Special Note Regarding Forward-Looking Statements



This report contains "forward-looking statements" subject to the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors, which could
cause the company's actual results, performance or outcomes to differ materially
from those expressed or implied in the forward-looking statements. The following
are some of the important factors that could cause the company's actual results,
performance or outcomes to differ materially from those discussed in the
forward-looking statements:

•changing market conditions;
•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;
•risks associated with the company's foreign operations, including market
acceptance and demand for the company's products and the company's ability to
manage the risk associated with the exposure to foreign currency exchange rate
fluctuations;
•the company's ability to protect its trademarks, copyrights and other
intellectual property;
•the impact of competitive products and pricing;
•the impact of announced management and organizational changes;
•the state of the residential construction, housing and home improvement
markets;

•the state of the credit markets, including mortgages, home equity loans and consumer credit;

•intense competition in the company's business segments including the impact of both new and established global competitors;

•unfavorable tax law changes and tax authority rulings;

•cybersecurity attacks and other breaches in security;

•the continued ability to realize profitable growth through the sourcing and completion of strategic acquisitions;

•the timely development and market acceptance of the company's products; and •the availability and cost of raw materials.



The company cautions readers to carefully consider the statements set forth in
the section entitled "Item 1A. Risk Factors" of this filing and discussion of
risks included in the company's SEC filings.

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                               NET SALES SUMMARY
                             (dollars in thousands)

                                             Fiscal Year Ended(1)
                                    2020                          2019                          2018
                             Sales         Percent         Sales         Percent         Sales         Percent
Business Segments:

Commercial Foodservice   $ 1,510,279        60.1  %    $ 1,984,345        67.1  %    $ 1,729,814        63.5  %

Food Processing              437,272        17.4           400,951        13.5           389,594        14.3

Residential Kitchen          565,706        22.5           574,150        19.4           603,523        22.2

Total                    $ 2,513,257       100.0  %    $ 2,959,446       100.0  %    $ 2,722,931       100.0  %

(1)The company's fiscal year ends on the Saturday nearest to December 31.


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Results of Operations

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



                                                                                    Fiscal Year Ended(1)
                                                                    2020                    2019                    2018
Net sales                                                              100.0  %                100.0  %                100.0  %
Cost of sales                                                           64.9                    62.7                    63.1
Gross profit                                                            35.1                    37.3                    36.9
Selling, general and administrative expenses                            21.2                    20.1                    19.8

Restructuring                                                            0.5                     0.3                     0.7
Gain on litigation settlement                                              -                    (0.5)                      -
Gain on sale of plant                                                   (0.1)                      -                       -
Impairments                                                              0.6                       -                       -
Income from operations                                                  12.9                    17.4                    16.4
Interest expense and deferred financing amortization, net                3.1                     2.9                     2.2

Net periodic pension benefit (other than service cost & curtailment)

                                                            (1.6)                   (1.0)                   (1.4)
Curtailment loss                                                         0.6                       -                       -
Other expense (income), net                                              0.1                    (0.1)                    0.1
Earnings before income taxes                                            10.7                    15.6                    15.5
Provision for income taxes                                               2.4                     3.7                     3.9
Net earnings                                                             8.3  %                 11.9  %                 11.6  %

(1)The company's fiscal year ends on the Saturday nearest to December 31.


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Fiscal Year Ended January 2, 2021 as Compared to December 28, 2019

NET SALES. Net sales in fiscal 2020 decreased by $446.1 million, or 15.1%, to
$2,513.3 million as compared to $2,959.4 million in fiscal 2019. Net sales
increased by $72.3 million, or 2.4%, from the fiscal 2019 acquisitions of
Cooking Solutions Group, Powerhouse, Ss Brewtech, Pacproinc, Brava, and Synesso
and the fiscal 2020 acquisitions of RAM, Deutsche, Wild Goose, and United
Foodservice Equipment Zhuhai. Excluding acquisitions, net sales decreased $518.4
million, or 17.5%, from the prior year. The impact of foreign exchange rates on
foreign sales translated into U.S. Dollars for fiscal 2020 increased net sales
by approximately $0.2 million. Excluding the impact of foreign exchange and
acquisitions, sales decreased 17.5% for the year, including a net sales decrease
of 26.5% at the Commercial Foodservice Equipment Group, a net sales increase of
5.9% at the Food Processing Equipment Group and a net sales decrease of 2.9% at
the Residential Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group decreased by $474.0
million, or 23.9%, to $1,510.3 million in fiscal 2020 as compared to $1,984.3
million in fiscal 2019. Net sales from the acquisitions of Cooking Solutions
Group, Powerhouse, Ss Brewtech, Synesso, RAM, Deutsche, Wild Goose, and United
Foodservice Equipment Zhuhai, which were acquired on April 1, 2019, April 1,
2019, June 15, 2019, November 27, 2019, January 13, 2020, March 2, 2020,
December 7, 2020, and December 18, 2020, respectively, accounted for an increase
of $53.1 million during fiscal 2020. Excluding the impact of acquisitions, net
sales of the Commercial Foodservice Equipment Group decreased $527.1 million, or
26.6%, as compared to the prior year. Excluding the impact of foreign exchange
and acquisitions, net sales decreased $525.6 million, or 26.5% at the Commercial
Foodservice Equipment Group. Domestically, the company realized a sales decrease
of $266.9 million, or 20.0%, to $1,067.9 million, as compared to $1,334.8
million in the prior year. This includes an increase of $43.0 million from
recent acquisitions. Excluding acquisitions, the net decrease in domestic sales
was $309.9 million, or 23.2%. International sales decreased $207.1 million, or
31.9%, to $442.4 million, as compared to $649.5 million in the prior year. This
includes the increase of $10.1 million from recent acquisitions and a decrease
of $1.5 million related to the unfavorable impact of exchange rates. Excluding
acquisitions and foreign exchange, the net sales decrease in international sales
was $215.7 million, or 33.2%. The decline in both domestic and international
sales reflects the impacts of COVID-19. This was most prevalent in the second
quarter of 2020 and despite decline over prior year gradually recovered in the
second half of the year.

