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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 30, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 333-39813
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B&G Foods, Inc.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3916496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Gatehall Drive, Suite 110, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 401-6500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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 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 [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X].
The aggregate market value of the voting stock held by non-affiliates
of the registrant is not applicable as no public market for the voting stock of
the registrant exists.
As of March 1, 2001, B&G Foods, Inc. had one share of its common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART I
ITEM 1. BUSINESS
I. Company Overview
B&G Foods, Inc. and its subsidiaries (collectively, "B&G" or the
"Company") manufacture, market and distribute a diversified portfolio of
shelf-stable branded food products. Some of the products manufactured and
distributed by the Company include Bloch & Guggenheimer pickles and peppers,
Regina vinegars, Polaner fruit spreads, preserves and wet spices, B&M baked
beans, Underwood meat spreads, Ac'cent flavor enhancer, Las Palmas enchilada
sauce and Joan of Arc dry canned beans.
The Company was organized by Bruckmann, Rosser, Sherrill & Co., L.P.
("BRS") in November 1996 to acquire Bloch & Guggenheimer, Inc., Burns & Ricker,
Inc. and certain related entities (the "B&G and B&R Acquisition") from Specialty
Foods Corporation ("Specialty Foods"), which is not an affiliate of the Company.
The B&G and B&R Acquisition was consummated on December 27, 1996 as a purchase
of all of the outstanding capital stock of BGH Holdings, Inc., the parent of
Bloch & Guggenheimer, Inc., and BRH Holdings, Inc., the parent of Burns &
Ricker, Inc.
On June 17, 1997, the Company acquired certain assets relating to the
Regina wine vinegars and cooking wines, Wright's liquid smoke hickory flavoring,
Brer Rabbit molasses and Vermont Maid syrup brands (the "Nabisco Brands
Acquisition"), including trademarks, inventory and certain equipment used to
bottle the Regina wine vinegars and cooking wines, from Nabisco, Inc.
("Nabisco"), which is not an affiliate of the Company.
On August 15, 1997, through a subsidiary, the Company acquired from E.
McIlhenny's Son Corporation all of the outstanding capital stock of JEM Brands,
Inc. ("JEM") (the "Trappey's Acquisition"), the holding company of Trappey's
Fine Foods, Inc. (together with JEM, "Trappey's").
On July 17, 1998, through a subsidiary, the Company acquired all of the
outstanding capital stock of Maple Grove Farms of Vermont, Inc. and related
entities (the "Maple Grove Acquisition") from certain individual investors. The
Maple Grove Acquisition included the Maple Grove Farms of Vermont and UpCountry
Naturals labels of pure maple syrup.
On February 5, 1999, the Company acquired certain assets of the Polaner
and related brands (collectively, "Polaner") from International Home Foods, Inc.
("IHF") and M. Polaner, Inc. (the "Polaner Acquisition"). Prior to the
consummation of the Polaner Acquisition, the Company had been the exclusive
manufacturer, or "co-packer," of the Polaner products for IHF, and had
distributed the Polaner products regionally under co-packing and distribution
contracts that were terminated upon consummation of the Polaner Acquisition. See
"--Co-Packing."
On March 15, 1999, through a subsidiary, the Company acquired the
assets of The Heritage Portfolio of Brands from The Pillsbury Company, Indivined
B.V. and IC Acquisition Corp. (the "Heritage Brands Acquisition"). The Heritage
Portfolio of Brands include Underwood meat spreads, B&M baked beans, Ac'cent
flavor
1
enhancer, Sa-son Ac'cent flavor enhancer, Las Palmas Mexican sauces and food
products and Joan of Arc dry bean products businesses.
On June 8, 2000, the Company entered into an agreement with Emeril's
Food of Love Productions, LLC ("Emeril") pursuant to which the Company and
Emeril agreed to create a signature line of seasonings, salad dressings, basting
sauce marinades and pepper sauces which will be marketed under the label
Emeril's Original.
On January 17, 2001, the Company completed the sale of its wholly owned
subsidiary, Burns & Ricker, Inc. ("Burns & Ricker"), to Nonni's Food Company,
Inc. ("Nonni's") (the "B&R Disposition") pursuant to a stock purchase agreement
of the same date under which the Company sold all of the issued and outstanding
capital stock of Burns & Ricker to Nonni's.
The Company is wholly-owned by B&G Foods Holdings Corp. ("Holdings"),
which in turn is owned by BRS and its affiliates, and members of the Company's
management and board of directors. See "Security Ownership of Certain Beneficial
Owners and Management." The Company maintains its corporate headquarters at 4
Gatehall Drive, Suite 110, Parsippany, New Jersey 07054.
II. Financial Information
The consolidated balance sheets at December 30, 2000 and January 1,
2000 and the consolidated statements of operations and cash flows for the years
ended December 30, 2000, January 1, 2000 and January 2, 1999 and related notes
thereto set forth the revenues from external customers, profit (or loss) and
total assets of the Company. See Item 8 -- "Financial Statements and
Supplementary Data."
III. Products and Markets
The Company manufactures, markets and distributes a diversified
portfolio of shelf-stable branded products with leading regional or national
market positions. Set forth below is a brief description of the Company's
products:
B&G Pickles & Peppers
The Company manufactures and distributes shelf-stable pickles,
relishes, peppers, olives and other related specialty items ("Pickles &
Peppers") primarily under the B&G and Bloch & Guggenheimer brand names. The
Company's Pickles & Peppers have strong sales in the New York area, and the
Company believes they are the leading brand of shelf-stable pickles sold in the
New York metropolitan area.
The Company positions its Pickles & Peppers as a quality, competitively
priced product. The Company currently offers 77 distinct pickle products and 41
distinct pepper products. Nationally, pepper products have enjoyed modest sales
growth over the past five years driven by changes in consumer trends and eating
styles.
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Trappey's Peppers and Sauces
Trappey's products fall into two major categories, shelf-stable peppers
and hot sauces. Trappey's, founded in 1898, was one of the first packers of
pepper hot sauce and the first to process peppers for pickling. Since its
inception, Trappey's has introduced many new products including Red Devil brand
hot sauce, Trappey's brand peppers, Torrido brand chili peppers and Italian
peperoncini peppers under the Dulcito brand.
Regina Vinegars and Cooking Wines
The Company manufactures and distributes vinegars and cooking wines
under the Regina label. The brand, which has been in existence since 1949, is
most commonly used in the preparation of salad dressings as well as in a variety
of recipe applications, including sauces, marinades and soups. Regina's premium
packaging, reputation and product quality have allowed it to maintain its number
one position nationally and command premium pricing while outselling
competitors.
Wright's Liquid Smoke
The Company manufactures and distributes Wright's, a leading brand of
liquid smoke. Wright's liquid smoke is an all-natural hickory seasoning that
reproduces the flavor and aroma of hickory pit smoking in meats, chicken and
fish. Wright's is manufactured by a patented process and has one primary
national competitor. Since acquiring Wright's, the Company has sought to
increase the brand's marketing by adding recipes and incentives on package and
display shippers. Wright's liquid smoke is also used by commercial processors to
smoke hams, bacon, sausage and barbeque sauces.
Brer Rabbit Molasses
The Company markets and distributes molasses under its Brer Rabbit
label, which enjoys significant national market share. Brer Rabbit molasses is
typically used in baking, barbeque sauces and as a breakfast syrup. The Brer
Rabbit product comes in mild and full varieties. The mild molasses is designed
for table use as well as cooking, while the full flavor molasses has a stronger
flavor and is used primarily for cooking.
Vermont Maid Syrup
Vermont Maid was a regional brand of maple-flavored syrup in the Boston
area market when it was acquired by the Company in 1997. The Company has
reformulated the brand into a thicker, richer formula and contemporized its look
by introducing more appealing packaging. Vermont Maid syrup is available in two
flavors, regular and lite. The Company is attempting to increase the national
distribution of Vermont Maid syrup.
Maple Grove Products
The Company manufactures, markets and distributes pure maple syrup
under the Maple Grove Farms of Vermont label ("Maple Grove"). The Company's pure
maple syrup is processed and bottled at the Company's facility in St. Johnsbury,
Vermont. The Company also
3
manufactures, markets and distributes a line of gourmet salad dressings,
marinades, fruit syrups, and confections and markets and distributes pancake
mixes under the Maple Grove label.
Hot Sauces
The Company manufactures, markets and distributes a variety of hot
sauces under the brand names Trappey's, Red Devil, Bull's and Louisiana Hot
Sauce. The Company processes its hot sauces in its plants in Louisiana. The
market for hot sauces is very competitive and the Company faces competition from
a number of national, regional and local competitors.
Polaner Fruit Spreads, Preserves and Wet Spices
The Company manufactures, markets and distributes the Polaner brand,
which is comprised of a broad array of fruit-based spreads as well as packed wet
spices such as bottled chopped garlic and basil. Polaner All-Fruit is the
leading national brand of fruit-juice sweetened fruit spread. The Polaner
products are manufactured by the Company at its facilities in Roseland, New
Jersey. The Company believes that the brand can be grown through focused
marketing efforts and new product introductions.
B&M Baked Beans
B&M is the original brand of brick-oven baked beans, having been
produced since 1927. The B&M line includes a variety of baked beans, brown bread
(a dense, traditional New England bread baked in the can), and also the Friends
brand of baked beans. To further increase the brand's image, B&M has been
re-staged with a re-styled label and a re-formulated recipe.
Underwood Meat Spreads
The Underwood brand markets meat spreads of several types, including
deviled ham, chicken and roast beef. Management believes that Underwood products
are unique because of their spreadable consistency, with no competitors offering
directly comparable products. Liver pate and sardines are also marketed under
the Underwood label. Granted in 1870, "Underwood Devil" is the oldest registered
food trademark in the U.S.
Ac'cent / Sa-son Flavor Enhancer
Ac'cent was introduced in 1947 as a flavor enhancer for meat
preparation. The product is an all-natural flavor enhancer primarily used on
beef, poultry, fish and vegetables. The brand is regionally strongest on the
East Coast and is marketed in the United States under the Ac'cent and the
Ac'cent/Sa-son labels.
Las Palmas Sauces and Food Products
Las Palmas, started in 1923, is a leading provider of enchilada sauce
in the authentic Mexican foods segment. Besides enchilada sauce, the Las Palmas
brand is used in other canned products, including jalapenos, green chilies and
crushed tomatillo.
4
Joan of Arc Bean Products
The Joan of Arc label is used in a full range of dry canned beans
packed in salt water. The best selling products under this label are kidney and
chili beans.
Emeril's Original Products
The Company manufactures, markets and distributes a line of seasonings,
salad dressings, basting sauce marinades and pepper sauces developed by
celebrity chef, Emeril Lagasse, under the label "Emeril's Original."
Burns & Ricker Baked Snack Foods
Prior to the B&R Disposition, the Company manufactured, marketed and
distributed bagel chips, snack mixes and other baked specialty products
primarily under the Burns & Ricker and New York Style brands.
IV. Co-Packing
Prior to the Polaner Acquisition in 1999, the Company had entered into
two co-packing contracts (the "Co-Packing Contracts") with IHF pursuant to which
the Company manufactured for IHF the Polaner lines of fruit spreads, preserves
and wet spices. In addition, the Company had entered into a third contract with
IHF (together with the Co-Packing Contracts, the "IHF Contracts") under which
the Company distributed the Polaner lines of fruit spreads, preserves and wet
spices in the New York metropolitan area. The IHF Contracts, in the aggregate,
accounted for $36.9 million, or 20.5%, of the Company's net sales for fiscal
1998. The IHF Contracts were terminated upon completion of the Polaner
Acquisition.
V. Distribution & Marketing
The Company uses several methods to distribute its products on a
regional and national basis. The Company distributes its products in the greater
New York metropolitan area primarily through its direct-store-organization
("DSO") sales and distribution system. The Company distributes its products
nationally through direct sales to supermarket chains, specialty food
distributors and direct sales to mass merchants and warehouse clubs.
The Company's DSO sales and distribution system supports an
organization of sales personnel who directly service individual grocery stores
with the Company's products. The DSO system relies on account managers to work
with buyers at the grocery chain's headquarters level, introducing new products
and organizing promotional support for existing product lines, as well as sales
personnel to operate at the store level by calling on store and grocery
department managers on a weekly basis, writing orders for products, positioning
new products and selling product displays to support promotional activity.
Products are delivered directly to stores by a fleet of trucks operated by
independent owners/operators.
Products sold nationally to supermarket chains and food service outlets
are generally distributed through brokers or distributors. National and regional
food brokers sell the entire portfolio of the Company's products. Broker sales
efforts are coordinated by B&G regional
5
sales managers, who supervise brokers' activities with buyers or distributors
and brokers' retail coverage of the products at the store level.
Marketing support for the products distributed through the DSO system
consists primarily of trade promotions aimed at gaining display activity to
produce impulse sales. Trade advertising and coupons supplement this activity. A
variety of in-store support vehicles such as hang tags, racks, signs and shipper
displays are used by the individual sales personnel to highlight the Company's
products. Marketing support on a national basis typically consists of scheduled
trade promotions, targeted coupons and cross-promotions with supporting
products. Advertising expenditures generally consist of purchasing magazine and
trade publication advertisements, which are supplemented with television
advertising for selected brands.
The Company did not export a significant amount of any of its products
during the 2000, 1999 or 1998 fiscal years.
VI. Competition
The food products business is highly competitive. The Company competes
with other producers of its products on the basis of price, convenience, quality
and product development expertise. The Company operates in markets that are
highly competitive, and the Company faces competition in each of its product
lines. The Company competes with a significant number of companies of varying
sizes, including divisions or subsidiaries of larger companies. Many of these
competitors have multiple product lines and may have substantially greater
financial and other resources.
During the 2000 fiscal year, the Company's most significant competitors
for its Pickles & Peppers were Vlasic and Mt. Olive branded products. In
addition, J.M. Smucker was and continues to be the main competitor of the
Company's fruit spread products marketed under the Polaner label. The Maple
Grove Farms of Vermont line of syrups and salad dressings compete directly with
the Camp brand in the pure maple syrup category but, along with the Company's
Vermont Maid syrup products, also have a number of competitors in the general
pancake syrup market, such as Aunt Jemima, Mrs. Buttersworth and Log Cabin. The
B&M Baked Bean products compete with Bush's products.
In addition, the Company's products compete not only against other
brands in their product category, but also against products in similar or
related product categories. For example, the Company's shelf-stable pickles
compete not only with other brands of shelf-stable pickles, but also those found
in the refrigerated sections of grocery stores.
VII. Customers and Seasonality
Other than IHF, none of the Company's customers accounted for more than
10% of its net sales in fiscal 1998 and no one customer accounted for more than
10% of net sales in fiscal 2000 or fiscal 1999. The IHF Contracts, in the
aggregate, accounted for $36.9 million, or 20.5%, of the Company's net sales for
fiscal 1998.
Sales of a number of the Company's products tend to be seasonal;
however, in the aggregate, the Company's sales are not heavily weighted to any
particular quarter.
6
The Company purchases most of the produce used to make its shelf-stable
pickles, relishes, peppers, olives and other related specialty items during the
months of July through October, and it purchases all of its maple syrup
requirements during the months of April through July. Consequently, its
liquidity needs are greatest during these periods.
