Item 1. Business
General
The Middleby Corporation (“Middleby” or the “company”), through its operating subsidiary Middleby Marshall Inc. (“Middleby Marshall”) and its subsidiaries, is a leader in the design, manufacture, marketing, distribution, and service of a broad line of (i) cooking and warming equipment used in all types of commercial restaurants and institutional kitchens and (ii) food preparation, cooking and packaging equipment for food processing operations.
Founded in 1888 as a manufacturer of baking ovens, Middleby Marshall Oven Company was acquired in 1983 by TMC Industries Ltd., a publicly traded company that changed its name in 1985 to The Middleby Corporation. The company has established itself as a leading provider of (i) commercial restaurant equipment and (ii) food processing equipment as a result of its acquisition of industry leading brands and through the introduction of innovative products within both of these segments.
Over the past three years the company has completed nine acquisitions in the commercial foodservice equipment and food processing equipment industries. These acquisitions have added eleven brands to the Middleby portfolio and positioned the company as a leading supplier of equipment in both industries.
In December 2007, subsequent to the company’s fiscal 2007 year end, the company acquired New Star International Holdings, Inc. (“Star”) for $189.5 million in cash. This acquisition added three leading brands to Middleby’s portfolio of brands in the commercial restaurant industry, including Star, a leader in light duty cooking and concession equipment, Holman, a leader in conveyor and pop-up toasters, and Lang, a leading oven and range line. This transaction positions Middleby as a leading supplier to convenience chains and fast casual restaurant chains.
In April 2008, the company acquired the net assets and related business operations of Frifri aro SA (“Frifri”) for $3.5 million in cash. Frifri is a leading European supplier of advanced frying systems.
In April 2008, the company acquired the assets of Giga Grandi Cucine S.r.l. (“Giga”) for $9.9 million in cash and assumed debt. Giga is a leading European manufacturer of ranges, ovens and steam cooking equipment.
In January 2009, subsequent to the company’s fiscal 2008 year end, the company acquired TurboChef Technologies, Inc. (“TurboChef”) for cash and shares of Middleby common stock. The total aggregate purchase price of the transaction amounted to $160.3 million including $116.3 million in cash and 1,539,668 shares of Middleby common stock valued at $44.0 million. TurboChef is a leader in speed-cook technology, one of the fastest growing segments of the commercial foodservice equipment market. TurboChef’s user-friendly speed cook ovens employ proprietary combinations of heating technologies to cook a variety of food products at
speeds up to 12 times faster than that of conventional heating methods.
In April 2009, the company acquired the assets of CookTek LLC (“CookTek”) for $8.0 million in cash and $1.0 million in a deferred payment due the seller. CookTek is a leader in the manufacture of induction cooking and warming systems for the commercial foodservice industry. CookTek’s line of induction cooking equipment utilizes magnetic waves to heat product in a highly energy efficient manner at speeds fast than conventional cooking equipment.
In April 2009, the company acquired substantially all of the assets of Anetsberger Brothers, Inc. (“Anets”), a leading manufacturer of griddles, fryers, and dough rollers for the commercial foodservice industry for $3.4 million in cash and $0.5 million in deferred payments. The acquisition of Anets allows Middleby to continue to expand its portfolio of leading brands in cooking and warming and increase its leading position in the griddle and fryer segment.
In December 2009, the company acquired all of the shares of Doyon Equipment Inc. (“Doyon”), a leading manufacturer of baking ovens for the commercial foodservice industry for approximately $6.4 million. The acquisition of Doyon enhances Middleby’s position as a leader in the baking segment and better positions the company to address the growing needs of the retail and supermarket foodservice segment
In July 2010, the company acquired substantially all of the assets and operations of PerfectFry Company (“PerfectFry”), a leading manufacturer of ventless countertop frying units for a purchase price of approximately $4.9 million. This acquisition further strengthens Middleby’s leadership position in ventless cooking solutions for the commercial foodservice industry.
In September 2010, the company acquired the food processing equipment business of Cozzini Inc. (“Cozzini”), a leading manufacturer of equipment solutions for the food processing industry for an aggregate purchase price of approximately $19.2 million in cash, and 34,263 shares of Middleby common stock valued at $1.8 million. The acquisition of Cozzini complements Middleby’s existing food processing equipment brands Alkar, RapidPak and MP Equipment.
1
The company's annual reports on Form 10-K, including this Form 10-K, as well as the company's quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports are available, free of charge, on the company's internet website, www.middleby.com. These reports are available as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
Business Divisions and Products
The company conducts its business through two principal business divisions: the Commercial Foodservice Equipment Group and the Food Processing Equipment Group. See Note 10 to the Consolidated Financial Statements for further information on the company's business segments.
The Commercial Foodservice Equipment Group has a broad portfolio of leading brands of cooking and warming equipment, which enable it to serve virtually any cooking or warming application within a commercial restaurant or institutional kitchen. This cooking and warming equipment is used across all types of foodservice operations, including quick-service restaurants, full-service restaurants, convenience stores, retail outlets, hotels and other institutions. The company offers a broad line of cooking equipment marketed under a portfolio of twenty -five brands, including, Anets®, Blodgett®, Blodgett Combi®,
Blodgett Range®, Bloomfield®, CTX®, Carter-Hoffmann®, CookTek®, Doyon®, Frifri®, Giga®, Holman®, Houno®, Jade®, Lang®, MagiKitch'n®, Middleby Marshall®, MPC®, NuVu®, Pitco®, PerfectFry® Southbend®, Star®, Toastmaster®, TurboChef® and Wells®. These products are manufactured at the company's U.S. facilities in California, Illinois, Michigan, New Hampshire, North Carolina, Tennessee, Texas and Vermont. The company also has international manufacturing facilities located in China, Denmark, Italy and the Philippines. The company also has sales and service offices located in Australia, Brazil, Belgium, China, France, Germany, Hong Kong, India, Italy, Mexico, the Philippines, Russia, Saudi Arabia, Singapore, South Korea, Spain, Switzerland, United Arab
Emirates and the United Kingdom.
The products offered by this group include ranges, convection ovens, conveyor ovens, baking ovens, proofers, broilers, fryers, combi-ovens, charbroilers, steam equipment, pop-up and conveyor toasters, steam cooking equipment, food warming equipment, induction cooking systems, griddles, ventless cooking systems, coffee brewers, tea brewers and beverage dispensing equipment.
This group is represented by the following product brands:
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For over 80 years, Anets® has been an innovator in the commercial foodservice industry with a full range of fryers, griddles, dough rollers, pasta cookers and bakery products.
Blodgett®, known for its durability and craftsmanship, is the leading brand of convection and combi-ovens. In demand since the late 1800's, the Blodgett oven has stood the test of time and set the industry standard.
Bloomfield® is one of the leading brands providing coffee brewers, tea brewers, and beverage dispensing equipment. Bloomfield has a reputation of durability and dependability.
Carter-Hoffmann® has been a leading provider of heated cabinets, rethermalizing equipment and food serving equipment for over 60 years. Carter-Hoffmann is known for providing innovative and energy saving equipment that allow a foodservice operation to save on food costs by holding food in its heated cabinets and holding stations for an extended period of time, while maintaining the quality of the product.
CookTek® is the leading innovator, developer and manufacturer of induction powered equipment for the foodservice industry, with a focus on cooking, buffet holding and hot food delivery. Designed to be simple to operate, rugged and durable, all products are supremely energy efficient - “green by nature.”
Doyon® has been a manufacturer of bakery ovens for more than 50 years. Doyon is recognized for its quality and service. Doyon’s products include bakery ovens, proofers and mixers.