UNITED
STATES





SECURITIES AND EXCHANGE
COMMISSION





Washington,
D.C.  20549





FORM
10-Q





(Mark
One)


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





For
the quarterly period ended October 3, 2009





or


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





Commission
File No. 1-9973





THE MIDDLEBY
CORPORATION


(Exact
Name of Registrant as Specified in its Charter)





Delaware
                  
                  36-3352497(State
      or Other Jurisdiction of
                  
                  (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)1400 Toastmaster Drive, Elgin,
      Illinois
                  
                  60120(Address
      of Principal Executive Offices)
                  
                  (Zip
      Code)





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





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


Yes x
No   ̈





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


Yes o No   ̈





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 o Non-accelerated filer
oSmaller reporting company o





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





As of
November 6, 2009, there were 18,556,037 shares of the registrant's common stock
outstanding.





THE MIDDLEBY CORPORATION AND
SUBSIDIARIES





QUARTER ENDED OCTOBER 3,
2009





INDEX





DESCRIPTION
                    
                    PAGEPART
      I.  FINANCIAL INFORMATIONItem
      1.
                    Condensed
      Consolidated Financial Statements (unaudited)CONDENSED
      CONSOLIDATED BALANCE SHEETS
                      October
      3, 2009 and January 3, 2009
                    1CONDENSED
      CONSOLIDATED STATEMENTSOF
      EARNINGS
                      October
      3, 2009 and September 27, 2008
                    2CONDENSED
      CONSOLIDATED STATEMENTSOF
      CASH FLOWS
                      October
      3, 2009 and September 27, 2008
                    3NOTES
      TO CONDENSED CONSOLIDATEDFINANCIAL
      STATEMENTS
                    4Item
      2.
                    Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    25Item
      3.
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    37Item 4.
                    Controls
      and Procedures
                    40PART
      II. OTHER INFORMATIONItem
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    41Item
      6.
                    Exhibits
                    42





PART I.  FINANCIAL
INFORMATION




Item
1.   Condensed Consolidated Financial Statements





THE MIDDLEBY CORPORATION AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
BALANCE SHEETS


(Amounts
In Thousands, Except Share Data)


(Unaudited)





Oct 3, 2009
                        
                        
                        Jan 3, 2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                        
                        $
                        10,991
                        
                        
                        $
                        6,144Accounts
      receivable, net of reserve for doubtful accounts of $7,625 and
      $6,598
                        
                        
                        79,033
                        
                        
                        
                        85,969Inventories,
      net
                        
                        
                        93,879
                        
                        
                        
                        91,551Prepaid
      expenses and other
                        
                        
                        8,334
                        
                        
                        
                        7,646Current
      deferred taxes
                        
                        
                        33,047
                        
                        
                        
                        18,387Total
      current assets
                        
                        
                        225,284
                        
                        
                        
                        209,697Property,
      plant and equipment, net of accumulated depreciation of $44,785 and
      $40,370
                        
                        
                        46,184
                        
                        
                        
                        44,757Goodwill
                        
                        
                        361,515
                        
                        
                        
                        266,663Other
      intangibles
                        
                        
                        186,795
                        
                        
                        
                        125,501Other
      assets
                        
                        
                        3,403
                        
                        
                        
                        3,314Total
      assets
                        
                        $
                        823,181
                        
                        
                        $
                        649,932LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Current
      maturities of long-term debt
                        
                        $
                        6,890
                        
                        
                        $
                        6,377Accounts
      payable
                        
                        
                        39,879
                        
                        
                        
                        32,543Accrued
      expenses
                        
                        
                        126,232
                        
                        
                        
                        102,579Total
      current liabilities
                        
                        
                        173,001
                        
                        
                        
                        141,499Long-term
      debt
                        
                        
                        288,118
                        
                        
                        
                        228,323Long-term
      deferred tax liability
                        
                        
                        12,450
                        
                        
                        
                        33,687Other
      non-current liabilities
                        
                        
                        30,452
                        
                        
                        
                        23,029Stockholders'
      equity:Preferred
      stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none
      issued
                        
                        
                        —
                        
                        
                        
                        —Common
      stock, $0.01 par value; 47,500,000 shares authorized; 22,625,950 and
      21,068,556 shares issued in 2009 and 2008, respectively
                        
                        
                        136
                        
                        
                        
                        120Paid-in
      capital
                        
                        
                        157,399
                        
                        
                        
                        107,305Treasury
      stock at cost; 4,069,913 and 4,074,713 shares in 2009 and 2008,
      respectively
                        
                        
                        (102,000
                        )
                        
                        
                        (102,000
                        )Retained
      earnings
                        
                        
                        269,513
                        
                        
                        
                        226,231Accumulated
      other comprehensive income
                        
                        
                        (5,888
                        )
                        
                        
                        (8,262
                        )Total
      stockholders' equity
                        
                        
                        319,160
                        
                        
                        
                        223,394Total
      liabilities and stockholders' equity
                        
                        $
                        823,181
                        
                        
                        $
                        649,932





See
accompanying notes


1


THE MIDDLEBY CORPORATION AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS


(In
Thousands, Except Per Share Data)


(Unaudited)





Three Months Ended
                
                
                Nine Months EndedOct 3, 2009
                
                
                Sep27, 2008
                
                
                Oct 3, 2009
                
                
                Sep 27, 2008Net
      sales
                
                $
                153,989
                
                
                $
                166,472
                
                
                $
                494,136
                
                
                $
                500,868Cost
      of sales
                
                
                91,952
                
                
                
                101,735
                
                
                
                301,989
                
                
                
                310,221Gross
      profit
                
                
                62,037
                
                
                
                64,737
                
                
                
                192,147
                
                
                
                190,647Selling
      expenses
                
                
                16,361
                
                
                
                16,822
                
                
                
                49,335
                
                
                
                49,743General
      and administrative expenses
                
                
                17,602
                
                
                
                16,962
                
                
                
                59,702
                
                
                
                51,443Income
      from operations
                
                
                28,074
                
                
                
                30,953
                
                
                
                83,110
                
                
                
                89,461Net
      interest expense and deferred financing amortization
                
                
                2,797
                
                
                
                3,168
                
                
                
                8,800
                
                
                
                9,910Other
      expense, net
                
                
                (137
                )
                
                
                850
                
                
                
                607
                
                
                
                1,798Earnings
      before income taxes
                
                
                25,414
                
                
                
                26,935
                
                
                
                73,703
                
                
                
                77,753Provision
      for income taxes
                
                
                9,913
                
                
                
                10,645
                
                
                
                30,421
                
                
                
                31,165Net
      earnings
                
                $
                15,501
                
                
                $
                16,290
                
                
                $
                43,282
                
                
                $
                46,588Net
      earnings per share:Basic
                
                $
                0.88
                
                
                $
                1.02
                
                
                $
                2.46
                
                
                $
                2.91Diluted
                
                $
                0.83
                
                
                $
                0.96
                
                
                $
                2.34
                
                
                $
                2.72Weighted
      average number of sharesBasic
                
                
                17,600
                
                
                
                15,911
                
                
                
                17,589
                
                
                
                15,985Dilutive
      stock option   1
                
                
                1,154
                
                
                
                1,106
                
                
                
                931
                
                
                
                1,158Diluted
                
                
                18,754
                
                
                
                17,017
                
                
                
                18,520
                
                
                
                17,143





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





See
accompanying notes


2


THE MIDDLEBY CORPORATION AND
SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
Thousands)


(Unaudited)





Nine Months EndedOct 3, 2009
                
                
                Sep 27, 2008Cash
      flows from operating activities-Net
      earnings
                
                $
                43,282
                
                
                $
                46,588Adjustments
      to reconcile net earnings to cash provided by operating
      activities:Depreciation
      and amortization
                
                
                11,873
                
                
                
                10,256Deferred
      taxes
                
                
                (2,850
                )
                
                
                2,593Non-cash
      share-based compensation
                
                
                8,184
                
                
                
                8,421Unrealized
      loss on derivative financial instruments
                
                
                14
                
                
                
                169Changes
      in assets and liabilities, net of acquisitions Accounts receivable,
      net
                
                
                22,065
                
                
                
                100Inventories,
      net
                
                
                11,718
                
                
                
                (7,022
                )Prepaid
      expenses and other assets
                
                
                (850
                )
                
                
                13,243Accounts
      payable
                
                
                (2,636
                )
                
                
                (2,108
                )Accrued
      expenses and other liabilities
                
                
                (13,638
                )
                
                
                (8,248
                )Net
      cash provided by operating activities
                
                
                77,162
                
                
                
                63,992Cash
      flows from investing activities-Net
      additions to property and equipment
                
                
                (4,941
                )
                
                
                (3,408
                )Acqusition
      of Carter Hoffman
                
                
                -
                
                
                
                (167
                )Acquisition
      of MP
                
                
                -
                
                
                
                (3,000
                )Acquisition
      of Wells Bloomfield
                
                
                -
                
                
                
                (317
                )Acquisition
      of Star
                
                
                -
                
                
                
                (188,241
                )Acquisition
      of Giga
                
                
                -
                
                
                
                (9,918
                )Acquisition
      of Frifri
                
                
                -
                
                
                
                (3,050
                )Acquisition
      of TurboChef
                
                
                (116,129
                )
                
                
                -Acquisition
      of CookTek
                
                
                (8,000
                )
                
                
                -Acquisition
      of Anets
                
                
                (3,359
                )
                