VIII. Inflation
The Company does not believe that its operating results have been
materially affected by inflation during the preceding three years. There can be
no assurance, however, that the Company's operating results will not be affected
by inflation in the future.
IX. Production
The Company purchases agricultural products and other raw materials
from growers, commodity processors and other food companies. The Company's
principal raw materials include peppers, cucumbers, vegetables, maple syrup,
meat, flour, vegetable oils, fruit concentrate and strawberries and other
fruits. The Company purchases its agricultural raw materials in bulk, from a
variety of suppliers, on an as-needed basis or pursuant to short-term supply
contracts. Approximately 75% of B&G's pickle and pepper agricultural products
come from sources near its manufacturing facilities in order to minimize the
high transportation costs associated with transporting these products.
The Company currently has agreements for manufacture by third parties
of its Regina, Las Palmas, Underwood and Joan of Arc products. These co-packing
arrangements require the Company to pay a fixed price per unit of the co-packed
product, with prices subject to annual adjustments. The Company believes that
there are alternative sources of co-packing production readily available for its
products.
X. Trademarks and Patents
The Company owns numerous trademarks which are registered in the United
States and abroad, including without limitation in Canada, Mexico, the United
Kingdom, Puerto Rico, the Dominican Republic, Japan, South Korea, the
Philippines and Thailand. As of March 1, 2001, the Company's trademarks included
B&G, Bloch & Guggenheimer, Brer Rabbit, Regina, San-Del, Sandwich Toppers,
Vermont Maid, Wright's, Joan of Arc, B&M, Friend's, Las Palmas, Ac'cent and
Underwood.
The Company considers its trademarks to be of significant importance to
the Company's business. The Company is not aware of any circumstances that would
have a material adverse effect on the Company's ability to use its trademarks.
XI. Governmental Regulation
The operations of the Company are subject to extensive regulation by
the United States Food and Drug Administration ("FDA"), the United States
Department of Agriculture and other state and local authorities regarding the
processing, packaging, storage, distribution and labeling of the Company's
products. The Company's processing facilities and products are subject to
periodic inspection by federal, state and local authorities. The Company
believes that it is
7
currently in substantial compliance with all material governmental laws and
regulations and maintains all material permits and licenses relating to its
operations. Nevertheless, there can be no assurance that the Company is in full
compliance with all such laws and regulations or that it will be able to comply
with any future laws and regulations in a cost-effective manner. Failure by the
Company to comply with applicable laws and regulations could subject it to civil
remedies, including fines, injunctions, recalls or seizures, as well as
potential criminal sanctions, which could have a material adverse effect on the
business, financial condition or results of operation of the Company.
The Company also is subject to the Food, Drug and Cosmetic Act and the
regulations promulgated thereunder by the FDA. This comprehensive regulatory
program governs, among other things, the manufacturing, composition and
ingredients, labeling, packaging and safety of food. For example, the FDA
regulates manufacturing practices for foods through its current "good
manufacturing practices" regulations and specifies the recipes for certain
foods. In addition, the Nutrition Labeling and Education Act of 1990 prescribes
the format and content of certain information required to appear on the labels
of food products. The Company is subject to regulation by certain other
governmental agencies, including the U.S. Department of Agriculture. Management
believes that the Company's facilities and practices are sufficient to maintain
compliance with applicable governmental regulations, although there can be no
assurances in this regard.
XII. Environmental Matters
The Company has not made any material expenditures during the last
three fiscal years in order to comply with environmental laws or regulations.
Based on the Company's experience to date, the Company believes that the future
cost of compliance with existing environmental laws and regulations (and
liability for known environmental conditions) will not have a material adverse
effect on the Company's business, financial condition or results of operations,
except as noted below. However, the Company cannot predict what environmental or
health and safety legislation or regulations will be enacted in the future or
how existing or future laws or regulations will be enforced, administered or
interpreted, nor can it predict the amount of future expenditures that may be
required in order to comply with such environmental or health and safety laws or
regulations or to respond to such environmental claims.
On January 17, 2001, the Company became aware that fuel oil from its
underground storage tank at its Roseland, New Jersey facility had been released
into the ground and a brook adjacent to such property. The New Jersey Department
of Environmental Protection ("NJDEP") initially engaged an environmental
services firm to address the cleanup of the oil in the brook; and, with the
approval of the NJDEP, the Company retained such environmental services firm on
January 18, 2001 for the same purpose. In addition, the Company hired another
environmental services firm to address the on-site oil impact to subsurface
soils. Since January 17, 2001, the Company and its environmental services firms
have been working to clean up the oil and are cooperating with the NJDEP. Based
on fuel tank readings taken in the normal course of business on December 7, 2000
and December 29, 2000, fuel tank readings taken on January 17, 2001 in response
to the notification of the potential release and consultation with the retained
environmental services firms, management believes that the release primarily
occurred after
8
January 1, 2001. Accordingly, no costs relating to this matter are included in
the fiscal 2000 consolidated financial statements.
Management believes that substantial progress has been made toward the
cleanup of the oil. The Company will continue monitoring the fuel tank readings,
sampling sediment and surface water for evidence of any new leaks and related
cleanup and monitoring activities. The Company estimates the costs related to
its cleanup efforts will be approximately $800,000 to $1,000,000, although there
can be no assurances in this regard. Such costs related to the cleanup will be
recorded in the first quarter of fiscal 2001. The Company will reassess the
impact of this matter as more information becomes available and as developments
occur.
XIII. Employees
As of January 31, 2001, B&G's workforce consisted of 712 employees. Of
that total, 475 employees were engaged in manufacturing, 94 were engaged in
marketing and sales, 109 were engaged in distribution and 34 were engaged in
administration. Approximately 214 of the Company's 712 employees, as of January
31, 2001, were covered by a collective bargaining agreement. In general, the
Company considers its employee and union relations to be good and has not
experienced any work stoppages since the Company's formation.
XIV. Recent Developments
On January 17, 2001, the Company completed the B&R Disposition. Under
the stock purchase agreement entered into on January 17, 2001 by the Company,
Burns & Ricker and Nonni's, the Company sold all of the issued and outstanding
capital stock of Burns & Ricker for $26.0 million in cash. The gain on the sale,
net of transaction expenses, was approximately $3.2 million (subject to certain
adjustments) and will be included in the Company's first quarter 2001 results of
operations. The Company applied the net cash proceeds from the sale of Burns &
Ricker toward the partial prepayment of term loans, as required under the
Company's Senior Secured Credit Facility. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Debt."
ITEM 2. PROPERTIES
The Company's plants are generally located near major customer markets
and raw materials. Management believes that the Company's manufacturing plants
have sufficient capacity to accommodate B&G's planned growth. As of March 1,
2001, the Company operated the manufacturing and warehouse facilities described
in the table below.
9
Facility Location Description Approximate
Sq. Ft.
- --------------------------- ------------------------------- --------------------
Parsippany, NJ Headquarters 21,000
Hurlock, MD* Manufacturing/Warehouse 236,000
Portland, ME* Manufacturing/Warehouse 225,000
New Iberia, LA* Manufacturing/Warehouse 158,000
Roseland, NJ Manufacturing/Warehouse 124,000
St. Johnsbury, VT* Manufacturing/Warehouse 92,000
La Vergne, TN Distribution Center 200,000
Houston, TX Warehouse 100,000
Biddeford, ME Warehouse 97,000
Hurlock, MD* Warehouse 80,000
Hurlock, MD Warehouse 66,000
Hurlock, MD Warehouse 35,000
St. Evariste, Quebec* Storage Facility 50,000
Sharptown, MD* Storage Facility 3,000
Bentonville, AK Sales Office 750
- --------------------------
* Owned.
ITEM 3. LEGAL PROCEEDINGS
The Company, in the ordinary course of business, is involved in various
legal proceedings. The Company does not believe the outcome of these proceedings
will have a material adverse effect on the Company's consolidated financial
condition, results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During fiscal 2000, no matters were submitted to a vote of stockholders
through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable.
10
ITEM 6. SELECTED FINANCIAL DATA
Fiscal Year Ended
----------------------------------------------------------------------------------
Dec. 30, Jan. 1, Jan. 2, Jan. 3, Dec. 28,
2000 2000 1999 1998 1996
(Successor) (Successor) (Successor) (Successor) (Predecessor)
----------------------------------------------------------------------------------
(Dollars in thousands)
Statement of Operations
Data (1)(5):
Net sales........................ $ 351,416 $ 336,112 $ 179,780 $ 151,615 $ 129,307
Cost of goods sold............... 200,651 196,184 117,514 105,720 95,769
---------- ---------- ---------- ---------- ----------
Gross profit................. 150,765 139,928 62,266 45,895 33,538
Sales, marketing and distribution
expenses..................... 100,711 91,120 40,102 30,114 23,832
General and administrative expenses
12,957 13,802 5,725 4,688 2,941
Management fee................... 500 450 250 250 1,249
Special charge-severance......... 250 - - - -
---------- ---------- ---------- ---------- ----------
Operating income............. 36,347 34,556 16,189 10,843 5,516
Interest expense................. 36,073 29,874 13,908 9,578 4,649
---------- ---------- ---------- ---------- ----------
Income before income tax
....expense and extraordinary
item...................... 274 4,682 2,281 1,265 867
Income tax expense (2)........... 1,559 2,429 1,431 833 591
---------- ---------- ---------- ---------- ----------
(Loss) income before
extraordinary item........... (1,285) 2,253 850 432 276
Extraordinary item, net of income
tax benefit (3).............. -- -- -- (1,804) --
----------- ---------- ---------- ----------- ---------
Net (loss) income ........... $ (1,285) $ 2,253 $ 850 $ (1,372) $ 276
=========== ========== ========== =========== ==========
Balance Sheet Data (at period end)(1):
Total assets................. $ 457,016 $ 477,057 $ 211,873 $ 180,035 $ 103,412
Long-term debt, including
current portion........... 329,323 340,892 144,696 121,376 53,513
Total stockholder's equity... 56,788 58,073 20,820 18,628 12,500
Other Financial Data (1):
Adjusted EBITDA (4).......... $ 52,351 $ 49,704 $ 23,372 $ 16,263 $ 9,621
(1) The B&G and B&R Acquisition, the Nabisco Brands Acquisition, the Trappey's
Acquisition, the Maple Grove Acquisition, the Polaner Acquisition and the
Heritage Brands Acquisition were consummated on December 27, 1996, June 17,
1997, August 15, 1997, July 17, 1998, February 5, 1999 and March 15, 1999,
respectively, and were accounted for using the purchase method of
accounting. The selected financial data set forth above as of January 3,
1998, January 2, 1999, January 1, 2000 and December 30, 2000 (the
"Successor") is presented on a consolidated basis. The selected financial
data set forth above as of December 28, 1996 (the "Predecessor") is
presented on a combined basis because the Predecessor companies (the
companies in existence before the B&G and B&R Acquisition) were under
common control. As a result of these acquisitions, the selected financial
data subsequent to the acquisitions is presented on a different cost basis
and uses certain different accounting policies than the selected financial
data prior to the acquisitions and, therefore, is not comparable. Further,
related party transactions affect the comparability of the selected
financial data.
(2) The Predecessor was part of the consolidated federal income tax returns of
its parent from August 1993 through December 27, 1996. Income tax expense
has been computed as if the Company filed a separate federal income tax
return for the year ended December 28, 1996.
(3) Reflects the write-off of deferred debt issuance costs in connection with
the debt repayments and amendments relating to the Company's prior credit
facility.
(4) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and extraordinary item and is presented because it is commonly
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance and to determine a company's ability to
service and incur debt. EBITDA should not be considered in isolation from
or as a substitute for net income, cash flows from operating activities or
other consolidated income or cash flow statement data prepared in
accordance with generally accepted accounting principles or as a measure of
profitability or liquidity. Adjusted EBITDA in fiscal 2000 was increased
for a one time charge of $0.3 million related to severance. There were no
adjustments to EBITDA in fiscal 1996 through fiscal 1999.
(5) The selected financial data set forth above as of all periods ending on or
prior to January 1, 2000 has been reclassified to reflect the adoption in
the fourth quarter of fiscal 2000 by the Company of the Financial
Accounting Standards Board's Emerging Issues Task Force ("EITF") Issue No.
00-10, "Accounting for Shipping and Handling Fees and Costs." The EITF
requires the Company to report all amounts billed to a customer in a sale
transaction as revenue, including those amounts related to shipping and
handling. The Company has historically included such amounts in sales as
required by the EITF. Prior to such adoption, however, shipping and
handling costs were included in sales, marketing and distribution expenses.
The Company has increased cost of goods sold and decreased sales, marketing
and distribution expenses by $16.1 million, $16.1 million, $9.3 million,
$6.8 million and $4.6 million in fiscal years 2000, 1999, 1998, 1997 and
1996, respectively, to reclassify such costs to cost of goods sold.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The B&G and B&R Acquisition, the Nabisco Brands Acquisition, the
Trappey's Acquisition, the Maple Grove Acquisition, the Polaner Acquisition and
the Heritage Brands Acquisition were consummated on December 27, 1996, June 17,
1997, August 15, 1997, July 17, 1998, February 5, 1999 and March 15, 1999,
respectively. The above acquisitions have been accounted for using the purchase
method of accounting and, accordingly, the results of operations of the acquired
companies are included in the Company's operating results from the dates of
acquisition. Operating results for the years ended December 30, 2000, January 1,
2000 and January 2, 1999 are presented on a consolidated basis. Such
acquisitions and the application of the purchase method of accounting affect
comparability between periods.
I. Year Ended December 30, 2000 Compared to Year Ended January 1, 2000
A. Net Sales
Net sales increased $15.3 million or 4.6% to $351.4 million for the 52
week period ended December 30, 2000 (the "2000 Period") from $336.1 million for
the 52 week period ended January 1, 2000 (the "1999 Period"). The net sales
increase included $19.5 million in the aggregate of incremental sales of
products acquired in the Polaner Acquisition and the Heritage Brands Acquisition
during the first quarter of fiscal 2000. Such brands were not owned in the
comparable first quarter of fiscal 1999. During the remaining nine months of the
year, sales for the Ac'cent / Sa-son branded flavor enhancer increased $1.3
million or 8.5%. Sales of Maple
12
Grove products and Wright's liquid smoke hickory flavoring increased $2.2
million and $0.5 million, or 5.1% and 9.8%, respectively, from the 1999 Period,
largely reflecting a higher unit volume. The Company's new line of Emeril's
Original branded products produced $4.0 million in sales in the 2000 period.
These increases were offset by a decrease in sales of Polaner brands, Las Palmas
brands, Underwood brands, B&M Baked Beans and Burns & Ricker baked snack foods
by $4.8 million, $2.6 million, $1.8 million, $1.6 million and $1.0 million, or
12.1%, 12.1%, 8.3%, 4.6% and 3.5%, respectively, largely reflecting lower unit
volume. Sales of the Company's other brands collectively decreased $0.4 million
in the 2000 Period.
B. Gross Profit
Gross profit increased $10.8 million or 7.7% to $150.8 million for the
2000 Period from $139.9 million in the 1999 Period. Gross profit expressed as a
percentage of net sales increased to 42.9% in the 2000 Period from 41.6% in the
1999 Period. This increase was due to a favorable shift in the sales mix to
higher gross profit margins from sales of the Heritage Portfolio of Brands
products, along with reduced labor and overhead costs at the Burns & Ricker
baked snack foods manufacturing facility and reduced maple syrup costs.
