THE MIDDLEBY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE ~~30, 2018~~29, 2019

(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" or “Middleby”), pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). 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 ~~2017~~2018 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year ~~2018.~~2019.

In the opinion of management, the financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of the company as of June ~~30, 2018~~29, 2019 and December ~~30, 2017,~~29, 2018, the results of operations for the three and six months ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017 and~~ cash flows for the six months ended June 29, 2019 and June 30, 2018 and ~~July 1, 2017.~~statement of stockholders' equity for the three and six months ended June 29, 2019 and June 30, 2018.

Certain prior year amounts have been reclassified to be consistent with current year presentation, including the non-operating components of pension benefit previously reported in Selling, general and administrative expenses to Net periodic pension benefit (other than service cost).

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, warranty reserves, insurance reserves, income tax reserves, non-cash share-based compensation and post-retirement obligations. Actual results could differ from the company's estimates.


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 $0.3 million and $1.7 million ~~and~~ ~~$3.0 million~~ for the three months period ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively. Non-cash share-based compensation expense was ~~$1.8~~$1.3 million and ~~$6.5~~$1.8 million for the six months period ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively.


C)	Income Taxes

A tax provision of ~~$47.9~~$53.9 million, at an effective rate of ~~24.3%~~25.1%, was recorded during the six months period ended June ~~30, 2018,~~29, 2019, as compared to a ~~$61.3~~$47.9 million tax provision at a ~~29.2%~~24.3% in the prior year period. In comparison to the prior year ~~period,~~ the effective rate increased primarily due to a tax ~~provision reflects a lower~~benefit recorded in 2018 for enacted tax rate changes. The effective rates in 2019 and 2018 are higher than the federal tax rate of ~~21.0%, as opposed to 35.0% in 2017, partially offset by additional taxes due under the Tax Cuts and Jobs Act of 2017. The 2017 tax provision was lower than the statutory rate of 35.0%~~21% primarily due to ~~a discrete~~state taxes and foreign tax benefit recognized as a result of the adoption of ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting". In the fourth quarter of 2017 the company recorded a provisional transition tax charge and a change in deferred tax accounts associated with the Tax Cuts and Jobs Act of 2017. These provisional amounts will be finalized in 2018.

rate differentials.


D)	Fair Value Measures

Accounting Standards Codification ("ASC") 820 "Fair Value Measurements and Disclosures" 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 liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):



	Fair Value Level 1		Fair Value Level 2		Fair Value Level 3		Total
As of June 29, 2019
Financial Assets:
Interest rate swaps	$	—	$	3,238	$	—	$	3,238

Financial Liabilities:
Interest rate swaps	$	—	$	25,402	$	—	$	25,402
Contingent consideration	$	—	$	—	$	8,536	$	8,536

As of December 29, 2018
Financial Assets:
Interest rate swaps	$	—	$	13,487	$	—	$	13,487

Financial Liabilities:
Interest rate swaps	$	—	$	4,125	$	—	$	4,125
Contingent consideration	$	—	$	—	$	3,566	$	3,566

Fair Value
Level 1

Fair Value
Level 2

Fair Value
Level 3
Total
As of June 30, 2018
Financial Assets:
    Interest rate swaps $ —
$ 20,875
$ —
$ 20,875

Financial Liabilities:
    Contingent consideration $ —
$ —
$ 4,237
$ 4,237

As of December 30, 2017
Financial Assets:
    Interest rate swaps $ —
$ 10,266
$ —
$ 10,266

Financial Liabilities:
    Contingent consideration $ —
$ —
$ 1,780
$ 1,780

The contingent consideration as of June ~~30, 2018~~29, 2019 relates to the earnout provision recorded in conjunction with the acquisitions of ~~Scanico A/S~~Josper S.A. ("~~Scanico"~~Josper") and ~~Josper S.A ("Josper").~~Ss Brewtech. The contingent consideration as of December ~~30, 2017~~29, 2018 relates to the earnout ~~provisions~~provision recorded in conjunction with the ~~acquisitions~~acquisition of ~~Scanico and Desmon Food Service Equipment Company ("Desmon").~~Josper.

The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase ~~agreements.~~agreement. On a quarterly basis, the company assesses the projected results for each ~~of the~~ acquired ~~businesses~~business in comparison to the earnout targets and adjusts the liability accordingly.

E) Consolidated Statements of Cash Flows

Cash paid for interest was $42.0 million and $17.4 million ~~and~~ ~~$11.3 million~~ for the six months ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively. Cash payments totaling $41.3 million and $53.3 million ~~and~~ ~~$75.1 million~~ were made for income taxes for the six months ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively.


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, food processing equipment and residential kitchen equipment industries.

The company has accounted for all business combinations using the acquisition method to record a new cost basis for the assets acquired and liabilities assumed. ~~The~~For the company's acquisitions, goodwill is calculated as the difference between the ~~purchase price~~acquisition fair value of the consideration transferred and the fair value of the net assets acquired, and ~~liabilities assumed has been recorded~~represents future economic benefits, including synergies, and assembled workforce, that are expected to be achieved as ~~goodwill in~~a result of the ~~financial statements.~~acquisition. The results of operations are reflected in the consolidated financial statements of the company from the dates of acquisition.

The following represents the company's more significant acquisitions in ~~2018~~2019 and ~~2017.~~2018. The company also made smaller acquisitions not listed below which are individually and collectively immaterial.

~~Burford~~

On May 1, 2017, the company completed its acquisition of all of the capital stock of Burford Corp. ("Burford"). Burford is a leading manufacturer of industrial baking equipment for the food processing industry located in Maysville, Oklahoma, for a purchase price of approximately $14.8 million, net of cash acquired. During the fourth quarter of 2017, the company finalized the working capital provision provided for by the purchase agreement resulting in a refund from the seller of ~~$0.3 million.~~

~~The final allocation of consideration paid for the Burford acquisition is summarized as follows (in thousands):~~

(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
997
8,286
Other intangibles 4,900
1,840
6,740
Current liabilities (2,254 ) (665 ) (2,919 )
Long term deferred tax liability (1,840 ) 224
(1,616 )
Other non-current liabilities —
(2,836 ) (2,836 )

Net assets acquired and liabilities assumed $ 17,689
$ (349 ) $ 17,340

The long term deferred tax liability amounted to $1.6 million. The net deferred tax liability is comprised of $2.7 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets, net of $0.4 million related to federal and state net operating loss carryforwards and $0.7 million of deferred tax asset arising from the difference between the book and tax basis of identifiable tangible asset and liability accounts.

The goodwill and $2.7 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $3.1 million allocated to customer relationships, $0.7 million allocated to developed technology and $0.3 million allocated to backlog, which are to be amortized over periods of 6 years, 7 years and 3 months, respectively. Goodwill and other intangibles of Burford are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

~~CVP Systems~~

On June 30, 2017, the company completed its acquisition of all of the capital stock of CVP Systems, Inc. ("CVP Systems"), a leading manufacturer of high-speed packaging systems for the meat processing industry located in Downers Grove, Illinois, for a purchase price of $29.8 million, net of cash acquired. The purchase price included $17.9 million in cash and 106,254 shares of Middleby common stock valued at $12.3 million. During the second quarter of 2018, the company finalized the working capital provision provided for by the purchase agreement resulting in a refund from the seller of $0.5 million.

~~The final allocation of consideration paid for the CVP Systems acquisition is summarized as follows (in thousands):~~

(as initially reported) June 30, 2017 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
(695 ) 19,602
Other intangibles 8,700
4,350
13,050
Current liabilities (1,532 ) (581 ) (2,113 )
Long term deferred tax liability (3,168 ) (443 ) (3,611 )
Other non-current liabilities —
(1,833 ) (1,833 )

Net assets acquired and liabilities assumed $ 31,129
$ (728 ) $ 30,401

The long term deferred tax liability amounted to $3.6 million. The net liability is comprised of $5.0 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets, net of $0.6 million related to federal and state net operating loss carryforwards and $0.8 million of deferred tax asset arising from the difference between the book and tax basis of identifiable tangible asset and liability accounts.

The goodwill and $6.2 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $5.7 million allocated to customer relationships, $0.8 million allocated to developed technology and $0.3 million allocated to backlog, which are to be amortized over periods of 5 years, 7 years and 3 months, respectively. Goodwill and other intangibles of CVP Systems are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

~~Sveba Dahlen~~

On June 30, 2017, the company completed its acquisition of all of the capital stock of Sveba Dahlen Group ("Sveba Dahlen"), a developer and manufacturer of ovens and baking equipment for the commercial foodservice and industrial baking industries headquartered in Fristad, Sweden, for a purchase price of $81.4 million, net of cash acquired.

~~The final allocation of consideration paid for the Sveba Dahlen acquisition is summarized as follows (in thousands):~~

(as initially reported) June 30, 2017 Measurement Period Adjustments (as adjusted) June 30, 2017
Cash $ 4,569
$ —
$ 4,569
Current assets 22,686
(997 ) 21,689
Property, plant and equipment 9,128
(431 ) 8,697
Goodwill 33,785
4,330
38,115
Other intangibles 34,175
225
34,400
Other assets 1,170
(280 ) 890
Current portion of long-term debt —
(14 ) (14 )
Current liabilities (11,782 ) (342 ) (12,124 )
Long-term debt —
(140 ) (140 )
Long term deferred tax liability (7,751 ) (626 ) (8,377 )
Other non-current liabilities (42 ) (1,725 ) (1,767 )

Net assets acquired and liabilities assumed $ 85,938
$ —
$ 85,938

The long term deferred tax liability amounted to $8.4 million. The liability is comprised of $7.5 million of deferred tax liability related to the difference between the book and tax basis of identifiable assets and $0.9 million of liabilities arising from the difference between the book and tax basis of tangible asset and liability accounts.

The goodwill and $21.1 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $12.8 million allocated to customer relationships and $0.5 million allocated to backlog, which are to be amortized over periods of 6 years and 3 months, respectively. Goodwill and other intangibles of Sveba Dahlen are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

~~QualServ~~

On August 31, 2017, the company completed its acquisition of substantially all of the assets of QualServ Solutions LLC ("QualServ"), a global commercial kitchen design, manufacturing, engineering, project management and equipment solutions provider located in Fort Smith, Arkansas, for a purchase price of $39.9 million, net of cash acquired. During the first quarter of 2018, the company finalized the working capital provision provided by the purchase agreement resulting in a refund from the seller of $0.3 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 (in thousands):

(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

The goodwill and $6.2 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $3.3 million allocated to customer relationships and $0.1 million allocated to backlog, which are to be amortized over periods of 6 years and 3 months, respectively. Goodwill and other intangibles of QualServ 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. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

~~Globe~~

On October 17, 2017, the company completed its acquisition of all of the capital stock of Globe Food Equipment Company ("Globe"), a leading brand in slicers and mixers for the commercial foodservice industry located in Dayton, Ohio, for a purchase price of $105.0 million, net of cash acquired. During the first quarter of 2018, the company finalized the working capital provision provided by the purchase agreement resulting in an additional payment to the seller of $0.4 million.

(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
(8,083 ) 59,093
Other intangibles 43,444
14,086
57,530
Current liabilities (5,994 ) (398 ) (6,392 )
Long term deferred tax liability (16,456 ) (4,971 ) (21,427 )
Other non-current liabilities (1,907 ) (193 ) (2,100 )

Net assets acquired and liabilities assumed $ 108,000
$ 441
$ 108,441

The long term deferred tax liability amounted to $21.4 million. The net liability is comprised of $21.6 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $0.2 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and $28.8 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $28.7 million allocated to customer relationships, which is to be amortized over a period of 9 years. Goodwill and other intangibles of Globe are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

~~Scanico~~

On December 7, 2017, the company completed its acquisition of all of the capital stock of Scanico, a leading manufacturer of industrial cooling and freezing equipment for the food processing industry located in Aalborg, Denmark, for a purchase price of $34.5 million, net of cash acquired. During the first quarter of 2018, the company finalized the working capital provision provided by the purchase agreement resulting in an additional payment to the seller of $0.3 million. An additional payment is also due upon the achievement of certain financial targets.

(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
(27 ) 420
Goodwill 30,072
470
30,542
Other intangibles 11,491
—
11,491
Current liabilities (7,987 ) (28 ) (8,015 )
Long term deferred tax liability (3,305 ) 30
(3,275 )

Consideration paid at closing $ 40,912
$ 334
$ 41,246

Contingent consideration 751
—
751

Net assets acquired and liabilities assumed $ 41,663
$ 334
$ 41,997

The long term deferred tax liability amounted to $3.3 million. The net liability is comprised of $2.5 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $0.8 million of deferred tax liability related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and $6.6 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $2.0 million allocated to customer relationships, $0.9 million allocated to developed technology and $2.0 million allocated to backlog, which are to be amortized over periods of 5 years, 5 years and 3 months, respectively. Goodwill and other intangibles of Scanico are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

The Scanico purchase agreement includes an earnout provision providing for a contingent payment due to the sellers to the extent certain financial targets are exceeded. This earnout is payable during the third quarter of 2018, if Scanico exceeds certain sales and earnings targets for the twelve months ended June 30, 2018. The contractual obligation associated with this contingent earnout provision recognized on the acquisition date is $0.8 million.

Hinds-Bock

On February 16, 2018, the company completed its acquisition of all of the capital stock of Hinds-Bock Corporation ("Hinds-Bock"), a leading manufacturer of solutions for filling and depositing bakery and food product located in Bothell, Washington, for a purchase price of ~~$25.8~~$25.4 million, net of cash acquired. ~~The purchase price is subject to adjustment based upon a~~During the third quarter of 2018, the company finalized the working capital provision provided by the purchase ~~agreement. The company expects to finalize this~~agreement resulting in a refund from the ~~third quarter~~seller of ~~2018.~~$0.4 million.

The ~~following estimated fair values~~final allocation of ~~assets acquired and liabilities assumed are provisional and are based on~~consideration paid for the ~~information that was available~~Hinds-Bock acquisition is summarized as ~~of the acquisition date to estimate the fair value of assets acquired and liabilities assumed~~follows (in thousands):



	(as initially reported) February 16, 2018			Measurement Period Adjustments			(as adjusted) February 16, 2018
Cash	$	5		$	—		$	5
Current assets	5,301			(3		)	5,298
Property, plant and equipment	3,557			—			3,557
Goodwill	12,686			(1,166		)	11,520
Other intangibles	8,081			1,119			9,200
Long term deferred tax asset	—			115			115
Current liabilities	(3,800		)	(465		)	(4,265		)

Net assets acquired and liabilities assumed	$	25,830		$	(400	)	$	25,430

(as initially reported) February 16, 2018 Preliminary Measurement Period Adjustments (as adjusted) February 16, 2018
Cash $ 5
$ —
$ 5
Current assets 5,301
—
5,301
Property, plant and equipment 3,557
—
3,557
Goodwill 12,686
—
12,686
Other intangibles 8,081
—
8,081
Current liabilities (3,800 ) —
(3,800 )

Net assets acquired and liabilities assumed $ 25,830
$ —
$ 25,830

The goodwill and ~~$3.8~~$4.9 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC ~~350.~~350 "Intangibles - Goodwill and Other". Other intangibles also include ~~$3.4~~$3.7 million allocated to customer relationships ~~$0.4 million allocated to developed technology~~ and ~~$0.4~~$0.6 million allocated to backlog, which are ~~to be~~being amortized over periods of ~~5 years, 5~~6 years and 3 months, respectively. Goodwill and other intangibles of Hinds-Bock are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.

Ve.Ma.C

On April 3, 2018, the company completed its acquisition of all of the capital stock of Ve.Ma.C S.r.l. ("Ve.Ma.C"), a leading designer and manufacturer of handling, automation and robotics solutions for protein food processing lines located in Castelnuovo Rangone, Italy, for a purchase price of approximately $10.5 million, net of cash acquired. ~~The purchase price is subject to adjustment based upon a~~During the third quarter of 2018, the company finalized the working capital provision provided by the purchase ~~agreement. The company expects to finalize this~~agreement, resulting in ~~the third quarter of 2018.~~no additional payment by either party.

The ~~following estimated fair values~~final allocation of ~~assets acquired and liabilities assumed are provisional and are based on~~consideration paid for the ~~information that was available~~Ve.Ma.C acquisition is summarized as ~~of the acquisition date to estimate the fair value of assets acquired and liabilities assumed~~follows (in thousands):



	(as initially reported) April 3, 2018			Measurement Period Adjustments			(as adjusted) April 3, 2018
Cash	$	1,833		$	—		$	1,833
Current assets	10,722			—			10,722
Property, plant and equipment	389			—			389
Goodwill	7,278			(2,506		)	4,772
Other intangibles	2,584			3,776			6,360
Other assets	12			—			12
Current portion of long-term debt	(1,901		)	—			(1,901		)
Current liabilities	(8,076		)	(216		)	(8,292		)
Long term deferred tax liability	(340		)	(1,054		)	(1,394		)
Other non-current liabilities	(212		)	—			(212		)

Net assets acquired and liabilities assumed	$	12,289		$	—		$	12,289

(as initially reported) April 3, 2018
Cash $ 1,833
Current assets 10,722
Property, plant and equipment 389
Goodwill 7,278
Other intangibles 2,584
Other assets 12
Current portion of long-term debt (1,901 )
Current liabilities (8,076 )
Long term deferred tax liability (340 )
Other non-current liabilities (212 )

Net assets acquired and liabilities assumed $ 12,289

The long term deferred tax liability amounted to ~~$0.3~~$1.4 million. The net liability is comprised of ~~$0.7~~$1.8 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $0.4 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and ~~$1.0~~$2.1 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include ~~$0.6~~$2.6 million allocated to customer relationships ~~$0.3 million allocated to developed technology~~ and ~~$0.7~~$1.6 million allocated to backlog, which are ~~to be~~being amortized over periods of ~~5 years, 5~~6 years and ~~3 months,~~up to 1 year, respectively. Goodwill and other intangibles of Ve.Ma.C are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

Firex

On April 27, 2018, the company completed its acquisition of all of the capital stock of Firex S.r.l. ("Firex"), a leading manufacturer of steam cooking equipment for the commercial foodservice industry located in Sedico, Italy, for a purchase price of approximately ~~$53.9~~$53.7 million, net of cash acquired. ~~The purchase price is subject to adjustment based upon a~~During the third quarter of 2018, the company finalized the working capital provision provided for by the purchase ~~agreement. The company expects to finalize this~~agreement resulting in a refund from the ~~third quarter~~seller of ~~2018.~~$0.3 million.