                -Net
      cash (used in) investing activities
                
                
                (132,429
                )
                
                
                (208,101
                )Cash
      flows from financing activities-Net
      proceeds under revolving credit facilities
                
                
                59,650
                
                
                
                156,450Net
      payments under foreign bank loan
                
                
                221
                
                
                
                525Debt
      issuance costs
                
                
                -
                
                
                
                (1,002
                )Repurchase
      of treasury stock
                
                
                -
                
                
                
                (12,359
                )Net
      proceeds from stock issuances
                
                
                384
                
                
                
                270Net
      cash provided by financing activities
                
                
                60,255
                
                
                
                143,884Effect
      of exchange rates on cash and cash equivalents
                
                
                (141
                )
                
                
                (211
                )Changes
      in cash and cash equivalents-Net
      increase (decrease) in cash and cash equivalents
                
                
                4,847
                
                
                
                (436
                )Cash
      and cash equivalents at beginning of year
                
                
                6,144
                
                
                
                7,463Cash
      and cash equivalents at end of quarter
                
                $
                10,991
                
                
                $
                7,027Supplemental
      disclosure of cash flow information:Interest
      paid
                
                $
                8,170
                
                
                $
                8,524Income
      tax payments
                
                $
                24,509
                
                
                $
                19,582Non-cash
      investing and  financing activities:Stock
      issuance related to the acquisition of TurboChef
                
                $
                44,048
                
                
                $
                —Contingent
      consideration related to the acquisition of CookTek
                
                $
                7,360
                
                
                $
                —





See
accompanying notes


3





THE MIDDLEBY CORPORATION AND
SUBSIDIARIES





NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS





October 3,
2009


(Unaudited)





1)
            Summary
      of Significant Accounting Policies





A)
            Basis
      of Presentation





The
condensed consolidated financial statements have been prepared by The Middleby
Corporation (the "company"), pursuant to the rules and regulations of the
Securities and Exchange Commission. The financial statements are unaudited and
certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations, although the company believes that the disclosures are
adequate to make the information not misleading.  These financial
statements should be read in conjunction with the financial statements and
related notes contained in the company's 2008 Form 10-K.





In the
opinion of management, the financial statements contain all adjustments
necessary to present fairly the financial position of the company as of October
3, 2009 and January 3, 2009, and the results of operations for the nine months
ended October 3, 2009 and September 27, 2008 and cash flows for the nine months
ended October 3, 2009 and September 27, 2008.





Events
that occurred after October 3, 2009, up until the filing of this Form 10-Q on
November 12, 2009 were considered in the preparation of these condensed
consolidated financial statements.





B)
            Non-
      Cash Share-Based Compensation





The
company estimates the fair value of market-based stock awards and stock options
at the time of grant and recognizes compensation cost over the vesting period of
the awards and options.  Non-cash share-based compensation expense was
$2.7 million and $2.8 million for the three months ended October 3, 2009 and
September 27, 2008 respectively.  Non-cash share-based compensation
was $8.2 million and $8.4 million for the nine month periods ended October 3,
2009 and September 27, 2008, 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 3, 2009, the total amount of liability for unrecognized tax benefits was
approximately $10.4 million (of which the entire amount would impact the
effective tax rate if recognized) plus approximately $1.4 million of accrued
interest and $1.8 million of penalties. It is reasonably possible that the
amounts of unrecognized tax benefits associated with state, federal and foreign
tax positions may decrease over the next twelve months due to expiration of a
statute or completion of an audit. While a reasonable range of the amount cannot
be determined, the company believes such decrease would not be
material.





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





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





D)
            Fair
      Value Measures





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.





ASC 825
“Financial Instruments” delayed the effective date of the application of ASC 820
to fiscal years beginning after November 15, 2008 for all nonfinancial
assets and nonfinancial liabilities that are recognized or disclosed at fair
value in the financial statements on a non-recurring basis. The adoption of ASC
825 did not have a material impact on the company’s financial position, results
of operations or cash flows.


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 and liabilities that are measured at fair value are
categorized using the fair value hierarchy at October 3, 2009 are as follows (in
thousands):





Fair Value
                  
                  
                  Fair Value
                  
                  
                  Fair ValueLevel 1
                  
                  
                  Level 2
                  
                  
                  Level 3
                  
                  
                  TotalFinancial
      Assets:None
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Financial
      Liabilities:Interest
      rate swaps
                  
                  
                  —
                  
                  
                  $
                  4,008
                  
                  
                  
                  —
                  
                  
                  $
                  4,008Contingent
      consideration
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  $
                  7,360
                  
                  
                  $
                  7,360





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





ASC 825
“Financial Instruments” also permits entities to choose to measure many
financial instruments and certain other items at fair value.  As the
company did not elect the fair value option, the adoption of ASC 825 did not
have a material impact on the company’s financial position, results of
operations and cash flows for the nine months ended October 3,
2009.









2)
              Acquisitions
      and Purchase Accounting





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





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


6





Star





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





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





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





The
goodwill and $47.0 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350 “Intangibles -
Goodwill and Other”.  Other intangibles also includes $0.4 million
allocated to backlog, $3.8 million allocated to developed technology and $24.0
million allocated to customer relationships which are to be amortized over
periods of 1 month, 7 years and 7 years, respectively.  Goodwill and
other intangibles of Star are allocated to the Commercial Foodservice Equipment
Group for segment reporting purposes. These assets generally are not expected to
be deductible for tax purposes.





Pro forma Financial
Information





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





December 29, 2007Net
      sales
                  
                  $
                  592,513Net
      earnings
                  
                  $
                  51,769Net
      earnings per share:Basic
                  
                  $
                  3.30Diluted
                  
                  $
                  3.06





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


7





Giga





On April
22, 2008, the company acquired the stock of Giga Grandi Cucine S.r.l. (“Giga”),
a leading European manufacturer of ranges, ovens and steam cooking equipment for
a purchase price of $9.7 million in cash plus transaction costs.  The
company also assumed $5.1 million of debt included as part of the net assets of
Giga.  An additional deferred payment of $3.3 million is also due
to the seller ratably over a three year period.





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





April 22, 2008Cash
                  
                  $
                  217Current
      assets
                  
                  
                  12,442Property,
      plant and equipment
                  
                  
                  628Goodwill
                  
                  
                  10,474Other
      intangibles
                  
                  
                  5,242Other
      assets
                  
                  
                  473Current
      maturities of long-term debt
                  
                  
                  (5,105
                  )Current
      liabilities
                  
                  
                  (6,874
                  )Other
      non-current liabilities
                  
                  
                  (7,347
                  )Total
      cash paid
                  
                  $
                  10,150





The
goodwill and $3.7 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350.  Other
intangibles also includes $0.2 million allocated to backlog and $1.3 million
allocated to customer relationships, which are to be amortized over periods of 3
months and 4 to 10 years, respectively.  Goodwill and other
intangibles of Giga are allocated to the Commercial Foodservice Equipment Group
for segment reporting purposes.





Frifri





On April
23, 2008, the company acquired the assets of FriFri aro SA (“FriFri”), a leading
European supplier of frying systems for an aggregate purchase price of $3.4
million plus transaction costs.





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





April 23, 2008Cash
                  
                  $
                  663Current
      assets
                  
                  
                  5,076Property,
      plant and equipment
                  
                  
                  398Goodwill
                  
                  
                  3,573Current
      liabilities
                  
                  
                  (6,182
                  )Total
      cash paid
                  
                  $
                  3,528


8





The
goodwill is subject to the non-amortization provisions of ASC
350.  Goodwill of Frifri is allocated to the Commercial Foodservice
Equipment Group for segment reporting purposes.




TurboChef





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





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





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





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





The
goodwill and $49.8 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of ASC 350.  Other
intangibles also includes $0.4 million allocated to backlog, $3.9 million
allocated to developed technology and $8.9 million allocated to customer
relationships which are to be amortized over periods of 3 months, 5 years and 5
years, respectively.  Goodwill and other intangibles of TurboChef are
allocated to the Commercial Foodservice Equipment Group for segment reporting
purposes. These
assets generally are not expected to be deductible for tax
purposes.


9





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




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




Results
of Operations





The
following unaudited results of operations for the three and nine months ended
October 3, 2009, reflect the operations of TurboChef on a stand-alone basis (in
thousands):





Three Months Ended
                    Oct 3, 2009
                  
                  
                  Nine Months Ended
                    Oct 3, 2009Net
      sales
                  
                  $
                  16,750
                  
                  
                  $
                  59,080Income
      from operations
                  
                  $
                  2,903
                  
                  
                  $
                  10,199





Pro
forma Financial Information





The
following unaudited pro forma results of operations for the three and nine
months ended September 27, 2008 assumes the TurboChef acquisition was completed
on December 30, 2007.  The pro forma results include adjustments to reflect
additional interest expense to fund the acquisition, amortization of intangibles
associated with the acquisition, and the effects of adjustments made to the
carrying value of certain assets.





