UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 28, 2002
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 333-39813
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B&G Foods, Inc.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3916496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Gatehall Drive, Suite 110, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 401-6500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X].
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant is not applicable as no public market for the voting stock of
the registrant exists.
As of February 28, 2003, B&G Foods, Inc. had one (1) share of common
stock, $.01 par value, outstanding, which was owned by an affiliate.
DOCUMENTS INCORPORATED BY REFERENCE:
None
PART I
ITEM 1. BUSINESS
I. Company Overview
B&G Foods, Inc. and its subsidiaries (collectively, "B&G" or the
"Company") operate in one industry segment and manufacture, sell and distribute
a diverse portfolio of high quality, shelf-stable, branded food products. In
general, the Company positions its retail branded products to appeal to
consumers desiring high quality and reasonably priced branded products. The
Company complements its branded retail product sales with a growing food service
business.
The Company was acquired by Bruckmann, Rosser, Sherrill & Co., L.P.
("BRS") in December 1996 from Specialty Foods Corporation, which is not an
affiliate of the Company. The Company is wholly-owned by B&G Foods Holdings
Corp. ("Holdings"), which in turn is owned by BRS and its affiliates, and
members of the Company's management and Board of Directors. See "Security
Ownership of Certain Beneficial Owners and Management." The Company maintains
its corporate headquarters at Four Gatehall Drive, Suite 110, Parsippany, New
Jersey 07054.
On June 17, 1997, the Company acquired certain assets relating to the
Regina wine vinegars and cooking wines, Wright's liquid smoke hickory flavoring,
Brer Rabbit molasses and Vermont Maid syrup brands (the "Nabisco Brands
Acquisition"), including trademarks, inventory and certain equipment used to
bottle the Regina wine vinegars and cooking wines, from Nabisco, Inc.
("Nabisco"), which is not an affiliate of the Company.
On August 15, 1997, through a subsidiary, the Company acquired from E.
Mcllhenny's Son Corporation all of the outstanding capital stock of JEM Brands,
Inc. ("JEM") (the "Trappey's Acquisition"), the holding company of Trappey's
Fine Foods, Inc. (together with JEM, "Trappey's").
On July 17, 1998, through a subsidiary, the Company acquired all of the
outstanding capital stock of Maple Grove Farms of Vermont, Inc. and related
entities (the "Maple Grove Acquisition") from certain individual investors. The
Maple Grove Acquisition included the Maple Grove Farms of Vermont and Up Country
Naturals labels of pure maple syrup.
On February 5, 1999, the Company acquired certain assets of the Polaner
and related brands (collectively, "Polaner") from International Home Foods, Inc.
("IHF") and M. Polaner, Inc. (the "Polaner Acquisition"). Prior to the
consummation of the Polaner Acquisition, the Company had been the exclusive
manufacturer, or "co-packer," of the Polaner products for IHF, and had
distributed the Polaner products regionally under co-packing and distribution
contracts that were terminated upon consummation of the Polaner Acquisition.
On March 15, 1999, through a subsidiary, the Company acquired the
assets of The Heritage Portfolio of Brands from The Pillsbury Company, Indivined
B.V. and IC Acquisition Corp. (the "Heritage Brands Acquisition"). The Heritage
Portfolio of Brands includes
1
Underwood meat spreads, B&M baked beans, Ac'cent flavor enhancer, Sa-son Ac'cent
flavor enhancer, Las Palmas Mexican sauces and food products and Joan of Arc dry
bean products businesses.
On June 8, 2000, the Company entered into an agreement with Emeril's
Food of Love Productions, LLC ("Emeril") pursuant to which the Company and
Emeril agreed to create a signature line of dry grocery products which are
marketed under the label Emeril's.
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.
II. Financial Information
The consolidated balance sheets at December 28, 2002 and December 29,
2001 and the consolidated statements of operations and cash flows for the years
ended December 28, 2002, December 29, 2001 and December 30, 2000 and related
notes thereto set forth the revenues from external customers, profit (or loss)
and total assets of the Company. See Item 8 -- "Financial Statements and
Supplementary Data."
III. Products and Markets
The Company manufactures, sells and distributes a diverse portfolio of
shelf-stable branded products. Set forth below is a brief description of the
Company's products and their markets:
Ac'cent. Ac'cent was introduced in 1947 as an all-natural flavor
enhancer for meat preparation. The product is primarily used on beef, poultry,
fish and vegetables. The brand is marketed throughout the United States.
B&M. B&M is the original brand of brick-oven baked beans and has been
produced since 1927. The B&M line includes a variety of baked beans and brown
bread (a dense, traditional New England bread baked in the can).
Bloch & Guggenheimer. The Bloch & Guggenheimer product line originated
in 1886. It consists of shelf-stable pickles, relishes, peppers, olives and
other related specialty items. These products are marketed primarily under the
B&G and Bloch & Guggenheimer brand names. Bloch & Guggenheimer products have
strong sales in the New York metropolitan area, and the Company believes that it
is the leading brand of shelf-stable pickles sold in the New York metropolitan
area. The Company positions its Bloch & Guggenheimer products as quality,
competitively priced products. The Company currently offers 77 distinct pickle
products and 41 distinct pepper products. Nationally, pepper products have
enjoyed modest sales growth over the past five years driven by changes in
consumer trends and eating styles.
Brer Rabbit. The Brer Rabbit brand has been in existence since 1907 and
enjoys significant national market share. Brer Rabbit molasses is typically used
in baking, barbeque sauces and as a breakfast syrup. The Brer Rabbit product
comes in mild and full flavor varieties. The mild molasses is designed for table
use as well as cooking, while the full flavor molasses has a stronger flavor and
is used primarily for cooking.
2
Emeril's. Emeril's products include a line of seasonings, salad
dressings, marinades, pepper sauces, barbeque sauces and pasta sauces developed
with celebrity chef Emeril Lagasse under the label "Emeril's." The Company began
producing Emeril's products in 2000.
Joan of Arc. Joan of Arc canned beans have been produced since 1895.
The Joan of Arc label is used in a full range of canned beans. The best selling
products under this label are kidney and chili beans. Joan of Arc products are
sold nationally with its strongest sales coming in the Midwest.
Las Palmas. Under the Las Palmas brand, which originated in 1923, the
Company is a leading provider of enchilada sauce in the authentic Mexican foods
segment. The Company also uses the Las Palmas brand for other canned products,
such as jalapenos, green chilies and crushed tomatillos.
Maple Grove Farms of Vermont. Pure maple syrup made under the Maple
Grove Farms of Vermont label has been in existence since 1915. Other products
under the Maple Grove Farms of Vermont label include a line of gourmet salad
dressings, marinades, fruit syrups, confections and pancake mixes.
Polaner. The Polaner brand is comprised of a broad array of fruit-based
spreads as well as wet spices such as bottled chopped garlic and basil. The
Polaner line of products was introduced in 1880.
Regina. The Regina brand includes vinegars and cooking wines. The
brand, which has been in existence since 1949, is most commonly used in the
preparation of salad dressings as well as in a variety of recipe applications,
including sauces, marinades and soups. Regina's premium packaging, reputation
and product quality have helped the brand to command premium pricing while
outselling competitors.
Sa-son. Sa-son was introduced in 1947 as a flavor enhancer used
primarily for Hispanic food preparation. The product is primarily used on beef,
poultry, fish and vegetables. The brand is regionally strongest on the East
Coast and in Puerto Rico but is marketed throughout the United States.
Trappey's. Trappey's products fall into two major categories, high
quality peppers and hot sauces. Trappey's, founded in 1898, was one of the first
packers of pepper hot sauce and the first to process peppers for pickling. Since
its inception, Trappey's has introduced many new products including Red Devil
brand hot sauce, Trappey's brand peppers, Torrido brand chili peppers and
Italian peperoncini peppers under the Dulcito brand.
Underwood. The Underwood brand markets meat spreads of several types,
including deviled ham, chicken and roast beef. Management believes that
Underwood products are unique because of their spreadable consistency, with no
competitors offering directly comparable products. Liver pate and sardines are
also marketed under the Underwood label. Granted in 1870, "Underwood Devil" is
the oldest registered food trademark in the United States. Underwood products
were introduced in that same year and are marketed nationally.
3
Up Country Naturals. The Company markets natural and organic foods,
including salad dressings, marinades, maple syrup and pancake and cake mixes,
under the Up Country Naturals label.
Vermont Maid. Vermont Maid is a maple-flavored syrup sold primarily in
the New England market. Vermont Maid has been in existence since 1919. The
Company has reformulated the brand into a thicker, richer formula and modernized
its look by introducing more appealing packaging. Vermont Maid syrup is
available in two flavors, regular and lite.
Wright's. Wright's liquid smoke, introduced in 1895, is an all-natural
hickory seasoning that reproduces the flavor and aroma of hickory pit smoking in
meats, chicken and fish. Wright's is manufactured by a patented process and has
one primary national competitor. Since acquiring Wright's, the Company has
sought to increase the brand's marketing by adding recipes and incentives on
packages and display shippers. Wright's liquid smoke is also used by commercial
processors to smoke hams, bacon, sausage and barbeque sauces.
IV. Marketing, Sales and Distribution
The Company sells and distributes its products through a unique,
multiple-channel system. B&G's established system allows it to cost-effectively
distribute additional volume of products through existing channels. B&G's
multiple-channel sales and distribution system includes the following:
o direct sales to supermarket chains;
o direct and distributor sales to food service outlets;
o direct sales to mass merchants, warehouse clubs and non-food
outlets;
o direct sales to specialty food distributors;
o direct-store-organization sales on a regional basis to
individual grocery stores; and
o other sales through export, catalogues and the Internet.
The Company generally sells its national brands through brokers to
supermarket chains, food service outlets, mass merchants, warehouse clubs,
non-food outlets and specialty food distributors. National and regional food
brokers sell the entire portfolio of the Company's products. Broker sales
efforts are coordinated by the Company's regional sales managers, who supervise
brokers' activities with buyers or distributors and brokers' retail coverage of
the products at the store level.
4
The Company distributes its products in the greater New York
metropolitan area primarily through its direct-store-organization sales and
distribution ("DSO") system. The DSO system supports an organization of sales
personnel who directly service over 2,000 individual grocery stores with the
Company's products.
Marketing support for the products distributed through the DSO system
consists primarily of trade promotions aimed at gaining display activity to
produce impulse sales. Trade advertising and coupons supplement this activity. A
variety of in-store support vehicles such as hang tags, racks, signs and shipper
displays are used by the individual sales personnel to highlight the Company's
products. Marketing support on a national basis typically consists of scheduled
trade promotions, targeted coupons and cross-promotions with supporting
products. Advertising expenditures generally consist of purchasing magazine and
trade publication advertisements, which are supplemented with television
advertising for selected brands.
The Company did not export a significant amount of any of its products
during the 2002, 2001 or 2000 fiscal years.
V. Competition
The Company faces competition in each of its product lines. Numerous
brands and products compete for shelf space and sales, with competition based
primarily on product quality, convenience, price, trade promotion, consumer
promotion, brand recognition and loyalty, customer service, effective
advertising and promotional activities and the ability to identify and satisfy
emerging consumer preferences. The Company competes with a significant number of
companies of varying sizes, including divisions or subsidiaries of larger
companies. Many of these competitors have multiple product lines, substantially
greater financial and other resources available to them and may have lower fixed
costs and/or be substantially less leveraged than B&G. The Company's ability to
grow its business could be impacted by the relative effectiveness of, and
competitive response to, B&G's new product initiatives, product innovation and
new advertising and promotional activities.
During fiscal 2002, the Company's most significant competitors for its
pickles and peppers products were Vlasic and Mt. Olive branded products. In
addition, J.M. Smucker was and continues to be the main competitor of the
Company's fruit spread products marketed under the Polaner label. The Maple
Grove Farms of Vermont line of syrups and salad dressings compete directly with
the SpringTree brand in the pure maple syrup category but, along with B&G's
Vermont Maid syrup products, also have a number of competitors in the general
pancake syrup market, such as Aunt Jemima, Mrs. Buttersworth and Log Cabin. The
B&M baked bean and Joan of Arc products compete with Bush's products.
In addition, the Company's products compete not only against other
brands in their respective product categories, but also against products in
similar or related product categories. For example, B&G's shelf-stable pickles
compete not only with other brands of shelf-stable pickles, but also those
products found in the refrigerated sections of grocery stores.
5
VI. Customers and Seasonality
None of the Company's customers accounted for more than 10% of the
Company's net sales in fiscal 2002, fiscal 2001 or fiscal 2000.
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 B&G purchases all of its maple syrup
requirements during the months of April through July. Consequently, the
Company's liquidity needs are greatest during these periods.
VII. Inflation
The Company does not believe that its operating results have been
materially affected by inflation during the preceding three years. There can be
no assurance, however, that the Company's operating results will not be affected
by inflation in the future.
VIII. Raw Materials
The Company purchases agricultural products and other raw materials
from growers, commodity processors and other food companies. The Company's
principal raw materials include peppers, cucumbers, other vegetables, fruits,
maple syrup, meat and poultry. The Company purchases its agricultural raw
materials in bulk or pursuant to short-term supply contracts. B&G purchases most
of its agricultural products between July 1 and October 31. It also uses
packaging materials, particularly glass jars and cans. The Company purchases its
raw materials from a variety of suppliers and alternate sources of supply that
are readily available.
The profitability of B&G's business relies in part on the prices of raw
materials, which can fluctuate due to a number of factors, including changes in
crop size, national, state and local government-sponsored agricultural programs,
export demand, natural disasters, weather conditions during the growing and
harvesting seasons, general growing conditions and the effect of insects, plant
diseases and fungi. Increases in raw material costs could have a material
adverse effect on B&G's consolidated financial condition, results of operations
or liquidity.
IX. Trademarks
The Company owns 78 trademarks which are registered in the United
States and 219 trademarks which are registered in foreign countries. Also, the
Company has 15 trademark applications pending in the United States and in
foreign countries. Examples of the Company's trademarks include Ac'cent, B&G,
B&G Sandwich Toppers, B&M, Bloch & Guggenheimer, Brer Rabbit, Joan of Arc, Maple
Grove Farms of Vermont, Polaner, Regina, Underwood, Vermont Maid and Wright's.