The ~~following estimated fair values~~final allocation of ~~assets acquired and liabilities assumed are provisional and are based on~~consideration paid for the ~~information that was available~~Firex acquisition is summarized as ~~of the acquisition date to estimate the fair value of assets acquired and liabilities assumed~~follows (in thousands):



	(as initially reported) April 27, 2018			Measurement Period Adjustments			(as adjusted) April 27, 2018
Cash	$	10,652		$	(37	)	$	10,615
Current assets	7,656			39			7,695
Property, plant and equipment	2,447			—			2,447
Goodwill	36,706			(1,424		)	35,282
Other intangibles	19,806			2,294			22,100
Current portion of long-term debt	(1,210		)	—			(1,210		)
Current liabilities	(4,099		)	(471		)	(4,570		)
Long term deferred tax liability	(4,995		)	(652		)	(5,647		)
Long-term debt	(1,069		)	—			(1,069		)
Other non-current liabilities	(1,318		)	—			(1,318		)

Net assets acquired and liabilities assumed	$	64,576		$	(251	)	$	64,325

(as initially reported) April 27, 2018
Cash $ 10,652
Current assets 7,656
Property, plant and equipment 2,447
Goodwill 36,706
Other intangibles 19,806
Current portion of long-term debt (1,210 )
Current liabilities (4,099 )
Long term deferred tax liability (4,995 )
Long-term debt (1,069 )
Other non-current liabilities (1,318 )

Net assets acquired and liabilities assumed $ 64,576

The long term deferred tax liability amounted to ~~$5.0~~$5.6 million. The net liability is comprised of ~~$5.4~~$6.1 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and ~~$0.4~~$0.5 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and ~~$9.5~~$10.2 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include ~~$9.7~~$11.3 million allocated to customer relationships ~~$0.2 million allocated to developed technology~~ and ~~$0.4~~$0.6 million allocated to backlog, which are ~~to be~~being amortized over periods of 7 ~~years, 5~~ years and 3 months, respectively. Goodwill and other intangibles of Firex are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

Josper

On May 10, 2018, the company completed its acquisition of all of the issued share capital of Josper S.A. ("Josper"), a leading manufacturer of charcoal grill and oven cooking equipment for commercial foodservice and residential applications located in Pineda de Mar, Spain, for a purchase price of approximately ~~$39.5~~$39.3 million, net of cash acquired. ~~The purchase price is subject to adjustment based upon a~~During the fourth quarter of 2018, the company finalized the working capital provision provided for by the purchase ~~agreement. The company expects to finalize this~~agreement resulting in a refund from the ~~third quarter~~seller of ~~2018. An additional payment is also due upon the achievement of certain financial targets.~~$0.2 million.

The ~~following estimated fair values~~final allocation of ~~assets acquired and liabilities assumed are provisional and are based on~~consideration paid for the ~~information that was available~~Josper acquisition is summarized as ~~of the acquisition date to estimate the fair value of assets acquired and liabilities assumed~~follows (in thousands):



	(as initially reported) May 10, 2018			Measurement Period Adjustments			(as adjusted) May 10, 2018
Cash	$	3,308		$	—		$	3,308
Current assets	6,579			13			6,592
Property, plant and equipment	4,739			—			4,739
Goodwill	27,140			(3,345		)	23,795
Other intangibles	13,136			4,754			17,890
Other assets	2			—			2
Current portion of long-term debt	(217		)	—			(217		)
Current liabilities	(5,146		)	(89		)	(5,235		)
Long-term debt	(1,608		)	—			(1,608		)
Long term deferred tax liability	(2,934		)	(1,579		)	(4,513		)
Other non-current liabilities	(2,169		)	—			(2,169		)

Consideration paid at closing	$	42,830		$	(246	)	$	42,584

Contingent consideration	3,454			—			3,454

Net assets acquired and liabilities assumed	$	46,284		$	(246	)	$	46,038

(as initially reported) May 10, 2018
Cash $ 3,308
Current assets 6,579
Property, plant and equipment 4,739
Goodwill 27,140
Other intangibles 13,136
Other assets 2
Current portion of long-term debt (217 )
Current liabilities (5,146 )
Long-term debt (1,608 )
Long term deferred tax liability (2,934 )
Other non-current liabilities (2,169 )

Consideration paid at closing $ 42,830

Contingent consideration $ 3,454

Net assets acquired and liabilities assumed $ 46,284

The long term deferred tax liability amounted to ~~$2.9~~$4.5 million. The net liability is comprised of ~~$2.8~~$4.4 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $0.1 million of deferred tax liability related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and ~~$6.3~~$9.5 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include ~~$6.4~~$8.3 million allocated to customer relationships ~~$0.2 million allocated to developed technology~~ and ~~$0.3~~$0.1 million allocated to backlog, which are ~~to be~~being amortized over periods of ~~5 years, 5~~7 years and 3 months, respectively. Goodwill and other intangibles of Josper are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

The Josper purchase agreement includes an earnout provision providing for a contingent payment due to the sellers to the extent certain financial targets are exceeded. This earnout is payable in 2019, 2020 and 2021, if Josper exceeds certain earnings targets for the twelve months ended December 31, 2018, December 31, 2019 and December 31, 2020, respectively. The contractual obligation associated with this contingent earnout provision recognized on the acquisition date is $3.5 million.

Taylor

On June 22, 2018, the company completed its acquisition of all of the capital stock of the Taylor Company ("Taylor"), a world leader in beverage solutions, soft serve and ice cream dispensing equipment, frozen drink machines, and automated double-sided grills, located in Rockton, Illinois, for a purchase price of approximately $1.0 billion. During the fourth quarter of 2018, the company finalized the working capital provision provided for by the purchase agreement resulting in a refund from the seller of $11.5 million.

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



	(as initially reported) June 22, 2018			Measurement Period Adjustments			(as adjusted) June 22, 2018
Cash	$	2,551		$	64		$	2,615
Current assets	71,162			(2,011		)	69,151
Property, plant and equipment	21,187			(556		)	20,631
Goodwill	491,339			(120,497		)	370,842
Other intangibles	484,210			119,550			603,760
Other assets	—			361			361
Long-term deferred tax asset	—			227			227
Current liabilities	(48,417		)	(4,099		)	(52,516		)
Other non-current liabilities	(8,161		)	(648		)	(8,809		)

Net assets acquired and liabilities assumed	$	1,013,871		$	(7,609	)	$	1,006,262

The goodwill and $304.7 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $290.9 million allocated to customer relationships, $1.7 million of existing developed oven technology, $4.4 million of equipment backlog, and $2.1 million of deferred service backlog, which are being amortized over periods up to 15 years, 5 years, 3 months, and 3 years, respectively. Goodwill and other intangibles of Taylor are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. A significant portion of the assets are expected to be deductible for tax purposes.

M-TEK

On October 1, 2018, the company completed its acquisition of all of the capital stock of the M-TEK Corporation ("M-TEK"), a leading manufacturer of Modified Atmospheric Packaging (MAP) systems located in Elgin, Illinois, for a purchase price of approximately $20.0 million. During the first quarter of 2019, the company finalized the working capital provision provided by the purchase agreement resulting in no adjustment to the purchase price.



	(as initially reported) October 1, 2018			Preliminary Measurement Period Adjustments			(as adjusted) October 1, 2018
Current assets	$	2,745		$	—		$	2,745
Property, plant and equipment	2,497			—			2,497
Goodwill	11,610			(1,000		)	10,610
Other intangibles	3,294			1,000			4,294
Current liabilities	(144		)	—			(144		)

Net assets acquired and liabilities assumed	$	20,002		$	—		$	20,002

The goodwill and $1.0 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $2.7 million allocated to customer relationships, $0.3 million allocated to developed technology, and $0.3 million allocated to backlog, which are being amortized over periods of 5 years, 5 years and 3 months, respectively. Goodwill and other intangibles of M-TEK are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.

~~Taylor~~Crown

On ~~June 22,~~December 3, 2018, the company completed its acquisition of all of the capital stock of the ~~Taylor Company~~Crown Food Service Equipment, Ltd. ("~~Taylor"~~Crown"), a ~~world leader in beverage solutions, soft serve~~leading design and ~~ice cream dispensing~~manufacturer of steam cooking equipment ~~frozen drink machines, and automated double-sided grills,~~for the commercial foodservice industry located in ~~Rockton, Illinois,~~Toronto, Canada, for a purchase price of approximately ~~$1.0 billion. Additionally,~~$41.8 million, net of cash acquired. During the second quarter of 2019, the company ~~incurred approximately $3.0 million of transaction expenses, which are reflected in~~finalized the ~~selling, general and administrative expenses in the consolidated statements of comprehensive income. The purchase price is subject to adjustment based upon a~~ working capital provision provided for by the purchase ~~agreement. The company expects to finalize this~~agreement resulting in a refund from the ~~fourth quarter~~seller of ~~2018.~~$0.2 million.



	(as initially reported) December 3, 2018			Preliminary Measurement Period Adjustments			(as adjusted) December 3, 2018
Cash	$	495		$	—		$	495
Current assets	5,045			—			5,045
Property, plant and equipment	8,710			3,658			12,368
Goodwill	31,226			(4,805		)	26,421
Other intangibles	—			2,958			2,958
Current liabilities	(2,340		)	(281		)	(2,621		)
Long-term deferred tax liability	(668		)	(1,753		)	(2,421		)

Net assets acquired and liabilities assumed	$	42,468		$	(223	)	$	42,245

(as initially reported) June 22, 2018
Cash $ 2,551
Current assets 71,162
Property, plant and equipment 21,187
Goodwill 491,339
Other intangibles 484,210
Current liabilities (48,417 )
Other non-current liabilities (8,161 )

Net assets acquired and liabilities assumed $ 1,013,871
The long term deferred tax liability amounted to $2.4 million. The net deferred tax liability is comprised of $0.8 million of deferred tax liability related to the difference between the book and tax basis of identifiable intangible assets and $1.6 million of deferred tax liability related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and ~~$230.0~~$3.0 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $237.5 million allocated to customer relationships, $15.0 million allocated to developed technology, and $1.7 million of existing developed oven technology, which are to be amortized over periods of 10 years, 7 years and 5 years, respectively. Goodwill and other intangibles of ~~Taylor~~Crown are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. ~~A significant portion of the assets are~~This asset is not expected to be deductible for tax purposes.

The company ~~estimated~~believes that information gathered to date provides a reasonable basis for estimating the fair ~~value~~values of ~~the~~ assets acquired and liabilities ~~of Taylor on a preliminary basis at~~assumed, but the ~~time of acquisition based on third-party appraisals used to assist in determining the fair market value~~company is waiting for ~~acquired tangible and intangible assets. Changes to these allocations will occur as~~ additional information ~~becomes available. The company is in the process of obtaining third-party valuations related~~necessary to ~~the~~finalize those fair ~~value of tangible and intangible assets, in addition to determining and recording the tax effects of the transaction to include all assets/liabilities since those are recorded at fair value.~~values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. ~~Acquired goodwill represents~~

EVO

On December 31, 2018, the ~~premium paid over~~company completed its acquisition of all of the capital stock of EVO America, Inc. ("EVO"), a leading design and manufacturer of ventless cooking equipment for the commercial foodservice industry, located near Portland, Oregon, for a purchase price of approximately $12.3 million, net of cash acquired. During the second quarter of 2019, the company finalized the working capital provision provided for by the purchase agreement resulting in a refund from the seller of $0.1 million.



	(as initially reported) December 31, 2018			Preliminary Measurement Period Adjustments			(as adjusted) December 31, 2018
Cash	$	162		$	—		$	162
Current assets	1,490			—			1,490
Goodwill	6,896			(53		)	6,843
Other intangibles	5,081			—			5,081
Current liabilities	(518		)	—			(518		)
Long-term deferred tax liability	(540		)	—			(540		)
Other non-current liabilities	(12		)	—			(12		)

Net assets acquired and liabilities assumed	$	12,559		$	(53	)	$	12,506

The long term deferred tax liability amounted to $0.5 million. The net deferred tax liability is comprised of $0.6 million of deferred tax liability related to the difference between the book and tax basis on identifiable intangible asset and liability accounts and $0.1 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and $3.0 million of other intangibles associated with the trade name is subject to the non-amortization provisions of ASC 350. Other intangibles also include $1.9 million allocated to customer relationships and $0.2 million allocated to developed technology, which are being amortized over periods of 10 years and 7 years, respectively. Goodwill and other intangibles of EVO are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

Cooking Solutions Group

On April 1, 2019, the company completed its acquisition of all of the capital stock of Cooking Solutions Group, Inc. ("Cooking Solutions Group") from Standex International Corporation, which consists of the brands APW Wyott, Bakers Pride, BKI and Ultrafryer with locations in Texas, South Carolina and Mexico for a purchase price of approximately $106.1 million. The purchase price is subject to adjustment based upon a working capital provision provided by the purchase agreement. The company expects to finalize this in the third quarter of 2019.



	(as initially reported) April 1, 2019
Cash	$	843
Current assets	33,666
Property, plant and equipment	15,959
Goodwill	31,207
Other intangibles	53,450
Current liabilities	(15,130		)
Long-term deferred tax liability	(13,082		)

Net assets acquired and liabilities assumed	$	106,913

The long term deferred tax liability amounted to $13.1 million. The net deferred tax liability is comprised of $13.2 million of deferred tax liability related to the difference between the book and tax basis on identifiable intangible asset and liability accounts and $0.1 million of deferred tax asset related to the difference between the book and tax basis on identifiable tangible assets and liability accounts.

The goodwill and $27.1 million of other intangibles associated with the trade name is subject to the non-amortization provisions of ASC 350. Other intangibles also include $24.6 million allocated to customer relationships, $1.5 million allocated to developed technology and $0.3 million allocated to backlog, which are being amortized over periods of 7 years, 5 years and 3 months, respectively. Goodwill and other intangibles of Cooking Solutions Group are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

Powerhouse

On April 1, 2019, the company completed the acquisition of all of the capital stock of Powerhouse Dynamics, Inc. ("Powerhouse"), a leader in cloud-based IoT solutions for the foodservice industry located near Boston, Massachusetts, for a purchase price of approximately $11.0 million, net of cash acquired. The purchase price is subject to adjustment based upon a working capital provision provided by the purchase agreement. The company expects to finalize this in the third quarter of 2019.



	(as initially reported) April 1, 2019
Cash	$	24
Current assets	1,351
Property, plant and equipment	14
Goodwill	5,789
Other intangibles	5,060
Long-term deferred tax asset	1,673
Current liabilities	(2,624		)
Other non-current liabilities	(271		)

Net assets acquired and liabilities assumed	$	11,016

The long term deferred tax asset amounted to $1.7 million and is comprised of tax loss carryforwards.

The goodwill is subject to the non-amortization provisions of ASC 350. Other intangibles also include $2.2 million allocated to customer relationships and $2.8 million allocated to developed technology, which are being amortized over periods of 6 years, respectively. Goodwill and other intangibles of Powerhouse are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes.

Ss Brewtech

On June 15, 2019, the company completed the acquisition of substantially all of the assets of Ss Brewtech, a market leader in professional craft brewing and beverage equipment based in Santa Ana, California, for a purchase price of approximately $36.8 million, net of cash acquired. The purchase price is subject to adjustment based upon a working capital provision provided by the purchase agreement. The company expects to finalize this in the fourth quarter of 2019.



	(as initially reported) June 15, 2019
Cash	$	468
Current assets	3,936
Property, plant and equipment	30
Goodwill	26,528
Other intangibles	15,318
Long-term deferred tax asset	155
Current liabilities	(3,393		)
Other non-current liabilities	(5,768		)

Consideration paid at closing	$	37,274

Deferred payments	2,404
Contingent consideration	4,258

Net assets acquired and liabilities assumed	$	43,936

The goodwill and $9.2 million of other intangibles associated with the trade name is subject to the non-amortization provisions of ASC 350. Other intangibles also include $5.6 million allocated to customer relationships and $0.5 million allocated to developed technology, which are being amortized over periods of 7 years and 6 years, respectively. Goodwill and other intangibles of Brewtech are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes.

The Brewtech purchase agreement includes deferred payments and an earnout provision providing for a contingent payment due to the sellers to the extent certain financial targets are exceeded. The deferred payments are payable in 2020, 2021 and 2022. The contractual obligation associated with the deferred payments on the acquisition date is $2.4 million. The earnout is payable in 2023, if Brewtech exceeds certain sales and earnings targets for the cumulative twelve months ended December 31, 2020, December 31, 2021 and December 31, 2022, respectively. The contractual obligation associated with this contingent earnout provision recognized on the acquisition date is $4.3 million.

Pro Forma Financial Information

In accordance with ASC 805 “Business Combinations”, the following unaudited pro forma results of operations for the six months ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ assumes ~~the 2017 acquisitions of Burford, CVP Systems, Sveba Dahlen, QualServ, L2F, Globe and Scanico and~~ the 2018 acquisitions of Hinds-Bock, Ve.Ma.C, Josper, Firex, Taylor, M-TEK and ~~Taylor~~Crown and the 2019 acquisitions of EVO, Cooking Solutions Group, Powerhouse and Ss Brewtech were completed on ~~January 1,~~December 31, 2017 (first day of fiscal year ~~2017)~~2018). The following pro forma results include adjustments to reflect additional interest expense to fund the acquisitions, amortization of intangibles associated with the acquisitions, and the effects of adjustments made to the carrying value of certain assets (in thousands, except per share data):



	Six Months Ended
	June 29, 2019		June 30, 2018
Net sales	$	1,480,397	$	1,494,792
Net earnings	160,996		127,715

Net earnings per share:
Basic	$	2.89	$	2.30
Diluted	2.89		2.30

Six Months Ended
June 30, 2018 July 1, 2017
Net sales $ 1,415,669
$ 1,432,093
Net earnings 142,566
129,622

Net earnings per share:

Basic $ 2.57
$ 2.27
Diluted 2.57
2.27

The historical consolidated financial information of the Company and the acquisitions have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results. Pro forma data may not be indicative of the results that would have been obtained had these acquisitions occurred at the beginning of the periods presented, nor is it intended to be a projection of future results. Additionally, the pro forma financial information does not reflect the costs which the company has incurred or may incur to integrate the acquired businesses.


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 required accrual 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 effect on its financial condition, results of operations or cash flows.


4)	~~Recently Issued Accounting Standards~~

4) Recently Issued Accounting Standards

Accounting Pronouncements - Recently Adopted

In May 2014, the Financial Accounts Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers”. This update amends the current guidance on revenue recognition related to contracts with customers and requires additional disclosures. We adopted this guidance on December 31, 2017 using the modified retrospective method. Under this method, we recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The cumulative adjustment to the opening balance of retained earnings was $4.4 million. For additional information related to the impact of adopting this guidance, see Note 5 of the Condensed Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". The amendments in ASU-15 address eight specific cash flow classification issues to reduce current and potential future diversity in practice. The adoption of this guidance did not have an impact on the company's Condensed Consolidated Statements of Cash Flows.