Three Months Ended
                    Sep 27, 2008
                  
                  
                  Nine Months Ended
                    Sep 27, 2008Net
      sales
                  
                  $
                  186,696
                  
                  
                  $
                  566,585Net
      earnings
                  
                  
                  11,411
                  
                  
                  
                  31,308Net
      earnings per share:Basic
                  
                  
                  0.66
                  
                  
                  
                  1.78Diluted
                  
                  
                  0.61
                  
                  
                  
                  1.67





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


10





CookTek





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





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





Apr 26, 2009
                  
                  
                  Measurement Period
                  
                  
                  Apr 26, 2009(as initially reported)
                  
                  
                  Adjustments
                  
                  
                  (as adjusted)Current
      assets
                  
                  $
                  2,595
                  
                  
                  $
                  (12
                  )
                  
                  $
                  2,583Property,
      plant and equipment
                  
                  
                  152
                  
                  
                  
                  —
                  
                  
                  
                  152Goodwill
                  
                  
                  11,544
                  
                  
                  
                  12
                  
                  
                  
                  11,556Other
      intangibles
                  
                  
                  3,622
                  
                  
                  
                  —
                  
                  
                  
                  3,622Current
      liabilities
                  
                  
                  (3,428
                  )
                  
                  
                  —
                  
                  
                  
                  (3,428
                  )Other
      non-current liabilities
                  
                  
                  (6,485
                  )
                  
                  
                  —
                  
                  
                  
                  (6,485
                  )Total
      cash paid
                  
                  $
                  8,000
                  
                  
                  $
                  —
                  
                  
                  $
                  8,000Deferred
      cash payment
                  
                  
                  1,000
                  
                  
                  
                  —
                  
                  
                  
                  1,000Contingent
      consideration
                  
                  
                  7,360
                  
                  
                  
                  —
                  
                  
                  
                  7,360Net
      assets acquired and liabilities assumed
                  
                  $
                  16,360
                  
                  
                  $
                  —
                  
                  
                  $
                  16,360





The
CookTek purchase agreement included an earnout provision providing for
contingent payments due to the sellers to the extent certain financial targets
are exceeded.  The earnout amounts are payable in the four consecutive
years subsequent to the acquisition date if CookTek is to exceed certain sales
targets for each of those years.  The earnout payment will amount to
10% of the sales in excess of the target for each of the respective
years.  There is no cap on the potential earnout payment, however, the
company’s estimated probable range of the contingent consideration is between $0
and $15 million.  The fair value of the contractual obligation
associated with the contingent earnout provision recognized on the acquisition
date is $7.4 million.  This
amount was determined based on an income approach.  The fair value
measurement is based upon significant inputs not observable in the market and
thus represents a Level 3 measurement as defined in ASC 820





The
goodwill and $2.3 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, $0.9
million allocated to developed technology and $0.5 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.


11





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





Anets





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





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





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





The
goodwill and $0.9 million of other intangibles associated with the trade name
are subject to the non-amortization provisions of 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.


12





3)
            Litigation
      Matters





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





4)
            Recently
      Issued Accounting Standards





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued ASC 805,
“Business Combinations”.  This statement provides companies with
principles and requirements on how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, liabilities assumed, and
any noncontrolling interest in the acquiree as well as the recognition and
measurement of goodwill acquired in a business combination. This statement also
requires certain disclosures to enable users of the financial statements to
evaluate the nature and financial effects of the business combination.
Acquisition costs associated with the business combination will generally be
expensed as incurred. This statement is effective for business combinations
occurring in fiscal years beginning after December 15,
2008.  Early adoption of ASC 805 was not permitted.  The
company adopted this statement on January 5, 2009, including the acquisition of
TurboChef.  Accordingly, the company has applied the principles of ASC 805
in valuing this acquisition.  Middleby shares of common stock which were
issued in conjunction with this transaction were valued using the share price at
the time of closing to determine the value of the purchase price.
 Additionally, the company incurred approximately $4.6 million in
transaction related expenses which were recorded as a deferred acquisition cost
reported as an asset on the balance sheet on January 3, 2009.  In
accordance with ASC 805, the company has applied a retrospective application and
appropriately reflected the expense incurred in 2008  as a reduction
in retained earnings in accordance with ASC 250-10-45, “Change in Accounting
Principles,” on reporting a change in accounting principle.





In
December 2007, the FASB issued ASC 810-10, “Consolidation”.  This
statement establishes accounting and reporting standards for the noncontrolling
interest (minority interest) in a subsidiary and for the deconsolidation of a
subsidiary. Upon its adoption, effective as of the beginning of the company’s
2009 fiscal year, noncontrolling interests will be classified as equity in the
company’s financial statements and income and comprehensive income attributed to
the noncontrolling interest will be included in the company’s income and
comprehensive income. The provisions of this standard must be applied
retrospectively upon adoption.  The adoption of ASC 810-10
“Consolidation” did not have a material impact on the company’s financial
position, results of operations or cash flows.


13





In
December 2008, the FASB issued ASC 715-20 “Compensation-Retirement
Benefits.” This statement requires disclosures about assets held in an
employer’s defined benefit pension or other postretirement plan. This statement
requires the disclosure of the percentage of the fair value of total plan assets
for each major category of plan assets, such as equity securities, debt
securities, real estate and all other assets, with the fair value of each major
asset category as of each annual reporting date for which a financial statement
is presented. It also requires disclosure of the level within the fair value
hierarchy in which each major category of plan assets falls, using the guidance
in ASC 820, “Fair Value Measurements and Disclosures.” This statement is
applicable to employers that are subject to the disclosure requirements and is
generally effective for fiscal years ending after December 15, 2009. The
company will comply with the disclosure provisions of this statement after its
effective date.





In May
2009, the FASB issued ASC 855, “Subsequent Events.” The objective of this
statement is to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This statement defines the period
after the balance sheet during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events occurring after the balances sheet date in its financial
statements and required disclosures. This statement is effective for interim or
annual financial periods ending after June 15, 2009.  The company has
complied with the disclosure requirements of ASC 855. The adoption of ASC 855
did not have a material impact on the company’s financial position, results of
operations or cash flows.





In June
2009, the FASB issued ASC 105 “Generally Accepted Accounting Principles.” This
statement sets forth a new authoritative guidance for U.S. generally accepted
accounting principles “GAAP” applicable to nongovernmental
entities.  ASC 105 establishes the GAAP hierarchy to include only two
levels of GAAP: authoritative and nonauthoritative. This statement is effective
for financial statements issued for interim and annual periods ending after
September 15, 2009. The company has complied with the reporting requirements of
ASC 105. The adoption of ASC 105 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 Ended
                  
                  
                  Nine Months EndedOct 3, 2009
                  
                  
                  Sept 27, 2008
                  
                  
                  Oct 3, 2009
                  
                  
                  Sept 27, 2008Net
      earnings
                  
                  $
                  15,501
                  
                  
                  $
                  16,290
                  
                  
                  $
                  43,282
                  
                  
                  $
                  46,588Currency
      translation adjustment
                  
                  
                  365
                  
                  
                  
                  (2,556
                  )
                  
                  
                  1,333
                  
                  
                  
                  (1,571
                  )Unrealized
      gain/(loss) on interest rate swaps, net of tax
                  
                  
                  466
                  
                  
                  
                  20
                  
                  
                  
                  1,041
                  
                  
                  
                  240Comprehensive
      income
                  
                  $
                  16,332
                  
                  
                  $
                  13,754
                  
                  
                  $
                  45,656
                  
                  
                  $
                  45,257


14





Accumulated
other comprehensive income is comprised of unrecognized pension benefit costs of
$2.5 million net of taxes of $1.1 million as of October 3, 2009 and January 3,
2009, foreign currency translation adjustments of $1.2 million as of October 3,
2009 and $2.5 million as of January 3, 2009 and an unrealized loss on interest
rate swaps of $2.1 million, net of taxes of $1.4 million and $3.2 million, net
of taxes of $2.1 million, as of October 3, 2009 and January 3, 2009
respectively.





6)
            Inventories





Inventories
are composed of material, labor and overhead and are stated at the lower of cost
or market.  Costs for inventory at two of the company's manufacturing
facilities have been determined using the last-in, first-out ("LIFO")
method.  These inventories under the LIFO method amounted to $16.1
million at October 3, 2009 and $22.5 million at January 3, 2009 and represented
approximately 17% and 25% of the total inventory in each respective
period.  Costs for all other inventory have been determined using the
first-in, first-out ("FIFO") method.  The company estimates reserves
for inventory obsolescence and shrinkage based on its judgment of future
realization.  Inventories at October 3, 2009 and January 3, 2009 are
as follows:





Oct 3, 2009
                  
                  
                  Jan 3, 2009(in thousands)Raw
      materials and parts
                  
                  $
                  53,349
                  
                  
                  $
                  36,375Work-in-process
                  
                  
                  13,682
                  
                  
                  
                  21,075Finished
      goods
                  
                  
                  27,415
                  
                  
                  
                  34,66894,446
                  
                  
                  
                  92,118LIFO
      adjustment
                  
                  
                  (567
                  )
                  
                  
                  (567
                  )$
                  93,879
                  
                  
                  $
                  91,551





7)
            Goodwill





Changes in the carrying amount of
goodwill for the nine months ended October 3, 2009 are as follows (in
thousands):





Commercial
                  
                  
                  Food
                  
                  
                  InternationalFoodservice
                  
                  
                  Processing
                  
                  
                  Distribution
                  
                  
                  TotalBalance
      as of January 3, 2009
                  
                  $
                  235,137
                  
                  
                  $
                  31,526
                  
                  
                  $
                  —
                  
                  
                  $
                  266,663Goodwill
      acquired during the year
                  
                  
                  91,695
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  91,695Adjustments
      to prior year acquisitions
                  
