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Acquisitions and Purchase Accounting | 9 Months Ended
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Oct. 01, 2011
Acquisitions and Purchase Accounting |
2) | Acquisitions and Purchase Accounting
The company operates in a highly fragmented industry and has completed numerous acquisitions over the past several years as a component of its growth strategy. The company has acquired industry leading brands and technologies to position itself as a leader in the commercial foodservice equipment and food processing equipment industries. The company has accounted for all business combinations using the purchase method to record a new cost basis for the assets acquired and liabilities assumed. The difference between the purchase price and the fair value of the assets acquired and liabilities assumed has been recorded as goodwill in the financial statements. The results of operations are reflected in the consolidated financial statements of the company from the date of acquisition. PerfectFry On July 13, 2010, the company completed its acquisition of substantially all of the assets and operations of PerfectFry Company LTD (“PerfectFry”), a leading manufacturer of ventless countertop frying units for the commercial foodservice industry for a purchase price of approximately $4.9 million. The final allocation of cash paid for the PerfectFry acquisition is summarized as follows (in thousands):
|  | (as initially reported) |  |  | Measurement Period |  |  | (as adjusted) |
|  | Jul 13, 2010 |  |  | Adjustments |  |  | Jul 13, 2010 |
Cash |  | $ | 247 |  |  | $ | — |  |  | $ | 247 |
Current assets |  |  | 1,949 |  |  |  | (316 | ) |  |  | 1,633 |
Goodwill |  |  | 2,502 |  |  |  | (296 | ) |  |  | 2,206 |
Other intangibles |  |  | 1,653 |  |  |  | — |  |  |  | 1,653 |
Current liabilities |  |  | (1,497 | ) |  |  | 612 |  |  |  | (885 | )
Net assets acquired and liabilities assumed |  | $ | 4,854 |  |  | $ | — |  |  | $ | 4,854 |
The goodwill and $1.2 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350 “Intangibles – Goodwill and Other.” Other intangibles also include $0.1 million allocated to developed technology and $0.3 million allocated to customer relationships which are to be amortized over a period of 5 years. Goodwill and other intangibles of PerfectFry are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. Cozzini On September 21, 2010, the company completed its acquisition of 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, net of cash acquired, including $17.4 million in cash and 34,263 shares of Middleby common stock valued at $1.8 million. An additional contingent payment of $2.0 million was made in the first quarter of 2011 upon the achievement of certain sales targets. During the second quarter of 2011, the company finalized the working capital provision resulting in no additional payments. The final allocation of cash paid for the Cozzini acquisition is summarized as follows (in thousands):
|  | (as initially reported) |  |  | Measurement Period |  |  | (as adjusted) |
|  | Sep 21, 2010 |  |  | Adjustments |  |  | Sep 21, 2010 |
Cash |  | $ | 557 |  |  | $ | 30 |  |  | $ | 587 |
Current assets |  |  | 13,601 |  |  |  | 172 |  |  |  | 13,773 |
Property, plant and equipment |  |  | 863 |  |  |  | (30 | ) |  |  | 833 |
Goodwill |  |  | 9,601 |  |  |  | (1,745 | ) |  |  | 7,856 |
Other intangibles |  |  | 6,691 |  |  |  | 1,119 |  |  |  | 7,810 |
Other assets |  |  | 636 |  |  |  | 72 |  |  |  | 708 |
Current liabilities |  |  | (11,859 | ) |  |  | 68 |  |  |  | (11,791 | )
Consideration paid at closing |  | $ | 20,090 |  |  | $ | (314 | ) |  | $ | 19,776 |
Contingent consideration |  |  | 2,000 |  |  |  | — |  |  |  | 2,000 |
Net assets acquired and liabilities assumed |  | $ | 22,090 |  |  | $ | (314 | ) |  | $ | 21,776 |
The goodwill and $3.6 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also include $2.7 million allocated to customer relationships and $1.4 million allocated to backlog which are to be amortized over the periods of 4 years and 3 months respectively. Goodwill and other intangibles of Cozzini are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. Beech On April 12, 2011, the company completed its acquisition of all of the capital stock of J.W. Beech Pty. Ltd., together with its subsidiary, Beech Ovens Pty. Ltd. (collectively “Beech”), a leading manufacturer of stone hearth ovens for the commercial foodservice industry for a purchase price of approximately $13.5 million. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
|  | (as initially reported) |  |  | Measurement Period |  |  | (as adjusted) |
|  | Apr 12, 2011 |  |  | Adjustments |  |  | Apr 12, 2011 |
Cash |  | $ | 525 |  |  | $ | — |  |  | $ | 525 |
Current assets |  |  | 1,145 |  |  |  | — |  |  |  | 1,145 |
Property, plant and equipment |  |  | 57 |  |  |  | — |  |  |  | 57 |
Goodwill |  |  | 11,433 |  |  |  | (632 | ) |  |  | 10,801 |
Other intangibles |  |  | 2,317 |  |  |  | (294 | ) |  |  | 2,023 |
Deferred tax asset |  |  | — |  |  |  | 704 |  |  |  | 704 |
Current liabilities |  |  | (1,100 | ) |  |  | — |  |  |  | (1,100 | )
Other non-current liabilities |  |  | (893 | ) |  |  | 222 |  |  |  | (671 | )
Net assets acquired and liabilities assumed |  | $ | 13,484 |  |  | $ | — |  |  | $ | 13,484 |
The goodwill and $1.9 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $0.1 million allocated to backlog which is to be amortized over a period of 3 months. Goodwill and other intangibles of Beech are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. Such changes are not expected to be significant. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Lincat Group On May 27, 2011, the company completed its acquisition of Lincat Group PLC (“Lincat”), a leading manufacturer of ranges, ovens, and counterline equipment for the commercial foodservice industry for a purchase price of approximately $94.5 million. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
