XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.24.3

Summary of Significant Accounting Policies | 9 Months Ended
--- | ---
Sep. 28, 2024
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 ("SEC"). 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 2023 Form 10-K. The company’s interim results are not necessarily indicative of future full year results for the fiscal year 2024. In the opinion of management, the financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the financial position of the company as of September 28, 2024 and December 30, 2023, the results of operations for the three and nine months ended September 28, 2024 and September 30, 2023, cash flows for the nine months ended September 28, 2024 and September 30, 2023 and statement of stockholders' equity for the three and nine months ended September 28, 2024 and September 30, 2023. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) 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, non-cash share-based compensation and post-retirement obligations. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in the notes herein. 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 $8.7 million and $13.2 million for the three months period ended September 28, 2024 and September 30, 2023, respectively. Non-cash share-based compensation expense was $30.1 million and $35.3 million for the nine months period ended September 28, 2024 and September 30, 2023, respectively. c)Income Taxes A tax provision of $40.5 million, at an effective rate of 26.2%, was recorded during the three months period ended September 28, 2024, as compared to a $35.7 million tax provision at an effective rate of 24.8% in the prior year period. A tax provision of $108.2 million, at an effective rate of 25.5%, was recorded during the nine months period ended September 28, 2024 as compared to a $107.9 million tax provision at an effective rate of 24.9% in the prior year period. The effective tax rate for the three months period ended September 28, 2024 is higher than the U.S. statutory tax rate of 21.0% primarily due to state taxes and foreign tax rate differentials. d)Fair Value Measures Accounting Standards Codification ("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 the company's own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 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 28, 2024 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 25,629 |  |  | $ | — |  |  | $ | 25,629 |
Foreign exchange derivative contracts | $ | — |  |  | $ | 55 |  |  | $ | — |  |  | $ | 55 |
Financial Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 44,311 |  |  | $ | 44,311 |
As of December 30, 2023 |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 42,779 |  |  | $ | — |  |  | $ | 42,779 |
Foreign exchange derivative contracts | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |
Financial Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 51,538 |  |  | $ | 51,538 |
The contingent consideration as of September 28, 2024 and December 30, 2023, relates to the earnout provisions recorded in conjunction with various purchase agreements. Earn-out liabilities are classified within Level 3 in the fair value hierarchy, as the methodology used to estimate fair value includes significant unobservable inputs reflecting management’s own assumptions. The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase agreement. On a quarterly basis, the company assesses the projected results for each of the acquisitions in comparison to the earnout targets and adjusts the liability accordingly. Discount rates for valuing contingent consideration are determined based on the company rates and specific acquisition risk considerations. Changes in fair value associated with the earnout provisions are recognized in Selling, general and administrative expenses within the Condensed Consolidated Statements of Comprehensive Income. The following table represents changes in the fair value of the contingent consideration liabilities:
| September 28, 2024
Beginning balance | $ | 51,538 |
Payments of contingent consideration | (4,141) |
Changes in fair value | (3,086) |
Ending balance | $ | 44,311 |
e) Consolidated Statements of Cash Flows Cash paid for interest was $75.6 million and $93.4 million for the nine months ended September 28, 2024 and September 30, 2023, respectively. Cash payments totaling $83.3 million and $119.4 million were made for income taxes for the nine months ended September 28, 2024 and September 30, 2023, respectively. Other non-cash items in the adjustments to reconcile net earnings to net cash provided by operating activities consists primarily of unrealized foreign exchange on non-functional currency third party debt. f) Earnings Per Share “Basic earnings per share” is calculated based upon the weighted average number of common shares actually outstanding, and “diluted earnings per share” is calculated based upon the weighted average number of common shares outstanding and other dilutive securities. The company’s potentially dilutive securities consist of shares issuable on vesting of restricted stock grants computed using the treasury method and amounted to 24,000 and 19,000 for the three months ended September 28, 2024 and September 30, 2023, respectively. The company’s potentially dilutive securities consist of shares issuable on vesting of restricted stock grants computed using the treasury method and amounted to 11,000 and 9,000 for the nine months ended September 28, 2024 and September 30, 2023, respectively. For the nine months ended September 28, 2024 and September 30, 2023, the average market price of the company's common stock exceeded the exercise price of the Convertible Notes (as defined below) resulting in 427,000 and 614,000 diluted common stock equivalents to be included in the diluted net earnings per share, respectively. There have been no material conversions to date. See Note 12, Financing Arrangements for further details on the Convertible Notes. There were no anti-dilutive restricted stock grants excluded from common stock equivalents in any period presented.

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147483426/235-10-50-1 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//235/tableOfContent + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration