THE MIDDLEBY CORPORATION REPORTS
SECOND QUARTER RESULTS; REVISIONS TO YEAR END BALANCE SHEET

Elgin, IL, August 7, 2002 - The Middleby Corporation (NASDAQ: MIDD), a global supplier of equipment to the foodservice industry, today reported earnings of $2,814,000 or $.31 per share on net sales of $62,478,000 for the second quarter ended June 29, 2002 as compared to earnings of $676,000 or $.08 per share on net sales of $25,293,000 in the prior year second quarter.  Earnings for the six months ended June 29, 2002 were $3,854,000 or $.43 per share on sales of $116,969,000 as compared to net earnings of $1,225,000 or $.14 per share on net sales of $50,040,000 in the prior year first half.  The second quarter and year to date financial performance for fiscal 2002 includes the results of Blodgett Holdings, Inc. (“Blodgett”), which was acquired from Maytag Corporation on December 21, 2001.

The increase in net sales from the prior year reflects the incremental business associated with the acquired Blodgett operations.  On a proforma basis, net sales for combined Middleby and Blodgett increased in the quarter by $4.2 million or 7.1% from $58,322,000 in the second quarter of 2001 and increased $4.3 million or 3.8% from $112,700,000 for the first six months of 2001.  The sales increase occurred largely at the acquired Blodgett operations in the second quarter of 2002.

Gross profit in the second quarter of 2002 was $21,521,000 as compared to $8,234,000 from the second quarter of 2001 and was $39,414,000 for the first six months of 2002 as compared to $16,405,000 in the prior year first half.  Operating income increased to $8,196,000 in the second quarter 2002 from $2,248,000 in the prior year comparable period and increased to $12,917,000 in the first six months of 2002 versus $4,085,000 in the prior year to date period.  Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $9,210,000 in the second quarter of 2002 and $15,666,000 for the first six months of 2002 as compared to $2,819,000 and $5,344,000 in the prior year respective quarter and six-month year to date periods.  The increase in gross profit, operating income and EBITDA has resulted from the addition of the acquired Blodgett operations.

Interest and other non-operating expense amounted to $3,292,000 in the second quarter of 2002 as compared to $576,000 in the prior year quarter and amounted to $6,019,000 in the first six months of 2002 as compared to $929,000 in the first six months of 2001.  The increase in interest and other non-operating expense reflects higher financing related costs associated with the debt incurred to finance the Blodgett acquisition.  Total debt was reduced during the second quarter by $7,935,000 to $83,543,000.  Total debt was reduced for the six months of 2002 by $12,656,000 from $96,199,000 at December 29, 2001.

The company also reported a restatement of its December 29, 2001 balance sheet to revise the accounting for the derivative securities associated with the financing of the Blodgett acquisition of December 21, 2001.  Subsequent to the issuance of the company’s financial statements for the year ended December 29, 2001, management has determined, after consultation with its newly appointed independent auditor, Deloitte & Touche, that the initial value assigned to the stock warrant rights issued in connection with the subordinated senior notes should be increased from $2.5 million to $3.3 million and reclassified to Other Non-Current Liabilities on the balance sheet.  The impact of the restatement to the fiscal 2001 balance sheet results in a $0.8 million reduction in Long-Term Debt, a $3.3 million increase in Other Non-Current Liabilities and a $2.5 million reduction in Shareholders' Equity.  The impact of this revision on net earnings in 2001 is de minimis and does not change reported earnings per share for the year ended December 29, 2001.

In connection with this revision in accounting, the company has restated its first quarter fiscal 2002 earnings for changes in the fair market value of derivative securities associated with the acquisition financing, including the interest rate swap that the company entered into in January 2002.  The net result of this restatement is to increase net earnings by $326,000 or $.04 per share for the first quarter of 2002.  These changes have been incorporated into the attached financial statements.

The company will file a restated and amended SEC Form 10-K/A for fiscal 2001 after the restated financial statements for that year are audited by Deloitte & Touche.  The company will also file a restated and amended SEC Form 10-Q/A for the first quarter of fiscal 2002. 

Commenting on the company’s performance for the second quarter, Selim A. Bassoul, President and Chief Executive Officer, said, “We are very pleased with the results of the second quarter.  The financial results reflect the positive impact of our acquisition-related restructuring initiatives that occurred in the first half of the year.  These initiatives included the reorganization of the management structure at Blodgett, a reduction in the headcount, and the consolidation of manufacturing for the Blodgett combi, conveyor and deck oven product lines into existing production facilities, which enabled the company to exit two manufacturing facilities.  The majority of the cost savings related to these actions were reflected in the second quarter results, although we anticipate modest gains in future profitability from continued improvement in operating efficiencies.  All major restructuring initiatives have now been completed.”

Mr. Bassoul continued, “The sales performance in the second quarter was very positive.  The increase in net sales from the prior year combined sales for Middleby and Blodgett is largely attributable to the refocusing of the Blodgett sales organization and the addition of a number of key individuals into that organization. In the first quarter the sales and marketing organization for Blodgett was decentralized allowing for a greater focus on each product line and an improved level of customer service.”