|  | (as initially reported) |  |  | Measurement Period |  |  | (as adjusted) |
|  | May 27, 2011 |  |  | Adjustments |  |  | May 27, 2011 |
Cash |  | $ | 12,392 |  |  | $ | — |  |  | $ | 12,392 |
Current assets |  |  | 16,992 |  |  |  | — |  |  |  | 16,992 |
Property, plant and equipment |  |  | 14,368 |  |  |  | — |  |  |  | 14,368 |
Goodwill |  |  | 45,765 |  |  |  | (1,120 | ) |  |  | 44,645 |
Other intangibles |  |  | 31,343 |  |  |  | (4,701 | ) |  |  | 26,642 |
Current liabilities |  |  | (10,924 | ) |  |  | (11 | ) |  |  | (10.935 | )
Other non-current liabilities |  |  | (15,414 | ) |  |  | 5,832 |  |  |  | (9,582 | )
Net assets acquired and liabilities assumed |  | $ | 94,522 |  |  | $ | — |  |  | $ | 94,522 |
The goodwill and $13.2 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $13.0 million allocated to customer relationships and $0.4 million allocated to backlog, which are to be amortized over periods of 5 years and 3 months, respectively. Goodwill and other intangibles of Lincat are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Danfotech On July 5, 2011, the company completed its acquisition of Danfotech Inc. (“Danfotech”), a manufacturer of meat presses and defrosting equipment for the food processing industry for a purchase price of approximately $6.3 million. The purchase price is subject to adjustment based upon a working capital provision within the purchase agreements. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
|  | Jul 5, 2011 |
Cash |  | $ | 165 |
Current assets |  |  | 1,073 |
Property, plant and equipment |  |  | 102 |
Goodwill |  |  | 3,423 |
Other intangibles |  |  | 1,864 |
Other assets |  |  | 4 |
Current liabilities |  |  | (309 | )
Other non-current liabilities |  |  | (46 | )
Net assets acquired and liabilities assumed |  | $ | 6,276 |
The goodwill and $1.1 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $0.6 million allocated to customer relationships, $0.1 million allocated to developed technology and $0.1 million allocated to backlog, which are to be amortized over periods of 4 years, 3 years and 3 months, respectively. Goodwill and other intangibles of Danfotech are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Maurer On July 22, 2011, the company completed its acquisition of Maurer-Atmos (“Maurer”), a manufacturer of batch and continuous ovens for the food processing industry for a purchase price of approximately $3.8 million. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
|  | Jul 22, 2011 |
Current assets |  | $ | 1,673 |
Property, plant and equipment |  |  | 628 |
Goodwill |  |  | 870 |
Other intangibles |  |  | 922 |
Current liabilities |  |  | (246 | )
Net assets acquired and liabilities assumed |  | $ | 3,847 |
The goodwill and $0.6 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $0.3 million allocated to customer relationships and less than $0.1 million allocated to developed technology, which are to be amortized over periods of 4 years and 3 years, respectively. Goodwill and other intangibles of Maurer are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are not expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. Auto-Bake On August 1, 2011, the company completed its acquisition of Auto-Bake Proprietary Limited (“Auto-Bake”), a manufacturer of automated baking ovens for the food processing industry for a purchase price of approximately $22.6 million. The purchase price is subject to adjustment based upon a working capital provision within the purchase agreements. The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed (in thousands):
|  | Aug 1, 2011 |
Cash |  | $ | 110 |
Current assets |  |  | 3,209 |
Property, plant and equipment |  |  | 477 |
Goodwill |  |  | 16,259 |
Other intangibles |  |  | 6,784 |
Other assets |  |  | 336 |
Current liabilities |  |  | (2,506 | )
Other non-current liabilities |  |  | (2,035 | )
Net assets acquired and liabilities assumed |  | $ | 22,634 |
The goodwill and $4.1 million of other intangibles associated with the trade name are subject to the non-amortization provisions of ASC 350. Other intangibles also includes $2.3 million allocated to customer relationships, $0.2 allocated to developed technology and $0.2 million allocated to backlog, which are to be amortized over periods of 4 years, 3 years and 3 months, respectively. Goodwill and other intangibles of Auto-Bake are allocated to the Food Processing Equipment Group for segment reporting purposes. These assets are expected to be deductible for tax purposes. The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. The company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1500-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7000-128479 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6927-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7008-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1490-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6996-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Appendix F -Paragraph F4 -Subparagraph e Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1383-128463 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1392-128463 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1497-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1524-128463 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1486-128463 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 + Details
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