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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Middleby Corp | NASDAQ:MIDD | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.21 | 0.87% | 140.08 | 137.00 | 142.93 | 142.65 | 138.67 | 140.86 | 544,964 | 22:30:00 |
x
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
o
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
36-3352497
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification Number)
|
|
|
1400 Toastmaster Drive, Elgin, Illinois
|
60120
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code:
|
(847) 741-3300
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
DESCRIPTION
|
PAGE
|
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 2018 and DECEMBER 30, 2017
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME MARCH 31, 2018 and APRIL 1, 2017
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS MARCH 31, 2018 and APRIL 1, 2017
|
|
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
ASSETS
|
Mar 31, 2018
|
|
|
Dec 30, 2017
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
103,290
|
|
|
$
|
89,654
|
|
Accounts receivable, net of reserve for doubtful accounts of $13,414 and $13,182
|
331,609
|
|
|
328,421
|
|
||
Inventories, net
|
459,151
|
|
|
424,639
|
|
||
Prepaid expenses and other
|
48,464
|
|
|
55,427
|
|
||
Prepaid taxes
|
17,141
|
|
|
33,748
|
|
||
Total current assets
|
959,655
|
|
|
931,889
|
|
||
Property, plant and equipment, net of accumulated depreciation of $150,869 and $142,278
|
296,473
|
|
|
281,915
|
|
||
Goodwill
|
1,293,896
|
|
|
1,264,810
|
|
||
Other intangibles, net of amortization of $218,451 and $207,334
|
787,513
|
|
|
780,426
|
|
||
Long-term deferred tax assets
|
46,284
|
|
|
44,565
|
|
||
Other assets
|
43,073
|
|
|
36,108
|
|
||
Total assets
|
$
|
3,426,894
|
|
|
$
|
3,339,713
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Current maturities of long-term debt
|
$
|
5,113
|
|
|
$
|
5,149
|
|
Accounts payable
|
145,366
|
|
|
146,333
|
|
||
Accrued expenses
|
305,132
|
|
|
322,171
|
|
||
Total current liabilities
|
455,611
|
|
|
473,653
|
|
||
Long-term debt
|
1,043,885
|
|
|
1,023,732
|
|
||
Long-term deferred tax liability
|
91,433
|
|
|
87,815
|
|
||
Accrued pension benefits
|
338,843
|
|
|
334,511
|
|
||
Other non-current liabilities
|
56,464
|
|
|
58,854
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 62,599,365 and 62,619,865 shares issued in 2018 and 2017, respectively
|
145
|
|
|
145
|
|
||
Paid-in capital
|
375,067
|
|
|
374,922
|
|
||
Treasury stock, at cost; 6,889,241 and 6,889,241 shares in 2018 and 2017, respectively
|
(445,118
|
)
|
|
(445,118
|
)
|
||
Retained earnings
|
1,757,500
|
|
|
1,697,618
|
|
||
Accumulated other comprehensive loss
|
(246,936
|
)
|
|
(266,419
|
)
|
||
Total stockholders' equity
|
1,440,658
|
|
|
1,361,148
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,426,894
|
|
|
$
|
3,339,713
|
|
|
Three Months Ended
|
||||||
|
Mar 31, 2018
|
|
|
Apr 1, 2017
|
|
||
Net sales
|
$
|
584,800
|
|
|
$
|
530,297
|
|
Cost of sales
|
373,167
|
|
|
320,847
|
|
||
Gross profit
|
211,633
|
|
|
209,450
|
|
||
Selling, general and administrative expenses
|
122,948
|
|
|
114,984
|
|
||
Restructuring expenses
|
1,693
|
|
|
1,725
|
|
||
Income from operations
|
86,992
|
|
|
92,741
|
|
||
Interest expense and deferred financing amortization, net
|
8,823
|
|
|
5,805
|
|
||
Net periodic pension benefit (other than service costs)
|
(9,705
|
)
|
|
(8,338
|
)
|
||
Other expense, net
|
1,173
|
|
|
1,867
|
|
||
Earnings before income taxes
|
86,701
|
|
|
93,407
|
|
||
Provision for income taxes
|
21,281
|
|
|
22,705
|
|
||
Net earnings
|
$
|
65,420
|
|
|
$
|
70,702
|
|
|
|
|
|
||||
Net earnings per share:
|
|
|
|
||||
Basic
|
$
|
1.18
|
|
|
$
|
1.24
|
|
Diluted
|
$
|
1.18
|
|
|
$
|
1.24
|
|
Weighted average number of shares
|
|
|
|
||||
Basic
|
55,573
|
|
|
57,103
|
|
||
Dilutive common stock equivalents
1
|
—
|
|
|
—
|
|
||
Diluted
|
55,573
|
|
|
57,103
|
|
