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As filed with the Securities and Exchange Commission on April 19, 2004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one) Quarterly Report Pursuant to Section 13 or 15(d)
[X] of the Securities Exchange Act of 1934
For the quarterly period ended April 3, 2004
or
Transition Report Pursuant to Section 13 or 15(d)
[ ] of the Securities Exchange Act of 1934
For the transition period from to _________.
Commission file number 333-39813
B&G FOODS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3916496
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4 Gatehall Drive, Suite 110, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 401-6500
Indicate by check 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of April 19, 2004, B&G Foods, Inc. had one (1) share of common stock,
par value $0.01 per share, outstanding, which was owned by an affiliate.
B&G Foods, Inc. and Subsidiaries
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets..................................................................1
Consolidated Statements of Operations........................................................2
Consolidated Statements of Stockholder's Equity..............................................3
Consolidated Statements of Cash Flows........................................................4
Notes to Consolidated Financial Statements...................................................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........................................10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk.............................................................................20
Item 4. Controls and Procedures.................................................................21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................21
Item 2. Changes in Securities and Use of Proceeds...............................................22
Item 3. Defaults Upon Senior Securities.........................................................22
Item 4. Submission of Matters to a Vote of Security Holders.....................................22
Item 5. Other Information.......................................................................22
Item 6. Exhibits and Reports on Form 8-K........................................................22
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS
i
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
Assets April 3, 2004 January 3, 2004
------------- ---------------
(Unaudited)
Current assets:
Cash and cash equivalents............................... $ 3,352 $ 8,092
Trade accounts receivable, net.......................... 25,632 22,348
Inventories............................................. 81,191 80,789
Prepaid expenses........................................ 3,416 2,336
Deferred income taxes................................... 115 115
-------------------------------
Total current assets............................... 113,706 113,680
Property, plant and equipment, net............................ 43,868 43,940
Goodwill...................................................... 188,629 188,629
Trademarks ................................................... 193,481 193,481
Other assets.................................................. 9,625 10,209
-------------------------------
Total Assets....................................... $549,309 $549,939
===============================
Liabilities and Stockholder's Equity
Current liabilities:
Current installments of long-term debt.................. $ 1,500 $ 1,500
Trade accounts payable.................................. 21,341 19,816
Accrued expenses........................................ 16,299 24,819
Due to related party.................................... 83 208
--------------------------------
Total current liabilities.......................... 39,223 46,343
Long-term debt................................................ 366,979 367,296
Deferred income taxes......................................... 44,249 42,774
Other liabilities............................................. 361 347
--------------------------------
Total liabilities.................................. 450,812 456,760
--------------------------------
Stockholder's equity:
Common stock, par value $0.01 per share. Authorized
1,000 shares; issued and outstanding 1 share - -
Additional paid-in capital 56,396 56,396
Accumulated other comprehensive income (70) (74)
Retained earnings 42,171 36,857
--------------------------------
Total stockholder's equity 98,497 93,179
--------------------------------
Total liabilities and stockholder's equity......... $549,309 $549,939
================================
See Notes to Consolidated Financial Statements.
1
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
April 3, 2004 March 29, 2003
------------- --------------
Net sales ................................... $ 90,677 $ 67,454
Cost of goods sold .......................... 61,691 47,388
------------- --------------
Gross profit ......................... 28,986 20,066
Operating expenses:
Sales, marketing and distribution expenses 10,858 7,443
General and administrative expenses ..... 1,535 1,632
Management fees-related party ........... 125 125
------------- --------------
Operating income ..................... 16,468 10,866
Other expenses:
Interest expense, net ................... 7,812 7,223
------------- --------------
Income before income tax expense ..... 8,656 3,643
Provision for income taxes .................. 3,342 1,402
------------- --------------
Net income ........................... $ 5,314 $ 2,241
============= ==============
See Notes to Consolidated Financial Statements.
