<HTML> <HEAD> <TITLE>10-Q</TITLE> </HEAD> <BODY> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 1, page: 1" --> <HR SIZE=5 NOSHADE> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Scotch Rule" --> <HR SIZE=5> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>FORM 10-Q</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>SECURITIES AND EXCHANGE COMMISSION</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>Washington, D.C. 20549</FONT></H1> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <P><FONT SIZE=3>(Mark One)<BR>[X] Quarterly Report Pursuant to Section 13 or 15(D) of the<BR> Securities Exchange Act of 1934. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3><B>For the period ended October 2, 1999.</B> </FONT></P> <!-- MARKER FORMAT-SHEET="Para In 0" --> <P align=center><FONT SIZE=3> or </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <P><FONT SIZE=3>[ ] Transition Report Pursuant to Section 13 or 15(D) of the<BR> Securities Exchange Act of 1934.</FONT></P> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3>Commission File No. 1-9973 </FONT></P> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>THE MIDDLEBY CORPORATION<BR> (Exact Name of Registrant as Specified in its Charter)</FONT></H1> </td> </tr> </TABLE> <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600> <TR VALIGN=TOP> <TD WIDTH=50% ALIGN=CENTER> <B>Delaware</B><BR> (State or Other Jurisdiction of <BR>Incorporation or Organization)</TD> <TD WIDTH=50% ALIGN=CENTER><B>36-3352497</B><BR> (I.R.S. Employer<BR> Identification No.)</TD> </TR></TABLE> <BR> <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600> <TR VALIGN=TOP> <TD WIDTH=75% ALIGN=CENTER> <B>2850 W. Golf Road, Suite 405, Rolling Meadows, Illinois</B><BR> (Address of Principal Executive Offices)</TD> <TD WIDTH=25% ALIGN=CENTER><B>60008</B><BR> (Zip Code)</TD> </TR></TABLE> <BR> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3>Registrant’s Telephone No., including Area Code <B>(847) 758-3880</B> </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <P><FONT SIZE=3>Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]</FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <P><FONT SIZE=3>As of November 10, 1999, there were 10,170,971 shares of the registrant’s common stock outstanding. </FONT></P> <!-- MARKER FORMAT-SHEET="Scotch Rule" --> <HR SIZE=5> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 2, page: 2" --> <HR SIZE=5 NOSHADE> <TABLE WIDTH=600> <TR> <TD> <BR> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>THE MIDDLEBY CORPORATION AND SUBSIDIARIES</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>QUARTER ENDED OCTOBER 2, 1999</FONT></H1> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3>INDEX </FONT></P> </td> </tr> </TABLE> <BR> <PRE> DESCRIPTION PAGE PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements BALANCE SHEETS 1 October 2, 1999 and January 2, 1999 STATEMENTS OF EARNINGS 2 October 2, 1999 and October 3, 1998 STATEMENTS OF CASH FLOWS 3 October 2, 1999 and October 3, 1998 NOTES TO FINANCIAL STATEMENTS 4 Item 2. Management’s Discussion and Analysis 8 of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II. OTHER INFORMATION 16 </PRE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 3, page: 3" --> <HR SIZE=5 NOSHADE> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Para Flush In 0" --> <P><FONT SIZE=3>PART I. FINANCIAL INFORMATION </FONT></P> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>THE MIDDLEBY CORPORATION AND SUBSIDIARIES<BR> CONSOLIDATED BALANCE SHEETS<BR> (In Thousands, Except Share Amounts)</FONT></H1> </td> </tr> </TABLE> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">(Unaudited)</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Jan. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="60%" ALIGN="LEFT"><FONT SIZE="-1">ASSETS</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 10,127</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 6,768</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accounts receivable, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">26,942</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">24,330</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Inventories, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">17,424</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">20,456</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Prepaid expenses and other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">986</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">941</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Current deferred taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,895</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,895</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total current assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">58,374</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">55,390</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Property, plant and equipment, net of</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> accumulated depreciation of</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> $17,241 and $15,910</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">21,497</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">22,596</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Excess purchase price over net assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> acquired, net of accumulated</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> amortization of $5,592 and $5,186</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">13,212</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">13,617</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Deferred taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,110</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">5,347</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Other assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,836</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,729</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 102,029</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 99,679</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">LIABILITIES AND SHAREHOLDERS’ EQUITY</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Current maturities of long-term debt .</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 2,113</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 1,893</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">8,191</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,945</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accrued expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">15,699</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">11,943</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">26,003</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">24,781</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">26,632</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">25,932</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Retirement benefits and other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> non-current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">5,061</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,232</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Shareholders’ equity:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Preferred stock, $.01 par value;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> nonvoting; 2,000,000 shares</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> authorized; none issued</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Common stock, $.01 par value;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> 20,000,000 shares authorized;</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> 10,996,000 issued in 1999 and</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> 1998</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">110</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">110</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Paid-in capital</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">54,654</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">54,602</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Treasury stock at cost; 838,000</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> shares in 1999 and 1998</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(3,309</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(3,309</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Accumulated deficit</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(4,908</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(4,303</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Accumulated other comprehensive</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,214</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,366</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total shareholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">44,333</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">44,734</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total liabilities and</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> shareholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 102,029</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 99,679</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3>See accompanying notes</FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 4, page: 4" --> <HR SIZE=5 NOSHADE> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3>THE MIDDLEBY CORPORATION AND