                  
                  2,264
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,264Exchange
      effect
                  
                  
                  893
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  893Balance
      as of October 3, 2009
                  
                  $
                  329,989
                  
                  
                  $
                  31,526
                  
                  
                  $
                  —
                  
                  
                  $
                  361,515


15





8)
            Accrued
      Expenses





Accrued
expenses consist of the following:





Oct 3, 2009
                  
                  
                  Jan 3, 2009(in thousands)Accrued
      payroll and related expenses
                  
                  $
                  21,974
                  
                  
                  $
                  23,294Accrued
      warranty
                  
                  
                  14,028
                  
                  
                  
                  12,595Advance
      customer deposits
                  
                  
                  11,803
                  
                  
                  
                  4,449Accrued
      customer rebates
                  
                  
                  11,552
                  
                  
                  
                  13,960Accrued
      product liability and workers comp
                  
                  
                  9,929
                  
                  
                  
                  8,577Accrued
      agent commissions
                  
                  
                  5,721
                  
                  
                  
                  4,493Accrued
      professional services
                  
                  
                  5,543
                  
                  
                  
                  5,283Other
      accrued expenses
                  
                  
                  45,682
                  
                  
                  
                  29,928$
                  126,232
                  
                  
                  $
                  102,579





9)
            Warranty
      Costs





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





A
rollforward of the warranty reserve is as follows:





Nine Months EndedOct 3, 2009(in thousands)Beginning
      balance
                  
                  $
                  12,595Warranty
      reserve related to acquisitions
                  
                  
                  2,414Warranty
      expense
                  
                  
                  18,084Warranty
      claims
                  
                  
                  (19,065
                  )Ending
      balance
                  
                  $
                  14,028


16





10)
            Financing
      Arrangements





Oct 3, 2009
                  
                  
                  Jan 3, 2009(in thousands)Senior
      secured revolving credit line
                  
                  $
                  286,000
                  
                  
                  $
                  226,350Foreign
      loan
                  
                  
                  9,008
                  
                  
                  
                  8,350Total
      debt
                  
                  $
                  295,008
                  
                  
                  $
                  234,700Less:  Current
      maturities of long-term debt
                  
                  
                  6,890
                  
                  
                  
                  6,377Long-term
      debt
                  
                  $
                  288,118
                  
                  
                  $
                  228,323





During
the fourth quarter of 2007 the company entered into a new senior secured credit
facility that matures in December 2012.  This agreement was later
amended in August 2008 to provide for the acquisition of TurboChef. Terms of the
senior credit agreement provide for $497.5 million of availability under a
revolving credit line.  As of October 3, 2009, the company had $286.0
million of borrowings outstanding under this facility.  The company
also has $6.1 million in outstanding letters of credit, which reduces the
borrowing availability under the revolving credit line.  Remaining
borrowing availability under this facility, which is also reduced by the
company’s foreign borrowings, was $196.4 million at October 3,
2009.





Borrowings
under the senior secured credit facility are assessed at an interest rate of
1.25% above LIBOR for long-term borrowings or at the higher of the Prime rate
and the Federal Funds Rate.  At October 3, 2009 the average interest
rate on the senior debt amounted to 1.51%. The interest rates on borrowings
under the senior bank facility may be adjusted quarterly based on the company’s
defined indebtedness ratio on a rolling four-quarter
basis.  Additionally, a commitment fee based upon the indebtedness
ratio is charged on the unused portion of the revolving credit
line.  This variable commitment fee amounted to 0.25% as of October 3,
2009.





In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On October 3, 2009 these facilities amounted
to $4.1 million in U.S. dollars, including $2.1 million outstanding under a
revolving credit facility and $2.0 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 4.65% on October 3, 2009. The term loan matures in 2013 and
the interest rate is assessed at 6.14%.





In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings denominated in Euro.  On October 3, 2009 these
facilities amounted to $4.9 million in U.S. dollars.  The borrowings under
these facilities are collateralized by the receivables of the company.  The
interest rate on these credit facilities is tied to six-month Euro LIBOR. 
At October 3, 2009, the average interest rate on these facilities amounted to
3.5%.  The facilities mature in April of 2015.


17





In April
2009, the FASB issued ASC 825 “Financial Instruments” and ASC 270 “Interim
Reporting”, which requires disclosures of fair value for any financial
instruments not currently reflected at fair value on the balance sheet for all
interim periods. This statement is effective for interim financial periods
ending after June 15, 2009.  The company has complied with the
disclosure requirements of these statements after its effective
date.  As ASC 270 relates to disclosure requirements, the adoption of
this statement did not have a material impact on the company’s financial
position, results of operations or cash flows.





The
company’s debt is reflected on the balance sheet at cost. Based on current
market conditions, the company believes its interest rate margins on its
existing debt are below the rate available in the market, which causes the fair
value of debt to fall below the carrying value.  The company believes
the current interest rate margin is approximately 1.0% below current market
rates.  However, as the interest rate margin is based upon numerous
factors, including but not limited to the credit rating of the borrower, the
duration of the loan, the structure and restrictions under the debt agreement,
current lending policies of the counterparty, and the company’s relationships
with its lenders, there is no readily available market data to ascertain the
current market rate for an equivalent debt instrument.  As a result,
the current interest rate margin is based upon the company’s best estimate based
upon discussions with its lenders.





The
company estimated the fair value of its loans by calculating the upfront cash
payment a market participant would require to assume the company’s
obligations.  The upfront cash payment is the amount that a market
participant would be able to lend at October 3, 2009 to achieve sufficient cash
inflows to cover the cash outflows under the company’s senior revolving credit
facility assuming the facility was outstanding in its entirety until
maturity.  Since the company maintains its borrowings under a
revolving credit facility and there is no predetermined borrowing or repayment
schedule, for purposes of this calculation the company calculated the fair value
of its obligations assuming the current amount of debt at the end of the period
was outstanding until the maturity of the company’s senior revolving credit
facility in December 2012.  Although borrowings could be materially
greater or less than the current amount of borrowings outstanding at the end of
the period, it is not practical to estimate the amounts that may be outstanding
during future periods.  The fair value of the company’s senior debt
obligations as estimated by the company based upon its assumptions is
approximately $285.7 million at October 3, 2009, as compared to the carrying
value of $295.0 million.





The
carrying value and estimated aggregate fair value, based primarily on market
prices, of debt is as follows (dollars in thousands):




October 3, 2009
                  
                  
                  January 3, 2009Carrying Value
                  
                  
                  Fair Value
                  
                  
                  Carrying Value
                  
                  
                  Fair ValueTotal
      debt
                  
                  $
                  295,008
                  
                  
                  $
                  285,745
                  
                  
                  $
                  234,700
                  
                  
                  $
                  226,486





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


18





The
company has historically entered into interest rate swap agreements to
effectively fix the interest rate on its outstanding debt.  The
agreements swap one-month LIBOR for fixed rates. As of October 3, 2009 the
company had the following interest rate swaps in effect:





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





The terms
of the senior secured credit facility limit the paying of dividends, capital
expenditures and leases, and require, among other things, ratios of indebtedness
of 3.5 debt to earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and fixed charge coverage of 1.25 EBITDA to fixed charges. The credit
agreement also provides that if a material adverse change in the company’s
business operations or conditions occurs, the lender could declare an event of
default. Under terms of the agreement a material adverse effect is defined as
(a) a material adverse change in, or a material adverse effect upon, the
operations, business properties, condition (financial and otherwise) or
prospects of the company and its subsidiaries taken as a whole; (b) a material
impairment of the ability of the company to perform under the loan agreements
and to avoid any event of default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the company of any
loan document. A material adverse effect is determined on a subjective basis by
the company's creditors.  The credit facility is secured by the
capital stock of the company’s domestic subsidiaries, 65% of the capital stock
of the company’s foreign subsidiaries and substantially all other assets of the
company.  At October 3, 2009, 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: Throughout
the year the company has entered into derivative instruments, principally
forward contracts to reduce exposures pertaining to fluctuations in foreign
exchange rates.  As of October 3, 2009, the company had no forward
contracts outstanding.


19





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 October 3, 2009, the fair value of these
instruments was a loss of $4.0 million.  The change in fair value of
these swap agreements in the first nine months of 2009 was a gain of $ 1.0
million, net of taxes.





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





Nine Months EndedLocation
                    
                    Oct 3, 2009
                    
                    
                    Sep 27, 2008(amounts in thousands)Fair
      value
                    
                    Other liabilities
                    
                    $
                    (4,008
                    )
                    
                    $
                    (12
                    )Amount
      of gain/(loss) recognized in other comprehensive income
                    
                    Other comprehensive income
                    
                    $
                    1,041
                    
                    
                    $
                    (240
                    )Gain/(loss)
      reclassified from accumulated other comprehensive income (effective
      portion)
                    
                    Other comprehensive income
                    
                    $
                    —
                    
                    
                    $
                    —Gain/(loss)
      recognized in income (ineffective portion)
                    
                    Other expense
                    
                    $
                    (14
                    )
                    
                    $
                    (169
                    )





Interest
rate swaps are subject to default risk to the extent the counterparty were
unable to satisfy its settlement obligations under the interest rate swap
agreements.  The company reviews the credit profile of the financial
institutions that are counterparties to such swap agreements and assesses their
creditworthiness prior to entering into the interest rate swap agreements and
throughout the term.  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, Missouri, New
Hampshire, North Carolina, Tennessee, Texas, Vermont, Denmark, Italy, and the
Philippines   Principal product lines of this segment include
baking ovens, broilers, catering equipment, charbroilers, combi-ovens, coffee
and beverage systems, convection ovens, conveyor ovens, countertop cooking
equipment, foodwarming equipment, fryers, griddles, hot food servers, induction
cooking and warming systems, ranges, speed cook ovens, steamers and steam
equipment, toasters and ventless cooking systems.  These products are
sold and marketed under the brand names:  Anets, Blodgett, Blodgett
Combi, Blodgett Range, Bloomfield, CTX, Carter-Hoffmann, CookTek, Frifri, Giga,
Holman, Houno, Jade, Lang, MagiKitch’n, Middleby Marshall, Nu-Vu, Pitco,
Southbend, Star, Toastmaster, TurboChef and Wells.