In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory," which requires companies to account for the income tax effect of intercompany sales and transfers of assets other than inventory when the transfer occurs. Under previous guidance the income tax effects of intercompany transfers of assets were deferred until the asset had been sold to an outside party or otherwise recognized. The adoption of this guidance did not have an impact on the company's Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Comprehensive Income or Condensed Consolidated Statements of Cash Flows.

In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in ASU-01 clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. The adoption of this guidance did not have a material impact on the company's Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Comprehensive Income or Condensed Consolidated Statements of Cash Flows.

In March 2017, the FASB issued ASU No. 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". The amendments in ASU-07 require that an employer report the service costs component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic pension cost and net periodic postretirement benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. We adopted this guidance retrospectively on December 31, 2017 using the practical expedient which permits utilizing amounts previously disclosed in its employee retirement plans note as the prior period estimation basis for the required retrospective presentation requirements. For additional information on the adoption of this guidance, see Note 15 of the Condensed Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This guidance allows for the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income to retained earnings. The adoption of this guidance did not have a material impact on the company's Condensed Consolidated Balance Sheet.

~~Accounting Pronouncements - To be adopted~~

In February 2016, the FASB issued ASU ~~No.~~ 2016-02, ~~"Leases~~Leases (Topic 842)". The amendments under this pronouncement ~~will~~ change the way all leases with a duration of one year or more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or operating lease liability. The company adopted this guidance on December 30, 2018 using the modified retrospective method. The company has elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The adoption of this guidance increased total assets and liabilities due to the recognition of right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financingassets and lease liabilities ~~those that contain provisions similar~~amounting to ~~capitalized leases, are amortized like capital leases are under current accounting, as amortization expense~~approximately $85.0 million. For additional information related to the impact of adopting this guidance, see Note 14 of the Condensed Consolidated Financial Statements.

In August 2017, the FASB issued ASU 2017-12, "Derivatives and ~~interest expense~~Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The amendments in ASU-12 provide new guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in the effectiveness is recorded in other comprehensive income (OCI) and amounts deferred in OCI are reclassified to earnings in the same income statement ~~of operations. Operating lease liabilities are amortized on a straight-line basis over~~line item in which the ~~life~~earnings effect of the ~~lease as lease expense~~hedged item is reported. The adoption of this guidance on December 30, 2018 did not have a material impact on the company's Condensed Consolidated Financial Statements. For additional information related to the impact of adopting this guidance, see Note 13 of the Condensed Consolidated Financial Statements.

In June 2018, the FASB issued ASU 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting". The amendments in ASU-08 simplify several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of this guidance on December 30, 2018 did not have an impact on the company's Condensed Consolidated Financial Statements.

In August of 2018, the SEC published Final Rule Release No. 33-10532, "Disclosure Update and Simplification." This guidance streamlines disclosure requirements by removing certain redundant topics and is effective for quarterly and annual reports submitted after November 5, 2018. The adoption of this guidance on December 30, 2018 resulted in the ~~statement~~presentation and expansion of ~~operations. This update~~the company's Condensed Consolidated Statements of Changes in Stockholders' Equity to display quarter-to-quarter details.

Accounting Pronouncements - To be adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and has since modified the standard with several ASUs (collectively, the “new credit loss standard”). The new credit loss standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU is effective for annual reporting periods, and interim ~~periods within those~~ reporting periods, beginning after December 15, 2018. The ASU requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial adoption. The company has developed a project plan for implementation and has made progress in surveying the company's business, assessing the company's portfolio of leases and compiling a central repository of all leases. The company has also selected a lease accounting software solution to support the new reporting requirements. The company expects to recognize significant right-of-use assets upon adoption and lease liabilities on its Condensed Consolidated Balance Sheet.2019. The company is ~~evaluating~~in the ~~overall~~process of assessing the impact on its receivables portfolio, control environment and impact the adoption of this ~~standard~~ASU will have on ~~its policies and procedures pertaining to its existing and future lease arrangements, disclosure requirements and~~ the company's Condensed Consolidated ~~Balance Sheet, Condensed Consolidated Statements of Comprehensive Income or Condensed Consolidated Statements of Cash Flows.~~Financial Statements.

In January 2017, the FASB issued ASU ~~No.~~ 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in ASU-04 simplify the subsequent measurement of goodwill, by removing the second step of the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This ASU is effective for annual reporting periods, and interim reporting periods, beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. The company is evaluating the application of this ASU on the company's annual impairment test. The company does not expect the adoption of this ASU to have a material impact on its Condensed Consolidated ~~Balance Sheet, Condensed Consolidated Statements of Comprehensive Income or Condensed Consolidated Statements of Cash Flows.~~Financial Statements.

In August ~~2017,~~2018, the FASB issued ASU ~~2017-12, "Derivatives and Hedging~~2018-13, "Fair Value Measurement (Topic ~~815)~~820): ~~Targeted Improvements~~Disclosure Framework - Changes to ~~Accounting~~the Disclosure Requirements for ~~Hedging Activities"~~Fair Value Measurement". The amendments in ~~ASU-12 provide new guidance about income statement classification~~ASU-13 remove, modify and ~~eliminates~~add various disclosure requirements around the ~~requirement~~topic in order to ~~separately measure~~clarify and ~~report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in~~improve the ~~effectiveness will be recorded in other comprehensive income (OCI) and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect~~cost-benefit nature of ~~the hedged item is reported.~~disclosures. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2018 with early adoption permitted. The company is currently evaluating the impacts the ASU will have on its Condensed Consolidated Balance Sheet, Condensed Consolidated Statements of Comprehensive Income or Condensed Consolidated Statements of Cash Flows.

In June 2018, the FASB issued ASU 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting". The amendments in ASU-08 simplify several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 20182019 with early adoption permitted. The company does not expect the adoption of this ASU to have a material impact on its Condensed Consolidated ~~Balance Sheet,~~Financial Statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)". The amendments in ASU-14 remove, modify and add various disclosure requirements around the topic in order to clarify and improve the cost-benefit nature of disclosures. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2020 with early adoption permitted. The amendments must be applied on a retrospective basis for all periods presented. The company is currently evaluating the impacts the adoption of this ASU will have on its Condensed Consolidated ~~Statements~~Financial Statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)". The amendments in ASU-15 align the requirements for capitalizing implementation costs in a service contract hosting arrangement with those of ~~Comprehensive Income~~developing or obtaining internal-use software. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2019 with early adoption permitted. The company does not expect the adoption of this ASU to have a material impact on its Condensed Consolidated ~~Statements~~Financial Statements.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments, which clarifies that receivables arising from operating leases are not within the scope of ~~Cash Flows.~~the credit losses standard, but rather, should be accounted for in accordance with the lease standard. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2019 with early adoption permitted for those that have adopted ASU No. 2016-13. The company does not expect this ASU to have a material impact on its Condensed Consolidated Financial Statements.


5)	Revenue Recognition

~~Accounting Policy~~

On December 31, 2017, we adopted the new accounting standard ASU No. 2014-09, “Revenue from Contracts with Customers" (ASC 606) using the modified retrospective method to contracts that were not completed as of December 30, 2017. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings.

The adoption of ASC 606 represents a change in accounting principle that will also provide readers with enhanced revenue recognition disclosures. Revenue is recognized when the control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and represents the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The company’s contracts can have multiple performance obligations or just a single performance obligation. For contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using the company’s best estimate of the standalone selling price of each distinct good or service in the contract.

Within the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups, the estimated standalone selling price of equipment is based on observable prices. Within the Food Processing Equipment Group, the company estimates the standalone selling price based on expected cost to manufacture the good or complete the service plus an appropriate profit margin.

Control may pass to the customer over time or at a point in time. In general, the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups recognize revenue at the point in time control transfers to their customers based on contractual shipping terms. Revenue from equipment sold under our long-term contracts within the Food Processing Equipment group is recognized over time as the equipment is manufactured and assembled. Installation services provided in connection with the delivery of the equipment are also generally recognized as those services are rendered. Over time transfer of control is measured using an appropriate input measure (e.g., costs incurred or direct labor hours incurred in relation to total estimate). These measures include forecasts based on the best information available and therefore reflect the company's judgment to faithfully depict the transfer of the goods.

~~Contract Estimates~~

Accounting for long-term contracts within the Food Processing Equipment group involves the use of various techniques to estimate total contract revenue and costs. For the company’s long-term contracts, estimated profit for the equipment performance obligations is recognized as the equipment is manufactured and assembled. Profit on the equipment performance obligations is estimated as the difference between the total estimated revenue and expected costs to complete a contract. Contract cost estimates are based on labor productivity and availability, the complexity of the work to be performed; the cost and availability of materials and labor, and the performance of subcontractors.

Contracts within the Commercial Foodservice and Residential Foodservice Equipment groups may contain variable consideration in the form of volume rebate programs. The company’s estimate of variable consideration is based on its experience with similarly situated customers using the portfolio approach.

~~Practical Expedients and Policy Elections~~

~~The company has taken advantage of the following practical expedients:~~

~~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 has made the following accounting policy elections permitted by ASC 606:~~

~~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.~~

~~Adoption of ASC 606~~

~~As a result of the adoption of ASC 606, the company has changed its accounting policy for revenue recognition as detailed below.~~

~~Equipment~~

Under the company’s historical accounting policies, revenue under long-term sales contracts within the Food Processing Equipment Group was recognized using the percentage of completion method. Upon adoption, a number of contracts that were not completed as of December 31, 2017 did not meet the requirements for recognition of revenue over time under ASC 606. As such the revenue is deferred and recognized at a point in time.

~~Installation Services~~

Under the company’s historical accounting policies, the company used the completed contract method for installation services associated with equipment sold within the Food Processing Equipment Group. Under ASC 606, the Company recognizes revenue from installation services over the period the services are rendered.

The cumulative effect of the changes made to our December 30, 2017 Condensed Consolidated Balance Sheet for the adoption of ASC 606 using the modified retrospective method to contracts that were not completed as of December 30, 2017 were as follows (in thousands):

Balance at
December 30, 2017 (as reported)
Adjustments due to ASC 606
Balance at
December 30, 2017 (as adjusted)
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

In accordance with the requirements of ASC 606, the adoption of ASC 606 had no impact on cash provided by operating activities within the company's Condensed Consolidated Statement of Cash Flows. The impact of adoption on our Condensed Consolidated Statement of Comprehensive Income and Condensed Consolidated Balance Sheet are as follows (in thousands)

Three Months Ended June 30, 2018
As Reported Balances without ASC 606 Effect of Change
Net sales $ 668,128
$ 667,697
$ 431
Cost of sales 417,369
417,452
(83 )
Provision for income taxes 26,576
26,482
94
Net earnings $ 83,988
$ 83,567
$ 421

Basic earnings per share $ 1.51
$ 1.50

Diluted earnings per share $ 1.51
$ 1.50

Six Months Ended June 30, 2018
As Reported Balances without ASC 606 Effect of Change
Net sales $ 1,252,928
$ 1,238,355
$ 14,573
Cost of sales 790,536
780,138
10,398
Provision for income taxes 47,857
46,792
1,065
Net earnings $ 149,408
$ 146,298
$ 3,110

Basic earnings per share $ 2.69
$ 2.63

Diluted earnings per share $ 2.69
$ 2.63

Balance as of June 30, 2018
As Reported Balances without ASC 606 Effect of Change
Assets
Inventories, net $ 493,667
$ 487,910
$ 5,757
Prepaid expenses and other 48,890
51,927
(3,037 )

Liabilities
Accrued expenses 361,501
365,744
(4,243 )
Long-term deferred tax liability 102,636
102,246
390

Equity
Retained earnings $ 1,841,489
$ 1,840,356
$ 1,133

Disaggregation of Revenue

We disaggregate our net sales by reportable operating segment and geographical location as we believe it best depicts how the nature, timing and uncertainty of our net sales and cash flows are affected by economic factors. In general, the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups recognize revenue at the point in time control transfers to their customers based on contractual shipping terms. Revenue from equipment sold under our long-term contracts within the Food Processing Equipment group is recognized over time as the equipment is manufactured and assembled. The following table summarizes our net sales by reportable operating segment and geographical location (in thousands):



	Commercial Foodservice		Food Processing		Residential Kitchen		Total
Three Months Ended June 29, 2019
United States and Canada	$	357,718	$	58,100	$	100,472	$	516,290
Asia	52,031		8,054		1,467		61,552
Europe and Middle East	85,962		25,881		47,006		158,849
Latin America	17,568		5,818		927		24,313
Total	$	513,279	$	97,853	$	149,872	$	761,004

Six Months Ended June 29, 2019
United States and Canada	$	657,993	$	115,689	$	183,830	$	957,512
Asia	100,324		16,736		2,865		119,925
Europe and Middle East	175,858		46,499		97,621		319,978
Latin America	36,635		11,403		2,353		50,391
Total	$	970,810	$	190,327	$	286,669	$	1,447,806

Three Months Ended June 30, 2018
United States and Canada	$	289,523	$	59,306	$	103,420	$	452,249
Asia	37,959		11,723		2,060		51,742
Europe and Middle East	75,352		16,803		53,819		145,974
Latin America	11,283		5,817		1,063		18,163
Total	$	414,117	$	93,649	$	160,362	$	668,128

Six Months Ended June 30, 2018
United States and Canada	$	544,636	$	126,241	$	181,980	$	852,857
Asia	66,991		17,435		3,579		88,005
Europe and Middle East	141,963		25,535		108,874		276,372
Latin America	20,431		13,010		2,253		35,694
Total	$	774,021	$	182,221	$	296,686	$	1,252,928

Commercial
Foodservice
Food Processing Residential Kitchen Total
Three Months Ended June 30, 2018

United States and Canada $ 289,523
$ 59,306
$ 103,420
$ 452,249
Asia 37,959
11,723
2,060
51,742
Europe and Middle East 75,352
16,803
53,819
145,974
Latin America 11,283
5,817
1,063
18,163
Total $ 414,117
$ 93,649
$ 160,362
$ 668,128

Six Months Ended June 30, 2018

United States and Canada $ 544,636
$ 126,241
$ 181,980
$ 852,857
Asia 66,991
17,435
3,579
88,005
Europe and Middle East 141,963
25,535
108,874
276,372
Latin America 20,431
13,010
2,253
35,694
Total $ 774,021
$ 182,221
$ 296,686
$ 1,252,928

Three Months Ended July 1, 2017
United States and Canada $ 239,159
$ 67,931
$ 92,355
$ 399,445
Asia 33,593
5,976
1,999
41,568
Europe and Middle East 50,802
9,371
56,813
116,986
Latin America 10,199
9,090
2,055
21,344
Total $ 333,753
$ 92,368
$ 153,222
$ 579,343

Six Months Ended July 1, 2017
United States and Canada $ 463,781
$ 127,676
$ 173,193
$ 764,650
Asia 65,843
10,399
4,537
80,779
Europe and Middle East 97,295
16,489
113,160
226,944
Latin America 19,083
15,080
3,104
37,267
Total $ 646,002
$ 169,644
$ 293,994
$ 1,109,640

Contract Balances

Contract assets primarily relate to the ~~Company's~~company's right to consideration for work completed but not billed at the reporting date and are recorded in prepaid expenses and other in the Condensed Consolidated Balance Sheet. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Accounts receivable are not considered contract assets under the ~~new~~ revenue standard as contract assets are conditioned upon the company's future satisfaction of a performance obligation. Accounts receivable, in contracts, are unconditional rights to consideration.

Contract liabilities relate to advance consideration received from customers for which revenue has not been recognized. Current contract liabilities are recorded in accrued expenses in the Condensed Consolidated Balance Sheet. Non-current contract liabilities are recorded in other non-current liabilities in the Condensed Consolidated Balance Sheet. Contract liabilities are reduced when the associated revenue from the contract is recognized.

The following table provides information about contract assets and contract liabilities from contracts with customers (in thousands):



	Jun 29, 2019		Dec 29, 2018
Contract assets	$	20,430	$	14,048
Contract liabilities	$	56,099	$	57,913
Non-current contract liabilities	$	13,065	$	12,170

Jun 30, 2018 At Adoption
Contract assets $ 7,846
$ 16,753
Contract liabilities 69,746
47,647

During the six months period ended June ~~30, 2018,~~29, 2019, the company reclassified ~~$11.5~~$7.1 million to ~~receivable~~receivables, which was included in the contract asset balance at the beginning of the period. During the six months period ended June ~~30, 2018,~~29, 2019, the company recognized revenue of ~~$42.1~~$50.4 million which was included in the contract liability balance at the beginning of the period. Additions to contract liabilities representing amounts billed to clients in excess of revenue recognized to date were ~~$60.8~~$52.9 million during the six months period ended June ~~30, 2018.~~29, 2019. Substantially, all of the company's outstanding performance obligations will be satisfied within 12 to 36 months. There were no contract asset impairments during the six months period ended June ~~30, 2018.~~29, 2019.

6) 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".

Changes in accumulated other comprehensive income⁽¹⁾ were as follows (in thousands):



	Currency Translation Adjustment			Pension Benefit Costs			Unrealized Gain/(Loss) Interest Rate Swap			Total
Balance as of December 29, 2018	$	(112,771	)	$	(170,938	)	$	7,233		$	(276,476	)
Other comprehensive income before reclassification	(1,762		)	(9		)	(25,041		)	(26,812		)
Amounts reclassified from accumulated other comprehensive income	—			—			1,550			1,550
Net current-period other comprehensive income	$	(1,762	)	$	(9	)	$	(23,491	)	$	(25,262	)
Balance as of June 29, 2019	$	(114,533	)	$	(170,947	)	$	(16,258	)	$	(301,738	)

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	(20,161		)	6,012			9,364			(4,785		)
Amounts reclassified from accumulated other comprehensive income	—			—			236			236
Net current-period other comprehensive income	$	(20,161	)	$	6,499		$	7,981		$	(5,681	)
Balance as of June 30, 2018	$	(89,882	)	$	(196,564	)	$	14,346		$	(272,100	)

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 (20,161 ) 4,393
10,971
(4,797 )
Amounts reclassified from accumulated other comprehensive income —
—
248
248
Net current-period other comprehensive income $ (20,161 ) $ 4,880
$ 9,600
$ (5,681 )
Balance as of June 30, 2018 $ (89,882 ) $ (198,183 ) $ 15,965
$ (272,100 )

(1) As of June 29, 2019 pension and interest rate swap amounts are net of tax of $(36.8) million and $(5.5) million, respectively. During the six months ended June 29, 2019, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of $(0.1) million and $(8.0) million, respectively. As of June 30, 2018 pension and interest rate swap amounts are net of tax of $(42.0) million and $5.4 million, respectively. During the six months ended June 30, 2018, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of $1.6 million and $1.1 million, respectively.

