UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~October~~April 2, ~~2021~~2022


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

Commission File No. 1-9973

THE MIDDLEBY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			36-3352497
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


1400 Toastmaster Drive,	Elgin,	Illinois	60120
(Address of principal executive offices)			(Zip Code)


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

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

Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “accelerated filer," "large accelerated filer," "smaller reporting company," and "emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


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

As of ~~November 5, 2021,~~May 6, 2022, there were ~~55,626,327~~54,389,831 shares of the registrant's common stock outstanding.

THE MIDDLEBY CORPORATION

QUARTER ENDED ~~OCTOBER~~APRIL 2, ~~2021~~2022

INDEX


DESCRIPTION		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)

	CONDENSED CONSOLIDATED BALANCE SHEETS as of ~~OCTOBER~~APRIL 2, ~~2021~~2022 and JANUARY ~~2, 2021~~1, 2022	1

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the three ~~and nine~~ months ended ~~OCTOBER~~APRIL 2, ~~2021~~2022 and ~~SEPTEMBER 26, 2020~~APRIL 3, 2021	2

	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY for the three ~~and nine~~ months ended ~~OCTOBER~~APRIL 2, ~~2021~~2022 and ~~SEPTEMBER 26, 2020~~APRIL 3, 2021	3

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the ~~nine~~three months ended ~~OCTOBER~~APRIL 2, ~~2021~~2022 and ~~SEPTEMBER 26, 2020~~APRIL 3, 2021	54

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	65

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3125

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3931

Item 4.	Controls and Procedures	4032

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4133

Item 6.	Exhibits	4234

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

(Unaudited)


ASSETS	ASSETS	Oct 2, 2021		Jan 2, 2021		ASSETS	Apr 2, 2022		Jan 1, 2022
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	251,476	$	268,103	Cash and cash equivalents	$	146,676	$	180,362
Accounts receivable, net of reserve for doubtful accounts of $19,440 and $19,225		466,487		363,361
Accounts receivable, net of reserve for doubtful accounts of $17,436 and $18,770						Accounts receivable, net of reserve for doubtful accounts of $17,436 and $18,770	629,855		577,142
Inventories, net	Inventories, net	686,043		540,198		Inventories, net	924,763		837,418
Prepaid expenses and other	Prepaid expenses and other	82,582		81,049		Prepaid expenses and other	108,721		92,269
Prepaid taxes	Prepaid taxes	21,149		17,782		Prepaid taxes	13,805		19,894
Total current assets	Total current assets	1,507,737		1,270,493		Total current assets	1,823,820		1,707,085
Property, plant and equipment, net of accumulated depreciation of $256,701 and $229,871		370,266		344,482
Property, plant and equipment, net of accumulated depreciation of $272,725 and $266,203						Property, plant and equipment, net of accumulated depreciation of $272,725 and $266,203	382,574		380,980
Goodwill	Goodwill	2,106,182		1,934,261		Goodwill	2,236,441		2,243,469
Other intangibles, net of amortization of $458,451 and $403,347		1,574,601		1,450,381
Other intangibles, net of amortization of $475,930 and $442,208						Other intangibles, net of amortization of $475,930 and $442,208	1,835,157		1,875,377
Long-term deferred tax assets	Long-term deferred tax assets	83,589		76,052		Long-term deferred tax assets	30,621		33,194
Other assets	Other assets	130,476		126,805		Other assets	165,552		143,493
Total assets	Total assets	$	5,772,851	$	5,202,474	Total assets	$	6,474,165	$	6,383,598

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of long-term debt	Current maturities of long-term debt	$	21,553	$	22,944	Current maturities of long-term debt	$	27,693	$	27,293
Accounts payable	Accounts payable	254,287		182,773		Accounts payable	305,344		304,740
Accrued expenses	Accrued expenses	546,996		494,541		Accrued expenses	585,364		582,855
Total current liabilities	Total current liabilities	822,836		700,258		Total current liabilities	918,401		914,888
Long-term debt	Long-term debt	1,866,022		1,706,652		Long-term debt	2,570,132		2,387,001
Long-term deferred tax liability	Long-term deferred tax liability	165,100		147,224		Long-term deferred tax liability	200,500		186,935
Accrued pension benefits	Accrued pension benefits	432,909		469,500		Accrued pension benefits	202,945		219,680
Other non-current liabilities	Other non-current liabilities	187,014		202,191		Other non-current liabilities	154,220		180,818
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued	Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued	—		—		Preferred stock, $0.01 par value; nonvoting; 2,000,000 shares authorized; none issued	—		—
Common stock, $0.01 par value; 63,654,275 and 63,651,773 shares issued in 2021 and 2020, respectively		147		147
Common stock, $0.01 par value; 63,509,015 and 63,666,020 shares issued in 2022 and 2021, respectively						Common stock, $0.01 par value; 63,509,015 and 63,666,020 shares issued in 2022 and 2021, respectively	147		147
Paid-in capital	Paid-in capital	381,014		433,308		Paid-in capital	363,741		357,309
Treasury stock, at cost; 8,027,948 and 8,013,296 shares in 2021 and 2020		(539,611)		(537,134)
Treasury stock, at cost; 9,117,274 and 8,170,276 shares in 2022 and 2021						Treasury stock, at cost; 9,117,274 and 8,170,276 shares in 2022 and 2021	(736,412)		(566,399)
Retained earnings	Retained earnings	2,959,625		2,568,756		Retained earnings	3,148,058		3,062,303
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(502,205)		(488,428)		Accumulated other comprehensive loss	(347,567)		(359,084)
Total stockholders' equity	Total stockholders' equity	2,298,970		1,976,649		Total stockholders' equity	2,427,967		2,494,276
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	5,772,851	$	5,202,474	Total liabilities and stockholders' equity	$	6,474,165	$	6,383,598

See accompanying notes

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands, Except Per Share Data)

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020				Apr 2, 2022		Apr 3, 2021
Net sales	Net sales	$	817,545	$	634,525	$	2,384,376	$	1,783,961	Net sales		$	994,676	$	758,058
Cost of sales	Cost of sales	517,918		411,776		1,505,149		1,157,896		Cost of sales		664,166		482,184
Gross profit	Gross profit	299,627		222,749		879,227		626,065		Gross profit		330,510		275,874
Selling, general and administrative expenses	Selling, general and administrative expenses	175,354		128,814		496,022		384,580		Selling, general and administrative expenses		206,071		154,957
Restructuring expenses	Restructuring expenses	791		7,263		2,596		10,281		Restructuring expenses		1,875		794
Merger termination fee		(110,000)		—		(110,000)		—
Loss (gain) on sale of plant		—		—		(763)		—

Gain on sale of plant										Gain on sale of plant		—		(1,050)

Income from operations	Income from operations	233,482		86,672		491,372		231,204		Income from operations		122,564		121,173
Interest expense and deferred financing amortization, net	Interest expense and deferred financing amortization, net	13,192		18,418		43,481		55,881		Interest expense and deferred financing amortization, net		17,654		16,067
Net periodic pension benefit (other than service costs)	Net periodic pension benefit (other than service costs)	(11,363)		(10,149)		(34,268)		(30,004)		Net periodic pension benefit (other than service costs)		(11,516)		(11,373)
Other expense (income), net	Other expense (income), net	794		(294)		(1,366)		3,414		Other expense (income), net		4,061		(1,691)
Earnings before income taxes	Earnings before income taxes	230,859		78,697		483,525		201,913		Earnings before income taxes		112,365		118,170
Provision for income taxes	Provision for income taxes	54,893		18,181		97,711		46,456		Provision for income taxes		26,610		28,907
Net earnings	Net earnings	$	175,966	$	60,516	$	385,814	$	155,457	Net earnings		$	85,755	$	89,263

Net earnings per share:	Net earnings per share:									Net earnings per share:
Basic	Basic	$	3.19	$	1.10	$	6.99	$	2.82	Basic		$	1.57	$	1.62
Diluted	Diluted	$	3.09	$	1.10	$	6.83	$	2.82	Diluted		$	1.52	$	1.59
Weighted average number of shares	Weighted average number of shares									Weighted average number of shares
Basic	Basic	55,232		54,982		55,225		55,104		Basic		54,669		55,213
Dilutive common stock equivalents	Dilutive common stock equivalents	1,707		118		1,301		48		Dilutive common stock equivalents		1,694		753
Diluted	Diluted	56,939		55,100		56,526		55,152		Diluted		56,363		55,966
Comprehensive income	Comprehensive income	$	163,011	$	82,887	$	372,037	$	133,201	Comprehensive income		$	97,272	$	87,091

See accompanying notes

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(amounts in thousands)

(Unaudited)

Common
Stock Paid-in
Capital Treasury
Stock Retained
Earnings Accumulated
Other
Comprehensive
Income/(loss) Total
Stockholders'
Equity
Balance, July 3, 2021 $ 147 $ 370,816 $ (539,496) $ 2,783,659 $ (489,250) $ 2,125,876
Net earnings — — — 175,966 — 175,966
Currency translation adjustments — — — — (21,881) (21,881)
Change in unrecognized pension benefit costs, net of tax of $1,296 — — — — 5,870 5,870
Unrealized gain on interest rate swap, net of tax of $1,065 — — — — 3,056 3,056
Stock compensation — 10,198 — — — 10,198
Purchase of treasury stock — — (115) — — (115)
Balance, October 2, 2021 $ 147 $ 381,014 $ (539,611) $ 2,959,625 $ (502,205) $ 2,298,970
Balance, January 2, 2021 $ 147 $ 433,308 $ (537,134) $ 2,568,756 $ (488,428) $ 1,976,649
Net earnings — — — 385,814 — 385,814
Adoption of ASU 2020-06 (1)
— (79,430) — 5,055 — (74,375)
Currency translation adjustments — — — — (33,000) (33,000)
Change in unrecognized pension benefit costs, net of tax of $673 — — — — 3,052 3,052
Unrealized gain on interest rate swap, net of tax of $5,637 — — — — 16,171 16,171
Stock compensation — 27,136 — — — 27,136
Purchase of treasury stock — — (2,477) — — (2,477)
Balance, October 2, 2021 $ 147 $ 381,014 $ (539,611) $ 2,959,625 $ (502,205) $ 2,298,970


	Common Stock		Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Total Stockholders' Equity










Balance, January 1, 2022	$	147	$	357,309	$	(566,399)	$	3,062,303	$	(359,084)	$	2,494,276
Net earnings	—		—		—		85,755		—		85,755
Currency translation adjustments	—		—		—		—		(27,191)		(27,191)
Change in unrecognized pension benefit costs, net of tax of $987	—		—		—		—		6,244		6,244
Unrealized gain on interest rate swap, net of tax of $10,892	—		—		—		—		31,116		31,116
Unrealized gain on certain investments, net of tax of $449	—		—		—		—		1,348		1,348
Stock compensation	—		13,723		—		—		—		13,723

Purchase of treasury stock	—		—		(170,013)		—		—		(170,013)
Purchase of capped calls, net of tax of $(2,364)	—		(7,291)		—		—		—		(7,291)
Balance, April 2, 2022	$	147	$	363,741	$	(736,412)	$	3,148,058	$	(347,567)	$	2,427,967


	Common Stock		Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income/(loss)		Total Stockholders' Equity












Balance, January 2, 2021	$	147	$	433,308	$	(537,134)	$	2,568,756	$	(488,428)	$	1,976,649
Net earnings	—		—		—		89,263		—		89,263
Adoption of 2020-06 (1)	—		(79,430)		—		5,055		—		(74,375)
Currency translation adjustments	—		—		—		—		(10,614)		(10,614)
Change in unrecognized pension benefit costs, net of tax of $(877)	—		—		—		—		(3,970)		(3,970)
Unrealized gain on interest rate swap, net of tax of $4,327	—		—		—		—		12,412		12,412
Stock compensation	—		7,609		—		—		—		7,609

Purchase of treasury stock	—		—		(1,762)		—		—		(1,762)

Balance, April 3, 2021	$	147	$	361,487	$	(538,896)	$	2,663,074	$	(490,600)	$	1,995,212

(1) As of January 3, 2021 the company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity using the modified retrospective method. The adoption of this guidance resulted in a $79.4 million reduction to paid-in capital, net of tax of $25.5 million, and the recognition of $5.1 million as an adjustment to the opening balance of retained earnings, net of tax of $1.6 million.

~~THE MIDDLEBY CORPORATION~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~(amounts in thousands)~~

(~~Unaudited~~)

Common
Stock Paid-in
Capital Treasury
Stock Retained
Earnings Accumulated
Other
Comprehensive
Income/(loss) Total
Stockholders'
Equity
Balance, June 27, 2020 $ 145 $ 406,640 $ (528,111) $ 2,456,403 $ (395,560) $ 1,939,517
Net earnings — — — 60,516 — 60,516
Currency translation adjustments — — — — 25,851 25,851
Change in unrecognized pension benefit costs, net of tax of $(1,283) — — — — (6,133) (6,133)
Unrealized gain on interest rate swap, net of tax of $960 — — — — 2,653 2,653
Stock compensation — 5,300 — — — 5,300
Stock issuance 1 3,705 — — — 3,706
Purchase of treasury stock — — (395) — — (395)
Equity component of issuance of convertible notes — 307 — — — 307
Balance, September 26, 2020 $ 146 $ 415,952 $ (528,506) $ 2,516,919 $ (373,189) $ 2,031,322
Balance, December 28, 2019 $ 145 $ 387,402 $ (451,262) $ 2,361,462 $ (350,933) $ 1,946,814
Net earnings — — — 155,457 — 155,457
Currency translation adjustments — — — — (3,213) (3,213)
Change in unrecognized pension benefit costs, net of tax of $1,308 — — — — 6,184 6,184
Unrealized (loss) on interest rate swap, net of tax of $(9,303) — — — — (25,227) (25,227)
Stock compensation — 14,422 — — — 14,422
Stock issuance 1 13,821 — — — 13,822
Purchase of treasury stock — — (77,244) — — (77,244)
Equity component of issuance of convertible notes — 307 — — — 307
Balance, September 26, 2020 $ 146 $ 415,952 $ (528,506) $ 2,516,919 $ (373,189) $ 2,031,322