SUBSIDIARIES<BR> CONSOLIDATED STATEMENTS OF EARNINGS<BR>(In Thousands, Except Per Share Amounts)</FONT></H1> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3><B>(Unaudited)</B> </FONT></P> </td> </tr> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Three Months Ended</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-1">Nine Months Ended</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=75% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="43%" ALIGN="LEFT"><FONT SIZE="-1">Net sales</FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 31,988</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 33,891</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$ 100,953</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1">$98,633</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cost of sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">21,810</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">24,471</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">70,426</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">69,103</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Gross profit</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,178</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">9,420</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">30,527</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">29,530</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Selling and distribution expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,817</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">5,016</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">14,158</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">15,534</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">General and administrative expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,356</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,992</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,181</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">8,901</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,248</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,208</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Income (loss) from operations</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">757</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(113</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,980</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,570</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Interest expense and deferred</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> financing amortization</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">665</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">665</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,052</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,161</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Other expense, (income) net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">218</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">160</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">570</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">413</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> (Loss) earnings before</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(126</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(938</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,358</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">996</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Provision for income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">531</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(50</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,963</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">573</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net (loss) earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (657</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (888</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (605</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 423</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Net(loss) earnings per share:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Basic</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.06</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.08</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.06</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 0.04</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Diluted</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.06</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.08</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (0.06</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 0.04</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Weighted average number of shares:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Basic</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,158</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,824</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,158</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">11,053</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Diluted</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,316</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,864</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,275</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">11,211</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> </TABLE> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Para Center" --> <P align=center><FONT SIZE=3>See accompanying notes</FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 5, page: 5" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <!-- MARKER FORMAT-SHEET="Head Major" --> <H1 ALIGN=CENTER><FONT SIZE=3> THE MIDDLEBY CORPORATION AND SUBSIDIARIES<BR> CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>(In Thousands)<BR>(Unaudited)</FONT></H1> </td> </tr> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Nine Months Ended</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=85% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="64%" ALIGN="LEFT"><FONT SIZE="-1">Cash flows from operating activities-</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ (605</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 423</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Adjustments to reconcile net earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> to cash provided by continuing</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> operating activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,855</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,997</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Utilization of NOL’s</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,650</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">513</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Non-cash portion of non-recurring</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> charges</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,248</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,405</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Changes in assets and liabilities-</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Accounts receivable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,612</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(3,042</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Inventories</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,032</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,395</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Prepaid expenses and other assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,407</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(1,150</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,753</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,090</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Accrued expenses and other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,042</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(214</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net cash provided by (used in)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> operating activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,450</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(4,553</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cash flows from investing activities-</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Purchase of subsidiary minority</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> interest</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(1,134</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Additions to property and equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(1,106</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2,425</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net cash (used in) provided by</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> investing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(1,106</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(3,559</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cash flows from financing activities-</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Proceeds (repayments under</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> intellectual property lease)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">290</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(204</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Increase