Special Notes Regarding Forward-Looking Statements



This report contains forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The company
cautions readers that these projections are based upon future results or events
and are highly dependent upon a variety of important factors which could cause
such results or events to differ materially from any forward-looking statements
which may be deemed to have been made in this report, or which are otherwise
made by or on behalf of the company. Such factors include, but are not limited
to, the impact of COVID-19 pandemic and the response of governments, businesses
and other third parties; volatility in earnings resulting from goodwill
impairment losses which may occur irregularly and in varying amounts;
variability in financing costs; quarterly variations in operating results;
dependence on key customers; international exposure; foreign exchange and
political risks affecting international sales; ability to protect trademarks,
copyrights and other intellectual property; 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 the company's 2021 Annual Report on Form 10-K.
All forward-looking statements are expressly qualified in their entirety by
these cautionary statements. The forward-looking statements included in this
report are made only as of the date hereof and, except as required by federal
securities laws and rules and regulations of the SEC, the company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

The ongoing conflict between Russia and Ukraine has resulted in significant
economic disruption globally and may adversely affect our business and results
of operations. In response to the Russia-Ukraine conflict, governments have
imposed sanctions and other restrictive actions against Russia and accordingly,
the company has suspended all sales into and purchases from Russia. The
Russia-Ukraine conflict has resulted in increased transportation costs and
supply chain challenges, and further escalation of such conflict may result in
additional supply chain disruptions, among other things, which may adversely
affect our business and results of operations. As the company does not have
material operations in Ukraine or Russia, the impact of this conflict did not
have a material impact on our results of operations during the six months ended
July 2, 2022. However, the extent of the adverse impacts of the ongoing conflict
on the broader global economy cannot be predicted and could negatively impact
our business and results of operations in the future.

Net Sales Summary
                             (dollars in thousands)


                                                       Three Months Ended                                                                Six Months Ended
                                      Jul 2, 2022                              Jul 3, 2021                             Jul 2, 2022                              Jul 3, 2021
                               Sales               Percent              Sales              Percent              Sales               Percent              Sales               Percent
Business Segments:
Commercial Foodservice     $   609,679                60.2  %       $  508,778                62.9  %       $ 1,153,332                57.5  %       $   989,933                63.2  %
Food Processing                123,913                12.2             130,008                16.1              243,856                12.1              242,502                15.5
Residential Kitchen            280,009                27.6             169,987                21.0              611,089                30.4              334,396                21.3
  Total                    $ 1,013,601               100.0  %       $  808,773               100.0  %       $ 2,008,277               100.0  %       $ 1,566,831               100.0  %



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Results of Operations

The following table sets forth certain consolidated statements of earnings items as a percentage of net sales for the periods:




                                                                   Three Months Ended                               Six Months Ended
                                                          Jul 2, 2022             Jul 3, 2021             Jul 2, 2022             Jul 3, 2021
Net sales                                                      100.0  %                  100.0  %              100.0  %                  100.0  %
Cost of sales                                                   64.4                      62.4                  65.6                      63.0
Gross profit                                                    35.6                      37.6                  34.4                      37.0
Selling, general and administrative expenses                    18.7                      20.5                  19.7                      20.5
Restructuring                                                    0.4                       0.1                   0.3                       0.1

Income from operations                                          16.5                      17.0                  14.4                      16.4

Interest expense and deferred financing amortization, net

                                                              2.1                       1.8                   1.9                       1.9

Net periodic pension benefit (other than service costs) (1.1) 


              (1.4)                 (1.1)                     (1.5)
Other expense (income), net                                      0.6                      (0.1)                  0.5                      (0.1)
Earnings before income taxes                                    14.9                      16.7                  13.1                      16.1
Provision for income taxes                                       3.8                       1.7                   3.2                       2.7
Net earnings                                                    11.1  %                   15.0  %                9.9  %                   13.4  %



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Three Months Ended July 2, 2022 as compared to Three Months Ended July 3, 2021

