative
Instruments





The
company has entered into interest rate swaps to fix the interest rate applicable
to certain of its variable-rate debt. The agreements swap one-month LIBOR for
fixed rates. The company has designated these swaps as cash flow hedges and all
changes in fair value of the swaps are recognized in accumulated other
comprehensive income. As of April 3, 2010, the fair value of these instruments
was a loss of $2.9 million. The change in fair value of these swap agreements in
the first three months of 2010 was a gain of $0.1 million, net of
taxes.





Foreign Exchange Derivative
Financial Instruments





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


31





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
April 3, 2010, the company carried out an evaluation, under the supervision and
with the participation of the company's management, including the company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the company's disclosure controls and procedures. Based
on the foregoing, the company's Chief Executive Officer and Chief Financial
Officer concluded that thecompany's disclosure
controls and procedures were effective as of the end of this
period.





During
the quarter ended April 3, 2010, 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.


32





PART II. OTHER
INFORMATION





The
company was not required to report the information pursuant to Items 1 through 6
of Part II of Form 10-Q for the three months ended April 3, 2010, except as
follows:





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





Issuer Purchases of Equity
Securities





Total
                        Number of
                        Shares
                        Purchased
                      
                      
                      Average
                        Price Paid
                        per Share
                      
                      
                      Total Number
                        of Shares
                        Purchased as
                        Part of Publicly
                        Announced
                        Plan or
                        Program
                      
                      
                      Maximum
                        Number of
                        Shares that May
                        Yet be
                        Purchased
                        Under the Plan
                        or ProgramJanuary
      3 to January 30, 2010
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      627,332January
      31, 2010 to February 27, 2010
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      627,332February
      28, 2010 to April 3, 2010
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      627,332Quarter
      ended April 3, 2010
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      627,332





In July
1998, the company's Board of Directors adopted a stock repurchase program that
authorized the purchase of common shares in open market purchases. As of April
3, 2010, 1,172,668 shares had been purchased under the 1998 stock repurchase
program.


33





Item
6. Exhibits





Exhibits
– The following exhibits are filed herewith:





Exhibit
      10.1 –
                Amended
      and Restated Employment Agreement, dated March 1, 2010, by and among The
      Middleby Corporation, Middleby Marshall Inc. and the Timothy J. FitzGerald
      (incorporated by reference to the company’s Current Report on Form 8-K
      filed on March 4, 2010).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).


34


SIGNATURE





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





THE MIDDLEBY CORPORATION(Registrant)Date
                                May 13, 2010
                                
                                By:
                                /s/ Timothy J.
FitzGeraldTimothy
      J. FitzGeraldVice
      President,Chief
      Financial
Officer


35