||
Comprehensive income
|
$
|
84,903
|
|
|
$
|
79,510
|
|
|
Three Months Ended
|
||||||
|
Mar 31, 2018
|
|
|
Apr 1, 2017
|
|
||
Cash flows from operating activities--
|
|
|
|
|
|
||
Net earnings
|
$
|
65,420
|
|
|
$
|
70,702
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities--
|
|
|
|
|
|
||
Depreciation and amortization
|
20,024
|
|
|
14,057
|
|
||
Non-cash share-based compensation
|
145
|
|
|
3,550
|
|
||
Deferred income taxes
|
2,568
|
|
|
15,285
|
|
||
Changes in assets and liabilities, net of acquisitions
|
|
|
|
|
|
||
Accounts receivable, net
|
1,041
|
|
|
19,417
|
|
||
Inventories, net
|
(9,129
|
)
|
|
(24,088
|
)
|
||
Prepaid expenses and other assets
|
19,326
|
|
|
(7,400
|
)
|
||
Accounts payable
|
(3,404
|
)
|
|
(2,201
|
)
|
||
Accrued expenses and other liabilities
|
(51,243
|
)
|
|
(42,442
|
)
|
||
Net cash provided by operating activities
|
44,748
|
|
|
46,880
|
|
||
Cash flows from investing activities--
|
|
|
|
|
|
||
Additions to property, plant and equipment
|
(16,657
|
)
|
|
(8,276
|
)
|
||
Purchase of Tradename
|
(5,399
|
)
|
|
—
|
|
||
Acquisitions, net of cash acquired
|
(29,459
|
)
|
|
(2,696
|
)
|
||
Net cash used in investing activities
|
(51,515
|
)
|
|
(10,972
|
)
|
||
Cash flows from financing activities--
|
|
|
|
|
|
||
Net proceeds (repayments) under Credit Facility
|
18,482
|
|
|
(3,133
|
)
|
||
Net (repayments) under international credit facilities
|
(114
|
)
|
|
(1,155
|
)
|
||
Net (repayments) under other debt arrangement
|
(3
|
)
|
|
(8
|
)
|
||
Repurchase of treasury stock
|
—
|
|
|
(24,645
|
)
|
||
Net cash provided by (used in) financing activities
|
18,365
|
|
|
(28,941
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
2,038
|
|
|
1,124
|
|
||
Changes in cash and cash equivalents--
|
|
|
|
|
|
||
Net increase in cash and cash equivalents
|
13,636
|
|
|
8,091
|
|
||
Cash and cash equivalents at beginning of year
|
89,654
|
|
|
68,485
|
|
||
Cash and cash equivalents at end of period
|
$
|
103,290
|
|
|
$
|
76,576
|
|
1)
|
Summary of Significant Accounting Policies
|
A)
|
Basis of Presentation
|
B)
|
Non-Cash Share-Based Compensation
|
C)
|
Income Taxes
|
D)
|
Fair Value Measures
|
|
Fair Value
Level 1
|
|
Fair Value
Level 2
|
|
Fair Value
Level 3
|
|
Total
|
||||||||
As of March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
16,946
|
|
|
$
|
—
|
|
|
$
|
16,946
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
803
|
|
|
$
|
803
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 30, 2017
|
|
|
|
|
|
|
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
10,266
|
|
|
$
|
—
|
|
|
$
|
10,266
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,780
|
|
|
$
|
1,780
|
|
2)
|
Acquisitions and Purchase Accounting
|
|
(as initially reported) May 1, 2017
|
|
Measurement Period Adjustments
|
|
(as adjusted) May 1, 2017
|
||||||
Cash
|
$
|
2,514
|
|
|
$
|
—
|
|
|
$
|
2,514
|
|
Current assets
|
6,424
|
|
|
104
|
|
|
6,528
|
|
|||
Property, plant and equipment
|
656
|
|
|
(13
|
)
|
|
643
|
|
|||
Goodwill
|
7,289
|
|
|
774
|
|
|
8,063
|
|
|||
Other intangibles
|
4,900
|
|
|
1,840
|
|
|
6,740
|
|
|||
Current liabilities
|
(2,254
|
)
|
|
(924
|
)
|
|
(3,178
|
)
|
|||
Long term deferred tax liability
|
(1,840
|
)
|
|
450
|
|
|
(1,390
|
)
|
|||
Other non-current liabilities
|
—
|
|
|
(2,580
|
)
|
|
(2,580
|
)
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
17,689
|
|
|
$
|
(349
|
)
|
|
$
|
17,340
|
|
|
(as initially reported) June 30, 2017
|
|
Preliminary Measurement Period Adjustments
|
|
(as adjusted) June 30, 2017
|
||||||
Cash
|
$
|
621
|
|
|
$
|
—
|
|
|
$
|
621
|
|
Current assets
|
5,973
|
|
|
(1,435
|
)
|
|
4,538
|
|
|||
Property, plant and equipment
|
238
|
|
|
(91
|
)
|
|
147
|
|
|||
Goodwill
|
20,297
|
|
|
432
|
|
|
20,729
|
|
|||
Other intangibles
|
8,700
|
|
|
4,350
|
|
|
13,050
|
|
|||
Current liabilities
|
(1,532
|
)
|
|
(514
|
)
|
|
(2,046
|
)
|
|||
Long term deferred tax liability
|
(3,168
|
)
|
|
(633
|
)
|
|
(3,801
|
)
|
|||
