THE MIDDLEBY CORPORATION REPORTS
SECOND QUARTER RESULTS

Elgin, IL, July 26, 2001 - The Middleby Corporation (NASDAQ: MIDD), a global supplier of equipment to the foodservice industry, today reported net earnings of $.08 per share on net sales of $25,293,000 for the fiscal second quarter ended June 30, 2001 as compared to net earnings of $.06 per share on sales of $32,375,000 in the second quarter of 2000.

Net sales decreased by $7,082,000 or 22% as compared to the second quarter of the prior year.  Sales in the second quarter continued to be significantly impacted by the slowdown in the U.S. and international economies.  Approximately one third of the sales decrease is attributable to the company’s top five major restaurant chain customers, which have temporarily slowed their rate of store openings and purchases of equipment.  Additionally, the strengthening of the U.S. dollar has resulted in lower reported international revenues for sales billed to customers in foreign currencies.

Gross profit decreased by $1,791,000 or 18% as compared to the second quarter of the prior year.  However, the gross margin rate increased to 32.6% in the second quarter of 2001 from 31.0% in the prior year quarter.  The increase in the gross margin rate reflects significant improvement at the company’s manufacturing operation in the Philippines resulting from a more favorable cost structure and mix of higher margin product sales.  Domestically, the company instituted pricing controls and programs in the second half of last year, which have favorably impacted the gross margin rate.  These improvements were largely offset by lower manufacturing efficiencies at the U.S. operations that have resulted from the large decrease in production volumes. 

Operating expenses decreased by $1,754,000 or 23% as compared to the second quarter of 2000.  The reduction in expenses reflects a combination of savings from lower payroll costs resulting from a 10% reduction in employee headcount during the first half of 2001 in response to the slowdown, tightened controls on discretionary spending, and lower variable expenses related to sales such as commissions and incentive compensation.  Additionally, as compared to the prior year second quarter, the company recognized increased benefits from restructuring efforts completed in the prior year. 

Net earnings for the quarter amounted to $676,000 or $.08 per share as compared to $641,000 or $.06 per share last year.  The increase in net earnings reflects lower operating expenses and interest costs which offset the impact of lower net sales and gross profit. 

Commenting on the company’s performance for the second quarter, Selim A. Bassoul, President and Chief Executive Officer, said, “The slowdown in the world economies and the reduced growth rates of our major customers continue to impact our revenues.  During the first and second quarter we initiated a number of programs targeted to stimulate sales, including customer financing programs and the introduction of energy savings products.  We have recognized market share gains from these programs, however, the realized impact on sales to date has been limited.  Sales volumes continue to be soft as we head into the third quarter.  We expect that revenues will increase from the first half of the year, however, we do not expect to achieve the levels recorded in the second half of fiscal 2000.”

Mr. Bassoul continued, “We have made significant efforts to adjust our business operations to the current sales volumes.  These efforts are reflected in net earnings that are slightly better in the second quarter and first half of fiscal 2001 as compared to the same periods last year despite the reduction in revenues.  These restructuring efforts have enabled the company to endure the current economic slowdown and should position the company to generate greatly improved earnings and shareholder returns as the economies improve and revenues return to historical levels.”

Statements in this press release or otherwise attributable to the company regarding the company’s business which are not historical fact are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The company cautions investors that such statements are estimates of future performance and are highly dependent upon a variety of important factors that could cause actual results to differ materially from such statements.  Such factors include, but are not limited to, quarterly variations in operating results; dependence on key customers; international exposure; foreign exchange and political risks affecting international sales; 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 those discussed under the heading entitled “Risk Factors” in the company’s Registration Statement on Form S-2 (No. 333-35397) filed with the Securities and Exchange Commission.

The Middleby Corporation is a leader in the design, manufacture, marketing and service of a broad line of equipment used for cooking and preparation of food in commercial and institutional kitchens and restaurants throughout the world.  The company’s leading equipment brands include Middleby Marshallâ, Southbend â, and Toastmaster â.  Middleby’s international subsidiary, Middleby Worldwide, is a leading exporter and distributor of foodservice equipment in the global marketplace and its international manufacturing subsidiary, Middleby Philippines Corporation, is a leading supplier of specialty equipment in the Asian markets.

For further information about Middleby, visit the company’s World Wide Web site, http://www.middleby.com.

Contact:            Selim A. Bassoul, Chief Executive Officer – 847- 429-7788
                        David B. Baker, Chief Financial Officer – 847- 429-7915

 

THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in 000’s, Except Per Share Information)
(Unaudited)

Three Months Ended Six Months Ended

                                               

 

2nd Qtr, 2001  

2nd Qtr, 2000  

2nd Qtr, 2001  

2nd Qtr, 2000

Net sales

$  25,293

$  32,375

$   50,040

$   64,849

Cost of sales

   17,059

    22,350

     33,634

     43,610

 

 

 

 

 

    Gross profit

 8,234

 10,025

16,406

21,239

 

 

 

 

 

Selling & distribution expense   

    3,561

    4,227

7,178

8,256

General & administrative expense

    2,425

   3,513

       5,143

       8,054

 

 

 

 

 

    Income from operations

    2,248

    2,285

4,085

4,929

 

 

 

 

 

Interest expense and deferred          

 

 

 

 

    Financing amortization, net

   178

   482

333

 959

Other expense (income), net

         398

        255

          596

          541

 

 

 

 

 

    Earnings before income taxes

1,672

 1,548

3,156

3,429

 

 

 

 

 

Provision for income taxes

         996

        907

       1,931

       2,298

 

 

 

 

 

    Net earnings

$        676   

$       641

$     1,225

$     1,131 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

    Basic

$       0.08

$      0.06

$       0.14

$       0.11

 

 

 

 

 

    Diluted

$       0.08

$      0.06

$       0.14

$       0.11

 

Weighted average number shares:

 

 

 

 

 

 

 

 

 

    Basic

      8,981

     10,177

     8,987

   10,181

 

 

 

 

 

    Diluted

      8,998

     10,338

     9,006

   10,348

  

THE MIDDLEBY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in 000’s)
(Unaudited)

 

 

As of 2nd Qtr

 

As of Year Ended

 

 

2001

 

2000

 

 ASSETS

 

 

 

 

 

Cash and cash equivalents

$      4,580

 

$      2,094

 

Accounts receivable, net

    15,633

 

    18,879

 

Inventories, net

19,394

 

18,372

 

Other current assets

        5,654

 

      5,117

 

    Total current assets

45,261

 

44,462

 

 

 

 

 

 

Property, plant and equipment, net

17,866

 

18,968

 

 

 

 

 

 

Excess purchase price over net

 

 

 

 

    assets acquired, net

12,604

 

13,056

 

 

 

 

 

 

Other assets

        1,218

 

        1,824

 

 

 

 

 

 

    Total assets

$    76,949

 

$    78,310

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

$           13

 

$          249

 

Accounts payable

5,738

 

7,211

 

Accrued expenses

     14,090

 

       17,918

 

    Total current liabilities

19,841

 

25,378

 

 

 

 

 

 

Long-term debt

12,053

 

8,290

 

 

 

 

 

 

Other non-current liabilities

6,082

 

7,181

 

 

 

 

 

 

Shareholders’ equity

      38,973

 

       37,461

 

 

 

 

 

 

    Total liabilities and shareholders’

 

 

 

 

        equity

$    76,949

 

$     78,310