THE MIDDLEBY CORPORATION REPORTS
RECORD THIRD QUARTER RESULTS

Elgin, IL, October 29, 2002 - The Middleby Corporation (NASDAQ: MIDD), a global supplier of equipment to the foodservice industry, today reported record earnings of $4,337,000 or $.47 per share on net sales of $57,679,000 for the third quarter ended September 28, 2002 as compared to earnings of $1,092,000 or $.12 per share on net sales of $25,714,000 in the prior year third quarter.  Earnings for the nine months ended September 28, 2002 were $8,191,000 or $.90 per share on sales of $174,648,000 as compared to net earnings of $2,317,000 or $.26 per share on net sales of $75,754,000 in the prior year first nine months.  The third 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 $0.4 million or 0.8% from $57,230,000 in the third quarter of 2001 and increased year to date $4.7 million or 2.8% from $169,930,000 for the first nine months of 2001.

Gross profit in the third quarter of 2002 was $20,464,000 as compared to $8,487,000 from the third quarter of 2001 and was $59,878,000 for the first nine months of 2002 as compared to $24,892,000 in the prior year first nine months.  The gross margin rate was 35.5% and 34.3% for the third quarter and first nine months of 2002 as compared to gross margin rates of 33.0% and 32.9% for the third quarter and first nine months of 2001.  Operating income increased to $8,947,000 in the third quarter 2002 from $2,435,000 in the prior year comparable period and increased to $21,864,000 in the first nine months of 2002 versus $6,520,000 in the prior year to date period.  Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $9,427,000 in the third quarter of 2002 and $25,093,000 for the first nine months of 2002 as compared to $3,407,000 and $8,751,000 in the prior year respective quarter and nine-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 $3,050,000 in the third quarter of 2002 as compared to $42,000 in the prior year quarter and amounted to $9,069,000 in the first nine months of 2002 as compared to $971,000 in the first nine 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 third quarter by $4,062,000 to $79,481,000.  Total debt was reduced for the first nine months of 2002 by $16,718,000 from $96,199,000 at December 29, 2001.  Included as part of the third quarter and year to date debt reduction was a $1.8 million reduction in the seller notes due to Maytag.  The notes to Maytag were subject to change pending finalization of post closing adjustments.  

The provision for income taxes for the third quarter and first nine months of 2002 includes approximately $1.3 million, or $.14 per share, of beneficial impact from a one-time deduction associated with the closing of a Japanese subsidiary.  This deduction was utilized during the third quarter of 2002.  Without the benefit of the one-time tax deduction, the company’s reported third quarter net earnings would have been approximately $3.0 million or $.33 per share.

Commenting on the company’s performance for the third quarter, Selim A. Bassoul, President and Chief Executive Officer, said, “We are pleased to report record earnings for our third quarter.  Despite a difficult economic environment and a flat foodservice equipment market, our third quarter net sales were modestly higher than last year’s third quarter proforma combined net sales for Middleby and Blodgett which included an unprofitable Blodgett product line with annual sales volume of approximately $1 million that we discontinued at the beginning of this year’s third quarter.  The positive impact of our acquisition-related restructuring initiatives completed early in 2002, were fully realized in the third quarter’s improved gross margin rate and operating income.  Additionally, we continue to pay down our acquisition related debt which, in turn, favorably impacts interest expense.”

Mr. Bassoul continued, “Going-forward, we anticipate that the impact of our already completed restructuring initiatives will continue to positively impact our performance in the fourth quarter of 2002.  We also expect to see strong cash flows in the fourth quarter that will allow us to continue to pay down the acquisition-related debt.”

William F. Whitman, Jr., Chairman of the Board, added, “The variability in the company’s net sales between quarters in 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.  Accordingly, we believe that our sales volume in the fourth quarter of 2002 will be more in line with our first quarter 2002 sales volume.”

An analyst conference call will be held on Wednesday morning, October 30, 2002.  Digital replay of that conference call will be available to the public after the conclusion of the call at approximately 11:30 a.m. Eastern time.  The replay may be accessed by calling 877-519-4471 and entering PIN number 3566210.  A transcript of the call will also be posted on the company’s website.