Other non-current liabilities
|
—
|
|
|
(2,362
|
)
|
|
(2,362
|
)
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
31,129
|
|
|
$
|
(253
|
)
|
|
$
|
30,876
|
|
|
(as initially reported) June 30, 2017
|
|
Preliminary Measurement Period Adjustments
|
|
(as adjusted) June 30, 2017
|
||||||
Cash
|
$
|
4,569
|
|
|
$
|
—
|
|
|
$
|
4,569
|
|
Current assets
|
22,686
|
|
|
(744
|
)
|
|
21,942
|
|
|||
Property, plant and equipment
|
9,128
|
|
|
(332
|
)
|
|
8,796
|
|
|||
Goodwill
|
33,785
|
|
|
(2,898
|
)
|
|
30,887
|
|
|||
Other intangibles
|
34,175
|
|
|
7,775
|
|
|
41,950
|
|
|||
Other assets
|
1,170
|
|
|
(3
|
)
|
|
1,167
|
|
|||
Current portion of long-term debt
|
—
|
|
|
(14
|
)
|
|
(14
|
)
|
|||
Current liabilities
|
(11,782
|
)
|
|
681
|
|
|
(11,101
|
)
|
|||
Long-term debt
|
—
|
|
|
(140
|
)
|
|
(140
|
)
|
|||
Long term deferred tax liability
|
(7,751
|
)
|
|
(2,600
|
)
|
|
(10,351
|
)
|
|||
Other non-current liabilities
|
(42
|
)
|
|
(1,725
|
)
|
|
(1,767
|
)
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
85,938
|
|
|
$
|
—
|
|
|
$
|
85,938
|
|
|
(as initially reported) August 31, 2017
|
|
Preliminary Measurement Period Adjustments
|
|
(as adjusted) August 31, 2017
|
||||||
Cash
|
$
|
1,130
|
|
|
$
|
—
|
|
|
$
|
1,130
|
|
Current assets
|
18,031
|
|
|
(64
|
)
|
|
17,967
|
|
|||
Property, plant and equipment
|
4,785
|
|
|
—
|
|
|
4,785
|
|
|||
Goodwill
|
14,590
|
|
|
(59
|
)
|
|
14,531
|
|
|||
Other intangibles
|
9,600
|
|
|
—
|
|
|
9,600
|
|
|||
Current liabilities
|
(6,810
|
)
|
|
(130
|
)
|
|
(6,940
|
)
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
41,326
|
|
|
$
|
(253
|
)
|
|
$
|
41,073
|
|
|
(as initially reported) October 17, 2017
|
|
Preliminary Measurement Period Adjustments
|
|
(as adjusted) October 17, 2017
|
||||||
Cash
|
$
|
3,420
|
|
|
$
|
—
|
|
|
$
|
3,420
|
|
Current assets
|
17,197
|
|
|
—
|
|
|
17,197
|
|
|||
Property, plant and equipment
|
1,120
|
|
|
—
|
|
|
1,120
|
|
|||
Goodwill
|
67,176
|
|
|
1,032
|
|
|
68,208
|
|
|||
Other intangibles
|
43,444
|
|
|
—
|
|
|
43,444
|
|
|||
Current liabilities
|
(5,994
|
)
|
|
(398
|
)
|
|
(6,392
|
)
|
|||
Long term deferred tax liability
|
(16,456
|
)
|
|
—
|
|
|
(16,456
|
)
|
|||
Other non-current liabilities
|
(1,907
|
)
|
|
(193
|
)
|
|
(2,100
|
)
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
108,000
|
|
|
$
|
441
|
|
|
$
|
108,441
|
|
|
(as initially reported) December 7, 2017
|
|
Preliminary Measurement Period Adjustments
|
|
(as adjusted) December 7, 2017
|
||||||
Cash
|
$
|
6,766
|
|
|
$
|
—
|
|
|
$
|
6,766
|
|
Current assets
|
3,428
|
|
|
(111
|
)
|
|
3,317
|
|
|||
Property, plant and equipment
|
447
|
|
|
(26
|
)
|
|
421
|
|
|||
Goodwill
|
30,072
|
|
|
136
|
|
|
30,208
|
|
|||
Other intangibles
|
11,491
|
|
|
—
|
|
|
11,491
|
|
|||
Current liabilities
|
(7,987
|
)
|
|
(29
|
)
|
|
(8,016
|
)
|
|||
Long term deferred tax liability
|
(3,305
|
)
|
|
30
|
|
|
(3,275
|
)
|
|||
|
|
|
|
|
|
||||||
Consideration paid at closing
|
$
|
40,912
|
|
|
$
|
—
|
|
|
$
|
40,912
|
|
|
|
|
|
|
|
||||||
Contingent consideration
|
751
|
|
|
—
|
|
|
751
|
|
|||
|
|
|
|
|
|
||||||
Net assets acquired and liabilities assumed
|
$
|
41,663
|
|
|
$
|
—
|
|
|
$
|
41,663
|
|
|
(as initially reported) February 16, 2018
|
||
Cash
|
$
|
5
|
|
Current assets
|
5,301
|
|
|
Property, plant and equipment
|
3,557
|
|
|
Goodwill
|
12,686
|
|
|
Other intangibles
|
8,081
|
|
|
Current liabilities
|
(3,800
|
)
|
|
|
|
||
Net assets acquired and liabilities assumed
|
$
|
25,830
|
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Net sales
|
$
|
587,242
|
|
|
$
|
597,078
|
|
Net earnings
|
67,081
|
|
|
65,750
|
|
||
|
|
|
|
||||
Net earnings per share:
|
|
|
|
|
|
||
Basic
|
1.21
|
|
|
1.15
|
|
||
Diluted
|
1.21
|
|
|
1.15
|
|
3)
|
Litigation Matters
|
4)
|
Recently Issued Accounting Standards
|
5)
|
Revenue Recognition
|
•
|
The company does not disclose information about remaining performance obligations that have original expected durations of one year or less.
