The Middleby Corporation Reports Third Quarter Results

ROLLING MEADOWS, Ill.--(BUSINESS WIRE)--Oct. 28, 1999--The Middleby Corporation (NASDAQ: MIDD), a global supplier of equipment to the foodservice industry, today reported its results for the fiscal third quarter ended October 2, 1999.

The Company reported a net loss of $657,000, or 6 cents per diluted share, including non-recurring pre-tax charges of $1,248,000, compared to a net loss of $888,000, or 8 cents per diluted share, in the fiscal 1998 third quarter, which included one-time pre-tax charges of $1,525,000. Excluding non-recurring charges recorded in both reporting periods, the Company's net earnings were $199,000, or 2 cents per diluted share, compared to net earnings of $58,000 or 1 cent per diluted share, in the prior year. As previously announced, the third quarter non-recurring charge included provisions for the closing of the Florida headquarters of the Company's international distribution division upon completing the move of the Latin American sales operations to the Company's subsidiary in Mexico City, Mexico, and restructuring initiatives at the Company's Japan sales subsidiary and Philippines-based manufacturing operation.

Net sales were $31,988,000, a 6% decrease from sales of $33,891,000 for the same quarter a year ago. Income from operations was $757,000 versus a loss of $113,000 in the prior year quarter. Excluding the one-time charges in both periods, income from operations was $2,005,000, an increase of 42% from $1,412,000 in the year ago quarter, and earnings before taxes were $1,122,000 versus $587,000 in the year ago quarter.

For the first nine months of 1999, the Company reported a net loss of $605,000, or 6 cents per diluted share, versus net earnings of $423,000, or 4 cents per diluted share, for the same nine-month period in 1998. Net sales increased 2% to $100,953,000 from $98,633,000 for the same period last year. Income from operations increased 11% to $3,980,000 from $3,570,000 in the prior year period, and earnings before taxes of $1,358,000 were 36% above the year ago results of $996,000. The current year-to-date results include pre-tax charges of $2,208,000, including the third quarter charge and previously recorded charges for severance payments related to restructuring efforts. Excluding the one-time charges in both periods, income from operations increased 21% to $6,188,000 from $5,095,000 and earnings before taxes increased 41% to $3,566,000 from $2,521,000 in the prior year nine-month period.

No tax benefit was recognized for losses at international subsidiaries during the current quarter and year-to-date periods. Accordingly, the reported tax provisions of $531,000 and $1,963,000 recorded in the quarter and year-to-date periods, respectively, were principally for U.S. taxable income. However, no payments of federal taxes other than AMT taxes are expected to be made in 1999 due to the utilization of tax loss carry-forwards.

Commenting on the Company's performance, David P. Riley, President and Chief Executive Officer, said, ``Our third quarter results reflect a very solid performance for our U.S.-based Cooking Systems Group, which has made steady progress with its strategic initiatives to improve operating performance. However, results of our international operations were again mixed as increased profits of certain distribution operations, such as Mexico and Europe, were offset by lower profits in Asian distribution units and our Philippines manufacturing operation. We have taken several actions to-date to reduce costs and realign our international operations.

``Net sales of the Cooking Systems Group, excluding the impact of exited product lines, decreased slightly compared to last year's third quarter. Increased sales of conveyor oven and core cooking equipment were offset by lower sales of counterline equipment due primarily to the replacement of certain product and model offerings, as we reposition the Toastmaster brand. Net sales of the international distribution business decreased by 2% with increased sales in Mexico and Europe offset by reduced sales within Canada, Asia and the Middle East. Net sales of our Philippines-based manufacturing operation were again down significantly reflecting continued reduced development of restaurants, hotels and resorts within the region. The Philippines operation reported losses in the quarter due to low orders from its major customers and inefficiencies incurred during the protracted negotiation of a recently signed collective bargaining agreement.

Mr. Riley continued, ``Gross margins in the third quarter improved to 31.8% compared to 27.8% reported in the prior year third quarter, due principally to higher margins of the Cooking Systems Group which benefited from improved production efficiencies, reduced overhead expenses from cost savings programs and favorable sales mix. This margin improvement was offset by the significantly lower margins at our Philippines operation. Also, margins for the international distribution business were slightly lower due to costs associated with inventory reduction programs, which have resulted in a 33% decrease in inventory levels overseas since the year-end. Operating expenses, excluding non-recurring charges in both fiscal quarters, increased $165,000 from the prior year's third quarter. The increase in operating expenses was due to current year costs for a bi-annual industry show and higher promotional costs, offset in part by reduced salaries from restructuring and cost reduction programs.