20




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





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





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


Net Sales
      Summary
                                (dollars
      in thousands)Three Months Ended
                              
                              
                              Nine Months EndedOct 3, 2009
                              
                              
                              Sep 27, 2008
                              
                              
                              Oct 3, 2009
                              
                              
                              Sep 27, 2008Sales
                              
                              
                              Percent
                              
                              
                              Sales
                              
                              
                              Percent
                              
                              
                              Sales
                              
                              
                              Percent
                              
                              
                              Sales
                              
                              
                              PercentBusiness Divisions:Commercial
      Foodservice
                              
                              $
                              131,367
                              
                              
                              
                              85.3
                              
                              
                              $
                              138,327
                              
                              
                              
                              83.1
                              
                              
                              $
                              432,160
                              
                              
                              
                              87.5
                              
                              
                              $
                              419,212
                              
                              
                              
                              83.7Food
      Processing
                              
                              
                              17,346
                              
                              
                              
                              11.3
                              
                              
                              
                              21,079
                              
                              
                              
                              12.7
                              
                              
                              
                              45,884
                              
                              
                              
                              9.3
                              
                              
                              
                              61,435
                              
                              
                              
                              12.3International
      Distribution(1)
                              
                              
                              13,765
                              
                              
                              
                              8.9
                              
                              
                              
                              16,162
                              
                              
                              
                              9.7
                              
                              
                              
                              38,286
                              
                              
                              
                              7.7
                              
                              
                              
                              47,380
                              
                              
                              
                              9.4Intercompany
      sales (2)
                              
                              
                              (8,489
                              )
                              
                              
                              (5.5
                              )
                              
                              
                              (9,096
                              )
                              
                              
                              (5.5
                              )
                              
                              
                              (22,194
                              )
                              
                              
                              (4.5
                              )
                              
                              
                              (27,159
                              )
                              
                              
                              (5.4
                              )Total
                              
                              $
                              153,989
                              
                              
                              
                              100.0
                              %
                              
                              $
                              166,472
                              
                              
                              
                              100.0
                              %
                              
                              $
                              494,136
                              
                              
                              
                              100.0
                              %
                              
                              $
                              500,868
                              
                              
                              
                              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


21





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 Oct 3, 2009Net
      sales
                    
                    $
                    131,367
                    
                    
                    $
                    17,346
                    
                    
                    $
                    13,765
                    
                    
                    $
                    —
                    
                    
                    $
                    (8,489
                    )
                    
                    $
                    153,989Operating
      income
                    
                    
                    29,806
                    
                    
                    
                    3,815
                    
                    
                    
                    849
                    
                    
                    
                    (6,396
                    )
                    
                    
                    —
                    
                    
                    
                    28,074Depreciation
      and amortization expense
                    
                    
                    3,243
                    
                    
                    
                    319
                    
                    
                    
                    45
                    
                    
                    
                    191
                    
                    
                    
                    —
                    
                    
                    
                    3,798Net
      capital expenditures
                    
                    
                    887
                    
                    
                    
                    50
                    
                    
                    
                    (8
                    )
                    
                    
                    42
                    
                    
                    
                    —
                    
                    
                    
                    971Nine  months
      ended Oct 3, 2009Net
      sales
                    
                    $
                    432,160
                    
                    
                    $
                    45,884
                    
                    
                    $
                    38,286
                    
                    
                    $
                    —
                    
                    
                    $
                    (22,194
                    )
                    
                    $
                    494,136Operating
      income
                    
                    
                    97,718
                    
                    
                    
                    7,658
                    
                    
                    
                    2,099
                    
                    
                    
                    (24,620
                    )
                    
                    
                    255
                    
                    
                    
                    83,110Depreciation
      and amortization expense
                    
                    
                    10,253
                    
                    
                    
                    980
                    
                    
                    
                    128
                    
                    
                    
                    512
                    
                    
                    
                    —
                    
                    
                    
                    11,873Net
      capital expenditures
                    
                    
                    4,322
                    
                    
                    
                    74
                    
                    
                    
                    145
                    
                    
                    
                    400
                    
                    
                    
                    —
                    
                    
                    
                    4,941Total
      assets
                    
                    
                    696,779
                    
                    
                    
                    68,177
                    
                    
                    
                    25,265
                    
                    
                    
                    39,267
                    
                    
                    
                    (6,307
                    )
                    
                    
                    823,181Long-lived
      assets
                    
                    
                    542,180
                    
                    
                    
                    43,347
                    
                    
                    
                    454
                    
                    
                    
                    11,916
                    
                    
                    
                    —
                    
                    
                    
                    597,897Three
      months ended Sep 27, 2008Net
      sales
                    
                    $
                    138,327
                    
                    
                    $
                    21,079
                    
                    
                    $
                    16,162
                    
                    
                    $
                    —
                    
                    
                    $
                    (9,096
                    )
                    
                    $
                    166,472Operating
      income
                    
                    
                    34,068
                    
                    
                    
                    4,189
                    
                    
                    
                    1,341
                    
                    
                    
                    (9,102
                    )
                    
                    
                    457
                    
                    
                    
                    30,953Depreciation
      and amortization expense
                    
                    
                    2,628
                    
                    
                    
                    411
                    
                    
                    
                    52
                    
                    
                    
                    236
                    
                    
                    
                    —
                    
                    
                    
                    3,327Net
      capital expenditures
                    
                    
                    678
                    
                    
                    
                    12
                    
                    
                    
                    (40
                    )
                    
                    
                    15
                    
                    
                    
                    —
                    
                    
                    
                    665Nine
      months ended Sep 27, 2008Net
      sales
                    
                    $
                    419,212
                    
                    
                    $
                    61,435
                    
                    
                    $
                    47,380
                    
                    
                    $
                    —
                    
                    
                    $
                    (27,159
                    )
                    
                    $
                    500,868Operating
      income
                    
                    
                    102,272
                    
                    
                    
                    10,275
                    
                    
                    
                    3,507
                    
                    
                    
                    (27,251
                    )
                    
                    
                    658
                    
                    
                    
                    89,461Depreciation
      and amortization expense
                    
                    
                    8,205
                    
                    
                    
                    1,242
                    
                    
                    
                    152
                    
                    
                    
                    394
                    
                    
                    
                    —
                    
                    
                    
                    9,993Net
      capital expenditures
                    
                    
                    3,122
                    
                    
                    
                    88
                    
                    
                    
                    161
                    
                    
                    
                    37
                    
                    
                    
                    —
                    
                    
                    
                    3,408Total
      assets
                    
                    
                    527,204
                    
                    
                    
                    71,495
                    
                    
                    
                    27,780
                    
                    
                    
                    30,774
                    
                    
                    
                    (9,218
                    )
                    
                    
                    648,035Long-lived
      assets
                    
                    
                    367,426
                    
                    
                    
                    43,656
                    
                    
                    
                    649
                    
                    
                    
                    11,172
                    
                    
                    
                    —
                    
                    
                    
                    422,903





(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.


22





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





Oct 3, 2009
                  
                  
                  Sep 27, 2008United
      States and Canada
                  
                  $
                  568,891
                  
                  
                  $
                  401,727Asia
                  
                  
                  1,917
                  
                  
                  
                  2,263Europe
      and Middle East
                  
                  
                  26,895
                  
                  
                  
                  18,608Latin
      America
                  
                  
                  194
                  
                  
                  
                  305Total
      international
                  
                  
                  29,006
                  
                  
                  
                  21,176$
                  597,897
                  
                  
                  $
                  422,903





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





Three Months Ended
                  
                  
                  Nine Months EndedOct 3, 2009
                  
                  
                  Sep 27, 2008
                  
                  
                  Oct 3, 2009
                  
                  
                  Sep 27, 2008United
      States and Canada
                  
                  $
                  125,071
                  
                  
                  $
                  133,923
                  
                  
                  $
                  417,703
                  
                  
                  $
                  405,495Asia
                  
                  
                  8,111
                  
                  
                  
                  9,242
                  
                  
                  
                  18,757
                  
                  
                  
                  25,752Europe
      and Middle East
                  
                  
                  17,039
                  
                  
                  
                  18,672
                  
                  
                  
                  46,392
                  
                  
                  
                  55,532Latin
      America
                  
                  
                  3,768
                  
                  
                  
                  4,635
                  
                  
                  
                  11,284
                  
                  
                  
                  14,089Net
      sales
                  
                  $
                  153,989
                  
                  
                  $
                  166,472
                  
                  
                  $
                  494,136
                  
                  
                  $
                  500,868





13)
            Employee
      Retirement Plans





(a)           Pension
Plans





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


23





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.