in revolving credit line, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">811</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,361</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Repurchase of treasury stock</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(1,948</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Other financing activities, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(310</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(114</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net cash (used in) provided by</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> financing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">791</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(905</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Effect of exchange rates on cash</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">224</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(269</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Changes in cash and cash equivalents-</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net decrease in cash and cash</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,359</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(9,286</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Cash and cash equivalents at</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> beginning of year</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">6,768</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">12,321</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Cash and cash equivalents at end</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> of quarter</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 10,127</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 3,035</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Interest paid</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 1,695</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 2,061</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Income taxes paid</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 176</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 623</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600> <TR> <TD> <P align=center><FONT SIZE=3>See accompanying notes</FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 6, page: 6" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <H1 ALIGN=CENTER><FONT SIZE=3>THE MIDDLEBY CORPORATION AND SUBSIDIARIES</FONT></H1> <H1 ALIGN=CENTER><FONT SIZE=3>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</FONT></H1> <H1 ALIGN=CENTER><FONT SIZE=3>OCTOBER 2, 1999<BR> (Unaudited)</FONT></H1> </td> </tr> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3></FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>1)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Summary of Significant Accounting Policies</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> The financial statements have been prepared by The Middleby Corporation (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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 1998 Annual Report. Other than as indicated herein, there have been no significant changes from the data presented in said Report.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> In the opinion of management, the financial statements contain all adjustments necessary to present fairly the financial position of the Company as of October 2, 1999 and January 2, 1999, and the results of operations for the nine months ended October 2, 1999 and October 3, 1998 and cash flows for the nine months ended October 2, 1999 and October 3, 1998. Certain prior year amounts have been reclassified to be consistent with the current year presentation.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>2)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Comprehensive Income</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> During the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income,” (SFAS No. 130), which requires companies to report all changes in equity during a period, except those resulting from investment by owners and distribution to owners, in a financial statement for the period in which they are recognized.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Components of comprehensive income were as follows:</FONT></TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Nine Months Ended</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">(in thousands)</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="57%" ALIGN="LEFT"><FONT SIZE="-1">Net earnings</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE="-1">$(605</FONT></TD> <TD WIDTH="11%" ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE="-1">$ 423</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cumulative translation</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> adjustment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">152</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(477</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Comprehensive (loss)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$(453</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$(54</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 7, page: 7" --> <HR SIZE=5> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>3)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Inventories</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Inventories are valued using the first-in, first-out method.</FONT></TD> </TR> </TABLE> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Inventories consist of the following:</FONT></TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Jan. 2, 1999</FONT><HR WIDTH=65% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">(In thousands)</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="54%" ALIGN="LEFT"><FONT SIZE="-1">Raw materials and parts</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="-1">$ 4,222</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE="-1">$ 5,281</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Work-in-process</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,607</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,743</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Finished goods</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">8,595</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">11,432</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$17,424</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$20,456</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>4)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Accrued Expenses</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Accrued expenses consist of the following:</FONT></TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Jan. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">(In thousands)</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="56%" ALIGN="LEFT"><FONT SIZE="-1">Accrued payroll and</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="-1"></FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> related expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 4,327</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$ 2,629</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accrued customer rebates</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,954</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,088</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accrued commissions</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,436</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,497</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Accrued warranty</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,920</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,372</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Other accrued expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">5,062</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,357</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$15,699</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$11,943</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>5)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Non-recurring Expenses</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> During the third quarter of 1999, the Company recorded restructuring charges aggregating to $1,248,000. The charge provided for $1,020,000 related to cost reduction actions at the Company’s International Distribution business. These actions include the closure of the division headquarters located in Florida and employee reduction efforts at the Florida headquarters office and the Japanese distribution operation. The headquarters for the International Distribution business has been integrated within the Company’s existing Corporate office. Distribution operations previously existing at the Florida facility have been integrated within regional distribution operations in Asia, Europe, and Latin America. The recorded charge pertains to lease exit costs, the disposal of fixed assets, and severance benefits. Additional charges of $228,000 were recorded principally for severance benefits related to headcount reductions within the International Specialty Equipment division. The Company anticipates actions related to the third quarter initiatives to be substantially completed by year-end.