(2) As of December 31, 2017, the company adopted ASU 2018-02,"Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". This guidance allowed for the reclassification of $1.1 million of stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 from accumulated other comprehensive income to retained earnings.

Components of other comprehensive income were as follows (in thousands):



	Three Months Ended						Six Months Ended
	Jun 29, 2019			Jun 30, 2018			Jun 29, 2019			Jun 30, 2018
Net earnings	$	92,210		$	83,988		$	161,223		$	149,408
Currency translation adjustment	(12,445		)	(41,963		)	(1,762		)	(20,161		)
Pension liability adjustment, net of tax	5,254			13,754			(9		)	6,499
Unrealized gain on interest rate swaps, net of tax	(14,124		)	3,045			(23,491		)	7,981
Comprehensive income	$	70,895		$	58,824		$	135,961		$	143,727

Three Months Ended Six Months Ended
Jun 30, 2018 Jul 1, 2017 Jun 30, 2018 Jul 1, 2017
Net earnings $ 83,988
$ 77,569
$ 149,408
$ 148,271
Currency translation adjustment (41,963 ) 18,621
(20,161 ) 29,456
Pension liability adjustment, net of tax 13,754
(6,647 ) 4,880
(9,174 )
Unrealized gain on interest rate swaps, net of tax 3,045
(1,001 ) 9,600
(501 )
Comprehensive income $ 58,824
$ 88,542
$ 143,727
$ 168,052


7)	Inventories

Inventories are composed of material, labor and overhead and are stated at the lower of cost or market. Costs for inventory have been determined using the first-in, first-out ("FIFO") method. The company estimates reserves for inventory obsolescence and shrinkage based on its judgment of future realization. Inventories at June ~~30, 2018~~29, 2019 and December ~~30, 2017~~29, 2018 are as follows (in thousands):



	Jun 29, 2019		Dec 29, 2018
Raw materials and parts	$	280,183	$	245,976
Work-in-process	61,538		51,164
Finished goods	270,138		224,670
	$	611,859	$	521,810

Jun 30, 2018 Dec 30, 2017
Raw materials and parts $ 215,056
$ 180,559
Work-in-process 57,092
38,917
Finished goods 221,519
205,163
$ 493,667
$ 424,639


8)	Goodwill

Changes in the carrying amount of goodwill for the six months ended June ~~30, 2018~~29, 2019 are as follows (in thousands):



	Commercial Foodservice			Food Processing			Residential Kitchen			Total
Balance as of December 29, 2018	$	1,102,067		$	219,054		$	422,054		$	1,743,175
Goodwill acquired during the year	71,547			—			—			71,547
Measurement period adjustments to goodwill acquired in prior year	(27,863		)	(3,722		)	—			(31,585		)
Exchange effect	(484		)	(265		)	(616		)	(1,365		)
Balance as of June 29, 2019	$	1,145,267		$	215,067		$	421,438		$	1,781,772

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 558,013
19,964
—
577,977
Measurement period adjustments to goodwill acquired in prior year (970 ) (468 ) —
(1,438 )
Exchange effect (8,797 ) (2,630 ) (5,167 ) (16,594 )
Balance as of June 30, 2018 $ 1,179,697
$ 215,144
$ 429,914
$ 1,824,755


9)	Intangibles

Intangible assets consist of the following (in thousands):



	June 29, 2019						December 29, 2018
	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	9.5	$	705,379	$	(252,831	)	9.5	$	644,145	$	(222,661	)
Backlog	2.0	27,797		(26,447		)	2.8	27,065		(24,755		)
Developed technology	4.8	28,879		(20,579		)	5.9	39,624		(20,998		)
		$	762,055	$	(299,857	)		$	710,834	$	(268,414	)
Indefinite-lived assets:
Trademarks and tradenames		$	980,557					$	918,604

June 30, 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 8.2 $ 596,526
$ (190,030 ) 5.2 $ 330,496
$ (171,005 )
Backlog 0.1 20,010
(19,739 ) 0.8 19,689
(18,081 )
Developed technology 6.3 40,559
(19,250 ) 4.2 22,485
(18,248 )
$ 657,095
$ (229,019 ) $ 372,670
$ (207,334 )
Indefinite-lived assets:

Trademarks and tradenames $ 864,695

$ 615,090

The aggregate intangible amortization expense was ~~$9.8~~$14.7 million and ~~$10.5~~$9.8 million for the second quarter periods ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively. The aggregate intangible amortization expense was ~~$21.3~~$30.8 million and ~~$17.3~~$21.3 million for the six months period ended June 29, 2019 and June 30, 2018, ~~and July 1, 2017,~~ respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):



Twelve Month Period coinciding with the end of our Fiscal Second Quarter	Amortization Expense

2020	$	64,293
2021	61,657
2022	58,333
2023	52,828
2024	45,602
Thereafter	179,485
	$	462,198

Twelve Month Period Ending in Amortization Expense

2019 $ 63,180
2020 58,686
2021 56,172
2022 53,462
2023 46,392
Thereafter 150,184
$ 428,076

10) Accrued Expenses

Accrued expenses consist of the following (in thousands):



	Jun 29, 2019		Dec 29, 2018
Accrued payroll and related expenses	$	69,470	$	74,952
Accrued warranty	67,947		59,451
Contract liabilities	56,099		57,913
Accrued customer rebates	35,329		45,740
Accrued short-term leases	21,143		—
Accrued sales and other tax	16,351		19,452
Accrued professional fees	15,504		17,313
Accrued product liability and workers compensation	14,630		16,284
Accrued agent commission	13,589		11,969
Other accrued expenses	58,668		64,372

	$	368,730	$	367,446

Jun 30, 2018 Dec 30, 2017
Contract liabilities $ 69,746
$ 31,069
Accrued payroll and related expenses 68,064
67,935
Accrued warranty 59,667
52,834
Accrued customer rebates 32,184
48,590
Accrued professional fees 18,004
18,250
Accrued sales and other tax 15,831
20,881
Accrued agent commission 12,221
11,035
Accrued product liability and workers compensation 11,859
11,976
Product recall 5,459
6,068
Restructuring 1,597
1,715
Other accrued expenses 66,869
51,818

$ 361,501
$ 322,171


11)	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, actual 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 (in thousands):



	Six Months Ended
	Jun 29, 2019
Balance as of December 29, 2018	$	59,451
Warranty reserve related to acquisitions	6,847
Warranty expense	33,333
Warranty claims	(31,684		)
Balance as of June 29, 2019	$	67,947

Six Months Ended
Jun 30, 2018
Balance as of December 30, 2017 $ 52,834
Warranty reserve related to acquisitions 5,485
Warranty expense 31,167
Warranty claims (29,819 )
Balance as of June 30, 2018 $ 59,667


12)	Financing Arrangements



	Jun 29, 2019		Dec 29, 2018
	(in thousands)
Senior secured revolving credit line	$	1,990,968	$	1,887,764
Foreign loans	4,455		4,166
Other debt arrangement	—		175
Total debt	$	1,995,423	$	1,892,105
Less: Current maturities of long-term debt	3,443		3,207
Long-term debt	$	1,991,980	$	1,888,898

Jun 30, 2018 Dec 30, 2017
(in thousands)
Credit Facility $ 2,058,287
$ 1,022,935
Other international credit facilities 8,163
5,768
Other debt arrangement 175
178
Total debt $ 2,066,625
$ 1,028,881
Less: Current maturities of long-term debt 6,297
5,149
Long-term debt $ 2,060,328
$ 1,023,732

On July 28, 2016, the company entered into an amended and restated five-year $2.5 billion multi-currency senior secured revolving credit agreement (the "Credit Facility")~~, with~~. On December 18, 2018, the ~~potential under certain circumstances~~company entered into an amendment to ~~increase the amount of~~ the Credit Facility, increasing the revolving commitments under the Credit Facility by $500.0 million to a total of $3.0 billion. As of June ~~30, 2018,~~29, 2019, the company had $~~2.1~~2.0 billion of borrowings outstanding under the Credit Facility, including ~~$2.0~~$1.9 billion of borrowings in U.S. Dollars ~~$87.6~~and $64.5 million of borrowings denominated in ~~Euro and $19.7 million of borrowings denominated in British Pounds.~~Euro. The company also had $~~9.7~~11.0 million in outstanding letters of credit as of June ~~30, 2018,~~29, 2019, which reduces the borrowing availability under the Credit Facility. Remaining borrowing availability under this facility was $~~0.4~~1.0 billion at June ~~30, 2018.~~29, 2019.

At June ~~30, 2018,~~29, 2019, borrowings under the Credit Facility accrued interest at a rate of ~~1.25%~~1.625% above LIBOR per annum or ~~0.25%~~0.625% above the highest of the prime rate, the federal funds rate plus 0.50% and one month LIBOR plus 1.00%. The average interest rate per annum on the debt under the Credit Facility was equal to ~~3.35%~~ ~~for~~3.93% at the end of the period. The interest rates on borrowings under the Credit Facility may be adjusted quarterly based on the company’s Funded Debt less Unrestricted Cash to Pro Forma EBITDA (the “Leverage Ratio”) on a rolling four-quarter basis. Additionally, a commitment fee based upon the Leverage Ratio is charged on the unused portion of the commitments under the Credit Facility. This variable commitment fee was equal to ~~0.20%~~0.25% per annum as of June ~~30, 2018.~~29, 2019.

In addition, the company has other international credit facilities to fund working capital needs outside the United States and the United Kingdom. At June ~~30, 2018,~~29, 2019, these foreign credit facilities amounted to ~~$8.2~~$4.5 million in U.S. Dollars with a weighted average per annum interest rate of approximately ~~4.08%~~6.45%.

The company’s debt is reflected on the balance sheet at cost. The company believes its interest rate margins on its existing debt are consistent with current market conditions and therefore the carrying value of debt reflects the fair value. The interest rate margin is based on the company's Leverage Ratio.

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 to achieve sufficient cash inflows to cover the cash outflows under the company’s senior secured 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 Credit Facility in July 2021. 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 carrying value and estimated aggregate fair value, a level 2 measurement, based primarily on market prices, of debt is as follows (in thousands):



	Jun 29, 2019				Dec 29, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Total debt	$	1,995,423	$	1,955,423	$	1,892,105	$	1,892,105

Jun 30, 2018 Dec 30, 2017
Carrying Value Fair Value Carrying Value Fair Value
Total debt $ 2,066,625
$ 2,066,625
$ 1,028,881
$ 1,028,881

The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the Credit Facility. At June ~~30, 2018,~~29, 2019, the company had outstanding floating-to-fixed interest rate swaps totaling ~~$499.0~~$51.0 million notional amount carrying an average interest rate of ~~1.66%~~1.27% maturing in less than 12 months and $948.0 million notional amount carrying an average interest rate of 2.22% that mature in more than 12 months but less than 8472 months.

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

The terms of the Credit Facility limit the ability of the company and its subsidiaries to, with certain exceptions: incur indebtedness; grant liens; engage in certain mergers, consolidations, acquisitions and dispositions; make restricted payments; enter into certain transactions with affiliates; and requires, among other things, the company to satisfy certain financial covenants: (i) a minimum Interest Coverage Ratio (as defined in the Credit Facility) of 3.00 to 1.00 and (ii) a maximum Leverage Ratio of Funded Debt less Unrestricted Cash to Pro Forma EBIDTA (each as defined in the Credit Facility) of 3.50 to 1.00, which may be adjusted to 4.00 to 1.00 for a four consecutive fiscal quarter period in connection with certain qualified acquisitions, subject to the terms and conditions contained in the Credit Facility. The Credit Facility is secured by substantially all of the assets of Middleby Marshall, the company and the company's domestic subsidiaries and is unconditionally guaranteed by, subject to certain exceptions, the company and certain of the company's direct and indirect material foreign and domestic subsidiaries. The Credit Facility contains certain customary events of default, including, but not limited to, the failure to make required payments; bankruptcy and other insolvency events; the failure to perform certain covenants; the material breach of a representation or warranty; non-payment of certain other indebtedness; the entry of undischarged judgments against the company or any subsidiary for the payment of material uninsured amounts; the invalidity of the company guarantee or any subsidiary guaranty; and a change of control of the company. At June ~~30, 2018,~~29, 2019, the company was in compliance with all covenants pursuant to its borrowing agreements.


13)	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 a derivative does qualify as a hedge under ASC 815, changes in the fair value will either be offset against the change in the 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~~

On December 30, 2018, the company adopted the new accounting standard ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" using the modified retrospective method. Prior to the adoption of ASU 2017-12, the ineffective portion of a hedge's change in fair value ~~will be immediately~~was recognized in earnings. Upon adoption of ASU 2017-12, the company no longer recognizes hedge ineffectiveness in our Condensed Consolidated Statements of Comprehensive Income, but instead recognizes the entire change in the fair value of the hedge contract in other accumulated comprehensive income.

Foreign Exchange: The company uses foreign currency forward, foreign exchange swaps and option purchase and sales contracts 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. The fair value of the forward and option contracts was a loss of $~~1.2~~0.6 million at the end of the second quarter of ~~2018.~~2019.

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 June ~~30, 2018,~~29, 2019, the fair value of these instruments was an ~~asset~~a liability of $~~20.9~~22.2 million. The change in fair value of these swap agreements in the first six months of ~~2018~~2019 was a ~~gain~~loss of $~~9.4~~23.3 million, net of taxes.

The following table summarizes the company’s fair value of interest rate swaps (in thousands):



	Condensed Consolidated Balance Sheet Presentation	Jun 29, 2019		Dec 29, 2018
Fair value	Other assets	$	3,238	$	13,487
Fair value	Other non-current liabilities	$	25,402	$	4,125

Condensed Consolidated
Balance Sheet Presentation
Jun 30, 2018
Dec 30, 2017
Fair value Other assets $ 20,875
$ 10,266

The impact on earnings from interest rate swaps was as follows (in thousands):



		Three Months Ended						Six Months Ended
	Presentation of Gain/(loss)	Jun 29, 2019			Jun 30, 2018			Jun 29, 2019			Jun 30, 2018
Gain/(loss) recognized in accumulated other comprehensive income	Other comprehensive income	$	(18,187	)	$	4,338		$	(29,976	)	$	10,958
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)	Interest expense	$	784		$	248		$	1,550		$	236
Gain/(loss) recognized in income (ineffective portion)	Other expense	$	—		$	(161	)	$	—		$	(113	)

Three Months Ended Six Months Ended
Presentation of Gain/(loss) Jun 30, 2018 Jul 1, 2017
Jun 30, 2018 Jul 1, 2017
Gain/(loss) recognized in accumulated other comprehensive income Other comprehensive income $ 4,338
$ (1,955 ) $ 10,958
$ (1,643 )
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion) Interest expense $ 248
$ (284 ) $ 236
$ (806 )
Gain/(loss) recognized in income (ineffective portion) Other expense $ (161 ) $ (8 ) $ (113 ) $ (15 )

Interest rate swaps are subject to default risk to the extent the counterparties are unable to satisfy their 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 agreements.


14)	Leases

Accounting Policy

On December 30, 2018, the company adopted the new accounting standard ASU No. 2016-02, "Leases"(ASC 842) using the modified retrospective method and elected to use the effective date as the date of initial application on transition. The company has elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs.

The adoption of ASC 842 represents a change in accounting principle that changes the way all leases with a duration of one year or more are treated. Under this guidance, lessees are required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or operating lease liability. The company determines if an arrangement is a lease at inception of a contract. Additionally, the guidance requires additional disclosure to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The most material impact of the new standard is the recognition of new right-of-use (ROU) assets and lease liabilities on the Condensed Consolidated Balance Sheet for operating leases. Operating lease ROU assets are included in other assets and operating lease liabilities are included accrued expenses and other non-current liabilities. The lease liabilities are measured based upon the present value of minimum future payments and the ROU assets to be recognized will be equal to lease liabilities, adjusted for prepaid and accrued rent balances.

Leases

The company leases warehouse space, office facilities and equipment under operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The company's lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for these leases is recognized on a straight-line basis over the term of the lease. The company has operating lease costs of $7.8 million and $15.3 million for the three and six months ended June 29, 2019, respectively, including short-term lease expense and variable lease costs, which were immaterial in the quarter.



Leases (in thousands)	June 29, 2019
Operating lease right-of-use assets	$	85,954

Operating Lease Liability:
Current	$	21,143
Non-Current	63,534
Total Liability	$	84,677



Total Lease Commitments (in thousands)
	Operating Leases
Remainder of 2019	$	11,958
2020	20,987
2021	17,306
2022	13,854
2023	9,444
2024 and thereafter	18,926
Total future lease commitments	92,475
Less imputed interest	7,798
Total	$	84,677



Other Lease Information (in thousands, except lease term and discount rate)	Three Months Ended June 29, 2019		Six Months Ended June 29, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,238	$	12,300

			June 29, 2019
Weighted-average remaining lease terms - operating leases			5.5 years

Weighted-average discount rate - operating leases			3.4		%


15)	Segment Information

The company operates in three reportable operating segments defined by management reporting structure and operating activities.

The Commercial Foodservice Equipment Group manufactures, sells, and distributes foodservice equipment for the restaurant and institutional kitchen industry. This business segment has manufacturing facilities in Arkansas, California, Illinois, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Washington, Australia, China, Denmark, Estonia, Italy, Mexico, the Philippines, Poland, Sweden and the United Kingdom. Principal product lines of this group include conveyor ovens, combi-ovens, convection ovens, baking ovens, proofing ovens, deck ovens, speed cooking ovens, hydrovection ovens, ranges, fryers, rethermalizers, steam cooking equipment, food warming equipment, catering equipment, heated cabinets, charbroilers, ventless cooking systems, kitchen ventilation, induction cooking equipment, countertop cooking equipment, toasters, griddles, charcoal grills, professional mixers, stainless steel fabrication, custom millwork, professional refrigerators, blast chillers, coldrooms, ice machines, freezers, and soft serve ice cream, coffee, and beverage dispensing equipment. These products are sold and marketed under the brand names: Anets, APW Wyott, Bakers Pride, Bear Varimixer, Beech, BKI, Blodgett, Blodgett Combi, Blodgett Range, Bloomfield, Britannia, CTX, Carter-Hoffmann, Celfrost, Concordia, CookTek, Crown, Desmon, Doyon, Eswood, EVO, Firex, Follett, Frifri, Giga, Globe, Goldstein, Holman, Houno, IMC, Induc, Jade, ~~Joe Tap,~~JoeTap, Josper, L2F, Lang, Lincat, MagiKitch’n, Market Forge, Marsal, Middleby Marshall, MPC, Nieco, Nu-Vu, PerfectFry, Pitco, QualServ, SiteSage, Southbend, Star, Sveba Dahlen, Ss Brewtech, Taylor, Toastmaster, TurboChef, Ultrafryer, Wells and Wunder-Bar.

