As filed with the Securities and Exchange Commission on July 25, 2002
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one) Quarterly Report Pursuant to Section 13 or 15(d)
[ ] of the Securities Exchange Act of 1934
For the quarterly period ended June 29, 2002
or
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
B&G FOODS, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of 13-3916496
incorporation or organization) (I.R.S. Employer 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
Indicate by check 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 [ ] No [ ]
As of July 25, 2002, B&G Foods, Inc. had one (1) share of common stock,
$.01 par value, outstanding, which was owned by an affiliate.
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B&G Foods, Inc. and Subsidiaries
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets......................................1
Consolidated Statements of Income................................2
Consolidated Statements of Cash Flows............................3
Notes to Consolidated Financial Statements.......................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............9
Item 3. Quantitative and Qualitative Disclosures about
Market Risk...............................................17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.........................................19
Item 2. Changes in Securities and Use of Proceeds.................19
Item 3. Defaults Upon Senior Securities...........................19
Item 4. Submission of Matters to a Vote of Security Holders.......19
Item 5. Other Information.........................................19
Item 6. Exhibits and Reports on Form 8-K..........................20
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES
Index to Exhibits....................................................26
(i)
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except per share data)
Assets June 29, 2002 December 29, 2001
------ ------------- -----------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 10,579 $ 15,055
Trade accounts receivable, net 21,814 21,621
Inventories 66,275 66,142
Prepaid expenses 3,921 1,790
Deferred income taxes 1,672 1,672
----------------------------
Total current assets 104,261 106,280
Property, plant and equipment, net 37,860 36,431
Goodwill, net 112,319 112,319
Intangible assets, net 162,781 162,781
Other assets 11,737 8,195
----------------------------
$ 428,958 $ 426,006
============================
Liabilities and Stockholder's Equity
Current liabilities:
Current installments of long-term debt $ 433 $ 17,436
Trade accounts payable 17,153 21,256
Accrued expenses20,752 17,494
Due to related party 208 208
----------------------------
Total current liabilities 38,546 56,394
Long-term debt 282,855 271,839
Deferred income taxes 36,732 34,701
Other liabilities 264 236
----------------------------
Total liabilities 358,397 363,170
Stockholder's equity:
Common stock, $.01 par value per share. Authorized
1,000 shares; issued and outstanding 1 share - -
Additional paid-in capital56,392 56,392
Retained earnings 14,169 6,444
----------------------------
Total stockholder's equity 70,561 62,836
----------------------------
$ 428,958 $ 426,006
============================
See notes to consolidated financial statements.
1
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in thousands)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
June 29, 2002 June 30, 2001 June 29, 2002 June 30, 2001
------------- ------------- ------------- -------------
Net sales................................... $ 77,850 $ 73,092 $ 144,060 $ 134,491
Cost of goods sold.......................... 53,576 49,888 99,081 91,698
------------- ------------- ------------- -------------
Gross profit............................ 24,274 23,204 44,979 42,793
Sales, marketing and distribution expenses 9,439 8,417 17,339 16,281
General and administrative expenses......... 1,311 3,605 2,589 7,104
Management fees............................. 125 125 250 250
------------- ------------- ------------- -------------
Special charge-environmental clean-up....... - - - 1,100
Operating income........................ 13,399 11,057 24,801 18,058
Gain on sale of assets...................... - - - (3,112)
Derivative gain............................. (1,057) - (1,057) -
Interest expense............................ 6,562 7,518 12,934 16,031
------------- ------------- ------------- -------------
Income before income tax expense ....... 7,894 3,539 12,924 5,139
3,187 1,845 5,199 2,837
Income tax expense ......................... ------------- ------------- ------------- -------------
Net income ............................. $ 4,707 $ 1,694 $ 7,725 $ 2,302
============= ============= ============= =============
See notes to consolidated financial statements.
2
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Twenty-six Weeks Ended
June 29, 2002 June 30, 2001
------------- -------------
Cash flows from operating activities:
Net income................................................................ $ 7,725 $ 2,302
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 2,528 7,071
Deferred income tax expense............................................ 2,031 2,837
Amortization of deferred debt issuance costs and bond discount......... 1,199 953
Gain on sale of assets................................................. - (3,112)
Changes in assets and liabilities, net of effects of net assets sold:
Trade accounts receivable........................................ (193) 4,617
Inventories...................................................... (133) (3,502)
Prepaid expenses................................................. (2,131) (2,034)
Other assets..................................................... (1,023) -
Trade accounts payable........................................... (4,103) (3,502)
Accrued expenses................................................. 3,258 516
Other liabilities................................................ 28 48
------------- -------------
Net cash provided by operating activities............................ 9,186 6,194
Cash flows from investing activities:
Capital expenditures................................................... (3,957) (1,173)
Net cash received for sale of assets................................... - 24,090
------------- -------------
Net cash (used in) provided by investing activities.................. (3,957) 22,917
Cash flows from financing activities:
Payments of long-term debt............................................. (104,811) (32,876)
Proceeds from issuance of long-term debt............................... 98,760 -
Payments of debt issuance costs........................................ (3,654) -
------------- -------------
Net cash used in financing activities................................ (9,705) (32,876)
------------- -------------
Decrease in cash and cash equivalents................................ (4,476) (3,765)
Cash and cash equivalents at beginning of period.......................... 15,055 13,433
------------- -------------
Cash and cash equivalents at end of period................................ $ 10,579 $ 9,668
============= =============
Supplemental disclosure of cash flow information - Cash paid for:
Interest............................................................. $ 17,965 $ 16,511
Income taxes......................................................... $ 923 $ 161
See notes to consolidated financial statements.
3
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(dollars in thousands)
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of B&G Foods,
Inc. and subsidiaries (the "Company") contain all adjustments (consisting only
of normal and recurring adjustments) necessary to present fairly the Company's
consolidated financial position as of June 29, 2002 and the results of their
operations and their cash flows for the thirteen and twenty-six week periods
ended June 29, 2002 and June 30, 2001.