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> During the first and second quarters of 1999, the Company recorded non-recurring expenses in the amount of $750,000 and $211,000, respectively. Theses charges principally related to severance benefits for terminated employees at the</FONT></TD> </TR> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 8, page: 8" --> <HR SIZE=5> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Cooking Systems Group and the International Distribution Division. As of October 2, 1999, the remaining liability associated with unpaid severance benefits amounted to $245,000.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> During the fourth quarter of 1998, the Cooking Systems Group recorded charges of $1,932,000 associated with the decision to discontinue certain non-strategic product lines. All actions associated with this initiative were fully concluded at the end of the third quarter of 1999.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3><B>6)</B> </FONT></TD> <TD WIDTH=90%><FONT SIZE=3><B>Segment Information</B></FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> The Company operates in three reportable business segments defined by factors including physical location, management reporting structure, and operating activities. These segments include the Cooking Systems Group, the International Specialty Equipment Division and the International Distribution Division.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates individual segment performance based on operating income. Intersegment sales are made at established arms-length transfer prices.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> The following table summarizes the results of operations for the Company’s business segments:</FONT></TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-2"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-2">Cooking<BR>Systems<BR>Group</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">International<BR>Specialty<BR>Equipment</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">International<BR>Distribution</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Corporate<BR>and<BR>Other(1)</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Eliminations<BR>(2)</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Total</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="34%" ALIGN="LEFT"><FONT SIZE="-2">Three months ended October 2, 1999</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Net sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$25,947</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 538</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 9,181</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 41</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$(3,719</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 31,988</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Operating income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">4,233</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(444</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(472</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(2,154</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(406</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">757</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">44</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,204</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,248</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Depreciation expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">502</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">105</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">73</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">41</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">721</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Capital expenditures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">127</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">69</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">39</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">235</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Nine months ended October 2, 1999</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Net sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">79,501</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,908</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28,869</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">348</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(10,673</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100,953</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Operating income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">11,061</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(1,069</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(1,704</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(3,986</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(322</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">3,980</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">582</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">44</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">378</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,204</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,208</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Depreciation expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,679</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">318</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">219</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">132</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,348</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Capital expenditures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">836</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">58</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">116</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">96</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,106</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Total assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">47,134</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">9,535</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">19,659</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">36,683</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(10,982</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">102,029</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Long-lived assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">17,506</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">3,688</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,160</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">21,301</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">43,655</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Three months ended October 3, 1998</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Net sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">26,474</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,700</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">9,409</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(3,792</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">33,891</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Operating income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,496</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">183</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(553</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(2,239</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(113</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Depreciation expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">418</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">71</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">67</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">27</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">583</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Capital expenditures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">188</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">202</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Nine months ended October 3, 1998</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Net sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">76,659</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">4,312</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28,273</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">832</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(11,443</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">98,633</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Operating income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">8,029</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">418</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(1,216</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(3,661</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">3,570</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,525</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Depreciation expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,201</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">222</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">198</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">89</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,710</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Capital