The Food Processing Equipment Group manufactures preparation, cooking, packaging food handling and food safety equipment for the food processing industry. This business segment has manufacturing operations in Georgia, Illinois, Iowa, North Carolina, Oklahoma, Texas, Virginia, Washington, Wisconsin, Denmark, France, Germany, India and the United Kingdom. Principal product lines of this group include batch ovens, baking ovens, proofing ovens, conveyor belt ovens, continuous processing ovens, frying systems and automated thermal processing systems, grinders, slicers, reduction and emulsion systems, mixers, blenders, battering equipment, breading equipment, seeding equipment, water cutting systems, food presses, food suspension equipment, filling and depositing solutions, forming equipment, automated loading and unloading systems, food safety, food handling, freezing, defrosting and packaging equipment. These products are sold and marketed under the brand names: Alkar, Armor Inox, Auto-Bake, Baker Thermal Solutions, Burford, Cozzini, CVP Systems, Danfotech, Drake, Emico, Glimek, Hinds-Bock, Maurer-Atmos, MP Equipment, M-TEK, RapidPak, Scanico, Spooner Vicars, Stewart Systems, Thurne and ~~Thurne,~~ Ve.Ma.C.

The Residential Kitchen Equipment Group manufactures, sells and distributes kitchen equipment for the residential market. This business segment has manufacturing facilities in California, Michigan, Mississippi, Oregon, Wisconsin, France, Ireland, Romania and the United Kingdom. Principal product lines of this group are ranges, cookers, stoves, ovens, refrigerators, dishwashers, microwaves, cooktops, ~~refrigerators,~~ wine coolers, ice machines, ventilation equipment and outdoor equipment. These products are sold and marketed under the brand names: AGA, AGA Cookshop, Brigade, EVO, Fired Earth, ~~Grange,~~ Heartland, La Cornue, Leisure Sinks, Lynx, Marvel, Mercury, Rangemaster, Rayburn, Redfyre, Sedona, Stanley, TurboChef, U-Line and Viking.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The chief operating decision maker evaluates individual segment performance based on operating income.

Net Sales Summary

(dollars in thousands)



	Three Months Ended								Six Months Ended
	Jun 29, 2019				Jun 30, 2018				Jun 29, 2019				Jun��30, 2018
	Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent
Business Segments:
Commercial Foodservice	$	513,279	67.4	%	$	414,117	62.0	%	$	970,810	67.1	%	$	774,021	61.8	%
Food Processing	97,853		12.9		93,649		14.0		190,327		13.1		182,221		14.5
Residential Kitchen	149,872		19.7		160,362		24.0		286,669		19.8		296,686		23.7
Total	$	761,004	100.0	%	$	668,128	100.0	%	$	1,447,806	100.0	%	$	1,252,928	100.0	%

Three Months Ended Six Months Ended
Jun 30, 2018 Jul 1, 2017 Jun 30, 2018 Jul 1, 2017
Sales Percent Sales Percent Sales Percent Sales Percent
Business Segments:

Commercial Foodservice $ 414,117
62.0 % $ 333,753
57.6 % $ 774,021
61.8 % $ 646,002
58.2 %
Food Processing 93,649
14.0
92,368
15.9
182,221
14.5
169,644
15.3
Residential Kitchen 160,362
24.0
153,222
26.5
296,686
23.7
293,994
26.5
Total $ 668,128
100.0 % $ 579,343
100.0 % $ 1,252,928
100.0 % $ 1,109,640
100.0 %

The following table summarizes the results of operations for the company's business segments~~(1)~~ (in thousands):


	Commercial Foodservice		Food Processing		Residential Kitchen		Corporate and Other(2)			Total		Commercial Foodservice		Food Processing		Residential Kitchen		Corporate and Other ⁽¹⁾			Total
Three Months Ended June 29, 2019
Net sales												$	513,279	$	97,853	$	149,872	$	—		$	761,004
Income (loss) from operations ⁽²⁾⁽³⁾												111,572		18,542		20,599		(11,106		)	139,607
Depreciation and amortization expense												16,410		2,423		5,336		452			24,621
Net capital expenditures												7,240		1,376		2,515		2,404			13,535

Six Months Ended June 29, 2019
Net sales												$	970,810	$	190,327	$	286,669	$	—		$	1,447,806
Income (loss) from operations ⁽²⁾⁽³⁾												208,383		31,128		39,370		(38,213		)	240,668
Depreciation and amortization expense												32,590		5,947		10,695		903			50,135
Net capital expenditures												13,213		2,077		3,936		2,404			21,630

Total assets												$	3,190,584	$	528,008	$	1,136,859	$	31,218		$	4,886,669

Three Months Ended June 30, 2018
Net sales	$	414,117	$	93,649	$	160,362	$	—		$	668,128	$	414,117	$	93,649	$	160,362	$	—		$	668,128
Income (loss) from operations (3,4)	100,008		14,648		16,520		(19,866		)	111,310
Income (loss) from operations ⁽²⁾⁽³⁾												100,008		14,648		16,520		(19,866		)	111,310
Depreciation and amortization expense	7,349		3,129		7,652		468			18,598		7,349		3,129		7,652		468			18,598
Net capital expenditures	2,929		460		2,744		1,418			7,551		2,929		460		2,744		1,418			7,551

Six Months Ended June 30, 2018
Net sales	$	774,021	$	182,221	$	296,686	$	—		$	1,252,928	$	774,021	$	182,221	$	296,686	$	—		$	1,252,928
Income (loss) from operations (3,4)	182,554		25,326		23,109		(32,687		)	198,302
Income (loss) from operations ⁽²⁾⁽³⁾												182,554		25,326		23,109		(32,687		)	198,302
Depreciation and amortization expense	15,349		7,176		15,161		936			38,622		15,349		7,176		15,161		936			38,622
Net capital expenditures	8,706		6,956		7,642		904			24,208		8,706		6,956		7,642		904			24,208

Total assets	$	2,889,677	$	497,439	$	1,133,356	$	81,731		$	4,602,203	$	2,889,677	$	497,439	$	1,133,356	$	81,731		$	4,602,203

Three Months Ended July 1, 2017
Net sales	$	333,753	$	92,368	$	153,222	$	—		$	579,343
Income (loss) from operations (3,4,5)	95,007		24,199		13,394		(19,076		)	113,524
Depreciation and amortization expense	8,496		1,657		7,627		478			18,258
Net capital expenditures	20,764		1,308		1,661		(301		)	23,432

Six Months Ended July 1, 2017
Net sales	$	646,002	$	169,644	$	293,994	$	—		$	1,109,640
Income (loss) from operations (3,4,5)	175,548		42,188		23,968		(35,439		)	206,265
Depreciation and amortization expense	13,478		3,044		14,834		959			32,315
Net capital expenditures	26,749		1,946		2,943		70			31,708

Total assets	$	1,495,316	$	393,674	$	1,205,676	$	45,869		$	3,140,535

(1)Includes corporate and other general company assets and operations.

~~(1)~~(2)Non-operating expenses are not allocated to the operating segments. Non-operating expenses consist of interest expense and deferred financing amortization, foreign exchange gains and losses and other income and expense items outside of income from operations.

~~(2)Includes corporate and other general company assets and operations.~~

(3)Restructuring expenses are allocated in operating income by segment. See note 1617 for further details.

~~(4)Includes reclassifications due to adoption ofASU No. 2017-07. See note 15 for further details.~~

~~(5)Gain on sale of plant allocated to Commercial Foodservice.~~

Geographic Information

Long-lived assets, not including goodwill and other intangibles (in thousands):



	Jun 29, 2019		Jun 30, 2018
United States and Canada	$	280,360	$	262,382
Asia	14,219		12,575
Europe and Middle East	175,745		128,584
Latin America	6,895		679
Total international	$	196,859	$	141,838
	$	477,219	$	404,220

Jun 30, 2018 Jul 1, 2017
United States and Canada $ 262,382
$ 202,789
Asia 12,575
15,370
Europe and Middle East 128,584
127,053
Latin America 679
1,034
Total international $ 141,838
$ 143,457
$ 404,220
$ 346,246


~~15)~~16)	Employee Retirement Plans


~~(a)~~	~~Pension Plans~~

(a)Pension Plans

U.S. Plans:

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

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

The company also maintains a retirement benefit agreement with its former Chairman ("Chairman Plan"). The retirement benefits are based upon a percentage of the former Chairman’s final base salary.

Non-U.S. Plans:

The company maintains a defined benefit plan for its employees at the Wrexham, the United Kingdom facility, which was acquired as part of the Lincat acquisition. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2010 prior to Middleby’s acquisition of the company. 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, 2010 upon reaching retirement age.

The company maintains several pension plans related to AGA and its subsidiaries (collectively, the "AGA Group"), the most significant being the Aga Rangemaster Group Pension Scheme ~~which covers the majority of employees~~ in the United Kingdom. Membership in the plan on a defined benefit basis of pension provision was closed to new entrants in 2001. The plan became open to new entrants on a defined contribution basis of pension provision in 2002, but was generally closed to new entrants on this basis during 2014.

The other, much smaller, defined benefit pension plans operating within the AGA Group cover employees in France, Ireland and the United Kingdom. All pension plan assets are held in separate trust funds although the net defined benefit pension obligations are included in the company's consolidated balance sheet.

The following table summarizes the company's net periodic pension benefit related to the AGA Group pension plans (in thousands):



	Three Months Ended						Six Months Ended
	June 29, 2019			June 30, 2018			June 29, 2019			June 30, 2018
Net Periodic Pension Benefit:
Service cost	$	620		$	957		$	1,246		$	1,934
Interest cost	8,349			8,113			16,781			16,391
Expected return on assets	(16,832		)	(18,895		)	(33,830		)	(38,173		)
Amortization of net (gain) loss	156			1,012			313			2,044
Amortization of prior service cost (credit)	642			—			1,290			—
Curtailment loss (gain)	388			677			388			964
Pension settlement gain	—			(23		)	—			(47		)
	$	(6,677	)	$	(8,159	)	$	(13,812	)	$	(16,887	)

Three Months Ended Six Months Ended
June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017
Net Periodic Pension Benefit:

Service cost $ 957
$ 996
$ 1,934
$ 1,960
Interest cost 8,113
8,017
16,391
15,781
Expected return on assets (18,895 ) (17,323 ) (38,173 ) (34,097 )
Amortization of net (gain) loss 1,012
743
2,044
1,463
Curtailment loss (gain) 677
—
964
—
Pension settlement gain (23 ) (49 ) (47 ) (97 )
$ (8,159 ) $ (7,616 ) $ (16,887 ) $ (14,990 )

The pension costs for all other plans of the company were not material during the period.

On December 31, 2017, the company adopted ASU No. 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost". The service cost component is recognized within Selling, general and administrative expenses and the non-operating components of pension benefit are included within Net periodic pension benefit (other than service cost) in the Condensed Consolidated Statements of Comprehensive Income. The adoption of this standard resulted in a reclassification for the three months period ended July 1, 2017 and six months period ended July 1, 2017, in which previously reported selling, general and administrative expenses was increased by $8.6 million and $17.0 million, respectively. Net income did not change as a result of the adoption of this standard.


~~(b)~~	~~Defined Contribution Plans~~

(b)Defined Contribution Plans

The company maintains two separate defined contribution 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 also maintains defined contribution plans for its United Kingdom based employees.


~~16)~~17)	Restructuring

~~Commercial Foodservice Equipment Group:~~

During the fiscal years 2018 and 2017, the company undertook cost reduction initiatives related to the Commercial Foodservice Equipment Group. These actions, which are not material to the company's operations, resulted in a charge of $1.0 million and $2.0 million in the three and six months ended June 30, 2018 primarily for severance related to headcount reductions and consolidation of manufacturing operations. These expenses are reflected in restructuring expenses in the Condensed Consolidated Statements of Comprehensive Income. The company estimates that these restructuring initiatives will result in future cost savings of approximately $10.0 million annually. The realization of the savings began in 2017 and will continue into fiscal year 2018 and the restructuring costs in the future are not expected to be significant related to these actions.

~~Food Processing Equipment Group:~~

During the fiscal years 2018 and 2017, the company undertook cost reduction initiatives related to the entire Food Processing Equipment Group. These actions, which are not material to the company's operations, resulted in a charge of ~~$0.4 million~~ in the three and six months ended June 30, 2018 primarily for severance related to headcount reductions and is reflected in restructuring expenses in the consolidated statements of comprehensive income. The company estimates that these restructuring initiatives will result in future cost savings of approximately $4.0 million annually. The realization of the savings began in 2018 and will continue through the year and the restructuring costs in the future are not expected to be significant related to these actions.

Residential Kitchen Equipment Group:

~~During fiscal years 2018, 2017, 2016 and~~Since the 2015 acquisition of the AGA Group, the company undertook various acquisition integration initiatives ~~related to the AGA Group within the Residential Kitchen Equipment Group. These initiatives included~~including organizational restructuring, headcount reductions and consolidation and disposition of certain facilities and business operations, including the impairment of ~~equipment. The~~equipment and facilities. Most recently during 2018, the company undertook additional restructuring efforts related to Grange, a non-core business within the AGA Group, and elected to cease its operations. This process was largely completed in the fourth quarter of 2018. Related to the AGA Group, the company recorded additional expense primarily related to headcount reductions of ~~$3.0~~$1.6 million and ~~$3.7~~$1.7 million in the three and six months ended June ~~30, 2018, related to the AGA Group. The expense primarily related to additional headcount reductions in conjunction with disposition of certain facilities and business operations. This expense is~~29, 2019, respectively. These expenses are reflected in restructuring expenses in the Condensed Consolidated Statements of Comprehensive Income. The cumulative expenses incurred to date for these initiatives is approximately ~~$44.3~~$57.4 million. The ~~company estimated that~~primary realization of the ~~main restructuring initiatives~~cost savings began in 2017 ~~would result in future cost savings~~and 2018 related to compensation and facility costs of approximately $20.0 million annually. ~~The realization of~~At June 29, 2019, the ~~savings began in 2017~~restructuring obligations accrued for these initiatives are immaterial and will ~~continue into fiscal year 2018, primarily related to the compensation and facility costs. The company anticipates that all severance obligations for the Residential Kitchen Equipment Group will~~ be ~~paid~~completed by the end of fiscal year ~~2018. The lease obligations extend through December~~ 2019.

The ~~costs and corresponding reserve balances~~restructuring expenses for the ~~Residential Kitchen Equipment Group are summarized as follows (in thousands):~~other segments of the company were not material during the period.


18)	Subsequent Event

On July 15, 2019, the company completed its acquisition of Packaging Progressions, Inc. ("Pacproinc") for a purchase price of approximately $74.0 million. Pacproinc is a market leader in automated packaging technologies for customers in the protein and bakery segments based in Souderton, Pennsylvania.

Severance/Benefits Facilities/Operations Other Total
Balance as of December 30, 2017 $ 3,698
$ 1,467
$ 157
$ 5,322
Expenses (income) 3,721
(47 ) 35
3,709
Exchange (30 ) (11 ) 27
(14 )
Payments/Utilization (4,256 ) (337 ) (32 ) (4,625 )
Balance as of June 30, 2018 $ 3,133
$ 1,072
$ 187
$ 4,392

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 SEC filings, including the company’s ~~2017~~2018 Annual Report on Form 10-K.

Net Sales Summary

(dollars in thousands)


	Three Months Ended								Six Months Ended								Three Months Ended								Six Months Ended
	Jun 30, 2018				Jul 1, 2017				Jun 30, 2018				Jul 1, 2017				Jun 29, 2019				Jun 30, 2018				Jun 29, 2019				Jun 30, 2018
	Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent
Business Segments:
Commercial Foodservice	$	414,117	62.0	%	$	333,753	57.6	%	$	774,021	61.8	%	$	646,002	58.2	%	$	513,279	67.4	%	$	414,117	62.0	%	$	970,810	67.1	%	$	774,021	61.8	%
Food Processing	93,649		14.0		92,368		15.9		182,221		14.5		169,644		15.3		97,853		12.9		93,649		14.0		190,327		13.1		182,221		14.5
Residential Kitchen	160,362		24.0		153,222		26.5		296,686		23.7		293,994		26.5		149,872		19.7		160,362		24.0		286,669		19.8		296,686		23.7
Total	$	668,128	100.0	%	$	579,343	100.0	%	$	1,252,928	100.0	%	$	1,109,640	100.0	%	$	761,004	100.0	%	$	668,128	100.0	%	$	1,447,806	100.0	%	$	1,252,928	100.0	%

Results of Operations

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


	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	Jun 30, 2018		Jul 1, 2017		Jun 30, 2018		Jul 1, 2017		Jun 29, 2019		Jun 30, 2018		Jun 29, 2019		Jun 30, 2018
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	62.5		59.5		63.1		60.0		62.4		62.5		62.4		63.1
Gross profit	37.5		40.5		36.9		40.0		37.6		37.5		37.6		36.9
Selling, general and administrative expenses	20.2		21.0		20.6		21.3		19.0		20.2		20.8		20.6
Restructuring	0.7		2.0		0.5		1.2		0.3		0.7		0.2		0.5
Gain on sale of plant	—		(2.1	)	—		(1.1	)
Income from operations	16.6		19.6		15.8		18.6		18.3		16.6		16.6		15.8
Interest expense and deferred financing amortization, net	1.6		1.0		1.5		1.0		2.9		1.6		2.9		1.5
Net periodic pension benefit (other than service costs)	(1.4	)	(1.5	)	(1.5	)	(1.5	)	(1.0	)	(1.4	)	(1.0	)	(1.5	)
Other expense, net	(0.1	)	0.1		0.1		0.2
Other (income) expense, net									(0.1	)	(0.1	)	(0.1	)	0.1
Earnings before income taxes	16.5		20.0		15.7		18.9		16.5		16.5		14.8		15.7
Provision for income taxes	4.0		6.7		3.8		5.5		4.4		4.0		3.7		3.8
Net earnings	12.5	%	13.3	%	11.9	%	13.4	%	12.1	%	12.5	%	11.1	%	11.9	%

Three Months Ended June ~~30, 2018~~29, 2019 as compared to Three Months Ended ~~July 1, 2017~~June 30, 2018

NET SALES. Net sales for the three months period ended June ~~30, 2018~~29, 2019 increased by ~~$88.8~~$92.9 million or ~~15.3%~~13.9% to ~~$668.1~~$761.0 million as compared to ~~$579.3~~$668.1 million in the three months period ended ~~July 1, 2017.~~June 30, 2018. Net sales increased by ~~$84.1~~$97.9 million, or ~~14.5%~~14.7%, from ~~acquisition growth, attributable to the 2017 acquisitions of Burford, CVP Systems, Sveba Dahlen, QualServ, L2F, Globe and Scanico and~~ the fiscal 2018 acquisitions of ~~Hinds-Bock, Ve.Ma.C,~~ Firex, Josper, Taylor, M-TEK, and ~~Taylor.~~Crown and the fiscal 2019 acquisitions of EVO, Cooking Solutions Group, Powerhouse, and Ss Brewtech. Excluding acquisitions and closure of a non-core business, net sales ~~increased $4.7~~decreased $1.9 million, or ~~0.8%~~0.3%, from the prior ~~year.~~year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the three months period ended June ~~30, 2018 increased~~29, 2019 decreased net sales by approximately ~~$6.7~~$10.5 million or ~~1.2%~~1.6%. ~~The adoption of ASC 606 increased net sales by approximately $0.4 million.~~ Excluding the impact of foreign exchange, acquisitions and ~~the adoption~~closure of ~~ASC 606,~~a non-core business, sales ~~decreased 0.4% for the year,~~increased 1.3%, including a net sales increase of ~~4.3%~~2.3% at the Commercial Foodservice Equipment Group, a net sales ~~decrease~~increase of ~~21.9%~~3.4% at the Food Processing Equipment Group and a net sales ~~increase~~decrease of ~~2.1%~~2.6% at the Residential Kitchen Equipment Group.