The results of operations for the thirteen and twenty-six week periods ended
June 29, 2002 are not necessarily indicative of the results to be expected for
the full year. The accompanying consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes included in
the Company's 2001 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
The Emerging Issues Task Force ("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 includes a conclusion
that the value of such sales incentives that results in a reduction of the price
paid by the customer should be netted against sales and not classified as a
sales or marketing expense. During 2001, the Company recorded reductions in
price pursuant to coupons as sales, marketing and distribution expenses. As
required, the Company implemented the provisions of such EITF consensus in the
first quarter of fiscal 2002 and, as a result, reclassified prior period coupon
expense as a reduction of net sales. Coupon expense reclassified in accordance
with the EITF consensus for the thirteen and twenty-six week periods ended June
30, 2001 was $0.4 million and $0.7 million, respectively. The implementation of
the provisions of such EITF consensus alters the classification of certain sales
incentives in the consolidated statements of income resulting in a reduction of
sales and gross margins, but does not have any effect on the Company's operating
income or net income. The Company historically has included, and continues to
include, free merchandise in cost of goods sold, as required by the new EITF
consensus.
In April 2001, the EITF reached a consensus with respect to EITF Issue No.
00-25, "Vendor Income Statement Characterization of Consideration to a Purchaser
of the Vendor's Products or Services." The consensus includes a conclusion that
consideration from a vendor to a retailer is presumed to be a reduction to the
selling prices of the vendor's products and, therefore, should be characterized
as a reduction of sales when recognized in the vendor's income statement. As
required, the Company implemented the provisions of such EITF consensus in the
first quarter of fiscal 2002 and, as a result, has reclassified certain prior
period expenses as a reduction of net sales. Such reclassification reduces sales
and gross margin, but does not have an impact on the Company's operating income
or net income. Such expenses reclassified in accordance with the EITF consensus
as a reduction of net sales and sales, marketing and distribution expenses for
the thirteen and twenty-six week periods ended June 30, 2001 were $14.6 million
and $24.9 million, respectively.
The following table summarizes the reclassifications of the prior period
amounts as if the two aforementioned new EITF consensuses had been implemented
effective December 31, 2000:
Thirteen weeks ended Twenty-six weeks ended
June 30, 2001 June 30, 2001
As Filed Reclassified As Filed Reclassified
-------- ------------ -------- ------------
Sales $88,090 $73,092 $160,046 $134,491
Gross profit 38,202 23,204 68,348 42,793
Sales, marketing and distribution expenses 23,415 8,417 41,836 16,281
4
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and
Other Intangible Assets." Statement No. 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement No. 141 also specifies the criteria intangible assets acquired
in a purchase method business combination must meet to be recognized and
reported as separate from goodwill. Statement No. 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of Statement No. 142. Statement No. 142 also requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment in
accordance with FASB Statement No. 144, "Accounting for the Impairment of
Disposal of Long-Lived Assets."
The Company adopted the provisions of Statement No. 141 on June 30, 2001,
and adopted the provisions of Statement No. 142 effective as of December 30,
2001. Goodwill and intangible assets acquired in business combinations completed
before July 1, 2001 continued to be amortized in fiscal 2001 in the same manner
permitted prior to the adoption of Statement No. 142.
In connection with the transitional goodwill impairment evaluation,
Statement No. 142 requires the Company to perform an assessment, for each
reporting unit, as to whether there is an indication that goodwill is impaired
as of the date of adoption by the Company of the provisions of Statement No.
142. Management believes the Company has one reporting unit. The Company has up
to six months from the date of adoption of the provisions of Statement No. 142
to determine the fair value of its reporting unit and to compare such value to
the reporting unit's carrying amount. If, upon such determination, the reporting
unit's carrying amount exceeds its fair value, the Company will be required to
perform the second step of the transitional impairment test. In the second step,
the Company must compare the implied fair value of the reporting unit's
goodwill, determined by allocating the reporting unit's fair value to all of its
assets (recognized and unrecognized) and liabilities in a manner similar to a
purchase price allocation in accordance with Statement No. 141, to its carrying
amount, both of which are required to be measured as of the date of adoption by
the Company of the provisions of Statement No. 142. This second step is required
to be completed as soon as possible, but no later than the end of the year of
such adoption. Any transitional impairment loss, if any, will be recognized as
the cumulative effect of a change in accounting principle in the Company's
consolidated statement of income.
As of December 30, 2001, the Company had unamortized goodwill in the amount
of $112.3 million, and unamortized identifiable intangible assets (trademarks)
in the amount of $162.8 million, all of which will be subject to the transition
provisions of Statement No.s 141 and 142. Effective as of December 30, 2001, the
Company ceased the amortization of all goodwill and identifiable intangible
assets having indefinite useful lives. Amortization expense related to goodwill
was $0.8 million and $1.6 million, respectively, for the thirteen and twenty-six
week periods ended June 30, 2001, respectively. Amortization expense related to
trademarks was $1.3 million and $2.7 million for the thirteen and twenty-six
week periods ended June 30, 2001, respectively. Based on the Company's
impairment analysis, the adoption of Statement No. 142 did not have a material
effect on the consolidated financial statements other than the nonamortization
of goodwill and other identifiable intangible assets deemed to have indefinite
useful lives effective as of December 30, 2001.
The following table reconciles previously reported net income to net income
adjusted as if the provisions of Statement No. 142 were in effect in fiscal
2001:
Thirteen weeks ended Twenty-six weeks ended
June 30, 2001 June 30, 2001
------------- -------------
Reported net income $1,694 $1,694 $2,302 $2,302
Add back: Goodwill amortization - 461 - 921
Add back: Trademark amortization - 820 - 1,640
------ ------ ------ ------
Adjusted net income $1,694 $2,975 $2,302 $4,863
====== ====== ====== ======
5
The Company accounts for its derivative and hedging transactions in
accordance with Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities," and Statement No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," (collectively referred to as
"Statement No. 133"). Statement No. 133 establishes accounting and reporting
standards for derivative instruments and for hedging activities and requires an
entity to recognize all derivative instruments either as an asset or a liability
in the balance sheet and to measure such instruments at fair value. These fair
value adjustments are to be included either in the determination of net income
or as a component of accumulated other comprehensive income depending on the
nature of the transaction.
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company only has one
interest rate swap agreement, which it entered into in March 2002, to manage its
exposure to interest rate fluctuations. The Company is exposed to credit risk in
the event of the inability of counter parties to perform under its outstanding
derivatives contracts. Management believes it has minimized such risk by
entering into transactions with a counter party that is a major financial
institution with a high credit rating.
(2) Nature of Operations and Business Dispositions
Nature of Operations
The Company operates in one industry segment, the manufacturing, selling 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. 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.
Business Disposition
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 for $26.0 million in cash. The gain
on the sale, net of transaction expenses, was approximately $3.1 million. The
Company applied the net cash proceeds from the B&R Disposition toward the
partial prepayment of term loans, as required under the Company's Senior Secured
Credit Facility. See Note 4 below.