B&G considers its trademarks to be of significant importance to the Company's
business.
6
X. Government Regulation
The Company's operations are subject to extensive regulation by the
United States Food and Drug Administration ("FDA"), the United States Department
of Agriculture and other federal, state and local authorities regarding the
processing, packaging, storage, distribution and labeling of its products. The
Company's processing facilities and products are subject to periodic inspection
by federal, state and local authorities. B&G believes that it is currently in
substantial compliance with all material governmental laws and regulations and
maintains all material permits and licenses relating to its operations.
Nevertheless, there can be no assurance that B&G is in full compliance with all
such laws and regulations or that B&G will be able to comply with any future
laws and regulations in a cost-effective manner. Failure by the Company to
comply with applicable laws and regulations could subject it to civil remedies,
including fines, injunctions, recalls or seizures, as well as potential criminal
sanctions, all of which could have a material adverse effect on B&G's
consolidated financial condition, results of operations or liquidity.
The Company is also subject to the Food, Drug and Cosmetic Act and the
regulations promulgated thereunder by the FDA. This comprehensive regulatory
program governs, among other things, the manufacturing, composition and
ingredients, labeling, packaging and safety of food. For example, the FDA
regulates manufacturing practices for foods through its current "good
manufacturing practices" regulations and specifies the recipes for certain
foods. In addition, the Nutrition Labeling and Education Act of 1990 prescribes
the format and content of certain information required to appear on the labels
of food products. The Company is subject to regulation by certain other
governmental agencies, including the U.S. Department of Agriculture. B&G's
management believes that the Company's facilities and practices are sufficient
to maintain compliance with applicable governmental regulations, although there
can be no assurances in this regard.
XI. Environmental Matters
Except as described below, the Company has not made any material
expenditures during the last three fiscal years in order to comply with
environmental laws or regulations. Based on its experience to date, B&G believes
that the future cost of compliance with existing environmental laws and
regulations (and liability for known environmental conditions) will not have a
material adverse effect on its consolidated financial condition, results of
operations or liquidity, except as noted below. However, the Company cannot
predict what environmental or health and safety legislation or regulations will
be enacted in the future or how existing or future laws or regulations will be
enforced, administered or interpreted, nor can the Company predict the amount of
future expenditures that may be required in order to comply with such
environmental or health and safety laws or regulations or to respond to such
environmental claims.
On January 17, 2001, the Company became aware that fuel oil from its
underground storage tank at its Roseland, New Jersey facility had been released
into the ground and 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
7
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 the Company's
environmental services firms, B&G 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. In September 2001, both firms submitted their findings to
the NJDEP along with recommendations for no further action. To date, the Company
has not received a response to such recommendations from the NJDEP. 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 B&G'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. In the third quarter of fiscal 2001, B&G 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
estimated expenses relating to this matter have been incurred and paid as of
December 28, 2002. At December 28, 2002 and December 29, 2001, there was $0 and
$80,000, respectively, accrued related to this matter.
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 parents 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. In February 2002, the Company
submitted a demand for indemnity, but the indemnitor's initial response was
limited to a request for additional information. In February 2003, the Company
and other parties to this action settled the claim for $0.1 million. The Company
anticipates that a court order memorializing the settlement will be entered into
in the first quarter of fiscal 2003.
The Company is involved in various other claims and legal actions
arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of these other 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.
XII. Employees and Labor Relations
As of January 31, 2003, the Company's workforce consisted of 662
employees. Of that total, 431 employees were engaged in manufacturing, 95 were
engaged in marketing and sales, 104 were engaged in distribution and 32 were
engaged in administration. Approximately 203 of the Company's 662 employees, as
of January 31, 2003, were covered by a collective bargaining agreement. In
general, B&G considers its employee and union relations to be good.
8
ITEM 2. PROPERTIES
The Company's plants are generally located near major customer markets
and raw materials. Management believes that the Company's manufacturing plants
have sufficient capacity to accommodate its planned growth. As of January 31,
2003, the Company operated the manufacturing and warehouse facilities described
in the table below.
Facility Location Description Approximate
Sq. Ft.
- --------------------------------------------------------------------------------
Parsippany, NJ Headquarters 21,000
Hurlock, MD* Manufacturing/Warehouse 236,000
Portland, ME* Manufacturing/Warehouse 225,000
New Iberia, LA* Manufacturing/Warehouse 158,000
Roseland, NJ Manufacturing/Warehouse 124,000
St. Johnsbury, VT* Manufacturing/Warehouse 92,000
La Vergne, TN Distribution Center 175,000
Houston, TX Warehouse 104,000
Biddeford, ME Warehouse 97,000
Hurlock, MD* Warehouse 80,000
Hurlock, MD Warehouse 66,000
Hurlock, MD Warehouse 35,000
St. Evariste, Quebec* Storage Facility 50,000
Sharptown, MD* Storage Facility 3,000
Bentonville, AK Sales Office 750
- -------------------------------
*Owned.
The Company also has agreements for the "co-packing" of some of its
products, a common industry practice in which other companies manufacture and
package these products under the Company's brand names. Third parties produce
Regina, Underwood, Las Palmas and Joan of Arc products and certain Emeril's
pasta sauces and spices under co-packing agreements or purchase orders. Each of
the Company's co-packers produce products for other companies as well. The
Company believes that there are alternative sources of co-packing production
readily available for its products.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is involved in various
legal proceedings. The Company does not believe the outcome of these proceedings
will have a material adverse effect on its 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 parents and was ultimately acquired by
9
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. In February
2002, the Company submitted a demand for indemnity, but the indemnitor's initial
response was limited to a request for additional information. In February 2003,
the Company and other parties to this action settled the claim for $0.1 million.
The Company anticipates that a court order memorializing the settlement will be
entered into in the first quarter of fiscal 2003.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During fiscal 2002, no matters were submitted to a vote of stockholders
through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable.
10
ITEM 6. SELECTED FINANCIAL DATA
Fiscal Year Ended
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Dec. 28, Dec. 29, Dec. 30, Jan. 1, Jan. 2,
2002 2001 2000 2000 1999
------------- --- ----------- -- ------------ --- ------------ -- ------------
(Dollars in thousands)
Consolidated Statement of Operations
Data(2)......................
Net sales(1).................... $293,677 $279,779 $351,416 $336,112 $179,780
Cost of goods sold.............. 203,707 192,525 200,651 196,184 117,514
------------- ----------- ------------ ------------ ------------
Gross profit................. 89,970 87,254 150,765 139,928 62,266
Sales, marketing and distribution
expenses..................... 35,852 34,922 100,711 91,120 40,102
General and administrative
expenses(3).................. 4,911 14,120 12,957 13,802 5,725
Management fees - related party 500 500 500 450 250
Environmental clean-up.......... 100 950 - - -
Special charge-severance........ - - 250 - -
------------- ----------- ------------ ------------ ------------
Operating income............. 48,607 36,762 36,347 34,556 16,189
Gain on sale of assets.......... - (3,112) - - -
Derivative gain................. (2,524) - - - -
Interest expense................ 26,626 29,847 36,074 29,874 13,908
------------- ----------- ------------ ------------ ------------
Income before income tax expense
24,505 10,027 274 4,682 2,281
Income tax expense.............. 9,260 4,029 1,559 2,429 1,431
------------- ----------- ------------ ------------ ------------
Net income (loss)............ $ 15,245 $ 5,998 $ (1,285) $ 2,253 $ 850
============= =========== ============ ============ ============
Consolidated Balance Sheet Data (at
period end)(2):
Total assets................. $430,673 $426,006 $457,016 $477,057 $211,873
Long-term debt, including current
portion.................... 273,796 289,275 329,323 340,892 144,696
Total stockholder's equity... 78,081 62,836 56,788 58,073 20,820
Other Financial Data(2):
Adjusted EBITDA(4)........... $ 54,007 $ 52,002 $ 52,351 $ 49,704 $ 23,372
- -------------------
(1) Certain amounts in fiscal 2001 aggregating $52.7 million have been
reclassified from sales, marketing and distribution expenses to a reduction
of net sales in accordance with EITF Issue No. 00-14, "Accounting for
Certain Sales Incentives," and EITF Issue No. 00-25, "Vendor Income
Statement Characterization of Consideration to a Purchaser of the Vendor's
Products or Services," as codified by EITF Issue 01-09. Such EITF
pronouncements, which were adopted by the Company in 2002, require the
Company to reclassify certain coupon and promotional expenses to be
presented as a reduction of net sales. The reclassification has no effect
on operating income. Due to the specificity of similar information not
being available in the Company's information systems for fiscal years 1998
through fiscal 2000, the Company is unable to determine what the
reclassification amounts should be for those years.
(2) The Maple Grove Acquisition, the Polaner Acquisition and the Heritage
Brands Acquisition were consummated on July 17, 1998, February 5, 1999 and
March 15, 1999, respectively, and were accounted for using the purchase
method of accounting. Accordingly, the assets acquired, liabilities
assumed, and results of operations are included in the consolidated
financial statements from the respective date of acquisition. The B&R
Disposition was completed on January 17, 2001.
(3) The Company adopted the provisions of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," as of December
30, 2001. Effective December 30, 2001, the Company ceased the amortization
of goodwill and trademarks. Amortization expenses related to goodwill and
trademarks were $8.5 million, $9.5 million, $9.2 million, and $3.2 million
in fiscal 2001, 2000, 1999 and 1998, respectively.
11
(4) EBITDA is defined as earnings before interest, taxes and depreciation and
amortization and is presented because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service and
incur debt. EBITDA should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of profitability
or liquidity.
Adjusted EBITDA is calculated by adding to or deducting from EBITDA certain
items that the Company believes are unusual consisting of: (a) a charge in
fiscal 2002 of $0.1 million related to environmental cleanup, (b) a
derivative gain of $2.5 million in fiscal 2002, (c) a charge in fiscal 2001
of $1.0 million related to environmental cleanup, (d) a charge of $0.3
million related to employee severance in fiscal 2000 and (e) a gain of $3.1
million related to the B&R Disposition in fiscal 2001. There were no
adjustments to EBITDA in fiscal 1998 and fiscal 1999.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On January 17, 2001, the Company completed the B&R Disposition. The B&R
Disposition affects comparability between periods.
I. Year Ended December 28, 2002 Compared to Year Ended December 29, 2001
A. Net Sales
Net sales increased $13.9 million or 5.0% to $293.7 million for the 52
week period ended December 28, 2002 (the "2002 Period") from $279.8 million for
the 52 week period ended December 29, 2001 (the "2001 Period"). Sales of the
Company's Emeril's, Las Palmas, Maple Grove Farms of Vermont, Ac'cent, Trappey,
Wrights and Polaner brands increased $7.6 million, $2.6 million, $2.2 million,
$2.2 million, $0.6 million, $0.3 million and $0.3 million or 45.1%, 14.5%, 5.1%,
13.5%, 4.2%, 6.0% and 0.7%, respectively, largely reflecting higher unit volume.
Sales of the Company's B&M baked beans and Sa-son brands decreased by $0.7
million and $0.5 million, or 2.6% and 9.3%, respectively. The B&R Disposition
accounted for $0.7 million of the sales decrease on a comparative basis. Trade
promotional spending, which is netted against net sales, expressed as a
percentage of gross sales increased slightly to 17.2% for the 2002 Period from
17.0% in the 2001 Period. This increase is due to incremental trade spending for
the B&M baked beans brand.
B. Gross Profit
Gross profit increased $2.7 million or 3.1% to $90.0 million for the
2002 Period from $87.3 million in the 2001 Period. Gross profit expressed as a
percentage of net sales decreased to 30.6% in the 2002 Period from 31.2% in the
2001 Period. The decrease in gross profit percentage included higher costs of
maple syrup, increased costs from the co-packers of the Underwood, Joan of Arc
and Las Palmas brands and an increase in trade spending which is now included in
net sales. These cost increases were offset by a mix shift of products sold by
the Company and a reduction in delivery expenses in an amount equal to 0.4% of
net sales.
C. Sales, Marketing and Distribution Expenses
Sales, marketing and distribution expenses increased $0.9 million or
2.7% to $35.9 million for the 2002 Period from $34.9 million for the 2001
Period. Such expenses expressed as a percentage of net sales decreased to 12.2%
in the 2002 Period from 12.5% in the 2001 Period. Selling expenses increased
$1.0 million or 8.4% relating to sales compensation and brokerage. Marketing
costs increased $0.6 million or 7.5% relating to additional spending on consumer
programs. These increases were partially offset by a decrease in warehousing
costs of $0.8 million or 14.7% due to reductions in headcount and the
elimination of one distribution center. All other costs increased $0.1 million
or 1.2%.
12
D. General and Administrative Expenses
General and administrative expenses (including amortization of goodwill
and trademark intangibles in the 2001 Period) and management fees decreased $9.2
million or 63.0% to $5.4 million in the 2002 Period from $14.6 million in the
2001 Period. Amortization of goodwill and trademark intangibles with indefinite
useful lives decreased from $8.5 million in the 2001 Period to $0 in the 2002
Period as a result of the implementation of the provisions of the Financial
Accounting Standard Board's ("FASB") Statement No. 142. All other general and
administrative expenses collectively decreased $0.7 million due to a decrease in
incentive compensation costs in the 2002 Period.
E. Environmental Clean-Up
As further described above in Item 1, XI, the Company recorded a charge
of $0.1 million, in the 2002 Period, relating to the Combe Fill South Landfill
in New Jersey. The Company recorded a charge of $1.0 million, net of insurance
proceeds, in the 2001 Period relating to the fuel oil tank leak at their
Roseland, New Jersey Facility.
F. Operating Income
As a result of the foregoing, operating income increased $11.8 million
or 32.2% to $48.6 million in the 2002 Period from $36.8 million in the 2001
Period. Operating income expressed as a percentage of net sales increased to
16.6% in the 2002 Period from 13.1% in the 2001 Period.
G. Gain of Sale of Assets
As further described in Note 1 to the consolidated financial
statements, the Company recorded a $3.1 million gain on the B&R Disposition in
the 2001 Period.
