The Middleby Corporation Reports Fourth Quarter Results

ELGIN, Ill.--(BUSINESS WIRE)--Feb. 20, 2001--The Middleby Corporation (NASDAQ: MIDD - news), a global supplier of equipment to the foodservice industry, today reported higher earnings for the fourth quarter and the fiscal year.

Net sales for the fourth quarter of fiscal 2000 were $30,988,000, a 2% decrease from the 1999 comparable period. Earnings before income taxes increased to $2,359,000 or 190% as compared to $814,000 in the prior year quarter. Net earnings for the quarter were $1,299,000 or $.14 per share as compared to a net loss of $388,000 or ($.04) per share in the fourth quarter of 1999.

For the fiscal year ended December 30, 2000 net sales were $126,888,000, a decrease of 4% from the prior year. Earnings before income taxes increased to $9,143,000, an increase of 321% as compared to $2,171,000 in fiscal 1999. Net earnings for the year were $3,538,000 or $.35 per share, an improvement from the 1999 reported net loss of $994,000 or ($.10) per share.

The fourth quarter decline in sales primarily relates to the company's international distribution operations. The sales decrease was largely attributable to the refocusing of efforts on a more selective product offering centered around the company's manufactured products and aligned with the division's distribution capabilities. These refocusing efforts occurred in fiscal 1999 and 2000 and resulted in the exit of various unprofitable distributed product lines. This decrease was offset, in part, by increased domestic sales related to business with the company's major pizza restaurant chain customers and sales at the company's manufacturing operation in the Philippines.

Gross margin of 42.1% in the fourth quarter of 2000 improved from 33.1% in the comparative prior year period. The improvement in the gross margin rate was realized at both the domestic and international manufacturing operations. Domestically, an improved sales mix, including sales related to a new line of conveyor ovens, has increased production efficiencies. Internationally, greater production volumes at the company's Philippine operation resulting from the manufacture of products for the U.S. market have resulted in improvements in overhead absorption. Additionally, margins at the international distribution operations increased resulting from the refocusing of sales efforts on more profitable product offerings.

Operating expenses for the quarter amounted to $10,112,000 as compared to $8,781,000 in the fourth quarter of 1999. This increased expense was attributable to pension and other benefit costs related to the retirement of the company's President. Effective January 1, 2001 Selim A. Bassoul was promoted from Chief Operating Officer to President and Chief Executive Officer.

Commenting on the company's performance for the quarter and year, Selim Bassoul said, ``The fourth quarter represented the fifth consecutive quarter of earnings improvement. Additionally, each quarter in 2000 represented an improvement from the prior year comparative quarter. We are very pleased with the financial results. The steady improvement in results over the past two years reflects management's effort to realign the company's cost structure and operations with its longer-term strategic objectives. We were able to significantly reduce costs which translated into higher gross margins and lower operating expenses. These efforts included difficult decisions to exit various manufactured and distributed product offerings that were not consistent with our business model and profitability targets. These decisions have had an adverse impact on sales in the short-term, but have allowed us to better position Middleby for future growth.

``Fiscal 2000 also represented a year in which we greatly strengthened our financial position. Improved cash flows allowed the company to reduce outstanding debt by $19.6 million and repurchase approximately 11.5% of our outstanding stock. Additionally, the company funded a $.10 special dividend to shareholders.''

Mr. Bassoul continued, ``Looking forward to 2001, our efforts are focused on sales growth. We are strengthening our relationships with all of our major customers and have introduced a new series of conveyor ovens that are better designed to meet the needs of their restaurant operations. We will also continue to enhance our international sales and service capabilities to facilitate the growth of major restaurant chains as they expand globally. We are introducing new products, such as our redesigned line of conveyor toasters, to strengthen our position as a market leader and allow us to gain marketshare. We will also continue to look for opportunities to capitalize on the manufacturing capabilities of our Philippines operation to be the low cost producer of selected products.''