NET SALES. Net sales for the three months period ended July 2, 2022 increased by
$204.8 million or 25.3% to $1,013.6 million as compared to $808.8 million in the
three months period ended July 3, 2021. Net sales increased by $117.0 million,
or 14.5%, from the fiscal 2021 acquisitions of Novy, Imperial, Newton CFV,
Char-Griller, and Kamado Joe and Masterbuilt. Excluding acquisitions, net sales
increased $87.8 million, or 10.9%, from the prior year period. The impact of
foreign exchange rates on foreign sales translated into U.S. Dollars for the
three months period ended July 2, 2022 decreased net sales by approximately
$19.9 million or 2.5%. Excluding the impact of foreign exchange and
acquisitions, sales increased 13.3% for the three months period ended July 2,
2022 as compared to the prior year period, including a net sales increase of
17.7% at the Commercial Foodservice Equipment Group, a net sales decrease of
1.4% at the Food Processing Equipment Group and a net sales increase of 11.4% at
the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $100.9
million, or 19.8%, to $609.7 million in the three months period ended July 2,
2022, as compared to $508.8 million in the prior year period. Net sales from the
acquisitions of Imperial and Newton CFV, which were acquired on September 24,
2021 and November 16, 2021, respectively, accounted for an increase of $20.4
million during the three months period ended July 2, 2022. Excluding the impact
of acquisitions, net sales of the Commercial Foodservice Equipment Group
increased $80.5 million, or 15.8%, as compared to the prior year period.
Excluding the impact of foreign exchange and acquisitions, net sales increased
$90.2 million, or 17.7%, at the Commercial Foodservice Equipment Group.
Domestically, the company realized a sales increase of $95.5 million, or 26.6%,
to $454.5 million, as compared to $359.0 million in the prior year period. This
includes an increase of $20.3 million from the recent acquisitions. Excluding
the acquisitions, the net increase in domestic sales was $75.2 million, or
20.9%. The increase in domestic sales is related to higher shipments from
realized benefits of investments to increase our production throughput.
International sales increased $5.4 million, or 3.6%, to $155.2 million, as
compared to $149.8 million in the prior year period. This includes a decrease of
$9.7 million related to the unfavorable impact of exchange rates. Excluding
acquisitions and foreign exchange, the net sales increase in international sales
was $15.0 million, or 10.0%. The increase in international sales is related to
improvements in market conditions, primarily in the European and Latin American
markets.

•Net sales of the Food Processing Equipment Group decreased by $6.1 million, or
4.7%, to $123.9 million in the three months period ended July 2, 2022, as
compared to $130.0 million in the prior year period. Excluding the impact of
foreign exchange, net sales decreased $1.8 million, or 1.4%, at the Food
Processing Equipment Group. Domestically, the company realized a sales decrease
of $7.6 million, or 8.0%, to $87.9 million, as compared to $95.5 million in the
prior year period. The decrease in domestic sales is primarily driven by protein
products. International sales increased $1.5 million, or 4.3%, to $36.0 million,
as compared to $34.5 million in the prior year period. This includes a decrease
of $4.3 million related to the unfavorable impact of exchange rates. Excluding
foreign exchange, the net sales increase in international sales was $5.8
million, or 16.8%. The increase in international sales reflects growth primarily
driven by protein products.

•Net sales of the Residential Kitchen Equipment Group increased by $110.0
million, or 64.7%, to $280.0 million in the three months period ended July 2,
2022, as compared to $170.0 million in the prior year period. Net sales from the
acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt, which were
acquired on July 12, 2021, December 27, 2021 and December 27, 2021,
respectively, accounted for an increase of $96.6 million during the three months
period ended July 2, 2022. Excluding the impact of the acquisitions, net sales
of the Residential Kitchen Equipment Group increased $13.4 million, or 7.9%, as
compared to the prior year period. Excluding the impact of foreign exchange and
acquisitions, net sales increased $19.3 million, or 11.4% at the Residential
Kitchen Equipment Group. Domestically, the company realized a sales increase of
$76.4 million, or 67.4%, to $189.7 million, as compared to $113.3 million in the
prior year period. This includes an increase of $57.1 million from the recent
acquisitions. Excluding the acquisitions, the net increase in domestic sales was
$19.3 million, or 17.0%. The increase in domestic sales reflects the strong
demand for our premium appliance brands. International sales increased $33.6
million, or 59.3%, to $90.3 million, as compared to $56.7 million in the prior
year period. This includes an increase of $39.5 million from the recent
acquisitions and a decrease of $5.9 million related to the unfavorable impact of
exchange rates. Excluding foreign exchange and the acquisitions, the
international sales were flat from prior year.