(3) Inventories
Inventories consist of the following:
6
June 29, 2002 December 29, 2001
------------- -----------------
Raw materials and packaging................ $ 23,565 $ 15,035
Work in process........................... 1,234 2,041
Finished goods............................... 41,476 49,066
------------- -----------------
$ 66,275 $ 66,142
============= =================
(4) Debt
The Company is a party to a $280,000 Senior Secured Credit Facility (the
"Senior Secured Credit Facility") comprised of a $60,000 five-year revolving
credit facility ("Revolving Credit Facility"), a $70,000 (initial amount)
five-year Term Loan A ("Term Loan A") and a $150,000 (initial amount) 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
prepayments upon the occurrence of certain events, including material asset
dispositions and issuances of securities. 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 and define maximum capital
expenditure limits, a minimum fixed charge coverage ratio, a minimum total
interest coverage ratio and a maximum indebtedness to EBITDA ratio. 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 additional
criteria. The Senior Secured Credit Facility limits expenditures on acquisitions
to $40,000 per year. There were no borrowings outstanding under the Revolving
Credit Facility at June 29, 2002 and at June 30, 2001. The outstanding balances
for Term Loan A and Term Loan B at June 29, 2002 was $0 and $64,464,
respectively.
The Company has outstanding $220,000 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, of which $120,000 principal amount was originally
issued in August 1997 and $100,000 principal amount (the "New Notes") was issued
by the Company through a private offering of the notes completed on March 7,
2002. The Notes contain certain transfer restrictions. The proceeds from the
issuance of the New Notes were used to pay off, in its entirety, the then
outstanding balance under Term Loan A, and to reduce the amount outstanding
under the Term Loan B, and pay related deferred financing fees.
As part of a registration rights agreement dated March 7, 2002, the Company
agreed to offer to exchange an aggregate principal amount of up to $220,000 of
its 9.625% Senior Subordinated Notes due 2007 (the "Exchange Notes") for a like
principal amount of its Notes outstanding (the "Exchange Offer"). The terms of
the Exchange 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 New Notes.
The Exchange Offer was completed on June 27, 2002.
The indentures for the Notes contain 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
7
or after August 1, 2005. Upon the occurrence of a Change in 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.
On March 21, 2002, the Company entered into an interest rate swap agreement
with a major financial institution pursuant to which the Company pays a variable
rate of three-month LIBOR plus 5.65% (7.57% at June 29, 2002) on a notional
amount of $100,000 expiring in June 2004 in exchange for a fixed rate of 9.625%.
The fair value of this derivative instrument at June 29, 2002 was $1,057, which
is included in other assets. Because the interest rate swap does not qualify as
an effective hedge, changes in the fair value are recorded in the consolidated
statement of income.
(5) Environmental Matters
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 into a brook adjacent to such property. The New Jersey
Department of Environmental Protection ("NJDEP") initially engaged an
environmental services firm to address the clean-up 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, together with its environmental
services firms, the Company has worked to clean-up the oil and is cooperating
with the NJDEP. Both environmental services firms have completed the site work
and believe they have remediated the site such that no further clean-up is
warranted. Both firms have submitted their findings to the NJDEP along with
recommendations for no further action. The Company is awaiting the NJDEP's
response to such recommendations. NJDEP could require additional investigation
before acceding to the no further action recommendations, but the cost of such
additional investigation is not expected to have a material adverse effect on
the Company's consolidated financial condition, results of operations or
liquidity.
The Company recorded a charge of $1.1 million in the first quarter of fiscal
2001 to cover the expected cost of the clean-up, which approximates the actual
amount spent on such clean-up through June 29, 2002. In the third quarter of
fiscal 2001, the Company received an insurance reimbursement of $0.2 million and
accrued an additional $0.1 million for certain remaining miscellaneous expenses.
Management believes that substantially all expenses relating to this matter have
been incurred and paid as of June 29, 2002, although future information and
developments may warrant or require the Company to incur additional expenses. At
June 29, 2002, the remaining accrual related to this matter was less than $0.1
million.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. The Company has
submitted a demand for indemnity, but the indemnitor's initial response was
limited to a request for additional information. The Company believes that it
may also have substantive defenses to the third-party complaint, and will
explore such defenses if the Company is not indemnified for this liability.
Nevertheless, based on the Company's understanding of the volume of waste White
Cap Preserves is alleged to have sent to
8
the site, the large number of potentially responsible parties and the size of
settlements by other parties with similar volumes, the Company does not believe
this liability, if any, will have a material adverse effect on its consolidated
financial condition, results of operations or liquidity.
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.
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 consolidated financial
position, results of operations or liquidity.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
13 week period ended June 29, 2002 compared to 13 week period ended June 30,
2001.
Net Sales. Net sales increased $4.8 million or 6.5% to $77.9 million for the
thirteen week period ended June 29, 2002 (the "2002 Quarterly Period") from
$73.1 million for the thirteen week period ended June 30, 2001 (the "2001
Quarterly Period"). Sales of the Company's line of Emeril's branded products,
B&M Baked Beans, Maple Grove Farms of Vermont products, Ac'cent branded flavor
enhancers, Las Palmas brands, Underwood brands and Polaner brands increased $2.6
million, $0.6 million, $0.5 million, $0.5 million, $0.4 million, $0.4 million
and $0.4 million or 59.4%, 5.1%, 5.1%, 11.8%, 11.7%, 7.4% and 4.2%,
respectively. These increases were offset by a reduction of sales in B&G pickles
and peppers and Joan of Arc brands in the amounts of $0.4 million and $0.3
million or 3.1% and 15.0%, respectively. All other brands accounted for an
additional increase of $0.1 million or 1.5%. Trade promotion spending, which is
included in net sales, expressed as a percentage of gross sales remained
constant at 17.9% for both the 2002 Quarterly Period and the 2001 Quarterly
Period.
Gross Profit. Gross profit increased $1.1 million or 4.6% to $24.3 million
for the 2002 Quarterly Period from $23.2 million for the 2001 Quarterly Period.
Gross profit expressed as a percentage of net sales decreased to 31.2% for the
2002 Quarterly Period from 31.7% for the 2001 Quarterly Period, primarily due to
an increase in the cost of maple syrup and certain co-pack items offset
partially by a reduction of delivery expenses in an amount equal to 1.0% of net
sales.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $1.0 million or 12.1% to $9.4 million for the
2002 Quarterly Period from $8.4 million for the 2001 Quarterly Period. Such
expenses expressed as a percentage of net sales increased to 12.1% in the 2002
Quarterly Period from 11.5% in the 2001 Quarterly Period. Selling expenses
increased $0.3 million or 8.1% and marketing costs increased $0.9 million or
29.1%. These increases were offset by a decrease in warehousing costs of $0.2
million or 14.4%.