C. Sales, Marketing and Distribution Expenses
Sales, marketing and distribution expenses increased $9.6 million or
10.5% to $100.7 million for the 2000 Period from $91.1 million for the 1999
Period. Such expenses expressed as a percentage of net sales increased to 28.7%
in the 2000 Period from 27.1% in the 1999 Period primarily as a result of the
Polaner Acquisition and the Heritage Brands Acquisition. Additional expenses
relating to these acquisitions accounted for $7.6 million of the increase. Trade
promotion spending and slotting expenses increased $4.9 million or 11.2%. The
increase in promotional spending and slotting expenses includes increases in
spending on the Heritage Portfolio of Brands and Vermont Maid brand of $5.0
million and $0.9 million, respectively, which was partially offset by a decrease
in promotional spending of $1.1 million on B&G branded pickles and peppers.
Increases in promotional spending and slotting for the Company's other brands,
taken as a whole, accounted for the remaining $0.1 million or 0.1%. Overall,
consumer spending expenses decreased $1.5 million or 14.0%. The decrease in
consumer spending expenses in the aggregate includes an increase in consumer
spending on B&G branded pickles of $0.7 million, which was more than offset by
decreases in consumer spending on Las Palmas brands, Polaner brands and Regina
brands of $0.8 million, $0.6 million and $0.5 million, respectively. Increases
in consumer spending for the Company's other brands, taken as a whole, accounted
for the remaining $0.3 million. Brokerage expenses and commissions decreased
$0.7 million or 9.5%, reflecting a reduced ongoing brokerage percentage.
Distribution expenses decreased $0.7 million or 16.0%.
D. General and Administrative Expenses
General and administrative expenses (including amortization of
intangibles and management fees) decreased $0.8 million or 5.6% to $13.5 million
in the 2000 Period from $14.3 million in the 1999 Period, primarily due to
decreased operating expenses of $1.1 million and increased amortization of
intangibles of $0.3 million associated with the Polaner Acquisition and the
Heritage Brands Acquisition.
13
E. Operating Income
As a result of the foregoing, operating income increased $1.8 million
or 5.2% to $36.3 million in the 2000 Period from $34.6 million in the 1999
Period. Operating income expressed as a percentage of net sales for the 2000
Period is 10.3%, which equaled the 10.3% obtained in the 1999 Period.
F. Interest Expense
Interest expense increased $6.2 million to $36.1 million in the 2000
Period from $29.9 million in the 1999 Period as a result of increased interest
rates during the 2000 Period.
G. Income Tax Expense
Income tax expense decreased $0.9 million to $1.6 million in the 2000
Period from $2.4 million in the 1999 Period. The Company's effective tax rate
for the 2000 Period was 569.0% as compared with 51.9% for the 1999 Period. The
increase in the effective tax rate reflects the effect of the amortization of
nondeductible goodwill and other intangibles when applied to income before
income tax expense of $0.3 million in the 2000 Period as compared to $4.7
million in the 1999 Period.
Because of the highly leveraged status of the Company, earnings before
interest, taxes, depreciation and amortization ("EBITDA") is an important
performance measure used by the Company and its stockholders. The Company
believes that EBITDA provides additional information for determining its ability
to meet future debt service requirements. However, EBITDA is not indicative of
operating income or cash flow from operations as determined under generally
accepted accounting principles. The Company's EBITDA from continuing operations
for the 2000 Period and the 1999 Period is calculated as follows (dollars in
millions):
2000 Period 1999 Period
----------- -----------
Net (loss) income $ (1.3) $ 2.3
Depreciation and amortization 15.7 15.1
Income tax expense 1.6 2.4
Interest expense 36.1 29.9
------ ------
EBITDA 52.1 49.7
Special charge-severance 0.3 0.0
------ ------
Adjusted EBITDA $ 52.4 $ 49.7
====== ======
14
II. Year Ended January 1, 2000 Compared to Year Ended January 2, 1999
A. Net Sales
Net sales increased $156.3 million or 87.0% to $336.1 million for the
52 week period ended January 1, 2000 (the "1999 Period") from $179.8 million for
the 52 week period ended January 2, 1999 (the "1998 Period"). The net sales
increase included $152.9 million in the aggregate of incremental sales of
products acquired in the Maple Grove Acquisition, the Polaner Acquisition and
the Heritage Brands Acquisition. Sales of Regina branded products, B&G branded
Pickles & Peppers, Burns & Ricker baked snack foods and Trappey's products
increased $2.3 million, $1.2 million, $0.7 million and $0.6 million, or 17.9%,
3.7%, 2.8% and 3.7%, respectively, from the 1998 Period, largely reflecting a
higher unit volume of retail products sales. These sales increases were
partially offset by a decrease in sales of $1.5 million or 6.9% of B&G food
service sales due to a shortfall in sales to a national sandwich chain.
Sales of the Company's other brands collectively increased $0.1 million or 1.2%.
B. Gross Profit
Gross profit increased $77.7 million or 124.7% to $139.9 million for
the 1999 Period from $62.3 million in the 1998 Period. Gross profit expressed as
a percentage of net sales increased to 41.6% in the 1999 Period from 34.6% in
the 1998 Period. This increase was due to a favorable shift in the sales mix to
higher gross profit margins from sales of the Company's Polaner and Heritage
Portfolio of Brands products, along with reduced labor and overhead costs at the
Burns & Ricker baked snack foods manufacturing facility.
C. Sales, Marketing and Distribution Expenses
Sales, marketing and distribution expenses increased $51.0 million or
127.2% to $91.1 million for the 1999 Period from $40.1 million for the 1998
Period. Such expenses expressed as a percentage of net sales increased to 27.1%
in the 1999 Period from 22.3% in the 1998 Period primarily as a result of the
Maple Grove Acquisition, the Polaner Acquisition and the Heritage Brands
Acquisition. Additional expenses relating to these acquisitions accounted for
$47.1 million of the increase. Trade promotion spending for B&G branded Pickles
& Peppers, Burns & Ricker baked snack foods and Regina branded products
increased by $3.8 million in the aggregate. Increases in promotional spending
for the Company's other brands, taken as a whole, accounted for the remaining
$0.5 million. All other sales and marketing expenses increased $0.3 million,
while overall distribution expenses decreased by $0.7 million.
D. General and Administrative Expenses
General and administrative expenses (including amortization of
intangibles and management fees) increased $8.3 million or 138.5% to $14.3
million in the 1999 Period from $6.0 million in the 1998 Period. Such increase
was primarily due to increased operating expenses of $2.3 million and
amortization of intangibles of $6.0 million associated with the Maple Grove
Acquisition, the Polaner Acquisition and the Heritage Brands Acquisition.
15
E. Operating Income
As a result of the foregoing, operating income increased $18.4 million
or 113.5% to $34.6 million in the 1999 Period from $16.2 million in the 1998
Period. Operating income expressed as a percentage of net sales increased to
10.3% in the 1999 Period from 9.0% in the 1998 Period.
F. Interest Expense
Interest expense increased $16.0 million to $29.9 million in the 1999
Period from $13.9 million in the 1998 Period as a result of the additional debt
incurred by the Company to fund the Maple Grove Acquisition, the Polaner
Acquisition and the Heritage Brands Acquisition.
G. Income Tax Expense
Income tax expense increased $1.0 million to $2.4 million in the 1999
Period from $1.4 million in the 1998 Period. The Company's effective tax rate
for the 1999 Period was 51.9% as compared with 62.7% for the 1998 Period.
Because of the highly leveraged status of the Company, EBITDA is an
important performance measure used by the Company and its stockholders. The
Company believes that EBITDA provides additional information for determining its
ability to meet future debt service requirements. However, EBITDA is not
indicative of operating income or cash flows from operations as determined under
generally accepted accounting principles. The Company's EBITDA is calculated as
follows (dollars in millions):
1999 Period 1998 Period
----------- -----------
Net income $ 2.3 $ 0.9
Depreciation and amortization 15.1 7.2
Income tax expense 2.4 1.4
Interest expense 29.9 13.9
------ ------
EBITDA $ 49.7 $ 23.4
====== ======
III. Liquidity and Capital Resources
Cash Flows
Cash provided by operating activities increased $11.0 million or 83.0%
to $24.2 million in the 2000 Period from $13.2 million in the 1999 Period. This
increase was primarily due to decreases in accounts receivable, inventories and
accrued expenses, which were partially offset by an increase in trade accounts
payable. Working capital at December 30, 2000 was $69.0 million, an increase of
$9.6 million over working capital at January 1, 2000 of $59.4 million. Cash
provided by operating activities decreased $0.4 million or 2.8% to $13.2 million
in the
16
1999 Period from $13.6 million in the 1998 Period. This decrease was primarily
due to increases in accounts receivable and inventories, which were partially
offset by increases in net income, trade accounts payable and accrued expenses.
Working capital at January 1, 2000 was $59.4 million, an increase of $28.8
million over working capital at January 2, 1999 of $30.6 million.
Net cash used in investing activities for the 2000 Period was $5.7
million as compared to $230.2 million for the 1999 Period. Investment
expenditures during the 1999 Period included $30.6 million for the Polaner
Acquisition and $194.1 million for the Heritage Brands Acquisition. Capital
expenditures during the 2000 Period, which included purchases of manufacturing
and computer equipment, was $5.9 million as compared to $5.5 million for the
1999 Period for similar such expenditures. Net cash used in investing activities
for the 1999 Period was $230.2 million as compared to $37.6 million for the 1998
Period. Investment expenditures during the 1998 Period consisted primarily of
$34.1 million for the Maple Grove Acquisition. Capital expenditures during the
1998 Period of $3.8 million included purchases of manufacturing and computer
equipment.
Net cash used in financing activities for the 2000 Period was $12.8
million as compared to net cash provided by financing activities of $224.1
million for the 1999 Period. The net cash used by financing activities for the
2000 Period included payments of $11.3 million due on the Term Loan A (as
defined below) and $1.3 million of deferred debt issuance costs incurred to
amend the Senior Secured Credit Facility (as defined below), along with capital
lease payments of $0.3 million. Net cash provided by financing activities for
the 1999 Period was $224.1 million as compared to $23.9 million for the 1998
Period. The net cash provided by financing activities for the 1999 Period was
obtained primarily from proceeds from the issuance of long-term debt and equity
to finance the Polaner Acquisition and the Heritage Brands Acquisition.
Acquisitions
The Company's liquidity and capital resources have been significantly
impacted by acquisitions and may be impacted in the foreseeable future by
additional acquisitions. The Company has historically financed acquisitions with
borrowings and cash flow from operations. The Company's future interest expense
has increased significantly as a result of additional indebtedness the Company
has incurred as a result of its recent acquisitions, and will increase with any
additional indebtedness the Company may incur to finance potential future
acquisitions, if any. To the extent future acquisitions, if any, are financed by
additional indebtedness, the resulting increase in debt and interest expense
could have a negative impact on liquidity.
Special Charge-Severance
During the second quarter of 2000, the Company recorded a severance
charge of $0.3 million. As part of the severance arrangements, 13 employees were
terminated. At December 30, 2000, all amounts related to such severance charges
were paid.
Debt
The Company has outstanding $120 million of 9.625% Senior Subordinated
Notes (the "Notes") due August 1, 2007 with interest payable semiannually on
February 1 and August 1 of each year. The Notes contain certain transfer
restrictions.
17
The Company is a party to a $280 million Senior Secured Credit Facility
("Senior Secured Credit Facility") comprised of a $60 million five-year
revolving credit facility ("Revolving Credit Facility"), a $70 million five-year
Term Loan A ("Term Loan A") and a $150 million seven-year Term Loan B ("Term
Loan B" and together with Term Loan A, the "Term Loan Facilities"). Interest is
determined based on several alternative rates as stipulated in the Senior
Secured Credit Facility, including the base lending rate per annum plus an
applicable margin, or LIBOR plus an applicable margin. The Senior Secured Credit
Facility is secured by substantially all of the Company's assets. The Senior
Secured Credit Facility provides for mandatory prepayment requirements based on
asset dispositions and issuances of securities, as defined. The Senior Secured
Credit Facility contains covenants that will restrict, among other things, the
ability of the Company to incur additional indebtedness, pay dividends and
create certain liens. The Senior Secured Credit Facility also contains certain
financial covenants, which, among other things, specify maximum capital
expenditure limits, a minimum fixed charge coverage ratio, a minimum total
interest coverage ratio and a maximum indebtedness to EBITDA ratio, each ratio
as defined. Proceeds of the Senior Secured Credit Facility are restricted to
funding the Company's working capital requirements, capital expenditures and
acquisitions of companies in the same line of business as the Company, subject
to certain criteria. The Senior Secured Credit Facility restricted expenditures
on acquisitions to $30 million in fiscal 2000 and will limit such expenditures
on acquisitions to $40 million per year thereafter. There were no borrowings
outstanding under the revolving credit facility at March 1, 2001.
At April 1, 2000, the Company was not in compliance with certain
financial covenants. On May 12, 2000, the Company and the lenders entered into
an amendment to the Senior Secured Credit Facility effective as of April 1, 2000
which, among other things, amended such covenants such that the Company
currently is and, as of April 1, 2000, was in compliance with such covenants as
amended.
IV. Future Capital Needs
The Company is highly leveraged. On December 30, 2000, the Company's
total long-term debt (including current installments) and stockholder's equity
was $329.3 million and $56.8 million, respectively.
The Company's primary sources of capital are cash flow from operations
and borrowings under the Revolving Credit Facility. The Company's primary
capital requirements include debt service, capital expenditures, working capital
needs and financing for acquisitions. The Company's ability to generate
sufficient cash to fund its operations depends generally on the results of its
operations and the availability of financing. Management believes that cash flow
from operations in conjunction with the available borrowing capacity under the
Revolving Credit Facility, net of outstanding letters of credit, of
approximately $58.7 million at December 30, 2000, and possible future debt
financing will be sufficient for the foreseeable future to meet debt service
requirements, make future acquisitions, if any, and fund capital expenditures.
However, there can be no assurance in this regard or that the terms available
for any future financing, if required, would be favorable to the Company.
18
V. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 standardizes the
accounting for derivative instruments by requiring that an entity recognize
derivatives as assets or liabilities in the statement of financial position and
measure them at fair value. In June 1999, the Financial Accounting Standards
Board issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Dates of FASB Statement No. 133 and
Amendment of FASB Statement No. 133." SFAS No. 137 defers the effective date of
SFAS No. 133, requiring implementation of the provisions of SFAS No. 133
effective January 1, 2001. SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," was issued in June 2000 amending
certain accounting and reporting standards of SFAS No. 133. Management believes
that the adoption of such revised accounting and reporting standards will not
have a material impact on the Company's consolidated financial statements.