|
•
|
The company generally expenses sales commissions when incurred because the amortization period would have been less than one year. These costs are recorded within selling, general and administrative expenses.
|
•
|
As the company’s standard payment terms are less than one year, the company does not assess whether a contract has a significant financing component.
|
•
|
The company treats shipping and handling activities performed after the customer obtains control of the good as a contract fulfillment activity.
|
•
|
Sales, use and value added taxes assessed by governmental authorities are excluded from the measurement of the transaction price within the company’s contracts with its customers.
|
|
Balance at
December 30, 2017 (as reported)
|
|
Adjustments due to ASC 606
|
|
Balance at
December 30, 2017 (as adjusted)
|
||||||
|
(in thousands)
|
||||||||||
Balance Sheet
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
328,421
|
|
|
$
|
(122
|
)
|
|
$
|
328,299
|
|
Inventories, net
|
424,639
|
|
|
14,993
|
|
|
439,632
|
|
|||
Prepaid expenses and other
|
55,427
|
|
|
(4,018
|
)
|
|
51,409
|
|
|||
Long-term deferred tax assets
|
44,565
|
|
|
1,319
|
|
|
45,884
|
|
|||
|
|
|
|
|
|
||||||
Liabilities & Stockholders' Equity
|
|
|
|
|
|
||||||
Accrued expenses
|
322,171
|
|
|
16,557
|
|
|
338,728
|
|
|||
Retained earnings
|
$
|
1,697,618
|
|
|
$
|
(4,405
|
)
|
|
$
|
1,693,213
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
As Reported
|
|
Balances without ASC 606
|
|
Effect of Change
|
||||||
|
(in thousands)
|
||||||||||
Net sales
|
$
|
584,800
|
|
|
$
|
570,658
|
|
|
$
|
14,142
|
|
Cost of sales
|
373,167
|
|
|
362,686
|
|
|
10,481
|
|
|||
Provision for income taxes
|
21,281
|
|
|
20,310
|
|
|
971
|
|
|||
Net earnings
|
$
|
65,420
|
|
|
$
|
62,731
|
|
|
$
|
2,689
|
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
1.18
|
|
|
$
|
1.13
|
|
|
|
||
Diluted earnings per share
|
$
|
1.18
|
|
|
$
|
1.13
|
|
|
|
|
Balance as of March 31, 2018
|
||||||||||
|
As Reported
|
|
Balances without ASC 606
|
|
Effect of Change
|
||||||
|
(in thousands)
|
||||||||||
Assets
|
|
|
|
|
|
||||||
Inventories, net
|
$
|
459,151
|
|
|
$
|
453,710
|
|
|
$
|
5,441
|
|
Prepaid expenses and other
|
48,464
|
|
|
51,630
|
|
|
(3,166
|
)
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accrued expenses
|
305,132
|
|
|
310,104
|
|
|
4,180
|
|
|||
Long-term deferred tax liability
|
91,433
|
|
|
90,816
|
|
|
(456
|
)
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
$
|
1,757,500
|
|
|
$
|
1,756,051
|
|
|
$
|
(1,449
|
)
|
|
Commercial
Foodservice
|
|
Food Processing
|
|
Residential Kitchen
|
|
Total
|
||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||
United States and Canada
|
$
|
255,113
|
|
|
$
|
66,935
|
|
|
$
|
78,560
|
|
|
$
|
400,608
|
|
Asia
|
29,032
|
|
|
5,712
|
|
|
1,519
|
|
|
36,263
|
|
||||
Europe and Middle East
|
66,611
|
|
|
8,732
|
|
|
55,055
|
|
|
130,398
|
|
||||
Latin America
|
9,148
|
|
|
7,193
|
|
|
1,190
|
|
|
17,531
|
|
||||
Total
|
$
|
359,904
|
|
|
$
|
88,572
|
|
|
$
|
136,324
|
|
|
$
|
584,800
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended April 1, 2017
|
|
|
|
|
|
|
|
||||||||
United States and Canada
|
$
|
224,622
|
|
|
$
|
59,745
|
|
|
$
|
80,838
|
|
|
$
|
365,205
|
|
Asia
|
32,250
|
|
|
4,423
|
|
|
2,538
|
|
|
39,211
|
|
||||
Europe and Middle East
|
46,493
|
|
|
7,118
|
|
|
56,347
|
|
|
109,958
|
|
||||
Latin America
|
8,884
|
|
|
5,990
|
|
|
1,049
|
|
|
15,923
|
|
||||
Total
|
$
|
312,249
|
|
|
$
|
77,276
|
|
|
$
|
140,772
|
|
|
$
|
530,297
|
|
|
Mar 31, 2018
|
|
At Adoption
|
||||
|
(in thousands)
|
||||||
Contract assets
|
$
|
11,315
|
|
|
$
|
16,753