•Net sales of the Food Processing Equipment Group increased by $36.3 million, or
9.1%, to $437.3 million in fiscal 2020, as compared to $401.0 million in fiscal
2019. Excluding the impact of foreign exchange and the acquisition of Pacproinc,
acquired July 16, 2019, net sales increased $23.8 million, or 5.9% at the Food
Processing Equipment Group. Domestically, the company realized a sales increase
of $64.5 million, or 26.2%, to $311.1 million, as compared to $246.6 million in
the prior year. Excluding the acquisition, net sales increased $51.8 million, or
21.0%. The increase in domestic sales reflects growth in protein equipment
sales. International sales decreased $28.2 million, or 18.3%, to $126.2 million,
as compared to $154.4 million in the prior year. This includes a decrease of
$1.1 million related to the unfavorable impact of exchange rates. Excluding the
acquisition and foreign exchange, the net sales decrease in international sales
was $28.0 million, or 18.1%. The decrease in international revenues reflects
declines in sales primarily due to the disruptive impact of COVID-19 on our
customers' operations.

•Net sales of the Residential Kitchen Equipment Group decreased by $8.4 million,
or 1.5%, to $565.7 million in fiscal 2020, as compared to $574.1 million in
fiscal 2019. Excluding the impact of foreign exchange, the acquisition of Brava,
acquired November, 19, 2019, net sales decreased $16.8 million, or 2.9% at the
Residential Kitchen Equipment Group. Domestically, the company realized a sales
increase of $11.2 million, or 3.1%, to $373.9 million, as compared to $362.7
million in the prior year. Excluding the acquisition, net sales increased $5.6
million, or 1.5%. The increase in domestic sales is primarily related to strong
consumer demand in the last six months of the year, offset by the impacts of
COVID-19 in the first half of the year. International sales decreased $19.6
million, or 9.3% to $191.8 million, as compared to $211.4 million in the prior
year. This includes an increase of $2.8 million related to the favorable impact
of exchange rates. Excluding foreign exchange, the net sales decrease in
international sales was $22.4 million, or 10.6%, primarily in the European
market, reflecting the impacts of Brexit and the outbreak of COVID-19 partially
offset by strong consumer demand in the last six months of the year.
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GROSS PROFIT. Gross profit decreased by $221.5 million to $882.0 million in
fiscal 2020 from $1,103.5 million in fiscal 2019, primarily reflecting the lower
sales volumes related to COVID-19, lower margins at recent acquisitions, offset
by the favorable impact of foreign exchange rates of $1.7 million. The gross
margin rate decreased from 37.3% in 2019 to 35.1% in 2020. The gross margin rate
in fiscal 2020 excluding acquisitions and impact of foreign exchange was 35.3%.

•Gross profit at the Commercial Foodservice Equipment Group decreased by $224.4
million, or 30.1%, to $522.2 million in fiscal 2020 as compared to $746.6
million in fiscal 2019. Gross profit from the acquisitions of Cooking Solutions
Group, Powerhouse, Ss Brewtech, Synesso, RAM, Deutsche, Wild Goose, and United
Foodservice Equipment Zhuhai, accounted for an approximately $13.0 million
increase in gross profit during fiscal 2020. Excluding acquisitions, the gross
profit decreased by approximately $237.4 million largely due to lower sales
volumes. The impact of foreign exchange rates increased gross profit by
approximately $0.1 million. The gross profit margin rate decreased to 34.6% as
compared to 37.6% in the prior year, primarily due to lower margins at recent
acquisitions. The gross margin rate in fiscal 2020 excluding acquisitions and
the impact of foreign exchange was 34.9%.

•Gross profit at the Food Processing Equipment Group increased by $14.9 million,
or 10.5%, to $157.1 million in fiscal 2020 as compared to $142.2 million in
fiscal 2019. Excluding the acquisition, gross profit increased by approximately
$10.6 million. The impact of foreign exchange rates increased gross profit by
approximately $0.4 million. The gross profit margin rate increased to 35.9% in
fiscal 2020 as compared to 35.5% in the prior year. The gross margin rate in
fiscal 2020 excluding the acquisition and the impact of foreign exchange was
35.9%.

•Gross profit at the Residential Kitchen Equipment Group decreased by $12.5
million, or 5.8%, to $204.3 million in fiscal 2020 as compared to $216.8 million
in fiscal 2019. The impact of foreign exchange rates increased gross profit by
approximately $1.2 million. The gross margin rate decreased to 36.1% in fiscal
2020 as compared to 37.8% in the prior year, primarily related to lower sales
volumes and the impact of facility consolidations.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Combined selling, general, and
administrative expenses decreased by $61.9 million to $531.9 million in fiscal
2020 from $593.8 million in 2019. As a percentage of net sales, selling, general
and administrative expenses amounted to 21.2% in fiscal 2020 and 20.1% in fiscal
2019.

Selling, general and administrative expenses reflect increased costs of
$30.2 million associated with acquisitions, including $7.2 million of non-cash
intangible amortization expense. Selling, general and administrative expenses
decreased $35.7 million related to compensation costs and commissions and $59.2
million due to controllable cost reductions primarily within professional fees,
travel and entertainment, convention costs, and advertising. Foreign exchange
rates had a favorable impact of $0.5 million. The decreases were partially
offset by a $11.5 million increase related to higher non-cash share based
compensation and$5.8 million related to increased allowances for doubtful
accounts given the current market conditions. The prior year expenses also
included $10.1 million related to transition costs with the former Chairman and
CEO upon his retirement in February 2019.