At a recent FASB Emerging Issues Task Force ("EITF") meeting, a
consensus was reached with respect to the issue of "Accounting for Certain Sales
Incentives," including point of sale coupons, rebates and free merchandise. The
consensus included a conclusion that the value of such sales incentives that
result in a reduction of the price paid by the customer should be netted against
revenue and not classified as a sales or marketing expense. The Company
currently records reductions in price pursuant to coupons as sales, marketing
and distribution expenses. Upon the implementation of the EITF consensus in the
second quarter of fiscal 2001, the Company will reclassify current and prior
period coupon expense as a reduction of net sales. Coupon expense was $2.5
million, $2.8 million and $0.6 million in fiscal 2000, 1999 and 1998,
respectively. The implementation of the EITF consensus will affect
classification in the consolidated statement of operations, but will not have
any effect on the Company's net income (loss). The Company includes free
merchandise in cost of goods sold as required by the new EITF consensus.
In the first quarter of fiscal 2000, the Company adopted the provisions
of the FASB's EITF Issue No. 00-10, "Accounting For Shipping and Handling Fees
and Costs," which requires the Company to report all amounts billed to a
customer in a sale transaction as revenue, including those amounts related to
shipping and handling. The Company has historically included such amounts in
sales as required by the EITF. Prior to such adoption, however, shipping and
handling costs were included in sales, marketing and distribution expenses. In
accordance with the provisions of such EITF Issue No. 00-10, shipping and
handling costs have been reclassified to cost of goods sold for all periods
presented.
VI. Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding future events or conditions, including statements
regarding industry prospects and the Company's expected financial position,
business and financing plans, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been
19
correct. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in this report and include the
Company's substantial leverage, the risks associated with the expansion of the
Company's business, the possible inability of the Company to integrate the
businesses it has acquired, lower sales volumes for the Company's products and
higher costs of food product raw materials, as well as factors that affect the
food industry generally. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligations to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of operations, the Company is exposed to market
risks arising from adverse changes in interest rates. Market risk is defined for
these purposes as the potential change in the fair value resulting from an
adverse movement in interest rates. As of December 30, 2000, the Company's only
variable rate borrowings were under the Term Loan Facilities which bear interest
at several alternative variable rates as stipulated in the Senior Secured Credit
Facility. A 100 basis point increase in interest rates, applied to the Company's
borrowings at March 1, 2001, would result in an annual increase in interest
expense and a corresponding reduction in cash-flow of approximately $1.8
million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets at December 30, 2000 and January 1,
2000 and the consolidated statements of operations and cash flows for the years
ended December 30, 2000, January 1, 2000 and January 2, 1999 and related notes
thereto are set forth below.
20
Independent Auditors' Report
The Board of Directors and Stockholder
B&G Foods, Inc.:
We have audited the accompanying consolidated balance sheets of B&G
Foods, Inc. and subsidiaries as of December 30, 2000 and January 1, 2000, and
the related consolidated statements of operations and cash flows for the years
ended December 30, 2000, January 1, 2000 and January 2, 1999. In connection with
our audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
B&G Foods, Inc. and subsidiaries as of December 30, 2000 and January 1, 2000,
and the results of their operations and their cash flows for the years ended
December 30, 2000, January 1, 2000 and January 2, 1999, in conformity with
accounting principles generally accepted in the United States of America. Also
in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Short Hills, New Jersey
February 23, 2001
21
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Assets Dec. 30, 2000 Jan. 1, 2000
------------- ------------
Current assets:
Cash and cash equivalents $ 13,433 7,745
Trade accounts receivable, less allowance for doubtful
accounts of $465 and $517 in 2000 and 1999, respectively 24,171 25,852
Inventories 63,626 71,913
Prepaid expenses 2,114 2,297
Net assets held for sale 20,685 -
Deferred income taxes 1,279 5,063
------------ -------
Total current assets 125,308 112,870
Property, plant and equipment, net 38,275 41,615
Intangible assets, net 283,666 312,143
Other assets 9,767 10,429
------------ -------
Total assets $ 457,016 477,057
============ =======
Liabilities and Stockholder's Equity Current liabilities:
Current installments of long-term debt 16,009 11,552
Trade accounts payable 24,781 23,640
Accrued expenses 15,267 18,057
Due to related party 208 208
------------ -------
Total current liabilities 56,265 53,457
Long-term debt 313,314 329,340
Other liabilities 149 51
Deferred income taxes 30,500 36,136
------------ -------
Total liabilities 400,228 418,984
------------ -------
Stockholder's equity:
Common stock, $.01 par value per share. Authorized
1,000 shares; issued and outstanding 1 share in
2000 and 1999 - -
Additional paid-in-capital 56,342 56,342
Retained earnings 446 1,731
------------ -------
Total stockholder's equity 56,788 58,073
Commitments and contingencies (notes 6, 12, 13 and 15)
------------ -------
Total liabilities and stockholder's equity $ 457,016 477,057
============ =======
See accompanying notes to consolidated financial statements.
22
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands)
Year Year Year
ended ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
------- ------ -------
Net sales $ 351,416 336,112 179,780
Cost of goods sold 200,651 196,184 117,514
---------- -------- --------
Gross profit 150,765 139,928 62,266
Sales, marketing and distribution expenses 100,711 91,120 40,102
General and administrative expenses 12,957 13,802 5,725
Management fees - related party 500 450 250
Special charge-severance 250 - -
---------- -------- --------
Operating income 36,347 34,556 16,189
Other expense:
Interest expense - related party - 15 74
Interest expense 36,073 29,859 13,834
---------- -------- --------
Income before income tax expense 274 4,682 2,281
Income tax expense 1,559 2,429 1,431
---------- -------- --------
Net (loss) income $ (1,285) 2,253 850
========== ======== ========
See accompanying notes to consolidated financial statements.
23
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Year Year
ended ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
------- ------ -------
Cash flows from operating activities:
Net (loss) income $ (1,285) 2,253 850
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 15,754 15,148 7,183
Amortization of deferred debt issuance costs 1,843 1,477 589
Deferred income tax expense (benefit) 2,150 (268) 1,069
Gain from sale of property, plant and equipment (93) - -
Provision for doubtful accounts 128 596 43
Changes in assets and liabilities, net of effects from
businesses acquired and net assets held for sale:
Trade accounts receivable 1,553 (10,792) (587)
Inventories 5,722 (5,026) 5,491
Prepaid expenses and other current assets (13) (651) 1,014
Other assets (9) (53) 38
Trade accounts payable 1,141 6,132 1,068
Accrued expenses (2,790) 4,851 (3,664)
Due to related party - (497) 508
Other liabilities 98 51 -
---------- ---------- -------
Net cash provided by operating activities 24,199 13,221 13,602
---------- ---------- -------
Cash flows from investing activities:
Paid for Successor Acquisitions - (224,700) (34,137)
Capital expenditures (5,891) (5,500) (3,780)
Proceeds from sales of property, plant and equipment 211 - 351
----------- ---------- --------
Net cash used in investing activities (5,680) (230,200) (37,566)
----------- ---------- --------
(continued)
24
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Dollars in thousands)
Year Year Year
ended Ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
-------- ------- -------
Cash flows from financing activities:
Payments of long-term debt (11,569) (24,264) (318)
Proceeds from issuance of long-term debt - 220,000 22,975
Proceeds from issuance of equity and capital
contributions - 35,000 1,345
Payments of debt issuance costs (1,262) (6,611) (127)
---------- ----------- ----------
Net cash (used in) provided by financing
activities (12,831) 224,125 23,872
---------- ----------- ----------
Increase (decrease) in cash and cash equivalents 5,688 7,146 (92)
Cash and cash equivalents at beginning of period 7,745 599 691
---------- ----------- ----------
Cash and cash equivalents at end of period $ 13,433 7,745 599
========== =========== ==========
Supplemental disclosure of cash flow information -
cash paid for:
Interest $ 34,104 26,093 13,290
========== =========== ==========
Income taxes $ 652 2,179 146
========== =========== ==========
See accompanying notes to consolidated financial statements.
25
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 30, 2000 and January 1, 2000
(Dollars in thousands)
(1) Business Acquisitions and Nature of Operations
Organization and Acquisition
B&G Foods, Inc. was incorporated on November 13, 1996 to acquire (the "B&G and
B&R Acquisition") BGH Holdings, Inc., the holding company of Bloch &
Guggenheimer, Inc. and related companies, and BRH Holdings, Inc., the holding
company of Burns & Ricker, Inc., subsidiaries of Specialty Foods Corporation
("SFC"). B&G Foods, Inc. and its subsidiaries subsequent to the B&G and B&R
Acquisition (which was consummated on December 27, 1996) are hereinafter
referred to as the "Company". On December 27, 1996, the Company issued one share
of common stock to, and became a wholly-owned subsidiary of, B&G Foods Holdings
Corp. ("Holdings"), which in turn is majority owned by Bruckmann, Rosser,
Sherrill and Co., L.P. ("BRS"), a private equity investment firm, and minority
owned by management and certain other investors.
Nature of Operations
The Company operates in one industry segment, the manufacturing, marketing and
distribution of branded, shelf-stable food products. The Company's products
include pickles, peppers, jams and jellies, canned meats and beans, spices,
syrups, hot sauces, maple syrup, salad dressings and other specialty food
products which are sold to retailers and food service establishments. The
Company distributes these products to retailers in the greater New York
metropolitan area through a direct-store-organization sales and distribution
system and elsewhere in the United States through a nationwide network of
independent brokers and distributors. Sales of a number of the Company's
products tend to be seasonal; however, in the aggregate, the Company's sales are
not heavily weighted to any particular quarter.
Special Charge-Severance
During the second quarter of 2000, the Company recorded a severance charge of
$0.3 million. As part of the severance arrangements, 13 employees were
terminated. At December 30, 2000, all amounts related to such severance charges
were paid.
Restructuring
As part of the 1996 B&G and B&R Acquisition, management authorized and committed
to a plan to undertake certain restructuring moves, principally involving the
consolidation of several warehouse and production facilities resulting in
restructuring accruals at December 28, 1996 of
26
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
$1,536 as part of the allocation of the purchase price. The restructuring
consisted primarily of approximately $952 of estimated lease and other tenancy
costs through 1998, $228 in severance and termination benefits for approximately
100 warehouse and production employees, and the remaining portion relating to
charges resulting from changes in the production process as part of the
consolidation, which was completed in June 1997. As of January 3, 1998, the
restructuring reserve balance was reduced to $656 as a result of cash
expenditures of $880 relating primarily to tenancy costs, severance payments,
and charges resulting from changes in the production process, which was
completed in June 1997. In fiscal 1998, the Company concluded its restructuring
plan and, as of January 2, 1999, the restructuring reserve balance was reduced
to $0 as a result of cash expenditures relating primarily to tenancy costs.
Acquisitions
On July 2, 1998, BGH Holdings, Inc. (the "Buyer"), a subsidiary of the Company,
entered into a Stock Purchase Agreement by and among the Buyer, Maple Grove
Farms of Vermont, Inc., Up Country Naturals of Vermont, Inc. and Les Produits
Alimentaires Jacques et Fils, Inc. (collectively, "Maple Grove"), and William F.
Callahan and Ruth M. Callahan (collectively, the "Sellers"), pursuant to which
the Buyer would acquire all of the issued and outstanding capital stock of Maple
Grove (the "Maple Grove Acquisition") for aggregate consideration of $34,137,
consisting of $14,170 in cash, 1,000 shares of common stock of Holdings having
an aggregate value of $10, and 990 shares of the 13% Series A Cumulative
Preferred Stock of Holdings, having an initial aggregate liquidation preference
of $990, plus the assumption of $17,325 in debt which was paid at closing and
transaction costs of $1,265. The closing under the Stock Purchase Agreement
occurred on July 17, 1998. Financing for this acquisition and certain related
transaction fees and expenses was provided by borrowings from the Company's
amended and restated senior secured credit facility.
On February 5, 1999, the Company acquired certain assets of the Polaner and
related brands (collectively, "Polaner") from International Home Foods, Inc.
("IHF") for approximately $30,574, including transaction costs (the "Polaner
Acquisition"). Financing for the Polaner Acquisition and certain related
transaction fees and expenses was provided by borrowings from the Company's then
$50,000 senior secured credit facility.
On March 15, 1999, through a subsidiary, the Company acquired the assets of The
Heritage Portfolio of Brands ("Heritage") from The Pillsbury Company, Indivined
B.V. and IC Acquisition Corp. for approximately $194,126, including transaction
costs (the "Heritage Brands Acquisition"). In connection with this transaction,
the Company entered into a $280,000 senior secured credit facility (the "Senior
Secured Credit Facility"). The borrowings under the Senior Secured Credit
Facility, together with an additional $35,000 of equity from BRS, were used to
fund the Heritage Brands Acquisition and refinance borrowings under the
Company's then existing $50,000 senior secured credit facility.
27
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
The acquisitions described above have been accounted for using the purchase
method and, accordingly, the assets acquired, liabilities assumed, and results
of operations are included in the consolidated financial statements from the
respective date of the acquisitions. The excess of the purchase price over the
fair value of identifiable net assets acquired, representing goodwill, is
included in intangible assets. Goodwill and trademarks resulting from the above
acquisitions are being amortized over their estimated useful lives on a
straight-line basis of 40 and 31-32 years, respectively.
The costs of the Polaner Acquisition and the Heritage Brands Acquisition as of
January 1, 2000 have been allocated to tangible and intangible assets as
follows:
Jan. 1,
2000
-------------
Property, plant and equipment $ 15,100
Intangible assets - trademarks 128,600
Intangible assets - goodwill 72,318
Other assets, principally net current assets 25,152
Deferred income tax liabilities, net (16,470)
-------------
$ 224,700
=============
Pro Forma Summary of Operations
The following unaudited pro forma summary of operations for the fiscal year
ended January 1, 2000 presents the results of operations of the Company as if
the Polaner Acquisition and Heritage Brands Acquisition had occurred as of the
beginning of such fiscal year. In addition to including the results of
operations of such acquisitions, the unaudited pro forma information gives
effect primarily to interest on additional borrowings and changes in
depreciation and amortization of intangible assets.
Year
ended
Jan. 1,
2000
-------------
Net sales $ 362,101
-------------
Income before extraordinary item $ 4,664
=============
The unaudited pro forma information presented above does not purport to be
indicative of the results that actually would have been attained if such
acquisitions, and related financing
28
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
transactions had occurred at the beginning of the year presented and is not
intended to be a projection of future results.
(2) Summary of Significant Accounting Policies
(a) Fiscal Year and Basis of Presentation
The Company utilizes a 52 week fiscal year ending on the Saturday
closest to December 31.
The financial statements are presented on a consolidated basis. All
significant intercompany balances and transactions have been
eliminated.
(b) Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, all highly
liquid debt instruments with original maturities of three months or
less are considered to be cash and cash equivalents.
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out and average cost methods.
(d) Property, Plant and Equipment
Property, plant, and equipment are stated at cost. Plant and equipment
under capital leases are stated at the present value of minimum lease
payments. Depreciation on plant and equipment is calculated using the
straight-line method over the estimated useful lives of the assets,
generally 12 to 20 years for buildings and improvements, 5 to 10 years
for machinery and equipment, and 3 to 5 years for office furniture and
vehicles. Plant and equipment held under capital leases and leasehold
improvements are amortized on a straight-line basis over the shorter of
the lease term or estimated useful life of the asset. Expenditures for
maintenance, repairs and minor replacements are charged to current
operations. Expenditures for major replacements and betterments are
capitalized.