expenditures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,148</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">72</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">138</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">67</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,425</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Total assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">44,450</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">10,487</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">22,856</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">32,868</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(10,982</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">99,679</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Long-lived assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">18,226</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">3,960</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,350</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">20,753</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">44,289</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 9, page: 9" --> <HR SIZE=5> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3>(1) </FONT></TD> <TD WIDTH=85%><FONT SIZE=3>Includes sales of discontinued product lines in addition to corporate and other general Company assets and operations</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=5%><FONT SIZE=3>(2) </FONT></TD> <TD WIDTH=85%><FONT SIZE=3>Includes elimination of intercompany sales and receivables. Intercompany sale transactions are predominantly from the Cooking Systems Group to the International Distribution Division.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=10%> </TD> <TD WIDTH=90%><FONT SIZE=3> Net sales by major geographic region were as follows (in thousands):</FONT></TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Three Months Ended</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-1">Nine Months Ended</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">October 2,<BR>1999</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">October 3,<BR>1998</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">October 2,<BR>1999</FONT><HR WIDTH=65% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">October 3,<BR>1998</FONT><HR WIDTH=65% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="38%" ALIGN="LEFT"><FONT SIZE="-1">United States</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="-1">$22,104</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="-1">$22,903</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="-1">$ 68,922</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="-1">$65,629</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Asia</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,509</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,830</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">9,512</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">11,119</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Europe and Middle East</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,948</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,471</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">9,773</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,809</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Latin America</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,462</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,382</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">9,247</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">7,550</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Canada</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">965</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1,305</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,499</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,526</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Total International</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">9,884</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,988</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">32,031</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">33,004</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Net Sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$31,988</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$33,891</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$100,953</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$98,633</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B>Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited).</B> </FONT></P> <P><FONT SIZE=3><B>Informational Note </B></FONT></P> <P><FONT SIZE=3>This report contains forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The Company cautions readers that these projections are based upon future results or events and are highly dependent upon a variety of important factors which could cause such results or events to differ materially from any forward-looking statements which may be deemed to have been made in this report, or which are otherwise made by or on behalf of the Company. Such factors include, but are not limited to, changing market conditions; the availability and cost of raw materials; the impact of competitive products and pricing; the timely development and market acceptance of the Company’s products; foreign exchange and political risks affecting international sales, in particular any continued weakness in Asian economies; and other risks detailed herein and from time to time in the Company’s Securities and Exchange Commission filings, including those discussed under “Risk Factors” in the Company’s Registration Statement on Form S-2 (Reg. No. 333-35397). Any forward looking statements contained in this report speak only as of the date of this filing. The Company undertakes no obligation to update publicly any forward looking information, whether as a result of new information, future events or otherwise. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 10, page: 10" --> <HR SIZE=5> <H1 ALIGN=CENTER><FONT SIZE=3>Net Sales Summary</FONT></H1> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-2"></FONT></TH> <TH COLSPAN="8"><FONT SIZE="-2">Three Months Ended</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="8"><FONT SIZE="-2">Nine Months Ended</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-2"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-2">Oct. 2, 1999</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-2">Oct. 3, 1998</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-2">Oct. 2, 1999</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-2">Oct. 3, 1998</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-2"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-2">Sales</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Percent</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Sales</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Percent</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Sales</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Percent</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Sales</FONT><HR WIDTH=95% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-2">Percent</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="27%" ALIGN="LEFT"><FONT SIZE="-2">Business Divisions</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE="-2"></FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Conveyor oven</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 11,521</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">36.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 11,462</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">33.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 36,330</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">36.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 33,604</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">34.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Counterline cooking</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">3,705</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">11.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">4,495</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">13.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">10,904</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">10.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">12,889</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">13.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Core cooking</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">10,721</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">33.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">10,517</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">31.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">32,267</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">32.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">30,166</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">30.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR> <TD COLSPAN="18"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Total Cooking Systems</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> Group</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">25,947</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">81.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">26,474</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">78.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">79,501</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">78.