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GROSS PROFIT. Gross profit increased to $360.7 million in the three months
period ended July 2, 2022, as compared to $303.7 million in the prior year
period, primarily reflecting higher sales volumes related to improvements in
market conditions and consumer demand. The impact of foreign exchange rates
decreased gross profit by approximately $8.0 million. The gross margin rate was
35.6% in the three months period ended July 2, 2022, as compared to 37.6% in the
prior year period. Gross profit margins have been negatively impacted by
acquisitions along with rising costs of many raw materials and inputs, as well
as higher labor rates and logistics costs.

•Gross profit at the Commercial Foodservice Equipment Group increased by $33.5
million, or 17.4%, to $225.5 million in the three months period ended July 2,
2022, as compared to $192.0 million in the prior year period. Gross profit from
the acquisitions of Imperial and Newton CFV increased gross profit by $8.2
million. Excluding acquisitions, gross profit increased by $25.3 million related
to higher sales volumes. The impact of foreign exchange rates decreased gross
profit by approximately $3.8 million. The gross margin rate decreased to 37.0%,
as compared to 37.7% in the prior year period. The gross margin rate, excluding
acquisitions and the impact of foreign exchange, was 36.9%.

•Gross profit at the Food Processing Equipment Group decreased by $5.4 million,
or 11.4%, to $41.8 million in the three months period ended July 2, 2022, as
compared to $47.2 million in the prior year period. The impact of foreign
exchange rates decreased gross profit by approximately $1.7 million. The gross
profit margin rate decreased to 33.7%, as compared to 36.3% in the prior year
period primarily related to lower sales volumes and product mix. The gross
margin rate, excluding the impact of foreign exchange, was 33.9%.

•Gross profit at the Residential Kitchen Equipment Group increased by $29.2
million, or 45.0%, to $94.1 million in the three months period ended July 2,
2022, as compared to $64.9 million in the prior year period. Gross profit from
the acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt increased
gross profit by $22.6 million. The impact of foreign exchange rates decreased
gross profit by approximately $2.5 million. The gross margin rate decreased to
33.6%, as compared to 38.2%, which was negatively impacted by acquisitions. The
gross margin rate, excluding acquisitions and the impact of foreign exchange,
was 39.1%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and
administrative expenses increased to $189.5 million in the three months period
ended July 2, 2022, as compared to $165.7 million in the three months period
ended July 3, 2021. As a percentage of net sales, selling, general, and
administrative expenses were 18.7% in the three months period ended July 2, 2022
as compared to 20.5% in the three months period ended July 3, 2021 .

Selling, general and administrative expenses reflect increased costs of $18.1
million associated with acquisitions, including $0.7 million of intangible
amortization expense. Selling, general and administrative expenses increased
from compensation, selling and commissions expenses, partially offset by lower
professional fees. Foreign exchange rates had an favorable impact of $3.7
million.

RESTRUCTURING EXPENSES. Restructuring expenses increased $3.0 million to
$4.0 million for the three months period ended July 2, 2022, as compared to $1.0
million for the three months period ended July 3, 2021. Restructuring expenses
in the three months period ended July 2, 2022 related primarily to non-cash
restructuring valuation allowances on balances associated with activities in
Russia. Restructuring expenses in the three months period ended July 3, 2021
related primarily to headcount reductions and facility consolidations within the
Commercial Foodservice Equipment Group.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were
$20.8 million in the three months period ended July 2, 2022, as compared to
$14.2 million in the prior year period primarily reflecting higher borrowings
levels on our current debt structure. Net periodic pension benefit (other than
service costs) decreased $0.7 million to $10.8 million in the three months
period ended July 2, 2022, as compared to $11.5 million in the prior year
period. Other expenses were $5.9 million in the three months period ended July
2, 2022, as compared to other income of $0.5 million in the prior year period
and consists mainly of foreign exchange gains and losses.