2
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Stockholder's Equity
(Dollars in thousands)
(Unaudited)
Accumulated
other Additional
Common Stock comprehensive paid-in Retained
Share Amount (loss) income capital Earnings Total
------- -------- ---------------- ------------ -------------- --------------
Balance at December 28, 2002 ........ 1 $ -- $(20) $ 56,396 $ 21,689 $ 78,065
------- -------- ----- --------- --------- ---------
Foreign currency translation ........ 34 34
Net income .......................... -- -- -- 2,241 2,241
---------
Comprehensive income ................ 2,275
------- -------- ----- --------- --------- ---------
Balance at March 29, 2003 ........... 1 $ -- $ 14 $ 56,396 $ 23,930 $ 80,340
======= ======== ===== ========= ========= =========
Balance at January 3, 2004 .......... 1 $ -- $(74) $ 56,396 $ 36,857 $ 93,179
------- -------- ----- --------- --------- ---------
Foreign currency translation ........ 4 4
Net income ................... ...... -- -- -- 5,314 5,314
---------
Comprehensive income ................ 5,318
---------
Balance at April 3, 2004 ............ 1 $ -- $(70) $ 56,396 $ 42,171 $ 98,497
======= ======== ===== ========= ========= =========
See Notes to Consolidated Financial Statements.
3
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
April 3, 2004 March 29, 2003
------------- --------------
Cash flows from operating activities:
Net income ..................................................................... $ 5,314 $ 2,241
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation................................................................. 1,605 1,361
Deferred income taxes........................................................ 1,475 817
Amortization and write off of deferred debt issuance costs and bond
discount..................................................................... 642 743
Provision for bad debt....................................................... 0 575
Changes in assets and liabilities, net of effects of business combination:
Trade accounts receivable.............................................. (3,284) 2,551
Inventories............................................................ (402) 3,373
Prepaid expenses....................................................... (1,080) (286)
Other assets........................................................... 0 (1)
Trade accounts payable................................................. 1,525 (2,359)
Accrued expenses....................................................... (8,507) (7,172)
Due to related party................................................... (125) (125)
Other liabilities...................................................... 14 14
------------- ------------
Net cash (used in) provided by operating activities........................ (2,823) 1,732
Cash flows from investing activities:
Capital expenditures......................................................... (1,546) (1,229)
------------- ------------
Net cash used in investing activities...................................... (1,546) (1,229)
Cash flows from financing activities:
Payments of long-term debt................................................... (375) (5,092)
------------- ------------
Net cash used in financing activities...................................... (375) (5,092)
Effect of exchange rate fluctuation on cash and cash equivalents............. 4 34
------------- ------------
Net decrease in cash and cash equivalents....................................... (4,740) (4,555)
Cash and cash equivalents at beginning of period................................ 8,092 15,866
------------- ------------
Cash and cash equivalents at end of period...................................... $ 3,352 $11,311
============== ============
Supplemental disclosure of cash flow information:
Cash interest.............................................................. $ 12,542 $ 11,788
Cash income taxes.......................................................... $ 1,808 $ 214
See Notes to Consolidated Financial Statements.
4
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of B&G
Foods, Inc. and its subsidiaries (collectively, "B&G" or the "Company") contain
all adjustments (consisting only of normal and recurring adjustments) necessary
to present fairly the Company's consolidated financial position as of April 3,
2004 and the results of their operations and their cash flows for the
thirteen-week periods ended April 3, 2004 and March 29, 2003.
The results of operations for the thirteen-week period ended April 3,
2004 are not necessarily indicative of the results to be expected for the full
year. The accompanying unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
included in the Company's 2003 Annual Report on Form 10K filed with the
Securities and Exchange Commission (the "SEC").