General and Administrative Expenses. General and administrative expenses
(including amortization of intangibles in the 2001 Quarterly Period and
management fees) decreased $2.3 million or 61.5% to $1.4 million for the 2002
Quarterly Period from $3.7 million in the 2001 Quarterly Period. Amortization of
goodwill and other intangibles with indefinite useful lives decreased from $2.1
million in the 2001 Quarterly Period to $0 in the 2002 Quarterly Period as a
result of the implementation of the provisions of FASB Statement No. 142. All
other general and administrative expenses collectively decreased $0.2 million in
the 2002 Quarterly Period.
Operating Income. As a result of the foregoing, operating income increased
$2.3 million or 21.2% to $13.4 million for the 2002 Quarterly Period from $11.1
million for the 2001 Quarterly Period. Operating
9
income expressed as a percentage of net sales increased to 17.2% in the 2002
Quarterly Period from 15.1% in the 2001 Quarterly Period.
Derivative Gain. Income of $1.1 million was recorded in the 2002 Quarterly
Period reflecting the change in the fair value of the Company's interest rate
swap agreement. See "Debt" below.
Interest Expense. Interest expense decreased $1.0 million to $6.6 million
for the 2002 Quarterly Period from $7.5 million in the 2001 Quarterly Period as
a result of lower outstanding loan balances and lower interest rates in the 2002
Quarterly Period.
Income Tax Expense. Income tax expense increased $1.3 million or 72.7% to
$3.2 million for the 2002 Quarterly Period from $1.9 million in the 2001
Quarterly Period. The Company's effective tax rate for the 2002 Quarterly Period
was 40.4% as compared to 52.0% in the 2001 Quarterly Period. The decrease in the
effective rate is due to the non-amortization of goodwill and trademarks in the
2002 Quarterly Period as a result of the adoption of FASB Statement No. 142.
Because of the highly leveraged status of the Company, earnings before
derivative gain, interest, taxes, depreciation and amortization ("Adjusted
EBITDA") is an important performance measure used by the Company and its
stockholders. The Company believes that Adjusted EBITDA provides additional
information for determining its ability to meet future debt service
requirements. However, Adjusted EBITDA is not indicative of operating income or
cash flow from operations as determined under generally accepted accounting
principles. The Company's Adjusted EBITDA for the thirteen weeks ended June 29,
2002 and June 30, 2001 is calculated as follows (dollars in millions):
Thirteen weeks ended
--------------------
June 29, 2002 June 30, 2001
------------- -------------
Net income $ 4.7 $ 1.7
Depreciation and amortization 1.3 3.6
Income tax expense 3.2 1.8
Interest expense 6.6 7.5
EBITDA 15.8 14.6
Derivative gain (1.1) 0.0
Adjusted EBITDA $ 14.7 $ 14.6
26 week period ended June 29, 2002 compared to 26 week period ended June 30,
2001.
Net Sales. Net sales increased $9.6 million or 7.1% to $144.1 million for
the twenty-six week period ended June 29, 2002 (the "2002 Year-to-Date Period")
from $134.5 million for the twenty-six week period ended June 30, 2001 (the
"2001 Year-to-Date Period"). Sales of the Company's line of Emeril's branded
products, Ac'cent branded flavor enhancers, Las Palmas brands, B&M Baked Beans,
Maple Grove Farms of Vermont products, Underwood brands and Trappey brands
increased $5.1 million, $1.3 million, $1.1 million, $0.7 million, $0.6 million,
$0.4 million and $0.3 million or 68.5%, 17.6%, 15.3%, 4.6%, 3.1%, 4.7% and 4.5%,
respectively. These increases were partially offset by a reduction of sales, in
the amount of $0.4 million, relating to the brands sold in connection with the
B&R Disposition and a reduction of sales for B&G pickles and peppers in the
amount of $0.5 million or 2.2%. All other brands accounted for an additional
increase of $1.0 million or 3.0%. Trade promotion spending, which is included in
net sales, expressed as a percentage of gross sales remained constant at 17.3%
for both the 2002 Year-to-Date Period and the 2001 Year-to-Date Period.
10
Gross Profit. Gross profit increased $2.2 million or 5.1% to $45.0 million
for the 2002 Year-to-Date Period from $42.8 million in the 2001 Year-to-Date
Period. Gross profit expressed as a percentage of net sales decreased to 31.2%
for the 2002 Year-to-Date Period from 31.8% in the 2001 Year-to-Date Period,
primarily due to an increase in the cost of maple syrup and certain co-pack
items offset partially by a reduction of delivery expenses in an amount equal to
0.6% of net sales.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $1.1 million or 6.5% to $17.3 million for the
2002 Year-to-Date Period from $16.3 million for the 2001 Year-to-Date Period.
Such expenses expressed as a percentage of net sales decreased to 12.0% in the
2002 Year-to-Date Period from 12.1% in the 2001 Year-to-Date Period. Selling
expenses increased $0.7 million or 8.8% and marketing costs increased $0.7
million or 11.7%. These increases were offset by a decrease in warehousing costs
of $0.3 million or 13.0%.
General and Administrative Expenses. General and administrative expenses
(including amortization of intangibles in the 2001 Year-to-Date Period and
management fees) decreased $4.5 million or 61.4% to $2.8 million for the 2002
Year-to-Date Period from $7.4 million in the 2001 Year-to-Date Period.
Amortization of goodwill and other intangibles with indefinite useful lives
decreased from $4.3 million in the 2001 Year-to-Date Period to $0 in the 2002
Year-to-Date Period as a result of the implementation of the provisions of FASB
Statement No. 142. All other general and administrative expenses collectively
decreased $0.2 million in the 2002 Year-to-Date Period.
Environmental Clean-Up. As further described below, the Company recorded a
charge of $1.1 million in the 2001 Year-to-Date Period.
Operating Income. As a result of the foregoing, operating income increased
$6.7 million or 37.3% to $24.8 million for the 2002 Year-to-Date Period from
$18.1 million for the 2001 Year-to-Date Period. Operating income expressed as a
percentage of net sales increased to 17.2% in the 2002 Year-to-Date Period from
13.4% in the 2001 Year-to-Date Period.
