What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-28 · 189 added, 225 removed, 1140 unchanged (27% of the section changed)

15 unchanged sentences

In our opinion, The Middleby Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Flavor Burst, Blue Sparq, Filtration Automation, Systems IV and Trade-Wind which are included in the 2023 consolidated financial statements of the Company and constituted 1.5% and 0.0% of total and net assets, respectively, as of December 30, 2023 and 0.3% and 0.0% of net sales and net earnings, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Flavor Burst, Blue Sparq, Filtration Automation, Systems IV and Trade-Wind.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of GBT GmbH Bakery, MaxMac, Emery Thompson, JC Ford and Gorreri which are included in the 2024 consolidated financial statements of the Company and constituted 2.5% and 0.0% of total and net assets, respectively, as of December 28, 2024 and 0.6% and (0.1)% of net sales and net earnings, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of GBT GmbH Bakery, MaxMac, Emery Thompson, JC Ford and Gorreri.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2024 and December 30, 2023, the related consolidated statements of earnings, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 28, 2024, and the related notes and financial statement schedule listed in the Index at Item 8 and our report dated February 26, 2025 expressed an unqualified opinion thereon.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Indefinite-Lived Intangible Assets Impairment Assessments

Description of the Matter At December 30, 2023, the Company's indefinite-lived intangible assets consist of trademarks and tradenames with an aggregate carrying value of approximately $1.3 billion.

As described in Note 3 of the consolidated financial statements, trademarks and tradenames with indefinite lives are tested by the Company’s management for impairment at least annually, in the fiscal fourth quarter, unless there are indications of impairment at other points throughout the year.

If the fair value of the intangible asset is less than its carrying amount, an impairment loss is recognized in an amount equal to the difference.

Management recognized non-cash indefinite-lived intangible asset impairment losses of $78.1 million for the year ended December 30, 2023.

As disclosed by management, management utilizes the relief from royalty method to estimate the fair value of its trademarks and tradenames.

Auditing the impairment tests of indefinite–lived intangible assets is complex due to the significant management judgments and estimates required to determine the fair value of the trademarks and tradenames, including assumptions related to forecasted net sales, discount rates and royalty rates, all of which are sensitive to and affected by economic, industry and company-specific qualitative factors.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over the impairment tests of indefinite-lived intangible assets.

This included evaluating controls over the Company’s process used to develop the forecasts of future net sales and the selection of royalty rates and discount rates used in estimating the fair value of the trademarks and tradenames with indefinite lives.

We also tested controls over management’s review of the completeness and accuracy of data used in their valuation models.

To test the estimated fair value of the Company’s trademarks and tradenames, we performed audit procedures that included, among others, assessing the methodologies, testing the significant assumptions discussed above and testing the completeness and accuracy of the underlying data.

We compared the significant assumptions used by management to current industry and economic trends, the Company’s historical results and other guideline companies within the same industry and evaluated whether changes in the Company’s business would affect the significant assumptions.

We assessed the historical accuracy of management’s estimates by comparing them to actual operating results and performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the trademarks and tradenames with indefinite lives resulting from changes in these assumptions.

We involved our valuation specialists to assist with our evaluation of the methodology and auditing certain significant assumptions included in the fair value estimates.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment

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If the fair value of the reporting units (for goodwill) is less than its respective carrying value, an impairment loss is recognized in an amount equal to the difference.

Auditing the Company’s quantitative goodwill impairment assessment is complex because the estimation of fair values involves complex valuation methodologies and subjective management assumptions.

These assumptions for the goodwill assessment include the net sales growth, EBITDA margin, discount rate, and market multiples.

Auditing the Company’s quantitative goodwill impairment assessment is complex because the estimation of fair values involves subjective management assumptions.

These assumptions for the goodwill assessment include the net sales growth, EBITDA margin and discount rate.

These significant assumptions used in the Company’s valuation model are forward looking and changes in these assumptions can have a material effect on the determination of fair values.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its impairment assessment for the Residential Kitchen reporting unit, including management’s review of the methods and significant assumptions described above.

Our audit procedures to test the annual impairment assessment for the Residential Kitchen reporting unit included, among others, assessing the valuation methodologies and assumptions described above, and the underlying data used to support such assumptions.

Our audit procedures to test the annual impairment assessment for the Residential Kitchen reporting unit included, among others, assessing the assumptions described above, and the underlying data used to support such assumptions.

For example, we compared certain assumptions to industry, market and economic trends.

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(amounts in thousands, except share data)

ASSETS Dec 28, 2024 Dec 30, 2023

Current assets:

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Treasury stock, at cost;

10,338,922 and 9,814,480 shares in 2023 and 2022

10,574,619 and 10,338,922 shares in 2024 and 2023, respectively

( 940,691 ) ( 906,031 )

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FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND JANUARY 1, 2022

AND DECEMBER 31, 2022

(amounts in thousands, except per share data)

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Impairments 38,637 78,114 —

Merger termination fee — — ( 110,000 )

Gain on sale of plant ( 1,139 ) — —

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Net periodic pension benefit (other than service cost & curtailment) ( 14,897 ) ( 9,071 ) ( 42,681 )

Other expense (income), net 4,213 28,893 ( 1,603 )

Other expense, net 1,536 4,213 28,893

Earnings before income taxes 577,320 519,378 564,415

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FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND JANUARY 1, 2022

AND DECEMBER 31, 2022

(amounts in thousands)

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Net earnings $ 428,433 $ 400,882 $ 436,569

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustments ( 67,765 ) 59,855 ( 107,691 )

Pension liability adjustment, net of tax 31,179 11,988 127,995

Unrealized gain (loss) on interest rate swaps, net of tax ( 16,569 ) 61,638 24,484

Unrealized (loss) gain on certain investments, net of tax — ( 1,330 ) 1,330

Other comprehensive income (loss):

Unrealized (loss) gain on interest rate swaps, net of tax ( 9,606 ) ( 16,569 ) 61,638

Unrealized loss on certain investments, net of tax — — ( 1,330 )

Other comprehensive (loss) income:

$ ( 46,192 ) $ 55,274 $ 80,612

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FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND JANUARY 1, 2022

AND DECEMBER 31, 2022

(amounts in thousands)

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Net earnings — — — 436,569 — 436,569

Adoption of ASU 2020-06 (1)

— ( 79,430 ) — 5,055 — ( 74,375 )

Currency translation adjustments — — — — ( 107,691 ) ( 107,691 )

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— — — — 61,638 61,638

Unrealized gain on certain investments, net of tax of $ 443

Unrealized loss on certain investments, net of tax of $( 443 )

— — — — ( 1,330 ) ( 1,330 )

Stock compensation — 58,368 — — — 58,368

Stock issuance — 2,522 — — — 2,522

Purchase of treasury stock — — ( 264,777 ) — — ( 264,777 )

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— ( 7,301 ) — — — ( 7,301 )

Balance, January 1, 2022 $ 147 $ 357,309 $ ( 566,399 ) $ 3,062,303 $ ( 359,084 ) $ 2,494,276