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">76,659</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">77.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">International Specialty</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> Equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">538</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">1,700</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">5.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2,908</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">2.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">4,312</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">4.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">International</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> Distribution (1)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">9,181</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">9,409</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">27.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28,869</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28,273</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">28.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR> <TD COLSPAN="18"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Total international</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> divisions</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">9,719</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">30.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">11,109</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">32.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">31,777</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">31.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">32,585</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">33.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> Intercompany</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> sales (2)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(3,719</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(11.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(3,792</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(11.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(10,673</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(10.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(11,443</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">(11.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2">Other</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">41</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">0.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">0.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">348</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">0.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">832</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">0.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR> <TD COLSPAN="18"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-2"> Total</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 31,988</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 33,891</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 100,953</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">$ 98,633</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-2">100.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-2"> </FONT></TD></TR> <TR> <TD COLSPAN="18"><HR SIZE="2"></TD></TR> </TABLE> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3></FONT></TD> <TD WIDTH=5%><FONT SIZE=3>(1) </FONT></TD> <TD WIDTH=90%><FONT SIZE=3>Consists of sales of products manufactured by Middleby and products manufactured by third parties.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3></FONT></TD> <TD WIDTH=5%><FONT SIZE=3>(2) </FONT></TD> <TD WIDTH=90%><FONT SIZE=3>Consists of sales to the Company’s international distribution division from the Company’s other business divisions.</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B>Results of Operations</B> </FONT></P> <P><FONT SIZE=3>The following table sets forth certain consolidated statements of earnings items as a percentage of net sales for the periods. </FONT></P> </td> </tr> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Three Months Ended</FONT><HR WIDTH=85% SIZE=1></TH> <TH COLSPAN="4"><FONT SIZE="-1">Nine Months Ended</FONT><HR WIDTH=85% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 2, 1999</FONT><HR WIDTH=75% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Oct. 3, 1998</FONT><HR WIDTH=75% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%" ALIGN="LEFT"><FONT SIZE="-1">Net sales</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE="-1">100.0</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE="-1">100.0</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE="-1">100.0</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE="-1">100.0</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Cost of sales</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">68.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">72.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">69.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">70.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Gross profit</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">31.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">27.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">30.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">29.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Selling, general and administrative</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">25.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">23.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">24.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">24.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Non-recurring expense</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Income (loss) from operations</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(0.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Interest expense and deferred</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> financing amortization, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Other (income) expense, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.5</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> (Loss) earnings before</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(0.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1.0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1">Provision for income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(0.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">1.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> Net (loss) earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2.1</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(2.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">(0.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">0.4</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR SIZE="2"></TD></TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 11, page: 11" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B>Three Months Ended October 2, 1999 Compared to Three Months Ended October 3, 1998</B> </FONT></P> <P><FONT SIZE=3><B><I>NET SALES.</I></B> Net sales in the three-month period ended October 2, 1999 decreased 6% to $32.0 million as compared to $33.9 million in the three-month period ended October 3, 1998. </FONT></P> <P><FONT SIZE=3>Sales of the Cooking Systems Group for the three-month period ended October 2, 1999 decreased 2% to $25.9 million from $26.5 million in the prior year. Sales of conveyor oven equipment remained consistent with the prior year period. Core cooking equipment sales increased 2% with continued success of new product introductions and market penetration. Sales of counterline equipment decreased 18% due to the replacement of certain product offerings, as the Company continues to strengthen the Toastmaster brand. </FONT></P> <P><FONT SIZE=3>Sales of the international divisions decreased 13% to $9.7 million from $11.1 million in the previous year period. Net sales of the International Distribution Division decreased by 2%. The lower sales level reflects the discontinuance of certain distributed product for third-party manufacturers, which was offset by increased sales of the Company’s manufactured product during the quarter. Continued sales growth in Europe and Mexico were offset by unfavorable sales in Latin America and Asia. Sales of the International Specialty Equipment Division decreased by $1.2 million, or 68%, reflecting continued sluggishness of restaurant, hotel and resort development within the region. </FONT></P> <P><FONT SIZE=3><B><I>GROSS PROFIT.</I></B> Gross profit increased 8% to $10.2 million from $9.4 million in the prior year period. As a percentage of sales, gross margins increased from 27.8% in the prior year to 31.8% principally due to cost reduction initiatives that commenced in the first quarter. However, margins for the International Distribution business were slightly lower due to costs associated with inventory reduction programs, which have resulted in a 33% decrease in inventory levels predominately within Asia and Europe since year-end. Additionally, gross margins at the International Speciality Equipment division were adversely impacted by the reduced sales volume during the period. </FONT></P> <P><FONT SIZE=3><B><I>SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.