H. Derivative Gain
Income of $2.5 million was recorded in the 2002 Period reflecting the
change in fair value of the Company's interest rate swap agreement since the
date the Company entered into such agreement (March 21, 2002). See "Debt" below.
I. Interest Expense
Interest expense decreased $3.2 million to $26.6 million in the 2002
Period from $29.8 million in the 2001 Period as a result of lower outstanding
loan balances and reduced interest rates in the 2002 Period.
13
J. Income Tax Expense
Income tax expense increased $5.2 million to $9.3 million in the 2002
Period from $4.0 million in the 2001 Period. The Company's effective tax rate
for the 2002 Period was 37.8% as compared with 40.2% for the 2001 Period. The
decrease in the effective rate reflects the effect of the amortization of
nondeductible goodwill and other intangibles and the implementation of state tax
planning initiatives, resulting in the reduction in current and deferred state
tax liabilities.
Because of the highly leveraged status of the Company, earnings before
derivative gain, interest, taxes, depreciation and amortization and
environmental clean-up charges ("Adjusted EBITDA") is an important performance
measure used by the Company and its investors. The Company believes that
Adjusted EBITDA provides additional information for determining the Company's
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 2002 Period and the 2001 Period is calculated as follows (dollars in
millions):
2002 Period 2001 Period
----------- -----------
Net income $ 15.2 $ 6.0
Depreciation and amortization (a) 5.3 14.3
Income tax expense 9.3 4.0
Interest expense 26.6 29.8
---- ----
EBITDA 56.4 54.1
Environmental clean-up 0.1 1.0
Gain on sale of assets -- (3.1)
Derivative gain (2.5) --
---- ---
Adjusted EBITDA $ 54.0 $ 52.0
==== ====
(a) Effective December 30, 2001, the Company adopted SFAS No.142 and
consequently ceased amortizing goodwill and trademark intangible assets
deemed to have an indefinite useful life.
II. Year Ended December 29, 2001 Compared to Year Ended December 30, 2000
Prior to Reclassification of Certain Marketing Expenses as a Reduction
of Net Sales for 2001 Period. (See Note 1 to Selected Financial Data in
Item 6 and Note 2(o) to the consolidated financial statements.)
A. Net Sales
Prior to the 2001 reclassification of certain marketing costs to net
sales upon implementation of the Emerging Issues Task Force ("EITF") Issue No.
00-14, "Accounting for Certain Sales Incentives," and EITF Issue No. 00-25,
"Vendor Income Statement Characterization of Consideration to a Purchaser of the
Vendor's Products or Services," as codified by EITF Issue No. 01-09, (as further
described in Note 2(o) to the consolidated financial statements) net sales
decreased $19.0 million or 5.4% to $332.4 million for the 2001 Period from
$351.4 million for the 52 week period ended December 30, 2000 (the "2000
Period"). The B&R Disposition accounted for $25.1 million of the sales decrease
on a comparative basis.
14
The Company's line of Emeril's branded products, which was introduced in July
2000, increased $14.7 million to $18.7 million for the 2001 Period from $4.0
million in the 2000 period. Sales of the Company's Maple Grove Farms of Vermont,
Ac'cent and Sa-son brands increased $2.1 million, $1.8 million and $0.4 million
or 4.5%, 11.2% and 6.3%, respectively. Sales of the Company's Polaner brands,
Joan of Arc brand, B&M baked beans, Las Palmas brands, Underwood brands, Trappey
brands, Brer Rabbit Molasses brands and Vermont Maid syrup decreased by $4.0
million, $1.9 million, $1.9 million, $1.5 million, $1.2 million, $1.0 million,
$0.8 million and $0.6 million, or 8.5%, 11.9%, 4.8%, 6.3% 4.7%, 5.8%, 18.5% and
11.2%, respectively, largely reflecting lower unit volume. The decline in the
sales of certain brands in the 2001 Period is partially due to a decision by
management to reduce trade spending. Net sales have been reduced in the 2001
Period by a reclassification from marketing expenses of $52.7 million relating
to the implementation of EITF Issue No. 01-09.
B. Gross Profit
Prior to the aforementioned 2001 reclassification for EITF Issue
No.01-09, gross profit decreased $10.9 million or 7.2% to $139.9 million for the
2001 Period from $150.8 million in the 2000 Period. Gross profit expressed as a
percentage of net sales decreased to 42.1% in the 2001 Period from 42.9% in the
2000 Period. The decrease in gross profit percentage included higher costs of
maple syrup, increased costs from the co-packers of the Underwood and Las Palmas
brands and a shift in the mix of products sold, including the fact that higher
margin Burns & Ricker branded products are no longer in the mix of products sold
by the Company. Gross profit has been reduced in the 2001 Period by a
reclassification of $52.7 million from marketing expenses to net sales relating
to the implementation of EITF Issue No. 01-09.
C. Sales, Marketing and Distribution Expenses
Prior to the aforementioned 2001 reclassification for EITF Issue No.
01-09, sales, marketing and distribution expenses decreased $13.1 million or
13.0% to $87.6 million for the 2001 Period from $100.7 million for the 2000
Period. Such expenses expressed as a percentage of net sales, prior to the 2001
reclassification for EITF Issue No. 01-09, decreased to 26.3% in the 2001 Period
from 28.7% in the 2000 Period. The decrease is primarily due to a decision by
management to reduce trade promotion spending coupled with the B&R Disposition.
Trade promotion spending decreased $10.4 million or 15.2%. Trade promotion
spending as a percentage of net sales decreased to 17.3% in the 2001 Period from
19.3% in the 2000 Period. Overall, consumer spending expenses decreased $1.3
million or 12.3%. Distribution expenses decreased $0.9 million or 14.8%. All
other expenses decreased $0.5 million. Sales, marketing and distribution
expenses have been reduced in the 2001 Period by a reclassification of $52.7
million to net sales relating to the implementation of EITF Issue No. 01-09.
D. General and Administrative Expenses
General and administrative expenses (including amortization of
intangibles and management fees) increased $1.2 million or 8.6% to $14.6 million
in the 2001 Period from $13.5 million in the 2000 Period. A decrease in
amortization in the amount of $1.0 million of certain intangibles disposed of in
the B&R Disposition was offset by an increase in operating expenses of $2.2
million due to an increase in incentive compensation costs in the 2001 Period.
15
E. Environmental Clean-Up
As further described above in Item 1, XI, the Company recorded a charge
of $1.0 million, net of insurance proceeds, in the 2001 Period.
F. Special Charge-Severance
During the 2000 Period, the Company recorded a severance charge of $0.3
million. As part of the severance arrangements, 13 employees were terminated.
G. Operating Income
As a result of the foregoing, operating income increased $0.4 million
or 1.1% to $36.8 million in the 2001 Period from $36.3 million in the 2000
Period. Operating income expressed as a percentage of net sales increased to
11.1% in the 2001 Period, prior to the aforementioned 2001 reclassification,
from 10.3% in the 2000 Period.
H. Gain of Sale of Assets
As further described in Note 1 to the consolidated financial
statements, the Company recorded a $3.1 million gain on the B&R Disposition.
I. Interest Expense
Interest expense decreased $6.2 million to $29.8 million in the 2001
Period from $36.1 million in the 2000 Period as a result of lower outstanding
loan balances in the 2001 Period due to the partial prepayment of the term loans
required in connection with the B&R Disposition and reduced interest rates.
J. Income Tax Expense
Income tax expense increased $2.5 million to $4.0 million in the 2001
Period from $1.6 million in the 2000 Period. The Company's effective tax rate
for the 2001 Period was 40.2% as compared with 569% for the 2000 Period. The
decrease in the effective tax rate reflects the relative lower effect of the
amortization of nondeductible goodwill and other intangibles when applied to
income before income tax expense of $10.0 million in the 2001 Period as compared
to $0.3 million in the 2000 Period.
Because of the highly leveraged status of the Company, earnings before
interest, taxes, depreciation and amortization, environmental clean-up charges,
gain on sale of assets, and special severance charges ("Adjusted EBITDA") is an
important performance measure used by the Company and its investors. The Company
believes that Adjusted EBITDA provides additional information for determining
the Company's 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 2001 Period and the 2000 Period is calculated
as follows (dollars in millions):
16
2001 Period 2000 Period
----------- -----------
Net income (loss) $ 6.0 $ (1.3)
Depreciation and amortization 14.3 15.7
Income tax expense 4.0 1.6
Interest expense 29.8 36.1
--------- ---------
EBITDA 54.1 52.1
Environmental clean-up 1.0 --
Gain on sale of assets (3.1) --
Special charge-severance -- 0.3
Adjusted EBITDA $ 52.0 $ 52.4
======== ========
III. Liquidity and Capital Resources
Cash Flows
Cash provided by operating activities increased $5.0 million or 23.4%
to $26.4 million in the 2002 Period from $21.4 million in the 2001 Period. This
increase was primarily due to an increase in net income and an increase in
accrued expenses partially offset by the elimination of goodwill and trademark
intangible amortization, an increase in inventory and a decrease in accounts
payable. Working capital at December 28, 2002 was $70.0 million, an increase of
$20.1 million over working capital at December 29, 2001 of $49.9 million. The
majority of the increase is a result from the reduction in the current
installment of short-term debt of $17.1 million, due to the refinancing of
long-term debt described below.
Net cash used in investing activities for the 2002 Period was $6.3
million as compared to net cash provided by investing activities of $20.2
million for the 2001 Period. Capital expenditures during the 2002 Period, which
included purchases of manufacturing and computer equipment, was $6.3 million as
compared to $3.9 million for the 2001 Period for similar such expenditures. Net
cash received of $24.1 million in the 2001 Period for the sale of assets
accounted for the remaining change.
Net cash used in financing activities for the 2002 Period was $19.4
million as compared to net cash used in financing activities for the 2001 Period
of $40.0 million. The net cash used by financing activities for the 2002 Period
included payments of deferred debt financing fees of $3.7 million, a payment of
$38.3 million toward the remaining balance of the Term Loan A and a partial
prepayment of $75.8 million toward the Term Loan B, which such payments were
partially offset by proceeds from the issuance of long-term debt of $98.8
million. The payments made toward Term Loan A and Term Loan B totaled $114.1
million, and included $95.8 million in prepayments of Term Loan A and Term Loan
B, the Company's required $0.4 million quarterly payments under Term Loan B and
an additional prepayment of $17.9 million under Term Loan B. In addition, a
payment of $0.3 million was made toward capital leases in the 2002 Period. The
net cash used by financing activities for the 2001 Period included payments of
$20.5 million due on Term Loan A and $19.3 million due on the Term Loan B, along
with capital lease payments of $0.2 million. These payments included a mandatory
prepayment made in January 2001 of $26.0 million required under the Senior
Secured Credit Facility in connection with the B&R Disposition.
17
Acquisitions
The Company's liquidity and capital resources may be impacted in the
foreseeable future by additional acquisitions. The Company has historically
financed acquisitions with borrowings and cash flows from operations. The
Company's future interest expense will increase with any additional indebtedness
the Company may incur to finance potential future acquisitions, if any. To the
extent future acquisitions, if any, are financed by additional indebtedness, the
resulting increase in debt and interest expense could have a negative impact on
liquidity.
Environmental Clean-Up Costs
See Item 1, X1 for a description of environmental matters.
Debt
The Company has outstanding $220 million of 9 5/8% Senior Subordinated
Notes due August 1, 2007 with interest payable semiannually on February 1 and
August 1 of each year. The 9 5/8% Senior Subordinated Notes contain certain
transfer restrictions.
The Company is a party to a $280 million Senior Secured Credit Facility
("Senior Secured Credit Facility") comprised of a $60 million five-year
Revolving Credit Facility ("Revolving Credit Facility"), a $70 million five-year
Term Loan A ("Term Loan A"), which has been paid in full, and a $150 million
seven-year Term Loan B ("Term Loan B" and together with Term Loan A, the "Term
Loan Facilities"). Interest is determined based on several alternative rates as
stipulated in the Senior Secured Credit Facility, including the base lending
rate per annum plus an applicable margin, or LIBOR plus an applicable margin.
The Senior Secured Credit Facility is secured by substantially all of the
Company's assets. The Senior Secured Credit Facility provides for mandatory
prepayments upon the occurrence of certain events, including material asset
dispositions and issuances of securities. The Senior Secured Credit Facility
contains covenants that restrict, among other things, the Company's ability 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 leverage 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 million per year. There were
no borrowings outstanding under the Revolving Credit Facility at December 28,
2002. The outstanding balances for Term Loan A and Term Loan B at December 28,
2002 were $0 and $54.9 million, respectively.
18
IV. Future Capital Needs
The Company is highly leveraged. On December 28, 2002, the Company's
total long-term debt (including current installments) and its stockholder's
equity was $273.8 million and $78.1 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
flows 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 December 28, 2002 will be sufficient for the
foreseeable future to fund operations, meet debt service requirements and fund
capital expenditures.
V. Recent Accounting Pronouncements
In 2001, the EITF reached a consensus with respect to Issue No. 00-14,
"Accounting for Certain Sales Incentives" (as codified by EITF Issue No. 01-09),
including point of sale coupons, rebates and free merchandise, which became
effective for the Company in the first quarter of 2002. 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, has reclassified
prior period coupon expense as a reduction of net sales. Coupon expense
reclassified in accordance with the EITF consensus was $1.4 million in fiscal
2001. 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. Due to the specificity of
similar information not being captured in the Company's information systems for
fiscal 2000, the Company is unable to determine what the reclassification amount
should be for that year.
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" (as codified by EITF Issue No.
01-09), which became effective for the Company in the first quarter of 2002. 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,
19
marketing and distribution expenses was $51.2 million in fiscal 2001. Due to the
specificity of similar information not being captured in the Company's
information systems for fiscal 2000, the Company is unable to determine what the
reclassification amount should be for that year.
In July 2001, the FASB issued Statement No. 142, "Goodwill and Other
Intangible Assets." 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 or Disposal of Long-Lived
Assets." The Company adopted the provisions of Statement No. 142 effective as of
December 30, 2001.