See accompanying notes

THE MIDDLEBY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


		Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020			Apr 2, 2022		Apr 3, 2021
Cash flows from operating activities--	Cash flows from operating activities--					Cash flows from operating activities--
Net earnings	Net earnings	$	385,814	$	155,457	Net earnings	$	85,755	$	89,263
Adjustments to reconcile net earnings to net cash provided by operating activities--	Adjustments to reconcile net earnings to net cash provided by operating activities--					Adjustments to reconcile net earnings to net cash provided by operating activities--
Depreciation and amortization	Depreciation and amortization	90,672		81,594		Depreciation and amortization	46,742		30,432
Amortization of discount and issuance costs on convertible notes		—		2,130
Non-cash share-based compensation	Non-cash share-based compensation	27,136		14,422		Non-cash share-based compensation	13,723		7,609
Deferred income taxes	Deferred income taxes	(5,704)		11,696		Deferred income taxes	8,586		1,913
Net periodic pension benefit (other than service costs)	Net periodic pension benefit (other than service costs)	(34,268)		(30,004)		Net periodic pension benefit (other than service costs)	(11,516)		(11,373)
Gain on sale of plant	Gain on sale of plant	(763)		—		Gain on sale of plant	—		(1,050)

Other non-cash items						Other non-cash items	(6,173)		—
Changes in assets and liabilities, net of acquisitions	Changes in assets and liabilities, net of acquisitions					Changes in assets and liabilities, net of acquisitions
Accounts receivable, net	Accounts receivable, net	(97,355)		69,176		Accounts receivable, net	(55,305)		(66,666)
Inventories, net	Inventories, net	(134,523)		43,188		Inventories, net	(88,474)		(33,266)
Prepaid expenses and other assets	Prepaid expenses and other assets	11,132		16,576		Prepaid expenses and other assets	(3,926)		27,407
Accounts payable	Accounts payable	61,286		(28,171)		Accounts payable	1,235		31,662
Accrued expenses and other liabilities	Accrued expenses and other liabilities	42,613		(19,882)		Accrued expenses and other liabilities	(5,991)		(16,236)
Net cash provided by operating activities		346,040		316,182
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(15,344)		59,695
Cash flows from investing activities--	Cash flows from investing activities--					Cash flows from investing activities--
Net additions to property, plant and equipment	Net additions to property, plant and equipment	(29,732)		(29,776)		Net additions to property, plant and equipment	(14,497)		(8,725)
Proceeds on sale of property, plant and equipment	Proceeds on sale of property, plant and equipment	6,062		9,381		Proceeds on sale of property, plant and equipment	—		3,354

Purchase of intangible assets						Purchase of intangible assets	(240)		—
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(389,009)		(33,144)		Acquisitions, net of cash acquired	(9,389)		(1,667)
Net cash used in investing activities	Net cash used in investing activities	(412,679)		(53,539)		Net cash used in investing activities	(24,126)		(7,038)
Cash flows from financing activities--	Cash flows from financing activities--					Cash flows from financing activities--
Proceeds under Credit Facility	Proceeds under Credit Facility	485,976		2,547,305		Proceeds under Credit Facility	365,000		18,995
Repayments under Credit Facility	Repayments under Credit Facility	(421,550)		(3,217,507)		Repayments under Credit Facility	(177,250)		(23,683)
Proceeds from issuance of convertible notes, net of issuance costs		—		729,933

Premiums paid for capped call	Premiums paid for capped call	—		(104,650)		Premiums paid for capped call	(9,655)		—
Net (repayments) proceeds under international credit facilities		(1,473)		2,033
Net repayments under other debt arrangement		(254)		(34)
Payments of deferred purchase price		(5,861)		(3,700)
Net proceeds (repayments) under international credit facilities						Net proceeds (repayments) under international credit facilities	756		(1,757)

Repurchase of treasury stock	Repurchase of treasury stock	(2,477)		(77,244)		Repurchase of treasury stock	(170,013)		(1,762)
Debt issuance costs on Credit Facility		—		(10,974)

Other, net						Other, net	(117)		(78)

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	54,361		(134,838)		Net cash provided by (used in) financing activities	8,721		(8,285)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(4,349)		(1,995)		Effect of exchange rates on cash and cash equivalents	(2,937)		(3,144)
Changes in cash and cash equivalents--	Changes in cash and cash equivalents--					Changes in cash and cash equivalents--
Net (decrease) increase in cash and cash equivalents	Net (decrease) increase in cash and cash equivalents	(16,627)		125,810		Net (decrease) increase in cash and cash equivalents	(33,686)		41,228
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	268,103		94,500		Cash and cash equivalents at beginning of year	180,362		268,103
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	251,476	$	220,310	Cash and cash equivalents at end of period	$	146,676	$	309,331

Non-cash investing and financing activities:
Stock issuance related to acquisition		$	—	$	3,706

See accompanying notes

THE MIDDLEBY CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~OCTOBER~~APRIL 2, ~~2021~~2022

(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 ~~2020~~2021 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year ~~2021.~~2022.

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 ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the results of operations for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, cash flows for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 and statement of stockholders' equity for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020.~~April 3, 2021.

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 ~~$10.2~~$13.7 million and ~~$5.3~~$7.6 million for the three months period ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020, respectively. Non-cash share-based compensation expense was $27.1 million and $14.4 million for the nine months period ended October 2,~~April 3, 2021, ~~and September 26, 2020,~~ respectively.

c)Income Taxes

A tax provision of ~~$54.9~~$26.6 million, at an effective rate of ~~23.8%~~23.7%, was recorded during the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to a $18.2 million tax provision at an effective rate of 23.1% in the prior year period. A tax provision of $97.7 million, at an effective rate of 20.2%, was recorded during the nine months period ended October 2, 2021, as compared to a $46.5$28.9 million tax provision at a ~~23.0%~~24.5% effective rate in the prior year period. The effective tax rate for the three months period ended April 2, 2022 is lower than the comparable year rate primarily due to excess tax benefits from share-based compensation award vesting.

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 the company's own assumptions.

The company’s financial assets and 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			Fair Value Level 1		Fair Value Level 2		Fair Value Level 3		Total
As of October 2, 2021
As of April 2, 2022										As of April 2, 2022
Financial Assets:	Financial Assets:									Financial Assets:
Interest rate swaps	Interest rate swaps	$	—	$	1,465	$	—	$	1,465	Interest rate swaps	$	—	$	26,124	$	—	$	26,124

Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Interest rate swaps	Interest rate swaps	$	—	$	30,750	$	—	$	30,750	Interest rate swaps	$	—	$	2,106	$	—	$	2,106
Contingent consideration	Contingent consideration	$	—	$	—	$	25,251	$	25,251	Contingent consideration	$	—	$	—	$	35,108	$	35,108
Foreign exchange derivative contracts	Foreign exchange derivative contracts	$	—	$	3,400	$	—	$	3,400	Foreign exchange derivative contracts	$	—	$	3,033	$	—	$	3,033

As of January 2, 2021

As of January 1, 2022										As of January 1, 2022
Financial Assets:										Financial Assets:
Interest rate swaps										Interest rate swaps	$	—	$	3,645	$	—	$	3,645
Foreign exchange derivative contracts										Foreign exchange derivative contracts	$	—	$	1,095	$	—	$	1,095

Financial Liabilities:	Financial Liabilities:									Financial Liabilities:
Interest rate swaps	Interest rate swaps	$	—	$	51,093	$	—	$	51,093	Interest rate swaps	$	—	$	21,635	$	—	$	21,635
Contingent consideration	Contingent consideration	$	—	$	—	$	25,558	$	25,558	Contingent consideration	$	—	$	—	$	34,983	$	34,983
Foreign exchange derivative contracts		$	—	$	2,191	$	—	$	2,191

The contingent consideration as of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, relates to the earnout provisions recorded in conjunction with various purchase agreements. The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase agreement. On a quarterly basis, the company assesses the projected results for each acquired business in comparison to the earnout targets and adjusts the liability accordingly.

e) Consolidated Statements of Cash Flows

Cash paid for interest was ~~$38.5~~$18.1 million and ~~$51.1~~$16.6 million for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively. Cash payments totaling ~~$98.9~~$7.9 million and ~~$28.0~~$12.8 million were made for income taxes for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively.

f) Earnings Per Share

“Basic earnings per share” is calculated based upon the weighted average number of common shares actually outstanding, and “diluted earnings per share” is calculated based upon the weighted average number of common shares outstanding and other dilutive securities.

The company’s potentially dilutive securities consist of shares issuable on vesting of restricted stock grants computed using the treasury method and amounted to ~~28,102~~5,653 and ~~118,143~~8,269 for the three months ended ~~October~~April 2, ~~2021,~~2022, and September 26, 2020, respectively. The company’s potentially dilutive securities consist of shares issuable on vesting of restricted stock grants computed using the treasury method and amounted to 16,342 and 47,555 for the nine months ended October 2,April 3, 2021, ~~and September 26, 2020,~~ respectively. For the ~~nine~~three months ended ~~October~~April 2, 2022 and April 3, 2021, the average market price of the company's common stock exceeded the exercise price of the Convertible Notes (as defined below) resulting in ~~1,678,501~~1,688,402 and ~~1,284,381~~744,334 diluted common stock equivalents to be included in the diluted net earnings per share, ~~for the three and nine months ended October 2, 2021,~~ respectively. There have been no conversions to date. See Note 12, Financing Arrangements for further details on the Convertible Notes. There were no anti-dilutive restricted stock grants excluded from common stock equivalents in any period presented.

2) Acquisitions and Purchase Accounting

The company accounts for all business combinations using the acquisition method to record a new cost basis for the assets acquired and liabilities assumed. The difference between the purchase price and the fair value of the assets acquired and liabilities assumed has been recorded as goodwill in the financial statements. The company recognizes identifiable intangible assets, primarily trade names and customer relationships, at their fair value using a discounted cash flow model. The significant assumptions used to estimate the value of the intangible assets include revenue growth rates, projected profit margins, discount rates, royalty rates, and customer attrition rates. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The results of operations are reflected in the consolidated financial statements of the company from the dates of acquisition.

~~Termination of Welbilt Merger~~

As previously disclosed, on April 20, 2021, Middleby, entered into a Merger Agreement with Welbilt, Inc., a Delaware corporation ("Welbilt"), Middleby Marshall Inc., a Delaware corporation and a direct wholly owned subsidiary of Middleby ("Acquiror") and Mosaic Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of Acquiror ("Merger Sub"), which provided that, upon the terms and subject to the conditions set forth therein, Merger Sub would merge with and into Welbilt, with Welbilt surviving as an indirect, wholly-owned subsidiary of Middleby.

As previously disclosed, on July 13, 2021, Middleby announced that, under the terms of the Merger Agreement, it would not exercise its right to propose any modifications to the terms of the Merger Agreement and would allow the five-day match period to expire. Accordingly, on July 14, 2021, Welbilt delivered to Middleby a written notice terminating the Merger Agreement in accordance with Section 7.1(c)(iii) of the Merger Agreement and, concurrently with Middleby’s receipt of the termination fee of $110.0 million in cash from Welbilt, the Merger Agreement was terminated on July 14, 2021.

The termination fee received is reflected in the Condensed Consolidated Statements of Comprehensive Income as the "merger termination fee" and $19.7 million of deal costs associated with the transaction are reflected in selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income.

~~The following represents the company's significant acquisitions in 2021 and 2020 as well as summarized information on various acquisitions that were not individually material.~~

~~2020 Acquisitions~~

~~During 2020, the~~ company completed ~~various~~no material acquisitions ~~that were not individually material. The estimated fair values of assets acquired and liabilities assumed are based on~~during the ~~information that was available as of the acquisition dates for the 2020 acquisitions and are summarized as follows (in thousands):~~

Preliminary Opening Balance Sheet Preliminary Measurement
Period
Adjustments Adjusted Opening Balance Sheet
Cash $ 14,647 $ — $ 14,647
Current assets 43,670 (13,391) 30,279
Property, plant and equipment 3,014 (241) 2,773
Goodwill 55,335 3,740 59,075
Other intangibles 63,201 (4,375) 58,826
Other assets 6,121 52 6,173
Current liabilities (54,478) 13,037 (41,441)
Long-term deferred tax liability (123) 387 264
Other non-current liabilities (21,902) 791 (21,111)
Consideration paid at closing $ 109,485 $ — $ 109,485
Deferred payments 8,666 (468) 8,198
Contingent consideration 16,144 (836) 15,308
Net assets acquired and liabilities assumed $ 134,295 $ (1,304) $ 132,991

~~The long-term deferred tax asset amounted to $0.3 million and is related to the difference between the book and tax basis on other assets and liability accounts.~~

The goodwill and $15.7 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include $10.6 million allocated to customer relationships, $26.2 million allocated to developed technology and $6.3 million allocated to backlog, which are being amortized over periods of 6 to 9 years, 6 to 12 years, and 3 to 9three months respectively. Goodwill of $59.1 million and other intangibles of $58.8 million of the companies are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. Of these assets, goodwill of $24.4 million and intangibles of $58.5 million are expected to be deductible for tax purposes.

Several purchase agreements include deferred payment and earnout provisions providing for contingent payments due to the sellers to the extent certain financial targets are exceeded. The deferred payments are payable between 2021 andended April 2, 2022. The contractual obligations associated with the deferred payments on the acquisition date amount to $8.2 million. The earnouts are payable between 2021 and 2023, if the company exceeds certain sales and earnings targets. The contractual obligations associated with the contingent earnout provisions recognized on the acquisition date amount to $15.3 million.

Novy Invest NV

On July 12, 2021, the company completed its acquisition of all of the capital stock of Novy Invest NV ("Novy"), a leading manufacturer of premium residential ventilation hoods and cook tops located in Belgium, for a purchase price of approximately $250.9 million, net of cash acquired.

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 values of assets acquired and liabilities assumed (in thousands):

~~Preliminary Opening Balance Sheet~~

~~Cash~~

~~16,152~~

~~Current assets~~

~~23,762~~

~~Property, plant and equipment~~

~~17,058~~

~~Goodwill~~

~~142,741~~

~~Other intangibles~~

~~126,557~~

~~Other assets~~

~~Current liabilities~~

~~(23,440)~~

~~Long-term deferred tax liability~~

~~(33,918)~~

~~Other non-current liabilities~~

~~(1,930)~~

~~Net assets acquired and liabilities assumed~~

~~267,008~~


	Preliminary Opening Balance Sheet		Preliminary Measurement Period Adjustments		Adjusted Opening Balance Sheet
Cash	$	16,152	$	—	$	16,152

Current assets	23,762		328		24,090
Property, plant and equipment	17,058		(969)		16,089
Goodwill	142,741		(17,414)		125,327
Other intangibles	126,557		22,966		149,523

Other assets	26		173		199

Current liabilities	(23,440)		591		(22,849)

Long-term deferred tax liability	(33,918)		(5,482)		(39,400)
Other non-current liabilities	(1,930)		(193)		(2,123)






Net assets acquired and liabilities assumed	$	267,008	$	—	$	267,008

The long-term deferred tax liability amounted to ~~$33.9~~$39.4 million. The deferred tax liability is comprised of ~~$31.6~~$37.4 million related to the difference between the book and tax basis of identifiable intangible assets and ~~$2.3~~$2.0 million related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and ~~$89.5~~$105.7 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include ~~$33.9~~$40.0 million allocated to customer relationships, ~~$2.3~~$2.7 million allocated to developed technology and ~~$0.9~~$1.1 million allocated to backlog, which are being amortized over periods of 7 years, 7 years, and 3 months, respectively. Goodwill of ~~$142.7~~$125.3 million and other intangibles of ~~$126.6~~$149.5 million ~~of the company~~from this acquisition are allocated to the Residential Kitchen Equipment Group for segment reporting purposes. Goodwill and other intangibles are not expected to be deductible for tax purposes.