|
|
Contract liabilities
|
51,276
|
|
|
47,647
|
|
|
Currency Translation Adjustment
|
|
Pension Benefit Costs
|
|
Unrealized Gain/(Loss) Interest Rate Swap
|
|
Total
|
||||||||
Balance as of December 30, 2017
|
$
|
(69,721
|
)
|
|
$
|
(203,063
|
)
|
|
$
|
6,365
|
|
|
$
|
(266,419
|
)
|
Adoption of ASU 2018-02
(2)
|
—
|
|
|
487
|
|
|
(1,619
|
)
|
|
(1,132
|
)
|
||||
Other comprehensive income before reclassification
|
21,802
|
|
|
(9,361
|
)
|
|
8,186
|
|
|
20,627
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||
Net current-period other comprehensive income
|
$
|
21,802
|
|
|
$
|
(8,874
|
)
|
|
$
|
6,555
|
|
|
$
|
19,483
|
|
Balance as of March 31, 2018
|
$
|
(47,919
|
)
|
|
$
|
(211,937
|
)
|
|
$
|
12,920
|
|
|
$
|
(246,936
|
)
|
|
Three Months Ended
|
||||||
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||
Net earnings
|
$
|
65,420
|
|
|
$
|
70,702
|
|
Currency translation adjustment
|
21,802
|
|
|
10,835
|
|
||
Pension liability adjustment, net of tax
|
(8,874
|
)
|
|
(2,527
|
)
|
||
Unrealized gain on interest rate swaps, net of tax
|
6,555
|
|
|
500
|
|
||
Comprehensive income
|
$
|
84,903
|
|
|
$
|
79,510
|
|
7)
|
Inventories
|
|
Mar 31, 2018
|
|
Dec 30, 2017
|
||||
|
(in thousands)
|
||||||
Raw materials and parts
|
$
|
193,565
|
|
|
$
|
180,559
|
|
Work-in-process
|
49,065
|
|
|
38,917
|
|
||
Finished goods
|
216,521
|
|
|
205,163
|
|
||
|
$
|
459,151
|
|
|
$
|
424,639
|
|
8)
|
Goodwill
|
|
Commercial
Foodservice
|
|
Food
Processing
|
|
Residential Kitchen
|
|
Total
|
||||||||
Balance as of December 30, 2017
|
$
|
631,451
|
|
|
$
|
198,278
|
|
|
$
|
435,081
|
|
|
$
|
1,264,810
|
|
Goodwill acquired during the year
|
2,802
|
|
|
12,686
|
|
|
—
|
|
|
15,488
|
|
||||
Measurement period adjustments to goodwill acquired in prior year
|
934
|
|
|
132
|
|
|
—
|
|
|
1,066
|
|
||||
Exchange effect
|
618
|
|
|
1,269
|
|
|
10,645
|
|
|
12,532
|
|
||||
Balance as of March 31, 2018
|
$
|
635,805
|
|
|
$
|
212,365
|
|
|
$
|
445,726
|
|
|
$
|
1,293,896
|
|
9)
|
Intangibles
|
|
March 31, 2018
|
|
December 30, 2017
|
||||||||||||||||
|
Estimated
Weighted Avg Remaining Life |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
|
Estimated
Weighted Avg Remaining Life |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer lists
|
5.0
|
|
$
|
333,922
|
|
|
$
|
(180,081
|
)
|
|
5.2
|
|
$
|
330,496
|
|
|
$
|
(171,005
|
)
|
Backlog
|
0.1
|
|
20,138
|
|
|
(19,913
|
)
|
|
0.8
|
|
19,689
|
|
|
(18,081
|
)
|
||||
Developed technology
|
4.1
|
|
22,897
|
|
|
(18,457
|
)
|
|
4.2
|
|
22,485
|
|
|
(18,248
|
)
|
||||
|
|
|
$
|
376,957
|
|
|
$
|
(218,451
|
)
|
|
|
|
$
|
372,670
|
|
|
$
|
(207,334
|
)
|
Indefinite-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trademarks and tradenames
|
|
|
$
|
629,007
|
|
|
|
|
|
|
|
$
|
615,090
|
|
|
|
|
Twelve Month Period Ending
|
|
Amortization Expense
|
||
|
|
|
||
2019
|
|
$
|
36,523
|
|
2020
|
|
30,105
|
|
|
2021
|
|
28,435
|
|
|
2022
|
|
25,398
|
|
|
2023
|
|
19,475
|
|
|
Thereafter
|
|
18,570
|
|
|
|
|
$
|
158,506
|
|
|
Mar 31, 2018
|
|
Dec 30, 2017
|
||||
|
(in thousands)
|
||||||
Accrued payroll and related expenses
|
$
|
62,737
|
|
|
$
|
67,935
|
|
Accrued warranty
|
54,069
|
|
|
52,834
|
|
||
Advanced customer deposits
|
51,276
|
|
|
31,069
|
|
||
Accrued customer rebates
|
25,917
|
|
|
48,590
|
|
||
Accrued professional fees
|
17,515
|
|
|
18,250
|
|
||
Accrued sales and other tax
|
14,481
|
|
|
20,881
|
|
||
Accrued agent commission
|
11,443
|
|
|
11,035
|
|
||
Accrued product liability and workers compensation
|
10,872
|
|
|
11,976
|
|
||
Product recall
|
5,749
|
|
|
6,068
|
|
||
Restructuring
|
1,561
|
|
|
1,715
|
|
||
Other accrued expenses
