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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)


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

For the period ended September 28, 2002

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
Incorporation or Organization)

 (I.R.S. Employer Identification No.)
      
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 twelve (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 |_|

As of November 8, 2002, there were 9,024,047 shares of the registrant’s common stock outstanding.



THE MIDDLEBY CORPORATION AND SUBSIDIARIES

QUARTER ENDED SEPTEMBER 28, 2002

INDEX


DESCRIPTION PAGE
     
PART I.  FINANCIAL INFORMATION
     
                 Item 1. Condensed Consolidated Financial Statements  
     
                              CONDENSED CONSOLIDATED BALANCE SHEETS 1
                                  September 28, 2002 and  
                                      December 29, 2001 (as restated)  
     
                              CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS 2
                                  September 28, 2002 and  
                                      September 29, 2001  
     
                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 3
                                  September 28, 2002 and  
                                      September 29, 2001  
     
                              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4
     
                 Item 2. Management’s Discussion and Analysis  
                              of Financial Condition and Results of  
                              Operations 15
     
                 Item 3. Quantitative and Qualitative Disclosures  
                              About Market Risk 24
     
                 Item 4. Controls and Procedures 27
     
PART II. OTHER INFORMATION 28



PART I. FINANCIAL INFORMATION

THE MIDDLEBY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
(Unaudited)


Sep. 28, 2002 (as restated(1))
Dec. 29, 2001
ASSETS                  
Cash and cash equivalents $ 2,305   $ 3,795  
Accounts receivable, net of reserve            
  for doubtful accounts of            
  $3,389 and $2,913   28,346     25,158  
Inventories, net   26,741     29,115  
Prepaid expenses and other   1,534     1,178  
Current deferred taxes   11,716     11,291  
     Total current assets   70,642     70,537  
Property, plant and equipment, net of            
  accumulated depreciation of            
  $25,174 and $22,185   28,259     30,598  
Goodwill   63,641     63,327  
Other intangibles   26,300     26,466  
Deferred taxes   1,980     1,980  
Other assets   6,543     7,589  
            Total assets $ 197,365   $ 200,497  
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Current maturities of long-term debt $ 11,500   $ 10,047  
Accounts payable   13,871     9,289  
Accrued expenses   36,829     38,438  
     Total current liabilities   62,200     57,774  
Long-term debt   67,981     86,152  
Other non-current liabilities   20,452     17,162  
Shareholders’ equity:            
  Preferred stock, $.01 par value;            
    nonvoting; 2,000,000 shares            
    authorized; none issued   —     —  
  Common stock, $.01 par value;            
    20,000,000 shares authorized;            
    11,026,521 and 11,024,396 issued            
    in 2002 and 2001, respectively   110     110  
  Shareholder receivables   (590 )   (290 )
  Paid-in capital   53,855     53,594  
  Treasury stock at cost; 2,002,474            
    shares in 2002 and 2,052,474 in            
    2001, respectively   (11,705 )   (11,997 )
 Retained earnings (accumulated            
    deficit)   7,162     (1,029 )
 Accumulated other comprehensive            
    loss   (2,100 )   (1,269 )
     Total shareholders’ equity   46,732     39,409  
            Total liabilities and            
              shareholders’ equity $ 197,365   $ 200,497  

(1) See Note 2

See accompanying notes

- 1 -



THE MIDDLEBY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands, Except Per Share Amounts)
(Unaudited)


Three Months Ended Nine Months Ended
Sep. 28, 2002 Sep. 29, 2001 Sep. 28, 2002 Sep. 29, 2001
(as restated)
      
Net sales $ 57,679            $ 25,714            $ 174,648            $ 75,754  
Cost of sales   37,215     17,227     114,770     50,862  
        Gross profit   20,464     8,487     59,878     24,892  
Selling and distribution expenses   7,042     3,173     21,575     10,351  
General and administrative expenses   4,475     2,879     16,439     8,022  
        Income from operations   8,947     2,435     21,864     6,519  
Interest expense and deferred                        
  financing amortization   2,661     128     8,783     460  
Loss (gain) on acquisition financing                        
  derivatives   (95 )   —     (109 )   —  
Other (income) expense, net   484     (86 )   395     509  
        Earnings before income taxes   5,897     2,393     12,795     5,550  
Provision for income taxes   1,560     1,301     4,604     3,233  
        Net earnings $ 4,337   $ 1,092   $ 8,191   $ 2,317  
      
Net earnings per share:                        
          Basic $ 0.48   $ 0.12   $ 0.91   $ 0.26  
          Diluted $ 0.47   $ 0.12   $ 0.90   $ 0.26  
      
Weighted average number of shares:                        
          Basic   8,991     8,981     8,979     8,987  
            Dilutive stock options(1)   211     13     92     16  
          Diluted   9,202     8,994     9,071     9,003  

(1) Excludes 242,000 stock options for the three and nine months ended September 29, 2001 with exercise prices from $6.00 to $7.06 which were anti-dilutive

See accompanying notes

- 2 -



THE MIDDLEBY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)


Nine Months Ended
Sep. 28, 2002 Sep. 29, 2001
Cash flows from operating activities–            
  Net earnings $ 8,191             $ 2,317  
     
  Adjustments to reconcile net earnings            
    to cash provided by operating            
    activities:            
     
    Depreciation and amortization   5,195     2,741  
    Deferred taxes   (425 )   2,246  
    Unrealized (gain) loss on            
      derivative financial instruments   (109 )   —  
     
  Changes in assets and liabilities–            
    Accounts receivable, net   (3,189 )   4,505  
    Inventories, net   2,374     1,317  
    Prepaid expenses and other assets   (343 )   (1,186 )
    Accounts payable   4,583     (1,918 )
    Accrued expenses and other            
      liabilities   607   (5,156 )
  Net cash provided by operating            
    activities   16,884     4,866  
     
Cash flows from investing activities–            
     
Net additions to property and equipment   (1,011 )   (325 )
  Net cash (used in) investing activities   (1,011 )   (325 )
Cash flows from financing activities–            
  Proceeds (repayments) under revolving            
   credit facilities, net   (13,885 )   (3,360 )
  Repayments of senior secured bank notes   (3,500 )   —  
  Repurchase of treasury stock   —     (220 )
  Other financing activities, net   (40 )   (276 )
    Net cash (used in)            
      financing activities   (17,425 )   (3,856 )
     
Effect of exchange rates on cash            
   and cash equivalents   62     (92 )
     
Changes in cash and cash equivalents–            
  Net