The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the company is waiting for additional information necessary to finalize those fair values for all acquisitions completed during 2021. The intangible assets are pending external valuation and are preliminarily valued using historical information from the Residential Kitchen Equipment Group and qualitative assessment of the business at acquisition date. Specifically, the company estimated the fair values of the intangible assets based on the percentage of purchase price assigned to similar intangible assets in previous acquisitions. Thus, the provisional measurements of fair values 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.

118

~~Imperial Manufacturing Company~~Kamado Joe and Masterbuilt

On ~~September 24,~~December 27, 2021, the company completed its acquisition of ~~all of the capital stock of Spenuzza, Inc. (dba Imperial Manufacturing Company)~~Masterbuilt Holdings, LLC, including its residential outdoor brands ("~~Imperial"~~Kamado Joe and Masterbuilt"), a leader in outdoor residential cooking located in ~~Corona, CA, a manufacturer of ranges, fryers, ovens, countertop equipment and other specialty cooking products for commercial kitchens,~~the Atlanta, Georgia area, for a purchase price of approximately ~~$127.3~~$400.8 million, net of cash acquired. The purchase price was comprised of $403.6 million in cash and 12,921 shares of Middleby common stock valued at $2.5 million. The purchase price is subject to adjustment as provided in the purchase agreement. The company expects to finalize this adjustment in the second quarter of 2022.

~~Preliminary Opening Balance Sheet~~

~~Cash~~

~~347~~

~~Current assets~~

~~8,070~~

~~Property, plant and equipment~~

~~19,120~~

~~Goodwill~~

~~42,570~~

~~Other intangibles~~

~~65,230~~

~~Other assets~~

~~Current liabilities~~

~~(7,701)~~

~~Net assets acquired and liabilities assumed~~

~~127,642~~


	Preliminary Opening Balance Sheet		Preliminary Measurement Period Adjustments		Adjusted Opening Balance Sheet
Cash	$	5,381	$	(70)	$	5,311

Current assets	137,826		(1,964)		135,862
Property, plant and equipment	7,773		—		7,773
Goodwill	110,052		4,746		114,798
Other intangibles	215,577		—		215,577

Other assets	2,143		—		2,143

Current liabilities	(54,865)		(2,747)		(57,612)

Long-term deferred tax liability	(15,907)		—		(15,907)
Other non-current liabilities	(1,914)		35		(1,879)






Net assets acquired and liabilities assumed	$	406,066	$	—	$	406,066

The long-term deferred tax liability amounted to $15.9 million. The net deferred tax liability is comprised of $2.3 million of deferred tax asset related to tax loss carryforwards and $18.2 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 ~~$35.5~~$158.8 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include ~~$28.3~~$50.3 million allocated to customer relationships ~~$0.9 million allocated to developed technology~~ and ~~$0.6~~$6.5 million allocated to backlog, which are being amortized over periods of 7 years ~~7 years,~~ and 3 months, respectively. Goodwill of ~~$42.6~~$114.8 million and other intangibles of ~~$65.2~~$215.6 million of the company are allocated to the ~~Commercial Foodservice~~Residential Kitchen Equipment Group for segment reporting ~~purposes~~purposes. Of these assets, goodwill of $71.7 million and intangibles of $164.3 million 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 for all ~~2021~~ acquisitions completed during 2021. The intangible assets are pending external valuation and are preliminarily valued using historical information from the Residential Kitchen Equipment Group and qualitative assessment of the business at acquisition date. Specifically, the company estimated the fair values of the intangible assets based on the percentage of purchase price assigned to ~~date.~~similar intangible assets in previous acquisitions. Thus, the provisional measurements of fair values 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.

Other 2021 Acquisitions

During the year ended January 1, 2022, the company completed various acquisitions that were not individually material. The following estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition dates for the other 2021 acquisitions and are summarized as follows (in thousands):


	Preliminary Opening Balance Sheet		Preliminary Measurement Period Adjustments		Adjusted Opening Balance Sheet
Cash	$	6,414	$	—	$	6,414

Current assets	76,077		726		76,803
Property, plant and equipment	19,561		(187)		19,374
Goodwill	85,270		9,514		94,784
Other intangibles	158,725		(9,193)		149,532

Other assets	2,101		31		2,132

Current liabilities	(33,910)		144		(33,766)

Long-term deferred tax asset (liability)	(3,010)		3,381		371
Other non-current liabilities	(7,092)		(3,397)		(10,489)

Consideration paid at closing	$	304,136	$	1,019	$	305,155


Contingent consideration	9,404		—		9,404

Net assets acquired and liabilities assumed	$	313,540	$	1,019	$	314,559

The long-term deferred tax asset amounted to $0.4 million. The net deferred tax asset is comprised of $0.7 million of deferred tax asset related to tax loss carryforwards and $0.3 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 $97.1 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350. Other intangibles also include $41.1 million allocated to customer relationships, $3.4 million allocated to developed technology, and $7.9 million allocated to backlog, which are being amortized over periods of 7 years, 7 years, and 3 months, respectively. Goodwill of $30.0 million and other intangibles of $89.0 million are allocated to the Residential Kitchen Equipment Group for segment reporting purposes. Goodwill of $64.8 million and other intangibles of $60.6 million are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. Of these assets, goodwill of $92.8 million and intangibles of $148.4 million are expected to be deductible for tax purposes.

One purchase agreement includes earnout provisions providing for contingent payments due to the sellers to the extent certain financial targets are exceeded and upon the achievement of product rollout targets. One earnout is payable upon the achievement of product rollout targets. The second earnout is payable during 2026 if the company exceeds certain earnings targets. The contractual obligation associated with the contingent earnout provisions recognized on the acquisition date amount to $9.4 million.

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 for all acquisitions completed during 2021. Certain intangible assets are pending external valuation and are preliminarily valued using historical information from the Residential Kitchen Equipment Group and Commercial Foodservice Equipment Group and qualitative assessments of the individual businesses at acquisition date. Specifically, the company estimated the fair values of the intangible assets based on the percentage of purchase price assigned to similar intangible assets in previous acquisitions. Thus, the provisional measurements of fair values 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.

Pro Forma Financial Information

~~In accordance with ASC 805~~ ~~Business Combinations, the~~The following unaudited pro forma results of operations for the ~~nine~~three months ended ~~October~~April 2, 2022 and April 3, 2021, assumes the 2021 and ~~September 26, 2020, assumes the 2020 and 2021~~2022 acquisitions described above were completed on ~~December 29, 2019~~January 3, 2021 (first day of fiscal year ~~2020)~~2021). The ~~following~~ pro forma results include adjustments to reflect amortization of intangibles associated with the acquisition and the effects of adjustments made to the carrying value of certain assets (in thousands, except per share data):

Nine Months Ended
October 2, 2021 September 26, 2020
Net sales $ 2,472,306 $ 1,899,883
Net earnings 407,715 155,067
Net earnings per share:
Basic $ 7.38 $ 2.81
Diluted $ 7.21 $ 2.81


	Three Months Ended
	April 2, 2022		April 3, 2021
Net sales	$	994,676	$	887,876
Net earnings	112,840		66,300

Net earnings per share:
Basic	$	2.06	$	1.20
Diluted	$	2.00	$	1.18

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.

1311

4) Recently Issued Accounting Standards

Accounting Pronouncements - Recently Adopted

In August 2020, the FASB issued ASU No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument is reported as a single liability instrument with no separate accounting for embedded conversion features. This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations. Effective January 3, 2021, the company early adopted ASU 2020-06 using the modified retrospective approach. Adoption of the new standard resulted in an increase to the opening balance of retained earnings of $5.1 million, a decrease to additional paid-in capital of $79.4 million, and an increase to convertible senior notes of $98.4 million. In addition, the company ceased recording non-cash interest expense associated with amortization of the debt discount and calculates earnings per share using the if-converted method to the extent those shares are not anti-dilutive.

In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)", which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This guidance is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2020 with early adoption permitted. The company adopted this guidance on January 3, 2021, and it did not have a material impact on the company's Consolidated Financial Statements upon adoption.

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848)," which clarified that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition related to reference rate reform. The amendments in this update were effective immediately for all entities. The adoption of this guidance did not materially impact the company's Consolidated Financial Statements.

~~Accounting Pronouncements - To be adopted~~

On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company adopted this standard in the first quarter of 2022 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

Accounting Pronouncements - To be adopted

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard is effective for the company on January 2, 2022 and only impacts annual financial statement footnote disclosures. The company is currently evaluating the impacts the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The standard should be applied prospectively, and it allows for a modified retrospective transition method resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The company is currently evaluating the impacts the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The new standard expands and clarifies the use of the portfolio layer method for fair value hedges of interest rate risk. The new standard allows non-prepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The new guidance on hedging multiple layers in a closed portfolio should be applied prospectively and the guidance on the accounting for fair value basis adjustments should be applied on a modified retrospective basis. The company is currently evaluating the impacts the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

1412

5) Revenue Recognition

Disaggregation of Revenue

The company disaggregates its net sales by reportable operating segment and geographical location as the company believes it best depicts how the nature, timing and uncertainty of its 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 the company's long-term contracts within the Food Processing Equipment group is recognized over time as the equipment is manufactured and assembled. The following table summarizes the company's net sales by reportable operating segment and geographical location (in thousands):


		Commercial Foodservice		Food Processing		Residential Kitchen		Total			Commercial Foodservice		Food Processing		Residential Kitchen		Total
Three Months Ended October 2, 2021

Three Months Ended April 2, 2022										Three Months Ended April 2, 2022
United States and Canada	United States and Canada	$	366,619	$	84,443	$	113,230	$	564,292	United States and Canada	$	374,909	$	94,797	$	229,599	$	699,305
Asia	Asia	49,489		4,257		2,741		56,487		Asia	52,016		3,743		6,005		61,764
Europe and Middle East	Europe and Middle East	82,881		14,332		76,310		173,523		Europe and Middle East	100,291		14,200		93,583		208,074
Latin America	Latin America	12,491		9,638		1,114		23,243		Latin America	16,437		7,203		1,893		25,533
Total	Total	$	511,480	$	112,670	$	193,395	$	817,545	Total	$	543,653	$	119,943	$	331,080	$	994,676

Nine Months Ended October 2, 2021
Three Months Ended April 3, 2021										Three Months Ended April 3, 2021
United States and Canada	United States and Canada	$	1,064,482	$	259,577	$	335,138	$	1,659,197	United States and Canada	$	338,837	$	79,650	$	108,574	$	527,061
Asia	Asia	146,849		10,713		7,631		165,193		Asia	49,719		4,003		3,032		56,754
Europe and Middle East	Europe and Middle East	255,649		56,507		181,359		493,515		Europe and Middle East	82,017		20,425		51,844		154,286
Latin America	Latin America	34,433		28,375		3,663		66,471		Latin America	10,582		8,416		959		19,957
Total	Total	$	1,501,413	$	355,172	$	527,791	$	2,384,376	Total	$	481,155	$	112,494	$	164,409	$	758,058

Three Months Ended September 26, 2020
United States and Canada		$	265,793	$	82,126	$	97,318	$	445,237
Asia		39,864		4,711		1,875		46,450
Europe and Middle East		60,603		18,600		52,216		131,419
Latin America		4,963		5,211		1,245		11,419
Total		$	371,223	$	110,648	$	152,654	$	634,525

Nine Months Ended September 26, 2020
United States and Canada		$	768,202	$	227,770	$	264,116	$	1,260,088
Asia		104,936		18,460		3,753		127,149
Europe and Middle East		180,187		57,051		117,187		354,425
Latin America		28,522		13,196		581		42,299
Total		$	1,081,847	$	316,477	$	385,637	$	1,783,961

1513

Contract Balances

Contract assets primarily relate to the 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 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):


		Oct 2, 2021		Jan 2, 2021			Apr 2, 2022		Jan 1, 2022
Contract assets	Contract assets	$	20,955	$	20,328	Contract assets	$	34,012	$	21,592
Contract liabilities	Contract liabilities	$	132,984	$	93,871	Contract liabilities	$	160,204	$	133,315
Non-current contract liabilities	Non-current contract liabilities	$	12,187	$	13,523	Non-current contract liabilities	$	11,089	$	11,602

During the ~~nine~~three months period ended ~~October~~April 2, ~~2021,~~2022, the company reclassified ~~$14.0~~$4.8 million to receivables, which was included in the contract asset balance at the beginning of the period. During the ~~nine~~three months period ended ~~October~~April 2, ~~2021,~~2022, the company recognized revenue of ~~$72.6~~$79.6 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 ~~$122.7~~$119.9 million during the ~~nine~~three months period ended ~~October~~April 2, ~~2021.~~2022. 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 ~~nine~~three months period ended ~~October~~April 2, ~~2021.~~2022.