(2) Adoption of New Accounting Standards
In 2003, the FASB revised Statement No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits". The FASB's revision of
Statement No. 132 requires new annual disclosures about the types of plan
assets, investment strategy, measurement date, plan obligations and cash flows
as well as the components of the net periodic benefit cost recognized in interim
periods. In addition, SEC registrants are now required to disclose its estimates
of contributions to the plan during the next fiscal year and the components of
the fair value of total plan assets by type (i.e. equity securities, debt
securities, real estate and other assets). We adopted the provisions of
Statement No. 132 (revised), except for expected future benefit payments, which
must be disclosed for fiscal years ending after June 15, 2004.
(3) Nature of Operations and Business Acquisitions
Nature of Operations
The Company operates in one industry segment and manufactures, sells
and distributes a diverse portfolio of high quality 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, taco shells, seasonings, dinner kits, taco sauces, refried beans,
salsa 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.
The Company purchases most of the produce used to make its shelf-stable
pickles, relishes, peppers and other related specialty items during the months
of July through October, and it purchases all of its maple syrup requirements
during the months of April through July. Consequently, its liquidity needs are
greatest during these periods.
5
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
Acquisitions and Financing
On August 21, 2003, the Company acquired certain assets of The Ortega
Brand of Business ("Ortega" or the "Ortega Acquisition") for approximately
$118,179 in cash (the "Ortega Purchase Price"), including transaction costs,
from Nestle Prepared Foods Company ("Nestle"). In connection with this
transaction, the Company entered into a $200,000 senior secured credit facility
comprised of a $50,000 five-year revolving credit facility and a $150,000
six-year term loan facility. The proceeds of such senior secured credit facility
were used to fund the Ortega Acquisition and refinance the Company's
then-existing credit facility. See Note 5 (Debt).
In connection with the Ortega Acquisition, the Company paid transaction
fees to Bruckmann, Rosser, Sherrill and Co., Inc., a related party, aggregating
$1,000. The Company recorded such transaction fees as part of the Ortega
Purchase Price.
The Ortega Acquisition was accounted for using the purchase method of
accounting and, accordingly, the assets acquired, liabilities assumed, and
results of operations are included in the consolidated financial statements from
the date of the Ortega Acquisition. The excess of the Ortega Purchase Price over
the fair value of identifiable net assets acquired represents goodwill.
Trademarks are deemed to have an indefinite useful life and are not amortized.
The following table sets forth the allocation of the Ortega Purchase
Price. The cost of the Ortega Acquisition has been allocated to tangible and
intangible assets as follows:
Property, plant and equipment $ 5,964
Goodwill 76,310
Indefinite-life intangible assets - trademarks 30,700
Other assets, principally net current assets 6,960
Other liabilities, principally net current liabilities (2,039)
Deferred income tax asset 284
---------
Total $ 118,179
=========
Unaudited Pro Forma Summary of Operations
The following unaudited pro forma summary of operations for the
thirteen weeks ended March 29, 2003 presents the operations of the Company as if
the Ortega Acquisition had occurred as of the beginning of the period presented.
In addition to including the results of operations of the Ortega business, the
unaudited pro forma information gives effect to interest on additional
borrowings and changes in depreciation and amortization of property, plant and
equipment.
Thirteen Weeks
--------------
Ended
-----
March 29, 2003
--------------
Net Sales $ 85,896
Net Income 2,661
The unaudited pro forma information presented above does not purport to
be indicative of the results that actually would have been attained if the
Ortega Acquisition, and the related financing transactions, had occurred as of
the beginning of the period presented and is not intended to be a projection of
future results.