|
49,512
|
|
|
51,818
|
|
||
|
|
|
|
||||
|
$
|
305,132
|
|
|
$
|
322,171
|
|
11)
|
Warranty Costs
|
|
Three Months Ended
|
||
|
Mar 31, 2018
|
||
|
(in thousands)
|
||
Balance as of December 30, 2017
|
$
|
52,834
|
|
Warranty reserve related to acquisitions
|
69
|
|
|
Warranty expense
|
14,488
|
|
|
Warranty claims
|
(13,322
|
)
|
|
Balance as of March 31, 2018
|
$
|
54,069
|
|
12)
|
Financing Arrangements
|
|
Mar 31, 2018
|
|
Dec 30, 2017
|
||||
|
(in thousands)
|
||||||
Credit Facility
|
$
|
1,043,108
|
|
|
$
|
1,022,935
|
|
Other international credit facilities
|
5,715
|
|
|
5,768
|
|
||
Other debt arrangement
|
175
|
|
|
178
|
|
||
Total debt
|
$
|
1,048,998
|
|
|
$
|
1,028,881
|
|
Less: Current maturities of long-term debt
|
5,113
|
|
|
5,149
|
|
||
Long-term debt
|
$
|
1,043,885
|
|
|
$
|
1,023,732
|
|
|
Mar 31, 2018
|
|
Dec 30, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Total debt
|
$
|
1,048,998
|
|
|
$
|
1,048,998
|
|
|
$
|
1,028,881
|
|
|
$
|
1,028,881
|
|
13)
|
Financial Instruments
|
|
Condensed Consolidated
Balance Sheet Presentation
|
|
Mar 31, 2018
|
|
|
Dec 30, 2017
|
|
||
Fair value
|
Other assets
|
|
$
|
16,946
|
|
|
$
|
10,266
|
|
|
|
|
Three Months Ended
|
||||||
|
Presentation of Gain/(loss)
|
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||
Gain/(loss) recognized in accumulated other comprehensive income
|
Other comprehensive income
|
|
$
|
6,620
|
|
|
$
|
312
|
|
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)
|
Interest expense
|
|
$
|
(12
|
)
|
|
$
|
(522
|
)
|
Gain/(loss) recognized in income (ineffective portion)
|
Other expense
|
|
$
|
48
|
|
|
$
|
(7
|
)
|
14)
|
Segment Information
|
|
Three Months Ended
|
||||||||||||
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||||||||
|
Sales
|
|
Percent
|
|
Sales
|
|
Percent
|
||||||
Business Segments:
|
|
|
|
|
|
|
|
||||||
Commercial Foodservice
|
$
|
359,904
|
|
|
61.5
|
%
|
|
$
|
312,249
|
|
|
58.9
|
%
|
Food Processing
|
88,572
|
|
|
15.2
|
|
|
77,276
|
|
|
14.6
|
|
||
Residential Kitchen
|
136,324
|
|
|
23.3
|
|
|
140,772
|
|
|
26.5
|
|
||
Total
|
$
|
584,800
|
|
|
100.0
|
%
|
|
$
|
530,297
|
|
|
100.0
|
%
|
|
Commercial
Foodservice
|
|
|
Food Processing
|
|
|
Residential Kitchen
|
|
|
Corporate
and Other
(2)
|
|
|
Total
|
|
|||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
359,904
|
|
|
$
|
88,572
|
|
|
$
|
136,324
|
|
|
$
|
—
|
|
|
$
|
584,800
|
|
Income (loss) from operations
(3)
|
82,546
|
|
|
10,678
|
|
|
6,589
|
|
|
(12,821
|
)
|
|
86,992
|
|
|||||
Depreciation and amortization expense
|
8,000
|
|
|
4,047
|
|
|
7,509
|
|
|
468
|
|
|
20,024
|
|
|||||
Net capital expenditures
|
5,777
|
|
|
6,496
|
|
|
4,898
|
|
|
(514
|
)
|
|
16,657
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
1,724,174
|
|
|
$
|
484,038
|
|
|
$
|
1,178,110
|
|
|
$
|
40,572
|
|
|
$
|
3,426,894
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended April 1, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
312,249
|
|
|
$
|
77,276
|
|
|
$
|
140,772
|
|
|
$
|
—
|
|
|
$
|
530,297
|
|
Income (loss) from operations
(3) (4)
|
80,541
|
|
|
17,989
|
|
|
10,574
|
|
|
(16,363
|
)
|
|
92,741
|
|
|||||
Depreciation and amortization expense
|
4,982
|
|
|
1,387
|
|
|
7,207
|
|
|
481
|
|
|
14,057
|
|
|||||
Net capital expenditures
|
5,985
|
|
|
638
|
|
|
1,282
|
|
|
371
|
|
|
8,276
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
1,359,869
|
|
|
$
|
344,307
|
|
|
$
|
1,200,241
|
|
|
$
|
38,614
|
|
|
$
|
2,943,031
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||
United States and Canada
|
$
|
239,179
|
|
|
$
|
178,363
|
|
Asia
|
13,294
|
|
|
15,357
|
|
||
Europe and Middle East
|
131,652
|
|
|