1614

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		Unrealized Gain Certain Investments		Total
Balance as of January 1, 2022										Balance as of January 1, 2022	$	(97,654)	$	(249,696)	$	(13,064)	$	1,330	$	(359,084)
Other comprehensive income before reclassification										Other comprehensive income before reclassification	(27,191)		6,244		27,155		1,348		7,556
Amounts reclassified from accumulated other comprehensive income										Amounts reclassified from accumulated other comprehensive income	—		—		3,961		—		3,961
Net current-period other comprehensive income										Net current-period other comprehensive income	$	(27,191)	$	6,244	$	31,116	1,348		$	11,517
Balance as of April 2, 2022										Balance as of April 2, 2022	$	(124,845)	$	(243,452)	$	18,052	2,678		$	(347,567)
		Currency Translation Adjustment		Pension Benefit Costs		Unrealized Gain/(Loss) Interest Rate Swap		Total
Balance as of January 2, 2021	Balance as of January 2, 2021	$	(49,961)	$	(400,919)	$	(37,548)	$	(488,428)	Balance as of January 2, 2021	$	(49,961)	$	(400,919)	$	(37,548)	$	—	$	(488,428)
Other comprehensive income before reclassification	Other comprehensive income before reclassification	(33,000)		3,052		1,480		(28,468)		Other comprehensive income before reclassification	(10,614)		(3,970)		7,389		—		(7,195)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	—		—		14,691		14,691		Amounts reclassified from accumulated other comprehensive income	—		—		5,023		—		5,023
Net current-period other comprehensive income	Net current-period other comprehensive income	$	(33,000)	$	3,052	$	16,171	$	(13,777)	Net current-period other comprehensive income	$	(10,614)	$	(3,970)	$	12,412	$	—	$	(2,172)
Balance as of October 2, 2021		$	(82,961)	$	(397,867)	$	(21,377)	$	(502,205)
Balance as of April 3, 2021										Balance as of April 3, 2021	$	(60,575)	$	(404,889)	$	(25,136)	$	—	$	(490,600)

Balance as of December 28, 2019		$	(105,705)	$	(228,336)	$	(16,892)	$	(350,933)
Other comprehensive income before reclassification		(3,213)		6,184		(35,646)		(32,675)
Amounts reclassified from accumulated other comprehensive income		—		—		10,419		10,419
Net current-period other comprehensive income		$	(3,213)	$	6,184	$	(25,227)	$	(22,256)
Balance as of September 26, 2020		$	(108,918)	$	(222,152)	$	(42,119)	$	(373,189)

(1) As of ~~October~~April 2, 2022, pension, interest rate swap, and gain on investment amounts are net of tax of $(38.5) million, $6.4 million, and $0.9 million, respectively. During the three months ended April 2, 2022, the adjustments to pension, interest rate swap, and gain on investments were net of tax of $1.0 million, $10.9 million, and $0.5 million, respectively. As of April 3, 2021 pension and interest rate swap amounts are net of tax of ~~$(88.4)~~$(90.0) million and ~~$(7.5)~~$(8.8) million, respectively. During the ~~nine~~three months ended ~~October 2,~~April 3, 2021, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of ~~$0.7~~$(0.9) million and $5.6 million, respectively. As of September 26, 2020 pension and interest rate swap amounts are net of tax of $(47.3) million and $(15.3) million, respectively. During the nine months ended September 26, 2020, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of $1.3 million and $(9.3)$4.3 million, respectively.

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020				Apr 2, 2022		Apr 3, 2021
Net earnings	Net earnings	$	175,966	$	60,516	$	385,814	$	155,457	Net earnings		$	85,755	$	89,263
Currency translation adjustment	Currency translation adjustment	(21,881)		25,851		(33,000)		(3,213)		Currency translation adjustment		(27,191)		(10,614)
Pension liability adjustment, net of tax	Pension liability adjustment, net of tax	5,870		(6,133)		3,052		6,184		Pension liability adjustment, net of tax		6,244		(3,970)
Unrealized gain (loss) on interest rate swaps, net of tax		3,056		2,653		16,171		(25,227)
Unrealized gain on interest rate swaps, net of tax										Unrealized gain on interest rate swaps, net of tax		31,116		12,412
Unrealized gain on certain investments, net of tax										Unrealized gain on certain investments, net of tax		1,348		—
Comprehensive income	Comprehensive income	$	163,011	$	82,887	$	372,037	$	133,201	Comprehensive income		$	97,272	$	87,091

7) Inventories

Inventories are composed of material, labor and overhead and are stated at the lower of cost or ~~market.~~net realizable value. 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 ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021~~1, 2022 are as follows (in thousands):


		Oct 2, 2021		Jan 2, 2021			Apr 2, 2022		Jan 1, 2022
Raw materials and parts	Raw materials and parts	$	369,221	$	263,200	Raw materials and parts	$	491,213	$	421,361
Work-in-process	Work-in-process	68,360		55,104		Work-in-process	74,325		65,581
Finished goods	Finished goods	248,462		221,894		Finished goods	359,225		350,476
		$	686,043	$	540,198		$	924,763	$	837,418

8) Goodwill

Changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 are as follows (in thousands):


		Commercial Foodservice		Food Processing		Residential Kitchen		Total			Commercial Foodservice		Food Processing		Residential Kitchen		Total
Balance as of January 2, 2021		$	1,228,436	$	255,798	$	450,027	$	1,934,261
Balance as of January 1, 2022										Balance as of January 1, 2022	$	1,285,087	$	250,715	$	707,667	$	2,243,469
Goodwill acquired during the year	Goodwill acquired during the year	42,570		—		142,741		185,311		Goodwill acquired during the year	1,764		—		—		1,764
Measurement period adjustments to goodwill acquired in prior year	Measurement period adjustments to goodwill acquired in prior year	2,302		—		—		2,302		Measurement period adjustments to goodwill acquired in prior year	980		—		3,909		4,889
Exchange effect	Exchange effect	(7,012)		(3,814)		(4,866)		(15,692)		Exchange effect	(3,014)		(1,045)		(9,622)		(13,681)
Balance as of October 2, 2021		$	1,266,296	$	251,984	$	587,902	$	2,106,182
Balance as of April 2, 2022										Balance as of April 2, 2022	$	1,284,817	$	249,670	$	701,954	$	2,236,441

The annual impairment assessment for goodwill and indefinite-lived intangible assets is performed as of the first day of the fourth quarter and since that assessment the company does not believe there are any indicators of impairment requiring subsequent analysis. This is supported by the review of order rates, backlog levels and financial performance across business segments.

9) Intangibles

Intangible assets consist of the following (in thousands):


		October 2, 2021					January 2, 2021						April 2, 2022					January 1, 2022
		Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization		Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization			Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization		Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:	Amortized intangible assets:											Amortized intangible assets:
Customer lists	Customer lists	7.9	$	794,079	$	(393,686)	8.5	$	735,264	$	(347,029)	Customer lists	7.4	$	863,339	$	(430,729)	7.6	$	863,339	$	(411,327)
Backlog	Backlog	0.2	37,039		(36,331)		0.3	34,729		(31,924)		Backlog	0.0	13,646		(13,646)		0.2	13,684		(929)
Developed technology	Developed technology	8.9	65,534		(28,434)		10.0	56,931		(24,394)		Developed technology	8.7	73,701		(31,555)		8.9	73,461		(29,952)
			$	896,652	$	(458,451)		$	826,924	$	(403,347)			$	950,686	$	(475,930)		$	950,484	$	(442,208)
Indefinite-lived assets:	Indefinite-lived assets:											Indefinite-lived assets:
Trademarks and tradenames	Trademarks and tradenames		$	1,136,400				$	1,026,804			Trademarks and tradenames		$	1,360,401				$	1,367,101

The aggregate intangible amortization expense was ~~$18.2~~$33.6 million and ~~$16.9~~$18.8 million for the three months period ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020, respectively. The aggregate intangible amortization expense was $54.9 million and $51.4 million for the nine months period ended October 2,~~April 3, 2021, ~~and September 26, 2020,~~ respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):

Twelve Month Period coinciding with the end of the company's Fiscal Third Quarter Amortization Expense

2022 $ 73,869
2023 66,711
2024 57,656
2025 48,507
2026 46,054
Thereafter 145,404
$ 438,201


Twelve Month Period coinciding with the end of the company's Fiscal First Quarter	Amortization Expense

2023	$	80,942
2024	74,658
2025	62,315
2026	57,876
2027	53,343
Thereafter	145,622
	$	474,756

1817

10) Accrued Expenses

Accrued expenses consist of the following (in thousands):


		Oct 2, 2021		Jan 2, 2021			Apr 2, 2022		Jan 1, 2022
Contract liabilities	Contract liabilities	$	132,984	$	93,871	Contract liabilities	$	160,204	$	133,315
Accrued payroll and related expenses	Accrued payroll and related expenses	105,498		93,926		Accrued payroll and related expenses	111,943		115,762
Accrued warranty	Accrued warranty	81,708		69,667		Accrued warranty	79,660		80,215
Accrued customer rebates	Accrued customer rebates	61,160		43,703		Accrued customer rebates	40,250		72,451
Accrued short-term leases	Accrued short-term leases	21,987		22,493		Accrued short-term leases	22,007		22,753
Accrued contingent consideration						Accrued contingent consideration	21,391		18,728
Accrued professional fees	Accrued professional fees	20,743		12,133		Accrued professional fees	20,647		19,292
Accrued sales and other tax	Accrued sales and other tax	17,380		22,030		Accrued sales and other tax	20,256		22,684
Accrued agent commission	Accrued agent commission	14,265		11,105		Accrued agent commission	15,520		13,670
Accrued product liability and workers compensation	Accrued product liability and workers compensation	11,244		12,909		Accrued product liability and workers compensation	11,722		10,952
Accrued interest rate swaps		768		14,075
Accrued liabilities held for sale		—		22,313

Other accrued expenses	Other accrued expenses	79,259		76,316		Other accrued expenses	81,764		73,033

		$	546,996	$	494,541		$	585,364	$	582,855

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):


	~~Nine~~Three Months Ended
	~~Oct~~Apr 2, ~~2021~~2022
Balance as of January ~~2, 2021~~1, 2022	$	~~69,667~~80,215
Warranty reserve related to acquisitions	~~1,836~~436
Warranty expense	~~54,164~~16,620
Warranty claims	~~(43,959)~~(17,611)
Balance as of ~~October~~April 2, ~~2021~~2022	$	~~81,708~~79,660

1918

12) Financing Arrangements


		Oct 2, 2021		Jan 2, 2021			Apr 2, 2022		Jan 1, 2022
		(in thousands)					(in thousands)
Senior secured revolving credit line	Senior secured revolving credit line	$	827,856	$	755,000	Senior secured revolving credit line	$	871,001	$	683,175
Term loan facility	Term loan facility	321,875		335,938		Term loan facility	987,251		993,340
Convertible senior notes	Convertible senior notes	733,825		632,847		Convertible senior notes	735,234		734,417
Foreign loans	Foreign loans	2,833		4,421		Foreign loans	3,271		2,224
Other debt arrangement	Other debt arrangement	1,186		1,390		Other debt arrangement	1,068		1,138
Total debt	Total debt	1,887,575		1,729,596		Total debt	2,597,825		2,414,294
Less: Current maturities of long-term debt	Less: Current maturities of long-term debt	21,553		22,944		Less: Current maturities of long-term debt	27,693		27,293
Long-term debt	Long-term debt	$	1,866,022	$	1,706,652	Long-term debt	$	2,570,132	$	2,387,001

Credit Facility

~~Credit Facility~~

On January 31, 2020, the company entered into an amended and restated five-year, $3.5 billion multi-currency senior secured credit agreement (as amended as described below, the "Credit Facility"). On August 21, 2020, the company entered into an amendment to the Credit Facility, prepaying $400.0 million aggregate principal amount of its term loan obligations owed. The Credit Facility, as amended, is in an aggregate principal amount of $3.1 billion, consisting of (i) a $350 million term loan facility and (ii) a $2.75 billion multi-currency revolving credit facility. The Credit Facility matures on January 31, 2025. The term loan facility amortizes in equal quarterly installments due on the last day of each fiscal quarter in an aggregate annual amount equal to 2.50% of the original aggregate principal amount of the term loan facility, with the balance, plus any accrued interest, due and payable on January 31, 2025. As of ~~October~~April 2, ~~2021,~~2022, the company had ~~$1.1~~$1.9 billion of borrowings outstanding under the Credit Facility, including ~~$566.5 million of borrowings in U.S. Dollars, $261.3 million of borrowings denominated in Euro, and $321.9 million~~$1.0 billion outstanding under the term ~~loan.~~loan ($987 million, net of unamortized issuance fees). The company also had ~~$2.7~~$2.2 million in outstanding letters of credit as of ~~October~~April 2, ~~2021,~~2022, which reduces the borrowing availability under the Credit Facility. Remaining borrowing capacity under this facility was $2.6 billion at April 2, 2022.

At ~~October~~April 2, ~~2021,~~2022, borrowings under the Credit Facility accrued interest at a rate of ~~1.375%~~1.625% above LIBOR per annum or ~~1.00%~~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, inclusive of hedging instruments, on the debt under the Credit Facility was equal to 2.78% 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~~Borrowings under the Credit Facility will accrue interest at a minimum of 1.625% above LIBOR and the variable unused commitment fee will be at a minimum of 0.25%. The average interest rate per annum, inclusive of hedging instruments, on the debt under the Credit Facility was equal to 2.85% at the end of the period and the variable commitment fee was equal to ~~0.20%~~0.25% per annum as of ~~October~~April 2, ~~2021.~~ 2022.

The term loan facility had an average interest rate per annum, inclusive of hedging instruments, of ~~2.60%~~3.35% as of ~~October~~April 2, ~~2021.~~2022.

In addition, the company has ~~other~~ international credit facilities to fund working capital needs outside the United States. At ~~October~~April 2, ~~2021,~~2022, these foreign credit facilities amounted to ~~$2.8~~$3.3 million in U.S. Dollars with a weighted average per annum interest rate of approximately ~~7.80%~~10.05%.

The company’s debt is reflected on the balance sheet at cost. The fair values of the Credit Facility, term debt and foreign and other debt is based on the amount of future cash flows associated with each instrument discounted using the company's incremental borrowing rate. 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 carrying value and estimated aggregate fair value, a level 2 measurement, based primarily on market prices, of debt excluding the Convertible Notes is as follows (in thousands):

Oct 2, 2021 Jan 2, 2021
Carrying Value Fair Value Carrying Value Fair Value
Total debt excluding convertible senior notes $ 1,153,750 $ 1,153,750 $ 1,096,749 $ 1,096,749


	Apr 2, 2022				Jan 1, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Total debt excluding convertible senior notes	$	1,862,591	$	1,869,089	$	1,679,877	$	1,686,537

The company uses floating-to-fixed interest rate swap agreements to hedge variable interest rate risk associated with the Credit Facility. In February 2022, the company entered into an additional floating-to-fixed interest rate swap agreements totaling $375.0 million notional amount carrying an average interest rate of 1.50%. At ~~October~~April 2, ~~2021,~~2022, the company had outstanding floating-to-fixed interest rate swaps totaling ~~$60.0~~

$129.0 million notional amount carrying an average interest rate of ~~1.31%~~1.71% maturing in less than 12 months and ~~$802.0~~$1,048.0 million notional amount carrying an average interest rate of ~~1.91%~~1.79% that mature in more than 12 months but less than 6670 months.

The company believes that its current capital resources, including cash and cash equivalents, cash expected to be generated from operation, 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, as amended, 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, (ii) a maximum Total Leverage Ratio of Funded Debt less Unrestricted Cash to Pro Forma EBITDA (each as defined in the Credit Facility) of 5.50 to 1.00, and (iii) a maximum Secured Leverage Ratio of Funded Debt less Unrestricted Cash to Pro Forma EBITDA (each as defined in the Credit Facility) of 3.50 to 1.00; which may be adjusted to 4.25 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 ~~October~~April 2, ~~2021,~~2022, the company was in compliance with all covenants pursuant to its borrowing agreements.