6
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
(4) Inventories
Inventories consist of the following:
April 3, 2004 January 3, 2004
------------- ----------------
Raw materials and packaging ........... $ 17,492 $ 14,916
Work in process ....................... 1,006 1,555
Finished goods ........................ 62,693 64,318
------------ ----------------
Total ............................ $ 81,191 $ 80,789
============ ================
(5) Debt
On August 21, 2003, the Company entered into a newly amended and
restated $200,000 senior secured credit facility, which was further amended and
restated as of September 9, 2003 (the "Senior Secured Credit Facility"),
comprised of a $50,000 five-year revolving credit facility ("Revolving Credit
Facility") and a $150,000 six-year term loan facility ("Term Loan"). The
proceeds of the Term Loan and of certain drawings under the Revolving Credit
Facility were used (i) to fund the Ortega Acquisition and to pay related
transaction fees and expenses and (ii) to fully pay off the Company's remaining
obligations under Term Loan B of the Company's then-existing Term Loan Agreement
dated as of March 15, 1999. In connection therewith, the Company capitalized
approximately $5,300 of new deferred debt issuance costs related to the Senior
Secured Credit Facility and, in accordance with the applicable guidance of the
FASB's Emerging Issues Task Force, wrote off $1,831 of deferred financing costs
related to the Company's then-existing Term Loan B. With respect to the Senior
Secured Credit Facility, interest is determined based on several alternative
rates, including the base lending rate per annum plus an applicable margin, or
LIBOR plus an applicable margin (4.52% at April 3, 2004). 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 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 $50,000
per acquisition unless the Company can satisfy certain leverage ratio
requirements. The outstanding balances for the Revolving Credit Facility and the
Term Loan at April 3, 2004 were $0 and $149,250, respectively. The available
borrowing capacity under the Revolving Credit Facility, net of outstanding
letters of credit of $1,300, was approximately $48,700 at April 3, 2004.
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. 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 the Company's then-existing Term Loan A, and to
reduce the amount outstanding under the Company's then-existing Term Loan B, and
pay related deferred debt issuance costs.
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
7
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
with, or transfer substantially all of its assets to, another person or entity,
encumber assets under certain circumstances, restrict dividends and other
payments from subsidiaries, engage in sale and leaseback transactions, issue
capital stock, 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.
(6) Commitments and Contingencies
The Company has not made any material expenditures during the
thirteen-week periods ended April 3, 2004 and March 29, 2003 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. 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.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability under the Comprehensive Environmental
Response, Compensation and Liability Act, or Superfund, for alleged disposal of
waste by White Cap Preserves, an alleged predecessor of the Company, at the
Combe Fill South Landfill, a Superfund site. In February 2003, B&G paid $100 in
settlement of all asserted claims arising from this matter, and in March 2003, a
bar order was entered by the United States District Court for the District of
New Jersey protecting B&G, subject to a limited re-opener clause, from any
claims for contribution, natural resources damages and certain other claims
related to the action until such time that the litigation is dismissed.
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.
(7) Pension Benefits
8
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
Net periodic costs for the thirteen week periods ended April 3, 2004
and March 29, 2003 includes the following components:
Thirteen Weeks Ended Thirteen Weeks Ended
April 3, 2004 March 29, 2003
------------- --------------
Service cost - benefits earned during the period $ 339 $ 234
Interest cost on projected benefit obligation 260 206
Expected return on plan assets (209) (158)
Net amortization and deferral 47 21
------------- --------------
Net pension benefit cost $ 437 $ 303
============= ==============
The Company previously disclosed in its consolidated financial statements for
the year ended January 3, 2004 that it is expected to contribute $1.3 million to
its pension plans in 2004. As of April 3, 2004, no contributions have been made.
The Company presently anticipates increasing its total contribution to $1.5
million for the year to fund its pension plan obligations in 2004.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under the heading "Forward-Looking
Statements" and elsewhere in this report. The following discussion should be
read in conjunction with the consolidated financial statements and related notes
included in our 2003 Annual Report on Form 10-K filed with the Securities and
Exchange Commission.
General
We manufacture, sell and distribute a diversified portfolio of high
quality, shelf-stable, branded food products, many of which have leading
regional or national retail market shares. In general, we position our branded
products to appeal to the consumer desiring a high quality and reasonably priced
branded product.
Our business strategy is to continue to increase sales, profitability
and free cash flow by enhancing our existing portfolio of branded shelf-stable
products and by capitalizing on our competitive strengths. We intend to
implement our strategy through the following initiatives: profitably growing our
established brands, leveraging our unique multiple-channel sales and
distribution system, introducing new products, capitalizing on the higher growth
Mexican segment of the food industry, and expanding our brand portfolio with new
licensing arrangements.