Balance, December 31, 2022 $ 147 $ 408,376 $ ( 831,176 ) $ 3,498,872 $ ( 278,472 ) $ 2,797,747

Net earnings — — — 400,882 — 400,882

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— — — — ( 16,569 ) ( 16,569 )

Unrealized loss on certain investments, net of tax of $( 443 )

— — — — ( 1,330 ) ( 1,330 )

Stock compensation — 51,047 — — — 51,047

Stock issuance 1 19,793 — — — 19,794

Purchase of treasury stock — — ( 74,855 ) — — ( 74,855 )

Purchase of capped calls, net of tax of $( 2,354 )

— ( 7,301 ) — — — ( 7,301 )

Balance, December 30, 2023 $ 148 $ 479,216 $ ( 906,031 ) $ 3,899,754 $ ( 223,198 ) $ 3,249,889

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Balance, December 28, 2024 $ 148 $ 520,177 $ ( 940,691 ) $ 4,328,187 $ ( 269,390 ) $ 3,638,431

(1) As of January 3, 2021 the company adopted ASU No.

2020-06, A ccounting for Convertible Instruments and Contracts in an Entity’s Own Equity using the modified retrospective method.

The adoption of this guidance resulted in a $ 79.4 million reduction to paid-in capital, net of tax of $ 25.5 million, and the recognition of $ 5.1 million as an adjustment to the opening balance of retained earnings, net of tax of $ 1.6 million.

The accompanying Notes to Consolidated Financial Statements

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FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND JANUARY 1, 2022

AND DECEMBER 31, 2022

(amounts in thousands)

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Impairments 38,637 78,114 —

Non-cash restructuring — — 1,924

Other non-cash items 645 1,529 ( 12,127 )

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Premiums paid for capped call — — ( 9,655 )

Net (repayments) proceeds under foreign bank loan ( 166 ) ( 24,470 ) ( 2,030 )

Net repayments under foreign bank loan ( 2,193 ) ( 166 ) ( 24,470 )

Payments of deferred purchase price ( 3,878 ) ( 7,701 ) ( 7,930 )

Repurchase of treasury stock ( 34,660 ) ( 74,565 ) ( 264,777 )

Debt issuance costs — — ( 9,242 )

Other, net ( 224 ) ( 211 ) ( 287 )

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FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND JANUARY 1, 2022

AND DECEMBER 31, 2022

(1) NATURE OF OPERATIONS

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The company manufactures and assembles this equipment at forty-four U.S.

and thirty-five international manufacturing facilities.

and thirty-eight international manufacturing facilities.

The company operates in three business segments:

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This equipment is used across all types of foodservice operations, including quick-service restaurants, full-service restaurants, convenience stores, retail outlets, hotels and other institutions.

The products offered by this group include conveyor ovens, combi-ovens, convection ovens, baking ovens, proofing ovens, deck ovens, speed cooking ovens, hydrovection ovens, ranges, fryers, rethermalizers, steam cooking equipment, food warming equipment, catering equipment, heated cabinets, charbroilers, ventless cooking systems, kitchen ventilation, induction cooking equipment, countertop cooking equipment, toasters, griddles, charcoal grills, professional mixers, stainless steel fabrication, custom millwork, professional refrigerators, blast chillers, coldrooms, ice machines, freezers, soft serve ice cream equipment, coffee and beverage dispensing equipment, home and professional craft brewing equipment, fry dispensers, bottle filling and canning equipment, IoT solutions and controls development and manufacturing.

The products offered by this group include conveyor ovens, combi-ovens, convection ovens, baking ovens, proofing ovens, deck ovens, high-speed cooking ovens, hydrovection ovens, ranges, fryers, rethermalizers, steam cooking equipment, food warming equipment, catering equipment, heated cabinets, charbroilers, ventless cooking systems, kitchen ventilation, induction cooking equipment, countertop cooking equipment, toasters, griddles, charcoal grills, professional mixers, stainless steel fabrication, custom millwork, professional refrigerators, blast chillers, coldrooms, ice machines, freezers, frozen dessert equipment, soft serve ice cream equipment, coffee and beverage dispensing equipment, home and professional craft brewing equipment, fry dispensers, bottle filling and canning equipment, IoT solutions and controls development and manufacturing.

The Food Processing Equipment Group offers a broad portfolio of processing solutions for customers producing pre-cooked meat products, such as hot dogs, dinner sausages, poultry and lunchmeats and baked goods such as muffins, cookies and bread.

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(2) ACQUISITIONS AND PURCHASE ACCOUNTING

The following represents the company's significant acquisitions in 2023 and 2022, the termination of a Merger Agreement, as well as summarized information on various acquisitions that were not individually material.

Termination of Welbilt Merger

On April 20, 2021, Middleby entered into a Merger Agreement with Welbilt, Inc.

Following Welbilt's receipt of an alternative acquisition proposal, on July 13, 2021, Middleby announced that, under the terms of the Merger Agreement, it would not exercise its right to propose any modifications to the terms of the Merger Agreement and would allow the match period to expire.

Accordingly, on July 14, 2021, Welbilt delivered to Middleby a written notice terminating the Merger Agreement and, concurrently with Middleby’s receipt of the termination fee of $ 110.0 million in cash from Welbilt, the Merger Agreement was terminated on July 14, 2021.

The termination fee received is reflected in the Consolidated Statements of Comprehensive Earnings as the "merger termination fee" and $ 19.7 million of deal costs associated with the transaction are reflected in selling, general and administrative expenses in the Consolidated Statements of Comprehensive Earnings.

The following represents summarized information on the company's acquisitions in 2023 and 2024 that were not individually material.

2023 Acquisitions

During 2023, the company completed various acquisitions that were not individually material.

The final allocation of consideration paid for the other 2022 acquisitions is summarized as follows (in thousands):

The final allocation of consideration paid for the 2023 acquisitions is summarized as follows (in thousands):

Preliminary Opening Balance Sheet Measurement

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Other intangibles 34,337 ( 722 ) 33,615

Long-term deferred tax asset 426 635 1,061

Other assets — 5 5

Current portion of long-term debt ( 22,841 ) 2,043 ( 20,798 )

Current liabilities ( 3,774 ) ( 1,147 ) ( 4,921 )

Long term debt ( 5,646 ) ( 3,995 ) ( 9,641 )

Long-term deferred tax liability ( 958 ) 23 ( 935 )

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Consideration paid at closing $ 90,948 $ 1,018 $ 91,966

Deferred payments — 1,970 1,970

Contingent consideration 14,743 216 14,959

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The net long-term deferred tax liability amounted to $ 0.9 million.

The net deferred tax liability is comprised of $ 20.8 million related to the difference between the book and tax basis of identifiable intangible assets and $ 0.8 million net deferred tax asset related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The net deferred tax liability is comprised of $ 0.3 million related to the difference between the book and tax basis of identifiable intangible assets and $ 0.6 million related to the difference between the book and tax basis on identifiable tangible asset and liability accounts.

The goodwill and $ 17.9 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350.