Convertible Notes

The following table summarizes the outstanding principal amount and carrying value of the Convertible Notes:


		Oct 2, 2021		Jan 2, 2021				Apr 2, 2022		Jan 1, 2022
		(in thousands)				(in thousands)
Principal amounts:	Principal amounts:						Principal amounts:
Principal	Principal	$	747,500	$	747,500		Principal	$	747,500	$	747,500
Unamortized debt discounts		—		(98,358)

Unamortized issuance costs	Unamortized issuance costs	(13,675)		(16,295)			Unamortized issuance costs	(12,266)		(13,083)
Net carrying amount	Net carrying amount	$	733,825	$	632,847		Net carrying amount	$	735,234	$	734,417

The following table summarizes total interest expense recognized related to the Convertible Notes:


		Three Months Ended				Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020				Apr 2, 2022		Apr 3, 2021
Contractual interest expense	Contractual interest expense	$	1,848	$	726	$	5,607	$	726	Contractual interest expense		$	1,890	$	1,890
Interest cost related to amortization of issuance costs	Interest cost related to amortization of issuance costs	864		2,130		2,620		2,130		Interest cost related to amortization of issuance costs		902		883
Total interest expense	Total interest expense	$	2,712	$	2,856	$	8,227	$	2,856	Total interest expense		$	2,792	$	2,773

On August 21, 2020, the company issued $747.5 million aggregate principal amount of 1.00% Convertible Senior Notes maturing on September 1, 2025 (the "Convertible Notes") in a private offering pursuant to an indenture, dated August 21, 2020 (the "Indenture"), between the company and U.S. Bank National Association, as trustee. The Convertible Notes are general unsecured obligations of the company and bear interest semi-annually in arrears. The estimated fair value of the Convertible Notes was ~~$1.1~~$1.0 billion as of ~~October~~April 2, ~~2021~~2022 and was determined through consideration of quoted market prices. The fair value is classified as Level 2, as defined in Note ~~1 (d)~~1(d), Fair Value Measurements ~~of this Quarterly Report on Form 10-Q~~, in these Notes to the Condensed Consolidated Financial Statement. The if-converted value of the Convertible Notes exceeded their respective principal value by ~~$262.8~~$191.0 million as of ~~October~~April 2, ~~2021.~~2022.~~The annual effective interest rate of the Convertible Notes following adoption of ASU 2020-06 is 1.5%.~~

The Convertible Notes were issued pursuant to the Indenture and bear interest semi-annually in arrears at a rate of 1.00% per annum on March 1 and September 1 of each year. The Convertible Notes are convertible based upon an initial conversion rate of 7.7746 shares of the company's common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $128.62 per share of the company's common stock. The conversion rate will be subject to adjustment upon occurrence of certain specified events in accordance with the Indenture but will not be adjusted for accrued and unpaid interest. Additionally, in the event of a Fundamental Change (as defined in the Indenture), holders of the Convertible Notes may require the company to repurchase all or a portion of their Convertible Notes at a price equal to 100.0% of the principal amount of Convertible Notes, plus any accrued and unpaid interest to, but excluding, the repurchase date. Upon conversion, the company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at the company's election, in respect of the remainder, if any, of the company's conversion obligation in excess of the aggregate principal amount of the notes being converted.

The Convertible Notes will mature on September 1, 2025 unless they are redeemed, repurchased or converted prior to such date in accordance with their terms. The company may settle the conversions of the Convertible Notes in cash, shares of the company's common stock or any combination thereof at its election. The number of shares of the company's common stock issuable at the conversion price of $128.62 per share is expected to be 5.8 million shares. As of October 2, 2021, there have been no conversions to date. For the nine months ended October 2, 2021, the average market price of the company's common stock exceeded the exercise price of the Convertible Notes resulting in 1,284,381 diluted common stock equivalents to be included in the diluted net earnings per share for the period.

~~The Indenture includes customary terms and covenants, including certain events of default after which the Convertible Notes may become due and payable immediately.~~

Capped Call Transactions

In ~~conjunction~~connection with the pricing of the Convertible Notes, the company entered into privately negotiated ~~capped call transactions in~~Capped Call Transactions (the "2020 Capped Call Transactions") and the company used the net proceeds of the offering of the Convertible Notes to pay the aggregate amount of $104.7 million ("for them. The company entered into two tranches of privately negotiated Capped Call Transactions in December 2021 (the "2021 Capped Call Transactions")~~. The~~ in the aggregate amount of $54.6 million. On March 15, 2022 , the company entered into an additional tranche of privately negotiated Capped Call Transactions (the "2022 Capped Call Transactions") in the amount of $9.7 million.

The 2020, 2021, and 2022 Capped Call Transactions (collectively, the "Capped Call Transactions") are expected generally to reduce the potential dilution and/or offset the cash payments the company is required to make in excess of the principal amount of the Convertible Notes upon conversion of the Convertible Notes in the event that the market price per share of the company's common stock is greater than the strike price of the Capped Call Transactions (which initially corresponds to the initial conversion price of the Convertible Notes and is subject to certain adjustments under the terms of the Capped Call Transactions), with such reduction and/or offset subject to a cap based on the cap price of the Capped Call Transactions. ~~Under the~~The 2020 Capped Call Transactions ~~the number of shares of common stock issuable at the conversion~~have an initial cap price of $207.93 ~~is expected to be 3.6 million shares. As~~per share of ~~October 2,~~the company's common stock. The 2021 ~~there~~Capped Call Transactions have ~~been no conversions to date.~~initial cap prices of $216.50 and $225.00 per share of the company's common stock. The 2022 Capped Call Transactions have an initial cap price of $229.00 per share. The Capped Call Transactions cover, initially, the number of shares of the company's common stock underlying the Convertible Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes.

The Capped Call Transactions are separate transactions entered into by the company with the capped call counterparties, and are not part of the terms of the Convertible Notes and will not affect any holder's right under the Convertible Notes. Holders of the Convertible Notes will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions do not meet the criteria for separate accounting as a derivative as they are indexed to the company's stock. The premiums paid of the Capped Call Transactions have been included as a net reduction to additional paid-in capital with stockholders' equity.

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.

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 notional amount of foreign currency contracts outstanding was $350.2 million and $350.5 million as of April 2, 2022 and January 1, 2022, respectively. The fair value of the forward and option contracts was a loss of ~~$3.4~~$3.0 million at the end of the ~~third~~first quarter of ~~2021.~~2022.

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. In February 2022, the company entered into an additional floating-to-fixed interest rate swap agreement that uses a daily Secured Overnight Financing Rate ("SOFR") in lieu of LIBOR. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. As of ~~October~~April 2, ~~2021,~~2022, the fair value of these instruments was a ~~liability~~asset of ~~$29.3~~$24.0 million. The change in fair value of these swap agreements in the first ~~nine~~three months of ~~2021~~2022 was a gain of ~~$16.2~~$31.1 million, net of taxes.

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


		Condensed Consolidated Balance Sheet Presentation	Oct 2, 2021		Jan 2, 2021			Condensed Consolidated Balance Sheet Presentation	Apr 2, 2022		Jan 1, 2022
Fair value	Fair value	Other assets	$	1,465	$	—	Fair value	Prepaid expense and other	$	623	—
Fair value	Fair value	Accrued expenses	$	768	$	14,075	Fair value	Other assets	$	25,501	$	3,645
Fair value	Fair value	Other non-current liabilities	$	29,982	$	37,018	Fair value	Accrued expenses	$	67	$	1,171
Fair value							Fair value	Other non-current liabilities	$	2,039	$	20,464

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


			Three Months Ended				Nine Months Ended						Three Months Ended
		Presentation of Gain/(loss)	Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020			Presentation of Gain/(loss)		Apr 2, 2022		Apr 3, 2021
Gain/(loss) recognized in accumulated other comprehensive income	Gain/(loss) recognized in accumulated other comprehensive income	Other comprehensive income	$	(340)	$	(1,545)	$	7,117	$	(44,949)	Gain/(loss) recognized in accumulated other comprehensive income	Other comprehensive income		$	38,047	$	11,716
Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)	Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)	Interest expense	$	(4,461)	$	(5,158)	$	(14,691)	$	(10,419)	Gain/(loss) reclassified from accumulated other comprehensive income (effective portion)	Interest expense		$	(3,961)	$	(5,023)

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.

2321

14) 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~~has a broad portfolio of foodservice equipment, ~~for the restaurant~~which enable it to serve virtually any cooking, warming, refrigeration, freezing and ~~institutional~~beverage application within a commercial kitchen ~~industry.~~or foodservice operation. This business segment has manufacturing facilities in Arkansas, California, Colorado, Florida, Illinois, Michigan, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Vermont, Washington, Australia, Canada, China, Denmark, Estonia, Italy, Mexico, the Philippines, Poland, Spain, Swedenequipment is used across all types of foodservice operations, including quick-service restaurants, full-service restaurants, convenience stores, retail outlets, hotels and ~~the United Kingdom. Principal product lines of~~other institutions. The products offered by 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, soft serve ice cream equipment, coffee and beverage dispensing equipment, home and professional craft brewing equipment, fry dispensers, bottle filling and canning equipment, and IoT solutions. These products are sold and marketed under the brand names: Anets, APW Wyott, Bakers Pride, Beech, BKI, Blodgett, Blodgett Combi, Bloomfield, Britannia, Carter-Hoffmann, Celfrost, Concordia, CookTek, Crown, CTX, Desmon, Deutsche Beverage, Doyon, Eswood, EVO, Firex, Follett, Frifri, Giga, Globe, Goldstein, Holman, Houno, IMC, Imperial, Induc, Ink Kegs, Inline Filling Systems, Jade, JoeTap, Josper, L2F, Lang, Lincat, MagiKitch’n, Market Forge, Marsal, Meheen, Middleby Marshall, MPC, Nieco, Nu-Vu, PerfectFry, Pitco, QualServ, RAM, Southbend, Ss Brewtech, Star, Starline, Sveba Dahlen, Synesso, Tank, Taylor, Thor, Toastmaster, TurboChef, Ultrafryer, Varimixer, Wells, Wild Goose and Wunder-Bar.

The Food Processing Equipment Group ~~manufactures preparation,~~offers a broad portfolio of processing solutions for customers producing pre-cooked meat products, such as hot dogs, dinner sausages, poultry and lunchmeats and baked goods such as muffins, cookies and bread. Through its broad line of products, the company is able to deliver a wide array of cooking ~~packaging~~solutions to service a variety of food ~~handling and~~processing requirements demanded by its customers. The company can offer highly integrated solutions that provide a food ~~safety equipment~~processing operation a uniquely integrated solution providing for the highest level of food processing industry. This business segment has manufacturing operations in Georgia, Illinois, Iowa, North Carolina, Oklahoma, Pennsylvania, Texas, Virginia, Washington, Wisconsin, Denmark, France, Germany, India, Italy,quality, product consistency, and ~~the United Kingdom. Principal~~reduced operating costs resulting from increased product ~~lines of~~yields, increased capacity and greater throughput and reduced labor costs through automation. The products offered by this group include a wide array of cooking and baking solutions, including batch ovens, baking ovens, proofing ovens, conveyor belt ovens, continuous processing ovens, frying systems and automated thermal processing ~~systems,~~systems. The company also provides a comprehensive portfolio of complementary food preparation equipment such as tumblers, massagers, grinders, slicers, reduction and emulsion systems, mixers, blenders, formers, battering equipment, breading equipment, seeding equipment, water cutting systems, food presses, food suspension equipment, filling and depositing solutions, and forming equipment, as well as a variety of automated loading and unloading systems, food safety, food handling, freezing, defrosting and packaging equipment. ~~These products are sold~~This portfolio of equipment can be integrated to provide customers a highly efficient and marketed under the brand names: Alkar, Armor Inox, Auto-Bake, Baker Thermal Solutions, Burford, Cozzini, CV-Tek, Danfotech, Deutsche Process, Drake, Glimek, Hinds-Bock, Maurer-Atmos, MP Equipment, Pacproinc, RapidPak, Scanico, Spooner Vicars, Stewart Systems, Thurne and Ve.Ma.C.customized solution.

The Residential Kitchen Equipment Group ~~manufactures, sells~~has a broad portfolio of innovative and ~~distributes~~professional-style residential kitchen equipment for the residential market. This business segment has manufacturing facilities in California, Michigan, Mississippi, Wisconsin, Belgium, France and the United Kingdom. Principal product lines ofequipment. The products offered by this group ~~are~~include ranges, cookers, stoves, cooktops, microwaves, ovens, refrigerators, dishwashers, undercounter refrigeration, wine cellars, ice machines, beer dispensers, ventilation equipment, mixers, rotisseries and outdoor cooking equipment. These products are sold and marketed under the brand names: AGA, AGA Cookshop, Brava, EVO, La Cornue, Leisure Sinks, Lynx, Marvel, Mercury, Novy, 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								Nine Months Ended									Three Months Ended
		Oct 2, 2021				Sep 26, 2020				Oct 2, 2021				Sep 26, 2020						Apr 2, 2022	Apr 3, 2021
		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent					Sales		Percent		Sales		Percent
Business Segments:	Business Segments:																	Business Segments:
Commercial Foodservice	Commercial Foodservice	$	511,480	62.6	%	$	371,223	58.5	%	$	1,501,413	63.0	%	$	1,081,847	60.6	%	Commercial Foodservice			$	543,653	54.7	%	$	481,155	63.5	%
Food Processing	Food Processing	112,670		13.8		110,648		17.4		355,172		14.9		316,477		17.7		Food Processing			119,943		12.0		112,494		14.8
Residential Kitchen	Residential Kitchen	193,395		23.6		152,654		24.1		527,791		22.1		385,637		21.7		Residential Kitchen			331,080		33.3		164,409		21.7
Total	Total	$	817,545	100.0	%	$	634,525	100.0	%	$	2,384,376	100.0	%	$	1,783,961	100.0	%	Total			$	994,676	100.0	%	$	758,058	100.0	%

2522

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


		Commercial Foodservice		Food Processing		Residential Kitchen		Corporate and Other (1)		Total			Commercial Foodservice		Food Processing		Residential Kitchen		Corporate and Other (1)		Total
Three Months Ended October 2, 2021
Net sales		$	511,480	$	112,670	$	193,395	$	—	$	817,545
Income (loss) from operations (2, 3, 6)		105,529		21,425		31,322		75,206		233,482
Depreciation expense		5,793		1,353		3,608		122		10,876
Amortization expense (5)		12,822		1,773		3,589		1,570		19,754
Net capital expenditures		6,391		1,106		2,127		797		10,421

Nine Months Ended October 2, 2021
Net sales		$	1,501,413	$	355,172	$	527,791	$	—	$	2,384,376
Income (loss) from operations (2, 3, 4, 6)		311,789		68,048		95,088		16,447		491,372
Depreciation expense		17,579		4,005		9,120		476		31,180
Amortization expense (5)		42,272		5,450		7,145		4,625		59,492
Net capital expenditures		17,599		3,539		7,256		1,338		29,732

