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Summary of Significant Accounting Policies | 3 Months Ended
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Apr. 04, 2015
Accounting Policies [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 2014 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year 2015. In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position of the company as of April 4, 2015 and January 3, 2015, the results of operations for the three months ended April 4, 2015 and March 29, 2014 and cash flows for the three months ended April 4, 2015 and March 29, 2014. 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 condensed 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 $2.0 million and $1.9 million for the first quarter periods ended April 4, 2015 and March 29, 2014, respectively. During the first quarter ended April 4, 2015, the company issued 100,704 restricted shares under its 2011 Stock Incentive Plan. These amounts are contingent on the attainment of certain performance objectives. The aggregate grant-date fair value of these awards was $10.9 million, based on the closing share price of the company's stock at the date of the grant.
C) | Income Taxes
As of January 3, 2015, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $12.5 million (of which $12.2 million would impact the effective tax rate if recognized) plus approximately $1.7 million of accrued interest and $3.0 million of penalties. The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of April 4, 2015, the company recognized a tax expense of $0.7 million for unrecognized tax benefits related to current year 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 $0.5 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 | 2012 – 2014
United States - states | 2005 – 2014
Australia | 2011 – 2014
Brazil | 2010 – 2014
Canada | 2009 – 2014
China | 2005 – 2014
Czech Republic | 2013 – 2014
Denmark | 2011 – 2014
France | 2011 – 2014
Germany | 2012 – 2014
India | 2013 – 2014
Italy | 2010 – 2014
Luxembourg | 2011 – 2014
Mexico | 2010 – 2014
Philippines | 2012 – 2014
South Korea | 2010 – 2011
Spain | 2009 – 2014
Taiwan | 2008 – 2012
United Kingdom | 2011 – 2014
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 April 4, 2015 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Pension plans | $ | 27,940 |  |  | $ | 1,115 |  |  | $ | — |  |  | $ | 29,055 |
Financial Liabilities: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 1,609 |  |  | $ | — |  |  | $ | 1,609 |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 9,269 |  |  | $ | 9,269 |
As of January 3, 2015 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Pension plans | $ | 27,647 |  |  | $ | 1,234 |  |  | $ | — |  |  | $ | 28,881 |
Financial Liabilities: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 810 |  |  | $ | — |  |  | $ | 810 |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 14,558 |  |  | $ | 14,558 |
The contingent consideration as of April 4, 2015 relates to the earnout provisions recorded in conjunction with the acquisitions of Spooner Vicars, PES, Concordia, Desmon and Goldstein Eswood. The contingent consideration as of January 3, 2015 relates to the earnout provisions recorded in conjunction with the acquisitions of Stewart, Nieco, Spooner Vicars, Market Forge, PES and Concordia. The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings of the acquired businesses, as defined in the respective purchase agreements. On a quarterly basis the company assesses the projected results for each of the acquired businesses in comparison to the earnout targets and adjusts the liability accordingly. E) Consolidated Statements of Cash Flows Cash paid for interest was $3.3 million and $3.7 million for the three months ended April 4, 2015 and March 29, 2014, respectively. Cash payments totaling $16.1 million and $6.8 million were made for income taxes for the three months ended April 4, 2015 and March 29, 2014, respectively.

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