(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)
            Restructuring





During
the first quarter the company made the decision and took action to close one of
its manufacturing facilities and transfer production to another of the company’s
manufacturing facilities.  This initiative was substantially completed
by the end of 2009 third quarter.  The company recorded expense
included within general and administrative expenses in the condensed
consolidated statements of earnings in the first nine months of 2009 for
severance obligations and facility closure and lease obligations associated with
this initiative.  These costs are summarized as follows (in
thousands):





Severance
      obligations
                  
                  $
                  2,300Facility
      closure and lease obligations
                  
                  
                  919Payments
                  
                  
                  (748
                  )Balance
      October 3, 2009
                  
                  $
                  2,471


24





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





Informational
Notes





This
report contains forward-looking statements subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995.  The company
cautions readers that these projections are based upon future results or events
and are highly dependent upon a variety of important factors which could cause
such results or events to differ materially from any forward-looking statements
which may be deemed to have been made in this report, or which are otherwise
made by or on behalf of the company.  Such factors include, but are
not limited to, volatility in earnings resulting from goodwill impairment losses
which may occur irregularly and in varying amounts; variability in financing
costs; quarterly variations in operating results; dependence on key customers;
international exposure; foreign exchange and political risks affecting
international sales; ability to protect trademarks, copyrights and other
intellectual property; changing market conditions; the impact of competitive
products and pricing; the timely development and market acceptance of the
company’s products; the availability and cost of raw materials; and other risks
detailed herein and from time-to-time in the company’s Securities and Exchange
Commission filings, including the company’s 2008 Annual Report on Form 10-K and
Item 1A of this Form 10-Q.




The
economic outlook is highly uncertain at this time, with challenging financial
markets and economic conditions. As a global business, the company’s operating
results are impacted by the health of the North American, European, Asian and
Latin American economies.  The depth and duration of economic decline
and the timing and strength of the recovery are very uncertain.


25




Net Sales
      Summary
                              (dollars
      in thousands)Three Months Ended
                            
                            
                            Nine Months EndedOct 3, 2009
                            
                            
                            Sep 27, 2008
                            
                            
                            Oct 3, 2009
                            
                            
                            Sep 27, 2008Sales
                            
                            
                            Percent
                            
                            
                            Sales
                            
                            
                            Percent
                            
                            
                            Sales
                            
                            
                            Percent
                            
                            
                            Sales
                            
                            
                            PercentBusiness Divisions:Commercial
      Foodservice
                            
                            $
                            131,367
                            
                            
                            
                            85.3
                            
                            
                            $
                            138,327
                            
                            
                            
                            83.1
                            
                            
                            $
                            432,160
                            
                            
                            
                            87.5
                            
                            
                            $
                            419,212
                            
                            
                            
                            83.7Food
      Processing
                            
                            
                            17,346
                            
                            
                            
                            11.3
                            
                            
                            
                            21,079
                            
                            
                            
                            12.7
                            
                            
                            
                            45,884
                            
                            
                            
                            9.3
                            
                            
                            
                            61,435
                            
                            
                            
                            12.3International
      Distribution(1)
                            
                            
                            13,765
                            
                            
                            
                            8.9
                            
                            
                            
                            16,162
                            
                            
                            
                            9.7
                            
                            
                            
                            38,286
                            
                            
                            
                            7.7
                            
                            
                            
                            47,380
                            
                            
                            
                            9.4Intercompany
      sales (2)
                            
                            
                            (8,489
                            )
                            
                            
                            (5.5
                            )
                            
                            
                            (9,096
                            )
                            
                            
                            (5.5
                            )
                            
                            
                            (22,194
                            )
                            
                            
                            (4.5
                            )
                            
                            
                            (27,159
                            )
                            
                            
                            (5.4
                            )Total
                            
                            $
                            153,989
                            
                            
                            
                            100.0
                            %
                            
                            $
                            166,472
                            
                            
                            
                            100.0
                            %
                            
                            $
                            494,136
                            
                            
                            
                            100.0
                            %
                            
                            $
                            500,868
                            
                            
                            
                            100.0
                            %





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





(2)
            Represents the elimination of
      salesfrom the
      Commercial Foodservice Equipment Group to the International Distribution
      Division.





Results of
Operations





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





Three Months Ended
                    
                    
                    Nine Months EndedOct 3, 2009
                    
                    
                    Sep 27, 2008
                    
                    
                    Oct 3, 2009
                    
                    
                    Sep 27, 2008Net
      sales
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %Cost
      of sales
                    
                    
                    59.7
                    
                    
                    
                    61.1
                    
                    
                    
                    61.1
                    
                    
                    
                    61.9Gross
      profit
                    
                    
                    40.3
                    
                    
                    
                    38.9
                    
                    
                    
                    38.9
                    
                    
                    
                    38.1Selling,
      general and administrative expenses
                    
                    
                    22.1
                    
                    
                    
                    20.3
                    
                    
                    
                    22.1
                    
                    
                    
                    20.2Income
      from operations
                    
                    
                    18.2
                    
                    
                    
                    18.6
                    
                    
                    
                    16.8
                    
                    
                    
                    17.9Net
      interest expense and deferred financing amortization
                    
                    
                    1.8
                    
                    
                    
                    1.9
                    
                    
                    
                    1.8
                    
                    
                    
                    2.0Other
      expense, net
                    
                    
                    (0.1
                    )
                    
                    
                    0.5
                    
                    
                    
                    0.1
                    
                    
                    
                    0.4Earnings
      before income taxes
                    
                    
                    16.5
                    
                    
                    
                    16.2
                    
                    
                    
                    14.9
                    
                    
                    
                    15.5Provision
      for income taxes
                    
                    
                    6.4
                    
                    
                    
                    6.4
                    
                    
                    
                    6.1
                    
                    
                    
                    6.2Net
      earnings
                    
                    
                    10.1
                    %
                    
                    
                    9.8
                    %
                    
                    
                    8.8
                    %
                    
                    
                    9.3
                    %


26


Three Months Ended October
3, 2009 Compared to Three Months Ended September 27,
2008





NET
SALES.Net sales for the third
quarter of fiscal 2009 were $154.0 million as compared to $166.5 million in the
third quarter of 2008.





·
            Net
      sales at the Commercial Foodservice Equipment Group amounted to $131.4
      million in the third quarter of 2009 as compared to $138.3 million in the
      prior year quarter.  Net sales from the acquisitions of
      TurboChef, which was acquired on January 5, 2009, CookTek, which was
      acquired on April 26, 2009, and Anets, which was acquired on April 30,
      2009, accounted for an increase of $20.5 million during the third quarter
      of 2009.  Excluding the impact of acquisitions, net sales of
      commercial foodservice equipment decreased $27.4
  million.





·
            Net
      sales for the Food Processing Equipment Group amounted to $17.3 million in
      the third quarter of 2009 as compared to $21.1 million in the prior year
      quarter.





·
            Net
      sales at the International Distribution Division amounted to $13.8 million
      in the third quarter of 2009 as compared to $16.2 million in the prior
      year reflecting lower sales in Asia, Europe and Latin
    America.





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





GROSS
PROFIT.Gross profit decreased to
$62.0 million in the third quarter of 2009 from $64.7 million in the prior year
period, reflecting the impact of lower sales volumes.  The gross
margin rate was 40.3% in the third quarter of 2009 as compared to 38.9% in the
prior year quarter.  The net change in the gross margin rate
reflects:





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





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





·
            The
      adverse impact of lower sales
volumes.


27





SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.Combined selling, general,
and administrative expenses increased from $33.8 million in the third quarter of
2008 to $34.0 million in the third quarter of 2009.  As a percentage
of net sales, operating expenses increased from 20.3% in the third quarter of
2008 to 22.1% in the third quarter of 2009. Selling expenses decreased slightly
from $16.8 million in the third quarter of 2008 to $16.4 million in the third
quarter of 2009.  Selling expenses reflect increased costs of $2.4
million associated the acquisitions of TurboChef, CookTek and Anets offset by
reduced costs of $2.0 million associated with commission expense due to lower
sales and lower commission rates. General and administrative expenses increased
from $17.0 million in the third quarter of 2008 to $17.6 million in the third
quarter of 2009.  General and administrative expenses reflect a $2.5
million non-recurring expense associated with the write-down of fixed assets and
the establishment of reserves for lease obligations associated with plant
consolidation initiatives and $1.9 million of costs associated with the acquired
operations of TurboChef, CookTek and Anets.  These increases in
expenses were offset by lower incentive based compensation and other expense
reduction measures.





NON-OPERATING
EXPENSES.Interest and deferred financing amortization costs
decreased to $2.8 million in the third quarter of 2009 as compared to $3.2
million in the third quarter of 2008, due to lower interest rates on increased
borrowings resulting from recent acquisitions.  Other income was $0.1
million in the third quarter of 2009 as compared to other expense of $0.9
million in the prior year third quarter.  Other expense and other income
consisted primarily of foreign exchange losses and gains.





INCOME
TAXES.A tax provision of $9.9
million, at an effective rate of 39%, was recorded during the third quarter of
2009, as compared to a $10.6 million provision at a 40% effective rate in the
prior year quarter.


28





Nine Months Ended October 3,
2009 Compared to Nine Months Ended September 27,
2008





NET
SALES.Net sales for the
nine-month period ended October 3, 2009 were $494.1 million as compared to
$500.9 million in the nine-month period ended September 27, 2008.