Gain of Sale of Assets. As further described in Note 2 of the consolidated
financial statements, the Company recorded a $3.1 million gain on the B&R
Disposition in the 2001 Year-to-Date Period.
Derivative Gain. Income of $1.1 million was recorded for the 2002
Year-to-Date Period to reflect the change in the fair value of the Company's
interest rate swap agreement. See "Debt" below.
Interest Expense. Interest expense decreased $3.1 million to $12.9 million
for the 2002 Year-to-Date Period from $16.0 million in the 2001 Year-to-Date
Period as a result of lower outstanding loan balances and lower interest rates
in the 2002 Year-to-Date Period.
Income Tax Expense. Income tax expense increased $2.4 million or 83.3% to
$5.2 million for the 2002 Year-to-Date Period from $2.8 million in the 2001
Year-to-Date Period. The Company's effective tax rate for the 2002 Year-to-Date
Period was 40.2% as compared to 55.2% in the 2001 Year-to-Date Period. The
decrease in the effective rate is due to the non-amortization of goodwill and
trademarks in the 2002 Year-to-Date Period as a result of the adoption of FASB
Statement No. 142.
Because of the highly leveraged status of the Company, earnings before
derivative gain, severance charges, interest, taxes, depreciation, amortization,
special charges and gain on sale of assets ("Adjusted EBITDA") is an important
performance measure used by the Company and its stockholders. The Company
believes that Adjusted EBITDA provides additional information for determining
its ability to meet future debt service requirements. However, Adjusted EBITDA
is not indicative of operating income or cash flow from operations as determined
under generally accepted accounting principles. The Company's Adjusted EBITDA
for the twenty-six weeks ended June 29, 2002 and June 30, 2001 is calculated as
follows (dollars in millions):
11
Twenty-six weeks ended
----------------------
June 29, 2002 June 30, 2001
------------- -------------
Net income $ 7.7 $ 2.3
Depreciation and amortization 2.5 7.1
Income tax expense 5.2 2.8
Interest expense 13.0 16.0
------- -------
EBITDA 28.4 28.2
Special charge-environmental clean-up 0.0 1.1
Derivative gain (1.1) 0.0
Gain on sale of assets 0.0 (3.1)
------- -------
Adjusted EBITDA $ 27.3 $ 26.2
======= =======
Liquidity and Capital Resources
Cash Flows
Cash provided by operating activities increased $3.0 million to $9.2 million
for the 2002 Year-to-Date Period from cash provided by operating activities of
$6.2 million in the 2001 Year-to-Date Period. The increase was due primarily to
an increase in net income. Working capital at June 29, 2002 was $65.7 million,
an increase of $15.8 million over working capital at December 29, 2001 of $49.9
million. The increase in working capital was primarily due to the refinancing of
long term debt.
Net cash used in investing activities for the 2002 Year-to-Date Period was
$4.0 million as compared to net cash provided by investing activities of $22.9
million for the 2001 Year-to-Date Period. The net cash provided by investing
activities in the 2001 Year-to-Date Period reflects the proceeds received from
the B&R Disposition in the amount of $24.1 million. Capital expenditures during
the 2002 Year-to-Date Period of $4.0 million included purchases of manufacturing
and computer equipment and were $2.8 million above the $1.2 million in similar
capital expenditures for the 2001 Year-to-Date Period.
Net cash used in financing activities for the 2002 Year-to-Date Period was
$9.7 million as compared to $32.9 million for the 2001 Year-to-Date Period. The
net cash used by financing activities for the 2002 Year-to-Date Period included
a payment of $38.3 million toward the remaining balance of the Term Loan A and a
partial prepayment of $66.2 million toward the Term Loan B. These payments
totaled $104.5 million, and included $95.8 million in prepayments of Term Loan A
and Term Loan B, the Company's required $0.2 million quarterly payments under
Term Loan B and an additional prepayment of $8.5 million under Term Loan B. The
net cash used by financing activities for the 2001 Year-to-Date Period included
payments of $13.9 million due on the Term Loan A and $18.9 million due on the
Term Loan B. These payments included a mandatory prepayment made in January 2001
of an aggregate of $26.0 million required under the Senior Secured Credit
Facility in connection with the B&R Disposition. In addition, a payment of $0.3
million was made toward capital leases in the 2002 Year-to-Date Period.
12
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
will increase with any additional indebtedness the Company may incur to finance
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.
Environmental Clean-Up
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 into a brook adjacent to such property. The New Jersey
Department of Environmental Protection ("NJDEP") initially engaged an
environmental services firm to address the clean-up 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, together with its environmental
services firms, the Company has worked to clean-up the oil and is cooperating
with the NJDEP. Both environmental services firms have completed the site work
and believe they have remediated the site such that no further clean-up is
warranted. Both firms have submitted their findings to the NJDEP along with
recommendations for no further action. The Company is awaiting the NJDEP's
response to such recommendations. NJDEP could require additional investigation
before acceding to the no further action recommendations, but the cost of such
additional investigation is not expected to have a material adverse effect on
the Company's consolidated financial condition, results of operations or
liquidity.
The Company recorded a charge of $1.1 million in the first quarter of fiscal
2001 to cover the expected cost of the clean-up, which approximates the actual
amount spent on such clean-up through June 29, 2002. In the third quarter of
fiscal 2001, the Company received an insurance reimbursement of $0.2 million and
accrued an additional $0.1 million for certain remaining miscellaneous expenses.
Management believes that substantially all expenses relating to this matter have
been incurred and paid as of June 29, 2002, although future information and
developments may warrant or require the Company to incur additional expenses. At
June 29, 2002, the remaining accrual related to this matter was less than $0.1
million.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. The Company has
submitted a demand for indemnity, but the indemnitor's initial response was
limited to a request for additional information. The Company believes that it
may also have substantive defenses to the third-party complaint, and will
explore those defenses if the Company is not indemnified for this liability.
Nevertheless, based on the Company's understanding of the volume of waste White
Cap Preserves is alleged to have sent to the site, the large number of
potentially responsible parties and the size of settlements by other parties
with similar volumes, the Company does not believe this liability, if any, will
have a material adverse effect on its consolidated financial condition, results
of operations or liquidity.