Net sales of the Commercial Foodservice Equipment Group increased by ~~$80.3~~$99.2 million, or ~~24.1%~~24.0%, to ~~$414.1~~$513.3 million in the three months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$333.8~~$414.1 million in the prior year period. Net sales from the acquisitions of ~~Sveba Dahlen, QualServ, L2F, Globe,~~ Firex, Josper, Taylor, Crown, EVO, Cooking Solutions Group, Powerhouse, and ~~Taylor~~Ss Brewtech, which were acquired on ~~June 30, 2017, August 31, 2017, October 6, 2017, October 17, 2017,~~ April 27, 2018, May 10, 2018, ~~and~~ June 22, 2018, December 3, 2018, December 31, 2018, April 1, 2019, April 1, 2019, and June 15, 2019, respectively, accounted for an increase of ~~$63.7~~$95.3 million during the three months period ended June ~~30, 2018.~~29, 2019. Excluding the impact of acquisitions, net sales of the Commercial Foodservice Equipment Group increased ~~$16.6~~$3.9 million, or ~~5.0%~~0.9%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales increased ~~$14.5~~$9.5 million or ~~4.3%~~2.3% at the Commercial Foodservice Equipment Group. Sales increased primarily related to several rollouts with our major chain ~~and retail~~ customers. Domestically, the company realized a sales increase of ~~$50.3~~$68.2 million, or ~~21.0%~~23.6%, to ~~$289.5~~$357.7 million, as compared to ~~$239.2~~$289.5 million in the prior year period. This includes an increase of ~~$36.7~~$62.2 million from recent acquisitions. Excluding the acquisitions, the net increase in domestic sales was ~~$13.6~~$6.0 million, or ~~5.7%~~2.1%. International sales increased ~~$30.0~~$31.0 million, or ~~31.7%~~24.9%, to ~~$124.6~~$155.6 million, as compared to ~~$94.6~~$124.6 million in the prior year period. This includes an increase of ~~$27.0~~$33.1 million from the recent acquisitions and ~~increase~~decrease of ~~$2.1~~$5.6 million related to the ~~favorable~~unfavorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net sales increase in international sales was ~~$0.9~~$3.5 million, or ~~1.0%~~2.8%. The increase in international revenues reflects strengthening of sales in the Asian and Latin American markets.

Net sales of the Food Processing Equipment Group increased by ~~$1.2~~$4.2 million, or ~~1.3%~~4.5%, to ~~$93.6~~$97.8 million in the three months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$92.4~~$93.6 million in the prior year period. Net sales from the ~~acquisitions~~acquisition of ~~Burford, CVP Systems, Scanico, Hinds-Bock and Ve.Ma.C,~~M-TEK, which ~~were~~was acquired on ~~May~~October 1, ~~2017, June 30, 2017, December 7, 2017, February 16,~~ 2018, ~~and April 3, 2018, respectively,~~ accounted for an increase of ~~$20.4~~$2.6 million during the three months period ended June ~~30, 2018.~~29, 2019. Excluding the impact of ~~acquisitions,~~the acquisition, net sales of the Food Processing Equipment Group ~~decreased $19.2~~increased $1.6 million, or ~~20.8%~~1.7%. Excluding the impact of foreign exchange ~~acquisitions~~ and the ~~adoption of ASC 606,~~acquisition, net sales ~~decreased 21.9%~~increased 3.4% at the Food Processing Equipment Group. Domestically, the company realized a sales decrease of ~~$8.6~~$1.2 million, or ~~12.7%~~2.0%, to ~~$59.3~~$58.1 million, as compared to ~~$67.9~~$59.3 million in the prior year period. This includes an increase of ~~$10.0~~$2.6 million from the recent ~~acquisitions.~~acquisition. Excluding the acquisition, the net decrease in domestic sales was $3.8 million, or 6.4%. International sales increased ~~$9.8~~$5.4 million, or ~~40.0%~~15.7%, to ~~$34.3~~$39.7 million, as compared to ~~$24.5~~$34.3 million in the prior year period. This includes ~~$10.4 million from recent acquisitions and increase~~a decrease of ~~$0.6~~$1.6 million related to the ~~favorable~~unfavorable impact of exchange rates. ~~Revenue for~~Excluding foreign exchange, the ~~Food Processing Equipment Group has been affected by the timing and deferral of certain large orders which create quarterly volatility for the group~~net sales increase in international sales was $7.0 million, or 20.4%.

Net sales of the Residential Kitchen Equipment Group ~~increased~~decreased by ~~$7.2~~$10.5 million or ~~4.7%~~6.5%, to ~~$160.4~~$149.9 million in the three months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$153.2~~$160.4 million in the prior year period. Excluding the impact of foreign exchange and closure of a non-core business, net sales ~~increased 2.1%~~decreased $4.1 million, or 2.6% at the Residential Kitchen Equipment Group. Domestically, the company realized a sales ~~increase~~decrease of ~~$11.1~~$2.9 million, or ~~12.0%~~2.8%, to ~~$103.4~~$100.5 million, as compared to ~~$92.3~~$103.4 million in the prior year period. ~~Sales at Viking increased by approximately 24% during~~Excluding the ~~quarter. This increase continues to be offset by the temporary~~ impact of ~~consolidating our premium brands through company owned distribution and canceling certain third party distributors.~~closure of non-core business, the net decrease in domestic sales was $2.4 million, or 2.3%. International sales decreased ~~$3.9~~$7.6 million or ~~6.4%~~13.3% to ~~$57.0~~$49.4 million, as compared to ~~$60.9~~$57.0 million in the prior year quarter. This includes ~~a favorable~~an unfavorable impact of exchange rates of ~~$4.0~~$3.3 million. ~~The~~Excluding foreign exchange and closure of a non-core business, the net 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.international sales was $1.7 million, or 3.1%.

GROSS PROFIT. Gross profit increased to ~~$250.8~~$286.5 million in the three months period ended June ~~30, 2018~~29, 2019 from ~~$234.6~~$250.8 million in the prior year period, primarily reflecting the impact of increased sales from acquisitions, ~~and favorable~~offset by the unfavorable impact of foreign exchanges rates of ~~$2.3~~$3.6 million. The gross margin rate was ~~40.5%~~37.5% in the three months period ended ~~July 1, 2017~~June 30, 2018 as compared to ~~37.5%~~37.6% in the current year period.

Gross profit at the Commercial Foodservice Equipment Group increased by ~~$24.4~~$32.0 million, or ~~17.8%~~19.8%, to ~~$161.8~~$193.8 million in the three months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$137.4~~$161.8 million in the prior year period. Gross profit from the acquisitions ~~of Sveba Dahlen, QualServ, L2F, Globe, Firex, Josper, and Taylor~~ accounted for approximately ~~$15.2~~$31.4 million of the increase in gross profit during the period. Excluding the recent acquisitions, gross profit increased by approximately ~~$9.2~~$0.6 million on higher sales volumes. The impact of foreign exchange rates ~~increased~~decreased gross profit by approximately ~~$0.8~~$1.7 million. The gross margin rate decreased to ~~39.1%~~37.8%, as compared to ~~41.2%~~39.1% in the prior year ~~period, due to lower margins at recent acquisitions.~~period. The gross margin rate excluding acquisitions and the impact of foreign exchange was 38.7%.

Gross profit at the Food Processing Equipment Group ~~decreased~~increased by ~~$5.2~~$1.8 million, or ~~13.5%~~5.4%, to $35.0 million in the three months period ended June 29, 2019, as compared to $33.2 million in the prior year period. Gross profit from the acquisition increased gross profit by $1.6 million. Excluding the recent acquisition, gross profit increased by approximately $0.2 million. The impact of foreign exchange rates decreased gross profit by approximately $0.7 million. The gross profit margin rate increased to 35.8%, as compared to 35.5% in the prior year period, reflecting a favorable product mix. The gross margin rate excluding the acquisition and the impact of foreign exchange was 35.2%.

Gross profit at the Residential Kitchen Equipment Group increased by $0.5 million, or 0.9%, to $58.2 million in the three months period ended June 29, 2019, as compared to $57.7 million in the prior year period. The impact of foreign exchange rates decreased gross profit by approximately $1.2 million. The gross margin rate increased to 38.8%, as compared to 36.0% in the prior year period, primarily related to the benefit of the disposition of the non-core business.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased from $135.0 million in the three months period ended June 30, 2018 to $144.6 million in the three months period ended June 29, 2019. As a percentage of net sales, selling, general, and administrative expenses were 20.2% in the three months period ended June 30, 2018, as compared to ~~$38.4 million~~19.0% in the ~~prior year period. Gross profit from the~~three months period ended June 29, 2019.

Selling, general and administrative expenses reflect increased costs of $20.2 million associated with acquisitions, including $6.5 million of ~~Burford, CVP Systems, Scanico, Hinds-Bock~~intangible amortization expense. Selling, general and ~~Ve.Ma.C increased gross profit by $6.7 million. The adoption of ASC 606 increased gross profit by approximately $0.5 million. Excluding the recent acquisitions and adoption of ASC 606, gross profit~~administrative expenses decreased by ~~approximately $12.4~~$2.4 million ~~on lower sales volumes. The~~related to favorable impact offrom foreign exchange rates ~~increased gross profit by approximately $0.4 million. The gross profit margin rate~~and $9.7 million related to lower compensation costs.

RESTRUCTURING EXPENSES.Restructuring expenses decreased ~~to 35.5%, as compared to 41.6% in the prior year period, reflecting the impact of lower sales volumes and unfavorable product mix resulting~~$2.2 million from ~~lesser sales of protein equipment which generally have higher margins.~~

~~Gross profit at the Residential Kitchen Equipment Group decreased by $3.2 million, or 5.3%, to $57.7~~$4.4 million in the three months period ended June 30, 2018 ~~as compared~~ to $60.9 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $1.1 million. The gross margin rate decreased to 36.0%, as compared to 39.8% in the prior year period, due primarily to the impact of the domestic distribution changes and sales incentives related to the Viking brand.

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased from $121.6 million in the three months period ended July 1, 2017 to $135.0~~$2.2 million in the three months period ended June 30, 2018. As a percentage of net sales, selling, general, and administrative expenses were 21.0% in the three months period ended July 1, 2017, as compared to 20.2% in the three months period ended June 30, 2018.

Selling, general and administrative expenses reflect increased costs of $16.7 million associated with the fiscal 2017 acquisitions of Burford, CVP Systems, Sveba Dahlen, QualServ, L2F, Globe and Scanico and the fiscal 2018 acquisitions of Hinds-Bock, Ve.Ma.C, Firex, Josper, and Taylor, including $2.6 million of intangible amortization expense. The unfavorable impact of foreign exchange rates increased selling, general and administrative expenses by approximately $1.5 million. Excluding acquisitions and foreign exchange rates, as a percentage of net sales, selling, general, and administrative expenses were 17.5%. Professional fees increased primarily related to Taylor transaction costs and legal costs of approximately $4.5 million. Additionally, selling, general and administrative expenses decreased $5.6 million related to lower compensation costs, $1.3 million related to lower non-cash share based compensation, and $3.3 million related to lower intangible amortization expense.

~~RESTRUCTURING EXPENSES~~.29, 2019. Restructuring expenses decreased $7.1 million from $11.5 million in the three months period ended July 1, 2017 to $4.4 million in the three months period ended June 30, 2018. In the three months period ended July 1, 2017, restructuring expenses included cost reduction initiatives related ~~to the AGA Group. In the three months period ended June 30, 2018, restructuring charges included cost reduction initiatives~~ primarily ~~related~~ to headcount reductions at the Commercial Foodservice Equipment Group and additional cost reduction initiatives related to the AGA ~~Group.~~

~~GAIN ON SALE OF PLANT. In the three months period ended July 1, 2017, the gain on sale of plant was $12.0 million related to the sale of a manufacturing facility within the Commercial Foodservice Equipment~~ Group ~~proceeds of which~~ were ~~used to purchase a larger manufacturing facility to gain efficiencies in workflow and allow for future manufacturing consolidation efforts.~~

~~NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $10.4 million~~higher in the three months period ended June 30, 2018 as compared to ~~$5.7~~the current year period.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $22.0 million in the three months period ended June 29, 2019, as compared to $10.4 million in the prior year period, reflecting increased interest due to higher interest rates and higher debt balances related to the funding of acquisitions.

INCOME TAXES. A tax provision of ~~$26.6~~$33.2 million, at an effective rate of ~~24.0%~~26.5%, was recorded during the three months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$38.6~~$26.6 million at an effective rate of ~~33.2%~~24.0%, in the prior year period. In comparison to the prior year ~~period,~~ the effective rate increased primarily due to a tax ~~provision reflects a lower~~benefit recorded in 2018 for enacted tax rate changes. The effective rates in 2019 and 2018 are higher than the federal tax rate of ~~21.0%, as opposed to 35.0% in 2017, partially offset by additional taxes due under the Tax Cuts and Jobs Act of 2017. The 2017 tax provision was lower than the statutory rate of 35.0%~~21% primarily due to ~~the U.S. domestic manufacturers deduction~~state taxes and ~~favorable~~ foreign tax rate differentials. In the fourth quarter of 2017, the company recorded a provisional transition tax charge and a change in deferred tax accounts associated with the Tax Cuts and Jobs Act of 2017. These provisional amounts will be finalized in 2018.

Six Months Ended June ~~30, 2018~~29, 2019 as compared to Six Months Ended ~~July 1, 2017~~June 30, 2018

NET SALES. Net sales for the six months period ended June ~~30, 2018~~29, 2019 increased by ~~$143.3~~$194.9 million or ~~12.9%,~~15.6% to ~~$1,252.9~~$1,447.8 million as compared to ~~$1,109.6~~$1,252.9 million in the six months period ended ~~July 1, 2017.~~June 30, 2018. Net sales increased by ~~$148.1~~$198.3 million, or ~~13.3%~~15.8%, from ~~acquisition growth, attributable to the 2017 acquisitions of Burford, CVP Systems, Sveba Dahlen, QualServ, L2F, Globe and Scanico and~~ the fiscal 2018 acquisitions of Hinds-Bock, Ve.Ma.C, Firex, Josper, Taylor, M-TEK, and ~~Taylor.~~Crown and the fiscal 2019 acquisitions of EVO, Cooking Solutions Group, Powerhouse, and Ss Brewtech. Excluding ~~the~~ acquisitions and closure of a non-core business, net sales ~~decreased $4.8~~increased $2.5 million, or ~~0.4%~~0.2%, from the prior ~~year.~~year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the six months period ended June ~~30, 2018 increased~~29, 2019 decreased net sales by approximately ~~$21.0~~$23.0 million or ~~1.9%~~1.8%. The adoption of ASC 606 increased net sales by approximately $14.6 million primarily related to previously recognized revenue on long-term equipment sales contracts at the Food Processing Equipment Group. Excluding the impact of foreign exchange, acquisitions and ~~the adoption~~closure of ~~ASC 606,~~a non-core business, sales ~~decreased 3.6%~~increased 2.0% for the year, including a net sales increase of ~~1.6%~~2.8% at the Commercial Foodservice Equipment Group, a net sales ~~decrease~~increase of ~~25.1%~~0.2% at the Food Processing Equipment Group and a net sales ~~decrease~~increase of ~~2.9%~~1.1% at the Residential Kitchen Equipment Group.

Net sales of the Commercial Foodservice Equipment Group increased by ~~$128.0~~$196.8 million, or ~~19.8%~~25.4%, to ~~$774.0~~$970.8 million in the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$646.0~~$774.0 million in the prior year period. Net sales from the acquisitions of ~~Sveba Dahlen, QualServ, L2F, Globe,~~ Firex, Josper, Taylor, Crown, EVO, Cooking Solutions Group, Powerhouse, and ~~Taylor~~Ss Brewtech, which were acquired on ~~June 30, 2017, August 31, 2017, October 6, 2017, October 17, 2017,~~ April 27, 2018, May 10, 2018, ~~and~~ June 22, 2018, December 3, 2018 and December 31, 2018, April 1, 2019, April 1, 2019, and June 15, 2019, respectively, accounted for an increase of ~~$109.7~~$187.3 million during the six months period ended June ~~30, 2018.~~29, 2019. Excluding the impact of ~~these~~ acquisitions, net sales of the Commercial Foodservice Equipment Group increased ~~$18.3~~$9.5 million, or ~~2.8%~~1.2%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales increased ~~$10.6~~$21.9 million or ~~1.6%~~2.8% at the Commercial Foodservice Equipment Group. Sales increased primarily related to several rollouts with our major chain customers. Domestically, the company realized a sales increase of ~~$87.9~~$113.4 million, or ~~19.2%~~20.8%, to ~~$544.6~~$658.0 million, as compared to ~~$456.7~~$544.6 million in the prior year period. This includes an increase of ~~$66.0~~$100.3 million from ~~the~~ recent acquisitions. Excluding the acquisitions, the net increase in domestic sales was ~~$21.9~~$13.1 million, or ~~4.8%~~2.4%. ~~Domestic sales growth reflects the increase in sales with major chain restaurants and retail customers.~~International sales increased ~~$40.1~~$83.4 million, or ~~21.2%~~36.4%, to ~~$229.4~~$312.8 million, as compared to ~~$189.3~~$229.4 million in the prior year period. This includes an increase of ~~$43.7~~$87.0 million from the recent acquisitions and ~~increase~~decrease of ~~$7.7~~$12.4 million related to the ~~favorable~~unfavorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net sales ~~decrease~~increase in international sales was ~~$11.3~~$8.8 million, or ~~6.0%~~3.8%. The ~~decline~~increase in international revenues reflects ~~lower~~strengthening of sales in ~~Australia~~the Asian and ~~China due to generally slower market conditions and timing of orders from major restaurant chain customers.~~

Latin American markets.

