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Summary of Significant Accounting Policies | 9 Months Ended
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Sep. 29, 2012
Notes To Financial Statements [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies
A) | Basis of Presentation
The condensed consolidated financial statements have been prepared by The Middleby Corporation (the "company" or “Middleby”), pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements are unaudited and certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the company believes that the disclosures are adequate to make the information not misleading. These financial statements should be read in conjunction with the financial statements and related notes contained in the company's 2011 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year 2012. During the third quarter of 2012, the company voluntarily changed the date of its required goodwill and indefinite-lived intangible asset impairment testing from the last day of the fourth quarter to the first day of the fourth quarter. This voluntary change in accounting principle allows the company additional time to complete its annual goodwill and indefinite-lived intangible asset impairment testing in advance of its year-end reporting and results in better alignment with the company's strategic planning and forecasting process. This change did not delay, accelerate or avoid an impairment charge. Accordingly, the company believes that this accounting change is preferable in its circumstances. This change constitutes a change in accounting principle under Accounting Standards Codification ("ASC") 250 "Accounting Changes and Error Corrections," and had no impact on the company's consolidated balance sheet, statement of operations or cash flows. This change is not applied retrospectively as it is impracticable to do so because retrospective application would require the application of significant estimates and assumptions with the use of hindsight. Accordingly, the change will be applied prospectively. In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position of the company as of September 29, 2012 and December 31, 2011, and the results of operations for the three and nine months ended September 29, 2012 and October 1, 2011 and cash flows for the nine months ended September 29, 2012 and October 1, 2011. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, allowances for doubtful accounts, reserves for excess and obsolete inventories, long lived and intangible assets, warranty reserves, insurance reserves, income tax reserves and post-retirement obligations. Actual results could differ from the company's estimates.
B) | Non-Cash Share-Based Compensation
The company estimates the fair value of market-based stock awards and stock options at the time of grant and recognizes compensation cost over the vesting period of the awards and options. Non-cash share-based compensation expense was $3.1 million and $5.5 million for the third quarter periods ended September 29, 2012 and October 1, 2011, respectively. Non-cash share-based compensation expense was $9.0 million and $12.8 million for the nine month periods ended September 29, 2012 and October 1, 2011, respectively.
C) | Income Taxes
The tax provision for the three and nine month periods ended September 29, 2012 reflects favorable reassessment of certain U.S. state tax exposures, lower effective tax rate on increased income in lower tax rate foreign jurisdictions and net tax benefit from certain deductions related to U.S. manufacturing activities. As of December 31, 2011, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $15.6 million (of which $14.1 million would impact the effective tax rate if recognized) plus approximately $1.9 million of accrued interest and $2.0 million of penalties. The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Interest of $0.1 million was recognized in the third quarter of 2012 and 2011, respectively. Penalties of $0.2 million and $0.1 million were recognized in the third quarter of 2012 and 2011, respectively. In the first nine months ended September 29, 2012, the company recognized a benefit of $4.1 million for unrecognized tax benefits related to reduced tax exposures. It is reasonably possible that the amounts of unrecognized tax benefits associated with state, federal and foreign tax positions may decrease over the next twelve months due to expiration of a statute or completion of an audit. The company believes that it is reasonably possible that approximately $0.1 million of its currently remaining unrecognized tax benefits may be recognized over the next twelve months as a result of lapses of statutes of limitations. A summary of the tax years that remain subject to examination in the company’s major tax jurisdictions are:
United States - federal | 2008 – 2011
United States - states | 2004 – 2011
Australia | 2011
Brazil | 2010 – 2011
Canada | 2009 – 2011
China | 2003 – 2011
Denmark | 2009 – 2011
France | 2011
Germany | 2011
Italy | 2009 – 2011
Luxembourg | 2011
Mexico | 2007 – 2011
Philippines | 2008 – 2011
South Korea | 2006 – 2011
Spain | 2008 – 2011
Taiwan | 2008 – 2011
United Kingdom | 2008 – 2011
D) | Fair Value Measures
ASC 820 "Fair Value Measurements and Disclosures" defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 – Unobservable inputs based on our own assumptions. The company’s financial assets and liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):
| Fair Value Level 1 |  | Fair Value Level 2 |  | Fair Value Level 3 |  | Total
As of September 29, 2012 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Pension plans | $ | 21,966 |  |  | $ | 1,538 |  |  | — |  |  | $ | 23,504 |
Financial Liabilities: |  |  |  |  |  |  |
Interest rate swaps | — |  |  | $ | 3,318 |  |  | — |  |  | $ | 3,318 |
Contingent consideration | — |  |  | — |  |  | $ | 5,845 |  |  | $ | 5,845 |
As of December 31, 2011 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Pension plans | $ | 21,229 |  |  | $ | 1,297 |  |  | — |  |  | $ | 22,526 |
Financial Liabilities: |  |  |  |  |  |  |
Interest rate swaps | — |  |  | $ | 3,216 |  |  | — |  |  | $ | 3,216 |
Contingent consideration | — |  |  | — |  |  | $ | 3,398 |  |  | $ | 3,398 |
The contingent consideration relates to the earnout provisions recorded in conjunction with the acquisitions of CookTek, Danfotech and Stewart.
E) | Consolidated Statements of Cash Flows
Cash paid for interest was $5.8 million and $6.0 million for the nine months ended September 29, 2012 and October 1, 2011, respectively. Cash payments totaling $32.4 million and $26.4 million were made for income taxes for the nine months ended September 29, 2012 and October 1, 2011, respectively.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 -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 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 + Details
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