Other intangibles also include $ 31.5 million allocated to customer relationships, $ 16.0 million allocated to developed technology, and $ 6.7 million allocated to backlog, which are being amortized over periods of 7 to 9 years, 5 to 11 years, and 3 to 12 months, respectively.

Other intangibles also include $ 7.2 million allocated to customer relationships, $ 7.9 million allocated to developed technology, and $ 0.6 million allocated to backlog, which are being amortized over periods of 7 years, 7 to 12 years, and 9 months, respectively.

Goodwill of $ 18.0 million and other intangibles of $ 7.8 million are allocated to the Food Processing Equipment Group for segment reporting purposes.

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Of these assets, goodwill of $ 40.0 million and intangibles of $ 32.2 million are expected to be deductible for tax purposes.

Several purchase agreements include deferred payment and earnout provisions providing for a contingent payment due to the sellers for the achievement of certain targets.

The deferred payments are payable between 2023 and 2024.

The contractual obligations associated with the deferred payments on the acquisition date amounts to $ 2.0 million.Three earnouts are payable to the extent certain EBITDA targets are met with measurement dates ending between 2022 and 2025.

One of these three earnouts is also payable yearly through 2027 based on product sales.

One earnout is payable yearly through 2028 based on product sales.

The contractual obligation associated with the contingent earnout provisions recognized on the acquisition date amount to $ 23.1 million.

Four purchase agreements include earnout provisions providing for a contingent payment due to the sellers for the achievement of certain targets.

Four earnouts are payable to the extent certain sales and EBITDA targets are met with measurement dates ending between 2024 and 2026.

One earnout is payable upon the achievement of certain product rollout targets specific to the year of measurement.

The contractual obligation associated with the contingent earnout provisions recognized on the acquisition date amounts to $ 15.0 million.

2024 Acquisitions

During 2024, the company completed various acquisitions that were not individually material.

The following estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition dates for the other 2023 acquisitions and are summarized as follows (in thousands):

The following estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition date for the 2024 acquisitions and are summarized as follows (in thousands):

Preliminary Opening Balance Sheet Preliminary Measurement

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Other intangibles 32,248 — 32,248

Long-term deferred tax asset 9 — 9

Other assets 266 938 1,204

Current portion of long-term debt ( 290 ) — ( 290 )

Current liabilities ( 42,304 ) ( 195 ) ( 42,499 )

Long-term debt ( 369 ) — ( 369 )

Long-term deferred tax liability ( 1,132 ) — ( 1,132 )

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The net long-term deferred tax liability amounted to $ 1.1 million.

The net deferred tax liability is related to the difference between the book and tax basis of identifiable intangible assets.

The goodwill and $ 16.7 million of other intangibles associated with the trade names are subject to the non-amortization provisions of ASC 350.

Other intangibles also include $ 12.2 million allocated to customer relationships, $ 1.1 million allocated to developed technology, and $ 2.2 million allocated to backlog, which are being amortized over periods of 5 to 7 years, 7 years, and 3 to 6 months respectively.

Goodwill of $ 46.7 million and other intangibles of $ 24.0 million are allocated to the Food Processing Equipment Group for segment reporting purposes.

Goodwill of $ 14.2 million and other intangibles of $ 8.2 million are allocated to the Commercial Foodservice Equipment Group for segment reporting purposes.

Goodwill of $ 13.6 million and other intangibles of $ 11.7 million are allocated to the Residential Kitchen Equipment Group for segment reporting purposes.

Of these assets, goodwill of $ 52.6 million and intangibles of $ 28.0 million are expected to be deductible for tax purposes.

Four purchase agreements include earnout provisions providing for a contingent payment due to the sellers for the achievement of certain targets.

Four earnouts are payable to the extent certain sales and EBITDA targets are met with measurement dates ending between 2024 and 2026.

One earnout is payable upon the achievement of certain product rollout targets specific to the year of measurement.

The contractual obligation associated with the contingent earnout provisions recognized on the acquisition date amount to $ 15.0 million.

The company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the company is waiting for additional information necessary to finalize those fair values for all acquisitions completed during 2023.

Certain intangible assets are preliminarily valued using historical information from the Commercial Foodservice Equipment Group, Food Processing Equipment Group, and Residential Kitchen Equipment Group and qualitative assessments of the individual businesses at acquisition date.

Two purchase agreements include earnout provisions providing for a contingent payment due to the sellers for the achievement of certain targets.

Two earnouts are payable to the extent certain sales and EBITDA targets are met with measurement dates ending between 2026 and 2027.

The contractual obligation associated with the contingent earnout provisions recognized on the acquisition date amounts to $ 8.7 million.

Certain intangible assets are preliminarily valued using historical information from the Food Processing Equipment Group and Commercial Foodservice Equipment Group and qualitative assessment of the businesses at acquisition date.

Specifically, the company estimated the fair values of the intangible assets based on the percentage of purchase price assigned to similar intangible assets in previous acquisitions.

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Diluted $ 8.03 $ 7.22

The historical consolidated financial information of the company and the acquisitions have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.

The historical consolidated financial information of the company and the acquisitions have been adjusted in the pro forma information to give effect to events that are (1) directly attributable to the transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.

Pro forma data may not be indicative of the results that would have been obtained had these acquisitions occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

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The company's fiscal year ends on the Saturday nearest December 31.

Fiscal years 2023, 2022, and 2021 ended on December 30, 2023, December 31, 2022 and January 1, 2022, respectively, with each year including 52 weeks.

Certain prior year amounts have been reclassified to be consistent with current year presentation.

Fiscal years 2024, 2023, and 2022 ended on December 28, 2024, December 30, 2023 and December 31, 2022, respectively, with each year including 52 weeks.

(b) Cash and Cash Equivalents

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Accounts receivable, as shown in the consolidated balance sheets, are net of allowances for doubtful accounts of $ 23.5 million and $ 20.3 million at December 30, 2023 and December 31, 2022, respectively.

At December 30, 2023, all accounts receivable are expected to be collected within one year.

Accounts receivable, as shown in the consolidated balance sheets, were net of allowances for doubtful accounts of $ 24.6 million and $ 23.5 million at December 28, 2024 and December 30, 2023, respectively.

At December 28, 2024, all accounts receivable were expected to be collected within one year.

(d) Inventories

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If there are changes in the planned use of property and equipment or if technological changes were to occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation and amortization expense in future periods.

Following is a summary of the estimated useful lives:

The f ollowing is a summary of the estimated useful lives:

Description Life

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If the fair value of the reporting unit is less than its carrying value, the resulting difference will be a charge to impairment of goodwill in the Consolidated Statements of Earnings in the period in which the determination is made.

Fair value is determined using a combination of present value techniques and market prices of comparable businesses.

The company performed a qualitative assessment as of October 1, 2023 over all three reporting units.

Fair value is determined using an income approach using a discounted cash flow model.

The company performed a qualitative assessment as of September 29, 2024 over all three reporting units.

As a result of the financial performance for the Residential Kitchen reporting unit, the company completed a quantitative analysis.