Debt
The Company is a party to a $280,000 Senior Secured Credit Facility (the
"Senior Secured Credit Facility") comprised of a $60,000 five-year revolving
credit facility ("Revolving Credit Facility"), a $70,000 (initial amount)
five-year Term Loan A ("Term Loan A") and a $150,000 (initial amount) seven-year
Term
13
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
prepayments upon the occurrence of certain events, including material asset
dispositions and issuances of securities. 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 and define maximum capital
expenditure limits, a minimum fixed charge coverage ratio, a minimum total
interest coverage ratio and a maximum indebtedness to EBITDA ratio. 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 additional
criteria. The Senior Secured Credit Facility limits expenditures on acquisitions
to $40,000 per year. There were no borrowings outstanding under the Revolving
Credit Facility at June 29, 2002 and at June 30, 2001. The outstanding balances
for Term Loan A and Term Loan B at June 29, 2002 was $0 and $64,464,
respectively.
The Company has outstanding $220,000 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, of which $120,000 principal amount was originally
issued in August 1997 and $100,000 principal amount (the "New Notes") was issued
by the Company through a private offering of the notes completed on March 7,
2002. The Notes contain certain transfer restrictions. The proceeds from the
issuance of the New Notes were used to pay off, in its entirety, the then
outstanding balance under Term Loan A, and to reduce the amount outstanding
under the Term Loan B, and pay related deferred financing fees.
As part of a registration rights agreement dated March 7, 2002, the Company
agreed to offer to exchange an aggregate principal amount of up to $220,000 of
its 9.625% Senior Subordinated Notes due 2007 (the "Exchange Notes") for a like
principal amount of its Notes outstanding (the "Exchange Offer"). The terms of
the Exchange 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 New Notes.
The Exchange Offer was completed on June 27, 2002.
The indentures for the Notes contain 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 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.
On March 21, 2002, the Company entered into an interest rate swap agreement
with a major financial institution pursuant to which the Company pays a variable
rate of three-month LIBOR plus 5.65% (7.57% at June 29, 2002) on a notional
amount of $100,000 expiring in June 2004 in exchange for a fixed rate of
14
9.625%. The fair value of this derivative instrument at June 29, 2002 was
$1,057, which is included in other assets. Because the interest rate swap does
not qualify as an effective hedge, changes in the fair value are recorded in the
consolidated statement of income.
Future Capital Needs
The Company is highly leveraged. On June 29, 2002, the Company's total
long-term debt (including current installments) and stockholder's equity was
$283.3 million and $70.6 million, respectively.
The Company's primary sources of capital are cash flows 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 $59.0 million at June 29, 2002, 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.
Seasonality
Sales of a number of the Company's products tend to be seasonal. In the
aggregate, however, the Company's sales are not heavily weighted to any
particular quarter. 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.
Recent Accounting Pronouncements
The Emerging Issues Task Force ("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 includes a conclusion
that the value of such sales incentives that results in a reduction of the price
paid by the customer should be netted against sales and not classified as a
sales or marketing expense. During 2001, the Company recorded reductions in
price pursuant to coupons as sales, marketing and distribution expenses. As
required, the Company implemented the provisions of such EITF consensus in the
first quarter of fiscal 2002 and, as a result, reclassified prior period coupon
expense as a reduction of net sales. Coupon expense reclassified in accordance
with the EITF consensus for the thirteen and twenty-six week periods ended June
30, 2001 was $0.4 million and $0.7 million, respectively. The implementation of
the provisions of such EITF consensus alters the classification of certain sales
incentives in the consolidated statements of income resulting in a reduction of
sales and gross margin, but does not have any effect on the Company's operating
income or net income. The Company historically has included, and continues to
include, free merchandise in cost of goods sold, as required by the new EITF
consensus.
In April 2001, the EITF reached a consensus with respect to EITF Issue No.
00-25, "Vendor Income Statement Characterization of Consideration to a Purchaser
of the Vendor's Products or Services." The consensus includes a conclusion that
consideration from a vendor to a retailer is presumed to be a reduction to the
selling prices of the vendor's products and, therefore, should be characterized
as a reduction of sales when recognized in the vendor's income statement. As
required, the Company implemented the provisions of such EITF consensus in the
first quarter of fiscal 2002 and, as a result, has reclassified certain prior
period expenses as a reduction of net sales. Such reclassification reduces sales
and gross margin, but does not have an impact on the Company's operating income
or net income. Such expenses reclassified in accordance with the EITF
15
consensus as a reduction of net sales and sales, marketing and distribution
expenses for the thirteen and twenty-six week periods ended June 30, 2001 were
$14.6 million and $24.9 million, respectively.
The following table summarizes the reclassification of the prior period
amounts as if the two aforementioned new EITF consensuses had been implemented
effective December 31, 2000:
Thirteen weeks ended Twenty-six weeks ended
June 30, 2001 June 30, 2001
As Filed Reclassified As Filed Reclassified
-------- ------------ -------- ------------
Sales $88,090 $73,092 $160,046 $134,491
Gross profit 38,202 23,204 68,348 42,793
Sales, marketing and distribution expenses 23,415 8,417 41,836 16,281
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and
Other Intangible Assets." Statement No. 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
as well as all purchase method business combinations completed after June 30,
2001. Statement No. 141 also specifies the criteria intangible assets acquired
in a purchase method business combination must meet to be recognized and
reported as separate from goodwill. Statement No. 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of Statement No. 142. Statement No. 142 also requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment in
accordance with FASB Statement No. 144, "Accounting for the Impairment of
Disposal of Long-Lived Assets."
The Company adopted the provisions of Statement No. 141 on June 30, 2001,
and adopted the provisions of Statement No. 142 effective as of December 30,
2001. Goodwill and intangible assets acquired in business combinations completed
before July 1, 2001 continued to be amortized in fiscal 2001 in the same manner
permitted prior to the adoption of Statement No. 142.
In connection with the transitional goodwill impairment evaluation,
Statement No. 142 requires the Company to perform an assessment, for each
reporting unit, as to whether there is an indication that goodwill is impaired
as of the date of adoption by the Company of the provisions of Statement No.
142. Management believes the Company has one reporting unit. The Company has up
to six months from the date of adoption of the provisions of Statement No. 142
to determine the fair value of its reporting unit and to compare such value to
the reporting unit's carrying amount. If, upon such determination, the reporting
unit's carrying amount exceeds its fair value, the Company will be required to
perform the second step of the transitional impairment test. In the second step,
the Company must compare the implied fair value of the reporting unit's
goodwill, determined by allocating the reporting unit's fair value to all of its
assets (recognized and unrecognized) and liabilities in a manner similar to a
purchase price allocation in accordance with Statement No. 141, to its carrying
amount, both of which are required to be measured as of the date of adoption by
the Company of the provisions of Statement No. 142. This second step is required
to be completed as soon as possible, but no later than the end of the year of
such adoption. Any transitional impairment loss, if any, will be recognized as
the cumulative effect of a change in accounting principle in the Company's
consolidated statement of income.