Since 1996, we have successfully acquired and integrated 16 separate
brands into our operations. We believe that successful future acquisitions, if
any, will enhance our portfolio of existing businesses, further leveraging our
existing platform.
We completed the acquisition of certain assets of The Ortega Brand of
Business from Nestle Prepared Foods Company on August 21, 2003, which we refer
to in this report as "Ortega" or the "Ortega acquisition". The Ortega
acquisition has been accounted for using the purchase method of accounting and,
accordingly, the assets acquired, liabilities assumed and results of operations
of the acquired business are included in our consolidated financial statements
from the date of acquisition.
On February 11, 2004, our sole stockholder, B&G Foods Holdings Corp.
("B&G Holdings"), filed a Registration Statement on Form S-1, which was
subsequently amended by the filing of Amendment No. 1 to the Registration
Statement on Form S-1 on March 31, 2004, for the registration of (A) B&G
Holdings' Enhanced Income Securities, or "EISs" (with each EIS representing one
share of Class A Common Stock and $6.00 aggregate principal amount of Senior
Subordinated Notes), and additional Senior Subordinated Notes separate from the
EISs and (B) B&G Holdings' Senior Notes, each as further described in the
Registration Statement. Each of the offerings is contingent on the completion of
the other offerings. In the event that the offerings are consummated,
immediately prior to completion of the offering contemplated by the Registration
Statement, we will be merged with and into B&G HOldings and the surviving entity
will be renamed B&G Foods, Inc. We and each of our subsidiaries are listed in
the Registration Statement as Additional Registrants.
We are subject to a number of challenges that may adversely affect our
businesses. These challenges, which are discussed below and under the heading
"Forward-Looking Statements" in this report include:
Fluctuations in Commodity Prices: We purchase raw materials, including
agricultural products, meat and poultry from growers, commodity processors,
other food companies and packaging manufacturers. Raw materials are subject to
fluctuations in price attributable to a number of factors. We manage this risk
by entering into short-term supply contracts and advance commodities purchase
agreements from time to time, and if necessary, by raising prices.
Consolidation in the Retail Trade and Consequent Inventory Reductions:
As the retail grocery trade continues to consolidate and our retail customers
grow larger and become more sophisticated, our retail customers may demand lower
pricing and increased promotional programs. These customers are also reducing
their inventories and increasing their emphasis on private label products. To
date we have been able to offset these trends by using our marketing expertise,
unique products and category leadership to maintain and increase volume.
Changing Customer Preferences: Consumers in the market categories in
which we compete frequently change their taste preferences, dietary habits and
product packaging preferences. By anticipating,
10
identifying or developing and marketing products that respond to these changes
in consumer preferences, we have largely been able to offset this challenge.
Consumer Concern Regarding Food Safety, Quality and Health: The food
industry is subject to consumer concerns regarding the safety and quality of
certain food products, including the health implications of genetically modified
organisms, obesity and trans fatty acids. By complying with applicable food and
safety laws and regulations, we have been able to produce food products that
generate consumer confidence in the safety and quality of our food products.
Changing Valuations of the Canadian Dollar in Relation to the U.S.
Dollar: We purchase most of our maple syrup requirements from manufacturers
located in Quebec, Canada. Over the past year the U.S. dollar has weakened
against the Canadian dollar, which has in turn increased our costs relating to
the production of our maple syrup products.
To confront these challenges, we continue to take steps to build the
value of our brands, to improve our existing portfolio of products with new
product and marketing initiatives, to reduce costs through productivity and to
address consumer concerns about food safety, quality and health.
Fluctuations in commodity prices can lead to retail price volatility
and intensive price competition, and can influence consumer and trade buying
patterns.
Critical Accounting Policies; Use of Estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires our
management 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.
We believe the following critical accounting policies involve the most
significant judgments and estimates used in the preparation of our consolidated
financial statements.