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The fair value of the reporting unit exceeded its carrying unit by more than 8% and no impairment of goodwill was recognized.

The company believes the assumptions utilized within the qualitative analysis are reasonable and consistent with assumptions that would be used by other marketplace participants.

Based on the qualitative assessment for all other reporting units it was determined there was no impairment of goodwill.

The company has not recognized any goodwill impairments and therefore there are no accumulated impairment losses.

The company believes the assumptions utilized within the quantitative analysis are reasonable and consistent with assumptions that would be used by other marketplace participants.

Based on the qualitative assessment for all other reporting units it was determined there was no impairment of goodwill and there are no accumulated impairment losses.

Goodwill is allocated to the business segments as follows (in thousands):

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Processing Residential Kitchen Total

Balance as of January 1, 2022 $ 1,298,369 $ 237,433 $ 707,667 $ 2,243,469

Balance as of December 31, 2022 $ 1,309,776 $ 350,303 $ 751,755 $ 2,411,834

Goodwill acquired during the year 9,640 17,922 13,586 41,148

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December 28, 2024 December 30, 2023

Amount Accumulated

Amortization Estimated

Amount Accumulated

Estimated Weighted Avg Remaining Life Gross Carrying Amount Accumulated Amortization Estimated Weighted Avg Remaining Life Gross Carrying Amount Accumulated Amortization

Amortized intangible assets:

Customer relationships 7.0 $ 845,326 $ ( 529,533 ) 7.6 $ 839,811 $ ( 460,885 )

Customer lists 6.4 $ 850,540 $ ( 581,301 ) 7.0 $ 845,326 $ ( 529,533 )

Backlog 0.3 2,192 ( 804 ) 0.0 — —

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$ 951,653 $ ( 633,842 ) $ 943,919 $ ( 574,079 )

Indefinite-lived intangible assets:

Trademarks and trade names $ 1,323,236 $ 1,369,391

The company completed its annual impairment assessment for indefinite-lived intangible assets as of October 1, 2023.

We identified indicators of impairment with certain trademarks within the each of its reporting units based on the qualitative assessment.

Indefinite-lived assets:

Trademarks and tradenames $ 1,293,226 $ 1,323,236

The company completed its annual impairment assessment for indefinite-lived intangible assets as of September 29, 2024.

We identified indicators of impairment with certain trademarks within each of its reporting units.

The primary indicator of impairment was market conditions resulting in lower than expected revenue performance in the current year and forecasted revenues for future periods.

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The fair values of the other trademarks tested with no impairment, per the analyses, exceeded their carrying values by 10% or more.

The Kamado Joe, Masterbuilt and Char-Griller trademarks within the Residential Kitchen Equipment Group were impaired based on the quantitative assessments.

The fair value of trademarks were estimated to be $ 122.3 million as compared to the carrying value of $ 198.4 million and resulted in a $ 76.1 million indefinite-lived intangible asset impairment charge.

The diminution in fair value for the trademarks was macroeconomic conditions such as higher inventory levels in the channel following periods of disruption in supply chain and inflationary pressures on the carrying costs of inventory levels in the retail industry.

The primary trademark impaired based on the quantitative assessments was within the Residential Kitchen Equipment Group.

The fair value of the trademark was estimated to be $ 83.6 million as compared to the carrying value of $ 100.4 million and resulted in a $ 16.8 million indefinite-lived intangible asset impairment charge.

The diminution in fair value for the trademark was due to European macroeconomic conditions such as high interest rates, challenging housing market conditions and higher carrying costs of inventory levels in the channel.

This led to lower than expected revenue in the current year and corresponding reductions of future revenue due to expectations for recovery in demand.

The company estimated the fair value of the trademarks using a relief from royalty method under the income approach.

In performing the quantitative analyses on these trademark, significant assumptions include revenue growth rates, assumed royalty rates and the discount rate.

The company estimated the fair value of the trademark using a relief from royalty method under the income approach.

In performing the quantitative analyses on this trademark, significant assumptions include revenue growth rates, assumed royalty rates and the discount rate.

The company believes the assumptions utilized within the quantitative analysis are reasonable and consistent with assumptions that would be used by other marketplace participants.

Collectively, for the Kamado Joe, Masterbuilt and Char-Griller trademarks, a 10.0% reduction in revenues would result in an impairment charge of approximately $ 11.3 million .

For the primary trademark impaired, a 10.0% reduction in revenues would result in an impairment charge of approximately $ 7.6 million .

A 50 basis point reduction of the royalty rates would result in an impairment charge of approximately $ 5.8 million .

A 50 basis point increase in the discount rates would result in an impairment charge of approximately $ 5.5 million .

The company performed a qualitative assessment as of October 1, 2023 for all other trademarks and trade names and determined it is more like than not that the fair value of its other indefinite-life intangible assets are greater than the carrying amounts.

The company elected to perform a qualitative assessment on the other indefinite-life intangible assets noting no events that indicated that the fair value was less than the carrying value that would require a quantitative impairment assessment.

The company performed a qualitative assessment as of September 29, 2024 for all other trademarks and trade names and determined it is more likely than not that the fair value of its other indefinite-life intangible assets are greater than the carrying amounts.

The company elected to perform a qualitative assessment on the other indefinite-life intangible assets.

We identified indicators of impairment resulting in an impairment charge of approximately $ 5.2 million associated with the decline in recoverable value of an equity method investment.

There were no other events that indicated that the fair value was less than the carrying value that would require a quantitative impairment assessment for other indefinite-life intangible assets.

The estimates of future cash flows used in determining the fair value of goodwill and indefinite-lived intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital.

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The actual cash flows could differ materially from management's estimates due to changes in business conditions, operating performance and economic conditions.

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment in accordance with the methodology discussed above under "Property, Plant and Equipment."

Definite-lived intangible assets are amortized over their estimated useful lives and tested for impairment whenever events or changes in circumstances indicate that the recorded value of an asset is greater than the sum of its expected future undiscounted cash flows.

The aggregate intangible amortization expense was $ 64.4 million, $ 75.0 million and $ 86.3 million in 2024, 2023 and 2022, respectively.

1 unchanged sentence

2025 $ 60,165

2029 and thereafter 109,559

Thereafter 78,201

(g) Accrued Expenses

5 unchanged sentences

Accrued short-term leases 27,938 26,417

Accrued sales and other tax 24,568 24,044

Accrued professional fees 18,461 19,541

Accrued contingent consideration 25,748 17,791

Accrued sales and other tax 20,626 24,568

Accrued agent commission 16,730 16,956

Accrued professional fees 13,973 18,461

Accrued product liability and workers compensation 10,386 11,169

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Changes in accumulated other comprehensive income (loss) (1) were as follows (in thousands):

Currency Translation Adjustment Pension Benefit Costs Unrealized Gain/(Loss) Interest Rate Swap Unrealized Loss Certain Investments Total

Balance as of January 1, 2022 $ ( 97,654 ) $ ( 249,696 ) $ ( 13,064 ) 1,330 $ ( 359,084 )

Currency Translation Adjustment Pension Benefit Costs Unrealized Gain/(Loss) Interest Rate Swap Total

Balance as of December 31, 2022 $ ( 205,345 ) $ ( 121,701 ) $ 48,574 $ ( 278,472 )

Other comprehensive income before reclassification $ 59,855 $ 11,392 $ 15,652 $ 86,899

6 unchanged sentences

Balance as of December 28, 2024 $ ( 213,255 ) $ ( 78,534 ) $ 22,399 $ ( 269,390 )

(1) As of December 30, 2023 pension and unrealized gain/(loss) interest rate swap amounts are net of tax of $ 4.0 million, and $ 11.2 million, respectively.