(e) Intangible Assets
Intangible assets consist of goodwill and trademarks. Goodwill is
amortized on a straight-line basis over 40 years. Trademarks are
amortized on a straight-line basis over 20 to 40 years. The Company
assesses the recoverability of the intangible assets by determining
whether the amortization of the intangible assets over their remaining
lives
29
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
can be recovered through undiscounted future operating cash flows. The
amount of impairment, if any, is measured based on projected discounted
future operating cash flows using a discount rate reflecting the
Company's average cost of funds. The assessment of the recoverability
of intangible assets will be impacted if estimated future operating
cash flows are not achieved.
(f) Deferred Debt Issuance Costs
Deferred debt issuance costs are amortized using the straight-line
method over the term of the related debt agreements and are classified
as other non-current assets. Amortization of deferred debt issuance
costs for fiscal years 2000, 1999 and 1998 was $1,843, $1,477 and $589,
respectively.
(g) Revenue Recognition
Revenues are recognized when products are shipped.
(h) Advertising Costs
Advertising costs are expensed as incurred. Advertising costs amounted
to approximately $2,469, $2,641 and $988 during the fiscal years 2000,
1999 and 1998, respectively.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities of the Company are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. A valuation allowance is provided when it is more likely than
not that all or some portion of the deferred tax asset will not be
realized. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
(j) Pension Plans
The Company has defined benefit pension plans covering substantially
all of its employees. The Company's funding policy is to contribute
annually the amount recommended by its actuaries.
30
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(k) Fair Value of Financial Instruments
Cash and cash equivalents, accounts receivable, accounts payable and
accrued expenses are reflected in the consolidated financial statements
at carrying value, which approximates fair value due to the short-term
nature of these instruments. The fair value of the $120,000 Senior
Subordinated Notes at December 30, 2000, based on quoted market prices,
was $84,000. The carrying value of the Company's remaining borrowings
approximates the fair value based on the current rates available to the
Company for similar instruments.
(l) Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the
management's estimates.
(m) Impairment of Long-Lived Assets and Long-Lived Assets to Be
Disposed Of
The Company accounts for long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". This Statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of
the assets exceeds the fair value of the assets. The Company considers
various valuation factors (principally, discounted cash flows) to
assess the fair values of long-lived assets. Assets held for sale are
reported at the lower of the carrying amount or fair value less costs
to sell.
31
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(n) Reclassifications
Certain amounts in the January 1, 2000 and January 2, 1999 consolidated
financial statements have been reclassified to conform with the
December 30, 2000 consolidated financial statement presentation.
In the fourth quarter of fiscal 2000, the Company adopted the
provisions of the FASB's Emerging Issues Task Force ("EITF") Issue No.
00-10, "Accounting For Shipping and Handling Fees and Costs," which
requires the Company to report all amounts billed to a customer in a
sale transaction as revenue, including those amounts related to
shipping and handling. The Company has historically included such
amounts in sales as required by the EITF. Prior to such adoption,
however, shipping and handling costs were included in sales, marketing
and distribution expense. In accordance with such EITF Issue No. 00-10,
the Company has reclassified shipping and handling costs to cost of
goods sold in its consolidated statements of operations for fiscal 1999
and 1998. As a result of this reclassification, previously reported
cost of goods sold was increased, and sales, marketing and distribution
expenses were decreased by $16.1 million and $9.3 million in fiscal
1999 and 1998, respectively.
(o) Statements of Cash Flows - Noncash Financing and Investing
Activities
Capital lease obligations of $460 and $469 were incurred during fiscal
years 1999 and 1998, respectively, when the Company entered into leases
for new machinery and equipment. No capital lease obligations were
entered into in fiscal 2000.
(p) Recent Accounting Pronouncements
The EITF has reached a consensus with respect to the issue of
"Accounting for Certain Sales Incentives," including point of sale
coupons, rebates and free merchandise. The consensus included a
conclusion that the value of such sales incentives that result in a
reduction of the price paid by the customer should be netted against
revenue and not classified as a sales or marketing expense. The Company
currently records reductions in price pursuant to coupons as sales,
marketing and distribution expenses. Upon the implementation of the
EITF consensus in the second quarter of fiscal 2001, the Company will
reclassify current and prior period coupon expense as a reduction of
net sales. Coupon expense was $2.5 million, $2.8 million and $0.6
million in fiscal 2000, 1999 and 1998, respectively. The implementation
of the EITF consensus will effect the classification of expenses in the
consolidated statement of operations, but will not have any effect on
the Company's net income (loss). The Company includes free merchandise
in cost of goods sold as required by the new EITF consensus.
32
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(3) Inventories
Inventories consists of the following:
Dec. 30, Jan. 1,
2000 2000
---------- ---------
Raw materials and packaging $ 16,613 19,319
Work in process 1,738 1,513
Finished goods 45,275 51,081
----------- -------
$ 63,626 71,913
=========== =======
(4) Property, Plant and Equipment
Property, plant and equipment, net consists of the following:
Dec. 30, Jan. 1,
2000 2000
---------- ---------
Land $ 2,879 2,990
Buildings and improvements 13,654 13,524
Leasehold improvements - 653
Machinery and equipment 30,256 31,432
Office furniture and vehicles 5,282 4,069
Leased property under capital leases 1,837 1,837
Construction-in-progress 8 -
--------- -------
53,916 54,505
Less accumulated depreciation and
amortization 15,641 12,890
---------- ---------
$ 38,275 41,615
========== =========
Plant and equipment includes amounts under capital leases as follows:
Dec. 30, Jan. 1,
2000 2000
---------- ---------
Machinery and equipment $ 591 591
Office furniture and vehicles 1,246 1,246
--------- --------
1,837 1,837
33
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Less accumulated amortization 1,181 1,055
---------- ---------
$ 656 782
========== =========
Amortization of assets held under capital leases is included with depreciation
expense.
(5) Intangible Assets
Intangible assets consists of the following:
Dec. 30, Jan. 1,
2000 2000
---------- ---------
Goodwill $ 123,067 130,192
Trademarks 180,226 195,874
---------- --------
303,293 326,066
Less accumulated amortization 19,627 13,923
---------- --------
$ 283,666 312,143
========== =======
(6) Leases
The Company has several noncancelable operating leases, primarily for its
corporate headquarters, warehouses, transportation equipment and machinery.
These leases generally require the Company to pay all executory costs such as
maintenance, taxes and insurance.
Future minimum lease payments under noncancelable operating leases (with initial
or remaining lease terms in excess of one year) for the periods set forth below
are as follows:
Years ended December:
2001 $ 3,076
2002 3,068
2003 2,419
2004 2,152
2005 1,690
Thereafter 5,029
-----------
$ 17,434
===========
34
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(6) Continued
Future minimum capital lease payments (included in long-term debt) as of
December 30, 2000 are as follows:
Years ended December 31:
2001 $ 374
2002 163
2003 74
Thereafter 29
-----------
Total minimum lease payments 640
Less amount representing interest (at 9% to 13%) 67
Present value of net minimum capital
lease payments 573
Less current installments of obligations under
capital leases 259
Obligations under capital leases, excluding
current installments (included in long-
term debt) $ 314
===========
Total rental expense was $3,400, $2,275 and $2,157 for the fiscal years 2000,
1999 and 1998, respectively.
The Company leases a manufacturing and warehouse facility from the Chairman of
the Board of Directors of the Company under an operating lease which expires in
April 2009. Total rent expense associated with this lease for the fiscal years
2000, 1999 and 1998 was $769, $639 and $477, respectively.
35
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(7) Long-term Debt
Long-term debt consists of the following:
Dec. 30, Jan. 1,
2000 2000
----------- ----------
Revolving credit facility $ - -
Term Loan A 58,750 70,000
Term Loan B 150,000 150,000
9.625% Senior Subordinated Notes due
August 1, 2007 120,000 120,000
Obligations under capital leases with interest at 9%
to 13% collateralized by certain machinery,
equipment and vehicles 573 892
----------- ----------
Total long-term debt 329,323 340,892
Less current installments 16,009 11,552
----------- ----------
Long-term debt, excluding current
installments $ 313,314 329,340
========== ==========
In connection with the B&G and B&R Acquisition, the Company was a party to a
$50,000 credit agreement which consisted of a revolving credit facility and term
loans. In connection with the 1998 Maple Grove Acquisition, a consent, waiver
and first amendment to the $50,000 credit agreement was entered into, which
included, among other things, a prospective change in certain financial
covenants and a consent by the lender regarding the purchase of Maple Grove. In
connection with the Heritage Brands Acquisition on March 15, 1999, the Company
entered into the Senior Secured Credit Facility (see note 1, "Acquisitions") and
refinanced all borrowings under the aforementioned $50,000 credit agreement.
The Senior Secured Credit Facility is comprised of a $60,000 five-year revolving
credit facility (the "Revolving Credit Facility"), a $70,000 five-year term loan
facility ("Term Loan A") and a $150,000 seven-year term loan facility ("Term
Loan B" and collectively with Term Loan A, the "Term Loan Facilities"). Interest
on the Senior Secured Credit Facility is determined based on several alternative
rates as stipulated in the Senior Secured Credit Facility, including the base
lending rate per annum plus an applicable margin or LIBOR plus an applicable
margin. At December 30, 2000 the interest rate for Term Loan A and Term Loan B
was 10.41% and 10.72%, respectively. At January 1, 2000 the interest rate for
Term Loan A and Term Loan B was 9.31% and 9.34%, respectively. The Senior
Secured Credit Facility is secured by
36
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(7) Continued
substantially all of the Company's assets. The Senior Secured Credit Facility
also provides for mandatory prepayment requirements based on asset dispositions
and issuance of securities, as defined. The Senior Secured Credit Facility
contains covenants that will restrict, among other things, the ability of the
Company to incur additional indebtedness, pay dividends and create certain
liens. The Senior Secured Credit Facility also contains certain financial
covenants which, among other things, specify maximum capital expenditure limits,
a minimum fixed charge coverage ratio, a minimum total interest coverage ratio
and a maximum indebtedness to earnings before interest, taxes, depreciation and
amortization ("EBITDA") ratio, each ratio as defined. Proceeds of the Senior
Secured Credit Facility are restricted to funding the Company's working capital
requirements, capital expenditures and acquisitions of companies in the same
line of business as the Company, subject to certain criteria. The Senior Secured
Credit Facility limited expenditures on acquisitions to $20,000 in fiscal 1999
and $30,000 in fiscal 2000 and will limit such expenditures on acquisitions to
$40,000 per year thereafter.
At April 1, 2000, the Company was not in compliance with certain financial
covenants. On May 12, 2000, the Company and the lenders entered into an
amendment to the Senior Secured Credit Facility effective as of April 1, 2000
which, among other things, amended such covenants such that the Company
currently is and, as of April 1, 2000, was in compliance with such covenants as
amended.
The Revolving Credit Facility requires an annual commitment fee of an amount
equal to 0.50% of the average daily unused portion of the Revolving Credit
Facility. The Revolving Credit Facility also provides a maximum commitment for
letters of credit of $5,000. At December 30, 2000 and January 1, 2000, letters
of credit of approximately $1,343 and $1,267, respectively, have been issued
under the Revolving Credit Facility.
The Company has outstanding $120,000 of 9.625% Senior Subordinated Notes (the
"Notes") due August 1, 2007 with interest payable semiannually on February 1 and
August 1 of each year, commencing February 1, 1998. The indenture for the Notes
contains certain covenants that, among other things, limit the ability of the
Company to incur additional debt, issue preferred stock, pay dividends or make
certain other restricted payments, enter into transactions with affiliates, make
certain asset dispositions, merge or consolidate with, or transfer substantially
all of its assets to, another person, as defined, encumber assets under certain
circumstances, restrict dividends and other payments from subsidiaries, engage
in sale and leaseback transactions, issue capital stock, as defined, or engage
in certain business activities.
The Notes are redeemable at the option of the Company, in whole or in part, at
any time on or after August 1, 2002 at 104.813% of their principal amount plus
accrued and unpaid interest and Liquidated Damages, as defined, if any,
beginning August 1, 2002, and thereafter at prices declining annually to 100% on
or after August 1, 2005. Upon the occurrence of a Change in
37
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(7) Continued
Control, as defined, the Company will have the option, at any time on or prior
to August 1, 2002, to redeem the Notes, in whole but not in part, at a
redemption price equal to 100% of the principal amount plus the Applicable
Premium, as defined, plus accrued and unpaid interest and Liquidated Damages, as
defined, if any, to the date of redemption, and if the Company does not so
redeem the Notes or if such Change in Control, as defined, occurs after August
1, 2002, the Company will be required to make an offer to repurchase the Notes
at a price equal to 101% of the principal amount, together with accrued and
unpaid interest and Liquidated Damages, as defined, if any, to the date of
repurchase. The Notes are not subject to any sinking fund requirements.
B&G Foods, Inc. has no assets or operations independent of its subsidiaries. All
of B&G Foods, Inc's. subsidiaries (the "Guarantors") are wholly-owned, and all
of B&G Foods, Inc's. subsidiaries jointly and severally, and fully and
unconditionally, guarantee the Notes (the "Subsidiary Guarantees").
Consequently, separate financial statements have not been presented for the
guarantor subsidiaries because management has determined that they would not be
material to investors. The Subsidiary Guarantee of each Guarantor is subordinate
to the prior payment in full of all Senior Debt, as defined. As of December 30,
2000, B&G Foods, Inc. and its subsidiaries had Senior Debt and additional
liabilities (including trade payables, accrued expenses, amounts due to related
parties, deferred income taxes and other liabilities) aggregating approximately
$71.5 million.
As part of the registration rights agreement dated August 11, 1997 entered into
with the initial purchasers of the Notes, the Company agreed to offer to
exchange an aggregate principal amount of up to $120,000 of its 9.625% Senior
Subordinated Notes due 2007 (the "New Notes") for a like principal amount of the
Notes outstanding (the "Exchange Offer").
The terms of the New Notes are identical in all material respects to those of
the Notes (including principal amount, interest rate, maturity and guarantees),
except for certain transfer restrictions and registration rights relating to the
Notes. The Exchange Offer was completed on February 6, 1998.
At December 30, 2000 and January 1, 2000, accrued interest of $9,313, and
$9,178, respectively, was included in accrued expenses in the accompanying
consolidated balance sheets.