Trade and Consumer Promotion Expenses. We offer 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 our 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.
11
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.
Income Tax Expense Estimates and Policies. As part of the income tax
provision process of preparing our consolidated financial statements, we are
required to estimate our income taxes. This process involves estimating our
current tax exposure together with assessing temporary differences resulting
from differing treatment of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities. We must then assess
the likelihood that our deferred tax assets will be recovered from future
taxable income and to the extent we believe the recovery is not likely, we must
establish a valuation allowance. Further, to the extent that we establish a
valuation allowance or increase this allowance in a financial accounting period,
we must include a tax provision, or reduce our tax benefit in our consolidated
statement of operations. We use our judgment to determine our provision or
benefit for income taxes, deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets.
We have recorded deferred tax assets, a portion of which represents net
operating loss carryforwards. A valuation allowance has been recorded for
certain state net operating loss carryforwards.
There are various factors that may cause those tax assumptions to
change in the near term, and we may have to record a valuation allowance against
our deferred tax assets. We cannot predict whether future U.S. federal and state
income tax laws and regulations might be passed that could have a material
effect on our results of operations. We assess the impact of significant changes
to the U.S. federal and state income tax laws and regulations on a regular basis
and update the assumption and estimates used to prepare our financial statements
when new regulation and legislation is enacted.
Results of Operations
The following table sets forth the percentages of net sales represented
by selected items for the thirteen week periods ended April 3, 2004 and March
29, 2003 reflected in our Consolidated Statements of Operations. The comparisons
of financial results are not necessarily indicative of future results:
Thirteen Weeks Ended
------------------------------------
April 3, 2004 March 29, 2003
------------- --------------
Common Size Income Statement:
Net sales 100.0% 100.0%
Cost of goods sold 68.0% 70.3%
------ ------
Gross profit 32.0% 29.7%
Operating expenses:
Sales, marketing and distribution expenses 12.0% 11.0%
General and administrative expenses 1.7% 2.4%
Management fees-related party 0.1% 0.2%
------ ------
Operating income 18.2% 16.1%
Interest expense 8.6% 10.7%
------ ------
Income before income taxes 9.5% 5.4%
Provision for income taxes 3.7% 2.1%
------ ------
Net income 5.9% 3.3%
====== =======
12
As used in this section the terms listed below have the following
meanings:
Net Sales. Our net sales represents gross sales of products shipped to
customers plus amounts charged customers for shipping and handling, less cash
discount, coupon redemption, slotting fees and trade promotional spending.
Gross Profit. Our gross profit is equal to our net sales less cost of
goods sold. The primary components of our cost of goods sold are cost of
internally manufactured products, purchases of finished goods from co-packers
plus freight costs to our distribution centers and to our customers.
Sales, Marketing and Distribution Expenses. Our sales, marketing and
distribution expenses include costs for marketing personnel, consumer programs,
internal sales forces, brokerage costs and warehouse facilities.
General and Administrative Expenses. Our general and administrative
expense includes administrative employee compensation and benefit costs, as well
as information technology infrastructure and communication costs, office rent
and supplies, professional services, management fees and other general corporate
expenses.
Thirteen week period ended April 3, 2004 compared to thirteen week period ended
March 29, 2003.
Net Sales. Net sales increased $23.2 million or 34.4% to $90.7 million
for the thirteen week period ended April 3, 2004 (the "2004 quarterly period")
from $67.5 million for the thirteen week period ended March 29, 2003 (the "2003
quarterly period"). The Ortega acquisition, which occurred August 21, 2003,
accounted for $22.3 million of the sales increase. Sales of the our line of
Maple Grove Farms Of Vermont, Emeril, Las Palmas and Underwood products
increased $1.2 million, $0.8 million, $0.5 million and $0.5 million or 12.6%,
13.9%, 11.4% and 10.1%, respectively, reflecting higher unit volume. These
increases were offset by a reduction of sales in B&M Baked Beans, Polaner and
Bloch & Guggenheimer products in the amounts of $1.0 million, $0.7 million and
$0.5 million or 19.2%, 6.7% and 5.1%, respectively. All other brands increased,
in the aggregate by, $0.1 million or 0.4%.