·
            Net
      sales at the Commercial Foodservice Equipment Group for the nine-month
      period ended October 3, 2009 amounted to $432.1 million as compared to
      $419.2 million for the nine-month period ended September 27, 2008. Net
      sales from the acquisitions of TurboChef, which was acquired on January 5,
      2009, CookTek, which was acquired on April 26, 2009 and Anets, which was
      acquired on April 30, 2009 accounted for an increase of $65.3 million in
      the nine month period ended October 3, 2009.  Excluding the
      impact of acquisitions, net sales of commercial foodservice equipment for
      the nine-month period ended October 3, 2009 decreased by $52.4 million as
      compared to the nine-month period ended September 27,
      2008.   Sales of the Commercial Foodservice Equipment Group
      were impacted by reduced restaurant openings and deferred purchases to
      replace and upgrade existing equipment.  This decline was offset
      in part by a large equipment rollout with a major chain customer to
      support a new menu item.





·
            Net
      sales for the Food Processing Equipment Group amounted to $45.9 million in
      the nine-month period ended October 3, 2009 as compared to $61.4 million
      in the prior year period.  Net sales of food processing
      equipment continued to be impacted by the adverse economic
      conditions.





·
            Net
      sales at the International Distribution Division amounted to $38.3 million
      in the nine-month period ended October 2, 2009 as compared to $47.4
      million, reflecting lower sales in Asia, Europe and Latin
      America.  Sales continue to be affected by adverse economic
      conditions internationally and reduced store openings by the U.S. chains
      in the international markets.





GROSS
PROFIT.Gross profit increased to
$192.1 million in the nine-month period ended October 3, 2009 from $190.6
million in the nine-month period ended September 27, 2008, reflecting the impact
of higher sales volumes.  The gross margin rate was 38.9% in the
nine-month period ended October 3, 2009 as compared to 38.1% in the nine-month
period ended September 27, 2008.  The net increase in the gross margin
rate reflects:





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





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





·
            The
      adverse impact of lower sales
volumes.


29





SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.Combined selling, general,
and administrative expenses increased from $101.2 million in the nine–month
period ended September 27, 2008 to $109.0 million in the nine-month period ended
October 3, 2009. As a percentage of net sales, operating expenses increased from
20.2% to 22.1% in the nine-month period ended October 3, 2009. Selling expenses
decreased slightly from $49.7 million in the nine-month period ended September
27, 2008 to $49.3 million in the nine month period ended October 3,
2009.  Selling expenses reflect increased costs of $7.0 million
associated the acquisitions of TurboChef, CookTek and Anets offset in part by
reduced costs of $6.1 million associated with commission expense due to lower
sales and lower commission rates. General and administrative expenses increased
from $51.4 million in the nine-month period ended September 27, 2008 to $59.7
million in the nine-month period ended September 27, 2008.  General
and administrative expenses reflect $7.5 million of costs associated with the
acquired operations of TurboChef, CookTek and Anets and $4.9 million associated
with the write-down of fixed assets, the establishment of reserves for lease
obligations and severance and employee benefits costs associated with plant
consolidation initiatives.





NON-OPERATING
EXPENSES.Interest and deferred financing amortization costs
decreased to $8.8 million in the nine-month period ended October 3, 2009 as
compared to $9.9 million in the nine-month period ended September 27, 2008, due
to lower interest rates on increased borrowings resulting from recent
acquisitions.  Other expense was $0.6 million in the nine-month period
ended October 3, 2009 as compared to $1.8 million in the nine-month period
ended September 27, 2008.  Other expense and other income
consisted primarily of foreign exchange losses and gains.





INCOME
TAXES.A tax provision of $30.4
million, at an effective rate of 41%, was recorded during the nine-month period
ended October 3, 2009, as compared to a $31.2 million provision at a 40%
effective rate in the nine-month period ended September 27,
2008.


30





Financial Condition and
Liquidity





During
the nine months ended October 3, 2009, cash and cash equivalents increased by
$4.8 million to $11.0 million at October 3, 2009  from $6.1 million at
January 3, 2009.  Net borrowings increased from $234.7 million at
January 3, 2009 to $295.0 million at October 3, 2009.





OPERATING
ACTIVITIES.Net cash provided by
operating activities was $77.2 million for the nine month period ended October
3, 2009 compared to $64.0 million for the nine-month period ended September 27,
2008.





During
the nine months ended October 3, 2009, changes in working capital included a
$22.1 million decrease in accounts receivable, a $11.7 million decrease in
inventory, and a $2.6 million decrease in accounts payable.  These
changes in working capital reflect the completion and collection of payment
related to a large chain customer order that was completed during the first half
of the year.  Prepaid and other assets increased $0.9 million. Accrued
expenses and other non-current liabilities also decreased by $13.6 million
reflecting the payment of transaction costs associated with the TurboChef
acquisition and obligations under prior year sales rebate and incentive
compensation program.





INVESTING
ACTIVITIES.During the nine months
ended October 3, 2009, net cash used in investing activities amounted to $132.4
million.  This includes cash utilized to complete the acquisitions of
TurboChef of $116.1 million, CookTek of $8.0 million, Anets of $3.4 million and
$4.9 million of capital expenditures associated with additions and upgrades of
production equipment and facility enhancements associated with plant
consolidation initiatives.





FINANCING
ACTIVITIES.Net cash flows provided by financing activities
were $60.3 million during the nine months ended October 3, 2009.  The
net increase in debt includes $59.7
million in net borrowings under the company’s $497.5 million revolving credit
facility utilized to fund the company’s investing activities, $0.2 million in
proceeds under foreign bank loans and $0.4 million of proceeds from stock
issuances.





At
October 3, 2009, the company was in compliance with all covenants pursuant to
its borrowing agreements. Management believes that future cash flows from
operating activities and borrowing availability under the revolving credit
facility will provide the company with sufficient financial resources to meet
its anticipated requirements for working capital, capital expenditures and debt
amortization for the foreseeable future.


31





Recently Issued Accounting
Standards





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued ASC 805,
“Business Combinations”. This statement provides companies with principles and
requirements on how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, and any
noncontrolling interest in the acquiree as well as the recognition and
measurement of goodwill acquired in a business combination. This statement also
requires certain disclosures to enable users of the financial statements to
evaluate the nature and financial effects of the business combination.
Acquisition costs associated with the business combination will generally be
expensed as incurred. This statement is effective for business combinations
occurring in fiscal years beginning after December 15, 2008. Early adoption of
ASC 805 was not permitted. The company adopted this statement on January 5,
2009, including the acquisition of TurboChef. Accordingly, the company has
applied the principles of ASC 805 in valuing this acquisition. Middleby shares
of common stock which were issued in conjunction with this transaction were
valued using the share price at the time of closing to determine the value of
the purchase price. Additionally, the company incurred approximately $4.6
million in transaction related expenses which were recorded as a deferred
acquisition cost reported as an asset on the balance sheet on January 3, 2009.
In accordance with ASC 805, the company has applied a retrospective application
and appropriately reflected the expense incurred in 2008 as a reduction in
retained earnings in accordance with ASC 250-10-45, “Changes in Accounting
Principles,” on reporting a change in accounting principle.





In
December 2007, the FASB issued ASC 810-10, “Consolidation”. This statement
establishes accounting and reporting standards for the noncontrolling interest
(minority interest) in a subsidiary and for the deconsolidation of a subsidiary.
Upon its adoption, effective as of the beginning of the company’s 2009 fiscal
year, noncontrolling interests will be classified as equity in the company’s
financial statements and income and comprehensive income attributed to the
noncontrolling interest will be included in the company’s income and
comprehensive income. The provisions of this standard must be applied
retrospectively upon adoption. The adoption of ASC 810-10 “Consolidation” did
not have a material impact on the company’s financial position, results of
operations or cash flows.





In
December 2008, the FASB issued ASC 715-20 “Compensation-Retirement Benefits.”
This statement requires disclosures about assets held in an employer’s defined
benefit pension or other postretirement plan. This statement requires the
disclosure of the percentage of the fair value of total plan assets for each
major category of plan assets, such as equity securities, debt securities, real
estate and all other assets, with the fair value of each major asset category as
of each annual reporting date for which a financial statement is presented. It
also requires disclosure of the level within the fair value hierarchy in which
each major category of plan assets falls, using the guidance in ASC 820, “Fair
Value Measurements and Disclosures.” This statement is applicable to employers
that are subject to the disclosure requirements and is generally effective for
fiscal years ending after December 15, 2009. The company will comply with the
disclosure provisions of this statement after its effective
date.


32





In May
2009, the FASB issued ASC 855, “Subsequent Events.” The objective of this
statement is to establish general standards of accounting for and disclosures of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This statement defines the period
after the balance sheet during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events occurring after the balances sheet date in its financial
statements and required disclosures. This statement is effective for interim or
annual financial periods ending after June 15, 2009.  The company has
complied with the disclosure requirements of ASC 855. The adoption of ASC 855
did not have a material impact on the company’s financial position, results of
operations or cash flows.





In June
2009, the FASB issued ASC 105 “Generally Accepted Accounting Principles.” This
statement sets forth a new authoritative guidance for U.S. generally accepted
accounting principles “GAAP” applicable to nongovernmental
entities.  ASC 105 establishes the GAAP hierarchy to include only two
levels of GAAP: authoritative and nonauthoritative. This statement is effective
for financial statements issued for interim and annual periods ending after
September 15, 2009. The company has complied with the reporting requirements of
ASC 105. The adoption of ASC 105 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.