38
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(7) Continued
The aggregate maturities of long-term debt are as follows:
Years ended December:
2001 $ 16,009
2002 19,972
2003 21,069
2004 59,290
2005 74,250
Thereafter 138,733
--------------
$ 329,323
==============
39
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(8) Income Tax Expense
Income tax expense consists of the following:
Year Year Year
ended ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
Current:
Federal $ (764) 2,071 -
State 245 765 113
------- ------ ------
(519) 2,836 113
------- ----- ------
Deferred:
Federal 1,346 (163) 1,228
State 732 (244) 90
------- ------ ------
2,078 (407) 1,318
------- ------ ------
$ 1,559 2,429 1,431
======= ====== ======
40
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Income tax expense differs from the expected income tax expense (computed by
applying the U.S. federal income tax rate of 34% to income before income tax
expense) as a result of the following:
Year Year Year
ended ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
--------- ------- -------
Computed expected tax expense $ 93 1,592 776
State income taxes, net of federal
income tax benefit 645 344 134
Nondeductible expenses, principally amortiza-
tion of goodwill 666 572 224
Change in valuation allowance for deferred
income taxes allocated to income tax
expense 415 (34) 84
Other (260) (45) 213
-------- ------ -----
$ 1,559 2,429 1,431
======== ====== =====
41
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:
Dec. 30, Jan. 1,
2000 2000
--------- --------
Deferred tax assets:
Accounts receivable, principally due to allowance $ 48 207
Inventories, principally due to additional costs
capitalized for tax purposes 758 834
Accruals and other liabilities not currently
deductible 2,206 4,516
Net operating loss carryforwards 5,051 3,407
Deferred financing costs 561 776
-------- --------
Total gross deferred tax assets 8,624 9,740
Less valuation allowance (1,282) (867)
-------- --------
Net deferred tax assets 7,342 8,873
-------- --------
Deferred tax liabilities:
Plant and equipment (2,293) (2,190)
Intangible assets (38,200) (37,756)
----------- ---------
Total deferred tax liabilities (40,493) (39,946)
----------- ---------
Net deferred tax liability (33,151) (31,073)
=========== =========
In assessing the realizability of deferred tax assets, management consrs whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it
is more likely than not that the Company will realize the benefits of these
deductible differences, net of the existing valuation allowances at December 30,
2000 and January 1, 2000. The amount of the deferred tax asset considered
42
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(8) Continued
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. The valuation
allowance at December 30, 2000 and January 1, 2000 of $1,282 and $867,
respectively, represents the allowance for certain state net operating loss
carryforwards of $21,449 and $14,479, respectively, which are available to
offset future state taxable income, if any, through 2007. The Company
established a valuation allowance for the deferred tax assets associated with
state net operating loss carryforwards at December 30, 2000 because management
believes that based upon historical and projected state taxable income, it is
not more likely than not that the deferred tax asset related to such net
operating loss carryforwards will be realized. Any future utilization of
acquired state net operating loss carryforwards will result in an adjustment to
goodwill to the extent it reduces the valuation allowance. The change in the
valuation allowance in fiscal 2000 was primarily due to a net increase of state
net operating loss carryforwards. In 1999, the decrease in the valuation
allowance was primarily due to the utilization of state net operating loss
carryforwards. In fiscal 2000, the Company has new state net operating loss
carryforwards of $6,980 which are available to offset future state taxable
income through 2007.
At December 30, 2000, the Company has net operating loss carryforwards for
federal income tax purposes of $10,730 which are available to offset future
federal taxable income, if any, through 2020. As a result of the acquisitions
described in note 1, the annual utilization of the net operating loss
carryforwards acquired is limited under certain provisions of the Internal
Revenue Code.
(9) Pension Benefits
The Company has defined benefit pension plans covering substantially all of its
employees. The benefits are based on years of service and the employee's
compensation, as defined. The Company makes annual contributions to the plans
equal to the maximum amount that can be deducted for income tax purposes. The
following table sets forth the Company's defined benefit pension plans' benefit
obligation, fair value of plan assets and funded status recognized in the
consolidated balance sheets:
43
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(9) Continued
Dec. 30, Jan. 1,
2000 2000
------------- ----------
Change in benefit obligation
Benefit obligation at beginning of period $ 6,917 7,785
Actuarial loss (178) (1,702)
Service cost 552 563
Interest cost 522 504
Benefits paid (231) (233)
----------- -----------
Benefit obligation at end of period 7,582 6,917
----------- -----------
Change in plan assets
Fair value of plan assets at beginning of period 6,250 5,976
Actual return on plan assets 29 433
Employer contributions 148 74
Benefits paid (231) (233)
----------- -----------
Fair value of plan assets at end of period 6,196 6,250
----------- -----------
Funded status (1,386) (667)
Unrecognized prior service cost 7 -
Unrecognized net actuarial gain (1,625) (2,030)
----------- -----------
Accrued pension cost $ (3,004) (2,697)
=========== ===========
Amount recognized in the consolidated balance sheet
Accrued benefit cost at beginning of period $ (2,697) (2,210)
Net periodic pension cost (455) (570)
Additional liability - 9
Contributions 148 74
----------- -----------
Accrued pension cost at end of period $ (3,004) (2,697)
=========== ===========
Weighted-average assumptions as of
December 30, 2000 and January 1, 2000
Discount rate 7.50% 8.00%
Rate of compensation increase 4.50% 4.50%
Expected long-term rate of return 7.75% 7.75% to 8.50%
Plan assets are invested primarily in government securities and mutual funds.
Net periodic cost includes the following components:
44
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(9) Continued
Year Year Year
ended ended ended
Dec. 30, Jan. 1, Jan. 2,
2000 2000 1999
--------- -------- --------
Service cost - benefits earned during the
period $ 552 562 470
Interest cost on projected benefit obligation 522 504 478
Expected return on plan assets (521) (496) (472)
Net amortization and deferral (98) - 55
------- ------ ------
Net pension cost $ 455 570 531
====== ====== ======
The Company sponsors several defined contribution plans covering substantially
all of its employees. Employees may contribute to these plans and these
contributions are matched at varying amounts by the Company. Company
contributions for the matching component of these plans amounted to $468, $426
and $226 for the fiscal years ended December 30, 2000, January 1, 2000 and
January 2, 1999, respectively. During fiscal 2000, the Company became a member
of a multi-employer pension plan. Pension expense incurred in fiscal 2000
related to such plan was $146.
45
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(10) Changes in Stockholder's Equity
The changes in stockholder's equity for the fiscal years ended December 30,
2000, January 1, 2000 and January 2, 1999 are as follows:
Additional Retained earnings
Common Stock paid-in- (accumulated
Shares Amount capital deficit) Total
------ ------ ----------
Balance at Jan. 3, 1998 1 $ -- 20,000 (1,372) 18,628
Net income -- -- -- 850 850
Proceeds from issuance of
equity -- -- 1,342 -- 1,342
---- ------ --------- -------- -------
Balance at Jan. 2, 1999 1 -- 21,342 (522) 20,820
Net income -- -- -- 2,253 2,253
Capital contribution -- -- 35,000 -- 35,000
---- ------ --------- -------- -------
Balance at Jan. 1, 2000 1 -- 56,342 1,731 58,073
Net loss -- -- -- (1,285) (1,285)
---- ------ --------- -------- -------
Balance at Dec. 30, 2000 1 $ -- 56,342 446 56,788
==== ======== ========= ======== =======
46
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(11) Related-party Transactions
In conjunction with the B&G and B&R Acquisition, the Company entered into a
management agreement with BRS (the "Management Agreement"), pursuant to which
BRS is paid an annual fee for certain management, business and organizational
strategy, and merchant and investment banking services. In March, 1999, such
annual fee was increased to $500 per year. Charges for such services amounted to
approximately $500 during the fiscal year ended December 30, 2000, $450 during
the fiscal year ended January 1, 2000 and $250 during the fiscal year ended
January 2, 1999. The Management Agreement will expire on the earlier of December
27, 2006 and the date that BRS owns less than 20% of the outstanding common
stock of Holdings.
The Company also entered into a transaction services agreement pursuant to which
BRS will be paid a transaction fee for management, financial and other corporate
advisory services rendered by BRS in connection with acquisitions by the
Company, which fee will not exceed 1.0% of the total transaction value. In
connection with the Polaner Acquisition and the Heritage Brands Acquisition in
fiscal 1999 and the Maple Grove Acquisition in fiscal 1998, the Company paid
transaction fees aggregating $300, $1,920 and $250, respectively, which were
included in the cost of the respective acquisitions.
As described in note 6, the Company leases a manufacturing and warehouse
facility from the Chairman of the Board of Directors of the Company.
"Due to related party" at December 30, 2000 and January 1, 2000 includes
management fees to BRS.
Related party interest expense on the unsecured notes payable to related parties
was $15 and $74 for the fiscal years ended January 1, 2000 and January 2, 1999,
respectively. There was no related party interest expense incurred in fiscal
year ended December 30, 2000.
47
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(12) Commitments and Contingencies
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
On December 30, 2000, the Company had purchase commitments with various
suppliers to purchase certain raw materials in the aggregate amount of
approximately $6,335. Management believes that all such commitments will be
fulfilled within one year.
The Company is subject to environmental regulations in the normal course of
business. Management believes that the cost of compliance with such regulations
will not have a material adverse effect on the Company's business, consolidated
financial position or results of operations, except as described in note 15.
(13) Business and Credit Concentrations
The Company's exposure to credit loss in the event of non-payment of accounts
receivable by customers is represented in the amount of those receivables. The
Company performs ongoing credit evaluations of its customers' financial
condition. As of December 30, 2000, the Company does not believe it has any
significant concentration of credit risk with respect to its trade accounts
receivable.
Prior to the Polaner Acquisition, the Company had entered into two co-packing
contracts with IHF pursuant to which the Company manufactured for IHF the
Polaner lines of fruit spreads, preserves and wet spices. In addition, the
Company had entered into a third contract with IHF under which the Company
distributed the Polaner lines of fruit spreads, preserves and wet spices in the
New York metropolitan area. The IHF contracts, in the aggregate, accounted for
$36.9 million or 20.5% of the Company's net sales for fiscal 1998. These
contracts were terminated upon completion of the Polaner Acquisition.
48
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(14) Quarterly Financial Data (unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------------ -------------- -------------- -------------- ---------------
Net sales
2000 $73,394 95,767 89,080 93,175 351,416
1999 56,480 97,620 87,552 94,460 336,112
Gross profit (a)
2000 $31,890 42,339 38,782 37,754 150,765
1999 20,920 42,118 37,092 39,798 139,928
Net income (loss)
2000 $(556) 1,144 189 (2,062) (1,285)
1999 (375) 1,930 476 222 2,253
(a) As further described in note 1, fiscal 1999 reflects the
reclassification of certain costs into cost of goods sold in
accordance with the adoption in the fourth quarter of fiscal
2000 of EITF Issue No. 00-10.
(15) Subsequent Events
On January 17, 2001, the Company completed the disposition of its subsidiary,
Burns & Ricker, Inc. ("Burns & Ricker"). Under the stock purchase agreement
entered into on January 17, 2001 by the Company, Burns & Ricker and Nonni's Food
Company, Inc., the Company sold all of the issued and outstanding capital stock
of Burns & Ricker for $26.0 million in cash. The gain on the sale, net of
transaction expenses, was approximately $3.2 million (subject to certain
adjustments) and will be included in the Company's first quarter 2001 results of
operations. The Company applied the net cash proceeds from the sale of Burns &
Ricker toward the partial prepayment of the Term Loans Facilities, as required
under the Company's Senior Secured Credit Facility. As of December 30, 2000, the
Burns & Ricker net assets of $20.7 million are classified as net assets held for
sale in the consolidated balance sheet.
On January 17, 2001, the Company became aware that fuel oil from its underground
storage tank at its Roseland, New Jersey facility had been released into the
ground and a brook adjacent to such property. The New Jersey Department of
Environmental Protection ("NJDEP") initially engaged an environmental services
firm to address the cleanup of the oil in the brook; and, with the approval of
the NJDEP, the Company retained such environmental services firm on January 18,
2001 for the same purpose. In addition, the Company hired another environmental
services
49
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
firm to address the on-site oil impact to subsurface soils. Since January 17,
2001, the Company and its environmental services firms have been working to
clean up the oil and are cooperating with the NJDEP. Based on fuel tank readings
taken in the normal course of business on December 7, 2000 and December 29,
2000, fuel tank readings taken on January 17, 2001 in response to the
notification of the potential release and consultation with the retained
environmental services firms, management believes that the release primarily
occurred after January 1, 2001. Accordingly, no costs relating to this matter
are included in the fiscal 2000 consolidated financial statements.
Management believes that substantial progress has been made toward the cleanup
of the oil. The Company will continue monitoring the fuel tank readings,
sampling sediment and surface water for evidence of any new leaks and related
cleanup and monitoring activities. The Company estimates the costs related to
its cleanup efforts will be approximately $800,000 to $1,000,000, although there
can be no assurances in this regard. Such costs related to the cleanup will be
recorded in the first quarter of fiscal 2001. The Company will reassess the
impact of this matter as more information becomes available and as developments
occur.
50
Schedule II
B&G Foods, Inc. and Subsidiaries
Valuation and Qualifying Accounts
(dollars in thousands)
Column A Column B Column C Column D Column E
Additions
---------------------------------
Balance at Charged to costs Charged to
beginning of and expenses other accounts Deductions - Balance at end
Description period - describe describe of period
----------- ------------ ---------------- -------------- ------------ --------------
2000:
Allowance for doubtful
accounts $ 517 $ 128 -- $ 180(a) $ 465
1999:
Allowance for doubtful
accounts $ 229 $ 596 -- $ 308(a) $ 517
1998:
Allowance for doubtful
accounts $ 237 $ 43 -- $ 51(a) $ 229
Restructuring accruals
$ 656 -- -- $ 656(b) $ --
(a) Represents bad-debt write-offs.
(b) Cash expenditures relating primarily to tenancy costs.
51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of B&G.
Other officers may also be appointed to fill certain positions. Each director of
B&G holds office until the next annual meeting of shareholders of B&G or until
his successor has been elected and qualified.
Name Age Position
---- --- --------
Leonard S. Polaner 70 Chairman of the Board of Directors
David L. Wenner 51 President, Chief Executive Officer and Director
Robert C. Cantwell 44 Executive Vice President of Finance and Chief Financial
Officer
David H. Burke 58 Executive Vice President of Sales and Marketing
James H. Brown 58 Executive Vice President of Manufacturing
Albert J. Soricelli 48 Executive Vice President of Marketing and Strategic
Planning
Thomas Baldwin 41 Director
William F. Callahan III 59 Director
Alfred Poe 51 Director
Harold O. Rosser II 52 Director
Stephen C. Sherrill 47 Director
Nicholas B. Dunphy 52 Director
Leonard S. Polaner, Chairman of the Board: Leonard Polaner has been
Chairman of the Board of B&G since March 1993 when the Polaner business was sold
to IHF. Prior to that time, Mr. Polaner was President and Chief Executive
Officer of B&G, positions which he had assumed upon joining the Company in 1986.
Mr. Polaner began his career in the food products industry in 1956 when, after
earning his Masters Degree from Harvard Business School, he joined Polaner, a
family-run business. He has been active in many industry trade groups, including
the New York Preservers Association and the International Jelly and Preservers
Association, organizations in which he served as President and as a member of
the Board of Directors, respectively.
David L. Wenner, President and Chief Executive Officer: David Wenner is
the President and Chief Executive Officer of the Company, positions he has held
since March 1993. Mr. Wenner joined B&G in 1989 as Assistant to the President
and was directly
52
responsible for the Company's distribution and Bloch & Guggenheimer operations.
In 1991, he was promoted to Vice President. He continued to be responsible for
distribution and assumed responsibility for all company operations. Prior to
joining B&G, Mr. Wenner spent 13 years at Johnson & Johnson in supervision and
management positions responsible for manufacturing, maintenance and purchasing.
Mr. Wenner is active in industry trade groups and has served as President of
Pickle Packers International.