Gross Profit. Gross profit increased $8.9 million or 44.5% to $29.0
million for the 2004 quarterly period from $20.1 million for the 2003 quarterly
period. Gross profit expressed as a percentage of net sales increased to 32.0%
in the 2004 quarterly period from 29.7% in the 2003 quarterly period. The
increase in gross profit percentage was primarily the result of the favorable
business impact of the Ortega acquisition, partially offset by higher costs of
maple syrup, the increased costs of pickle and pepper production and an increase
in trade spending.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $3.4 million or 45.9% to $10.9 million for the
2004 quarterly period from $7.4 million for the 2003 quarterly period. The
Ortega acquisition accounted for $2.4 million of the increase in sales and
marketing expenses for the 2004 quarterly period. Advertising expenses increased
$0.7 million and all other expenses increased $0.3 million.
General and Administrative Expenses. General and administrative
expenses and management fees decreased $0.1 million or 5.5% to $1.7 million for
the 2004 quarterly period from $1.8 million in the 2003 quarterly period.
Included in the 2003 quarterly period is a bad debt write-off of $0.6 million
relating to Fleming Companies, Inc., which filed Chapter 11 bankruptcy on April
1, 2003. The reduction of bad debt expense in the 2004 quarterly period is
partially offset by an increase in incentive compensation accruals of $0.5
million.
13
Operating Income. As a result of the foregoing, operating income
increased $5.6 million or 51.6% to $16.5 million for the 2004 quarterly period
from $10.9 million for the 2003 quarterly period. Operating income expressed as
a percentage of net sales increased to 18.2% in the 2004 quarterly period from
16.1% in the 2003 quarterly period.
Interest Expense. Interest expense increased $0.6 million to $7.8
million for the 2004 quarterly period from $7.2 million in the 2003 quarterly
period. In addition, total debt increased approximately $100.0 million in the
2004 quarterly period verses the 2003 quarterly period. See "Debt" below.
Income Tax Expense. Income tax expense increased $1.9 million or 138.4%
to $3.3 million for the 2004 quarterly period from $1.4 million in the 2003
quarterly period. Our effective tax rate was 38.6% for the 2004 quarterly period
and 38.5% for the 2003 quarterly period.
Non-GAAP Financial Measures
Certain disclosures in this report include "non-GAAP (Generally
Accepted Accounting Principles) financial measures." A non-GAAP financial
measure is defined as a numerical measure of our financial performance that
excludes or includes amounts so as to be different than the most directly
comparable measure calculated and presented in accordance with GAAP in our
consolidated balance sheets and related consolidated statements of operations
and cash flows. We present EBITDA (earnings before interest, taxes, depreciation
and amortization) because we believe it is a useful indicator of our historical
debt capacity and ability to service debt.
A reconciliation of EBITDA and "free cash flow" with the most directly
comparable GAAP measure is included below for the thirteen-weeks ended April 3,
2004 and March 29, 2003 along with the components of EBITDA.
EBITDA margin is calculated as a percentage of net sales.
Use of Non-GAAP Financial Measures (amounts in thousands).
Thirteen Weeks Ended
--------------------
April 3, 2004 March 29, 2003
------------- --------------
Net income $5,314 $2,241(1)
Depreciation 1,605 1,361
Income tax expense 3,342 1,402
Interest expense, net 7,812 7,223
-------------------------------
EBITDA (2) 18,073 12,227
Income tax expense (3,342) (1,402)
Interest expense, net (7,812) (7,223)
Deferred income taxes 1,475 817
Amortization of deferred financing and bond discount 642 743
Changes in assets and liabilities, net of effects of
business combination (11,859) (3,430)
-------------------------------
Net cash (used in) provided by operating activities (2,823) 1,732
Capital expenditures (1,546) (1,229)
-------------------------------
Free cash flow (3) ($4,369) $503
===============================
(1) Net income includes an unusual bad debt expense incurred in the 2003
quarterly period of $0.6 million ($.04 million, net of tax) relating to
Fleming Companies, Inc., which filed for Chapter 11 Bankruptcy on April 1,
2003.