RESTRUCTURING EXPENSES. Restructuring expenses increased $1.9 million to $12.4
million from $10.5 million in the prior year period. In fiscal 2020,
restructuring expenses related primarily to headcount reductions and facility
consolidations within the Commercial Foodservice Equipment Group. During fiscal
2019, restructuring charges related primarily to headcount reductions and cost
reduction initiatives related to facility consolidations at the Commercial
Foodservice Equipment Group and Residential Kitchen Equipment Group.

GAIN ON LITIGATION SETTLEMENT. In fiscal 2019, the company reached a settlement
with respect to a lawsuit filed by the company arising from
a prior acquisition included in the Residential Kitchen Equipment Group. The
gain associated with this settlement, which is net of the release of funds in
escrow, is reflected in the consolidated statement of earnings.

IMPAIRMENTS. In fiscal 2020, the company recognized impairment of $11.6 million
associated with several tradenames in conjunction with the diminution of value
as we assessed current market conditions and future business plans. See Note 3
(f) to the Consolidated Financial Statements for further information on the
annual impairment testing. In addition the company recorded an impairment charge
of approximately $2.9 million to reflect the fair market value of assets held
for sale for a non-core business within the Residential Kitchen Equipment Group.
See Note 13, Restructuring and Acquisition Integration Initiatives, in the Notes
to the Consolidated Financial Statements for further information on
restructuring initiatives.
                                       32
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INCOME FROM OPERATIONS. Income from operations decreased $189.6 million to
$324.4 million in fiscal 2020 from $514.0 million in fiscal 2019. Operating
income as a percentage of net sales amounted to 12.9% in 2020 as compared to
17.4% in 2019. The decrease in operating income resulted from the impacts of
COVID-19. Operating income in fiscal 2019 included the gain on litigation
settlement, offset by the transition costs related to the former Chairman and
CEO. Operating income in fiscal 2020 included impairment charges related to
intangible assets, fixed assets, and assets held for sale.

Income from operations in 2020 included $127.7 million of non-cash expenses,
including $39.1 million of depreciation expense, $69.0 million of intangible
amortization related to acquisitions and $19.6 million of stock based
compensation. This compares to $110.0 million of non-cash expenses in the prior
year, including $37.9 million of depreciation expense, $64.0 million of
intangible amortization related to acquisitions and $8.1 million of stock based
compensation costs.

NON-OPERATING EXPENSES. Non-operating expenses increased $5.0 million to $56.4
million of expense in fiscal 2020 from $51.4 million of income in fiscal 2019.
Net interest expense and deferred financing decreased $4.0 million to $78.6
million in fiscal 2020 from $82.6 million in fiscal 2019 reflecting the
reduction in the average interest rates under the Credit Facility and benefit
from the Convertible Notes, offset by higher non-cash interest from the lower
interest rate on Convertible Notes. Net periodic pension benefit (other than
service costs and curtailment) increased $10.3 million to $40.0 million in
fiscal 2020 from $29.7 million in fiscal 2019, related to the increase in
discount rate used to calculate the interest cost and lower expected returns on
assets driven by lower asset values for fiscal 2019. During fiscal 2020 a
curtailment cost of approximately $14.7 million was recognized as a result of
closing the AGA Group Pension Scheme to future pension accruals.

INCOME TAXES. A tax provision of $60.8 million, at an effective rate of 22.7%,
was recorded for fiscal 2020 as compared to $110.4 million at an effective rate
of 23.9%, in fiscal 2019. In comparison to the prior year, the tax provision
reflects favorable tax adjustments for deferred tax rate changes and adjustments
for the finalization of 2019 tax returns. The effective rates in 2020 and 2019
are higher than the federal tax rate of 21% primarily due to state taxes and
foreign tax rate differentials.
                                       33
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Fiscal Year Ended December 28, 2019 as Compared to December 29, 2018

NET SALES. Net sales in fiscal 2019 increased by $236.5 million, or 8.7%, to
$2,959.4 million as compared to $2,722.9 million in fiscal 2018. The increase in
net sales of $278.9 million, or 10.2%, was attributable to acquisition growth,
resulting from the fiscal 2018 acquisitions of Hinds-Bock, Ve.Ma.C, Firex,
Josper, Taylor, M-TEK, and Crown and the fiscal 2019 acquisitions of EVO,
Cooking Solutions Group, Powerhouse, Ss Brewtech, Pacproinc, Synesso, and Brava.
Excluding acquisitions and closure of a non-core business, net sales decreased
$33.3 million, or 1.2%, from the prior year. The impact of foreign exchange
rates on foreign sales translated into U.S. Dollars for fiscal 2019 decreased
net sales by approximately $36.1 million or 1.3%. Excluding the impact of
foreign exchange, acquisitions and closure of a non-core business, sales
increased 0.1% for the year, including a net sales increase of 1.6% at the
Commercial Foodservice Equipment Group, a net sales decrease of 3.3% at the Food
Processing Equipment Group and a net sales decrease of 2.0% at the Residential
Kitchen Equipment Group.

•Net sales of the Commercial Foodservice Equipment Group increased by $254.5
million, or 14.7%, to $1,984.3 million in fiscal 2019 as compared to $1,729.8
million in fiscal 2018. Net sales from the acquisitions of Firex, Josper,
Taylor, Crown, EVO, Cooking Solutions Group, Powerhouse, Ss Brewtech, and
Synesso, which were acquired on April 27, 2018, May 10, 2018, June 22, 2018,
December 3, 2018, December 31, 2018, April 1, 2019, April 1, 2019, June 15,
2019, and November 27, 2019, respectively, accounted for an increase of $247.1
million during fiscal 2019. Excluding the impact of acquisitions, net sales of
the Commercial Foodservice Equipment Group increased $7.4 million, or 0.4%, as
compared to the prior year. Excluding the impact of foreign exchange and
acquisitions, net sales increased $27.2 million, or 1.6% at the Commercial
Foodservice Equipment Group. Domestically, the company realized a sales increase
of $158.8 million, or 13.5%, to $1,334.8 million, as compared to $1,176.0
million in the prior year. This includes an increase of $158.3 million from
recent acquisitions. Excluding acquisitions, net sales were relatively flat.
International sales increased $95.7 million, or 17.3%, to $649.5 million, as
compared to $553.8 million in the prior year. This includes the increase of
$88.8 million from recent acquisitions and a decrease of $19.8 million related
to the unfavorable impact of exchange rates. Excluding acquisitions and foreign
exchange, the net sales increase in international sales was $26.7 million, or
4.8%. The increase in international revenues reflects strengthening of sales in
the Asian and Latin American markets.