</I></B> Selling, general and administrative expenses increased to $8.2 million as compared to $8.0 million in the prior year period. As a percentage of net sales, expenses increased to 25.5% as compared to 23.6%. Expenses for the quarter included approximately $0.3 million related to a bi-annual trade show. Expenses were also comparatively higher due in part to increased advertising, depreciation and incentive compensation. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 12, page: 12" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B><I>NON-RECURRING EXPENSES.</I></B> The Company recorded restructuring charges of approximately $1.2 million during the third quarter. The charge provided for $1.0 million related to cost reduction actions at the Company’s International Distribution business. These actions include the closure of the division headquarters located in Florida and employee reduction efforts at the Florida headquarters office and the Japanese distribution operation. The headquarters for the International Distribution business has been integrated within the Company’s existing Corporate office. Distribution operations previously existing at the Florida facility have been integrated within regional distribution operations in Asia, Europe, and Latin America. The recorded charge pertains to lease exit costs, the disposal of fixed assets, and severance benefits. Additional charges of $0.2 million were recorded principally for severance benefits related to headcount reductions within the International Specialty Equipment division. </FONT></P> <P><FONT SIZE=3><B><I>INCOME FROM OPERATIONS.</I></B> Income from operations increased to $0.8 million from $(0.1) million in the prior year. The net increase in earnings reflects improved gross margins and slightly lower operating expenses. </FONT></P> <P><FONT SIZE=3><B><I>NON-OPERATING EXPENSES.</I></B> Non-operating expenses increased to $0.9 million from $0.8 million in the prior year due in part to exchange losses resulting from weakening of the Philippine Peso at the end of the quarter. </FONT></P> <P><FONT SIZE=3><I><B>INCOME TAXES.</B></I> A tax provision of $0.5 million was recorded during the quarter primarily associated with taxable income reported at the Company’s operations in Mexico, Europe and the United States, while no benefit was recognized for losses at its international subsidiaries within Asia. </FONT></P> <P><FONT SIZE=3><B>Nine Months Ended October 2, 1999 Compared to Nine Months Ended October 3, 1998</B> </FONT></P> <P><FONT SIZE=3><B><I>NET SALES.</I></B> Net sales in the nine-month period ended October 2, 1999 increased 2% to $101.0 million as compared to $98.6 million in the nine-month period ended October 3, 1998. </FONT></P> <P><FONT SIZE=3>Sales of the Cooking Systems Group for the nine-month period ended October 2, 1999 increased 4% to $79.5 million from $76.7 million in the prior year. Sales of conveyor oven equipment increased 8% due to improved sales to major restaurant chains. Core cooking equipment sales increased 7% largely due to continued market penetration and success with new product introductions. Counterline equipment sales decreased 15% due to product replacement activities as the Company continues with efforts to strengthen the Toastmaster product offering. </FONT></P> <P><FONT SIZE=3>Sales of the international divisions decreased 3% to $31.8 million from $32.7 million in the previous year period. Net sales of the International Distribution division increased by 2% with greater sales in Mexico, Europe and Canada, offset by decreased sales in Asia. Sales of the International Specialty Equipment division decreased 33% from the prior year period, as a result of continued sluggishness of restaurant, hotel and resort development within the region. Prior year revenue included sales to a certain major U.S. restaurant chain, which has temporarily slowed the rate of store openings within Asia. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 19, page: 19" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B><I>GROSS PROFIT.</I></B> Gross profit increased to $30.5 million from $29.5 million. As a percentage of sales, gross margins increased from 29.9% to 30.2%. Gross margins at the Cooking Systems Group reflect continued improvement throughout the year as a result of cost reduction efforts implemented during the first and second quarters of 1999. Favorable sales mix with increased sales of conveyor oven equipment also contributed to the improved margins. This improvement was offset in part by lower margins at the Philippines manufacturing operation resulting from lower volume and production inefficiencies during union labor negotiations. Also, margins for the International Distribution business were slightly lower due to costs associated with inventory reduction programs. </FONT></P> <P><FONT SIZE=3><B><I>SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.</I></B> Selling, general and administrative expenses decreased to $24.3 million from $24.4 million in the prior year. As a percentage of net sales, selling, general and administrative expenses decreased to 24.1% as compared to 24.8%. Expenses for the first nine months of the year reflect higher advertising costs, depreciation expense, legal expense and incentive compensation offset by the partial benefit of cost reduction measures implemented during the first nine months of 1999. </FONT></P> <P><FONT SIZE=3><B><I>NON-RECURRING EXPENSES.</I></B> Non-recurring expenses of approximately $2.2 million were recorded during the nine months ended October 2, 1999 for severance and benefit costs associated with employee reduction efforts for all operating units and facility integration efforts at the International Distribution division. Employee headcount has been reduced as a result of the cost reduction measures to 844 at the end of the quarter as compared to 994 at the fiscal year-end of 1998. </FONT></P> <P><FONT SIZE=3><B><I>INCOME FROM OPERATIONS.</I></B> Income from operations increased to $4.0 million from $3.6 million in the prior year, principally due to increased sales volume and improved margin rate. Excluding non-recurring expenses, income from operations increased by $1.1 million. </FONT></P> <P><FONT SIZE=3><B><I>NON-OPERATING EXPENSES.</I></B> Non-operating expenses increased to $2.6 million from $2.5 million in the prior year period. Interest expense of $2.1 million was slightly less than the prior year on lower borrowings, while other expense increased by $0.1 million due in part to foreign exchange losses. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 14, page: 14" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B><I>INCOME TAXES.</I></B> A tax provision of $2.0 million was recorded during the nine months ended October 2, 1999. A provision has been recorded for income associated with the Company’s operations in Mexico, Europe and the United States, while no benefit has been recorded for losses at its international subsidiaries within Asia. </FONT></P> <P><FONT SIZE=3><B>Financial Condition and Liquidity</B> </FONT></P> <P><FONT SIZE=3>Total cash and cash equivalents increased by $3.4 million to $10.1 million at October 2, 1999 from $6.8 million at January 2, 1999. Net borrowings increased from $27.8 million at January 2, 1999 to $29.0 million at October 2, 1999. The net increase in liquidity was provided by cash from operating activities of $2.5 million and increased borrowings of $0.8 million offset by capital expenditures of $1.1 million. </FONT></P> <P><FONT SIZE=3><B><I>OPERATING ACTIVITIES.</I></B> Net cash provided by operating activities before changes in assets and liabilities was $5.1 million in the nine months ended October 2, 1999 as compared to $4.3 million in the prior year period. Net cash provided by operating activities after changes in assets and liabilities was $3.5 million as compared to net cash used of $4.6 million in the prior year period. The improvement in operating cash flow from the prior year period is largely due to inventory reduction efforts which took place during the first nine months of 1999, representing a $3.0 million improvement in cash flow from the prior year period. </FONT></P> <P><FONT SIZE=3>During the first nine months of 1999, accounts receivables increased $2.6 million due to increased domestic sales and slower collections of receivables in the Philippines from a certain major restaurant chain due to a delay in store openings. Inventories decreased by $3.0 million as a result of the Company’s inventory reduction efforts, particularly within the international markets. The net increase in prepaid expenses and other assets of $2.4 million was principally due to the establishment of a trust to fund retirement benefits under executive employment agreements. Accounts payable decreased $2.8 million due to the timing of payments, including the effect of repayments of payables which were extended at the prior year-end. Accrued expenses and other liabilities increased $3.0 million due to increased reserve levels associated with severance requirements and an increase in liabilities under certain sales related programs. </FONT></P> <P><FONT SIZE=3><B><I>INVESTING ACTIVITIES.</I></B> During the nine months of 1999, the Company had capital expenditures of $1.1 million primarily to enhance manufacturing capabilities and upgrade computer systems at the Cooking Systems Group. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 15, page: 15" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B><I>FINANCING ACTIVITIES.