120,505
|
|
||
Latin America
|
1,705
|
|
|
1,050
|
|
||
Total international
|
$
|
146,651
|
|
|
$
|
136,912
|
|
|
$
|
385,830
|
|
|
$
|
315,275
|
|
15)
|
Employee Retirement Plans
|
(a)
|
Pension Plans
|
|
Three Months Ended
|
||||||
|
March 31, 2018
|
|
April 1, 2017
|
||||
Net Periodic Pension Benefit:
|
|
|
|
||||
Service cost
|
$
|
977
|
|
|
$
|
964
|
|
Interest cost
|
8,278
|
|
|
7,764
|
|
||
Expected return on assets
|
(19,278
|
)
|
|
(16,774
|
)
|
||
Amortization of net (gain) loss
|
1,032
|
|
|
720
|
|
||
Curtailment loss (gain)
|
287
|
|
|
—
|
|
||
Pension settlement gain
|
(24
|
)
|
|
(48
|
)
|
||
|
$
|
(8,728
|
)
|
|
$
|
(7,374
|
)
|
(b)
|
Defined Contribution Plans
|
16)
|
Restructuring
|
|
|
Severance/Benefits
|
|
Facilities/Operations
|
|
Other
|
|
Total
|
||||||||
Balance as of December 30, 2017
|
|
$
|
3,698
|
|
|
$
|
1,467
|
|
|
$
|
157
|
|
|
$
|
5,322
|
|
Expenses
|
|
777
|
|
|
(183
|
)
|
|
146
|
|
|
740
|
|
||||
Exchange
|
|
126
|
|
|
26
|
|
|
3
|
|
|
155
|
|
||||
Payments/Utilization
|
|
(2,307
|
)
|
|
(123
|
)
|
|
(67
|
)
|
|
(2,497
|
)
|
||||
Balance as of March 31, 2018
|
|
$
|
2,294
|
|
|
$
|
1,187
|
|
|
$
|
239
|
|
|
$
|
3,720
|
|
17)
|
Subsequent Events
|
|
Three Months Ended
|
||||||||||||
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||||||||
|
Sales
|
|
Percent
|
|
Sales
|
|
Percent
|
||||||
Business Segments:
|
|
|
|
|
|
|
|
||||||
Commercial Foodservice
|
$
|
359,904
|
|
|
61.5
|
%
|
|
$
|
312,249
|
|
|
58.9
|
%
|
Food Processing
|
88,572
|
|
|
15.2
|
|
|
77,276
|
|
|
14.6
|
|
||
Residential Kitchen
|
136,324
|
|
|
23.3
|
|
|
140,772
|
|
|
26.5
|
|
||
Total
|
$
|
584,800
|
|
|
100.0
|
%
|
|
$
|
530,297
|
|
|
100.0
|
%
|
|
Three Months Ended
|
||||
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
63.8
|
|
|
60.5
|
|
Gross profit
|
36.2
|
|
|
39.5
|
|
Selling, general and administrative expenses
|
21.0
|
|
|
21.7
|
|
Restructuring expenses
|
0.3
|
|
|
0.3
|
|
Income from operations
|
14.9
|
|
|
17.5
|
|
Interest expense and deferred financing amortization, net
|
1.5
|
|
|
1.1
|
|
Net periodic pension benefit (other than service costs)
|
(1.7
|
)
|
|
(1.6
|
)
|
Other expense, net
|
0.2
|
|
|
0.4
|
|
Earnings before income taxes
|
14.9
|
|
|
17.6
|
|
Provision for income taxes
|
3.6
|
|
|
4.3
|
|
Net earnings
|
11.3
|
%
|
|
13.3
|
%
|
•
|
Net sales of the Commercial Foodservice Equipment Group increased by
$47.7 million
, or
15.3%
, to
$359.9 million
in the
three months period ended March 31, 2018
, as compared to
$312.2 million
in the prior year period. Net sales from the acquisitions of Sveba Dahlen, QualServ, L2F and Globe which were acquired on June 30, 2017, August 31, 2017, October 6, 2017 and October 17, 2017, respectively, accounted for an increase of
$46.0 million
during the
three months period ended March 31, 2018
. Excluding the impact of these acquisitions, net sales of the Commercial Foodservice Equipment Group
increased
$1.7 million
, or
0.5%
, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales
decreased
$4.3 million
, or
1.4%
at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales increase of
$30.5 million
, or
13.6%
, to
$255.1 million
, as compared to
$224.6 million
in the prior year period. This includes an increase of
$29.4 million
from the recent acquisitions. Excluding the acquisitions, the net increase in domestic sales was
$1.1 million
, or
0.5%
.
Domestic sales growth reflects the continued impact of disruption from changes to strengthen the sales organization. The efforts
include
consolidati
on
of
the
independent sales representatives
which
will improve the efficiency of the sales process and enhance strategic alignment.
International sales increased
$17.2 million
, or
19.6%
, to
$104.8 million
, as compared to
$87.6 million
in the prior year period. This includes an increase of
$16.6 million
from the recent acquisitions and increase of
$6.0 million
related to the favorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net sales decrease in international sales was
$5.4 million
, or
6.2%
. The decline in international revenues reflects lower sales in Australia due to generally slower market conditions and lower sales in India due to management transition and timing of orders from major restaurant chain customers.
|
•
|
Net sales of the Food Processing Equipment Group increased by
$11.3 million
, or
14.6%
, to
$88.6 million
in the
three months period ended March 31, 2018
, as compared to
$77.3 million
in the prior year period. Net sales from the acquisitions of Burford, CVP Systems, Scanico and Hinds-Bock, which were acquired on May 1, 2017, June 30, 2017, December 7, 2017 and February 16, 2018 respectively, accounted for an increase of
$17.9 million
during the
three months period ended March 31, 2018
. Excluding the impact of these acquisitions, net sales of the Food Processing Equipment Group
decreased
$6.6 million
, or
8.5%
. Excluding the impact of foreign exchange, acquisitions and the adoption of ASC 606, net sales
decreased
$22.2 million
, or
28.7%
at the Food Processing Equipment Group. Domestically, the company realized a sales increase of
$7.2 million
, or
12.0%
, to
$67.0 million
, as compared to
$59.8 million
in the prior year period. This includes an increase of
$9.6 million
from the recent acquisitions and approximately
$14.1 million
related to the adoption of ASC 606. International sales increased
$4.1 million
, or
23.4%
, to
$21.6 million
, as compared to
$17.5 million
in the prior year period. This includes an increase of
$8.3 million
from the recent acquisitions and increase of
$1.5 million
related to the favorable impact of exchange rates. Revenues for the Food Processing Equipment Group have been affected by the timing and deferral of certain large orders which create quarterly volatility for the group.
|
•
|
Net sales of the Residential Kitchen Equipment Group decreased by
$4.5 million
, or
3.2%
, to
$136.3 million
in the
three months period ended March 31, 2018
, as compared to
$140.8 million
in the prior year period. Excluding the impact of foreign exchange, net sales decreased
8.4%
at the Residential Kitchen Equipment Group. Domestically, the company realized a sales decrease of
$2.4 million
, or
3.0%
, to
$78.5 million
, as compared to
$80.9 million
in the prior year period. Sales at Viking increased by approximately 5% during the quarter. This increase was more than offset by the temporary impact of consolidating our premium brands through company owned distribution and canceling certain third party distributors. International sales decreased
$2.1 million
, or
3.5%
, to
$57.8 million
, as compared to
$59.9 million
in the prior year quarter. This includes a favorable impact of exchange rates of
$7.3 million
. The sales decrease reflects slower conditions in the UK market impacting the AGA and Rangemaster brands. Additionally, revenues at non-core businesses, acquired in connection with AGA, have been lower in connection with restructuring initiatives to improve profitability.
|
•
|
Gross profit at the Commercial Foodservice Equipment Group increased by
$10.6 million
, or
8.3%
, to
$138.3 million
in the
three months period ended March 31, 2018
, as compared to
$127.7 million
in the prior year period. Gross profit from the acquisitions of Sveba Dahlen, QualServ, L2F and Globe accounted for approximately
$10.3 million
of the increase in gross profit during the period. Excluding the recent acquisitions, gross profit increased by approximately
$0.3 million
. The impact of foreign exchange rates increased gross profit by approximately
$1.8 million
. The gross margin rate decreased to
38.4%
, as compared to
40.9%
in the prior year period, due to lower margins at recent acquisitions.
|
•
|
Gross profit at the Food Processing Equipment Group decreased by
$2.4 million
, or
7.9%
, to
$28.1 million
in the
three months period ended March 31, 2018
, as compared to
$30.5 million
in the prior year period. Gross profit from the acquisitions of Burford, CVP Systems, Scanico and Hinds-Bock increased gross profit by approximately
$7.4 million
during the period. The adoption of ASC 606 increased gross profit by approximately
$3.7 million
. Excluding the recent acquisitions and adoption of ASC 606, gross profit decreased by approximately
$13.5 million
on lower sales volumes. The impact of foreign exchange rates increased gross profit by approximately
$0.8 million
. The gross profit margin rate decreased to
31.7%
, as compared to
39.5%
in the prior year period reflecting the impact of lower volumes and unfavorable product mix resulting from lesser sales at our highest margin protein equipment divisions.
|
•
|
Gross profit at the Residential Kitchen Equipment Group decreased by
$6.3 million
, or
12.1%
, to
$45.7 million
in the
three months period ended March 31, 2018
, as compared to
$52.0 million
in the prior year period. The impact of foreign exchange rates increased gross profit by approximately
$2.4 million
. The gross margin rate decreased to
33.5%
, as compared to
36.9%
in the prior year period, due primarily to the impact of the domestic distribution changes and product display investments and sales incentives related to the Viking brand.
|
Twelve Month Period Ending
|
|
Variable Rate
Debt
|
||
|
|
|
||
2019
|
|
$
|
5,113
|
|
2020
|
|
338
|
|
|
2021
|
|
163
|
|
|
2022
|
|
1,043,271
|
|
|
2023 and thereafter
|
|
113
|
|
|
|
|
$
|
1,048,998
|
|
|
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 Program (1)
|
|
|
December 31 to January 27, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,373,800
|
|
January 28 to February 24, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
2,373,800
|
|
|
February 25 to March 31, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
2,373,800
|
|
|
Quarter ended March 31, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,373,800
|
|
|
|
|
THE MIDDLEBY CORPORATION
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date:
|
May 10, 2018
|
|
By:
|
/s/ Timothy J. FitzGerald
|
|
|
|
|
Timothy J. FitzGerald
|
|
|
|
|
Vice President,
|
|
|
|
|
Chief Financial Officer
|
1 Year Middleby Chart |
1 Month Middleby Chart |
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