As required by Statement No. 142, the Company performed an assessment
to determine whether goodwill of the Company was impaired as of December 28,
2002 and December 30, 2001. In connection therewith, the Company determined that
its operations consisted of one reporting unit. Under Statement No. 142,
goodwill impairment is deemed to exist if the net book value of a reporting unit
exceeds its estimated fair value. The Company determined that, as of December
28, 2002 and December 30, 2001, the fair value of the Company's single reporting
unit exceeded its carrying amount, and therefore there is no indication that
goodwill was impaired as of such dates. The Company will perform its annual
impairment review each fiscal year end to measure goodwill for impairment.
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. Effective as of December 30, 2001,
the Company ceased the amortization of goodwill and all trademarks having
indefinite useful lives. Amortization expense related to goodwill was $3.1
million and $3.8 million for fiscal 2001 and 2000, respectively. Amortization
expense related to trademarks was $5.4 million and $5.7 million for fiscal 2001
and 2000, respectively.
In June 2001, the FASB issued Statement No. 143, "Accounting for Asset
Retirement Obligations." Statement No. 143 requires the Company to record the
fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development,
and/or normal use of the assets. The Company also records a corresponding asset
that is depreciated over the life of the asset. Subsequent to the initial
measurement of the asset retirement obligation, the obligation will be adjusted
at the end of each period to reflect the passage of time and changes in the
estimated future cash flows underlying the obligation. The Company is required
to adopt Statement No. 143 on December 29, 2002. The adoption of Statement No.
143 is not expected to have a material effect on the Company's consolidated
financial statements.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." Statement No. 144 addresses
financial accounting and reporting for the impairment and disposal of long-lived
assets. This Statement requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances
20
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.
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" ("EITF 94-3").
Statement No. 146 replaces EITF 94-3. The Company is required to adopt the
provisions of this Statement for any exit or disposal activities initiated after
December 31, 2002. This Statement will be applied prospectively after the
adoption date and will depend on future actions and, consequently, the Company
cannot determine the impact, if any, that the adoption of this Statement will
have on its consolidated financial statements.
VI. Related-Party Transactions
The Company is party to a management agreement (the "Management
Agreement") with Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS & Co."), the
manager of Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS"), pursuant to which
BRS & Co. is paid an annual fee of $0.5 million per year for certain management,
business and organizational strategy, and merchant and investment banking
services. BRS and its affiliates, together with members of the Company's
management and Board of Directors, own B&G Foods Holding Corp., the sole
stockholder of the Company. The Management Agreement will expire on the earlier
of December 27, 2006 and the date that BRS owns less than 20% of the outstanding
common stock of B&G Foods Holding Corp. The Company is also party to a
transaction services agreement pursuant to which BRS & Co. will be paid a
transaction fee for management, financial and other corporate advisory services
rendered by BRS & Co. in connection with acquisitions by the Company, which fee
will not exceed 1.0% of the total transaction value. No fees were paid in fiscal
years 2002, 2001 and 2000.
The Company leases a manufacturing and warehouse facility from the
Chairman of the Board of Directors of the Company. Total rent expense associated
with this lease was $0.8 million for the fiscal years 2002, 2001 and 2000.
Holdings has an Incentive Stock Option Plan (the "Plan') for key
employees of the Company. The Plan authorizes options for up to 6,700 shares of
Holding's common stock. The Plan provides for grants of incentive stock options
or non-qualified stock options. Under the Plan, the Board of Directors of
Holdings determines the exercise price of options granted, which in the case of
incentive stock options, cannot be less than fair value. All option grants have
been made at fair value as determined by a third party valuation. Options expire
up to ten years from the grant date and vest ratably over five years. During
fiscal 2002, 2001 and 2000, 0, 700 and 0 options, respectively, were granted. As
of December 28, 2002, 6,625 options were outstanding, all of which were
incentive stock options.
21
VII. Critical Accounting Policies
The Securities and Exchange Commission has issued disclosure guidance
for "critical accounting policies." The SEC defines "critical accounting
policies" as those that require application of management's most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain and may change in
subsequent periods.
Management is required to make certain estimates and assumptions during
the preparation of consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America. These
estimates and assumptions impact the reported amount of assets and liabilities
and disclosures of contingent assets and liabilities as of the date of the
consolidated financial statements. Estimates and assumptions are reviewed
periodically and the effects of revisions are reflected in the consolidated
financial statements in the period they are determined to be necessary. Actual
results could differ from those estimates.
The significant accounting policies are described in Note 2 of the
consolidated financial statements. Not all of these significant accounting
policies require management to make difficult, subjective or complex judgments
or estimates. However, management considers the following policies to be
critical within the SEC definition.
Trade and Consumer Promotion Expenses
The Company offers various sales incentive programs to customers and
consumers, such as price discounts, in-store display incentives, slotting fees,
and coupons. The recognition of expense for these programs involves use of
judgment related to performance and redemption estimates. Estimates are made
based on historical experience and other factors. Actual expenses may differ if
the level of redemption rates and performance vary from estimates.
Inventories
Inventories are valued at the lower of cost or market value and have
been reduced by an allowance for excess, obsolete and unsaleable inventories.
The estimate is based on management's review of inventories on hand compared to
estimated future usage and sales.
Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset.
22
Goodwill and intangible assets (trademarks) not subject to amortization
are tested annually for impairment, and are tested for impairment more
frequently if events and circumstances indicate that the asset might be
impaired. An impairment loss is recognized to the extent that the carrying
amount exceeds the asset's fair value.
Deferred Income Taxes
Deferred tax assets have been recorded by the Company, a portion of
which represents net operating loss carryforwards. A valuation allowance has
been recorded for certain state net operating loss carryforwards. In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment. In the event that actual results
differ from these estimates or these estimates are adjusted in future periods,
the Company may need to establish additional valuation allowances which could
materially impact its results of operations.
Commitments and Contractual Obligations
Our contractual obligations and commitments principally include
obligations associated with our outstanding indebtedness and future minimum
operating lease obligations as set forth in the following table:
- ----------------------------------------------------------------------------------------------------------------------
Payments Due by Period
- ----------------------------------------------------------------------------------------------------------------------
(In thousands)
- ----------------------------------------------------------------------------------------------------------------------
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Contractual
Obligations:
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Total 2003 2004 2005 2006 2007 and
----- ---- ---- ---- ---- --------
thereafter
----------
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Long-term debt $273,796 $ 370 $20,074 $27,474 $6,938 $218,940
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Operating leases 15,655 3,944 3,475 2,988 1,835 3,413
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Management fees 2,000 500 500 500 500 0
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Purchase commitments 10,908 10,908 0 0 0 0
------ ------ - - - -
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
Total contractual cash $302,359 $15,722 $24,049 $30,962 $9,273 $222,353
======== ======= ======= ======= ====== ========
obligations
- --------------------------- ------------- ---------------- --------------- --------------- ------------- -------------
23
VIII. 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
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, terrorist attacks, increased
competition, environmental liabilities, lower sales volumes for the Company's
products and higher costs of food product raw materials, as well as factors that
affect the food industry generally. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Company undertakes no obligations to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of operations, the Company is exposed to market
risks arising from adverse changes in interest rates. Market risk is defined for
these purposes as the potential change in the fair value of financial asset or
liability resulting from an adverse movement in interest rates. As of December
28, 2002, the Company's only variable rate borrowings were under the Term Loan B
and the Revolving Credit Facility, which bear interest at several alternative
variable rates as stipulated in the Senior Secured Credit Facility. A 100 basis
point increase in interest rates, applied to the Company's borrowings at
February 28, 2003, would result in an annual increase in interest expense and a
corresponding reduction in cash-flow of approximately $0.3 million.
The Company also has outstanding $220 million of 9 5/8% Senior
Subordinated Notes due August 1, 2007 with interest payable semiannually on
February 1 and August 1 of each year, of which $120 million principal amount was
originally issued in August 1997 and $100 million principal amount was issued by
the Company through a private offering of the notes completed on March 7, 2002.
The fair value of the $220 million Senior Subordinated Notes at December 28,
2002, based on quoted market prices, was $227.7 million.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets at December 28, 2002 and December 29,
2001 and the consolidated statements of operations and cash flows for the years
ended December 28, 2002, December 29, 2001 and December 30, 2000 and related
notes thereto are set forth below.
24
Independent Auditors' Report
The Board of Directors and Stockholder
B&G Foods, Inc.:
We have audited the accompanying consolidated balance sheets of B&G
Foods, Inc. and subsidiaries as of December 28, 2002 and December 29, 2001, and
the related consolidated statements of operations and cash flows for the years
ended December 28, 2002, December 29, 2001 and December 30, 2000. In connection
with our audits of the consolidated financial statements, we also have audited
the schedule of valuation and qualifying accounts for the years ended December
28, 2002, December 29, 2001 and December 30, 2000 . These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
B&G Foods, Inc. and subsidiaries as of December 28, 2002 and December 29, 2001,
and the results of their operations and their cash flows for the years ended
December 28, 2002, December 29, 2001 and December 30, 2000, in conformity with
accounting principles generally accepted in the United States of America. Also
in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
25
As described in Note 2 to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets," as of December 30, 2001, which
changes its accounting for goodwill and intangible assets. As described in Note
2 to the consolidated financial statements, the Company adopted the Emerging
Issues Task Force, Issue No. 01-09, "Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of a Vendor's Products)" as of
December 30, 2001. In accordance with the EITF, certain promotional expenses are
presented and reclassified as a reduction of net sales in fiscal 2002 and 2001.
However, due to the specificity of similar information not being captured in the
Company's information systems in fiscal 2000, the Company is unable to determine
what the reclassification amount would be for that year.
/s/KPMG LLP
Short Hills, New Jersey
February 24, 2003
26
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Assets Dec. 28, 2002 Dec. 29, 2001
------------- -------------
Current assets:
Cash and cash equivalents $ 15,866 15,055
Trade accounts receivable, less allowance for doubtful
accounts of $464 and $55 in 2002 and 2002, respectively 21,900 21,621
Inventories 67,536 66,142
Prepaid expenses 2,024 1,790
Deferred income taxes 1,485 1,672
-------- --------
Total current assets 108,811 106,280
Property, plant and equipment, net 37,414 36,431
Goodwill, net of accumulated amortization of $10,724 in 2001 112,319 112,319
Trademarks, net of accumulated amortization of $17,445 in 2001 162,781 162,781
Other assets 9,348 8,195
--------- ---------
Total assets $ 430,673 426,006
======= =======
Liabilities and Stockholder's Equity
Current liabilities:
Current installments of long-term debt 370 17,436
Trade accounts payable 18,826 21,256
Accrued expenses 19,425 17,494
Due to related party 208 208
-------- --------
Total current liabilities 38,829 56,394
Long-term debt 273,426 271,839
Other liabilities 291 236
Deferred income taxes 40,046 34,701
---------- --------
Total liabilities 352,592 363,170
--------- -------
Commitments and contingencies (Notes 5, 6, 10 and 11)
Stockholder's equity
Common stock, $.01 par value per share. Authorized
1,000 shares; issued and outstanding 1 share in
2002 and 2001 - -
Additional paid-in capital 56,392 56,392
Retained earnings 21,689 6,444
------ -------
Total stockholder's equity 78,081 62,836
------ ------
Total liabilities and stockholder's equity $ 430,673 426,006
======= =======
See accompanying notes to consolidated financial statements
27
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands)
Year ended Year ended Year ended
----------------------- ------------------------ ----------------------
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
Net sales (Note 2(o)) $ 293,677 279,779 351,416
Cost of goods sold 203,707 192,525 200,651
----------------------- ------------------------ ----------------------
Gross profit 89,970 87,254 150,765
Sales, marketing and distribution expenses 35,852 34,922 100,711
(Note 2(o))
General and administrative expenses 4,911 14,120 12,957
Management fees - related party 500 500 500
Environmental clean-up 100 950 -
Special charge-severance - - 250
----------------------- ------------------------ ----------------------
Operating income 48,607 36,762 36,347
Other expense:
Gain on sale of assets - (3,112) -
Derivative gain (2,524) - -
Interest expense 26,626 29,847 36,073
Income before income tax expense 24,505 10,027 274
Income tax expense 9,260 4,029 1,559
----------------------- ------------------------ ----------------------
Net income (loss) $ 15,245 5,998 (1,285)
======================= ======================== ======================
See accompanying notes to consolidated financial statements.
28
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year ended Year ended Year ended
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
-------------- ------------- -------------
Dec. 29, 2001
Cash flows from operating activities:
Net income (loss) $ 15,245 5,998 (1,285)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 5,300 14,290 15,754
Amortization of deferred debt issuance costs
and bond discount 2,686 1,972 1,843
Deferred income tax expense 5,532 3,832 2,150
Gain from sale of property, plant and equipment - (3,112) (93)
Provision for doubtful accounts 84 118 128
Changes in assets and liabilities, net of effects
from businesses acquired and net assets held for sale:
Trade accounts receivable (363) 2,432 1,553
Inventories (1,394) (2,788) 5,722
Prepaid expenses (234) 303 (13)
Other assets 33 (400) (9)
Trade accounts payable (2,430) (3,525) 1,141
Accrued expenses 1,931 2,227 (2,790)
Other liabilities 55 87 98
------------------ ------------------ ------------------
Net cash provided by operating activities 26,445 21,434 24,199
Cash flows from investing activities:
Capital expenditures (6,283) (3,904) (5,891)
Net proceeds from sale of assets - 24,090 -
Proceeds from sales of property, plant and equipment - - 211
------------------ ------------------ ------------------
Net cash (used in) provided by investing activities (6,283) 20,186 (5,680)
Cash flows from financing activities:
Payments of long-term debt (114,417) (40,048) (11,569)
Proceeds from issuance of long-term debt 98,760 - -
Proceeds from issuance of equity and capital contributions - 50 -
Payments of debt issuance costs (3,694) - -
------------------ ------------------ ------------------
Net cash used in financing activities (19,351) (39,998) (12,831)
------------------ ------------------ ------------------
Increase in cash and cash equivalents 811 1,622 5,688
Cash and cash equivalents at beginning of period 15,055 13,433 7,745
------------------ ------------------ ------------------
Cash and cash equivalents at end of period $ 15,866 15,055 13,433
Supplemental disclosure of cash flow information - cash paid for:
Interest $22,975 29,966 34,104
Income taxes $3,778 271 652
See accompanying notes to consolidated financial statements.