</I></B> Net borrowings under financing arrangements increased from $27.8 million to $29.0 million during the first nine months of 1999. The net increase is primarily due to net borrowings of $0.8 million in a foreign currency denominated loan under its unsecured multi-currency revolving credit line. </FONT></P> <P><FONT SIZE=3>During the first quarter of 1999, the Company’s financing agreements were amended to reduce the credit limit under the revolving credit facility from $20.0 million to $10.0 million and to adjust the minimum requirements for certain covenants which the Company had violated at year-end. As of October 2, 1999, the Company was not in compliance with the amended covenants. The Company is obtaining waivers for these covenant violations. Management believes that the Company will have sufficient financial resources available to meet its anticipated requirements for working capital, growth strategies, capital expenditures and debt amortization for the foreseeable future. </FONT></P> <P><FONT SIZE=3><B>Year 2000 Compliance</B> </FONT></P> <P><FONT SIZE=3>The Company has assessed the impact of the Year 2000 issue on its reporting systems and operations. The Year 2000 issue exists because many computer systems and applications currently use two-digit date fields to designate a year. As the century date occurs, date sensitive systems may recognize the Year 2000 as 1900 or not at all. This inability to recognize or properly treat the year 2000 may cause the Company’s systems to process critical financial and operational information incorrectly. </FONT></P> <P><FONT SIZE=3>The Company has undertaken a review of its information technology (“IT”) systems. The Company has implemented new IT systems at its International Distribution Division to enhance its current transaction processing and information reporting capabilities. These systems are Year 2000 compliant. </FONT></P> <P><FONT SIZE=3>In addition, the Company has substantially completed upgrades to existing IT systems at all other business units to make these systems Year 2000 compliant. </FONT></P> <P><FONT SIZE=3>The Company has also undertaken a review of its critical non-IT systems, such as production machinery and phone systems. The Company has contacted equipment vendors and service providers to assess the potential risk associated with these systems. Non-compliant systems have been replaced or modified. Based upon internal evaluations and assurances provided by equipment and service vendors, the Company does not believe further modification to or replacement of existing non-IT systems will be required. However, the Company cannot verify the assurances it has been provided from third parties. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 16, page: 16" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3>Additionally, a review of key suppliers and customers has been completed to ensure that the flow of products and services will not be disrupted as a result of failure of the supplier or customer to become Year 2000 compliant. While the Company is receiving assurances that no such interruption will occur, the Company cannot ensure that third parties will become compliant. Any significant or prolonged interruption in the supply of essential services or products would adversely affect the Company’s operations and ability to conduct business. In the event that an interruption with a service provider or other vendor occurs, the Company will obtain services and products from other available sources. Similarly, problems with a significant portion of the Company’s customers in processing and paying invoices could materially impact the Company’s cash flows or liquidity. The Company is unable to anticipate whether a significant portion of its customers will have difficulty in processing and paying invoices. </FONT></P> <P><FONT SIZE=3>Expenses associated with the Year 2000 issue relate primarily to the modification of existing IT systems, and to date have not been material. The Company does not anticipate any future costs to address the Year 2000 issue will be incurred. </FONT></P> <P><FONT SIZE=3>The foregoing is a Year 2000 readiness disclosure entitled to protection as provided in the Year 2000 Information and Readiness Disclosure Act. </FONT></P> <P><FONT SIZE=3><B>International Exposure </B></FONT></P> <P><FONT SIZE=3>The Company has manufacturing operations located in Asia and distribution operations in Asia, Canada, Europe and Latin America. The Company anticipates that international sales will continue to account for a significant portion of consolidated net sales in the foreseeable future. Countries within Asia and certain other regions continue to be impacted by adverse economic conditions which have affected the Company’s sales volumes into these markets. Some sales by the foreign operations are in local currency and an increase in the relative value of the U.S. dollar against such currencies would lead to the reduction in consolidated U.S. dollar sales and earnings. </FONT></P> <P><FONT SIZE=3>Additionally, certain foreign currency exposures, typically of a long-term nature, are not specifically hedged and there can be no assurances that the Company’s future results of operations will not be adversely affected by currency fluctuations. </FONT></P> </td> </tr> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 17, page: 17" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3><B>Item 3. Quantitative and Qualitative Disclosures About Market Risk</B> </FONT></P> <P><FONT SIZE=3>The Company is exposed to market risk related to changes in interest rates. The following table summarizes the maturity of the Company’s debt obligations: </FONT></P> </td> </tr> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">Fixed<BR>Rate<BR>Debt</FONT><HR WIDTH=45% SIZE=1></TH> <TH COLSPAN="2"><FONT SIZE="-1">Variable<BR>Rate<BR>Debt</FONT><HR WIDTH=45% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">(dollars in thousands)</FONT><HR WIDTH=95% SIZE=1></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE="-1">1999</FONT></TD> <TD WIDTH="18%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE="-1">$ 1,999</FONT></TD> <TD WIDTH="12%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE="-1">$ —</FONT></TD> <TD WIDTH="8%" ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="RIGHT"><FONT SIZE="-1">2000</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">10,096</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="RIGHT"><FONT SIZE="-1">2001</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">4,981</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">3,960</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="RIGHT"><FONT SIZE="-1">2002</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">5,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="RIGHT"><FONT SIZE="-1">2003</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">2,500</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">—</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$24,576</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="-1">$3,960</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="-1"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR SIZE="1"></TD></TR> </TABLE> <TABLE WIDTH=600> <TR> <TD> <P><FONT SIZE=3>Fixed rate debt is comprised of a $15.0 million senior note and $9.6 million due under lease arrangements. The senior note bears interest at a rate of 10.99% and the lease arrangements bear interest at an average implicit interest rate of 10.2%. Variable rate debt is comprised of a $2.2 million Yen denominated loan and a $1.7 million Euro denominated loan under the Company’s $10.0 million revolving credit line. Interest under the revolving credit facility is assessed based upon the bank’s reference rate. The average interest rate assessed in the first three quarters of 1999 was 0.9% for the Yen denominated loan and 3.6% in the third quarter for the Euro denominated loan. </FONT></P> <H1 ALIGN=CENTER><FONT SIZE=3>PART II. OTHER INFORMATION</FONT></H1> <P><FONT SIZE=3>The Company was not required to report the information pursuant to Items 1 through 6 of Part II of Form 10-Q for the three months ended October 2, 1999, except as follows: </FONT></P> <H1 ALIGN=CENTER><FONT SIZE=3>Item 6. Exhibits and Reports on Form 8-K</FONT></H1> </td> </tr> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3></FONT></TD> <TD WIDTH=5%><FONT SIZE=3>a) </FONT></TD> <TD WIDTH=90%><FONT SIZE=3>Exhibits - The following Exhibits are filed herewith:</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=7%><FONT SIZE=3> </FONT></TD> <TD WIDTH=88%><FONT SIZE=3>Exhibit (27) - Financial Data Schedules (EDGAR only)</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3></FONT></TD> <TD WIDTH=5%><FONT SIZE=3>b) </FONT></TD> <TD WIDTH=90%><FONT SIZE=3>Reports on Form 8-K:</FONT></TD> </TR> </TABLE> <BR> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=5%><FONT SIZE=3> </FONT></TD> <TD WIDTH=7%><FONT SIZE=3> </FONT></TD> <TD WIDTH=88%><FONT SIZE=3>None.</FONT></TD> </TR> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 18, page: 18" --> <HR SIZE=5> <TABLE WIDTH=600> <TR> <TD> <H1 ALIGN=CENTER><FONT SIZE=3>SIGNATURE</FONT></H1> <P><FONT SIZE=3>Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. </FONT></P> </td> </tr> </TABLE> <BR> <TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600> <TR VALIGN=TOP> <TD WIDTH=45% ALIGN=left> </TD> <TD WIDTH=5% ALIGN=left> </TD> <TD WIDTH=50% ALIGN=left><U>THE MIDDLEBY CORPORATION</U><BR> (Registrant) </TD> </TR> <TR VALIGN=TOP> <TD ALIGN=LEFT>Date November 16, 1999</TD> <TD ALIGN=LEFT> </TD> <TD ALIGN=LEFT>By: <U>/s/ Timothy J. FitzGerald</U><BR> Timothy J. FitzGerald<BR> Corporate Controller<BR> (Principal Financial and<BR> Accounting Officer)</td></tr> </TABLE> </BODY> </HTML>