Total assets		$	3,498,696	$	640,229	$	1,578,857	$	55,069	$	5,772,851

Three Months Ended September 26, 2020
Net sales		$	371,223	$	110,648	$	152,654	$	—	$	634,525
Income (loss) from operations (2, 3)		57,483		22,860		22,626		(16,297)		86,672
Depreciation expense		5,360		1,480		2,965		—		9,805
Amortization expense (5)		12,923		1,794		2,170		692		17,579
Net capital expenditures		5,279		692		794		299		7,064

Nine Months Ended September 26, 2020

Three Months Ended April 2, 2022												Three Months Ended April 2, 2022
Net sales	Net sales	$	1,081,847	$	316,477	$	385,637	$	—	$	1,783,961	Net sales	$	543,653	$	119,943	$	331,080	$	—	$	994,676
Income (loss) from operations (2, 3)	Income (loss) from operations (2, 3)	173,064		57,801		41,860		(41,521)		231,204		Income (loss) from operations (2, 3)	109,718		20,112		24,946		(32,212)		122,564
Depreciation expense	Depreciation expense	15,567		4,179		8,742		15		28,503		Depreciation expense	5,872		1,325		3,985		190		11,372
Amortization expense (5)	Amortization expense (5)	38,257		5,494		7,627		1,713		53,091		Amortization expense (5)	13,649		1,787		18,129		1,805		35,370
Net capital expenditures	Net capital expenditures	22,152		3,115		4,089		420		29,776		Net capital expenditures	5,564		3,087		5,541		305		14,497

Total assets	Total assets	$	3,155,360	$	628,156	$	1,149,550	$	87,118	$	5,020,184	Total assets	$	3,596,857	$	654,766	$	2,127,119	$	95,423	$	6,474,165

Three Months Ended April 3, 2021												Three Months Ended April 3, 2021
Net sales												Net sales	$	481,155	$	112,494	$	164,409	$	—	$	758,058
Income (loss) from operations (2, 3, 4)												Income (loss) from operations (2, 3, 4)	96,316		19,662		29,856		(24,661)		121,173
Depreciation expense												Depreciation expense	5,793		1,315		2,774		255		10,137
Amortization expense (5)												Amortization expense (5)	15,204		1,843		1,772		1,476		20,295
Net capital expenditures												Net capital expenditures	5,195		928		2,256		346		8,725

Total assets												Total assets	$	3,283,354	$	632,746	$	1,213,045	$	160,768	$	5,289,913

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

(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.

(3)Restructuring expenses are allocated in operating income by segment. ~~See note 16 for further details.~~

(4)Gain ~~(loss)~~ on sale of plants are included in Commercial ~~Foodservice and Residential Kitchen.~~Foodservice.

(5)Includes amortization of deferred financing costs and Convertible Notes issuance costs.

~~(6)Termination fee from Welbilt merger is included in Corporate and Other.~~

Geographic Information

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


		Oct 2, 2021		Sep 26, 2020			Apr 2, 2022		Apr 3, 2021
United States and Canada	United States and Canada	$	337,790	$	321,159	United States and Canada	$	401,182	$	332,387

Asia	Asia	33,783		22,857		Asia	19,626		18,747
Europe and Middle East	Europe and Middle East	204,696		152,914		Europe and Middle East	147,005		182,577
Latin America	Latin America	8,062		6,111		Latin America	10,934		6,155
Total international	Total international	$	246,541	$	181,882	Total international	$	177,565	$	209,785
		$	584,331	$	503,041		$	578,747	$	539,865

2723

15) Employee Retirement 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. 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. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2010 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, 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 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. In December 2020, it was agreed that the Group Pension Scheme would be closed to future pension accruals effective April 5, 2021.

The other, much smaller, defined benefit pension plans operating within the AGA Group cover employees in France 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				Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020				Apr 2, 2022		Apr 3, 2021
Net Periodic Pension Benefit:	Net Periodic Pension Benefit:									Net Periodic Pension Benefit:
Service cost	Service cost	$	194	$	649	$	584	$	1,918	Service cost		$	—	$	194
Interest cost	Interest cost	4,287		6,456		12,927		19,086		Interest cost		6,705		4,290
Expected return on assets	Expected return on assets	(19,516)		(18,089)		(58,851)		(53,476)		Expected return on assets		(19,956)		(19,531)
Amortization of net loss (gain)	Amortization of net loss (gain)	3,150		842		9,498		2,489		Amortization of net loss (gain)		965		3,152
Amortization of prior service cost (credit)	Amortization of prior service cost (credit)	716		642		2,158		1,897		Amortization of prior service cost (credit)		696		716

		$	(11,169)	$	(9,500)	$	(33,684)	$	(28,086)			$	(11,590)	$	(11,179)

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

16) Share Repurchases

~~(b)Defined Contribution Plans~~In November 2017, the company's Board of Directors approved a stock repurchase program authorizing the company to repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock. During three months period ended April 2, 2022, the company repurchased 862,912 shares of its common stock under the program for $155.2 million, including applicable commissions, which represented an average price of $179.89. As of April 2, 2022, 2,027,577 shares had been purchased under the 2017 stock repurchase program and 472,423 shares remained authorized for repurchase.

The company maintains 2 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) Restructuring~~

~~Commercial Foodservice Equipment Group~~

During the fiscal years 2020 and 2019, the company undertook cost reduction initiatives related to the Commercial Foodservice Equipment Group including headcount reductions and facility consolidations. These actions resulted in expenses of $0.5 million and $7.0 million in the three months ended October 2, 2021 and September 26, 2020, respectively, primarily for severance related to headcount reductions associated with the COVID-19 pandemic and facility consolidations. For the nine months period ended October 2, 2021 and September 26, 2020 the expenses for these actions amounted to $1.4 million and $8.6 million, respectively. These expenses are reflected in restructuring expenses in the Condensed Consolidated Statements of Comprehensive Income. The realization of cost savings from the restructuring initiatives began in 2020 with an expected annual savings of approximately $20.0 million. At October 2, 2021, the restructuring obligations accrued for these initiatives are immaterial and will substantially be complete by the end of fiscal 2021.

~~The restructuring expenses for the other segments of the company were not material during the period.~~

~~17) Share Repurchases~~

~~The company~~ treats shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. ~~For~~During the three ~~and nine~~ months period ended ~~October~~April 2, ~~2021,~~2022, the company repurchased ~~621 and 14,652~~84,086 shares of its common stock ~~respectively,~~ that were surrendered to the company for withholding taxes related to restricted stock vestings for ~~$0.1 million and $2.5 million, respectively. These withheld shares are not considered common stock repurchases under~~$14.8 million. During the ~~authorized common stock repurchase plan and accordingly are not included in the common stock repurchase totals disclosed below.~~

In November 2017, the company's Board of Directors approved a stock repurchase program authorizing the company to repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock. During 2020,three months period ended April 3, 2021, the company repurchased ~~896,965~~10,473 shares of its common stock ~~under~~that were surrendered to the ~~program~~company for ~~$69.7 million, including applicable commissions, which represented an average price of $77.70. As of October 2, 2021, 1,023,165 shares had been purchased under the 2017~~withholding taxes related to restricted stock ~~repurchase program and 1,476,835 remain authorized~~vestings for ~~repurchase.~~

$1.8 million.

2924

~~18) Subsequent Events~~

On October 21, 2021, the company entered into a five-year, $4.5 billion amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement amends and restates the company’s prior $3.1 billion credit facility. The Credit Agreement provides for a new senior secured credit facility in an aggregate principal amount of $4.5 billion, consisting of (i) a $1 billion term loan facility, (ii) a $750 million delayed draw term loan facility and (iii) a $2.75 billion multi-currency revolving credit facility, with the potential, under certain circumstances, to increase the amount of the credit facility by the greater of $625 million and 100% of consolidated EBITDA for the most recently ended period of consecutive fiscal quarters (plus additional amounts, subject to compliance with a senior secured net leverage ratio), either by increasing the revolving commitment or by adding one or more revolver or term loan tranches.The credit facility matures on October 21, 2026, with the potential to extend the maturity date in one year increments with the consent of the extending lenders. All obligations under the Credit Agreement are secured by substantially all the assets of the company and certain of the company’s material domestic subsidiaries, and unconditionally guaranteed by, subject to certain exceptions, the company and certain of the company’s direct and indirect material foreign and domestic subsidiaries.

The term loan facility will amortize in equal quarterly installments due on the last day of each fiscal quarter, commencing with the first full fiscal quarter after October 21, 2021, in an aggregate annual amount equal to 2.50% of the original aggregate principal amount of the term loan facility, with the balance, plus any accrued interest, due and payable on October 21, 2026. The delayed draw term loan facility is available for borrowing within one year. The delayed draw term loan facility will amortize in quarterly installments due on the last day of each fiscal quarter, commencing with the first full fiscal quarter after each delayed draw term loan borrowing in an amount equal to 0.625% of the original aggregate principal amount of such borrowing, with the balance, plus any accrued interest, due and payable on October 21, 2026. The Credit Agreement requires the company to satisfy the following financial covenants: (i) a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 3.00 to 1.00; and (ii) a maximum Secured Leverage Ratio (as defined in the Credit Agreement) of Funded Secured Debt less Unrestricted Cash to Pro Forma EBITDA (each as defined in the Credit Agreement) of 3.75 to 1.00, which may be adjusted to 4.25 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 Agreement. The Credit Agreement provides availability to provide working capital, capital expenditures, to support the issuance of letters of credit and other general corporate purposes, as well as for financing permitted acquisitions. The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement, a copy of which is attached as Exhibit 10.1 hereto.

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

Special Notes Regarding Forward-Looking Statements

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, the impact of COVID-19 pandemic and the response of governments, businesses and other third parties; 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 ~~2020~~2021 Annual Report on Form 10-K. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this report are made only as of the date hereof and, except as required by federal securities laws and rules and regulations of the SEC, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

~~Termination~~The ongoing conflict between Russia and Ukraine has resulted in significant economic disruption globally and may adversely affect our business and results of ~~Welbilt Merger~~

~~As previously disclosed, on April 20, 2021, Middleby, entered into a Merger Agreement with Welbilt, Acquiror and Merger Sub, which provided that, upon the terms and subject~~operations. In response to the ~~conditions set forth therein, Merger Sub would merge with~~Russia-Ukraine conflict, governments have imposed sanctions and other restrictive actions against Russia and accordingly, the company has suspended all sales into ~~Welbilt, with Welbilt surviving as an indirect, wholly-owned subsidiary~~and purchases from Russia. The Russia-Ukraine conflict has resulted in increased transportation costs and supply chain challenges, and further escalation of ~~Middleby.~~

such conflict may result in additional supply chain disruptions, among other things, which may adversely affect our business and results of operations. As ~~previously disclosed,~~the Company does not have material operations in Ukraine or Russia, the impact of this conflict did not have a material impact on ~~July 13, 2021, Middleby announced that, under~~our results of operations during the ~~terms~~three months ended April 2, 2022. However, the extent of the ~~Merger Agreement, it would not exercise its right to propose any modifications to the terms~~adverse impacts of the ~~Merger Agreement~~ongoing conflict on the broader global economy cannot be predicted and ~~would allow the five-day match period to expire. Accordingly, on July 14, 2021, Welbilt delivered to Middleby a written notice terminating the Merger Agreement in accordance with Section 7.1(c)(iii)~~could negatively impact our business and results of ~~the Merger Agreement and, concurrently with Middleby’s receipt of the termination fee of $110 million in cash from Welbilt, the Merger Agreement was terminated on July 14, 2021.~~

~~The termination fee received is reflected~~operations in the Condensed Consolidated Statements of Comprehensive Income as the "merger termination fee" and $19.7 million of deal costs associated with the transaction are reflected in selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income.

future.

Net Sales Summary

(dollars in thousands)


		Three Months Ended								Nine Months Ended									Three Months Ended
		Oct 2, 2021				Sep 26, 2020				Oct 2, 2021				Sep 26, 2020						Apr 2, 2022	Apr 3, 2021
		Sales		Percent		Sales		Percent		Sales		Percent		Sales		Percent					Sales		Percent		Sales		Percent
Business Segments:	Business Segments:																	Business Segments:
Commercial Foodservice	Commercial Foodservice	$	511,480	62.6	%	$	371,223	58.5	%	$	1,501,413	63.0	%	$	1,081,847	60.6	%	Commercial Foodservice			$	543,653	54.7	%	$	481,155	63.5	%
Food Processing	Food Processing	112,670		13.8		110,648		17.4		355,172		14.9		316,477		17.7		Food Processing			119,943		12.0		112,494		14.8
Residential Kitchen	Residential Kitchen	193,395		23.6		152,654		24.1		527,791		22.1		385,637		21.7		Residential Kitchen			331,080		33.3		164,409		21.7
Total	Total	$	817,545	100.0	%	$	634,525	100.0	%	$	2,384,376	100.0	%	$	1,783,961	100.0	%	Total			$	994,676	100.0	%	$	758,058	100.0	%

3125

Results of Operations

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


		Three Months Ended				Nine Months Ended					Three Months Ended
		Oct 2, 2021		Sep 26, 2020		Oct 2, 2021		Sep 26, 2020				Apr 2, 2022		Apr 3, 2021
Net sales	Net sales	100.0	%	100.0	%	100.0	%	100.0	%	Net sales		100.0	%	100.0	%
Cost of sales	Cost of sales	63.4		64.9		63.1		64.9		Cost of sales		66.8		63.6
Gross profit	Gross profit	36.6		35.1		36.9		35.1		Gross profit		33.2		36.4
Selling, general and administrative expenses	Selling, general and administrative expenses	21.4		20.3		20.8		21.6		Selling, general and administrative expenses		20.7		20.4
Restructuring	Restructuring	0.1		1.1		0.1		0.6		Restructuring		0.2		0.1
Merger termination fee		(13.5)		—		(4.6)		—

Income from operations	Income from operations	28.6		13.7		20.6		12.9		Income from operations		12.3		16.0
Interest expense and deferred financing amortization, net	Interest expense and deferred financing amortization, net	1.6		2.9		1.8		3.1		Interest expense and deferred financing amortization, net		1.8		2.1
Net periodic pension benefit (other than service costs)	Net periodic pension benefit (other than service costs)	(1.4)		(1.6)		(1.4)		(1.7)		Net periodic pension benefit (other than service costs)		(1.2)		(1.5)
Other expense (income), net	Other expense (income), net	0.1		—		(0.1)		0.2		Other expense (income), net		0.4		(0.2)
Earnings before income taxes	Earnings before income taxes	28.3		12.4		20.3		11.3		Earnings before income taxes		11.3		15.6
Provision for income taxes	Provision for income taxes	6.7		2.9		4.1		2.6		Provision for income taxes		2.7		3.8
Net earnings	Net earnings	21.6	%	9.5	%	16.2	%	8.7	%	Net earnings		8.6	%	11.8	%