Net sales of the Food Processing Equipment Group increased by ~~$12.6~~$8.1 million, or ~~7.4%~~4.4%, to ~~$182.2~~$190.3 million in the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$169.6~~$182.2 million in the prior year period. Net sales from the acquisitions of ~~Burford, CVP Systems, Scanico,~~ Hinds-Bock, Ve.Ma.C and ~~Ve.Ma.C,~~M-TEK, which were acquired on ~~May 1, 2017, June 30, 2017, December 7, 2017,~~ February 16, 2018, ~~and~~ April 3, 2018 and October 1, 2018, respectively, accounted for an increase of ~~$38.4~~$11.0 million during the six months period ended June ~~30, 2018.~~29, 2019. Excluding the impact of ~~these~~ acquisitions, net sales of the Food Processing Equipment Group decreased ~~$25.8~~$2.9 million, or ~~15.2%~~1.6%. Excluding the impact of foreign exchange ~~acquisitions~~ and ~~the adoption of ASC 606,~~acquisitions, net sales ~~decreased $42.5~~increased $0.4 million or ~~25.1%~~0.2% at the Food Processing Equipment Group. Domestically, the company realized a sales decrease of ~~$2.9~~$10.5 million, or ~~2.2%~~8.3%, to ~~$126.2~~$115.7 million, as compared to ~~$129.1~~$126.2 million in the prior year period. This includes an increase of ~~$19.6~~$6.0 million from recent acquisitions. Excluding the ~~recent~~ acquisitions, ~~and approximately $14.6~~the net decrease in domestic sales was $16.5 million, ~~related to the adoption of ASC 606.~~or 13.1%. International sales increased ~~$15.5~~$18.6 million, or ~~38.3%~~33.2%, to ~~$56.0~~$74.6 million, as compared to ~~$40.5~~$56.0 million in the prior year period. This includes an increase of ~~$18.8~~$5.0 million from ~~the~~ recent acquisitions and ~~an increase~~a decrease of ~~$2.1~~$3.3 million related to the ~~favorable~~unfavorable impact of exchange rates. ~~Revenues for~~Excluding acquisitions and foreign exchange, 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 increase in international sales was $16.9 million, or 30.2%.

Net sales of the Residential Kitchen Equipment Group ~~increased~~decreased by ~~$2.7~~$10.0 million or ~~0.9%~~3.4%, to ~~$296.7~~$286.7 million in the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$294.0~~$296.7 million in the prior year period. Excluding the impact of foreign exchange and closure of a non-core business, net sales ~~decreased 2.9%~~increased $3.2 million, or 1.1% at the Residential Kitchen Equipment Group. Domestically, the company realized a sales increase of ~~$8.3~~$1.8 million, or ~~4.8%~~1.0%, to ~~$182.0~~$183.8 million, as compared to ~~$173.7~~$182.0 million in the prior year period. ~~Sales at Viking increased by approximately 14% during~~Excluding the ~~year. This increase was offset by the temporary~~ impact of ~~consolidating our premium brands through company owned distribution and canceling certain third party distributors.~~closure of non-core business, the net increase in domestic sales was $2.8 million, or 1.5%. International sales decreased ~~$5.6~~$11.8 million or ~~4.7%,~~10.3% to ~~$114.7~~$102.9 million, as compared to ~~$120.3~~$114.7 million in the prior year quarter. This includes ~~a favorable~~an unfavorable impact of exchange rates of ~~$11.2~~$7.3 million. ~~The~~Excluding foreign exchange and closure of a non-core business, the net sales ~~decrease reflects slower conditions~~increase 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.international sales was $0.4 million, or 0.4%.

GROSS PROFIT. Gross profit increased to $543.8 million in the six months period ended June 29, 2019 from $462.4 million in the prior year period, primarily reflecting the impact of increased sales from acquisitions, offset by the unfavorable impact of foreign exchanges rates of $7.6 million. The gross margin rate was 36.9% in the six months period ended June 30, 2018 from $444.1 million in the prior year period, reflecting the impact of increased sales from the acquisitions, adoption of ASC 606 and favorable impact of foreign exchange rates of $7.2 million. The gross margin rate decreased from 40.0% in the six months period ended July 1, 2017 as compared to ~~36.9%~~37.6% in the current year period.

Gross profit at the Commercial Foodservice Equipment Group increased by ~~$35.1~~$66.3 million, or ~~13.2%~~22.1%, to ~~$300.2~~$366.5 million in the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$265.1~~$300.2 million in the prior year period. Gross profit from the acquisitions ~~of Sveba Dahlen, QualServ, L2F, Globe, Firex, Josper, and Taylor~~ accounted for approximately ~~$25.5~~$63.6 million of the increase in gross profit during the period. Excluding the recent acquisitions, gross profit increased by approximately ~~$9.6 million.~~$2.7 million on higher sales volumes. The impact of foreign exchange rates ~~increased~~decreased gross profit by approximately ~~$2.5~~$3.7 million. The gross margin rate decreased to ~~38.8%~~37.8%, as compared to ~~41.0%~~38.8% in the prior year ~~period, due to lower margins at recent acquisitions.~~period. The gross margin rate excluding acquisitions and the impact of foreign exchange was 38.5%.

Gross profit at the Food Processing Equipment Group ~~decreased~~increased by ~~$7.6~~$6.1 million, or ~~11.0%~~10.0%, to $67.4 million in the six months period ended June 29, 2019, as compared to $61.3 million in the prior year period. Gross profit from the acquisitions increased gross profit by $5.8 million. Excluding the recent acquisitions, gross profit increased by approximately $0.3 million. The impact of foreign exchange rates decreased gross profit by approximately $1.3 million. The gross profit margin rate increased to 35.4%, as compared to 33.6% in the prior year period, reflecting a favorable product mix.

Gross profit at the Residential Kitchen Equipment Group increased by $8.1 million, or 7.8%, to $111.5 million in the six months period ended June 29, 2019, as compared to $103.4 million in the prior year period. The impact of foreign exchange rates decreased gross profit by approximately $2.6 million. The gross margin rate increased to 38.9%, as compared to 34.9% in the prior year period, primarily related to higher sales volumes for the domestic premium brands.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased from $258.0 million in the six months period ended June 30, 2018 to $300.5 million in the six months period ended June 29, 2019. As a percentage of net sales, selling, general, and administrative expenses were 20.6% in the six months period ended June 30, 2018, as compared to ~~$68.9 million~~20.8% in the ~~prior year period. Gross profit~~six months period ended June 29, 2019.

Selling, general and administrative expenses reflect increased costs of $40.2 million associated with acquisitions, including $14.8 million of intangible amortization expense. Selling, general and administrative expenses increased by $10.0 million related to transition costs with the former Chairman and CEO upon his retirement in February 2019. The increase was offset by the favorable impact from the acquisitions of Burford, CVP Systems, Scanico, Hinds-Bock and Ve.Ma.C increased gross profit by approximately $14.1 million during the period. The adoption of ASC 606 increased gross profit by approximately $4.2 million. Excluding the recent acquisitions and adoption of ASC 606, gross profit decreased by approximately $25.9 million on lower sales volumes. The impact of foreign exchange rates ~~increased gross profit by approximately $1.1~~of $5.2 million. ~~The gross profit margin rate~~

RESTRUCTURING EXPENSES.Restructuring expenses decreased ~~to 33.6%, as compared to 40.6% in the prior year period reflecting the impact of lower volumes and unfavorable product mix resulting~~$3.5 million from ~~lesser sales of protein equipment which generally have higher margins.~~

~~Gross profit at the Residential Kitchen Equipment Group decreased by $9.5 million, or 8.4%, to $103.4~~$6.1 million in the six months period ended June 30, 2018 ~~as compared~~ to $112.9 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $3.6 million. The gross margin rate decreased to 34.9%, as compared to 38.4% in the prior year period, due primarily to the impact of the domestic distribution changes and sales incentives related to the Viking brand.

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased from $236.6 million in the six months period ended July 1, 2017 to $258.0~~$2.6 million in the six months period ended June 30, 2018. As a percentage of net sales, selling, general and administrative expenses were 21.3% in the six months period ended July 1, 2017, as compared to 20.6% in the six months period ended June 30, 2018.

Selling, general and administrative expenses reflect increased costs of $31.5 million associated with the 2017 acquisitions of Burford, CVP Systems, Sveba Dahlen, QualServ, L2F, Globe and Scanico and the fiscal 2018 acquisitions of Hinds-Bock, Ve.Ma.C, Firex, Josper, and Taylor, including $6.8 million of intangible amortization expense. The unfavorable impact of foreign exchange rates increased selling, general and administrative expenses by approximately $4.9 million. Excluding acquisitions and foreign exchange rates, as a percentage of net sales, selling, general, and administrative expenses were 17.7%. Professional fees increased approximately $4.9 million primarily related to Taylor transaction costs and legal costs. Additionally, selling general and administrative expenses decreased $8.7 million related to lower compensation costs, $4.7 million related to lower non-cash share based compensation, and $2.9 million related to lower intangible amortization expense.

~~RESTRUCTURING EXPENSES~~.29, 2019. Restructuring expenses decreased $7.1 million from $13.2 million in the six months period ended July 1, 2017 to $6.1 million in the six months period ended June 30, 2018. In the six months period ended July 1, 2017, restructuring expenses related ~~cost reduction initiatives related to the AGA Group. Additionally, restructuring charges included cost reduction initiatives~~ primarily related to headcount reductions at the Commercial Foodservice Equipment Group, Food Processing Equipment Group and Residential Kitchen Equipment Group. In the six months period ended June 30, 2018, restructuring charges included cost reduction initiatives primarily related to headcount reductions at the Commercial Foodservice Equipment Group and additional cost reduction initiatives related to the AGA ~~Group.~~

~~GAIN ON SALE OF PLANT. In the six months period ended July 1, 2017 the gain on sale of plant was $12.0 million related to the sale of a manufacturing facility within the Commercial Foodservice Equipment~~ Group ~~proceeds of which~~ were ~~used to purchase a larger manufacturing facility to gain efficiencies in workflow and allow for future manufacturing consolidation efforts.~~

~~NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $19.2 million~~higher in the six months period ended June 30, 2018 as compared to ~~$11.5 million in~~ the ~~prior~~current year ~~period reflecting higher debt balances related to the~~period.

~~funding of acquisitions. Other expense was $0.6~~NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were $42.5 million in the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~other expense of $2.2~~$19.2 million in the prior year period, reflecting increased interest due to higher interest rates and ~~consists mainly~~higher debt balances related to the funding of ~~foreign exchange gains and losses.~~acquisitions.

INCOME TAXES. A tax provision of ~~$47.9~~$53.9 million, at an effective rate of ~~24.3%~~25.1%, was recorded during the six months period ended June ~~30, 2018,~~29, 2019, as compared to ~~$61.3~~$47.9 million at an effective rate of ~~29.2%~~24.3%, in the prior year period. In comparison to the prior year ~~period,~~ the effective rate increased primarily due to a tax ~~provision reflects a lower~~benefit recorded in 2018 for enacted tax rate changes. The effective rates in 2019 and 2018 are higher than the federal tax rate of ~~21.0%, as opposed to 35.0% in 2017, partially offset by additional taxes due under the Tax Cuts and Jobs Act of 2017. The 2017 tax provision was lower than the statutory rate of 35.0%~~21% primarily due to ~~a discrete~~state taxes and foreign tax benefit recognized as a result of the adoption of ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting". In the fourth quarter of 2017, the company recorded a provisional transition tax charge and a change in deferred tax accounts associated with the Tax Cuts and Jobs Act of 2017. These provisional amounts will be finalized in 2018.rate differentials.

Financial Condition and Liquidity

During the six months ended June ~~30, 2018,~~29, 2019, cash and cash equivalents increased by ~~$2.6~~$10.0 million to ~~$92.3~~$81.7 million at June ~~30, 2018~~29, 2019 from ~~$89.7~~$71.7 million at December ~~30, 2017.~~29, 2018. Net borrowings increased from ~~$1.0~~$1.9 billion to $2.0 billion at December ~~30, 2017 to $2.1 billion at~~29, 2018 and June ~~30, 2018.~~29, 2019, respectively, as the cost of acquisitions exceeded cash provided by operations.

OPERATING ACTIVITIES. Net cash provided by operating activities was $101.6 million for the six months ended June 29, 2019, compared to $146.6 million for the six months ended June 30, ~~2018, compared to $86.0 million for~~2018.

Improved earnings have generated increased cash flows over the prior year period. The combined impact of timing of payments made and collections received have not materially impacted the change in cash flows between the periods. However, significant increases in inventory have negatively impacted cash flows during the six ~~months~~month ended ~~July 1, 2017.~~June 29, 2019. The increases are attributable to various factors including purchasing in advance of potential price increases expected from tariffs and building to mitigate risk around order fulfillment rates. Inventory levels also have been impacted by lower than anticipated sales levels.

INVESTING ACTIVITIES.During the six months ended June 30, 2018, changes in assets and liabilities reduced operating cash flows by $48.7 million. The changes included an increase in accounts receivable of $28.2 million due to increased sales volumes at the Commercial Foodservice Equipment Group and Viking in addition to the increase in receivables at the Food Processing Equipment Group due to timing of large orders in the six months ended June 30, 2018. Changes also included a $30.7 million decrease in accrued expenses and other non-current liabilities primarily related to the payment of 2017 annual rebate programs at the Commercial Foodservice Equipment Group and Residential Kitchen Equipment Group and payment of 2017 incentive obligations.

~~INVESTING ACTIVITIES~~. ~~During the six months ended June 30, 2018,~~29, 2019, net cash used for investing activities amounted to ~~$1.2 billion.~~$188.7 million. This included ~~$1.1 billion~~$167.3 million for the ~~2018~~2019 acquisitions of ~~Hinds-Bock, JoeTap, Ve.Ma.C, Firex, Josper~~EVO, Cooking Solutions Group, Powerhouse and ~~Taylor, $5.4 million related~~Ss Brewtech. The decrease over the prior year period was primarily attributable to the 2018 purchase of ~~tradename and $24.2 million of additions and upgrades of production equipment and manufacturing facilities.~~Taylor for approximately $1.0 billion.

FINANCING ACTIVITIES. Net cash flows provided by financing activities were ~~$1.0 billion~~$97.2 million during the six months ended June ~~30, 2018.~~29, 2019. The company’s borrowing activities during the quarter included ~~$1.0 billion~~$103.6 million of net proceeds under its ~~$2.5~~$3.0 billion Credit ~~Facility and $3.0~~Facility. Additionally, the company used $6.1 million to repurchase 50,433 shares of ~~net repayments under its foreign banking facilities.~~Middleby common stock that were surrendered to the company for withholding taxes related to restricted stock vestings during the quarter. During 2018, financing cash flows were impacted by the purchase of Taylor, which resulted in approximately $1.0 billion of borrowings.

At June ~~30, 2018,~~29, 2019, the company was in compliance with all covenants pursuant to its borrowing agreements. The company believes that its current capital resources, including cash and cash equivalents, cash generated from operations, funds available from its Credit Facility and access to the credit and capital markets will be sufficient to finance its operations, debt service obligations, capital expenditures, acquisitions, product development and integration expenditures for the foreseeable future.

Recently Issued Accounting Standards

See Part 1, Notes to Condensed Consolidated Financial Statements, Note 4 - Recent Issued Accounting Standards.

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 significant 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 and any such differences could be material to our consolidated financial statements. There have been no changes in our critical accounting policies, which include revenue recognition, inventories, goodwill and other intangibles, pensions benefits, and income taxes, as discussed in our Annual Report on Form 10-K for the year ended December ~~30, 2017~~29, 2018 (our ~~“2017~~“2018 Annual Report on Form 10-K”) other than those described below.

During the six months period ended June ~~30, 2018,~~29, 2019, the company adopted ASC ~~606, "Revenue from Contracts with Customers"~~842, "Leases". See Part 1, Notes to Condensed Consolidated Financial Statements, Note 514 - ~~Revenue Recognition~~Leases for additional information on the required disclosures related to the impact of adopting this guidance.

~~Goodwill and Indefinite-Life Intangibles~~

The company’s business acquisitions result in the recognition of goodwill and other intangible assets, which are a significant portion of the company’s total assets. The company recognizes goodwill and other intangible assets under the guidance of ASC Topic 350-10, “Intangibles - Goodwill and Other.” Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Identifiable intangible assets are recognized separately from goodwill and include trademarks and trade names, technology, customer relationships and other specifically identifiable assets. Trademarks and trade names are deemed to be indefinite-lived. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing.

~~Goodwill Valuations~~

On an annual basis on the first day of the fourth quarter, or more frequently if triggering events occur, the company compares the estimated fair value to the carrying value to determine if a potential goodwill impairment exists. The reporting units at which we test goodwill for impairment are our operating segments. These consist of the Commercial Foodservice Equipment Group, the Food Processing Equipment Group and the Residential Kitchen Equipment Group. If the fair value is less than its carrying value, an impairment loss, if any, is recorded for the difference between the implied fair value and the carrying value of goodwill.

In conducting a qualitative assessment, the company analyzes a variety of events or factors that may influence the fair value of the reporting unit including, but not limited to: the results of prior quantitative assessments performed; changes in the carrying amount of the reporting unit; actual and projected revenue and operating margin; relevant market data for both the company and its peer companies; industry outlooks; macroeconomic conditions; liquidity; changes in key personnel; and the company's competitive position. Significant judgment is used to evaluate the totality of these events and factors to make the determination of whether it is more likely than not that the fair value of the reporting unit or indefinite-life intangible is less than its carrying value.

In performing a quantitative assessment, we estimate each reporting unit's fair value under an income approach using a discounted cash flow model. The income approach uses each reporting unit's projection of estimated operating results and cash flows that are discounted using a market participant discount rate based on a weighted-average cost of capital. The financial projections reflect management's best estimate of economic and market conditions over the projected period including forecasted revenue growth, operating margins, tax rate, capital expenditures, depreciation, amortization and changes in working capital requirements. Other assumptions include discount rate and terminal growth rate. The estimated fair value of each reporting unit is compared to their respective carrying values. Additionally, we validate our estimates of fair value under the income approach by comparing the fair value estimate using a market approach. A market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units. We consider the implied control premium and conclude whether it is reasonable based on other recent market transactions.

We performed a qualitative assessment as of October 1, 2017 over the Commercial Foodservice Equipment Group and the Food Processing Equipment Group reporting units and determined it is more likely than not that the fair value of our reporting units are greater than the carrying amounts.