During the twelve months ended December 30, 2023, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of $ 6.0 million and $( 5.6 ) million, respectively.

(1) As of December 28, 2024, pension and unrealized gain on interest rate swap amounts, net of tax, were $ 13.9 million and $ 8.0 million, respectively.

During the twelve months ended December 28, 2024, the adjustments to pension and unrealized gain on interest rate swap amounts, net of tax, were $ 9.9 million and $( 3.2 ) million, respectively

(j) Fair Value Measures

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Level 3 – Unobservable inputs based on our own assumptions

The company’s financial assets and liabilities that are measured at fair value are categorized using the fair value hierarchy at December 30, 2023 and December 31, 2022 are as follows (in thousands):

The company’s financial assets and liabilities that are measured at fair value and are categorized using the fair value hierarchy are as follows (in thousands):

Level 1 Fair Value

4 unchanged sentences

Interest rate swaps $ — $ 29,952 $ — $ 29,952

Foreign exchange derivative contracts $ — $ 29 $ — $ 29

Financial Liabilities:

Contingent consideration $ — $ — $ 53,228 $ 53,228

Foreign exchange derivative contracts $ — $ 1,400 $ — $ 1,400

As of December 30, 2023

1 unchanged sentence

Interest rate swaps $ — $ 42,779 $ — $ 42,779

Foreign exchange derivative contracts $ — $ 29 $ — $ 29

Financial Liabilities:

Contingent consideration $ — $ — $ 51,538 $ 51,538

Foreign exchange derivative contracts $ — $ 474 $ — $ 474

The contingent consideration, as of December 28, 2024 and December 30, 2023, relates to the earnout provisions recorded in conjunction with various purchase agreements.

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Exchange gains and losses on foreign currency transactions are included in determining net income for the period in which they occur.

These transactions amounted to a loss of $ 8.7 million, loss of $ 28.1 million and a gain of $ 0.3 million in 2023, 2022 and 2021, respectively, and are included in other expense on the statements of earnings.

These transactions amounted to a loss of $ 1.3 million, $ 8.7 million and $ 28.1 million in 2024, 2023 and 2022, respectively, and are included in other expense on the statements of earnings.

(l) Shipping and Handling Costs

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Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.

A rollforward of the warranty reserve for the fiscal years 2023 and 2022 are as follows (in thousands):

A rollforward of the warranty reserve for the fiscal years 2024 and 2023 is as follows (in thousands):

Beginning balance $ 89,039 $ 82,096

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See Note 5, Financing Arrangements, in these Notes to the Consolidated Financial Statements for further details on the Convertible Notes.

There were no anti-dilutive equity awards excluded from common stock equivalents for 2023, 2022 or 2021.

There were no anti-dilutive equity awards excluded from common stock equivalents for 2024, 2023 and 2022.

(q) Consolidated Statements of Cash Flows

3 unchanged sentences

Accounting Pronouncements - Recently Adopted

In March 2020, the Financial Accounting Standards Board (the " FASB") issued Accounting Standards Update ("ASU") 2 020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope, which amends ASU 2020-04 and clarifies the scope and guidance of Topic 848 to allow for derivatives impacted by the rate reform to qualify for certain optional expedients and exceptions for contract modifications and hedge accounting.

The guidance is optional and is effective for a limited period of time.

In December 2022, the FASB also issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, to defer the sunset date of ASC 848 from December 31, 2022, to December 31, 2024.

These new standards were effective upon issuance and generally can be applied to applicable contract modifications.

All of the company's agreements previously utilizing LIBOR have transitioned to Secured Overnight Financing Rate ("SOFR") on or before July 1, 2023.

These changes did not have a material impact on its Consolidated Financial Statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The new accounting rules require entities to apply “Revenue from Contracts with Customers (Topic 606)” to recognize and measure contract assets and contract liabilities in a business combination.

The new accounting rules were effective for the Company in the first quarter of 2023.

The company adopted this standard in the first quarter of 2023 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods.

The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies.

The new standard is effective for the company as of January 1, 2023 and only impacts annual financial statement footnote disclosures.

The company adopted this standard in the first quarter of 2023 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this update eliminate the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty.

The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The standard should be applied prospectively, and it allows for a modified retrospective transition method resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

The company adopted this standard in the first quarter of 2023 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging—Portfolio Layer Method.

The new standard expands and clarifies the use of the portfolio layer method for fair value hedges of interest rate risk.

The new standard allows non-prepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method.

The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The new guidance on hedging multiple layers in a closed portfolio should be applied prospectively and the guidance on the accounting for fair value basis adjustments should be applied on a modified retrospective basis.

The company adopted this standard in the first quarter of 2023 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

Accounting Pronouncements - To be adopted

In March 2023, the FASB issued Accounting Standards Update ASU 2023-01, Leases (Topic 842):

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The guidance is effective for the company beginning on January 1, 2024.

The company is currently evaluating the impact the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

In November 2023, the FASB issued Accounting Standard Update ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendment requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, as well as disclosure of the title and position of the Chief Operating Decision Maker (“CODM”).

The guidance is effective for the company beginning on January 1, 2024.

Early adoption is permitted.

The company is currently evaluating the impact the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

The company adopted this standard in the first quarter of 2024 and it did not have a material impact on its Consolidated Financial Statements and disclosures.

In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The company adopted this standard effective January 1, 2024 using a retrospective method.

For further information, refer to the Segments section in Note 10, "Segment Information."

Accounting Pronouncements - To be adopted

In December 2023, the FASB issued Accounting Standard Update ASU No.

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The company is currently evaluating the impact the adoption of this guidance will have on its Consolidated Financial Statements and disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses, which requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the footnotes to the financial statements for both annual and interim periods.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The company is currently evaluating the impact of the adoption of this standard.

(4) REVENUE RECOGNITION

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We disaggregate our net sales by reportable operating segment and geographical location as we believe it best depicts how the nature, timing and uncertainty of our net sales and cash flows are affected by economic factors.

In general, the Commercial Foodservice Equipment and Residential Foodservice Equipment Groups recognize revenue at the point in time control transfers to their customers based on contractual shipping terms.

Revenue from equipment sold under our long-term contracts within the Food Processing Equipment group is recognized over time as the equipment is manufactured and assembled.