INCOME TAXES. A tax provision of $38.0 million, at an effective rate of 25.1%,
was recorded during the three months period ended July 2, 2022, as compared to
$13.9 million at an effective rate of 10.3%, in the prior year period. The
effective tax rate for the three months period ended July 2, 2022 is higher than
the comparable prior year rate primarily due to discrete tax benefits recorded
in 2021 for a deferred tax benefit for the enacted UK tax rate change from 19%
to 25% and tax benefits from amended U.S. tax returns. When excluding the
discrete tax adjustments, the 2021 rate was approximately 24.5%.
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Six Months Ended July 2, 2022 as compared to Six Months Ended July 3, 2021

NET SALES. Net sales for the six months period ended July 2, 2022 increased by
$441.5 million, or 28.2%, to $2,008.3 million as compared to $1,566.8 million in
the six months period ended July 3, 2021. Net sales increased by $273.9 million,
or 17.5%, from the fiscal 2021 acquisitions of Novy, Imperial, Newton CFV,
Char-Griller, and Kamado Joe and Masterbuilt. Excluding acquisitions, net sales
increased $167.6 million, or 10.7%, from the prior year period. The impact of
foreign exchange rates on foreign sales translated into U.S. Dollars for the six
months period ended July 2, 2022 decreased net sales by approximately $28.8
million, or 1.8%. Excluding the impact of foreign exchange and acquisitions,
sales increased 12.5% for six months period ended July 2, 2022 as compared to
the prior year period, including a net sales increase of 14.4% at the Commercial
Foodservice Equipment Group, a net sales increase of 3.2% at the Food Processing
Equipment Group and a net sales increase of 13.6% at the Residential Kitchen
Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $163.4
million, or 16.5%, to $1,153.3 million in the six months period ended July 2,
2022, as compared to $989.9 million in the prior year period. Net sales from the
acquisitions of Imperial and Newton CFV, which were acquired on September 24,
2021 and November 16, 2021, respectively, accounted for an increase of $34.9
million during the six months period ended July 2, 2022. Excluding the impact of
acquisitions, net sales of the Commercial Foodservice Equipment Group increased
$128.5 million, or 13.0%, as compared to the prior year period. Excluding the
impact of foreign exchange and acquisitions, net sales increased $143.0 million,
or 14.4%, at the Commercial Foodservice Equipment Group. Domestically, the
company realized a sales increase of $151.4 million, or 21.7%, to $849.3
million, as compared to $697.9 million in the prior year period. This includes
an increase of $34.2 million from recent acquisitions. Excluding acquisitions,
the net increase in domestic sales was $117.2 million, or 16.8%. The increase in
domestic sales is related to improvements in market conditions and consumer
demand. International sales increased $12.0 million, or 4.1%, to $304.0 million,
as compared to $292.0 million in the prior year period. This includes an
increase of $0.7 million from the recent acquisitions and a decrease of $14.5
million related to the unfavorable impact of exchange rates. Excluding
acquisitions and foreign exchange, the net sales increase in international sales
was $25.8 million, or 8.8%. The increase in international revenues is related to
improvements in market conditions, primarily in the European and Latin American
markets.

•Net sales of the Food Processing Equipment Group increased by $1.4 million, or
0.6%, to $243.9 million in the six months period ended July 2, 2022, as compared
to $242.5 million in the prior year period. Excluding the impact of foreign
exchange, net sales increased $7.8 million, or 3.2%, at the Food Processing
Equipment Group. Domestically, the company realized a sales increase of $7.6
million, or 4.3%, to $182.7 million, as compared to $175.1 million in the prior
year period. The increase in domestic sales reflects growth primarily driven by
protein products. International sales decreased $6.2 million, or 9.2%, to $61.2
million, as compared to $67.4 million in the prior year period. This includes a
decrease of $6.4 million related to the unfavorable impact of exchange rates.
Excluding foreign exchange, the international sales were flat from prior year.