3226

Three Months Ended ~~October~~April 2, ~~2021~~2022 as compared to Three Months Ended ~~September 26, 2020~~April 3, 2021

NET SALES. Net sales for the three months period ended ~~October~~April 2, ~~2021~~2022 increased by ~~$183.0~~$236.6 million or ~~28.8%~~31.2% to ~~$817.5~~$994.7 million as compared to ~~$634.5~~$758.1 million in the three months period ended ~~September 26, 2020.~~April 3, 2021. Net sales increased by ~~$39.4~~$157.0 million, or ~~6.2%~~20.7%, from ~~the fiscal 2020 acquisitions of Wild Goose and United Foodservice Equipment Zhuhai and~~ the fiscal 2021 acquisitions of Novy, Imperial, Newton CFV, Char-Griller, and ~~Imperial.~~Kamado Joe and Masterbuilt. Excluding acquisitions, ~~and a disposition,~~ net sales increased ~~$148.9~~$79.6 million, or ~~23.7%~~10.5%, from the prior year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the three months period ended ~~October~~April 2, ~~2021 increased~~2022 decreased net sales by approximately ~~$7.9~~$8.8 million or ~~1.3%~~1.2%. Excluding the impact of foreign exchange ~~acquisitions~~ and ~~a disposition,~~acquisitions sales increased ~~22.4%~~11.7% for the three months period ended ~~October~~April 2, ~~2021~~2022 as compared to the prior year period, including a net sales increase of ~~31.9%~~10.9% at the Commercial Foodservice Equipment Group, a net sales increase of ~~1.4%~~8.4% at the Food Processing Equipment Group and a net sales increase of ~~14.2%~~16.1% at the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by ~~$140.3~~$62.5 million, or ~~37.8%~~13.0%, to ~~$511.5~~$543.7 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$371.2~~$481.2 million in the prior year period. Net sales from the acquisitions of ~~Wild Goose, United Foodservice Equipment Zhuhai,~~Imperial and ~~Imperial,~~Newton CFV, which were acquired on ~~December 7, 2020,~~September 24, 2021 and ~~December 18, 2020, and September 24,~~November 16, 2021, respectively, accounted for an increase of ~~$18.2~~$14.6 million during the three months period ended ~~October~~April 2, ~~2021.~~2022. Excluding the impact of acquisitions, net sales of the Commercial Foodservice Equipment Group increased ~~$122.1~~$47.9 million, or ~~32.9%~~10.0%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales increased ~~$118.5~~$52.6 million, or ~~31.9%~~10.9%, at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales increase of ~~$100.8~~$36.0 million, or ~~37.9%~~10.6%, to ~~$366.6~~$374.9 million, as compared to ~~$265.8~~$338.9 million in the prior year period. This includes an increase of ~~$14.8~~$13.4 million from the recent acquisitions. Excluding the acquisitions, the net increase in domestic sales was ~~$86.0~~$22.6 million, or ~~32.4%~~6.7%. The increase in domestic sales is related to improvements in market conditions and consumer demand. International sales increased ~~$39.5~~$26.5 million, or ~~37.5%~~18.6%, to ~~$144.9~~$168.8 million, as compared to ~~$105.4~~$142.3 million in the prior year period. This includes an increase of ~~$3.4~~$1.2 million from the recent acquisitions and ~~an increase~~a decrease of ~~$3.6~~$4.7 million related to the ~~favorable~~unfavorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net sales increase in international sales was ~~$32.5~~$30.0 million, or ~~30.8%~~21.1%. The increase in ~~domestic and~~ international sales is related to improvements in market conditions, ~~and consumer demand, as~~primarily in the ~~prior year period was significantly impacted by the COVID-19 pandemic.~~European markets.

•Net sales of the Food Processing Equipment Group increased by ~~$2.0~~$7.4 million, or ~~1.8%~~6.6%, to ~~$112.6~~$119.9 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$110.6~~$112.5 million in the prior year period. Excluding the impact of foreign exchange, net sales increased ~~$1.5~~$9.4 million, or ~~1.4%~~8.4%, at the Food Processing Equipment Group. Domestically, the company realized a sales increase of ~~$2.3~~$15.1 million, or ~~2.8%~~18.9%, to ~~$84.4~~$94.8 million, as compared to ~~$82.1~~$79.7 million in the prior year period. The increase in domestic sales reflects growth primarily driven by protein products. International sales decreased ~~$0.3~~$7.7 million, or ~~1.1%~~23.5%, to ~~$28.2~~$25.1 million, as compared to ~~$28.5~~$32.8 million in the prior year period. This includes ~~an increase~~a decrease of ~~$0.5~~$2.0 million related to the ~~favorable~~unfavorable impact of exchange rates. Excluding foreign exchange, the net sales decrease in international sales was ~~$0.8~~$5.7 million, or ~~2.8%~~17.4%. The decrease in international sales is impacted by the timing of certain larger projects in the European markets.

•Net sales of the Residential Kitchen Equipment Group increased by ~~$40.7~~$166.7 million, or ~~26.7%~~101.4%, to ~~$193.4~~$331.1 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$152.7~~$164.4 million in the prior year period. Net sales from the acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt, which were acquired on July 12, 2021, December 27, 2021 and December 27, 2021, respectively, accounted for an increase of $142.4 million during the three months period ended April 2, 2022. Excluding the impact of the ~~acquisition of Novy, acquired on July 12, 2021, and the disposition,~~acquisitions, net sales of the Residential Kitchen Equipment Group increased ~~$24.8~~$24.3 million, or ~~16.8%~~14.8%, as compared to the prior year period. Excluding the impact of foreign exchange ~~the acquisition,~~ and the ~~disposition,~~acquisitions, net sales increased ~~$21.0~~$26.4 million, or ~~14.2%~~16.1% at the Residential Kitchen Equipment Group. Domestically, the company realized a sales increase of ~~$15.9~~$121.0 million, or ~~16.3%~~111.4%, to ~~$113.2~~$229.6 million, as compared to ~~$97.3~~$108.6 million in the prior year period. International sales increased ~~$24.8~~$45.7 million, or ~~44.8%~~81.9%, to ~~$80.2~~$101.5 million, as compared to ~~$55.4~~$55.8 million in the prior year period. This includes an ~~increase~~decrease of ~~$3.8~~$2.1 million related to the ~~favorable~~unfavorable impact of exchange rates. Excluding foreign exchange ~~the acquisition,~~ and the ~~disposition,~~acquisitions, the net sales increase in international sales was ~~$5.1~~$3.6 million, or ~~10.2%~~6.5%. The increase in domestic and international sales reflects the strong demand for our premium appliance brands and strength in the European market.

3327

GROSS PROFIT. Gross profit increased to ~~$299.6~~$330.5 million in the three months period ended ~~October~~April 2, ~~2021~~2022 from ~~$222.7~~$275.9 million in the prior year period, primarily reflecting higher sales volumes related to improvements in market conditions and consumer ~~demand and favorable~~demand. The impact of foreign ~~exchanges~~exchange rates ~~of $2.7~~decreased gross profit by approximately $3.3 million. The gross margin rate was ~~35.1%~~36.4% in the three months period ended ~~September 26, 2020~~April 3, 2021 as compared to ~~36.6%~~33.2% in the current year period. Gross profit margins have been negatively impacted by acquisitions, including $14.3 million of acquisition related inventory step-up charges, along with rising costs of many raw materials and inputs, ~~as well as higher~~ labor rates and logistics costs.

•Gross profit at the Commercial Foodservice Equipment Group increased by ~~$59.8~~$24.0 million, or ~~46.9%~~13.7%, to ~~$187.3~~$199.2 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$127.5~~$175.2 million in the prior year period. Gross profit from the acquisitions of ~~Wild Goose, United Foodservice Equipment Zhuhai,~~Imperial and ~~Imperial~~Newton CFV increased gross profit by ~~$7.1~~$5.0 million. Excluding acquisitions, gross profit increased by ~~$52.7~~$19.0 million related to higher sales volumes. The impact of foreign exchange rates ~~increased~~decreased gross profit by approximately ~~$1.2~~$1.7 million. The gross margin rate increased to 36.6%, as compared to ~~34.3%~~36.4% in the prior year period. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was ~~36.6%~~36.7%.

•Gross profit at the Food Processing Equipment Group increased by $1.5 million, or ~~3.7%~~3.8%, to ~~$41.9~~$40.7 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$40.4~~$39.2 million in the prior year period. The impact of foreign exchange rates ~~increased~~decreased gross profit by approximately ~~$0.3~~$0.7 million. The gross profit margin rate ~~increased~~decreased to ~~37.2%~~33.9%, as compared to ~~36.5%~~34.8% in the prior year period primarily related to higher sales volumes and product mix. The gross margin rate, excluding the impact of foreign exchange, was ~~37.1%~~34.0%.

•Gross profit at the Residential Kitchen Equipment Group increased by ~~$15.2~~$30.2 million, or ~~27.4%~~49.7%, to ~~$70.7~~$91.0 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$55.5~~$60.8 million in the prior year period. Gross profit from the acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt increased gross profit by $20.9 million. The impact of foreign exchange rates ~~increased~~decreased gross profit by approximately ~~$1.2~~$0.9 million. The gross margin rate ~~increased~~decreased to ~~36.6%~~27.5%, as compared to ~~36.3%~~37.0% in the prior year period related to higher sales volumes. Gross profit margins have been negatively impacted by acquisitions, including $14.3 million of acquisition related inventory step-up charges. The gross margin rate, excluding ~~the acquisition~~acquisitions and the impact of foreign exchange, was ~~37.5%~~37.2%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and administrative expenses increased from ~~$128.8~~$155.0 million in the three months period ended ~~September 26, 2020~~April 3, 2021 to ~~$175.4~~$206.1 million in the three months period ended ~~October~~April 2, ~~2021.~~2022. As a percentage of net sales, selling, general, and administrative expenses were ~~20.3%~~20.4% in the three months period ended ~~September 26, 2020,~~April 3, 2021, as compared to ~~21.4%~~20.7% in the three months period ended ~~October~~April 2, ~~2021.~~2022.

Selling, general and administrative expenses reflect increased costs of ~~$9.4~~$36.1 million associated with acquisitions, including ~~$2.2~~$17.7 million of intangible amortization expense. Selling, general and administrative expenses increased ~~$16.9~~$6.1 million related to compensation ~~costs and $11.9 million related to professional fees, including deal expenses.~~costs. Higher sales volumes also resulted in increased commission expense. Foreign exchange rates had an ~~unfavorable~~favorable impact of ~~$1.3~~$1.7 million.

RESTRUCTURING EXPENSES. Restructuring expenses were ~~$7.3 million for the three months period ended September 26, 2020 and~~ $0.8 million for the three months period ended ~~October~~April 3, 2021 and $1.9 million for the three months period ended April 2, ~~2021.~~2022. Restructuring expenses in both periods related primarily to headcount reductions and facility consolidations within the Commercial Foodservice Equipment Group.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were ~~$13.2~~$17.7 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$18.4~~$16.1 million in the prior year ~~period, reflecting the reduction in borrowing levels, the reduction in average interest rates under the Credit Facility and the benefit from the Convertible Notes.~~period. Net periodic pension benefit (other than service costs) increased ~~$1.3~~$0.1 million to ~~$11.4~~$11.5 million in the three months period ended ~~October~~April 2, ~~2021~~2022 from ~~$10.1~~$11.4 million in the prior year ~~period, related to the decrease in discount rate used to calculate the interest cost.~~period. Other expense was ~~$0.8~~$4.1 million in the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to other income of ~~$0.3~~$1.7 million in the prior year period and consists mainly of foreign exchange gains and losses.

INCOME TAXES. A tax provision of ~~$54.9~~$26.6 million, at an effective rate of ~~23.8%~~23.7%, was recorded during the three months period ended ~~October~~April 2, ~~2021,~~2022, as compared to ~~$18.2~~$28.9 million at an effective rate of ~~23.1%, in the prior year period.~~

~~Nine Months Ended October 2, 2021 as compared to Nine Months Ended September 26, 2020~~

~~NET SALES~~. Net sales for the nine months period ended October 2, 2021 increased by $600.4 million or 33.7% to $2,384.4 million as compared to $1,784.0 million in the nine months period ended September 26, 2020. Net sales increased by $73.5 million, or 4.1%, from the fiscal 2020 acquisitions of Deutsche, Wild Goose and United Foodservice Equipment Zhuhai, and fiscal 2021 acquisitions of Novy and Imperial. Excluding acquisitions and a disposition, net sales increased $540.9 million, or 30.6%, from the prior year period. The impact of foreign exchange rates on foreign sales translated into U.S. Dollars for the nine months period ended October 2, 2021 increased net sales by approximately $39.2 million or 2.2%. Excluding the impact of foreign exchange, acquisitions and a disposition, sales increased 28.3% for nine months period ended October 2, 2021 as compared to the prior year period, including a net sales increase of 32.2% at the Commercial Foodservice Equipment Group, a net sales increase of 10.7% at the Food Processing Equipment Group and a net sales increase of 32.2% at the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $419.5 million, or 38.8%, to $1,501.4 million in the nine months period ended October 2, 2021, as compared to $1,081.9 million in the prior year period. Net sales from the acquisitions of Deutsche, Wild Goose, United Foodservice Equipment Zhuhai, and Imperial, which were acquired on March 2, 2020, December 7, 2020, December 18, 2020, and September 24, 2021, respectively, accounted for an increase of $52.3 million during the nine months period ended October 2, 2021. Excluding the impact of acquisitions, net sales of the Commercial Foodservice Equipment Group increased $367.2 million, or 33.9%, as compared to the prior year period. Excluding the impact of foreign exchange and acquisitions, net sales increased $348.0 million or 32.2% at the Commercial Foodservice Equipment Group. Domestically, the company realized a sales increase of $296.3 million, or 38.6%, to $1,064.5 million, as compared to $768.2 million in the prior year period. This includes an increase of $40.3 million from recent acquisitions. Excluding acquisitions, the net increase in domestic sales was $256.0 million, or 33.3%. The increase in domestic sales is related to improvements in market conditions and consumer demand. International sales increased $123.2 million, or 39.3%, to $436.9 million, as compared to $313.7 million in the prior year period. This includes an increase of $12.0 million from the recent acquisitions and an increase of $19.2 million related to the favorable impact of exchange rates. Excluding acquisitions and foreign exchange, the net sales increase in international sales was $92.0 million, or 29.3%. The increase in international revenues is related to improvements in market conditions, primarily in the European and Asian markets.