We performed a quantitative assessment over the Residential Kitchen Equipment Group as of October 1, 2017 due to weaker than expected revenue performance and a corresponding reduction of future revenue expectations. Based on the results of our annual quantitative assessment conducted on October 1, 2017, we concluded that no impairment existed as the fair value of our Residential Kitchen Equipment Group reporting unit substantially exceeded its carrying value.

In estimating the fair value of specific intangible assets, management relies on a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, comparable transactions and other market data. There are inherent uncertainties related to these factors and management’s judgment in applying them in the impairment tests of goodwill and other intangible assets. If actual results are not consistent with management's estimate and assumptions, a material impairment could have an adverse effect on the company's financial condition and results of operations.

~~Indefinite-Life Intangible Valuations~~

In performing a quantitative assessment of indefinite-life intangible assets other than goodwill, primarily trademarks and trade names, we estimate the fair value of these intangible assets using the relief-from-royalty method which requires assumptions related to projected revenues from our long-range plans; assumed royalty rates that could be payable if we did not own the trademark; and a discount rate using a market based weighted-average cost of capital. If the estimated fair value of the indefinite-life intangible asset is less than its carrying value, we would recognize an impairment loss.

Based on the quantitative assessment performed as of October 1, 2017, an impairment of our Viking tradename was determined to exist, primarily the result of weaker than expected revenue performance in the current year and a corresponding reduction of future revenue expectations. The impairment resulted from the decline in revenues attributable, in part, to the product recall announced in 2015 primarily related to products manufactured prior to the acquisition of Viking. The fair value of the Viking tradename was estimated to be $93.0 million as compared to the carrying value of $151.0 million and resulted in a $58.0 million indefinite-lived intangible asset impairment charge.

In performing the quantitative analysis on these trademark assets, significant assumptions used in our relief-from-royalty model included revenue growth rates, assumed royalty rates and the discount rate, which are discussed further below.

Revenue growth rates relate to projected revenues from our long-range plans and vary from brand to brand. Adverse changes in the operating environment or our inability to grow revenues at the forecasted rates may result in a material impairment charge. We performed a sensitivity analysis on the estimated fair values, noting a 1% reduction of forecasted revenues to the Viking trade name projections would result in an impairment charge of approximately $6 million.

In determining royalty rates for the valuation of our trademarks, we considered factors that affect the assumed royalty rates that would hypothetically be paid for the use of the trademarks. The most significant factors in determining the assumed royalty rates include the overall role and importance of the trademarks in the particular industry, the profitability of the products utilizing the trademarks, and the position of the trademarked products in the given market segment. Based on this analysis, we determined a royalty rate of 7% for our Viking trade name. We performed a sensitivity analysis on the estimated fair values for Viking, noting a 50 basis point reduction to the royalty rates would result in an impairment charge of approximately $7 million.

In developing discount rates for the valuation of our trademarks, we used the market based weighted average cost of capital, adjusted for higher relative level of risks associated with doing business in other countries, as applicable, as well as the higher relative levels of risks associated with intangible assets. Based on this analysis, we determined the discount rate to be 11.0% for Viking. We performed a sensitivity analysis on the estimated fair values for Viking, noting a 100 basis point increase to the discount rate would result in an impairment charge of approximately $10 million.

We performed a qualitative assessment as of October 1, 2017 over the other trademarks and trade names and determined it is more likely than not that the fair value of our other indefinite-life intangible assets are greater than the carrying amounts.

If actual results are not consistent with management's estimate and assumptions, a material impairment charge of our trademarks and trade names could occur, which could have an adverse effect on the company's financial condition and results of operations.

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:


Twelve Month Period Ending	Variable Rate Debt
Twelve Month Period coinciding with the end of our Fiscal Second Quarter			Variable Rate Debt

2019	$	6,297
2020	611		$	3,443
2021	567		336
2022	2,058,855		1,991,303
2023 and thereafter	295
2023			202
2024 and thereafter			139
	$	2,066,625	$	1,995,423

On July 28, 2016, the company entered into an amended and restated five-year $2.5 billion multi-currency senior secured revolving credit agreement (the "Credit Facility")~~, with~~. On December 18, 2018, the ~~potential under certain circumstances~~company entered into an amendment to ~~increase the amount of~~ the Credit Facility, increasing the revolving commitments under the Credit Facility by $500.0 million to a total of $3.0 billion. As of June ~~30, 2018,~~29, 2019, the company had ~~$2.1~~$2.0 billion of borrowings outstanding under the Credit Facility, including ~~$2.0~~$1.9 billion of borrowings in U.S. Dollars ~~$87.6~~and $64.5 million of borrowings denominated in ~~Euro and $19.7 million of borrowings denominated in British Pounds.~~Euro. The company also had ~~$9.7~~$11.0 million in outstanding letters of credit as of June ~~30, 2018,~~29, 2019, which reduces the borrowing availability under the Credit Facility. Remaining borrowing availability under this facility was ~~$0.4~~$1.0 billion at June ~~30, 2018.~~29, 2019.

At June ~~30, 2018,~~29, 2019, borrowings under the Credit Facility accrued interest at a rate of ~~1.25%~~1.625% above LIBOR per annum or ~~0.25%~~0.625% above the highest of the prime rate, the federal funds rate plus 0.50% and one month LIBOR plus 1.00%. The average interest rate per annum on the debt under the Credit Facility was equal to ~~3.35% for~~3.93% at the end of the period. The interest rates on borrowings under the Credit Facility may be adjusted quarterly based on the company’s Funded Debt less Unrestricted Cash to Pro Forma EBITDA (the “Leverage Ratio”) on a rolling four-quarter basis. Additionally, a commitment fee based upon the Leverage Ratio is charged on the unused portion of the commitments under the Credit Facility. This variable commitment fee was equal to ~~0.20%~~0.25% per annum as of June ~~30, 2018.~~29, 2019.

The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the revolving credit line. At June ~~30, 2018,~~29, 2019, the company had outstanding floating-to-fixed interest rate swaps totaling ~~$499.0~~$51.0 million notional amount carrying an average interest rate of ~~1.66%~~1.27% maturing in less than 12 months and $948.0 million notional amount carrying an average interest rate of 2.22% that mature in more than 12 months but less than 8472 months.

The Credit Facility matures on July 28, 2021, and accordingly has been classified as a long-term liability on the condensed consolidated balance sheet.

Financing Derivative Instruments

The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. The agreements swap one-month LIBOR for fixed rates. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. As of June ~~30, 2018,~~29, 2019, the fair value of these instruments was ~~an asset~~a liability of ~~$20.9~~$22.2 million. The change in fair value of these swap agreements in the first six months of ~~2018~~2019 was a ~~gain~~loss of ~~$9.4~~$23.3 million, net of taxes. The potential net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted interest rates would not have a material impact on the company's financial position, results of operations and cash flows.

Foreign Exchange Derivative Financial Instruments

The company uses foreign currency forward, foreign exchange swaps and option purchase and sales contracts 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. The potential net loss on fair value for such instruments from a hypothetical 10% adverse change in quoted foreign exchange rates would not have a material impact on the company's financial position, results of operations and cash flows. The fair value of the forward and option contracts was a ~~lossof $1.2~~loss of $0.6 million at the end of the second quarter of ~~2018.~~2019.

Item 4. Controls and Procedures

The company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of June ~~30, 2018,~~29, 2019, 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 company's disclosure controls and procedures. Based on the foregoing, the company's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of this period.

During the quarter ended June ~~30, 2018,~~29, 2019, 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.

PART II. OTHER INFORMATION

The company was not required to report the information pursuant to Items 1 through 6 of Part II of Form 10-Q for the six months ended June ~~30, 2018,~~29, 2019, except as follows:

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

c) 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 Program (1)
~~April 1~~March 31 to April ~~28, 2018~~27, 2019	—	$	—	—	2,373,800
April 2928 to May ~~26, 2018~~25, 2019	—	—		—	2,373,800
May 2726 to June ~~30, 2018~~29, 2019	—	—		—	2,373,800
Quarter ended June ~~30, 2018~~29, 2019	—	$	—	—	2,373,800

(1) On November 7, 2017, the company's Board of Directors resolved to terminate the company's existing share repurchase program, effective as of such date, which was originally adopted in 1998, and approved a new stock repurchase program. This program authorizes the company to repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock. As of June ~~30, 2018,~~29, 2019, the total number of shares authorized for repurchase under the program is 2,500,000. As of June ~~30, 2018,~~29, 2019, 126,200 shares had been purchased under the ~~1998~~2017 stock repurchase program.

Item 6. Exhibits



Exhibits – The following exhibits are filed herewith:

Exhibit 10.1* –	Form of Stock Award Agreement for The Middleby Corporation 2011 Long-Term Incentive Plan, incorporated by reference to the company's Form 8-K Exhibit 10.1 filed on April 16, 2019.

Exhibit 10.2* –	Form of Restricted Stock Award Agreement for The Middleby Corporation 2011 Long-Term Incentive Plan, incorporated by reference to the company's Form 8-K Exhibit 10.2 filed on April 16, 2019.

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).

Exhibit 101 –	Financial statements on Form 10-Q for the quarter ended June ~~30, 2018,~~29, 2019, filed on August ~~9, 2018,~~8, 2019, formatted in Inline Extensive Business Reporting Language ~~(XBRL)~~(iXBRL); (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of earnings, (iii) condensed statements of cash flows, (iv) notes to the condensed consolidated financial statements.

Exhibit 104 –	Cover Page Interactive Data File (formatted as Inline Extensive Business Reporting Language (iXBRL) and contained in Exhibit 101).

* Designates management contract or compensation plan.

SIGNATURE

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



		THE MIDDLEBY CORPORATION
		(Registrant)

Date:	August ~~9, 2018~~8, 2019	By:	/s/ ~~Timothy J. FitzGerald~~Bryan E. Mittelman
			~~Timothy J. FitzGerald~~
			~~Vice President,~~Bryan E. Mittelman
			Chief Financial Officer

5047



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)



Large accelerated filerx	☒	Accelerated filero	☐	Non-accelerated filero	☐
Smaller reporting companyo	☐	Emerging growth companyo	☐



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock	MIDD	Nasdaq Global Market


ASSETS	Jun 30, 2018			Dec 30, 2017			Jun 29, 2019			Dec 29, 2018
Current assets:
Cash and cash equivalents	$	92,284		$	89,654		$	81,687		$	71,701
Accounts receivable, net of reserve for doubtful accounts of $13,472 and $13,182	400,266			328,421
Accounts receivable, net of reserve for doubtful accounts of $15,055 and $13,608							411,303			398,660
Inventories, net	493,667			424,639			611,859			521,810
Prepaid expenses and other	48,890			55,427			62,941			50,940
Prepaid taxes	45,350			33,748			17,133			18,483
Total current assets	1,080,457			931,889			1,184,923			1,061,594
Property, plant and equipment, net of accumulated depreciation of $156,504 and $142,278	317,150			281,915
Property, plant and equipment, net of accumulated depreciation of $181,827 and $167,737							336,929			314,569
Goodwill	1,824,755			1,264,810			1,781,772			1,743,175
Other intangibles, net of amortization of $229,019 and $207,334	1,292,771			780,426
Other intangibles, net of amortization of $299,857 and $268,414							1,442,755			1,361,024
Long-term deferred tax assets	40,807			44,565			28,370			32,188
Other assets	46,263			36,108			111,920			37,231
Total assets	$	4,602,203		$	3,339,713		$	4,886,669		$	4,549,781

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	6,297		$	5,149		$	3,443		$	3,207
Accounts payable	188,256			146,333			193,124			188,299
Accrued expenses	361,501			322,171			368,730			367,446
Total current liabilities	556,054			473,653			565,297			558,952
Long-term debt	2,060,328			1,023,732			1,991,980			1,888,898
Long-term deferred tax liability	102,636			87,815			128,342			113,896
Accrued pension benefits	309,573			334,511			239,785			253,119
Other non-current liabilities	72,456			58,854			163,014			69,713
Stockholders' equity:
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued	—			—			—			—
Common stock, $0.01 par value; 62,612,865 and 62,619,865 shares issued in 2018 and 2017, respectively	145			145
Common stock, $0.01 par value; 62,611,440 and 62,592,707 shares issued in 2019 and 2018, respectively							145			145
Paid-in capital	376,740			374,922			380,603			377,419
Treasury stock, at cost; 6,889,241 and 6,889,241 shares in 2018 and 2017, respectively	(445,118		)	(445,118		)
Treasury stock, at cost; 6,939,684 and 6,889,241 shares in 2019 and 2018							(451,204		)	(445,118		)
Retained earnings	1,841,489			1,697,618			2,170,445			2,009,233
Accumulated other comprehensive loss	(272,100		)	(266,419		)	(301,738		)	(276,476		)
Total stockholders' equity	1,501,156			1,361,148			1,798,251			1,665,203
Total liabilities and stockholders' equity	$	4,602,203		$	3,339,713		$	4,886,669		$	4,549,781



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



Registrant's telephone number, including area code:	(847)	741-3300



DESCRIPTION		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	CONDENSED CONSOLIDATED BALANCE SHEETS as of JUNE ~~30, 2018~~29, 2019 and DECEMBER ~~30, 2017~~29, 2018	1

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the three and six months ended JUNE 29, 2019 and JUNE 30, 2018 ~~and JULY 1, 2017~~	2

	CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS' EQUITY for the three and six months ended JUNE 29, 2019 and JUNE 30, 2018 ~~and JULY 1, 2017~~	3

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the six months ended JUNE 29, 2019 and JUNE 30, 2018	5

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	46

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4542

Item 4.	Controls and Procedures	4744

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4845

Item 6.	Exhibits	4946



	Common Stock		Paid-in Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income/(loss)			Total Stockholders' Equity
Balance, March 30, 2019	$	145	$	378,488	$	(450,386	)	$	2,078,235		$	(280,423	)	$	1,726,059
Net earnings	—		—		—			92,210			—			92,210
Currency translation adjustments	—		—		—			—			(12,445		)	(12,445		)
Change in unrecognized pension benefit costs, net of tax of $1,081	—		—		—			—			5,254			5,254
Unrealized loss on interest rate swap, net of tax of $(4,846)	—		—		—			—			(14,124		)	(14,124		)
Stock compensation	—		265		—			—			—			265
Stock issuance	—		1,850		—			—			—			1,850
Purchase of treasury stock	—		—		(818		)	—			—			(818		)
Balance, June 29, 2019	$	145	$	380,603	$	(451,204	)	$	2,170,445		$	(301,738	)	$	1,798,251

Balance, December 29, 2018	$	145	$	377,419	$	(445,118	)	$	2,009,233		$	(276,476	)	$	1,665,203
Net earnings	—		—		—			161,223			—			161,223
Adoption of ASU 2017-12 (1)	—		—		—			(11		)	11			—
Currency translation adjustments	—		—		—			—			(1,762		)	(1,762		)
Change in unrecognized pension benefit costs, net of tax of $(71)	—		—		—			—			(9		)	(9		)
Unrealized loss on interest rate swap, net of tax of $(8,023)	—		—		—			—			(23,502		)	(23,502		)
Stock compensation	—		1,334		—			—			—			1,334
Stock issuance	—		1,850		—			—			—			1,850
Purchase of treasury stock	—		—		(6,086		)	—			—			(6,086		)
Balance, June 29, 2019	$	145	$	380,603	$	(451,204	)	$	2,170,445		$	(301,738	)	$	1,798,251



	(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			997			8,286
Other intangibles	4,900			1,840			6,740
Current liabilities	(2,254		)	(665		)	(2,919		)
Long term deferred tax liability	(1,840		)	224			(1,616		)
Other non-current liabilities	—			(2,836		)	(2,836		)

Net assets acquired and liabilities assumed	$	17,689		$	(349	)	$	17,340



	(as initially reported) June 30, 2017			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			(695		)	19,602
Other intangibles	8,700			4,350			13,050
Current liabilities	(1,532		)	(581		)	(2,113		)
Long term deferred tax liability	(3,168		)	(443		)	(3,611		)
Other non-current liabilities	—			(1,833		)	(1,833		)

Net assets acquired and liabilities assumed	$	31,129		$	(728	)	$	30,401



	(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			(8,083		)	59,093
Other intangibles	43,444			14,086			57,530
Current liabilities	(5,994		)	(398		)	(6,392		)
Long term deferred tax liability	(16,456		)	(4,971		)	(21,427		)
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			(27		)	420
Goodwill	30,072			470			30,542
Other intangibles	11,491			—			11,491
Current liabilities	(7,987		)	(28		)	(8,015		)
Long term deferred tax liability	(3,305		)	30			(3,275		)

Consideration paid at closing	$	40,912		$	334		$	41,246

Contingent consideration	751			—			751

Net assets acquired and liabilities assumed	$	41,663		$	334		$	41,997



	Six Months Ended
	June 30, 2018		July 1, 2017
Net sales	$	1,415,669	$	1,432,093
Net earnings	142,566		129,622

Net earnings per share:
Basic	$	2.57	$	2.27
Diluted	2.57		2.27



	Balance at December 30, 2017 (as reported)		Adjustments due to ASC 606			Balance at December 30, 2017 (as adjusted)
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 June 30, 2018
	As Reported		Balances without ASC 606		Effect of Change
Net sales	$	668,128	$	667,697	$	431
Cost of sales	417,369		417,452		(83		)
Provision for income taxes	26,576		26,482		94
Net earnings	$	83,988	$	83,567	$	421

Basic earnings per share	$	1.51	$	1.50
Diluted earnings per share	$	1.51	$	1.50



	Jun 30, 2018		At Adoption
Contract assets	$	7,846	$	16,753
Contract liabilities	69,746		47,647



	June 30, 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	8.2	$	596,526	$	(190,030	)	5.2	$	330,496	$	(171,005	)
Backlog	0.1	20,010		(19,739		)	0.8	19,689		(18,081		)
Developed technology	6.3	40,559		(19,250		)	4.2	22,485		(18,248		)
		$	657,095	$	(229,019	)		$	372,670	$	(207,334	)
Indefinite-lived assets:
Trademarks and tradenames		$	864,695					$	615,090



Twelve Month Period Ending in	Amortization Expense

2019	$	63,180
2020	58,686
2021	56,172
2022	53,462
2023	46,392
Thereafter	150,184
	$	428,076



	Severance/Benefits			Facilities/Operations			Other			Total
Balance as of December 30, 2017	$	3,698		$	1,467		$	157		$	5,322
Expenses (income)	3,721			(47		)	35			3,709
Exchange	(30		)	(11		)	27			(14		)
Payments/Utilization	(4,256		)	(337		)	(32		)	(4,625		)
Balance as of June 30, 2018	$	3,133		$	1,072		$	187		$	4,392