29
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 28, 2002 and December 29, 2001
(Dollars in thousands)
(1) Nature of Operations
Organization
B&G Foods, Inc. and subsidiaries (the "Company") is a wholly-owned subsidiary of
B&G Foods Holdings Corp. ("Holdings"), which in turn is majority owned by
Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS"), a private equity investment
firm, and minority owned by management, directors and certain other investors.
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. Sales during the first quarter
of the fiscal year are generally below that of the following three quarters.
Business and Credit Concentrations
The Company's exposure to credit loss in the event of non-payment of accounts
receivable by customers is represented in the amount of such receivables. The
Company performs ongoing credit evaluations of its customers' financial
condition. As of December 28, 2002, the Company does not believe it has any
significant concentration of credit risk with respect to its trade accounts
receivable. The Company had no customers in fiscal 2002, 2001 or 2000 that
exceeded 10% of consolidated net sales.
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. Burns & Ricker generated sales of $26.4 million during fiscal
2000.
30
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Special Charge-Severance
During the second quarter of 2000, the Company recorded a severance charge of
$0.3 million. As part of the severance arrangements, 13 employees were
terminated. At December 30, 2000, all amounts related to such severance charges
were paid.
(2) Summary of Significant Accounting Policies
(a) Fiscal Year and Basis of Presentation
The Company utilizes a 52 week fiscal year ending on the Saturday closest to
December 31.
The financial statements are presented on a consolidated basis. All significant
intercompany balances and transactions have been eliminated.
(b) Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, all highly liquid
debt instruments with original maturities of three months or less are considered
to be cash and cash equivalents.
(c) Inventories
Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out and average cost methods.
(d) Property, Plant and Equipment
Property, plant, and equipment are stated at cost. Plant and equipment under
capital leases are stated at the present value of the minimum lease payments.
Depreciation on plant and equipment is calculated using the straight-line method
over the estimated useful lives of the assets, generally 12 to 20 years for
buildings and improvements, 5 to 10 years for machinery and equipment, and 3 to
5 years for office furniture and vehicles. Plant and equipment held under
capital leases and leasehold improvements are amortized on a straight-line basis
over the shorter of the lease term or estimated useful life of the asset.
Expenditures for maintenance, repairs and minor replacements are charged to
current operations. Expenditures for major replacements and betterments are
capitalized.
31
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(e) Intangible Assets
Intangible assets consist of goodwill and trademarks. As described in Note 2(o),
the Company adopted the Financial Accounting Standard Board's ("FASB") Statement
of Financial Accounting Standards ("SFAS") No. 142 "Goodwill and Other
Intangible Assets" on December 30, 2001. Goodwill and intangible assets not
subject to amortization are tested annually for impairment, and are tested for
impairment more frequently if events and circumstances indicate that the asset
might be impaired. An impairment loss is recognized to the extent that the
carrying amount exceeds the asset's fair value.
Prior to adoption of Statement No. 142, goodwill was amortized on a
straight-line basis over 40 years and trademarks were amortized on a
straight-line basis over 31 to 40 years. The Company assessed the recoverability
of the intangible assets by determining whether the amortization of the
intangible assets over their remaining lives could be recovered through
undiscounted future operating cash flows. The amount of impairment, if any, was
measured as the difference between the asset's carrying value and the projected
discounted future operating cash flows using a discount rate reflecting the
Company's average cost of funds.
(f) Deferred Debt Issuance Costs
Deferred debt issuance costs are amortized using the straight-line method over
the term of the related debt agreements and are classified as other non-current
assets. Amortization of deferred debt issuance costs for fiscal years 2002, 2001
and 2000 was $2,508, $1,972 and $1,843, respectively.
(g) Revenue Recognition
Revenues are recognized when products are shipped. The Company reports all
amounts billed to a customer in a sale transaction as revenue, including those
amounts related to shipping and handling. Shipping and handling costs are
included in cost of goods sold. As further described in Note 2(o), certain
coupons and promotional expenses are included as a reduction of net sales.
(h) Advertising Costs
Advertising costs are expensed as incurred. Advertising costs amounted to
approximately $2,202, $1,833 and $2,469 during the fiscal years 2002, 2001 and
2000, respectively.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities of the Company are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and
32
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided when it is more likely than not that all or some portion of the
deferred tax asset will not be realized. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
(j) Pension Plans
The Company has defined benefit pension plans covering substantially all of its
employees. The Company's funding policy is to contribute annually the amount
recommended by its actuaries.
(k) Fair Value of Financial Instruments
Cash and cash equivalents, trade accounts receivable, trade accounts payable,
accrued expenses and due to related party are reflected in the consolidated
financial statements at carrying value, which approximates fair value due to the
short-term nature of these instruments. The fair value of the $220,000 Senior
Subordinated Notes at December 28, 2002, based on quoted market prices, was
$227,700. The carrying value of the Company's remaining borrowings approximates
their fair value based on the current rates available to the Company for similar
instruments.
(l) Use of Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management of the
Company to make a number of estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Some of
the more significant estimates made by management involve trade and consumer
promotion expenses, allowances for excess, obsolete and unsaleable inventories,
and the recoverability of goodwill, trademarks, property, plant and equipment
and deferred tax assets. Actual results could differ from those estimates.
(m) Impairment of Long-Lived Assets
In accordance with SFAS No. 144, long-lived assets, such as property, plant, and
equipment, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would
33
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
be separately presented in the balance sheet and reported at the lower of the
carrying amount of fair value less costs to sell, and are no longer depreciated.
The assets and liabilities of a disposed group classified as held for sale would
be presented separately in the appropriate asset and liability sections of the
consolidated balance sheet.
Prior to the adoption of SFAS No. 144, the Company accounted for long-lived
assets in accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." The impairment criteria and
measurement requirements of SFAS No. 144 are substantially unchanged from those
of SFAS No. 121 for assets held and used.
(n) Derivative Financial Instruments
The Company accounts for its derivative and hedging transactions in accordance
with SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and SFAS 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 (see Note 6).
(o) Adoption of New Accounting Standards
In 2001, the Emerging Issues Task Force ("EITF") reached a consensus with
respect to EITF Issue No. 00-14, "Accounting for Certain Sales Incentives" (as
codified by EITF Issue 01-09), including point of sale coupons, rebates and free
merchandise, which became effective for the Company in the first quarter of
2002. 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, has reclassified prior period coupon expense as a reduction of net
sales. Coupon expense reclassified in accordance with the EITF consensus was
$1.4 million in 2001. Due to the specificity of similar information not being
captured in the Company's information systems for fiscal 2000, the Company is
unable to determine what the reclassification amount should be for that year.
The implementation of the provisions of such EITF consensus alters the
classification of certain sales incentives in the consolidated statements of
operations resulting in a reduction of sales and gross margins, but does not
have any effect on
34
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
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" (as codified by EITF Issue 01-09), which
became effective for the Company in the first quarter of 2002. 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 was $51.2 million for fiscal 2001. Due to
the specificity of similar information not being captured in the Company's
information systems for fiscal 2000, the Company is unable to determine what the
reclassification amount should be for that year.
The following table summarizes the reclassification of the prior period amounts
as if the aforementioned new EITF consensuses had been implemented effective
December 31, 2000:
Year Ended December 29, 2001
As Filed Reclassified
----------------- ----------------
Sales $ 332,433 $ 279,779
Gross profit 139,908 87,254
Sales, marketing and distribution expenses 87,576 34,922
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS 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 SFAS No. 142.
SFAS 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 SFAS No. 144.
The Company adopted the provisions of SFAS No. 142 effective as of December 30,
2001.
As required by SFAS No. 142, the Company performed an assessment to determine
whether goodwill of the Company was impaired as of December 28, 2002 and
December 30, 2001. In connection therewith, the Company determined that its
operations consisted of one reporting unit. Under SFAS No. 142, goodwill
impairment is deemed to exist if the net book value of a reporting unit exceeds
its estimated fair value. The Company determined that, as of December 28, 2002
and December 30, 2001, the fair value of the Company's single reporting unit
exceeded its carrying amount, and therefore there is no indication that goodwill
was impaired as of such dates. The Company will perform its annual impairment
review each fiscal year end to measure goodwill for impairment.
35
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
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. Effective as of December 30, 2001, the Company
ceased the amortization of goodwill and all trademarks having indefinite useful
lives. Amortization expense related to goodwill was $3.1 million and $3.8
million for the fiscal 2001 and 2000, respectively. Amortization expense related
to trademarks was $5.4 million and $5.7 million for fiscal 2001 and 2000,
respectively.
The following table reconciles previously reported net income to net income
(loss) adjusted as if the provisions of SFAS No. 142 were in effect in fiscal
2001 and fiscal 2000:
Year ended Year ended
---------------------- ------------------
Dec. 29, 2001 Dec. 30, 2000
---------------------- ------------------
Reported net income (loss) $5,998 (1,285)
Add back: Goodwill amortization, net 1,839 2,305
of income taxes
Add back: Trademark amortization, net 3,271 3,419
of income taxes
Adjusted net income $11,108 4,439
====================== ==================
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and
reporting for the impairment and disposal of long-lived assets. SFAS No. 144
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. SFAS 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 SFAS No. 144 on December 30, 2001 and such adoption had no
effect on the Company's consolidated financial statements.
36
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(3) Inventories
Inventories consists of the following:
Dec. 28, 2002 Dec. 29, 2001
--------------------------- ----------------------
Raw materials and packaging $ 13,601 15,140
Work in process 1,623 2,041
Finished goods 52,312 48,961
------ ------
$ 67,536 66,142
======== ======
(4) Property, Plant and Equipment
Property, plant and equipment, net consists of the following:
Dec. 28, 2002 Dec. 29, 2001
--------------------------- ----------------------
Land $ 3,012 2,880
Buildings and improvements 14,431 13,720
Machinery and equipment 37,924 33,590
Office furniture and vehicles 7,472 5,791
Leased property under capital leases - 1,837
Construction-in-progress - 2
--------- --------
62,839 57,820
Less accumulated depreciation and
amortization 25,425 21,389
--------- --------
$ 37,414 36,431
Plant and equipment includes amounts under capital leases as follows:
Dec. 29, 2001
----------------------
Machinery and equipment $ 591
Office furniture and vehicles 1,246
-----
1,837
Less accumulated amortization 1,308
-----
$ 529
=====
Amortization of assets held under capital leases is included with depreciation
expense.
(5) Leases
The Company has several noncancelable operating leases, primarily for its
corporate headquarters, warehouses, transportation equipment and machinery.
These leases generally require the Company to pay all executory costs such as
maintenance, taxes and insurance.
Future minimum lease payments under noncancelable operating leases (with initial
or remaining lease terms in excess of one year) for the periods set forth below
are as follows:
37
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Years ended December:
--------------------
2003 $ 3,944
2004 3,475
2005 2,988
2006 1,835
2007 1,417
Thereafter 1,996
-----
$ 15,655
========
Total rental expense was $2,957, $3,116 and $3,400 for the fiscal years 2002,
2001 and 2000, respectively.
The Company leases a manufacturing and warehouse facility from the Chairman of
the Board of Directors of the Company under an operating lease which expires in
April 2009. Total rent expense associated with this lease was $769 for the
fiscal years 2002, 2001 and 2000.
(6) Long-term Debt
Long-term debt consists of the following:
Dec. 28, 2002 Dec. 29, 2001
----------------- ---------------
Revolving credit facility $ - -
Term Loan A - 38,301
Term Loan B 54,856 130,661
9 5/8% Senior Subordinated Notes due August 1, 2007,
net of unamortized discount of $1,060 at December 28, 2002
218,940 120,000
Obligations under capital leases with interest at 9% to
13% collateralized by certain machinery, equipment and vehicles
- 313
----------------- ---------------
Total long-term debt 273,796 289,275
Less current installments 370 17,436
----------------- ---------------
Long-term debt, excluding current installments $ 273,426 271,839
================= ===============
38
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
The Senior Secured Credit Facility is comprised of a $60,000 five-year
Revolving Credit Facility (the "Revolving Credit Facility"), a $70,000 (initial
amount) five-year Term Loan Facility ("Term Loan A") and a $150,000 (initial
amount) seven-year Term Loan Facility ("Term Loan B" and collectively with Term
Loan A, the "Term Loan Facilities"). Interest on the Senior Secured Credit
Facility is determined based on several alternative rates as stipulated in the
Senior Secured Credit Facility, including the base lending rate per annum plus
an applicable margin or LIBOR plus an applicable margin. At December 28, 2002
the interest rate for Term Loan B was 5.40%. At December 29, 2001, the interest
rate for Term Loan A and Term Loan B was 7.31% and 6.17% to 7.56%, respectively.
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 restrict, among other things, the Company's ability 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 leverage 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.
The Revolving Credit Facility requires an annual commitment fee of an
amount equal to 0.60% of the average daily unused portion of the Revolving
Credit Facility. The Revolving Credit Facility also provides a maximum
commitment for letters of credit of $5,000. At December 28, 2002 and December
29, 2001, letters of credit of approximately $1,267 have been issued under the
Revolving Credit Facility.
The Company has outstanding $220,000 of 9 5/8% 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 at a discount of $1,240. 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
debt issuance costs.
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 5/8% 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.
39
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
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 certain 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 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
agreed to pay a variable rate of three-month LIBOR plus 5.65% on a notional
amount of $100,000 in exchange for a fixed rate of 9.625%. Because the interest
rate swap did not qualify as an effective hedge, changes in the fair value are
recorded in the consolidated statement of operations. The Company sold the
interest rate swap agreement on August 7, 2002 for $2,524. Included in the
fiscal 2002 consolidated statement of operations is a derivative gain
representing the change in fair value of the interest rate swap of $2,524.
B&G Foods, Inc. has no assets or operations independent of its
subsidiaries. All of B&G Foods, Inc.'s subsidiaries (the "Guarantors") are
wholly-owned, and all of B&G Foods, Inc.'s subsidiaries jointly and severally,
and fully and unconditionally, guarantee the Notes (the "Subsidiary
Guarantees"). Consequently, separate financial statements have not been
presented for the guarantor subsidiaries because management has determined that
they would not be material to investors. The Subsidiary Guarantee of each
Guarantor is subordinate to the prior payment in full of all Senior Debt, as
defined.