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

3rd Qtr

YTD

    1st Qtr

2nd Qtr

3rd Qtr

YTD

Net sales

$ 54,491

$ 62,478

$ 57,679

$ 174,648

$ 24,747

$ 25,293

$ 25,714

$ 75,754

Cost of sales

   36,598

   40,957

   37,215

   114,770

   16,576

   17,059

   17,227

   50,862

 

 

 

 

 

 

 

 

 

    Gross profit

17,893

21,521

20,464

 59,878

8,171

8,234

8,487

 24,892

 

 

 

 

 

 

 

 

 

Selling & distribution expense   

7,221

7,312

7,042

    21,575

3,617

3,561

3,173

    10,351

General & administrative expense

     5,951

     6,013

     4,475

     16,439

     2,717

     2,425

     2,879

    8,021

 

 

 

 

 

 

 

 

 

    Income from operations

4,721

8,196

8,947

    21,864

1,837

2,248

2,435

    6,520

 

 

 

 

 

 

 

 

 

Interest expense and deferred           

 

 

 

 

 

 

 

 

    financing amortization, net

3,098

3,024

2,661

   8,783

155

178

128

   461

(Gain) loss on acquisition     

    financing derivatives

 

(593)

 

579

 

(95)

 

(109)

 

-

 

-

 

-

 

-

Other expense (income), net

        222

      (311)

       484

          395

        198

        398

         (86)

        510

 

 

 

 

 

 

 

 

 

    Earnings before income taxes

1,994

4,904

5,897

12,795

1,484

1,672

2,393

 5,549

 

 

 

 

 

 

 

 

 

Provision for income taxes

        954

     2,090

    1,560

       4,604

        935

        996

     1,301

     3,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Net earnings

$   1,040

$   2,814

$  4,337

$     8,191

$      549

$      676

$   1,092

$   2,317

 

 

 

 

 

 

 

 

 

    EBITDA

$   6,456

$   9,210

$  9,427

$   25,093

$   2,525

$   2,819

$   3,407

$   8,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

$     0.12

$     0.31

$     0.48

$       0.91

$      0.06

$     0.08

$     0.12

$     0.26

 

 

 

 

 

 

 

 

 

    Diluted

$     0.12

$     0.31

$     0.47

$       0.90

$      0.06

$     0.08

$     0.12

$     0.26

 

 

 

 

 

 

 

 

 

 

Weighted average number shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

    8,972

    8,974

    8,991

      8,979

     8,996

     8,981

     8,981

     8,987

 

 

 

 

 

 

 

 

 

    Diluted

    8,994

    9,082

    9,202

      9,071

     9,036

     8,998

     8,994

     9,003

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

 

 

 

(as restated)

 

 

Sep. 28, 2002

 

Dec. 29, 2001

 ASSETS
 

 

 

 

 

Cash and cash equivalents

$      2,305

 

$      3,795

 

Accounts receivable, net

    28,346

 

    25,158

 

Inventories, net

26,741

 

29,115

 

Other current assets

      13,250

 

      12,469

 

    Total current assets

70,642

 

70,537

 

 

 

 

 

 

Property, plant and equipment, net

28,259

 

30,598

 

 

 

 

 

 

Goodwill and other intangibles

89,941

 

89,793

 

 

 

 

 

 

Other assets

        8,523

 

        9,569

 

 

 

 

 

 

    Total assets

$  197,365

 

$  200,497

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

$    11,500

 

$    10,047

 

Accounts payable

13,871

 

9,289

 

Accrued expenses

      36,454

 

      38,438

 

    Total current liabilities

61,825

 

57,774

 

 

 

 

 

 

Long-term debt

67,981

 

86,152

 

 

 

 

 

 

Other non-current liabilities

20,452

 

17,162

 

 

 

 

 

 

Shareholders’ equity

      47,107

 

      39,409

 

 

 

 

 

 

    Total liabilities and shareholders’

 

 

 

 

        Equity

$  197,365

 

$  200,497

 

   

 

 

 

 

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