The following table summarizes our net sales by reportable operating segment and geographical location (in thousands):

12 unchanged sentences

Total $ 2,521,471 $ 720,618 $ 794,516 $ 4,036,605

Twelve Months Ended January 1, 2022

Twelve Months Ended December 31, 2022

United States and Canada $ 1,750,986 $ 426,124 $ 701,909 $ 2,879,019

16 unchanged sentences

During the twelve months period ended December 28, 2024, the company reclassified $ 43.3 million to accounts receivable which was included in the contract asset balance at the beginning of the period.

During the twelve months period ended December 30, 2023, the company recognized revenue of $ 161.7 million which was included in the contract liability balance at the beginning of the period.

During the twelve months period ended December 28, 2024, the company recognized revenue of $ 89.9 million which was included in the contract liability balance at

the beginning of the period.

Additions to contract liabilities representing amounts billed to clients in excess of revenue recognized to date were $ 72.5 million during the twelve months period ended December 28, 2024.

Additions to contract liabilities include $ 27.3 million related to companies acquired during the twelve months period ended December 28, 2024.

Substantially all of the company's outstanding performance obligations will be satisfied within 12 to 36 months.

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The funds were used to reduce outstanding borrowings under the revolver.

The delayed draw term loan amortizes in quarterly installments due on the last day of each fiscal quarter, commencing on December 30, 2023, in an amount equal to 0.625 % of the principal drawn, with the balance, plus any accrued interest payable by October 21, 2026.

As of December 30, 2023, the company had $ 1.7 billion of borrowings outstanding under the Credit Facility, including $ 950 million outstanding under the term loan ($ 946 million, net of unamortized issuance fees) and $ 727 million outstanding under the delayed draw term loan.

The delayed draw term loan amortizes in quarterly installments due on the last day of each fiscal quarter, and commenced on December 31, 2022, in an amount equal to 0.625 % of the principal drawn, with the balance, plus any accrued interest payable by October 21, 2026.

As of December 28, 2024, the company had $ 1.6 billion of borrowings outstanding under its credit facility (the "Credit Facility"), including $ 931.3 million outstanding under the term loan ($ 928.5 million , net of unamortized issuance fees) and $ 712.5 million outstanding under the delayed draw term loan.

The company also had $ 4.3 million in outstanding letters of credit as of December 28, 2024, which reduces the borrowing availability under the Credit Facility.

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The following table summarizes the outstanding principal amount and carrying value of the Convertible Notes:

December 28, 2024 December 30, 2023

(in thousands)

5 unchanged sentences

Twelve Months Ended

Dec 28, 2024 Dec 30, 2023 Dec 31, 2022

Contractual interest expense $ 7,433 $ 7,454 $ 7,475

47 unchanged sentences

The 2021 Capped Call Transactions have initial cap prices of $ 216.50 and $ 225.00 per share of the company's common stock.

The 2022 Capped Call Transactions have an initial cap price of $ 229.00 per share of the company's common stock.

The 2022 Capped Call Transactions have an initial cap price of $ 229.00 per share.

The Capped Call Transactions cover, initially, the number of shares of the company's common stock underlying the Convertible Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes.

5 unchanged sentences

2026 1,600,151

2026 1,589,014

2029 and thereafter 4,372

(1) The current year debt payable includes the maturities of the convertible notes.

(6) COMMON AND PREFERRED STOCK

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In November 2017, the company's Board of Directors approved a stock repurchase program authorizing the company to repurchase in the aggregate up to 2,500,000 shares of its outstanding common stock.

In May 2022, the company's Board of Directors approved the company to repurchase an additional 2,500,000 shares of its outstanding common stock under the current program.

In May 2022 and July 2024, the company's Board of Directors approved the company to repurchase an additional 2,500,000 shares of its outstanding common stock under the current program.

During 2023, the company repurchased 397,738 shares of its common stock under the program for $ 55.6 million, including applicable commissions, which represented an average price of $ 139.68 .

During 2023, the company repurchased 397,738 shares of its common stock under the program for $ 55.6 million, including applicable commissions and excise tax, which represented an average price of $ 139.68 .

During 2024, the company repurchased 117,526 shares of its common stock under the program for $ 16.4 million, including applicable commissions, which represented an average price of $ 139.39 .

As of December 28, 2024, 3,233,890 shares had been purchased under the 2017 stock repurchase program and 4,266,110 remain authorized for repurchase.

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Non-cash share-based compensation of $ 36.2 million, $ 51.0 million and $ 58.4 million was recognized for fiscal 2024, 2023 and 2022, respectively, associated with restricted share grants and restricted stock units.

The company recorded a related tax benefit of $ 0.8 million, $ 1.3 million and less than $ 0.4 million in fiscal 2023, 2022 and 2021, respectively.

The company recorded a related tax benefit of $ 0.1 million, $ 0.8 million and $ 1.3 million in fiscal 2024, 2023 and 2022, respectively.

Restricted share grants:

4 unchanged sentences

A summary of the company’s nonvested restricted share grant activity and their corresponding fair value on the date of grant for fiscal year ended December 28, 2024 is as follows:

Shares Weighted

Shares Weighted Average

Nonvested shares at December 30, 2023 2,080 136.13

Granted 2,080 136.13

Vested ( 2,080 ) 150.73

1 unchanged sentence

Nonvested shares at December 28, 2024 — —

As of December 30, 2023, there was $ 0.1 million of total unrecognized compensation cost related to nonvested restricted share grant compensation arrangements, if all performance conditions are fully achieved.

The remaining weighted average life is 0.3 years .

As of December 28, 2024, all compensation cost related to nonvested restricted share grant compensation arrangements were recognized and there are no additional nonvested shares.

Restricted stock units:

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A summary of the company’s nonvested restricted stock unit activity at target shares and their corresponding fair value on the date of grant for fiscal year ended December 28, 2024 is as follows:

Units Weighted

Units Weighted Average

Nonvested shares at December 30, 2023 651,731 160.15

3 unchanged sentences

Nonvested shares at December 28, 2024 697,678 149.80

As of December 30, 2023, there was $ 70.8 million of total unrecognized compensation cost related to nonvested restricted stock unit compensation arrangements, if all performance conditions are fully achieved.

As of December 28, 2024, there was $ 48.0 million of total unrecognized compensation cost related to nonvested restricted stock unit compensation arrangements, if all performance conditions are achieved as estimated.

The remaining weighted average life is 2.03 years .

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Total $ 148,887 $ 118,496 $ 127,846

Reconciliation of the differences between income taxes computed at the federal statutory rate to the effective rate are as follows:

The r econciliation of the differences between income taxes computed at the federal statutory rate to the effective rate were as follows:

2024 2023 2022

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A tax provision of $ 148.9 million, at an effective rate of 25.8 %, was recorded for fiscal 2024 as compared to $ 118.5 million at an effective rate of 22.8 %, in fiscal 2023.

The fiscal 2023 tax provision includes a $ 7.0 million tax benefit for the finalization of the 2022 tax returns.

The fiscal 2022 tax provision includes a deferred tax benefit of approximately $ 13 million associated with legal entity restructuring the company undertook to integrate and simplify the company’s business operations.