At December 28, 2002 and December 29, 2001, accrued interest of $9,328
and $7,222, respectively, is included in accrued expenses in the accompanying
consolidated balance sheets.
The aggregate maturities of long-term debt are as follows:
40
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Years ended December:
--------------------
2003 $ 370
2004 20,074
2005 27,474
2006 6,938
2007 218,940
-------
$273,796
(7) Income Tax Expense
Income tax expense consists of the following:
Year ended Year ended Year ended
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
----------------------- ----------------------- --------------------
Current:
Federal $ 3,252 54 (764)
State 476 168 245
--- --- ---
3,728 222 (519)
Deferred:
Federal 4,694 2,995 1,346
State 838 812 732
--- --- ---
5,532 3,807 2,078
----- ----- -----
$9,260 4,029 1,559
====== ===== =====
Income tax expense differs from the expected income tax expense (computed by
applying the U.S. federal income tax rate of 34% to income before income tax
expense) as a result of the following:
41
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Year ended Year ended Year ended
Dec. 28, 2002 December 29, 2001 Dec. 30, 2000
--------------- ----------------- -------------
Computed expected tax expense $ 8,332 3,409 93
State income taxes, net of federal income tax benefit 867 647 645
Nondeductible expenses, principally amortization of 61 855 666
goodwill in 2001 and 2000
Change in valuation allowance for deferred income taxes 0 0 415
allocated to income tax expense
Gain on sale of assets 0 (844) 0
Other 0 (38) (260)
--------------- ----------------- -------------
$ 9,260 4,029 1,559
=============== ================= =============
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:
Dec. 28, 2002 Dec. 29, 2001
------------- -------------
Deferred tax assets:
Accounts receivable, principally due to allowance $ 44 44
Inventories, principally due to additional costs
capitalized for tax purposes 355 691
Accruals and other liabilities not currently deductible 1,539 1,386
Net operating loss carryforwards 3,338 3,586
Deferred financing costs 206 347
------------- -------------
Total gross deferred tax assets 5,482 6,054
Less valuation allowance (1,282) (1,282)
------------- -------------
Net deferred tax assets 4,200 4,772
------------- -------------
Deferred tax liabilities:
Plant and equipment (4,559) (3,817)
Intangible assets (37,439) (33,984)
Derivative gain (763) 0
------------- -------------
Total deferred tax liabilities (42,761) (37,801)
------------- -------------
Net deferred tax liability $ (38,561) (33,029)
============= =============
42
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based upon the level of
historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it
is more likely than not that the Company will realize the benefits of these
deductible differences, net of the existing valuation allowances at December 28,
2002 and December 29, 2001. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. The valuation
allowance at December 28, 2002 and December 29, 2001 of $1,282 and $1,282,
respectively, represents the allowance for certain fully reserved state net
operating loss carryforwards of $23,206 and $22,773, respectively, which are
available to offset future state taxable income, if any, through 2007. The
Company established a valuation allowance for the deferred tax assets associated
with state net operating loss carryforwards at December 28, 2002 because
management believes that based upon historical and projected state taxable
income, it is not more likely than not that the deferred tax asset related to
such net operating loss carryforwards will be realized. Any future utilization
of acquired state net operating loss carryforwards will result in an adjustment
to goodwill to the extent it reduces the valuation allowance.
At December 28, 2002, the Company has net operating loss carryforwards for
federal income tax purposes of $5,807 which are available to offset future
federal taxable income, if any, through 2020. As a result of the Company's
acquisitions in prior years, the annual utilization of the net operating loss
carryforwards acquired is limited under certain provisions of the Internal
Revenue Code.
(8) Pension Benefits
The Company has defined benefit pension plans covering substantially all of its
employees. The benefits are based on years of service and the employee's
compensation, as defined. The Company makes annual contributions to the plans
equal to the maximum amount that can be deducted for income tax purposes. The
following table sets forth the Company's defined benefit pension plans' benefit
obligation, fair value of plan assets and funded status recognized in the
consolidated balance sheets:
43
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Dec. 28, 2002 Dec. 29, 2001
--------------------- --------------------
Change in benefit obligation
Benefit obligation at beginning of period $ 9,415 7,582
Actuarial gain 828 847
Service cost 716 652
Interest cost 667 601
Benefits paid (260) (267)
--------------------- --------------------
Benefit obligation at end of period 11,366 9,415
--------------------- --------------------
Change in plan assets
Fair value of plan assets at beginning of period 5,740 6,196
Actual loss on plan assets (70) (333)
Employer contributions 1,380 144
Benefits paid (260) (267)
--------------------- --------------------
Fair value of plan assets at end of period 6,790 5,740
--------------------- --------------------
Funded status (4,576) (3,675)
Unrecognized prior service cost 6 6
Unrecognized net actuarial loss 1,515 124
--------------------- --------------------
Accrued pension cost $ (3,055) (3,545)
===================== ====================
Amount recognized in the consolidated balance sheets
Accrued benefit cost at beginning of period $ (3,545) (3,004)
Net periodic pension cost 890 (685)
--------------------- --------------------
Contributions 1,380 144
Accrued pension cost at end of period $ (3,055) (3,545)
===================== ====================
Weighted-average assumptions as of December 28, 2002 and
December 29, 2001
Discount rate 6.75% 7.25%
Rate of compensation increase 4.00% 4.00%
Expected long-term rate of return 7.25-8.25% 7.75-8.50%
Plan assets are invested primarily in government securities and mutual funds.
Net periodic cost includes the following components:
44
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Year ended Year ended Year ended
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
---------------- ---------------- ----------------
Service cost - benefits earned during the period $ 716 652 552
Interest cost on projected benefit obligation 667 601 522
Expected return on plan assets (503) (515) (521)
Net amortization and deferral 10 (53) (98)
---------------- ---------------- ----------------
Net pension cost $ 890 685 455
================ ================ ================
The Company sponsors several defined contribution plans covering
substantially all of its employees. Employees may contribute to these plans and
these contributions are matched at varying amounts by the Company. Company
contributions for the matching component of these plans amounted to $523, $453
and $468 for the fiscal years ended December 28, 2002, December 29, 2001 and
December 30, 2000, respectively. Pension expense relating to a multi-employer
pension plan amounted to $459, $390 and $112 for the fiscal years ended December
28, 2002, December 29, 2001 and December 30, 2000, respectively.
(9) Changes in Stockholder's Equity
The changes in stockholder's equity for the fiscal years ended December 28,
2002, December 29, 2001 and December 30, 2000 are as follows:
Additional
Common Stock paid-in Retained
Share Amount capital Earnings Total
-------- -------- ----------- ------------- ----------
Balance at Jan. 1, 2000 1 $-- 56,342 1,731 58,073
Net loss -- -- -- (1,285) (1,285)
-------- -------- ----------- ------------- ----------
Balance at Dec. 30, 2000 1 -- 56,342 466 56,788
Capital contribution -- -- 50 -- 50
Net income -- -- -- 5,998 5,998
-------- -------- ----------- ------------- ----------
Balance at Dec. 29, 2001 1 -- 56,392 6,444 62,836
Net income -- -- -- 15,245 15,245
-------- -------- ----------- ------------- ----------
Balance at Dec. 28, 2002 1 $-- 56,392 21,689 78,081
======== ======== =========== ============= ==========
45
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
(10) Related-party Transactions
The Company is party to a management agreement (the "Management Agreement") with
Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS & Co."), the manager of BRS,
pursuant to which BRS & Co. is paid an annual fee of $500 per year for certain
management, business and organizational strategy, and merchant and investment
banking services. The Management Agreement will expire on the earlier of
December 27, 2006 and the date that BRS owns less than 20% of the outstanding
common stock of Holdings.
The Company is also party to a transaction services agreement pursuant to which
BRS & Co. will be paid a transaction fee for management, financial and other
corporate advisory services rendered by BRS & Co. in connection with
acquisitions by the Company, which fee will not exceed 1.0% of the total
transaction value. No fees were incurred in fiscal years 2002, 2001 and 2000.
As described in Note 5, the Company leases a manufacturing and warehouse
facility from the Chairman of the Board of Directors of the Company.
"Due to related party" at December 28, 2002 and December 29, 2001 includes
management fees to BRS.
Holdings has an Incentive Stock Option Plan (the "Plan') for key employees of
the Company. The Plan authorizes options for up to 6,700 shares of Holding's
common stock. The Plan provides for grants of incentive stock options or
non-qualified stock options. Under the Plan, the Board of Directors of Holdings
determines the exercise price of options granted, which, in the case of
incentive stock options, cannot be less than fair value. All option grants have
been made at fair value as determined by a third party valuation. Options expire
up to ten years from the grant date and vest ratably over five years. During
fiscal 2002, 2001 and 2000, 0, 700 and 0 options, respectively, were granted. As
of December 28, 2002, 6,625 options were outstanding, all of which were
incentive stock options.
(11) Commitments and Contingencies
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
46
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
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. In September 2001, both firms have submitted their findings to the
NJDEP along with recommendations for no further action. To date, the Company has
not received a response to such recommendations from the NJDEP. 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 as of December 29,
2001. 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
estimated expenses relating to this matter have been incurred and paid as of
December 28, 2002, although future information and developments may warrant or
require the Company to incur additional expenses. At December 28, 2002 and
December 29, 2001, there was $0 and $80, respectively, accrued related to this
matter.
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 parents 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. In February 2002, the Company submitted a demand
for indemnity, but the indemnitor's initial response was limited to a request
for additional information. In February 2003, the Company and other parties to
this action settled the claim for $100. The Company anticipates that a court
order memorializing the settlement will be entered into in the first quarter of
fiscal 2003.
The Company is involved in various other claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these other 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.
47
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
On December 28, 2002, the Company had purchase commitments with various
suppliers to purchase certain raw materials in the aggregate amount of
approximately $10,908. Management believes that all such commitments will be
fulfilled within one year.
(12) Quarterly Financial Data (unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
---------- ----------- --------- --------- --------
Net sales
2002 $66,210 77,850 70,900 78,717 293,677
2001 $61,399 73,092 71,982 73,306 279,779
Gross profit
2002 $20,705 24,274 22,197 22,794 89,970
2001 $19,589 23,204 22,780 21,681 87,254
Net income
2002 $3,018 4,707 3,861 3,659 15,245
2001 $ 608 1,694 1,085 2,611 5,998
48
Schedule II
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Dollars in thousands)
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to other
beginning of costs and accounts - Deductions - Balance at end of
Description period expenses describe describe period
2002:
Allowance for
doubtful accounts $ 455 $ 84 -- $ 75(a) $ 464
Environmental
Reserves $ 80 $ 100 -- $ 80(c) $ 100
2001:
Allowance for
doubtful accounts $ 465 $ 118 -- $ 128(a) $ 455
Environmental
Reserves -- $ 1,200 -- $ 1,120(b) $ 80
2000:
Allowance for
doubtful accounts $ 517 $ 128 -- $ 180(a) $ 465
(a) Represents bad-debt write-offs.
(b) Represents payments of $870 and an insurance reimbursement of $250.
(c) Represents payments.
49
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
persons who are the members of the Board of Directors or executive officers of
B&G. Other officers may also be appointed to fill certain positions. Each of the
directors of B&G holds office until the next annual meeting of the shareholders
of B&G or until his successor has been elected and qualified.
Name Age Position
---- --- --------
Leonard S. Polaner 71 Chairman of the Board of Directors
David L. Wenner 53 President, Chief Executive Officer and Director
Robert C. Cantwell 46 Executive Vice President of Finance and Chief Financial Officer
David H. Burke 61 Executive Vice President of Sales
James H. Brown 60 Executive Vice President of Manufacturing
Albert J. Soricelli 50 Executive Vice President of Marketing and Strategic Planning
Thomas Baldwin 43 Director
William F. Callahan III 61 Director
James R. Chambers 44 Director
Nicholas B. Dunphy 54 Director
Alfred Poe 53 Director
Stephen C. Sherrill 49 Director
Leonard S. Polaner, Chairman of the Board: Leonard Polaner has been
Chairman of the Board of B&G since March 1993 when the Polaner business was sold
to International Home Foods, Inc. Prior to that time, Mr. Polaner was President
and Chief Executive Officer of B&G, positions which he had assumed upon joining
the Company in 1986. Mr. Polaner began his career in the food products industry
in 1956 when, after earning his Masters Degree from Harvard Business School, he
joined Polaner, a family-run business. He has been active in many industry trade
groups, including the New York Preservers Association, where he served as
President, and the International Jelly and Preservers Association, organizations
in which he served as President and as a member of the Board of Directors,
respectively.
David L. Wenner, President and Chief Executive Officer and Director:
David Wenner is the President and Chief Executive Officer of the Company,
positions he has held since March 1993, and has been a Director of the Company
since August 1997. Mr. Wenner joined B&G in 1989 as Assistant to the President
and was directly responsible for the Company's distribution and Bloch &
Guggenheimer operations. In 1991, he was promoted to Vice President. He
continued to be responsible for distribution and assumed responsibility for all
company operations. Prior to joining B&G, Mr. Wenner spent 13 years at Johnson &
Johnson in supervision and management positions responsible for manufacturing,
maintenance and purchasing. Mr. Wenner is active in industry trade groups and
has served as President of Pickle Packers International.
50
Robert C. Cantwell, Executive Vice President of Finance and Chief
Financial Officer: Robert Cantwell is the Executive Vice President of Finance
and Chief Financial Officer of B&G. Mr. Cantwell joined the Company in 1983 as
the Assistant Vice President of Finance. In that position, Mr. Cantwell had
responsibility for all financial reporting, including budgeting. Mr. Cantwell
was promoted to his current position in 1991, assuming full responsibility for
all financial matters, as well as management information systems, data
processing, administration and corporate human resources. Prior to joining the
Company, Mr. Cantwell spent four years at Deloitte & Touche, where he received
accreditation as a Certified Public Accountant.