•Net sales of the Food Processing Equipment Group increased by $38.7 million, or 12.2%, to $355.2 million in the nine months period ended October 2, 2021, as compared to $316.5 million in the prior year period. Excluding the impact of foreign exchange, net sales increased $34.0 million or 10.7% at the Food Processing Equipment Group. Domestically, the company realized a sales increase of $31.8 million, or 14.0%, to $259.6 million, as compared to $227.8 million in the prior year period. The increase in domestic sales reflects growth primarily driven by both protein and bakery products. International sales increased $6.9 million, or 7.8%, to $95.6 million, as compared to $88.7 million in the prior year period. This includes an increase of $4.7 million related to the favorable impact of exchange rates. Excluding the foreign exchange, the net sales increase in international sales was $2.2 million, or 2.5%. The increase in international revenues is primarily driven by protein projects.

•Net sales of the Residential Kitchen Equipment Group increased by $142.2 million or 36.9%, to $527.8 million in the nine months period ended October 2, 2021, as compared to $385.6 million in the prior year period. Excluding the impact of the acquisition of Novy, acquired on July 12, 2021, and the disposition, net sales increased $135.0 million, or 36.3%, as compared to the prior year period. Excluding the impact of foreign exchange, the acquisition, and the disposition, net sales increased $119.7 million, or 32.2%, at the Residential Kitchen Equipment Group. Domestically, the company realized a sales increase of $71.0 million, or 26.9%, to $335.1 million, as compared to $264.1 million in the prior year period. International sales increased $71.2 million, or 58.6%, to $192.7 million, as compared to $121.5 million in the prior year period. This includes an increase of $15.3 million related to the favorable impact of exchange rates. Excluding foreign exchange, an acquisition, and a disposition, the net sales increase in international sales was $48.7 million, or 45.3%. The increase in domestic and international sales reflects the strong demand for our premium appliance brands and strength in the European market.

~~GROSS PROFIT~~. Gross profit increased to $879.2 million in the nine months period ended October 2, 2021 from $626.1 million in the prior year period, primarily reflecting higher sales volumes related to improvements in market conditions and consumer demand and the favorable impact of foreign exchanges rates of $14.2 million. The gross margin rate was 35.1% in the nine months period ended September 26, 2020 as compared to 36.9% in the current year period. Gross profit margins have been negatively impacted by rising costs of many raw materials and inputs, as well as higher labor rates and logistics costs.

•Gross profit at the Commercial Foodservice Equipment Group increased by $176.9 million, or 46.8%, to $554.5 million in the nine months period ended October 2, 2021, as compared to $377.6 million in the prior year period. Gross profit from the acquisitions of Deutsche, Wild Goose, United Foodservice Equipment Zhuhai, and Imperial increased gross profit by $18.8 million. Excluding acquisitions, gross profit increased by $158.1 million related to higher sales volumes. The impact of foreign exchange rates increased gross profit by approximately $6.9 million. The gross margin rate increased to 36.9%, as compared to 34.9% in the prior year period. The gross margin rate, excluding acquisitions and the impact of foreign exchange, was 37.0%.

•Gross profit at the Food Processing Equipment Group increased by $15.7 million, or 13.9%, to $128.3 million in the nine months period ended October 2, 2021, as compared to $112.6 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $2.3 million. The gross profit margin rate increased to 36.1%, as compared to 35.6% in the prior year period primarily related to higher sales volumes and product mix. The gross margin rate, excluding the impact of foreign exchange, was 35.9%.

•Gross profit at the Residential Kitchen Equipment Group increased by $58.8 million, or 42.8%, to $196.3 million in the nine months period ended October 2, 2021, as compared to $137.5 million in the prior year period. The impact of foreign exchange rates increased gross profit by approximately $5.0 million. The gross margin rate increased to 37.2%, as compared to 35.7% in the prior year period, related to higher sales volumes. The gross margin rate, excluding the acquisition and the impact of foreign exchange, was 37.6%.

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES~~. Combined selling, general and administrative expenses increased from $384.6 million in the nine months period ended September 26, 2020 to $496.0 million in the nine months period ended October 2, 2021. As a percentage of net sales, selling, general, and administrative expenses were 21.6% in the nine months period ended September 26, 2020, as compared to 20.8% in the nine months period ended October 2, 2021.

Selling, general and administrative expenses reflect increased costs of $19.2 million associated with acquisitions, including $6.5 million of intangible amortization expense. Selling, general and administrative expenses increased $56.0 million related to compensation costs and $28.0 million related to professional fees, including deal expenses. Higher sales volumes also resulted in increased commission expense, which was offset by decreases in bad debt provisions. Foreign exchange rates had an unfavorable impact of $6.9 million.

~~RESTRUCTURING EXPENSES~~.Restructuring expenses decreased $7.7 million from $10.3 million in the nine months period ended September 26, 2020 to $2.6 million in the nine months period ended October 2, 2021. Restructuring expenses in both periods related primarily to headcount reductions and facility consolidations within the Commercial Foodservice Equipment Group.

~~NON-OPERATING EXPENSES~~. Interest and deferred financing amortization costs were $43.5 million in the nine months period ended October 2, 2021, as compared to $55.9 million in the prior year period, reflecting the reduction in borrowing levels, the reduction in the average interest rates under the Credit Facility and the benefit from the Convertible Notes. Net periodic pension benefit (other than service costs) increased $4.3 million to $34.3 million in the nine months period ended October 2, 2021 from $30.0 million in the prior year period, related to the decrease in discount rate used to calculate the interest cost. Other income was $1.4 million in the nine months period ended October 2, 2021, as compared to other expense of $3.4 million in the prior year period and consists mainly of foreign exchange gains and losses.

~~INCOME TAXES. A tax provision of $97.7 million, at an effective rate of 20.2%, was recorded during the nine months period ended October 2, 2021, as compared to $46.5 million at an effective rate of 23.0%~~24.5%, in the prior year period. The effective tax rate for the three months period ended April 2, 2022 is lower ~~rate in~~than the ~~current~~comparable year israte primarily due to ~~several discrete tax benefits, including a deferred tax benefit for the enacted UK tax rate change from 19% to 25% and~~excess tax benefits from ~~amended U.S. tax returns, partially offset by a tax charge for state deferred tax rate changes.~~ share-based compensation award vesting.

~~When excluding the discrete tax adjustments, the 2021 rate was approximately 24.0%.~~

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Financial Condition and Liquidity

During the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, cash and cash equivalents decreased by ~~$16.6~~$33.7 million to ~~$251.5~~$146.7 million from ~~$268.1~~$180.4 million at January ~~2, 2021.~~1, 2022. Total debt increased to ~~$1.9~~$2.6 billion at ~~October~~April 2, ~~2021~~2022 from ~~$1.7~~$2.4 billion at January 2, 2021 primarily due to the adoption of ASU 2020-06 as discussed in Note 4, Recently Issued Accounting Standards, in the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1, ~~of this Quarterly Report on Form 10-Q.~~2022.

OPERATING ACTIVITIES. Net cash used for operating activities was $15.3 million for the three months ended April 2, 2022, compared to net cash provided by operating activities ~~was $346.0~~of $59.7 million for the ~~nine~~three months ended October 2, 2021, compared to $316.2 million for the nine months ended September 26, 2020. During the nine months period ended October 2, 2021, the company received approximately $67.7 million in a termination fee, net of deal costs and taxes, approximately.April 3, 2021.

During the ~~nine~~three months period ended ~~October~~April 2, ~~2021,~~2022, working capital changes meaningfully impacted operating cash flows. These included an increase in accounts receivable of ~~$97.4~~$55.3 million due to increased sales from improved market ~~conditions and increased sales volumes. Also,~~conditions. Additionally, inventory increased ~~$134.5~~$88.5 million ~~and accounts payable increased $61.3 million~~due to ~~support increased demand and~~the seasonality of acquired businesses, efforts to ~~manage~~mitigate supply chain ~~risks.~~risks and the inflationary impacts on inventory.

INVESTING ACTIVITIES. During the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, net cash used for investing activities amounted to ~~$412.7~~$24.1 million. Cash used to fund acquisitions and investments amounted to ~~$389.0 million primarily for the 2021 acquisitions of Novy and Imperial during the nine months ended October 2, 2021.~~$6.4 million. Additionally, ~~$29.7~~$14.5 million was expended, primarily for additions and upgrades of production equipment and manufacturing ~~facilities and residential and commercial showrooms. Proceeds on the sale of property following facility consolidation actions generated $6.1 million~~facilities.

FINANCING ACTIVITIES. Net cash flows provided by financing activities were ~~$54.4~~$8.7 million during the ~~nine~~three months ended ~~October~~April 2, ~~2021.~~2022. The company’s borrowing activities during the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 included ~~$64.4~~$187.8 million of net proceeds under its Credit Facility. ~~The~~Additionally, the company ~~used $2.5~~repurchased $170.0 million of Middleby common shares during the three months ended April 2, 2022. This was comprised of $14.8 million to repurchase ~~14,652~~84,086 shares of Middleby common stock that were surrendered to the company by employees in lieu of cash payment for withholding taxes related to restricted stock vesting ~~during the quarter. Additionally, the company settled deferred purchase price obligations~~and $155.2 million used to repurchase 862,912 shares of ~~$5.9 million during the nine months ended October 2, 2021.~~its common stock under a repurchase program.

At ~~October~~April 2, ~~2021,~~2022, 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.

3729

Recently Issued Accounting Standards

See Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 4 - Recent Issued Accounting Standards, of this Quarterly Report on Form 10-Q.

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 the company's consolidated financial statements. There have been no changes in the company's critical accounting policies, which include revenue recognition, inventories, goodwill and ~~other~~indefinite-life intangibles, convertible debt, pensions benefits, and income taxes, as discussed in the company's Annual Report on Form 10-K for the year ended January ~~2, 2021~~1, 2022 (the ~~“2020~~“2021 Annual Report on Form 10-K”) ~~other than those described below.~~.

~~Effective January 3, 2021, the company adopted ASU 2020-06, "Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity."~~

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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 coinciding with the end of the company's Fiscal Third Quarter		Variable Rate Debt
Twelve Month Period coinciding with the end of the company's Fiscal First Quarter				Twelve Month Period coinciding with the end of the company's Fiscal First Quarter	Variable Rate Debt

2022		$	21,553
2023	2023	19,051		2023	$	27,693
2024	2024	19,056		2024	23,644
2025	2025	1,827,627		2025	23,639
2026 and thereafter		288
2026				2026	758,789
2027 and thereafter				2027 and thereafter	1,764,060
		$	1,887,575		$	2,597,825

The company is exposed to interest rate risk on its floating-rate debt. The company has entered into interest rate swaps to fix the interest rate applicable to certain of its variable-rate debt. The agreements swap one-month LIBOR for fixed rates. The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income. As of ~~October~~April 2, ~~2021,~~2022, the fair value of these instruments was ~~a liability~~an asset of ~~$29.3~~$24.0 million. The change in fair value of these swap agreements in the first ~~nine~~three months of ~~2021~~2022 was a gain of ~~$16.2~~$31.1 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.

In August 2020, the company issued $747.5 million aggregate principal amount of Convertible Notes in a private offering pursuant to the Indenture. The company does not have economic interest rate exposure as the Convertible Notes have a fixed annual rate of 1.00%. The fair value of the Convertible Notes is subject to interest rate risk, market risk and other factors due to its conversion feature. The fair value of the Convertible Notes is also affected by the price and volatility of the company’s common stock and will generally increase or decrease as the market price of our common stock changes. The interest and market value changes affect the fair value of the Convertible Notes but do not impact the company’s financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, the company carries the Convertible Notes at face value, less any unamortized discount on the balance sheet and presents the fair value for disclosure purposes only.

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 loss of ~~$3.4~~$3.0 million at the end of the ~~third~~first quarter of ~~2021.~~2022.

The company accounts for its derivative financial instruments in accordance with ASC 815, "Derivatives and Hedging". In accordance with ASC 815, these instruments are recognized on the balance sheet as either an asset or a liability measured at fair value. Changes in the market value and the related foreign exchange gains and losses are recorded in the statement of earnings.

3931

Item 4. Controls and Procedures

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

As of ~~October~~April 2, ~~2021,~~2022, 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 ~~October~~April 2, ~~2021,~~2022, 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.

4032

PART II. OTHER INFORMATION

The company was not required to report the information pursuant to Items 1 through 6 of Part II of Form 10-Q for the ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, 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)

~~July 4, 2021 to July 31, 2021~~

—

~~1,476,835~~

~~August 1, 2021 to August 28, 2021~~

—

~~1,476,835~~

~~August 29, 2021 to October 2, 2021~~

—

~~1,476,835~~

~~Quarter ended October 2, 2021~~

—

~~1,476,835~~


	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)
January 2, 2022 to January 29, 2022	188,397	$	187.77	188,397	1,146,938
January 30, 2022 to February 26, 2022	314,740	184.10		314,740	832,198
February 27, 2022 to April 2, 2022	359,775	172.08		359,775	472,423
Quarter ended April 2, 2022	862,912	$	179.89	862,912	472,423

(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 ~~October~~April 2, ~~2021,~~2022, the total number of shares authorized for repurchase under the program is 2,500,000. As of ~~October~~April 2, ~~2021, 1,023,165~~2022, 2,027,577 shares had been purchased under the 2017 stock repurchase program.

In the consolidated financial statements, the company also treats shares withheld for tax purposes on behalf of employees in connection with the vesting of restricted share grants as common stock repurchases because they reduce the number of shares that would have been issued upon vesting. These withheld shares are not considered common stock repurchases under the authorized common stock repurchase plan and accordingly are not included in the common stock repurchase totals in the preceding table.

4133

Item 6. Exhibits


Exhibits:

~~Exhibit 10.1 –~~			Eighth Amended and Restated Credit Agreement, dated as of October 21, 2021, among Middleby Marshall Inc., The Middleby Corporation, the Subsidiary Borrowers named therein, the lenders named therein and Bank of America, N.A., as administrative agent for the lenders, incorporated by reference to the company Form 8-K Exhibit 10.1 filed on October 21, 2021.

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 ~~October~~April 2, ~~2021,~~2022, filed on ~~November 10, 2021,~~May 12, 2022, formatted in Inline Extensive Business Reporting Language (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).

4234

SIGNATURE

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

THE MIDDLEBY CORPORATION

(Registrant)

Date:

~~November 10, 2021~~May 12, 2022

By:

/s/ Bryan E. Mittelman

Bryan E. Mittelman

Chief Financial Officer

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	Nine Months Ended
	October 2, 2021		September 26, 2020
Net sales	$	2,472,306	$	1,899,883
Net earnings	407,715		155,067

Net earnings per share:
Basic	$	7.38	$	2.81
Diluted	$	7.21	$	2.81