Robert C. Cantwell, Executive Vice President of Finance and Chief
Financial Officer: Robert Cantwell is the Executive Vice President of Finance
and Chief Financial Officer of B&G. He joined the Company in 1983 as the
Assistant Vice President of Finance. In that position, Mr. Cantwell had
responsibility for all financial reporting, including budgeting. Mr. Cantwell
was promoted to his current position in 1991, assuming full responsibility for
all financial matters, as well as MIS, Data Processing, Administration and
Corporate Human Resources. Prior to joining the Company, Mr. Cantwell spent four
years at Deloitte & Touche, where he received accreditation as a Certified
Public Accountant.
David H. Burke, Executive Vice President of Sales and Marketing: David
Burke is the Executive Vice President of Sales and Marketing of the Company. Mr.
Burke has an extensive background with major consumer products companies. His
experience includes eight years with Procter & Gamble in sales and sales
management and 12 years at Quaker Oats, where he was a Regional Sales Manager
and later the director of Broker Sales. Mr. Burke also spent four years with Pet
Inc. as Vice President for their frozen foods business. Mr. Burke joined B&G in
1990 as Vice President of Sales and was and continues to be responsible for
sales and marketing of all B&G brands.
James H. Brown, Executive Vice President of Manufacturing: James Brown
is the Senior Vice President of Manufacturing and has 28 years of experience in
manufacturing with B&G and Polaner. He has been responsible for all
manufacturing at the Roseland facility since 1981. In 1994, he assumed
responsibility for B&G's other manufacturing facilities. Prior to joining
Polaner in 1972, Mr. Brown worked at Kraft Foods for two years as a project
engineer and spent four years in the U.S. Navy.
Albert J. Soricelli, VP of Marketing & Strategic Planning: Prior to
joining B&G in 2000, Mr. Soricelli spent 18 years at American Home Food in
Madison, NJ in increasing levels of management positions and was promoted to
Senior VP/General Manager in 1989. More recently, Mr. Soricelli served as
President of Nice Pak Products, in Orangeburg, NY, a $200 million dollar baby
and wet wipe consumer product company. As VP of Marketing & Strategic Planning
for B&G, Mr. Soricelli is responsible for the growth of the Company through
acquisitions, divestitures, and sound financial structuring.
Thomas J. Baldwin, Director: Since 1997, Thomas Baldwin has been a
Director of B&G. Since 1995, Thomas Baldwin has been the Chief Executive Officer
and a founding stockholder of Christmas Corner, Inc., a specialty retail chain
that owns and operates seasonal Christmas stores. Mr. Baldwin is also a
principal and co-founder of PB
53
Ventures. From 1993 through 1995, Mr. Baldwin was a Managing Director of the
leveraged buyout firm Invus Group, Ltd.
William F. Callahan III, Director: William Callahan has been a Director
of B&G since B&G acquired Maple Grove in 1998. Prior to that, Mr. Callahan was
the C.E.O. and owner of Maple Grove. Mr. Callahan began his career in the
specialty foods business in 1975 when he acquired Maple Grove. Prior to such
acquisition, Mr. Callahan was Vice President, Sales of Blyth, Eastman, Dillon
and Co. in New York and a trial attorney for the U.S. Securities and Exchange
Commission in New York. Mr. Callahan is a graduate of Georgetown University and
the Boston University Law School. He is a member of the State of Vermont Chamber
of Commerce, a member of the Vermont Maple Industry Council and the State of
Vermont Agriculture Commissioner's Task Force.
Alfred Poe, Director: Alfred Poe has been a director since 1997. He is
President and Chief Executive Officer of Superior Nutrition Corporation, a
provider of nutrition products. He was Chairman of the Board of the MenuDirect
Corporation, a provider of specialty meals for people on restricted diets from
1997 to 1999. Mr. Poe was a Corporate Vice President of Campbell's Soup Company
from 1991 through 1996. From 1993 through 1996, he was the President of
Campbell's Meal Enhancement Group. From 1982 to 1991, Mr. Poe held various
positions, including Vice President, Brands Director and Commercial Director,
with Mars, Inc.
Harold O. Rosser II, Director: Since its formation in 1995, Harold
Rosser has been a Managing Director of BRS. Mr. Rosser was an officer of
Citicorp Venture Capital from 1987 through 1994. Prior to that, he spent 12
years with Citicorp/Citibank in various management and corporate finance
positions. Mr. Rosser is a director of Jitney-Jungle Stores of America, Inc.,
American Paper Group, Inc., Acapulco Restaurants, Inc., California Pizza
Kitchen, Inc. and Penhall International, Inc.
Stephen C. Sherrill, Director: Since its formation in 1995, Stephen
Sherrill has been a Managing Director of BRS. Mr. Sherrill was an officer of
Citicorp Venture Capital from 1983 through 1994. Prior to that, he was an
associate at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison.
Mr. Sherrill is a director of Galey & Lord, Inc., Jitney-Jungle Stores of
America, Inc., Doane Pet Care Enterprises, Inc., Mediq Incorporated, Health Plus
Corporation and Alliance Laundry Systems LLC.
Nicholas B. Dunphy, Director: Mr. Dunphy is a Managing Partner of
Canterbury Capital II, LLC, with more than 20 years' business and investment
banking experience. Prior to co-founding Canterbury Capital II, LLC, in 1996, he
was a managing director and founding partner of Barclays Mezzanine Group. Before
joining Barclays in 1980, Mr. Dunphy qualified as a Chartered Accountant in
Canada and subsequently spent five years with Toronto Dominion Bank. Mr. Dunphy
earned a B.Sc. from Manchester University in England and a Masters in Business
Administration from York University in Canada.
54
ITEM 11. EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation earned by the Company's Chief Executive Officer and the four other
most highly paid executive officers of the Company, including the Chairman
(collectively, the "Named Executive Officers"), for services rendered in all
capacities to the Company for fiscal 2000:
SUMMARY COMPENSATION TABLE
All Other
Name and Principal Position Year Salary Bonus (1) Other Compensation
--------------------------- ---- ------ --------- ----- ------------
(2) (3)
--- ---
Leonard S. Polaner
Chairman of the Board 2000 $100,516 $35,181 $13,800 $9,500
David L. Wenner
President and Chief Executive Officer 2000 257,069 137,600 10,000 11,900
Robert C. Cantwell
Executive Vice President of Finance and Chief
Financial Officer 2000 201,357 75,350 10,000 11,900
David H. Burke
Executive Vice President of Sales and Marketing
2000 196,675 73,600 10,000 11,900
James H. Brown
Executive Vice President of Manufacturing
2000 170,117 63,100 10,850 11,900
(1) Includes annual bonus payment under the Company's Annual Bonus Plan.
(2) Includes personal use of a Company automobile or automobile allowances.
(3) Includes the Company's matching contributions to the 401(k) Plan and
contribution to the Company's Pension Plan.
Director Compensation and Arrangements
- --------------------------------------
Directors of the Company receive compensation for their services as
directors in the amount of $1,000 per meeting of the Board of Directors.
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof.
Annual Bonus Plan
- -----------------
The Company also maintains an Annual Bonus Plan that provides for
annual incentive awards to be made to key executives upon the Company's
attainment of pre-set annual financial objectives. The amount of the annual
award to each executive is based upon a percentage of the executive's annualized
base salary. Awards are paid in cash in a
55
lump sum following the close of each plan year. The plan provides for forfeiture
of proration of awards in the event of certain circumstances such as the
executive's promotion or demotion, death, retirement or resignation.
Stock Option Plan
- -----------------
In order to attract, retain and motivate selected employees and
officers of the Company, Holdings adopted the B&G Foods Holdings Corp. 1997
Incentive Stock Option Plan (the "Option Plan") for key employees of the Company
and its subsidiaries. The Option Plan provides that it may be administered by
Holdings' Board of Directors or a committee designated by the Board of Directors
of Holdings. Holdings' Board of Directors has designated a committee comprised
of Stephen C. Sherrill and Harold O. Rosser II. Options granted under the Option
Plan will be exercisable in accordance with the terms established by the
Holdings' Board of Directors. Options will expire on the date determined by the
Holdings' Board of Directors, which shall not be later than the tenth
anniversary of the date of grant.
No grants of options have been made under the Option Plan.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Board of Directors of the Company has appointed a Compensation
Committee comprised of Mr. Sherrill and Mr. Rosser. Mr. Sherrill is a former
officer of the Company, for which position he received no compensation; Mr.
Rosser is not and has not been an officer of the Company. Each of Mr. Sherrill
and Mr. Rosser are principals of BRS.
Employment Agreements
- ---------------------
The Company has no employment agreements.
401(k) Plan
- -----------
The Company maintains a tax-qualified defined contribution plan with a
cash or deferred arrangement intended to qualify under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). Company employees become
eligible to participate in the plan upon reaching age 21 and completing one year
of employment with the Company. Each participant in the plan may elect to defer,
in the form of contributions to the plan, up to 17% of compensation that would
otherwise be paid to the participant in the applicable year, which percentage
may be increased or decreased by the administrative committee of the plan, but
is otherwise not to exceed the statutorily prescribed annual limit ($10,500 in
2000). The Company makes a 50% matching contribution with respect to each
participant's elective contributions, up to six percent of such participant's
compensation. Matching contributions vest over a rolling five-year period.
56
Pension Plan
- ------------
PENSION PLAN TABLE
Years of Service
Renumeration 15 20 25 30 35
- ------------ -- -- -- -- --
40,000 $ 4,794 $ 6,392 $ 7,990 $ 9,588 $11,186
60,000 $ 8,244 $10,992 $13,740 $16,488 $19,236
80,000 $11,694 $15,592 $19,490 $23,388 $27,286
100,000 $15,144 $20,192 $25,240 $30,288 $35,336
120,000 $18,594 $24,792 $30,990 $37,188 $43,386
140,000 $22,044 $29,392 $36,740 $44,088 $51,436
160,000 $25,494 $33,992 $42,490 $50,988 $59,486
Benefits under the plans are calculated generally under a formula of
0.75% of final average earnings multiplied by service plus 0.4% of final average
earnings in excess of covered compensation multiplied by service limited to 35
years. The compensation covered by the pension plan is W-2 earnings and any
amounts contributed to any tax qualified profit sharing plan or cafeteria plan
limited to $160,000 as required by Section 401(a)(17) of the Code. As of
December 30, 2000, the years of credited service for each of the Named Executive
Officers were: Mr. Polaner, 13; Mr. Wenner, 11; Mr. Cantwell, 17; Mr. Burke, 10;
and Mr. Brown, 13.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
B&G Foods, Inc. is a wholly owned subsidiary of Holdings. The following
table sets forth certain information as of March 1, 2001 with respect to the
beneficial ownership of the 13% Series A Cumulative Preferred Stock, par value
$0.01 per share, of Holdings ("Series A Preferred"), 13% Series B Cumulative
Preferred Stock, par value $0.01 per share, of Holdings ("Series B Preferred"),
Series C Senior Preferred Stock, par value $0.01 per share, of Holdings ("Series
C Preferred") and the common stock, par value $0.01 per share, of Holdings
("Common Stock") by (i) each person or entity who owns five percent or more
thereof, (ii) each director of the Company who is a stockholder, (iii) the Named
Executive Officers and (iv) all directors and officers of the Company as a
group. Unless otherwise specified, all shares are directly held.
57
Number and Percent of Shares
----------------------------
Name of Beneficial Owner Common Stock(1) Series A Preferred Series B Preferred Series C Preferred
- ------------------------ --------------- ------------------ ------------------ ------------------
Bruckmann, Rosser, Sherrill & Co., 100,021.48 18,774.99 12,310.54 5,000.00
L.P. (2)(3) 85.1% 92.4% 100.0% 20.0%
Two Greenwich Plaza
Suite 100
Greenwich, CT 06830
Canterbury Mezzanine Capital 9,857.92 ----- ----- 15,000.00
II, L.P. (4) (5) 8.8% 60.0%
600 Fifth Avenue
23rd Floor
New York, NY 10019
The CIT Group/Equity 3,285.97 ----- ----- 5,000.00
Investments, Inc.(6) 3.1% 20.0%
650 CIT Drive
Livingston, NJ 07039
Leonard S. Polaner (7) 3,000 145 ----- -----
2.9% *
David L. Wenner (7) 3,000 20 ----- -----
2.9% *
David H. Burke (7) 3,000 20 ----- -----
2.9% *
James H. Brown (7) 3,000 20 ----- -----
2.9% *
Robert C. Cantwell (7) 3,000 20 ----- -----
2.9% *
Thomas J. Baldwin (7) 500 110.44 ----- -----
* *
Alfred Poe (7) 500 110.44 ----- -----
* *
William F. Callahan III (7) 1,450 1,050.94 ----- -----
1.4% 5.2%
58
Number and Percent of Shares
----------------------------
Name of Beneficial Owner Common Stock(1) Series A Preferred Series B Preferred Series C Preferred
- ------------------------ --------------- ------------------ ------------------ ------------------
Harold O. Rosser II (7)(8)(9) 381.56 71.61 47.01 19.09
* * * *
Stephen C. Sherrill (7)(8)(10) 1,958.69 367.59 241.32 98.01
1.9% 1.8% 2.0% *
Nicholas B. Dunphy (11)(12) ----- ----- ----- -----
All directors and officers as a group
(12 persons) (8)(11) 19,790.25 1,936.02 288.33 117.10
19.2% 9.5% 2.3% *
- --------------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of Common Stock subject
to options or warrants held by that person that are currently
exercisable or exercisable within 60 days of March 1, 2001 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person.
(2) Includes shares held by certain other entities and individuals
affiliated with BRS (together with BRS, the "BRS Investors"). BRS
disclaims beneficial ownership of such shares. BRS is a limited
partnership, the sole general partner of which is BRS Partners, Limited
Partnership ("BRS Partners") and the manager of which is Bruckmann,
Rosser, Sherrill & Co., Inc. ("BRS & Co."). The sole general partner of
BRS Partners is BRSE Associates, Inc. ("BRSE Associates"). Harold O.
Rosser II and Stephen C. Sherrill are stockholders of BRS & Co. and
BRSE Associates and may be deemed to share beneficial ownership of the
shares shown as beneficially owned by BRS. Such individuals disclaim
beneficial ownership of any such shares.
(3) With respect to the Common Stock, such amount includes warrants to
purchase 15,021.58 shares of Common Stock, exercisable within 60 days
of March 1, 2001, with an exercise price of $0.01 per share and an
expiration date of December 22, 2009.
(4) Canterbury Mezzanine Capital II, L.P. ("Canterbury Mezzanine") is a
limited partnership, the sole general partner of which is Canterbury
Capital II, LLC ("Canterbury Capital"). Nicholas B. Dunphy holds a
minor membership interest in Canterbury Mezzanine and a membership
interest in Canterbury Capital and may be deemed to share beneficial
ownership of the shares shown as beneficially
59
owned by Canterbury Mezzanine. Mr. Dunphy disclaims beneficial
ownership of any such shares.
(5) With respect to the Common Stock, such amount includes warrants to
purchase 9,857.92 shares of Common Stock, exercisable within 60 days of
March 1, 2001, with an exercise price of $0.01 per share and an
expiration date of December 22, 2009.
(6) With respect to the Common Stock, such amount includes warrants to
purchase 3,285.97 shares of Common Stock, exercisable within 60 days of
March 1, 2001, with an exercise price of $0.01 per share and an
expiration date of December 22, 2009.
(7) The address of such person is c/o B&G Foods, Inc., 4 Gatehall Drive,
Suite 110, Parsippany, New Jersey, 07054.