Mr. Bassoul concluded, ``We are pleased with the position of Middleby as we conclude 2000. However, we are cautious about our short-term prospects heading into 2001. In the first month of 2001, we have seen a few of our customers delay purchasing decisions, as they are tentative about slowness in the economy. Additionally, one of our major restaurant chain customers has delayed its new store opening schedule, which will have a negative impact on our sales for the first part of the year. However, we are in a strong position to weather any short-term slowness due to the positive actions we have taken during the last two years. We anticipate continued long-term improvement in our financial performance.''

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 Marshall®, Southbend (R), and Toastmaster (R). Middleby's international subsidiary, Middleby Worldwide, is a leading exporter and distributor of foodservice equipment in the global marketplace and its international fabrication 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)

                            Three Months Ended    Fiscal Year Ended
                          --------------------- ---------------------
                            4th Qtr,   4th Qtr,
                             2000       1999       2000       1999
                          ---------- ---------- ---------- ----------

Net sales                 $  30,988  $  31,585  $ 126,888  $ 132,541
Cost of sales                17,938     21,125     81,702     91,551
                          ---------- ---------- ---------- ----------

    Gross profit             13,050     10,460     45,186     40,990

Selling & distribution
 expense                      3,723      4,532     15,858     18,694
General & administrative
 expense                      6,389      4,249     17,478     14,430
Non-recurring expense            --         --         --      2,208
                          ---------- ---------- ---------- ----------

    Income from operations    2,938      1,679     11,850      5,658

Interest expense and
 deferred financing
 amortization, net               53        672      1,204      2,724
Other expense (income), net     526        193      1,503        763
                          ---------- ---------- ---------- ----------

    Earnings before income
     taxes                    2,359        814      9,143      2,171

Provision for income taxes    1,060      1,202      5,370      3,165
                          ---------- ---------- ---------- ----------

    Net earnings (loss)
     before extraordinary
     item                 $   1,299  $     (388)$   3,773  $     (994)
                          ========== ========== ========== ==========
Extraordinary item
 (net of tax)                    --         --        235         --
                          ---------- ---------- ---------- ----------

Net earnings (loss)       $   1,299  $     (388)$   3,538  $     (994)
                          ========== ========== ========== ==========

Net earnings (loss) before
 extraordinary item per
 share:

    Basic                 $    0.14  $    (0.04)$     0.38 $    (0.10)
                          ========== ========== ========== ==========

    Diluted               $    0.14  $    (0.04)$     0.37 $    (0.10)
                          ========== ========== ========== ==========

Net earnings (loss) per
 share:

    Basic                 $    0.14  $    (0.04)$     0.35 $    (0.10)
                          ========== ========== ========== ==========

    Diluted               $    0.14  $    (0.04)$     0.35 $    (0.10)
                          ========== ========== ========== ==========

Weighted average number
 shares:

    Basic                     9,377     10,171      9,971     10,161
                          ========== ========== ========== ==========

    Diluted                   9,394     10,283     10,091     10,277
                          ========== ========== ========== ==========



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

                                          As of the Fiscal Year Ended

                                                    2000      1999
                                                ---------- ----------
 ASSETS

Cash and cash equivalents                       $   2,094  $  14,536
Accounts receivable, net                           18,879     24,919
Inventories, net                                   18,372     16,884
Other current assets                                5,117      4,039
                                                ---------- ----------
    Total current assets                           44,462     60,378

Property, plant and equipment, net                 18,968     21,281

Excess purchase price over net
    assets acquired, net                           13,056     13,962

Other assets                                        1,824      3,427
                                                ---------- ----------

    Total assets                                $  78,310  $  99,048
                                                ========== ==========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt            $     249  $   7,131
Accounts payable                                    7,211      8,861
Accrued expenses                                   17,918     16,291
                                                ---------- ----------
    Total current liabilities                      25,378     32,283

Long-term debt                                      8,290     21,004

Other non-current liabilities                       7,181      2,593

Shareholders' equity                               37,461     43,168
                                                ---------- ----------

    Total liabilities and shareholders'
        equity                                  $  78,310  $  99,048
                                                ========== ==========