•Net sales of the Food Processing Equipment Group increased by $11.4 million, or
2.9%, to $401.0 million in fiscal 2019, as compared to $389.6 million in fiscal
2018. Net sales from the acquisitions of Hinds-Bock, Ve.Ma.C, M-TEK and
Pacproinc, which were acquired on February 16, 2018, April 3, 2018, October 1,
2018, and July 16, 2019 respectively, accounted for an increase of $29.3
million. Excluding the impact of acquisitions, net sales of the Food Processing
Equipment Group decreased $17.9 million, or 4.6%. Excluding the impact of
foreign exchange and acquisitions net sales decreased $12.7 million, or 3.3% at
the Food Processing Equipment Group. Domestically, the company realized a sales
decrease of $17.1 million, or 6.5%, to $246.6 million, as compared to $263.7
million in the prior year. This includes an increase of $24.1 million from
recent acquisitions. Excluding acquisitions, net sales decreased $41.2 million,
or 15.6%. International sales increased $28.5 million, or 22.6%, to $154.4
million, as compared to $125.9 million in the prior year. This includes the
increase of $5.2 million from the recent acquisitions and a decrease of $5.2
million related to the unfavorable impact of exchange rates. Excluding
acquisitions and foreign exchange, the net sales decrease in international sales
was $28.5 million, or 22.6%. Revenues for the Food Processing Equipment Group
have been affected by the timing and deferral of certain larger projects.

•Net sales of the Residential Kitchen Equipment Group decreased by $29.4
million, or 4.9%, to $574.1 million in fiscal 2019, as compared to $603.5
million in fiscal 2018. Excluding the impact of foreign exchange, the
acquisition of Brava, acquired November, 19, 2019, and closure of a non-core
business, net sales decreased $11.7 million, or 2.0% at the Residential Kitchen
Equipment Group. Domestically, the company realized a sales decrease of $4.0
million, or 1.1%, to $362.7 million, as compared to $366.7 million in the prior
year. Excluding acquisitions and closure of a non-core business the net sales
decrease in domestic sales was $4.7 million, or 1.3%. International sales
decreased $25.4 million, or 10.7% to $211.4 million, as compared to $236.8
million in the prior year. This includes an unfavorable impact of exchange rates
of $11.1 million. Excluding the impact of foreign exchange, acquisition, and
closure of a non-core business the net sales decrease in international sales
was$7.0 million, or 3.1%. The decrease in international revenues reflects
decline of sales in the European market.


                                       34
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GROSS PROFIT. Gross profit increased by $99.4 million to $1,103.5 million in
fiscal 2019 from $1,004.1 million in fiscal 2018, reflecting the impact of
increased sales from acquisitions and unfavorable impact of foreign exchange
rates of $12.1 million. The gross margin rate increased from 36.9% in 2018 to
37.3% in 2019. The gross margin rate in fiscal 2019 excluding acquisitions and
impact of foreign exchange was 37.9%.

•Gross profit at the Commercial Foodservice Equipment Group increased by $88.1
million, or 13.4%, to $746.6 million in fiscal 2019 as compared to $658.5
million in fiscal 2018. Gross profit from the acquisitions of Firex, Josper,
Taylor, Crown, EVO, Cooking Solutions Group, Powerhouse, Ss Brewtech, and
Synesso accounted for approximately $73.3 million of the increase in gross
profit during fiscal 2019. Excluding acquisitions, the gross profit increased by
approximately $14.8 million largely due to selling prices. The impact of foreign
exchange rates decreased gross profit by approximately $6.1 million. The gross
profit margin rate decreased to 37.6% as compared to 38.1% in the prior year,
primarily due to lower margins at recent acquisitions. The gross margin rate in
fiscal 2019 excluding acquisitions and impact of foreign exchange was 38.7%.

•Gross profit at the Food Processing Equipment Group increased by $8.6 million,
or 6.4%, to $142.2 million in fiscal 2019 as compared to $133.6 million in
fiscal 2018. Gross profit from the acquisitions of Hinds-Bock, Ve.Ma.C, M-TEK
and Pacproinc accounted for approximately $12.8 million of the increase in gross
profit during fiscal 2019. Excluding acquisitions, the gross profit decreased by
approximately $4.2 million based on lower sales volumes. The impact of foreign
exchange rates decreased gross profit by approximately $2.1 million. The gross
profit margin rate increased to 35.5% in fiscal 2019 as compared to 34.3% in the
prior year, reflecting the impact of acquisitions. The gross margin rate in
fiscal 2019 excluding acquisitions and impact of foreign exchange was 34.9%.

•Gross profit at the Residential Kitchen Equipment Group decreased by $0.3
million, or 0.1%, to $216.8 million in fiscal 2019 as compared to $217.1 million
in fiscal 2018. Gross profit was offset by unfavorable foreign exchange rates of
$3.9 million. The gross margin rate increased to 37.8% in fiscal 2019 as
compared to 36.0% in the prior year. The gross margin rate in fiscal 2019
excluding acquisitions and impact of foreign exchange was 37.7%.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Combined selling, general, and
administrative expenses increased by $55.0 million to $593.8 million in fiscal
2019 from $538.8 million in 2018. As a percentage of net sales, selling, general
and administrative expenses amounted to 20.1% in fiscal 2019 and 19.8% in fiscal
2018.