(8) With respect to Mr. Sherrill and Mr. Rosser, directors of the Company,
excludes shares held by BRS and certain other entities and individuals
affiliated with BRS, of which shares Mr. Sherrill and Mr. Rosser
disclaim beneficial ownership.
(9) With respect to the Common Stock, such amount includes warrants to
purchase 57.36 shares of Common Stock, exercisable within 60 days of
March 1, 2001, with an exercise price of $0.01 per share and an
expiration date of December 22, 2009.
(10) With respect to the Common Stock, such amount includes warrants to
purchase 294.46 shares of Common Stock, exercisable within 60 days of
March 1, 2001, with an exercise price of $0.01 per share and an
expiration date of December 22, 2009.
(11) With respect to Mr. Dunphy, a director of the Company, excludes shares
held by Canterbury Mezzanine, of which shares Mr. Dunphy disclaims
beneficial ownership.
(12) The address of such person is c/o Canterbury Mezzanine Capital II,
L.P., 600 Fifth Avenue, 23rd Floor, New York, New York 10019.
60
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stockholders Agreement and Registration Rights Agreement
- --------------------------------------------------------
The BRS Investors and certain members of the Company's Board of
Directors and executive officers of the Company (collectively, the "Management
Stockholders") are parties to that certain Amended and Restated Securities
Holders Agreement dated December 22, 1999 among Holdings, the BRS Investors
named therein, Canterbury Mezzanine Capital II, L.P., The CIT Group/Equity
Investments, Inc. and the Management Stockholders named therein (the "Securities
Holders Agreement") and the Registration Rights Agreement attached as Exhibit B
to the Securities Holders Agreement.
BRS Management Agreement and Transaction Services Agreement
- -----------------------------------------------------------
The Company and Holdings are party to a management services agreement
(the "BRS Management Agreement") with BRS & Co., the manager of BRS, pursuant to
which BRS & Co. is paid $500,000 per annum for certain management, business and
organizational strategy and merchant and investment banking services rendered to
the Company and Holdings, which services include, but are not limited to, advice
on corporate and financial planning, oversight of operations, including the
manufacturing, marketing and sales of the Company's products, development of
business plans, the structure of the Company's debt and equity capitalization
and the identification and development of business opportunities. Any future
increase in payments under the BRS Management Agreement are restricted by the
terms of the Company's indenture governing its 9 5/8% Senior Subordinated Notes
due 2007. The Company and BRS & Co. also are party to a transaction services
agreement pursuant to which BRS & Co. will be paid a transaction fee for
management, financial and other corporate advisory services rendered by BRS &
Co. in connection with acquisitions by the Company, which fee will not exceed
1.0% of the total transaction value. In connection with the Polaner Acquisition
and the Heritage Brands Acquisition in fiscal 1999 and the Maple Grove
Acquisition in fiscal 1998, the Company paid transaction fees aggregating
$300,000, $1,920,000 and $250,000 respectively, which were included in the cost
of the respective acquisitions. No transaction fees were paid in fiscal 2000.
Roseland Lease
- --------------
The Company's subsidiary, Roseland Distribution Company ("RDC"), is
party to a lease (the "Roseland Lease") for its Roseland facility with 426 Eagle
Rock Avenue Associates ("Eagle Rock"), a real estate partnership of which
Leonard S. Polaner, the Company's Chairman, is the general partner. The Company
pays $59,583 per month in rent to Eagle Rock pursuant to the Roseland Lease. In
the opinion of management, the terms of the Roseland Lease are at least as
favorable to the Company as the terms that could have been obtained from an
unaffiliated third party.
61
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS.
Independent Auditors' Report
Consolidated Balance Sheets as of December 30, 2000 and
January 1, 2000.
Consolidated Statements of Operations for the years ended
December 30, 2000, January 1, 2000 and January 2, 1999.
Consolidated Statements of Cash Flows for the years ended
December 30, 2000, January 1, 2000 and January 2, 1999.
Notes to Consolidated Financial Statements.
(2) FINANCIAL STATEMENT SCHEDULE.
Valuation and Qualifying Accounts.
(b) REPORTS ON FORM 8-K:
None.
62
(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
- --------------------- ----------------------------------------------------
2.1 Stock Purchase Agreement, dated July 2, 1998, by and
among BGH Holdings, Inc., Maple Grove Farms of
Vermont, Inc., Up Country Naturals of Vermont, Inc.,
Les Produits Alimentaires Jacques et Fils Inc.,
William F. Callahan and Ruth M. Callahan. (Filed
with the Securities and Exchange Commission as
Exhibit 2.1 to Commission Filing No. 333-39813 on
August 3, 1998 and incorporated herein by reference)
2.2 Asset Purchase Agreement, dated as of January 12,
1999, by and among Roseland Distribution Company,
International Home Foods, Inc. and M. Polaner, Inc.
(Filed with the Securities and Exchange Commission
as Exhibit 1 to the Company's Report on Form 8-K
filed February 19, 1999 and incorporated herein by
reference)
2.3 Asset and Stock Purchase Agreement, dated as of
January 28, 1999, by and among The Pillsbury
Company, Indivined B.V., IC Acquisition Company,
Heritage Acquisition Corp. and, as guarantor, B&G
Foods, Inc. (Filed as Exhibit 2.1 to the Company's
Report on Form 8-K filed April 1, 1999 and
incorporated herein by reference).
3.1 Certificate of Incorporation of B&G Foods, Inc.
(Filed with the Securities and Exchange Commission
as Exhibit 3.1 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.2 to Amendment
No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by
reference)
3.3 Certificate of Incorporation of BGH Holdings, Inc.
(Filed with the Securities and Exchange Commission
as Exhibit 3.3 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.4 Bylaws of BGH Holdings, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.4 to
Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated
herein by reference)
3.5 Intentionally omitted.
3.6 Intentionally omitted.
3.7 Certificate of Incorporation of Trappey's Fine
Foods, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.7 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14,
1998 and incorporated herein by reference)
3.8 Bylaws of Trappey's Fine Foods, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.8 to
Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated
herein by reference)
3.9 Certificate of Incorporation for Bloch &
Guggenheimer, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.9 to Amendment No.
1 to Registration Statement No. 333-39813 on January
14, 1998 and
63
incorporated herein by reference)
3.10 Bylaws of Bloch & Guggenheimer, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.10
to Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated
herein by reference)
3.11 Certificate of Incorporation of RWBW Acquisition
Corp. (Filed with the Securities and Exchange
Commission as Exhibit 3.11 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14,
1998 and incorporated herein by reference)
3.12 Bylaws of RWBW Acquisition Corp. (Filed with the
Securities and Exchange Commission as Exhibit 3.12
to Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated
herein by reference)
3.13 Intentionally omitted.
3.14 Intentionally omitted.
3.15 Certificate of Incorporation of Roseland
Distribution Company. (Filed with the Securities and
Exchange Commission as Exhibit 3.15 to Amendment No.
1 to Registration Statement No. 333-39813 on January
14, 1998 and incorporated herein by reference)
3.16 Bylaws of Roseland Distribution Company. (Filed with
the Securities and Exchange Commission as Exhibit
3.16 to Amendment No. 1 to Registration Statement
No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.17 Intentionally omitted.
3.18 Intentionally omitted.
3.19 Certificate of Incorporation of Burns & Ricker, Inc.
(Filed with the Securities and Exchange Commission
as Exhibit 3.19 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.20 Bylaws of Burns & Ricker, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.20
to Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated
herein by reference)
4.1 Indenture dated as of August 11, 1997 between B&G
Foods, Inc. (the "Company"), BGH Holdings, Inc.,
RWBW Acquisition Corp., BRH Holdings, Inc., Bloch &
Guggenheimer, Inc., Roseland Distribution Company,
Burns & Ricker, Inc., Roseland Manufacturing, Inc.,
and RWBW Brands Company (collectively, the
"Guarantors") and The Bank of New York, as trustee
(the "Trustee"). (Filed with the Securities and
Exchange Commission as Exhibit 4.1 to Registration
Statement No. 333-39813 on November 7, 1997 and
incorporated herein by reference)
4.2 Form of the Company's 9% Senior Notes due 2007.
(Filed with the Securities and Exchange Commission
as Exhibit 4.1 to Registration Statement No.
333-39813 on November 7, 1997 and incorporated
herein by reference)
10.1 Registration Rights Agreement dated as of August 11,
1997 by and among
64
the Company, the Guarantors party thereto, Lehman
Brothers, Inc. and Lazard Freres & Co., LLC. (Filed
with the Securities and Exchange Commission as
Exhibit 10.1 to Registration Statement No. 333-39813
on November 7, 1997 and incorporated herein by
reference)
10.2 Purchase Agreement dated August 6, 1997 among the
Company, the Guarantors party thereto, Lehman
Brothers, Inc., and Lazard Freres & Co., LLC. (Filed
with the Securities and Exchange Commission as
Exhibit 10.2 to Registration Statement No. 333-39813
on November 7, 1997 and incorporated herein by
reference)
10.3 Intentionally omitted.
10.4 Intentionally omitted.
10.5 Amended and Restated Jams Manufacturing Agreement
dated as of March 3, 1997 by and between Roseland
Manufacturing, Inc., and International Home Foods,
Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.5 to Amendment No. 2 to
Registration Statement No. 333-39813 on February 4,
1998 and incorporated herein by reference)
10.6 Sales and Distribution Agreement dated as of March
19, 1993 by and between M. Polaner, Inc. and DSD,
Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.6 to Amendment No. 2 to
Registration Statement No. 333-39813 on February 4,
1998 and incorporated herein by reference)
10.7 Spices Supply Agreement dated as of March 19, 1993
by and between Bloch & Guggenheimer, Inc. and M.
Polaner, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 10.7 to Amendment No.
2 to Registration Statement No. 333-39813 on
February 4, 1998 and incorporated herein by
reference)
10.8 Transition Services Agreement, dated as of February
5, 1999, among International Home Foods, Inc., M.
Polaner, Inc. and Roseland Distribution Company.
(Filed with the Securities and Exchange Commission
as Exhibit 2 to the Company's Report on Form 8-K
filed February 19, 1999 and incorporated herein by
reference)
10.9 Guaranty, dated as of January 12, 1999, of B&G
Foods, Inc. in favor of International Home Foods,
Inc. and M. Polaner, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3 to the
Company's Report on Form 8-K filed February 19, 1999
and incorporated herein by reference)
10.10 Consent, Waiver and Second Amendment, dated as of
January 12, 1999, to the Second Amended and Restated
Credit Agreement, dated as of August 11, 1997, among
B&G Foods, Inc., the subsidiaries party thereto,
Heller Financial, Inc., as agent and lender, and the
other lenders party thereto. (Filed with the
Securities and Exchange Commission as Exhibit 4 to
the Company's Report on Form 8-K filed February 19,
1999 and incorporated herein by reference)
10.11 Revolving Credit Agreement, dated as of March 15,
1999 among B&G Foods Holdings Corp., B&G Foods,
Inc., as borrower, the several lenders
65
from time to time party thereto, Lehman Brothers
Inc., as Arranger, The Bank of New York, as
Documentation Agent, Heller Financial, Inc., as
Co-Documentation Agent, and Lehman Commercial Paper
Inc. as Syndication Agent and Administrative Agent
(Filed as Exhibit 10.1 to the Company's Report on
Form 10-Q filed May 17, 1999 and incorporated herein
by reference).
10.12 Term Loan Agreement, dated as of March 15, 1999,
among B&G Foods Holdings Corp., B&G Foods, Inc., as
borrower, the several lenders from time to time
party thereto, Lehman Brothers Inc., as Arranger,
The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and
Lehman Commercial Paper, Inc., as Syndication Agent
and Administrative Agent (Filed as Exhibit 10.2 to
the Company's Report on Form 10-Q filed May 17, 1999
and incorporated herein by reference).
10.13 Guarantee and Collateral Agreement, dated as of
March 15, 1999, by B&G Foods Holdings Corp., B&G
Foods, Inc., and certain of its subsidiaries in
favor of Lehman Commercial Paper, Inc., as
Administrative Agent (Filed as Exhibit 10.3 to the
Company's Report on Form 10-Q filed May 17, 1999 and
incorporated herein by reference)
10.14 Amended and Restated Securities Holders Agreement
dated December 22, 1999 among B&G Foods Holdings
Corp., Bruckmann, Rosser, Sherrill & Co., L.P.,
Canterbury Mezzanine Capital II, L.P., The CIT
Group/Equity Investments, Inc. and the Management
Stockholders named therein (Filed as Exhibit 10.14
to the Company's Report on Form 10-K filed March 3,
2000 and incorporated herein by reference)
10.15 Amendment, dated as of May 12, 2000, to Revolving
Credit Agreement, dated as of March 15, 1999, among
B&G Foods Holdings Corp., B&G Foods, Inc., as
borrower, the several lenders from time to time
party thereto, Lehman Brothers Inc., as Arranger,
The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and
Lehman Commercial Paper Inc. as Syndication Agent
and Administrative Agent (Filed as Exhibit 10.15 to
the Company's Report on Form 10-Q filed May 15, 2000
and incorporated herein by reference)
10.16 Amendment, dated as of May 12, 2000, to Term Loan
Agreement, dated as of March 15, 1999, among B&G
Foods Holdings Corp., B&G Foods, Inc., as borrower,
the several lenders from time to time party thereto,
Lehman Brothers Inc., as Arranger, The Bank of New
York, as Documentation Agent, Heller Financial,
Inc., as Co-Documentation Agent, and Lehman
Commercial Paper, Inc., as Syndication Agent and
Administrative Agent (Filed as Exhibit 10.16 to the
Company's Report on Form 10-Q filed May 15, 2000 and
incorporated herein by reference)
12.1 Computation of Ratio of Earnings to Fixed Charges
(Filed herewith)
21.1 Subsidiaries of the Company and the Additional
Registrants. (Filed herewith)
27.1 Financial Data Schedule. (Filed herewith)
66
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
B&G FOODS, INC.
By: /s/ David L. Wenner
---------------------------------
David L. Wenner
Chief Executive Officer
Date: March 13, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
- ------------------------------ ----------------------------------- --------------
/s/ Leonard S. Polaner
- ------------------------------ Chairman of the Board of March 13, 2001
Leonard S. Polaner Directors
/s/ David L. Wenner President, Chief Executive March 13, 2001
- ------------------------------ Officer and Director (Principal
David L. Wenner Executive Officer)
Executive Vice President of March 13, 2001
/s/ Robert C. Cantwell Finance and Chief Financial
- ------------------------------ Officer (Principal Financial
Robert C. Cantwell and Accounting Officer)
/s/ Thomas Baldwin
- ------------------------------ Director March 13, 2001
Thomas Baldwin
/s/ William F. Callahan III
- ------------------------------ Director March 13, 2001
William F. Callahan III
/s/ Alfred Poe
- ------------------------------ Director March 13, 2001
Alfred Poe
/s/ Harold O. Rosser
- ------------------------------ Director March 13, 2001
Harold O. Rosser
/s/ Nicholas B. Dunphy
- ------------------------------ Director March 13, 2001
Nicholas B. Dunphy
/s/ Stephen C. Sherrill
- ------------------------------ Director March 13, 2001
Stephen C. Sherrill