•Net sales of the Residential Kitchen Equipment Group increased by $276.7
million, or 82.7%, to $611.1 million in the six months period ended July 2,
2022, as compared to $334.4 million in the prior year period. Net sales from the
acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt, which were
acquired on July 12, 2021, December 27, 2021 and December 27, 2021,
respectively, accounted for an increase of $239.0 million during the six months
period ended July 2, 2022. Excluding the impact of acquisitions, net sales of
the Residential Kitchen Equipment Group increased $37.7 million, or 11.3%, as
compared to the prior year period. Excluding the impact of foreign exchange and
acquisitions, net sales increased $45.6 million, or 13.6%, at the Residential
Kitchen Equipment Group. Domestically, the company realized a sales increase of
$197.4 million, or 89.0%, to $419.3 million, as compared to $221.9 million in
the prior year period. This includes an increase of $155.2 million from recent
acquisitions. Excluding acquisitions, the net increase in domestic sales was
$42.2 million, or 19.0%. The increase in domestic sales reflects the strong
demand for our premium appliance brands. International sales increased $79.3
million, or 70.5%, to $191.8 million, as compared to $112.5 million in the prior
year period. This includes an increase of $83.8 million from the recent
acquisitions and a decrease of $7.9 million related to the unfavorable impact of
exchange rates. Excluding foreign exchange and acquisitions, the net sales
increase in international sales was $3.4 million, or 3.0%.

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GROSS PROFIT. Gross profit increased to $691.3 million in the six months period
ended July 2, 2022 as compared to $579.6 million in the prior year period,
primarily reflecting higher sales volumes related to improvements in market
conditions and consumer demand. The impact of foreign exchange rates decreased
gross profit by approximately $11.3 million. The gross margin rate was 34.4% in
the six months period ended July 2, 2022 as compared to 37.0% in the six months
period ended July 3, 2021. Gross profit margins have been negatively impacted by
acquisitions, including $15.1 million of acquisition related inventory step-up
charges, along with rising costs of many raw materials and inputs, as well as
higher labor rates and logistics costs.

•Gross profit at the Commercial Foodservice Equipment Group increased by $57.5
million, or 15.7%, to $424.7 million in the six months period ended July 2,
2022, as compared to $367.2 million in the prior year period. Gross profit from
the acquisitions of Imperial and Newton CFV increased gross profit by $13.2
million. Excluding acquisitions, gross profit increased by $44.3 million related
to higher sales volumes. The impact of foreign exchange rates decreased gross
profit by approximately $5.6 million. The gross margin rate decreased to 36.8%,
as compared to 37.1% in the prior year period. The gross margin rate, excluding
acquisitions and the impact of foreign exchange, was 36.8%.

•Gross profit at the Food Processing Equipment Group decreased by $3.8 million,
or 4.4%, to $82.5 million in the six months period ended July 2, 2022, as
compared to $86.3 million in the prior year period. The impact of foreign
exchange rates decreased gross profit by approximately $2.4 million. The gross
profit margin rate decreased to 33.8%, as compared to 35.6% in the prior year
period primarily related to product mix. The gross margin rate, excluding the
impact of foreign exchange, was 33.9%.

•Gross profit at the Residential Kitchen Equipment Group increased by $59.5
million, or 47.4%, to $185.1 million in the six months period ended July 2,
2022, as compared to $125.6 million in the prior year period. Gross profit from
the acquisitions of Novy, Char-Griller, and Kamado Joe and Masterbuilt increased
gross profit by $43.5 million. The impact of foreign exchange rates decreased
gross profit by approximately $3.3 million. The gross margin rate decreased to
30.3%, as compared to 37.6% in the prior year period. Gross profit margins have
been negatively impacted by acquisitions, including $15.1 million of acquisition
related inventory step-up charges. The gross margin rate, excluding acquisitions
and the impact of foreign exchange, was 38.1%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Combined selling, general and
administrative expenses increased to $395.6 million in the six months period
ended July 2, 2022, as compared to $320.7 million in the six months period ended
July 3, 2021. As a percentage of net sales, selling, general, and administrative
expenses were 19.7% in the six months period ended July 2, 2022, as compared to
20.5% in the six months period ended July 3, 2021.

Selling, general and administrative expenses reflect increased costs of
$54.2 million associated with acquisitions, including $18.4 million of
intangible amortization expense. Selling, general and administrative expenses
increased from compensation, selling and commissions expenses, partially offset
by lower professional fees. Foreign exchange rates had an favorable impact of
$5.3 million.