The fiscal 2024 tax provision includes a $ 3.6 million tax expense for the finalization of the 2023 tax returns as compared to the fiscal 2023 provision that included a net tax benefit of $ 7.0 million for the finalization of the 2022 tax returns.

The effective rates in 2024 and 2023 were higher than the federal tax rate of 21.0 % primarily due to state taxes and foreign tax rate differentials.

18 unchanged sentences

Depreciable assets ( 43,746 ) ( 40,036 )

Operating lease right-of-use assets ( 21,139 ) ( 19,240 )

Interest rate swaps ( 7,587 ) ( 10,927 )

Operating lease right-of-use assets ( 21,754 ) ( 21,139 )

Pension and post-retirement benefits ( 22,886 ) ( 9,719 )

16 unchanged sentences

Interest recognized in fiscal years 2024, 2023 and 2022 was $ 0.6 million, $ 1.4 million and $ 0.6 million, respectively.

Penalties recognized in fiscal years 2023, 2022 and 2021 was $ 0.0 million , $ 0.2 million and $( 1.0 ) million, respectively.

The following table summarizes the activity related to the unrecognized tax benefits for the fiscal years ended January 1, 2022, December 31, 2022 and December 30, 2023 (in thousands):

Balance at January 1, 2022 $ 36,209

Penalties recognized in fiscal years 2024, 2023 and 2022 were $( 0.3 ) million, $ 0.0 million and $ 0.2 million, respectively.

The following table summarizes the activity related to the unrecognized tax benefits for the fiscal years ended December 31, 2022, December 30, 2023 and December 28, 2024 (in thousands):

Balance at December 31, 2022 $ 33,648

Increases to current year tax positions 2,126

Increase to prior year tax positions 534

Decrease to prior year tax positions ( 1,709 )

Settlements ( 1,974 )

Lapse of statute of limitations ( 1,852 )

1 unchanged sentence

Increases to current year tax positions 3,689

Settlements (639)

Lapse of statute of limitations ( 7,421 )

Balance as of December 28, 2024 $ 29,551

It is reasonably possible that the amounts of unrecognized tax benefits associated with state, federal and foreign tax positions may decrease over the next twelve months due to expiration of a statute or completion of an audit.

The company believes that it is reasonably possible that $ 3.9 million of its remaining unrecognized tax benefits may be recognized by the end of 2025 as a result of settlements with taxing authorities or lapses of statutes of limitations.

12 unchanged sentences

The notional amount of foreign currency contracts outstanding was $ 239.3 million and $ 253.1 million as of December 28, 2024 and December 30, 2023, respectively.

The fair value of these forward contracts was an unrealized gain of less than $ 0.1 million at the end of the year.

The fair value of these forward contracts was an unrealized loss of $ 1.4 million at the end of the year.

(b) Interest Rate

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The company has designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in accumulated other comprehensive income.

The fair value of these instruments was an asset of $ 42.8 million and an asset of $ 65.0 million as of December 30, 2023 and December 31, 2022, respectively.

The fair value of these instruments was an asset of $ 30.0 million and $ 42.8 million as of December 28, 2024 and December 30, 2023, respectively.

The change in fair value of these swap agreements in 2024 was a loss of $ 9.6 million, net of taxes.

16 unchanged sentences

When a contract excludes an implicit rate, the company utilizes an incremental borrowing rate based on information available at the lease commencement date including lease term and geographic region.

The initial valuation of the right-of-use (“ROU”) asset includes the initial measurement of the lease liability, lease payments made in advance of the lease commencement date and initial direct costs incurred by the company and excludes lease incentives.

The initial valuation of the right-of-use (“ROU”) asset includes the initial measurement of the lease liability, lease payments made in advance of the lease commencement date and

initial direct costs incurred by the company and excludes lease incentives.

Operating lease ROU assets are included in other assets and operating lease liabilities are included in accrued expenses and other non-current liabilities.

2 unchanged sentences

The company leases warehouse space, office facilities and equipment under operating leases.

The company has operating lease costs of $ 39.6 million, $ 35.7 million and $ 31.5 million in fiscal 2023, 2022 and 2021 respectively, including short-term lease expense and variable lease costs, which were immaterial in the year.

The company had operating lease costs of $ 39.3 million, $ 39.6 million and $ 35.7 million in fiscal 2024, 2023 and 2022 respectively, including short-term lease expense and variable lease costs, which were immaterial in the year.

Leases (in thousands) December 28, 2024 December 30, 2023

Operating lease right-of-use assets:

$ 109,373 $ 102,314

Other assets $ 121,168 $ 109,373

Operating lease liabilities:

Accrued expenses 27,938 26,417

26,417 25,250

Other non-current liabilities 98,042 87,550

87,550 80,242

Total Liability $ 125,980 $ 113,967

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(10) SEGMENT INFORMATION

The company operates in three reportable operating segments defined by management reporting structure and operating activities.

An operating segment is defined as a component of an enterprise which has discrete financial information that is evaluated regularly.

The company determined that its Chief Executive Officer is the Chief Operating Decision Maker (the "CODM") who possesses the ultimate authority with respect to assessment of performance, allocation of resources, and all strategic actions of the company.

In performing this responsibility, the CODM regularly reviews key internal management reports, financial information including forecasts, and quarterly results, which are prepared at the operating segment level.

In accordance with ASC 280-10, Segment Reporting , the company operates in three reportable operating segments defined by management reporting structure and operating activities.

The Company’s reportable segments are:

(i) the Commercial Foodservice Equipment Group, (ii) the Food Processing Equipment Group, and (iii) the Residential Kitchen Equipment Group.

Adjusted EBITDA is the profitability metric reported to the CODM for purposes of making decisions about allocation of resources to each segment and assessing performance of each segment.

The company defines Adjusted EBITDA as operating income less depreciation, intangible amortization, restructuring, acquisition related adjustments, impairments, stock compensation and other non-recurring items which management considers to be outside core operating results.

The CODM reviews this metric regularly to compare the profitability of segments, identify trends, and evaluate which segments require additional resources or strategic adjustments.

The CODM uses Adjusted EBITDA to support the allocation of resources predominantly in the annual budget and forecasting process.

The company believes that investors find this measure useful in comparing our operating performance to that of other companies in our industry because this measure generally illustrates the underlying performance of the business.

Management believes that inter-segment sales are made at established arm's length transfer prices.

All inter-segment transactions are eliminated and values are presented net of eliminations.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Additional detail about each of the reportable segments and its corporate income and expenses is set forth below:

The Commercial Foodservice Equipment Group manufactures, sells, and distributes foodservice equipment for the restaurant and institutional kitchen industry.

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The Residential Kitchen Equipment Group manufactures, sells and distributes kitchen equipment for the residential market.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The chief operating decision maker evaluates individual segment performance based on operating income.

Management believes that intersegment sales are made at established arm's length transfer prices.