Selling, general and administrative expenses reflect increased costs of $64.3
million associated with the fiscal 2018 acquisitions of Hinds-Bock, Ve.Ma.C,
Firex, Josper, Taylor, M-TEK, and Crown and the fiscal 2019 acquisitions of EVO,
Cooking Solutions Group, Powerhouse, Ss Brewtech, Pacproinc, Synesso, and Brava,
including $19.6 million of non-cash intangible amortization expense. Selling,
general and administrative expenses increased by $10.0 million related to
transition costs with the former Chairman and CEO upon his retirement in
February 2019 and $5.6 million related to higher non-cash share based
compensation. The increase was offset by the favorable impact of foreign
exchange rates of $7.6 million and $13.6 million related to lower compensation
costs.

RESTRUCTURING EXPENSES. Restructuring expenses decreased $8.8 million to $10.5
million from $19.3 million in the prior year period. In fiscal 2019,
restructuring charges related primarily to headcount reductions and cost
reduction initiatives related to facility consolidations at the Commercial
Foodservice Equipment Group and Residential Kitchen Equipment Group. During
fiscal 2018, restructuring charges related primarily to exiting operations of a
non-core business in the Residential Kitchen Equipment Group, as well as
headcount reductions at the Commercial Foodservice Equipment Group and
additional cost reduction initiatives related to the AGA Group.

GAIN ON LITIGATION SETTLEMENT. During the fourth quarter, we reached a
settlement with respect to a lawsuit filed by the Company arising from a prior
acquisition included in the Residential Kitchen Equipment Group. The gain
associated with this settlement, which is net of the release of funds in escrow,
is reflected in the consolidated statement of earnings.


                                       35
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INCOME FROM OPERATIONS. Income from operations increased $68.0 million to $514.0
million in fiscal 2019 from
$446.0 million in fiscal 2018. Operating income as a percentage of net sales
amounted to 17.4% in 2019 as compared to 16.4% in 2018. The increase in
operating income resulted from the increase in net sales and gross profit,
offset partially by increased operating expenses. Operating income in fiscal
2019 included the gain on litigation settlement, offset by the transition costs
related to the former Chairman and CEO. Excluding the impact of restructuring
expenses and gain on litigation settlement, offset by the transition costs
related to the former Chairman and CEO, operating income increased $54.5 million
to $519.8 million in fiscal 2019 from $465.3 million in fiscal 2018. Operating
income as a percentage of net sales, excluding those items, amounted to 17.6% in
2019 in comparison to 17.1% in 2018.

Income from operations in 2019 included $110.0 million of non-cash expenses,
including $37.9 million of depreciation expense, $64.0 million of intangible
amortization related to acquisitions and $8.1 million of stock based
compensation. This compares to $98.3 million of non-cash expenses in the prior
year, including $35.8 million of depreciation expense, $60.0 million of
intangible amortization related to acquisitions and $2.5 million of stock based
compensation costs.

NON-OPERATING EXPENSES. Non-operating expenses increased $29.0 million to $51.4
million of expense in fiscal 2019 from $22.4 million of income in fiscal 2018.
Net interest expense and deferred financing increased $23.9 million to $82.6
million in fiscal 2019 from $58.7 million in fiscal 2018 reflecting higher
interest rates and higher debt balances related to the funding of acquisitions.
Net periodic pension benefit (other than service costs) increased $9.2 million
to $28.9 million in fiscal 2019 from $38.1 million in fiscal 2018, related to
the increase in discount rate used to calculate the interest cost and lower
expected returns on assets driven by lower asset values for fiscal 2019.

INCOME TAXES. A tax provision of $110.4 million, at an effective rate of 23.9%,
was recorded for fiscal 2019 as compared to $106.4 million at an effective rate
of 25.1%, in fiscal 2018. In comparison to the prior year the tax provision
reflects favorable tax adjustments for a refund of foreign taxes, enacted tax
rate changes in several foreign jurisdictions and adjustments for the
finalization of 2018 tax returns. The effective rates in 2019 and 2018 are
higher than the federal tax rate of 21% primarily due to state taxes,
non-deductible expenses and foreign tax rate differentials.
                                       36
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Financial Condition and Liquidity



Total cash and cash equivalents increased by $173.6 million to $268.1 million at
January 2, 2021 from $94.5 million at December 28, 2019. Total debt, excluding
the unamortized debt discount associated with the Convertible Notes, decreased
to $1.8 billion at January 2, 2021 from $1.9 billion at December 28, 2019.

OPERATING ACTIVITIES. Net cash provided by operating activities after changes in
assets and liabilities amounted to $524.8 million as compared to $377.4 million
in the prior year.

During fiscal 2020, sales volumes were significantly lower as compared to 2019
due to the impacts of the COVID-19 pandemic, primarily in the Commercial
Foodservice Equipment Group. Lower earnings generated less income and associated
cash flows. However, reductions in working capital requirements generated more
than offsetting cash flow benefits. Net cash used to fund changes in assets and
liabilities amounted to $174.9 million in 2020, primarily related to lower
receivables, reductions in inventory levels, the amount and timing of payments,
as well as increases in employer payroll tax accruals from the CARES Act.

In connection with the company's acquisition activities during the year, the
company added assets and liabilities from the opening balance sheets of the
acquired businesses in its consolidated balance sheets and accordingly these
amounts are not reflected in the net change in working capital.

INVESTING ACTIVITIES. During 2020, net cash used for investing activities
amounted to $106.8 million. This included $79.6 million primarily for the 2020
acquisitions of RAM, Deutsche, Wild Goose and United Foodservice Equipment
Zhuhai. Additionally, $34.8 million was expended, primarily associated with
additions and upgrades of production equipment, manufacturing facilities and
residential and commercial showrooms, and was offset by $14.1 million in
proceeds on the sale of properties following facility consolidations actions.