As of December 30, 2001, the Company had unamortized goodwill in the amount
of $112.3 million, and unamortized identifiable intangible assets (trademarks)
in the amount of $162.8 million, all of which will be subject to the transition
provisions of Statement No.s 141 and 142. Effective as of December 30, 2001, the
Company ceased the amortization of all goodwill and identifiable intangible
assets having indefinite useful lives. Amortization expense related to goodwill
was $0.8 million and $1.6 million, respectively, for the thirteen and twenty-six
week periods ended June 30, 2001. Amortization expense related to trademarks was
$1.3 million and $2.7 million for the thirteen and twenty-six week periods ended
June 30, 2001. Based on the Company's impairment analysis, the adoption of
Statement No. 142 did not have a material effect on the
16
consolidated financial statements other than the nonamortization of goodwill and
other identifiable intangible assets deemed to have indefinite useful lives
effective as of December 30, 2001.
The following table reconciles previously reported net income to net income
adjusted as if the provisions of Statement No. 142 were in effect in fiscal
2001:
Thirteen weeks ended Twenty-six weeks ended
June 30, 2001 June 30, 2001
------------- -------------
Reported net income $1,694 $1,694 $2,302 $2,302
Add back: Goodwill amortization 0 461 0 921
Add back: Trademark amortization 0 820 0 1,640
------ ------ ------ ------
Adjusted net income $1,694 $2,975 $2,302 $4,863
====== ====== ====== ======
In August, 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets." Statement No. 144 addresses
financial accounting and reporting for the impairment of disposal of long-lived
assets. This Statement requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Statement No. 144 requires
companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. The Company adopted Statement No. 144 on December
30, 2001 and such adoption had no effect on the Company's consolidated financial
statements for the thirteen and twenty-six week periods ended June 29, 2002.
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 correct. Important factors that could cause actual results to
differ materially from the Company's expectations are disclosed in this report
as well as the Company's most recent annual report on Form 10-K, 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 3. 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 June 29, 2002, the Company's only variable
rate borrowings were under Term Loan B and the Revolving Credit Facility, which
bear interest at several
17
alternative variable rates as stipulated in the Senior Secured Credit Facility,
and the $100,000 New Notes, which bear interest at the variable rate of
three-month LIBOR plus 5.65% at June 29, 2002 pursuant to the interest rate swap
agreement. A 100 basis point increase in interest rates, applied to the
Company's borrowings at June 29, 2002, would result in an annual increase in
interest expense and a corresponding reduction in cash flow of approximately
$1.7 million.
18
PART II
OTHER INFORMATION
Item 1. 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.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. The Company has
submitted a demand for indemnity, but the indemnitor's initial response was
limited to a request for additional information. The Company believes that it
may also have substantive defenses to the third-party complaint, and will
explore such defenses if the Company is not indemnified for this liability.
Nevertheless, based on the Company's understanding of the volume of waste White
Cap Preserves is alleged to have sent to the site, the large number of
potentially responsible parties and the size of settlements by other parties
with similar volumes, the Company does not believe this liability, if any, will
have a material adverse effect on its consolidated financial condition, results
of operations or liquidity.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
19
Item 6. Exhibits and Reports on Form 8-K
(a) 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 Certificate of Incorporation of Maple Groves Farms of Vermont,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.5 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.6 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
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 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-
20
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 Certificate of Incorporation of Les Produits Alimentaires
Jacques Et Fils, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.13 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated herein
by reference)
3.14 Bylaws of Les Produits Alimentaires Jacques Et Fils, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.14 to Amendment No. 1 to Registration Statement No. 333-86062
on May 9, 2002 and incorporated herein by reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a 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 Polaner, Inc. (f/k/a 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 Certificate of Incorporation of Heritage Acquisition Corp.
(Filed with the Securities and Exchange Commission as Exhibit
3.17 to Amendment No. 1 to Registration Statement No. 333-86062
on May 9, 2002 and incorporated herein by reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the Securities
and Exchange Commission as Exhibit 3.18 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed with
the Securities and Exchange Commission as Exhibit 3.19 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the Securities
and Exchange Commission as Exhibit 3.20 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc.,
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, and The Bank of New York, as 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 First Supplemental Indenture dated as of May 31, 2000 (to the
Indenture dated as of August 11, 1997) between B&G Foods, Inc.,
BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc. (f.k.a. Roseland Distribution
Company), Burns & Ricker, Inc., Trappey's Fine Foods, Inc.,
Maple Groves Farms of Vermont, Inc., William Underwood Company,
Heritage Acquisition Corp. and the Bank of New York. (Filed
with the Securities and Exchange Commission as Exhibit 4.2 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
4.3 Second Supplemental Indenture dated as of February 28, 2002
between B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition
Corp., Bloch & Guggenheimer, Inc., Polaner, Inc. (f.k.a.
Roseland Distribution Company), Trappey's Fine Foods, Inc.,
Maple Groves Farms of Vermont, Inc., William Underwood Company,
Heritage Acquisition Corp., Les Produits Alimentaires Jacques
Et Fils, Inc. and the Bank of
21
New York. (Filed with the Securities and Exchange Commission as
Exhibit 4.3 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
4.4 Indenture dated as of March 7, 2002 between B&G Foods, Inc, BGH
Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc., Maple Groves Farms of Vermont, Inc., Les
Produits Alimentaires Jacques Et Fils, Inc., Heritage
Acquisition Corp., Trappey's Fine Foods, Inc., William
Underwood Company and The Bank of New York, as trustee (Filed
with the Securities and Exchange Commission as Exhibit 4.4 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
4.5 Form of the Company's 9 5/8% Senior Notes due 2007. (Included
in Exhibit 4.1 and 4.4)
10.1 Registration Rights Agreement dated as of August 11, 1997 by
and among the Company, the Guarantors party thereto, Lehman
Brothers, Inc. and Lazard Freres & Co., LLC. (Filed with the
Securities and Exchange Commission as Exhibit 10.1 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 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)
10.4 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
10.1 to the Company's Report on Form 10-Q filed May 17, 1999
and incorporated herein by reference).
10.5 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).