The following table summarizes the results of operations for the company’s business segments (1) (dollars in thousands):

3 unchanged sentences

Net sales $ 2,419,236 $ 731,003 $ 724,923 $ — $ 3,875,162

Income (loss) from operations (3)

Cost of sales 1,460,903 440,358 506,372 ( 2,840 ) 2,404,793

Other segment items (3,4)

294,375 103,382 144,961 61,356 604,074

Segment adjusted EBITDA (5)

663,958 187,263 73,590 ( 58,516 ) 866,295

Depreciation expense (6)

7 unchanged sentences

Net sales $ 2,521,471 $ 720,618 $ 794,516 $ — $ 4,036,605

Income (loss) from operations (3)

Cost of sales 1,510,920 446,239 544,532 852 2,502,543

Other segment items (3)

311,131 95,044 154,139 73,354 633,668

Segment adjusted EBITDA (5)

699,420 179,335 95,845 ( 74,206 ) 900,394

Depreciation expense (6)

7 unchanged sentences

Net sales $ 2,394,762 $ 589,969 $ 1,048,122 $ — $ 4,032,853

Income (loss) from operations (3,7,8)

Cost of sales 1,485,321 377,389 722,358 1,231 2,586,299

Other segment items (3)

282,385 82,437 146,675 81,649 593,146

Segment adjusted EBITDA (5)

627,056 130,143 179,089 ( 82,880 ) 853,408

Depreciation expense (6)

9 unchanged sentences

(2) Includes corporate and other general company assets and operations.

(3) Restructuring expenses and impairments are included in operating income of the segment to which they pertain.

See note 3(f) and 12 for further details .

(3) Other segment items for each reportable segment includes operating expenses, which primarily consists of selling, general and administrative expenses.

Other segment items excludes the impact of depreciation, intangible amortization, restructuring, impairments, stock compensation and other items that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance.

(4) Gain on sale of plant is included in Food Processing.

(5) Excludes the impacts mentioned in Other segment items.

(6) Includes depreciation on right of use assets.

1 unchanged sentence

(8) Long-lived assets consist of property, plant and equipment, long-term deferred tax assets and other assets.

(7) Termination fee from Welbilt merger is included in Corporate and Other.

(8) Gain on sale of plant is included in Commercial Foodservice and Residential Kitchen for 2021.

A reconciliation of our segment information for earnings before income taxes to the corresponding amounts in the Consolidated Statements of Earnings is shown in the table below for the periods presented:

2024 2023 2022

Adjusted EBITDA $ 866,295 $ 900,394 $ 853,408

Other segment operating expenses (1)

210,107 265,526 213,804

Income from operations 656,188 634,868 639,604

Interest expense and deferred financing amortization, net 92,229 120,348 88,977

Net periodic pension benefit (other than service cost & curtailment) ( 14,897 ) ( 9,071 ) ( 42,681 )

Other expense, net 1,536 4,213 28,893

Earnings before income taxes 577,320 519,378 564,415

Provision for income taxes 148,887 118,496 127,846

Net earnings $ 428,433 $ 400,882 $ 436,569

(1) Consists of the impact of depreciation, intangible amortization, restructuring, impairments, stock compensation and other items that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance.

Geographic Information

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Benefits are determined based upon retirement age and years of service with the company.

This defined benefit plan was frozen on April 30, 2010 and no further benefits accrue to the participants beyond this date.

This defined benefit plan was frozen on April 30,

2010 and no further benefits accrue to the participants beyond this date.

Plan participants will receive or continue to receive payments for benefits earned on or prior to April 30, 2010 upon reaching retirement age.

18 unchanged sentences

Interest on benefit obligations 1,267 43,892 1,315 46,046

Actuarial loss (gain) 539 1,970 ( 8,060 ) ( 409,462 )

Actuarial (gain) loss ( 1,598 ) ( 94,002 ) 539 1,970

Net benefit payments ( 1,747 ) ( 61,506 ) ( 1,745 ) ( 59,018 )

4 unchanged sentences

Company contributions 1,244 103 1,114 6,012

Investment gain (loss) 1,384 81,945 ( 2,728 ) ( 207,270 )

Investment gain 760 4,086 1,384 81,945

Benefit payments and plan expenses ( 1,747 ) ( 61,506 ) ( 1,745 ) ( 59,018 )

11 unchanged sentences

Pre-tax components recognized in other comprehensive income for the period:

Current year actuarial gain $ 28 $ ( 17,079 ) $ ( 4,259 ) $ ( 148,515 )

Current year actuarial (gain) loss $ ( 1,432 ) $ ( 36,008 ) $ 28 $ ( 17,079 )

Actuarial loss recognized ( 281 ) ( 205 ) ( 420 ) ( 150 )

62 unchanged sentences

Indirect 3,184 33 — — 3,151

Hedge Fund Strategy:

Equity Long/Short 8,361 — — — 8,361

Arbitrage & Event 10,731 — — — 10,731

Directional Trading & Fixed Income 315 — — — 315

Cash & Other 162,812 — — — 162,812

Direct Sourcing 913 — — — 913

Leveraged Loans 28,292 — — — 28,292

18 unchanged sentences

Other 3,222 — — — 3,222

Convertible Bonds

Direct 91,993 — 91,993 — —

20 unchanged sentences

2029 through 2034 11,412 362,589

Expected contributions to the U.S.

Plans and Non-U.S.

Plans to be made in 2024 are $ 0.6 million and $ 5.8 million, respectively.

The expected contributions to the U.S.

Plans to be made in 2025 is $ 0.6 million.

For the Non-U.S.

Plans, the expected contribution is nil in 2025.

(b) Defined Contribution Plans

7 unchanged sentences

These actions are reflected in the restructuring expenses in the Consolidated Statements of Earnings.

The primary realization of cost savings from the restructuring initiatives began in 2023 with expected annual savings of approximately $ 12.0 million.

The primary realization of cost savings from the restructuring initiatives began in 2023 with cumulative expected annual savings of approximately $ 28.0 million.

At December 28, 2024, the restructuring obligations accrued for these initiatives are immaterial and will be substantially complete by the end of fiscal year 2025.

The restructuring expenses for the other segments of the company were not material during fiscal years 2024, 2023 and 2022.

(13) SUBSEQUENT EVENTS

On February 25, 2025, the company announced its intent to separate its Food Processing business through a spin-off of the Food Processing business, under which the stock of Food Processing, as a new independent publicly traded company, will be distributed to Middleby’s shareholders.

As of the date hereof, Middleby is targeting completion of the separation by early 2026, subject to certain customary conditions, including, among others, final approval by the company’s Board of Directors and the effectiveness of appropriate filings with the SEC.

The spin-off of Food Processing is expected to be tax-free for U.S.

federal income tax purposes.

There can be no assurance that any separation transaction will ultimately occur or, if one does occur, of its terms or timing.

THE MIDDLEBY CORPORATION

1 unchanged sentence

FOR THE FISCAL YEARS ENDED DECEMBER 28, 2024, DECEMBER 30, 2023

AND January 1, 2022

AND DECEMBER 31, 2022

(amounts in thousands)

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data