David H. Burke, Executive Vice President of Sales: David Burke is the
Executive Vice President of Sales of the Company. Mr. Burke has an extensive
background with major consumer products companies. His experience includes eight
years with Procter & Gamble in sales and sales management and 12 years at Quaker
Oats, where he was a Regional Sales Manager and later the director of Broker
Sales. Mr. Burke also spent four years with Pet Inc. as Vice President for their
frozen foods business. Mr. Burke joined B&G in 1990 as Vice President of Sales
and was and continues to be responsible for sales of all B&G brands.
James H. Brown, Executive Vice President of Manufacturing: James Brown
is the Executive Vice President of Manufacturing and has 28 years of experience
in manufacturing with B&G and Polaner. Mr. Brown has been responsible for all
manufacturing at the Roseland facility since 1981. In 1994, he assumed
responsibility for B&G's other manufacturing facilities. Prior to joining
Polaner in 1972, Mr. Brown worked at Kraft Foods for two years as a project
engineer and spent four years in the U.S. Navy.
Albert J. Soricelli, Executive Vice President of Marketing & Strategic
Planning: Prior to joining B&G in 2000, Mr. Soricelli held various executive
positions in the food and consumer products industry. Mr. Soricelli spent 18
years at American Home Foods in Madison, New Jersey where he held the position
of Senior Vice President/General Manager. More recently, Mr. Soricelli served as
President of Nice Pak Products, in Orangeburg, New York, a baby and wet wipe
consumer product company. As Executive Vice President of Marketing & Strategic
Planning for B&G, Mr. Soricelli is responsible for marketing, acquisitions, and
divestitures.
Thomas J. Baldwin, Director: Thomas Baldwin has been a Director of B&G
since 1997. Since March 2000, Mr. Baldwin has been a Managing Director of BRS.
From 1995 until February 2000, Mr. Baldwin was the Chief Executive Officer and a
founding stockholder of Christmas Corner, Inc., a specialty retail chain that
owns and operates seasonal Christmas stores. From 1990 until 1995, Mr. Baldwin
was a Managing Director of the leveraged buyout firm Invus Group, Ltd.
William F. Callahan III, Director: William Callahan has been a Director
of B&G since B&G acquired Maple Grove Farms of Vermont, Inc. in 1998. Prior to
that, Mr. Callahan was the Chief Executive Officer and owner of Maple Grove
Farms of Vermont, Inc. Mr. Callahan began his career in the specialty foods
business in 1975 when he acquired Maple Grove Farms of Vermont, Inc.. Prior to
such acquisition, Mr. Callahan was Vice President, Sales of Blyth, Eastman,
Dillon and Co. in New York and a trial attorney for the U.S. Securities and
Exchange Commission in New York. Mr. Callahan is a graduate of Georgetown
University and the Boston University Law School. He is a member of the State of
Vermont Chamber of Commerce, a member of the Vermont Maple Industry Council and
the State of Vermont Agriculture Commissioner's Task Force.
51
James R. Chambers, Director: James Chambers has been a Director of B&G
since 2001. Mr. Chambers is President and Chief Executive Officer of Remy
Amerique, Inc. a subsidiary of Remy Cointreau. Prior to Remy, Mr. Chambers was
Chief Executive Officer of Paxonix, Inc., a wholly owned subsidiary of
MeadWestvaco Corporation, Chief Executive Officer and President of Netgrocer,
Inc., an online grocery retailer, and Group President of Information Resources,
Inc., one of the largest research consultancies in the United States. From 1981
through 1997, Mr. Chambers held various positions with Nabisco, Inc., including
President, Refrigerated Foods, Senior Vice President of Sales and Distribution
and Vice President, Chief Information Officer. Mr. Chambers holds a BSE from
Princeton University and an MBA from the Wharton School of Business.
Nicholas B. Dunphy, Director: Nicholas Dunphy has been a Director of
B&G since 2000. Mr. Dunphy is a Managing Partner of Canterbury Capital II, LLC,
with more than 20 years' business and investment banking experience. Prior to
co-founding Canterbury Capital II, LLC, in 1996, he was a managing director and
founding partner of Barclays Mezzanine Group. Before joining Barclays in 1980,
Mr. Dunphy qualified as a Chartered Accountant in Canada and subsequently spent
five years with Toronto Dominion Bank. Mr. Dunphy earned a B.Sc. from Manchester
University in England and a Masters in Business Administration from York
University in Canada.
Alfred Poe, Director: Alfred Poe has been a Director of B&G since 1997.
Mr. Poe is President and Chief Executive Officer of Superior Nutrition
Corporation, a provider of nutrition products. He was Chairman of the Board of
the MenuDirect Corporation, a provider of specialty meals for people on
restricted diets from 1997 to 1999. Mr. Poe was a Corporate Vice President of
Campbell's Soup Company from 1991 through 1996. From 1993 through 1996, he was
the President of Campbell's Meal Enhancement Group. From 1982 to 1991, Mr. Poe
held various positions, including Vice President, Brands Director and Commercial
Director with Mars, Inc.
Stephen C. Sherrill, Director: Stephen Sherrill has been a Director of
B&G since 1997. Since its formation in 1995, Mr. Sherrill has been a Managing
Director of BRS. Mr. Sherrill was an officer of Citicorp Venture Capital from
1983 until 1994. Prior to that, he was an associate at the New York law firm of
Paul, Weiss, Rifkind, Wharton & Garrison. Mr. Sherrill is a director of Galey &
Lord, Inc., Doane Pet Care Enterprises, Inc., Health Plus Corporation and
Alliance Laundry Systems LLC.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
annual and long-term compensation for services in all capacities for fiscal
years 2002, 2001 and 2000 paid to the Company's five most highly compensated
Executive Officers who were serving as such at December 28, 2002.
52
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Long-Term All Other
Principal Position Year Salary Bonus(1) Other(2) Compensation(3) Compensation(4)
- ------------------ ---- ------ -------- -------- --------------- ---------------
David L. Wenner 2002 $299,621 $200,010 $10,000 - $13,600
President and Chief 2001 274,573 275,000 10,000 - 13,600
Executive Officer 2000 257,069 - 10,000 - 13,600
Robert C. Cantwell 2002 229,854 111,726 10,000 - 13,600
Executive Vice President and Chief 2001 216,688 159,600 10,000 - 13,600
Financial Officer 2000 201,357 - 10,000 - 13,600
David H. Burke 2002 222,102 103,605 10,000 - 13,600
Executive Vice President of Sales 2001 209,698 147,000 10,000 - 13,600
2000 196,675 - 10,000 - 13,600
Albert J. Soricelli 2002 212,852 99,405 10,000 - 13,600
Executive Vice President of 2001 199,525 140,000 10,000 700 13,600
Marketing and Strategic Planning 2000 135,264 - 4,615 - 8,000
James H. Brown 2002 191,640 93,338 12,350 - 13,600
Executive Vice President of 2001 181,294 133,00 12,350 - 13,600
Manufacturing 2000 170,217 - 10,850 - 13,600
- ---------------------
(1) Includes annual bonus earned under the Company's Annual Bonus Plan.
(2) Includes personal use of a Company automobile or automobile allowances
paid.
(3) Number of shares of common stock underlying options.
(4) Includes the Company's matching contributions to the 401(k) Plan and
contributions to the Company's Pension Plan.
Director Compensation and Arrangements
Directors of the Company receive compensation for their services as
directors in the amount of $1,000 to $2,000 per meeting of the Board of
Directors. Directors of the Company are entitled to reimbursement of their
reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the Board of Directors or committees thereof.
Annual Bonus Plan
The Company maintains an Annual Bonus Plan that provides for annual
incentive awards to be made to key executives upon the Company's attainment of
pre-set annual financial objectives. The amount of the annual award to each
executive is based upon a percentage of the executive's annualized base salary.
Awards are paid in cash in a lump sum following the close of each plan year. The
plan provides for forfeiture of proration of awards in the event of certain
circumstances such as the executive's promotion or demotion, death, retirement
or resignation.
53
Stock Option Plan
In order to attract, retain and motivate selected employees and
officers of the Company, Holdings adopted the B&G Foods Holdings Corp. 1997
Incentive Stock Option Plan (the "Option Plan") for the Company and its
subsidiaries' key employees. The Option Plan authorizes for grant to key
employees and officers options for up to 6,700 shares of common stock of B&G
Foods Holdings. The Option Plan authorizes Holdings to grant either (i) options
intended to constitute incentive stock options under the Internal Revenue Code
of 1986 or (ii) non-qualified stock options. The plan provides that it may be
administered by Holdings' Board of Directors or a committee designated by
Holdings' Board of Directors. Holdings' Board of Directors has designated a
committee comprised of Stephen C. Sherrill and Thomas Baldwin. Options granted
under the Option Plan will be exercisable in accordance with the terms
established by the Board of Directors. Under the Option Plan, the Board of
Directors determines the exercise price of each option granted, which, in the
case of incentive stock options, cannot be less than fair value. All option
grants have been made at fair value as determined by a third party valuation.
Options will expire on the date determined by the Board of Directors, which may
not be later than the tenth anniversary of the date of grant. The options vest
ratably over 5 years. During fiscal year 2001, options to purchase 700 shares of
common stock of B&G Foods Holdings Corp. were granted to Albert Soricelli. No
other options were granted during fiscal 2001 and no options were granted during
fiscal 2002. As of February 28, 2003, options to purchase 6,625 shares of common
stock of B&G Foods Holdings Corp., all of which were incentive stock options,
had been granted since the inception of the Option Plan.
Equity Compensation Plan Information
The following table provides information about the Company's common stock that
may be issued upon the exercise of stock options and stock units under all of
the Company's equity compensation plans in effect as of February 28, 2003.
- -------------------------------- -------------------------- ------------------------ ----------------------------
Number of securities
remaining available for
Number of securities to Weighter-average future issuance under
be issued upon exercise exercise price of equity compensation plans
of outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a))
- -------------------------------- -------------------------- ------------------------ ----------------------------
(a) (b) (c)
- -------------------------------- -------------------------- ------------------------ ----------------------------
- -------------------------------- -------------------------- ------------------------ ----------------------------
Equity compensation plans
approved by security
holders 6,625 $10.00 75
- -------------------------------- -------------------------- ------------------------ ----------------------------
Equity compensation plans not
approved by security
holders 688 $10.00 0
- -------------------------------- -------------------------- ------------------------ ----------------------------
Total 7,313 $10.00 75
===== ====== ==
- -------------------------------- -------------------------- ------------------------ ----------------------------
54
Material Features of Individual Arrangements Not Approved by Securityholders
Options to purchase 688 shares of common stock of Holdings have been
granted pursuant to a license agreement with a third party that is neither a
director, officer nor existing shareholder of the Company nor an affiliate
thereof. All of such options are exercisable at a price of $10 per share of
common stock, are fully vested and expire on June 9, 2010.
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company has appointed a Compensation
Committee comprised of Mr. Sherrill and Mr. Baldwin. Mr. Sherrill is a former
officer of the Company, although he received no compensation in such capacity.
Mr. Baldwin is not and has not been an officer of B&G. Each of Mr. Sherrill and
Mr. Baldwin is a principal of BRS.
Employment Agreements
The Company is not a party to any employment agreements.
401(k) Plan
The Company maintains a tax-qualified defined contribution plan with a
cash or deferred arrangement intended to qualify under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Company's employees
become eligible to participate in the plan upon reaching age 21 and completing
one year of employment with B&G. Each participant in the plan may elect to
defer, in the form of contributions to the plan, up to 75% of compensation that
would otherwise be paid to the participant in the applicable year, which
percentage may be increased or decreased by the administrative committee of the
plan, but is otherwise not to exceed the statutorily prescribed annual limit
($11,000 in 2002 if the participant is under age 50, or $12,000 in 2002 if age
is 50 or over). The Company makes a 50% matching contribution with respect to
each participant's elective contributions, up to six percent of such
participant's compensation. Matching contributions vest over a rolling five-year
period.
Pension Plan
Estimated Annual Pension
------------------------------------------------------------------------------------------------
(Years of Service)
Remuneration 15 20 25 30 35
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
$ 40,000 $ 4,533 $ 6,044 $ 7,556 $ 9,067 $ 10,578
60,000 $ 7,983 $ 10,644 $ 13,306 $ 15,967 $ 18,628
80,000 $ 11,433 $ 15,244 $ 19,056 $ 22,867 $ 26,678
100,000 $ 14,883 $ 19,844 $ 24,806 $ 29,767 $ 34,728
120,000 $ 18,333 $ 24,444 $ 30,556 $ 36,667 $ 42,778
140,000 $ 21,783 $ 29,044 $ 36,306 $ 43,567 $ 50,828
160,000 $ 25,233 $ 33,644 $ 42,056 $ 50,467 $ 58,878
180,000 $ 28,683 $ 38,244 $ 47,806 $ 57,367 $ 66,928
200,000 $ 32,133 $ 42,844 $ 53,556 $ 64,267 $ 74,978
55
Benefits under the plan are calculated generally under a formula of
0.75% of final average earnings multiplied by service plus 0.4% of final average
earnings in excess of covered compensation multiplied by service limited to 35
years. The compensation covered by the pension plan is W-2 earnings and any
amounts contributed to any tax qualified profit sharing plan or cafeteria plan
are limited to $200,000 as required by Section 401(a)(17) of the Code. As of
December 28, 2002, the years of credited service for each of the Company's five
most highly compensated Executive Officers who were serving as such at December
28, 2002 were: Mr. Wenner, 13; Mr. Cantwell, 19; Mr. Burke, 12; Mr. Brown, 15;
and Mr. Soricelli, 3.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
B&G is a wholly owned subsidiary of Holdings. The following table sets
forth information as of February 28, 2003 with respect to the beneficial
ownership of Holdings' common stock and preferred stock by:
o each person or entity who owns five percent or more of Holdings,
o each director of the Company,
o the executive officers named in the summary compensation table, and
o all of the directors and officers of the Company as a group.
Unless otherwise specified, all shares are directly held.
Beneficial ownership of shares is determined under the rules of the
Securities and Exchange Commission and generally includes any shares over which
a person exercises sole or shared voting or investment power. Except as
indicated by footnote, and subject to applicable community property laws, each
person identified in the table possesses sole voting and investment power with
respect to all shares of stock held by him. Shares subject to options currently
exercisable or exercisable within 60 days of February 28, 2003 and not subject
to repurchase on that date are deemed outstanding for calculating the percentage
of outstanding shares of the person holding these options, but are not deemed
outstanding for purposes of calculating the percentage ownership of any other
person.