FINANCING ACTIVITIES. Net cash flows used for financing activities amounted to
$252.5 million in 2020. On January 31, 2020, the company entered into an amended
and restated five-year, $3.5 billion multi-currency senior secured credit
agreement (the "Credit Facility").  On August 21, 2020, the company issued
$747.5 million aggregate principal amount of 1.00% Convertible Senior Notes due
2025, and incurred $17.6 million of issuance costs. The company then entered
into privately negotiated capped call transactions (the "Capped Call
Transactions") in an aggregate amount of $104.7 million. A portion of the net
proceeds from the offering of the Convertible Notes was used to prepay $400.0
million aggregate principal amount of its term loan obligations and to execute
an amendment to the Credit Facility. The company incurred approximately $11.0
million of debt issuance costs, in aggregate, for amendments to the Credit
Facility. The company's borrowing activities during 2020 included $48.5 million
of net repayments under its Credit Facility.
Additionally, the company repurchased $85.9 million of Middleby common shares
during 2020. This was comprised of $16.2 million to repurchase 176,242 shares of
Middleby common stock that were surrendered to the company for withholding taxes
related to restricted stock vestings and $69.7 million used to repurchase
896,965 shares of its common stock under a repurchase program.

At January 2, 2021, the company was in compliance with all covenants pursuant to
its borrowing agreements. The company has run various scenarios to estimate the
impact of the COVID-19 pandemic and continues to believe that its future cash
generated from operations, together with its capacity under its Credit Facility
and its cash on hand, will provide adequate resources to meet its working
capital needs and cash requirements and maintain compliance with financial
covenants in its Credit Facility for at least the next 12 months.

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Contractual Obligations



The company's contractual cash payment obligations are set forth below (dollars
in thousands):

                            Amounts                                                           Total
                        Due Sellers                       Estimated                     Contractual
                               From                        Interest      Operating             Cash
                        Acquisition             Debt        on Debt         Leases      Obligations
Less than 1 year     $     13,787      $    22,944      $  55,755      $  24,675      $   117,161
1-3 years                  17,972           38,317         99,712         37,880          193,881
4-5 years                   1,137        1,668,091         57,556         22,529        1,749,313
After 5 years               1,875              244            580         23,446           26,145

                     $     34,771      $ 1,729,596      $ 213,603      $ 108,530      $ 2,086,500

The company has obligations to make $34.8 million of estimated contingent purchase price payments to the sellers that were deferred in conjunction with various acquisitions.



As of January 2, 2021, the company had $1.1 billion outstanding under its Credit
Facility. The average interest rate on this debt, inclusive of hedging
instruments, amounted to 3.97% at the end of the period. As of January 2, 2021,
the company also has $4.4 million of debt outstanding under various foreign
credit facilities and $1.4 million of other debt arrangements. The estimated
interest payments reflected in the table above assume that the level of debt and
average interest rate on the company's revolving credit line under its Credit
Facility does not change until the facility reaches maturity. The estimated
payments also assume that relative to the company's foreign borrowings and other
debt arrangements: all scheduled term loan payments are made; the level of
borrowings does not change; and the average interest rates remain at their
January 2, 2021 rates. As of January 2, 2021, the company has $747.5 million
aggregate principal amount of Convertible Notes outstanding that bear interest
semi-annually in arrears at a rate of 1.00% per annum. The Convertible Notes
will mature on September 1, 2025 unless they are redeemed, repurchased or
converted prior to such date in accordance with their terms. Also reflected in
the table above is $17.4 million of payments to be made related to the company's
interest rate swap agreements in 2021.

As indicated in Note 11 to the consolidated financial statements, the company's
projected benefit obligation under its defined benefit plans exceeded the plans'
assets by $469.5 million at the end of 2020 as compared to $289.1 million at the
end of 2019. The unfunded benefit obligations were comprised of a $21.4 million
underfunding of the company's U.S. Plans and $448.1 million underfunding of the
company's Non-U.S. Plans. The company made minimum contributions required by the
Employee Retirement Income Security Act of 1974 ("ERISA") of $1.6 million and
$1.2 million in 2020 and 2019, respectively, to the company's U.S. Plans. The
company expects to continue to make minimum contributions to the U.S. Plans as
required by ERISA, of $0.6 million in 2021. The company expects to contribute
$4.7 million to the Non-U.S. Plans in 2021.

The company places purchase orders with its suppliers in the ordinary course of
business. These purchase orders are generally to fulfill short-term
manufacturing requirements of less than 90 days and most are cancelable with a
restocking penalty. The company has no material long-term purchase contracts or
minimum purchase obligations with any supplier.

Off-Balance Sheet Arrangements

The company has no activities, obligations or exposures associated with off-balance sheet arrangements.

Related Party Transactions

From December 29, 2019 through the date hereof, there were no transactions between the company, its directors and executive officers that are required to be disclosed pursuant to Item 404 of Regulation S-K, promulgated under the Securities and Exchange Act of 1934, as amended.


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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 our consolidated financial statements.

Revenue Recognition
Revenue is recognized when the control of the promised goods or services are
transferred to our customers, in an amount that reflects the consideration that
we expect to receive in exchange for those goods or services.

A performance obligation is a promise in a contract to transfer a distinct good
or service to the customer and represents the unit of account. A contract's
transaction price is allocated to each distinct performance obligation and
recognized as revenue when, or as, the performance obligation is satisfied. The
company's contracts can have multiple performance obligations or just a single
performance obligation. For contracts with multiple performance obligations, the
contract's transaction price is allocated to each performance obligation using
the company's best estimate of the standalone selling price of each distinct
good or service in the contract.

Within the Commercial Foodservice Equipment and Residential Foodservice
Equipment Groups, the estimated standalone selling price of equipment is based
on observable prices. Within the Food Processing Equipment Group, the company
estimates the standalone selling price based on expected cost to manufacture the
good or complete the service plus an appropriate profit margin.