William F. Whitman, Jr., Chairman of the Board, added, "The increase in the second quarter net sales from the first quarter of 2002 reflects the impact of the seasonality of the foodservice equipment industry.  Historically, the second and third quarters generate higher sales volumes due to a larger number of restaurant openings and greater activity in the institutional and outdoor catering markets.  The second quarter tends to be the strongest, with the third quarter close behind.  Due to order patterns from the major chains, predictability of performance from quarter to quarter can prove to be difficult."

Mr. Whitman, continued, “Strong cash flows have allowed us to aggressively reduce the acquisition related debt and its associated interest costs.  We anticipate that cash flow from operations will slow somewhat in the third quarter as the company pays certain deferred acquisition related costs and incentive compensation obligations accrued for at the end of 2001.  We do, however, anticipate that we will further reduce our bank debt during the third quarter.”

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 volatility in earnings resulting from changes in the value of stock warrant rights issued in conjunction with the acquisition financing caused by fluctuations in Middleby's stock price; variability in financing costs; 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 the ability to successfully integrate the acquired operations of Blodgett; and other risks detailed herein and from time-to-time in the company’s SEC filings.

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 Blodgett®, Blodgett Combi®, CTX®, MagiKitch’n®, Middleby Marshall®, Pitco Frialator®, Southbend, and Toastmaster®.  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)

 

 

2002

 

 

2001

 

 

 

 

 

 

 

 

 

 

(as restated)

 

 

 

 

 

 

 

1st Qtr

2nd Qtr

YTD

    1st Qtr

2nd Qtr

YTD

 

Net sales

$ 54,491

$ 62,478

$ 116,969

$ 24,747

$ 25,293

$ 50,040

 

Cost of sales

36,598

40,957

77,555

16,576

17,059

33,635

 

 

 

 

 

 

 

 

 

Gross profit

17,893

21,521

 39,414

8,171

8,234

 16,405

 

 

 

 

 

 

 

 

 

Selling & distribution expense   

7,221

7,312

    14,533

3,617

3,561

    7,178

 

General & administrative expense

5,951

6,013

11,964

2,717

2,425

5,142

 

 

 

 

 

 

 

 

 

Income from operations

4,721

8,196

    12,917

1,837

2,248

    4,085

 

 

 

 

 

 

 

 

 

Interest expense and deferred financing amortization, net

3,098

3,024

   6,122

155

178

   333

 

(Gain) loss on acquisition financing derivatives

 
 (593)


579

 
(14)

-

-

  -

 

             

Other expense (income), net

222

(311)

(89)

198

398

596

 

 

 

 

 

 

 

 

 

Earnings before income taxes

1,994

4,904

6,898

1,484

1,672

 3,156

 

 

 

 

 

 

 

 

 

Provision for income taxes

954

2,090

3,044

935

996

1,931

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Net earnings

$  1,040

$   2,814

$    3,854

$     549

$      676

$  1,225

 

 

 

 

 

 

 

 

 

    EBITDA

$  6,456

$   9,210

$  15,666

$  2,525

$   2,819

$   5,344

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

$    0.12

$     0.31

$     0.43

$    0.06

$     0.08

$     0.14

 

 

 

 

 

 

 

 

 

    Diluted

$    0.12

$     0.31

$     0.43

$    0.06

$     0.08

$     0.14

 


Weighted average number shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

8,972

8,974

8,973

8,996

8,981

8,987

 

 

 

 

 

 

 

 

 

    Diluted

8,994

9,082

9,031

9,036

8,998

9,006

 

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

 

 

 

(as restated)

 

 

Jun. 29, 2002

 

Dec. 29, 2001

 

 ASSETS
 

 

 

 

 

Cash and cash equivalents

$        813

 

$       3,795

 

Accounts receivable, net

    29,219

 

    25,158

 

Inventories, net

27,283

 

29,115

 

Other current assets

12,899

 

12,469

 

Total current assets

70,214

 

70,537

 

 

 

 

 

 

Property, plant and equipment, net

28,941

 

30,598

 

 

 

 

 

 

Goodwill and other intangibles

89,627

 

89,793

 

 

 

 

 

 

Other assets

8,788

 

9,569

 

 

 

 

 

 

Total assets

$   197,570

 

$   200,497

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

$     13,500

 

$     10,047

 

Accounts payable

13,969

 

9,289

 

Accrued expenses

38,945

 

38,438

 

Total current liabilities

66,414

 

57,774

 

 

 

 

 

 

Long-term debt

70,043

 

86,152

 

 

 

 

 

 

Other non-current liabilities

17,705

 

17,162

 

 

 

 

 

 

Shareholders’ equity

43,408

 

39,409

 

 

 

 

 

 

Total liabilities and shareholders' Equity

$   197,570

 

$   200,497

 

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