RESTRUCTURING EXPENSES. Restructuring expenses increased $4.1 million to $5.9
million in the six months period ended July 2, 2022 from $1.8 million in the six
months period ended July 3, 2021. Restructuring expenses in the six months
period ended July 2, 2022 related primarily to non-cash restructuring valuation
allowances on balances associated with activities in Russia and headcount
reductions and facility consolidations within the Commercial Foodservice
Equipment Group and Residential Kitchen Equipment Group. Restructuring expenses
in the six months period ended July 3, 2021 related primarily to headcount
reductions and facility consolidations within the Commercial Foodservice
Equipment Group.

NON-OPERATING EXPENSES. Interest and deferred financing amortization costs were
$38.5 million in the six months period ended July 2, 2022, as compared to $30.3
million in the prior year period, reflecting the increase in borrowing levels
under our current credit facility. Net periodic pension benefit (other than
service costs) decreased $0.6 million to $22.3 million in the six months period
ended July 2, 2022, as compared to $22.9 million in the prior year period. Other
income was $9.9 million in the six months period ended July 2, 2022, as compared
to other income of $2.2 million in the prior year period and consists mainly of
foreign exchange gains and losses.

INCOME TAXES. A tax provision of $64.6 million, at an effective rate of 24.5%,
was recorded during the six months period ended July 2, 2022, as compared to
$42.8 million at an effective rate of 16.9%, in the prior year period. The
effective tax rate for the three months period ended July 2, 2022 is higher than
the comparable prior year rate primarily due to discrete tax benefits recorded
in 2021 for a deferred tax benefit for the enacted UK tax rate change from 19%
to 25% and tax benefits from amended U.S. tax returns. When excluding the
discrete tax adjustments, the 2021 rate was approximately 24.5%.
                                       34
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Financial Condition and Liquidity



During the six months ended July 2, 2022, cash and cash equivalents decreased by
$13.8 million to $166.6 million from $180.4 million at January 1, 2022. Total
debt increased to $2.7 billion at July 2, 2022 from $2.4 billion at January 1,
2022.

OPERATING ACTIVITIES. Net cash provided by operating activities was $89.5 million for the six months ended July 2, 2022, compared to $172.4 million for the six months ended July 3, 2021.



During the six months period ended July 2, 2022, working capital changes
meaningfully impacted operating cash flows. These included an increase in
accounts receivable of $50.2 million due to increased sales from improved market
conditions. Additionally, inventory increased $171.9 million due to the
seasonality of acquired businesses, efforts to mitigate supply chain risks and
the inflationary impacts on inventory.

INVESTING ACTIVITIES. During the six months ended July 2, 2022, net cash used for investing activities amounted to $107.3 million. Cash used to fund acquisitions and investments amounted to $74.9 million. Additionally, $32.1 million was expended, primarily for additions and upgrades of production equipment and manufacturing facilities.



FINANCING ACTIVITIES. Net cash flows provided by financing activities were $17.7
million during the six months ended July 2, 2022. The company's borrowing
activities during the six months ended July 2, 2022 included $273.5 million of
net proceeds under its Credit Facility. Additionally, the company repurchased
$239.6 million of Middleby common shares during the six months ended July 2,
2022. This was comprised of $15.6 million to repurchase 88,904 shares of
Middleby common stock that were surrendered to the company by employees in lieu
of cash payment for withholding taxes related to restricted stock vesting and
$224.0 million used to repurchase 1,365,598 shares of its common stock under a
repurchase program.

At July 2, 2022, the company believes that its current capital resources,
including cash and cash equivalents, cash expected to be generated from
operations, funds available from its current lenders and access to the credit
and capital markets will be sufficient to finance its operations, debt service
obligations, capital expenditures, product development and expenditures for the
foreseeable future.


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Recently Issued Accounting Standards

See Part I, Item 1, Notes to Condensed Consolidated Financial Statements, Note 4 - Recent Issued Accounting Standards, of this Quarterly Report on Form 10-Q.

Cybersecurity Governance



The company dedicates significant resources in an effort to secure its
confidential information as well as the data and any personal information the
company receives and stores about its customers and employees. The company has
systems in place designed to securely receive and store that information and to
detect, contain, and respond to data security incidents.

The company has a robust information security training and compliance program
for all new and existing employees. Training is provided at least annually, with
a formal communication cadence of additional components of training being
provided throughout the year. The company has not experienced a material
cybersecurity or information security breach in the last three years.