Control may pass to the customer over time or at a point in time. In general,
the Commercial Foodservice Equipment and Residential Foodservice Equipment
Groups recognize revenue at the point in time control transfers to their
customers based on contractual shipping terms. Revenue from equipment sold under
our long-term contracts within the Food Processing Equipment group is recognized
over time as the equipment is manufactured and assembled. Installation services
provided in connection with the delivery of the equipment are also generally
recognized as those services are rendered. Over time transfer of control is
measured using an appropriate input measure (e.g., costs incurred or direct
labor hours incurred in relation to total estimate). These measures include
forecasts based on the best information available and therefore reflect the
company's judgment to faithfully depict the transfer of the goods.

Inventories


Inventories are stated at the lower of cost or net realizable value using the
first-in, first-out method for the majority of the company's inventories. The
company evaluates the need to record valuation adjustments for inventory on a
regular basis. The company's policy is to evaluate all inventories including raw
material, work-in-process, finished goods, and spare parts. Inventory in excess
of estimated usage requirements is written down to its estimated net realizable
value. Inherent in the estimates of net realizable value are estimates related
to our future manufacturing schedules, customer demand, possible alternative
uses, and ultimate realization of potentially excess inventory.

Goodwill and Indefinite-Life Intangibles
The company's business acquisitions result in the recognition of goodwill and
other intangible assets, which are a significant portion of the company's total
assets. Goodwill represents the excess of acquisition costs over the fair value
of the net tangible assets and identifiable intangible assets acquired in a
business combination. Identifiable intangible assets are recognized separately
from goodwill and include trademarks and trade names, technology, customer
relationships and other specifically identifiable assets. Trademarks and trade
names are deemed to be indefinite-lived. Goodwill and indefinite-lived
intangible assets are not amortized, but are subject to impairment testing.

On an annual basis on the first day of the fourth quarter, or more frequently if
triggering events occur, the company performs an impairment assessment for
goodwill and indefinite-lived intangible assets. The company considers
qualitative factors to assess if it is more likely than not that the fair value
of goodwill and indefinite-lived intangible assets is below the carrying value.




                                       39

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In conducting a qualitative assessment, the company analyzes a variety of events
or factors that may influence the fair value of the reporting unit including,
but not limited to: the results of prior quantitative assessments performed;
changes in the carrying amount of the reporting unit; actual and projected
revenue and operating margin; relevant market data for both the company and its
peer companies; industry outlooks; macroeconomic conditions; liquidity; changes
in key personnel; and the company's competitive position. Significant judgment
is used to evaluate the totality of these events and factors to make the
determination of whether it is more likely than not that the fair value of the
reporting unit or indefinite-life intangible is less than its carrying value.

Goodwill Valuations
The reporting units at which we test goodwill for impairment are our operating
segments. These consist of the Commercial Foodservice Equipment Group, the Food
Processing Equipment Group and the Residential Kitchen Equipment Group. If the
fair value is less than its carrying value, an impairment loss, if any, is
recorded for the difference between the implied fair value and the carrying
value of goodwill.

In performing a quantitative assessment, if required, the company estimates each
reporting unit's fair value under an income approach using a discounted cash
flow model. The income approach uses each reporting unit's projection of
estimated operating results and cash flows that are discounted using a market
participant discount rate based on a weighted-average cost of capital. The
financial projections reflect management's best estimate of economic and market
conditions over the projected period including forecasted revenue growth,
operating margins, tax rate, capital expenditures, depreciation, amortization
and changes in working capital requirements. Other assumptions include discount
rate and terminal growth rate. The estimated fair value of each reporting unit
is compared to their respective carrying values. Additionally, the company
validates the estimates of fair value under the income approach by comparing the
fair value estimate using a market approach. A market approach estimates fair
value by applying cash flow multiples to the reporting unit's operating
performance. The multiples are derived from comparable publicly traded companies
with similar operating and investment characteristics of the reporting units.
The company considers the implied control premium and conclude whether it is
reasonable based on other recent market transactions.

The company performed a qualitative assessment as of September 27, 2020 over all
three reporting units and determined it is more likely than not that the fair
value of our reporting units are greater than the carrying amounts. As a result
of the financial performance indicators for the Commercial Foodservice reporting
unit, the company completed a quantitative analysis. The fair value of the
reporting unit exceeded its carrying value by more than 100% and no impairment
of goodwill was recognized. As a result of the qualitative assessment for the
other two segments, the company determined it is more likely than not that the
fair value of our reporting units are greater than the carrying amounts.

In estimating the fair value of its reporting units, management relies on a
number of factors, including operating results, business plans, economic
projections, anticipated future cash flows, comparable transactions and other
market data. There are inherent uncertainties related to these factors and
management's judgment in applying them in the impairment tests of goodwill. If
actual results are not consistent with management's estimate and assumptions, a
material impairment could have an adverse effect on the company's financial
condition and results of operations.


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Indefinite-Life Intangible Valuations
In performing a quantitative assessment of indefinite-life intangible assets
other than goodwill, primarily trademarks and trade names, we estimate the fair
value of these intangible assets using the relief-from-royalty method which
requires assumptions related to projected revenues from our long-range plans;
assumed royalty rates that could be payable if we did not own the trademark; and
a discount rate using a market based weighted-average cost of capital. If the
estimated fair value of the indefinite-life intangible asset is less than its
carrying value, we would recognize an impairment loss.

Based on the qualitative assessment as of September 27, 2020, the company
identified several trademarks and trade names with indicators of potential risk
for impairment and performed quantitative assessment. In performing the
quantitative analysis on these trademark assets, significant assumptions used in
our relief-from-royalty model included revenue growth rates, assumed royalty
rates and the discount rate, which are discussed further below.

•Revenue growth rates relate to projected revenues from our long-range plans and
vary from brand to brand. Adverse changes in the operating environment or our
inability to grow revenues at the forecasted rates may result in a material
impairment charge.