33





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 for 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.





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.


34





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





Contractual
Obligations





The
company's contractual cash payment obligations as of October 3, 2009 are set
forth below (in thousands):





Amounts
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  TotalDue to Sellers
                  
                  
                  
                  
                  
                  Operating/
                  
                  
                  Idle
                  
                  
                  ContractualFrom
                  
                  
                  Long-term
                  
                  
                  Capital
                  
                  
                  Facility
                  
                  
                  CashAcquisitions
                  
                  
                  Debt
                  
                  
                  Leases
                  
                  
                  Leases
                  
                  
                  ObligationsLess
      than 1 year
                  
                  $
                  2,522
                  
                  
                  $
                  6,890
                  
                  
                  $
                  3,264
                  
                  
                  $
                  744
                  
                  
                  $
                  13,4201-3
      years
                  
                  
                  5,217
                  
                  
                  
                  447
                  
                  
                  
                  4,645
                  
                  
                  
                  1,062
                  
                  
                  
                  11,3713-5
      years
                  
                  
                  3,025
                  
                  
                  
                  286,447
                  
                  
                  
                  1,073
                  
                  
                  
                  996
                  
                  
                  
                  291,541After
      5 years
                  
                  
                  -
                  
                  
                  
                  1,224
                  
                  
                  
                  —
                  
                  
                  
                  351
                  
                  
                  
                  1,575$
                  10,764
                  
                  
                  $
                  295,008
                  
                  
                  $
                  8,982
                  
                  
                  $
                  3,153
                  
                  
                  $
                  317,907





The
company has an obligation to make $3.4 million of purchase price payments to the
sellers of Giga that were deferred in conjunction with the acquisition. The
company has an obligation to make certain contingent consideration payments to
the sellers of CookTek. The fair value amount of these payments was $7.4 million
as of October 3, 2009.









Idle
facility leases consist of obligations for two manufacturing locations that have
been exited in conjunction with the company's plant consolidation
initiatives.  These lease obligations continue through June 2012 and
June 2015, respectively.  The obligation presented above does not
reflect any anticipated sublease income from these facilities.


35




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





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





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


36


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)October
      3, 2010
                  
                  $
                  —
                  
                  
                  $
                  6,890October
      3, 2011
                  
                  
                  —
                  
                  
                  
                  224October
      3, 2012
                  
                  
                  —
                  
                  
                  
                  223October
      3, 2013
                  
                  
                  —
                  
                  
                  
                  286,223October
      3, 2014 and thereafter
                  
                  
                  —
                  
                  
                  
                  1,448$
                  —
                  
                  
                  $
                  295,008





During
the fourth quarter of 2007 the company entered into a new senior secured credit
facility that matures on December 2012. This agreement was later amended in
August 2008 to provide for the acquisition of TurboChef. Terms of the senior
credit agreement provide for $497.5 million of availability under a revolving
credit line.  As of October 3, 2009, the company had $286.0 million of
borrowings outstanding under this facility.  The company also has $6.1
million in outstanding letters of credit, which reduces the borrowing
availability under the revolving credit line.  Remaining borrowing
availability under this facility, which is also reduced by the company’s foreign
borrowings, was $196.4 million at October 3, 2009.





Borrowings
under the senior secured credit facility are assessed at an interest rate 1.25%
above LIBOR for long-term borrowings or at the higher of the Prime rate and the
Federal Funds Rate.  At October 3, 2009 the average interest rate on
the senior debt amounted to 1.51%. The interest rates on borrowings under the
senior bank facility may be adjusted quarterly based on the company’s defined
indebtedness ratio on a rolling four-quarter basis.  Additionally, a
commitment fee, based upon the indebtedness ratio is charged on the unused
portion of the revolving credit line.  This variable commitment fee
amounted to 0.25% as of October 3, 2009.





In August
2006, the company completed its acquisition of Houno A/S in Denmark. This
acquisition was funded in part with locally established debt facilities with
borrowings in Danish Krone.  On October 3, 2009 these facilities amounted
to $4.1 million in U.S. dollars, including $2.1 million outstanding under a
revolving credit facility and $2.0 million of a term loan.  The interest
rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR,
which amounted to 4.65% on October 3, 2009. The term loan matures in 2013 and
the interest rate is assessed at 6.14%.





In April
2008, the company completed its acquisition of Giga Grandi Cucine S.r.l in
Italy. This acquisition was funded in part with locally established debt
facilities with borrowings denominated in Euro.  On October 3, 2009 these
facilities amounted to $4.9 million in U.S. dollars.  The borrowings under
these facilities are collateralized by the receivables of the company.  The
interest rate on these credit facilities is tied to six-month Euro LIBOR. 
At October 3, 2009, the average interest rate on these facilities amounted to
3.5%.  The facilities mature in April of 2015.


37





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 October 3, 2009 the
company had the following interest rate swaps in effect:





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





The terms
of the senior secured credit facility limit the paying of dividends, capital
expenditures and leases, and require, among other things, ratios of indebtedness
of 3.5 debt to earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and fixed charge coverage of 1.25 EBITDA to fixed charges. The credit
agreement also provides that if a material adverse change in the company’s
business operations or conditions occurs, the lender could declare an event of
default. Under terms of the agreement a material adverse effect is defined as
(a) a material adverse change in, or a material adverse effect upon, the
operations, business properties, condition (financial and otherwise) or
prospects of the company and its subsidiaries taken as a whole; (b) a material
impairment of the ability of the company to perform under the loan agreements
and to avoid any event of default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the company of any
loan document. A material adverse effect is determined on a subjective basis by
the company's creditors.  The credit facility is secured by the
capital stock of the company’s domestic subsidiaries, 65% of the capital stock
of the company’s foreign subsidiaries and substantially all other assets of the
company.  At October 3, 2009, the company was in compliance with all
covenants pursuant to its borrowing agreements.


38





Financing Derivative
Instruments





The
company has entered into interest rate swaps to fix the interest rate applicable
to certain of its variable-rate debt. The agreements swap one-month LIBOR for a
fixed rates  The company has designated these swaps as cash flow
hedges and all changes in fair value of the swaps are recognized in accumulated
other comprehensive income.  As of October 3, 2009, the fair value of
these instruments was a loss of $4.0 million.  The change in fair
value of these swap agreements in the first nine months of 2009 was a gain of
$1.0 million, net of taxes.





Foreign Exchange Derivative
Financial Instruments





The
company uses foreign currency forward purchase and sale contracts with terms of
less than one year to hedge its exposure to changes in foreign currency exchange
rates.  The company’s primary hedging activities are to mitigate its
exposure to changes in exchange rates on intercompany and third party trade
receivables and payables. The company does not currently enter into derivative
financial instruments for speculative purposes. In managing its foreign currency
exposures, the company identifies and aggregates naturally occurring offsetting
positions and then hedges residual balance sheet exposures.  There
were no forward contracts outstanding at the end of the quarter ended October 3,
2009.


39


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
October 3, 2009, the company carried out an evaluation, under the supervision
and with the participation of the company's management, including the company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the company's disclosure controls and procedures. Based
on the foregoing, the company's Chief Executive Officer and Chief Financial
Officer concluded that thecompany's disclosure
controls and procedures were effective as of the end of this
period.





During
the quarter ended October 3, 2009, there has been no change in the company's
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the company's internal control over
financial reporting.


40





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 nine months ended October 3, 2009, except as
follows:





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





Issuer Purchases of Equity
Securities





Total
                    Number of
                    Shares
                    Purchased
                  
                  
                  Average
                    Price Paid
                    per Share
                  
                  
                  Total Number
                    of Shares
                    Purchased as
                    Part of Publicly
                    Announced
                    Plan or
                    Program
                  
                  
                  Maximum
                    Number of
                    Shares that May
                    Yet be
                    Purchased
                    Under the Plan
                    or ProgramJuly
      5 to August 1, 2009
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  627,332August
      2, 2009 to August 29, 2009
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  627,332August
      30, 2009 to September 3, 2009
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  627,332Quarter
      ended October 3, 2009
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  627,322





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 October 3, 2009, 1,172,668 shares had been purchased under the 1998 stock
repurchase program.


41





Item
6.  Exhibits





Exhibits
– The following exhibits are filed herewith:




Exhibit 31.1 –
              Rule
      13a-14(a)/15d -14(a) Certification of the Chief Executive Officer as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.





Exhibit 31.2 –
              Rule
      13a-14(a)/15d -14(a) Certification of the Chief Financial Officer as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.





Exhibit 32.1 –
              Certification
      by the Principal Executive Officer of The Middleby Corporation Pursuant to
      Rule 13A-14(b) under the Exchange Act and Section 906 of the
      Sarbanes-Oxley Act of 2002(18 U.S.C.
1350).





Exhibit 32.2 –
              Certification
      by the Principal Financial Officer of The Middleby Corporation Pursuant to
      Rule 13A-14(b) under the Exchange Act and Section 906 of the
      Sarbanes-Oxley Act of 2002(18 U.S.C.
1350).







42




SIGNATURE





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





THE MIDDLEBY
      CORPORATION(Registrant)Date
                    November 12, 2009
                    
                    By:
                    /s/  Timothy J.
      FitzGeraldTimothy
      J. FitzGeraldVice
      President,Chief
      Financial
Officer


43