Oversight responsibility for information security matters is shared by the Board
(primarily through the Audit Committee) and senior management. The Audit
Committee oversees the company's cybersecurity and information security program
and receives periodic updates (more frequently than annually) from senior
management on cybersecurity and information security matters. The company
maintains a program, overseen by the company's Chief Financial Officer, that is
designed to protect and preserve the confidentiality, integrity and continued
availability of all information owned by or in the care of the company. The
company has implemented a cyber incident response plan that provides controls
and procedures for timely and accurate reporting of any material cybersecurity
incident.

Critical Accounting Policies and Estimates



Management's discussion and analysis of financial condition and results of
operations are based upon the company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires the
company to make significant estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses as well as related
disclosures. On an ongoing basis, the company evaluates its estimates and
judgments based on historical experience and various other factors that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions and any such
differences could be material to the company's consolidated financial
statements. There have been no changes in the company's critical accounting
policies, which include revenue recognition, inventories, goodwill and
indefinite-life intangibles, convertible debt, pensions benefits, and income
taxes, as discussed in the company's Annual Report on Form 10-K for the year
ended January 1, 2022 (the "2021 Annual Report on Form 10-K").


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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The company is exposed to market risk related to changes in interest rates. The following table summarizes the maturity of the company's debt obligations:

Twelve Month Period coinciding with the end of the company's Fiscal Second 


        Variable Rate
                                  Quarter                                               Debt

2023                                                                              $       49,076
2024                                                                                      25,590
2025                                                                                      24,022
2026                                                                                     760,137
2027 and thereafter                                                                    1,837,564
                                                                                  $    2,696,389


The company is exposed to interest rate risk on its floating-rate debt. The
company has entered into interest rate swaps to fix the interest rate applicable
to certain of its variable-rate debt. The agreements swap one-month LIBOR for
fixed rates. The company has designated these swaps as cash flow hedges and all
changes in fair value of the swaps are recognized in accumulated other
comprehensive income. As of July 2, 2022, the fair value of these instruments
was an asset of $35.1 million. The change in fair value of these swap agreements
in the first six months of 2022 was a gain of $39.2 million, net of taxes. The
potential net loss on fair value for such instruments from a hypothetical 10%
adverse change in quoted interest rates would not have a material impact on the
company's financial position, results of operations and cash flows.

In August 2020, the company issued $747.5 million aggregate principal amount of
Convertible Notes in a private offering pursuant to the Indenture. The company
does not have economic interest rate exposure as the Convertible Notes have a
fixed annual rate of 1.00%. The fair value of the Convertible Notes is subject
to interest rate risk, market risk and other factors due to its conversion
feature. The fair value of the Convertible Notes is also affected by the price
and volatility of the company's common stock and will generally increase or
decrease as the market price of our common stock changes. The interest and
market value changes affect the fair value of the Convertible Notes but do not
impact the company's financial position, cash flows or results of operations due
to the fixed nature of the debt obligation. Additionally, the company carries
the Convertible Notes at face value, less any unamortized discount on the
balance sheet and presents the fair value for disclosure purposes only.

Foreign Exchange Derivative Financial Instruments



The company uses foreign currency forward, foreign exchange swaps and option
purchase and sales contracts to hedge its exposure to changes in foreign
currency exchange rates. The company's primary hedging activities are to
mitigate its exposure to changes in exchange rates on intercompany and third
party trade receivables and payables. The company does not currently enter into
derivative financial instruments for speculative purposes. In managing its
foreign currency exposures, the company identifies and aggregates naturally
occurring offsetting positions and then hedges residual balance sheet exposures.
The potential net loss on fair value for such instruments from a hypothetical
10% adverse change in quoted foreign exchange rates would not have a material
impact on the company's financial position, results of operations and cash
flows. The fair value of the forward and option contracts was a loss of $0.4
million at the end of the second quarter of 2022.

The company accounts for its derivative financial instruments in accordance with
ASC 815, "Derivatives and Hedging". In accordance with ASC 815, these
instruments are recognized on the balance sheet as either an asset or a
liability measured at fair value. Changes in the market value and the related
foreign exchange gains and losses are recorded in the statement of earnings.
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