•In determining royalty rates for the valuation of our trademarks, we considered
factors that affect the assumed royalty rates that would hypothetically be paid
for the use of the trademarks. The most significant factors in determining the
assumed royalty rates include the overall role and importance of the trademarks
in the particular industry, the profitability of the products utilizing the
trademarks, and the position of the trademarked products in the given market
segment.

•In developing discount rates for the valuation of our trademarks, we used the
market based weighted average cost of capital, adjusted for higher relative
level of risks associated with doing business in other countries, as applicable,
as well as the higher relative levels of risks associated with intangible
assets.

As a result of quantitative testing the company recognized $11.6 million of
impairment charges associated with several trademarks, none of which were
individually material. The gross value of the trademarks tested, including the
impaired trademarks, was approximately $90.0 million. The fair values of the
other trademarks tested with no impairment per the analyses, exceeded their
carrying values by more than 20%. The company believes the assumptions utilized
within the quantitative analysis are reasonable.

The company performed a qualitative assessment as of September 27, 2020 over all
the other trademarks and trade names and determined it is more likely than not
that the fair value of its other indefinite-life intangible assets are greater
than the carrying amounts.

The company continues to monitor the global outbreak of the COVID-19 pandemic to
assess the outlook for demand of its products and the impact on its business and
financial performance. If actual results are not consistent with management's
estimate and assumptions, a material impairment charge of our trademarks and
trade names could occur, which could have an adverse effect on the company's
financial condition and results of operations.


                                       41
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Convertible Debt



The company issued convertible debt with debt and equity components. The company
evaluated the different components and features of the hybrid instrument and
determined whether certain elements were embedded derivative instruments which
require bifurcation. Components of convertible debt instruments that upon
conversion may be settled fully in cash or partly in cash based on a net-share
settlement basis are accounted for separately as long-term debt and equity when
the conversion feature of the convertible bonds constitute an embedded equity
instrument. When an equity instrument is identified, proceeds from issuance are
allocated between debt and equity by measuring first the liability component and
then determining the equity component as a residual amount. The liability
component is measured as the fair value of a similar nonconvertible debt, which
results in the recognition of a debt discount. In subsequent periods, the
company will amortize the debt discount to interest expense, net within the
Consolidated Statements of Earnings, using the effective interest method based
on the expected maturity of the debt. The equity component is reported in
additional paid-in capital within the Consolidated Statement of Changes in
Stockholders' Equity and is not remeasured as long as it continues to meet the
conditions for equity classification.

The company allocated transaction costs related to the issuance of convertible
debt using the same proportions as the proceeds from the convertible debt.
Transaction costs attributable to the liability component are recorded as a
direct deduction from the related debt liability in the Consolidated Balance
Sheets and are amortized to interest expense, net within the Consolidated
Statements of Earnings over the term of the convertible debt using the effective
interest rate method. Transaction costs attributable to the equity component are
netted within additional paid-in capital within the Consolidated Statement of
Stockholders' Equity.

For additional information regarding the company's convertible debt, see Note 5, Financing Arrangements, in the Notes to the Consolidated Financial Statements.



Pension Benefits
The company sponsors pension benefits to certain employees. The accounting for
these plans depends on assumptions made by management, which are used by
actuaries the company engages to calculate the projected and accumulated
obligations and the annual expense recognized for these plans. These assumptions
include expected long-term rate of return on plan assets and discount rates.

The amount of unrecognized actuarial gains and losses recognized in the current
year's operations is based on amortizing the unrecognized gains or losses for
each plan that exceed the larger of 10% of the projected benefit obligation or
the fair value of plan assets, also known as the corridor. The amount of
unrecognized gain or loss that exceeds the corridor is amortized over the
average future service of the plan participants or the average life expectancy
of inactive plan participants for plans where all or almost all of the plan
participants are inactive. While we believe that our assumptions are
appropriate, significant differences in our actual experience or significant
changes in our assumptions may materially affect our pension obligations and our
future expense.

Income taxes
The company provides deferred income tax assets and liabilities based on the
estimated future tax effects of differences between the financial and tax bases
of assets and liabilities based on currently enacted tax laws. The company's
deferred and other tax balances are based on management's interpretation of the
tax regulations and rulings in numerous taxing jurisdictions. Income tax expense
and liabilities recognized by the company also reflect its best estimates and
assumptions regarding, among other things, the level of future taxable income,
the effect of the company's various tax planning strategies and uncertain tax
positions. Future tax authority rulings and changes in tax laws, changes in
projected levels of taxable income and future tax planning strategies could
affect the actual effective tax rate and tax balances recorded by the company.
The company follows the provisions under ASC 740-10-25 that provides a
recognition threshold and measurement criteria for the financial statement
recognition of a tax benefit taken or expected to be taken in a tax return. Tax
benefits are recognized only when it is more likely than not, based on the
technical merits, that the benefits will be sustained on examination. Tax
benefits that meet the more-likely-than-not recognition threshold are measured
using a probability weighting of the largest amount of tax benefit that has
greater than 50% likelihood of being realized upon settlement. Whether the
more-likely-than-not recognition threshold is met for a particular tax benefit
is a matter of judgment based on the individual facts and circumstances
evaluated in light of all available evidence as of the balance sheet date.

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New Accounting Pronouncements

See Note 3(r) to the Consolidated Financial Statements for further information on the new accounting pronouncements.

Certain Risk Factors That May Affect Future Results



An investment in shares of the company's common stock involves risks. The
company believes the risks and uncertainties described in "Item 1A. Risk
Factors" and in "Special Note Regarding Forward-Looking Statements" are the
material risks it faces. Additional risks and uncertainties not currently known
to the company or that it currently deems immaterial may impair its business
operations. If any of the risks identified in "Item 1A. Risk Factors" actually
occurs, the company's business, results of operations and financial condition
could be materially adversely affected, and the trading price of the company's
common stock could decline.
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