56
Number and Percent of Shares
----------------------------
Common Series A Series B Series C
Name of Beneficial Owner Stock Preferred Preferred Preferred
------------------------ ----- --------- --------- ---------
Bruckmann, Rosser, Sherrill & Co., L.P. (1)(2) 100,021.48 18,774.99 12,310.54 5,000.00
Two Greenwich Plaza 83.3% 92.3% 100.0% 20.0%
Suite 100
Greenwich, CT 06830
Canterbury Mezzanine Capital II, L.P. (3) (4) 9,857.92 - - 15,000.00
600 Fifth Avenue 8.5% 60.0%
23rd Floor
New York, NY 10020
The CIT Group/Equity Investments, Inc. (5) 3,285.97 - - 5,000.00
650 CIT Drivev 3.0% 20.0%
Livingston, NJ 07039
Leonard S. Polaner (6)(7) 3,000 145 - -
2.8% *
David L. Wenner (6) 3,000 20 - -
2.8% *
David H. Burke (6) 3,000 20 - -
2.8% *
James H. Brown (6) 3,000 20 - -
2.8% *
Robert C. Cantwell (6) 3,000 20 - -
2.8% *
Albert J. Soricelli (6) 3,000 20 - -
2.8% *
Thomas J. Baldwin (6)(8) 500 20 - -
* *
Alfred Poe (6) 500 110.44 - -
* *
William F. Callahan III (6) 1,450 1,050.94 - -
1.4% 5.2%
James R. Chambers (6) - - - -
Stephen C. Sherrill (6)(8)(9) 1,958.69 367.59 241.32 98.01
1.9% 1.8% 2.0% *
Nicholas B. Dunphy (10)(11) - - - -
All directors and officers as a group (12 persons) 22,408.69 1,793.97 241.32 98.01
(7)(8)(10)
21.5% 8.8% 2.0% *
- --------------------
* Less than 1%
(1) Includes shares held by certain other entities and individuals affiliated
with BRS. BRS disclaims beneficial ownership of such shares. BRS is a
limited partnership, the sole general partner of which is BRS Partners,
Limited Partnership and the manager of which is BRS & Co. The sole general
partner of BRS Partners, Limited Partnership is BRSE Associates, Inc.
Stephen C. Sherrill and Thomas J. Baldwin are stockholders of BRS & Co. and
BRSE Associates, Inc. and may be deemed to share beneficial ownership of
the shares shown as beneficially owned by BRS. Such individuals disclaim
beneficial ownership of any such shares.
(2) Includes warrants to purchase 15,021.58 shares of Common Stock, exercisable
within 60 days of February 28, 2003, with an exercise price of $0.01 per
share and an expiration date of December 22, 2009.
57
(3) Canterbury Mezzanine Capital II, L.P. is a limited partnership, the sole
general partner of which is Canterbury Capital II, LLC. Nicholas B. Dunphy
holds a minor membership interest in Canterbury Mezzanine and a membership
interest in Canterbury Capital and may be deemed to share beneficial
ownership of the shares shown as beneficially owned by Canterbury
Mezzanine. Mr. Dunphy disclaims beneficial ownership of any such shares.
(4) Includes warrants to purchase 9,857.92 shares of Common Stock, exercisable
within 60 days of February 28, 2003, with an exercise price of $0.01 per
share and an expiration date of December 22, 2009.
(5) Includes warrants to purchase 3,285.97 shares of Common Stock, exercisable
within 60 days of February 28, 2003, with an exercise price of $0.01 per
share and an expiration date of December 22, 2009.
(6) The address of such person is c/o B&G Foods, Inc., 4 Gatehall Drive, Suite
110, Parsippany, New Jersey, 07054.
(7) Includes 3,000 shares of Common Stock issued to Ellen Polaner as Trustee
under the Indenture of Leonard Polaner dated March 9, 1998 for the benefit
of Steven Polaner, Doug Polaner and Max Polaner. Mr. Polaner disclaims
beneficial ownership of such shares.
(8) With respect to Mr. Sherrill and Mr. Baldwin, directors of the Company,
excludes shares held by BRS and certain other entities and individuals
affiliated with BRS, of which shares Mr. Sherrill and Mr. Baldwin disclaim
beneficial ownership.
(9) Includes warrants to purchase 294.46 shares of Common Stock, exercisable
within 60 days of February 28, 2003, with an exercise price of $0.01 per
share and an expiration date of December 22, 2009.
(10) With respect to Mr. Dunphy, a director of the Company, excludes shares held
by Canterbury Mezzanine, of which shares Mr. Dunphy disclaims beneficial
ownership.
(11) The address of Mr. Dunphy is c/o Canterbury Mezzanine Capital II, L.P., 600
Fifth Avenue, 23rd Floor, New York, New York 10020.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Stockholders Agreement and Registration Rights Agreement
Stockholders Agreement. BRS, Canterbury Mezzanine Capital II, L.P.
("Canterbury"), The CIT Group/Equity Investments, Inc. ("CIT"), certain entities
and individuals affiliated with BRS (the "BRS Investors"), Canterbury (the
"Canterbury Investors") and CIT (the "CIT Investors"), and certain members of
the Company's Board of Directors and executive officers (collectively, the
"Management Stockholders") are parties to that certain Amended and Restated
Securities Holders Agreement, dated as of December 22, 1999 (the "Securities
Holders Agreement"). A copy of the Securities Holders Agreement is available
upon request to the Company.
58
The Securities Holders Agreement contains provisions that may restrict
the ability of B&G's Board of Directors and executive officers from transferring
any Holdings common stock or preferred stock except pursuant to the terms of the
Securities Holders Agreement. If the Board of Directors of Holdings and holders
of more than 50% of Holdings' common stock approve the sale of Holdings or its
subsidiaries, each stockholder has agreed to consent to the sale and, if the
sale includes the sale of stock, each stockholder has agreed to sell his or her
common stock and preferred stock on the terms and conditions approved by the
Board of Directors of Holdings and the holders of a majority of the common stock
then outstanding. The Securities Holders Agreement also provides for additional
restrictions on transfer of the common stock and preferred stock by the
Company's executive officers, including the right of Holdings to purchase any
and all common stock and preferred stock held by the Company's executive
officers upon termination of their employment prior to the expiration of five
years from the date the stock was acquired, at a formula price, and the grant of
a right of first refusal in favor of Holdings in the event an executive officer
elects to transfer such common stock or preferred stock.
Registration Rights Agreement. BRS, the BRS Investors and the
Management Stockholders are parties to a Registration Rights Agreement pursuant
to which Holdings has granted registration rights to the stockholders of
Holdings with respect to its common stock. Under the Registration Rights
Agreement, Holdings has granted to BRS, the BRS Investors, Canterbury, the
Canterbury Investors, CIT and the CIT Investors, two demand registration rights
with respect to the shares of common stock held by them. All of the stockholders
party to the Registration Rights Agreement have the right to participate, or
"piggy-back," in certain registrations initiated by Holdings.
Bruckmann, Rosser, Sherrill & Co., Inc.
Management Agreement and Transaction Services Agreement
The Company and Holdings are parties to a management services agreement
(the "BRS Management Agreement") with Bruckmann, Rosser, Sherrill & Co., Inc.
("BRS & Co."), the manager of BRS, pursuant to which BRS & Co. is paid $500,000
per annum for management, business and organizational strategy and merchant and
investment banking services rendered to the Company and Holdings, which services
include, but are not limited to, advice on corporate and financial planning,
oversight of operations, including the manufacturing, marketing and sales of the
Company's products, development of business plans, the structure of the
Company's debt and equity capitalization and the identification and development
of business opportunities. Any future increase in payments under the BRS
Management Agreement is restricted by the terms of the Company's indenture
governing its 9 5/8% senior subordinated notes due 2007. The Company and BRS
also are parties to a transaction services agreement pursuant to which BRS will
be paid a transaction fee for management, financial and other corporate advisory
services rendered by BRS in connection with acquisitions, divestitures and
financings by the Company, which fee will not exceed 1.0% of the total
transaction value.
59
Roseland Lease
B&G Foods, Inc. is party to a lease for its Roseland facility with 426
Eagle Rock Avenue Associates, a real estate partnership of which Leonard S.
Polaner, B&G's Chairman, is the general partner. The Company pays $59,600 per
month in rent to 426 Eagle Rock Avenue Associates pursuant to the Roseland
lease. In the opinion of management, the terms of the Roseland lease are at
least as favorable to the Company as the terms that could have been obtained
from an unaffiliated third party.
ITEM 14. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days
prior to the filing date of this report, the Company carried out an evaluation
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of the Company's management, including the Company's
President and Chief Executive Officer and the Company's Chief Financial Officer.
Based upon that evaluation, the Company's President and Chief Executive Officer
and the Company's Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective. Subsequent to the date the
Company carried out its evaluation, there have been no significant changes in
the Company's internal controls or in other factors which could significantly
affect internal controls.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
60
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS.
Independent Auditors' Report.
Consolidated Balance Sheets as of December 28, 2002 and
December 29, 2001.
Consolidated Statements of Operations for the years ended
December 28, 2002, December 29, 2001 and December 30, 2000.
Consolidated Statements of Cash Flows for the years ended
December 28, 2002, December 29, 2001 and December 30, 2000.
Notes to Consolidated Financial Statements.
(2) FINANCIAL STATEMENT SCHEDULE.
Valuation and Qualifying Accounts.
(b) REPORTS ON FORM 8-K:
None.
(c) EXHIBITS
EXHIBIT NO. DESCRIPTION
- ------------------------- --------------------------------------------------------------------------------------------
2.1 Stock Purchase Agreement, dated July 2, 1998, by and among BGH Holdings, Inc., Maple Grove
Farms of Vermont, Inc., Up Country Naturals of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils Inc., William F. Callahan and Ruth M. Callahan. (Filed with the
Securities and Exchange Commission as Exhibit 2.1 to Commission Filing No. 333-39813 on
August 3, 1998 and incorporated herein by reference)
2.2 Asset Purchase Agreement, dated as of January 12, 1999, by and among Roseland Distribution
Company, International Home Foods, Inc. and M. Polaner, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 1 to the Company's Report on Form 8-K filed February
19, 1999 and incorporated herein by reference)
2.3 Asset and Stock Purchase Agreement, dated as of January 28, 1999, by and among
The Pillsbury Company, Indivined B.V., IC Acquisition Company, Heritage Acquisition Corp. and,
as guarantor, B&G Foods, Inc. (Filed as Exhibit 2.1 to the Company's Report on Form 8-K filed
April 1, 1999 and incorporated herein by reference).
3.1 Certificate of Incorporation of B&G Foods, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.1 to Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities and Exchange Commission as Exhibit
3.2 to Amendment No. 1 to Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
61
EXHIBIT NO. DESCRIPTION
- ------------------------- --------------------------------------------------------------------------------------------
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)
62
EXHIBIT NO. DESCRIPTION
- ------------------------- --------------------------------------------------------------------------------------------
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).
63
EXHIBIT NO. DESCRIPTION
- ------------------------- --------------------------------------------------------------------------------------------
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.)
12.1 Computation of Ratio of Earnings to Fixed Charges (Filed herewith)
64
EXHIBIT NO. DESCRIPTION
- ------------------------- --------------------------------------------------------------------------------------------
21.1 Subsidiaries of the Company and the Additional Registrants. (Filed herewith)
65
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
B&G FOODS, INC.
By: /s/ David L. Wenner
--------------------------------------------
David L. Wenner
Date: February 28, 2003 Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
NAME TITLE DATE
- ------------------------------------------ --------------------------------------- ---------------------
/s/ Leonard S. Polaner Chairman of the Board of February 28, 2003
- ------------------------------------------ Directors
Leonard S. Polaner
/s/ David L. Wenner President, Chief Executive Officer February 28, 2003
- ------------------------------------------ and Director (Principal
David L. Wenner Executive Officer)
/s/ Robert C. Cantwell Executive Vice President of February 28, 2003
- ------------------------------------------ Finance and Chief Financial
Robert C. Cantwell Officer (Principal Financial and
Accounting Officer)
/s/ Thomas Baldwin Director February 28, 2003
- ------------------------------------------
Thomas Baldwin
/s/ William F. Callahan III Director February 28, 2003
- ------------------------------------------
William F. Callahan III
/s/ Alfred Poe Director February 28, 2003
- ------------------------------------------
Alfred Poe
/s/ Nicholas B. Dunphy Director February 28, 2003
- ------------------------------------------
Nicholas B. Dunphy
/s/ Stephen C. Sherrill Director February 28, 2003
- ------------------------------------------
Stephen C. Sherrill
/s/ James R. Chambers Director February 28, 2003
- ------------------------------------------
James R. Chambers
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, David L. Wenner, certify that:
1. I have reviewed this annual report on Form 10-K of B&G Foods, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 28, 2003
/s/ David L. Wenner
- ----------------------------------
David L. Wenner
Chief Executive Officer
CERTIFICATION BY CHIEF FINANCIAL OFFICER
I, Robert C. Cantwell, certify that:
1. I have reviewed this annual report on Form 10-K of B&G Foods, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: February 28, 2003
/s/ Robert C. Cantwell
- ----------------------------------
Robert C. Cantwell
Chief Financial 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)
EXHIBIT NO. DESCRIPTION
- ------------------------ ---------------------------------------------------------------------------------------------
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)
EXHIBIT NO. DESCRIPTION
- ------------------------ ---------------------------------------------------------------------------------------------
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)
EXHIBIT NO. DESCRIPTION
- ------------------------ ---------------------------------------------------------------------------------------------
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)
EXHIBIT NO. DESCRIPTION
- ------------------------ ---------------------------------------------------------------------------------------------
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.)
EXHIBIT NO. DESCRIPTION
- ------------------------ ---------------------------------------------------------------------------------------------
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.)
12.1 Computation of Ratio of Earnings to Fixed Charges (Filed herewith)
21.1 Subsidiaries of the Company and the Additional Registrants. (Filed herewith)