Mr. Riley concluded, ``Throughout this year we have been aggressive in taking the necessary actions towards realizing our operating and financial goals after the challenges of the 1998 fiscal year. Our Asian operations continue to be significantly impacted by low demand levels in markets affected by the past years' currency crises. However, we expect that the restructuring actions we have now taken will provide a lower cost structure and a more focused strategy to achieve our financial goals.''

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 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. Any forward looking statements made herein speak as of the date of this release, and the Company undertakes no obligation to update such statements in light of future events or otherwise.

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® (conveyor cooking equipment), Southbend (R) (core cooking and steam cooking equipment), and Toastmaster (R) (counterline cooking and warming equipment). Middleby's international subsidiary, Middleby Worldwide, Inc., 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,

                       THE MIDDLEBY CORPORATION
           (Amounts in 000's, Except Per Share Information)

                       Three Months Ended          Nine Months Ended
                     October 2,  October 3,     October 2,  October 3,
                       1998         1998          1999         1999
                       -------------------     -----------------------

Net sales            $ 31,988     $ 33,891     $ 100,953     $ 98,633
Cost of sales          21,810       24,471        70,426       69,103
                       ------       ------       -------       ------

    Gross profit       10,178        9,420        30,527       29,530

Selling & distribution
 expense                4,817        5,016        14,158       15,534
General & administrative
 expense                3,356        2,992        10,181        8,901
Non-recurring expense   1,248        1,525         2,208        1,525
                       ------       ------       -------       ------

 Income (loss)
  from operations         757         (113)        3,980        3,570

Interest expense and
 deferred financing
 amortization, net        665          665         2,052        2,161
Other expense
 (income), net            218          160           570          413
                       ------       ------       -------       ------

 (Loss) earnings
  before income taxes    (126)        (938)        1,358          996

Provision for
 income taxes             531          (50)        1,963          573
                       ------       ------       -------       ------

 Net (loss) earnings  $  (657)     $  (888)      $  (605)       $ 423
                       ======       ======       =======       ======

Basic earnings per share

Net (loss)
 earnings per share   $ (0.06)     $ (0.08)      $ (0.06)      $ 0.04

Weighted average
 shares outstanding    10,158       10,824        10,158       11,053

Diluted earnings per share

Net (loss)
 earnings per share   $ (0.06)     $ (0.08)      $ (0.06)      $ 0.04

Weighted average
 shares outstanding    10,316       10,864        10,275       11,211

                       THE MIDDLEBY CORPORATION
                          (Amounts in 000's)

                            As of              As of           As of
                          October 2,          July 3,         Jan. 2,
                             1999               1999            1999

Cash and cash equivalent $ 10,127           $  4,411           $ 6,768
Accounts receivable, net   26,942             27,156            24,330
Inventories, net           17,724             18,153            20,456
Other current assets        3,881              3,677             3,836
                           -------          ---------          -------
    Total current assets   58,674             53,397            55,390

Property, plant and
 equipment, net            21,497             21,910            22,596

Excess purchase price
 over net assets
 acquired, net             13,212             13,347            13,617

Other assets                8,946              9,450             8,076
                           -------          ---------          -------

    Total assets         $ 102,329          $ 98,104          $ 99,679
                           =======          =========         ========


Current maturities of
 long-term debt          $  2,113            $ 2,166           $ 1,893
Accounts payable            8,537              8,848            10,945
Accrued expenses           15,699             13,819            11,943
                           -------          ---------          -------
    Total current
     liabilities           26,349             24,833            24,781

Long-term debt             26,525             24,644            25,932

Retirement benefits &
 other non-current
 liabilities                5,061              3,989             4,232

Shareholders' equity       44,394             44,638            44,734
                           -------          ---------          -------

    Total liabilities
     and shareholders'
     equity             $ 102,329           $ 98,104          $ 99,679
                           =======          =========          =======

For further information about Middleby, visit the Company’s World Wide Web site,


David Riley, President, 847-758-3880 of The Middleby Corporation.