10.6 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)
10.7 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)
10.8 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
22
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)
10.9 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)
10.10 Second Amendment, dated as of March 5, 2002, to Revolving
Credit Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several banks and other financial
institutions or entities from time to time parties to the
Revolving Credit Agreement, Lehman Brothers Inc., as advisor,
lead arranger and book manager, 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 with the
Securities and Exchange Commission as Exhibit 10.10 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference.)
10.11 Second Amendment, dated as of March 5, 2002, to Term Loan
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several financial institutions or
entities from time to time parties to the Term Loan Agreement
thereto, Lehman Brothers Inc., as advisor, lead arranger and
book manager, 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 with the Securities and Exchange Commission as
Exhibit 10.11 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference.)
10.12 Purchase Agreement dated as of March 4, 2002 between B&G Foods,
Inc., BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods, Inc.,
Maple Grove Farms of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils, Inc., Heritage Acquisition Corp., William
Underwood Company and The Bank of New York (Filed with the
Securities and Exchange Commission as Exhibit 10.12 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
10.13 Registration Rights Agreement dated as of March 7, 2002 between
B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition Corp.,
Bloch & Guggenheimer, Inc., Polaner, Inc., Trappey's Fine
Foods, Inc., Maple Grove Farms of Vermont, Inc., Les Produits
Alimentaires Jacques et Fils, Inc., Heritage Acquisition Corp.,
William Underwood Company, Lehman Brothers Inc. and Fleet
Securities, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.13 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)
(b) Reports on Form 8-K
Current Report on Form 8-K dated and filed June 14, 2002 announcing the
Company's intention to extend the expiration date for its previously announced
exchange offer.
23
Current Report on Form 8-K dated and filed June 19, 2002 announcing the
Company's intention to extend the expiration date for its previously announced
exchange offer.
Current Report on Form 8-K dated and filed June 24, 2002 announcing the
Company's intention to extend the expiration date for its previously announced
exchange offer.
24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 25, 2002 B&G FOODS, INC.
By: /s/ Robert C. Cantwell
--------------------------------------------
Robert C. Cantwell
Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer and Authorized Officer)
INDEX TO 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 Certificate of Incorporation of Maple Groves Farms of Vermont,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.5 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.6 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
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 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 Certificate of Incorporation of Les Produits Alimentaires
Jacques Et Fils, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.13 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated herein
by reference) 3.14 Bylaws of Les Produits Alimentaires Jacques
Et Fils, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.14 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated herein
by reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a 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 Polaner, Inc. (f/k/a 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
Certificate of Incorporation of Heritage Acquisition Corp.
(Filed with the Securities and Exchange Commission as Exhibit
3.17 to Amendment No. 1 to Registration Statement No. 333-86062
on May 9, 2002 and incorporated herein by reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the Securities
and Exchange Commission as Exhibit 3.18 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed with
the Securities and Exchange Commission as Exhibit 3.19 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the Securities
and Exchange Commission as Exhibit 3.20 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc.,
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, and The Bank of New York, as 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 First Supplemental Indenture dated as of May 31, 2000 (to the
Indenture dated as of August 11, 1997) between B&G Foods, Inc.,
BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc. (f.k.a. Roseland Distribution
Company), Burns & Ricker, Inc., Trappey's Fine Foods, Inc.,
Maple Groves Farms of Vermont, Inc., William Underwood Company,
Heritage Acquisition Corp. and the Bank of New York. (Filed
with the Securities and Exchange Commission as Exhibit 4.2 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
4.3 Second Supplemental Indenture dated as of February 28, 2002
between B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition
Corp., Bloch & Guggenheimer, Inc., Polaner, Inc. (f.k.a.
Roseland Distribution Company), Trappey's Fine Foods, Inc.,
Maple Groves Farms of Vermont, Inc., William Underwood Company,
Heritage Acquisition Corp., Les Produits Alimentaires Jacques
Et Fils, Inc. and the Bank of New York. (Filed with the
Securities and Exchange Commission as Exhibit 4.3 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference)
4.4 Indenture dated as of March 7, 2002 between B&G Foods, Inc, BGH
Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc., Maple Groves Farms of Vermont, Inc., Les
Produits Alimentaires Jacques Et Fils, Inc., Heritage
Acquisition Corp., Trappey's Fine Foods, Inc., William
Underwood Company and The Bank of New York, as trustee (Filed
with the Securities and Exchange Commission as Exhibit 4.4 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
4.5 Form of the Company's 9 5/8% Senior Notes due 2007. (Included
in Exhibit 4.1 and 4.4) 10.1 Registration Rights Agreement
dated as of August 11, 1997 by and among the Company, the
Guarantors party thereto, Lehman Brothers, Inc. and Lazard
Freres & Co., LLC. (Filed with the Securities and Exchange
Commission as Exhibit 10.1 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 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)
10.4 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
10.1 to the Company's Report on Form 10-Q filed May 17, 1999
and incorporated herein by reference).
10.5 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).
10.6 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)
10.7 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)
10.8 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)
10.9 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)
10.10 Second Amendment, dated as of March 5, 2002, to Revolving
Credit Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several banks and other financial
institutions or entities from time to time parties to the
Revolving Credit Agreement, Lehman Brothers Inc., as advisor,
lead arranger and book manager, 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 with the
Securities and Exchange Commission as Exhibit 10.10 to
Amendment No. 1 to Registration Statement No. 333-86062 on May
9, 2002 and incorporated herein by reference.)
10.11 Second Amendment, dated as of March 5, 2002, to Term Loan
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several financial institutions or
entities from time to time parties to the Term Loan Agreement
thereto, Lehman Brothers Inc., as advisor, lead arranger and
book manager, 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 with the Securities and Exchange Commission as
Exhibit 10.11 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference.)
10.12 Purchase Agreement dated as of March 4, 2002 between B&G Foods,
Inc., BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods, Inc.,
Maple Grove Farms of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils, Inc., Heritage Acquisition Corp., William
Underwood Company and The Bank of New York (Filed with the
Securities and Exchange Commission as Exhibit 10.12 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
10.13 Registration Rights Agreement dated as of March 7, 2002 between
B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition Corp.,
Bloch & Guggenheimer, Inc., Polaner, Inc., Trappey's Fine
Foods, Inc., Maple Grove Farms of Vermont, Inc., Les Produits
Alimentaires Jacques et Fils, Inc., Heritage Acquisition Corp.,
William Underwood Company, Lehman Brothers Inc. and Fleet
Securities, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.13 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)