14
(2) We define EBITDA as earnings before interest, income taxes, depreciation
and amortization. We believe that the most directly comparable GAAP
financial measure to EBITDA is net cash provided by (used in) operating
activities. The table above presents a reconciliation of EBITDA to net
cash provided by (used in) operating activities. We present EBITDA because
we believe it is a useful indicator of our historical debt capacity and
ability to service our debt. EBITDA is not a substitute for operating
income, net income or net cash provided by operating activities, as
determined in accordance with generally accepted accounting principles.
EBITDA is not a complete net cash flow measure because EBITDA is a measure
of liquidity that does not include reductions for cash payments for an
entity's obligation to service its debt, fund its working capital,
acquisitions and capital expenditures and pay its income taxes. Rather,
EBITDA is one potential indicator of an entity's ability to fund these
cash requirements. EBITDA also is not a complete measure of an entity's
profitability because it does not include costs and expenses for
depreciation and amortization, interest and related expenses and income
taxes. EBITDA, as we define it, may differ from similarly named measures
used by other entities.
(3) We disclose free cash flow because we believe that it is a measure of cash
flow generated that is available for investing and financing activities.
Free cash flow is defined as net cash provided by (used in) operating
activities less capital expenditures. We believe that the most directly
comparable GAAP financial measure to free cash flow is net cash provided
by (used in) operating activities. Free cash flow represents cash
generated after paying for interest on borrowings, income taxes, capital
expenditures and changes in working capital, but before repaying
outstanding debt, investing cash to acquire businesses and making other
strategic investments. Thus, key assumptions underlying free cash flow are
that we will be able to refinance our existing debt when it matures with
new debt and that we will be able to finance any new acquisitions we make
by raising new debt or equity capital.
Liquidity and Capital Resources
Our primary liquidity requirements include debt service, capital
expenditures, working capital needs and financing for acquisitions. See also,
"Commitments and Contractual Obligations" below. We will fund our liquidity
needs primarily through cash generated from operations and to the extent
necessary, through borrowings under our revolving credit facility.
Cash Flows. Cash used in operating activities increased $4.6 million to
$2.8 million for the 2004 quarterly period from cash provided by operating
activities of $1.7 million in the 2003 quarterly period. The increase was due to
an increase in trade accounts receivable and inventory and a decrease in accrued
expenses partially offset by an increase in trade accounts payable and net
income as compared to the 2003 quarterly period. Working capital at April 3,
2004 was $74.5 million, an increase of $7.2 million over working capital at
January 3, 2004 of $67.3 million. This change in working capital is primarily
due to a decrease in accrued expenses relating to accrued interest and accrued
incentive compensation.
Net cash used in investing activities for the 2004 quarterly period was
$1.5 million as compared to net cash used in investing activities of $1.2
million for the 2003 quarterly period. Capital expenditures during the 2004
quarterly period of $1.5 million included purchases of manufacturing and
computer equipment and were $0.3 million above the $1.2 million in similar
capital expenditures for the 2003 quarterly period.
Net cash used in financing activities for the 2004 quarterly period was
$0.4 million as compared to $5.1 million for the 2003 quarterly period. The net
cash used by financing activities for the 2004 quarterly period included the
Company's required $0.4 million quarterly payment under our Term Loan B. The net
cash used by financing activities for the 2003 quarterly period included the
Company's required $0.1 million quarterly payment, and an additional prepayment
of $5.0 million, under our then-existing Term Loan B.
We believe, based on a number of factors, including our trademark and
goodwill amortization from our prior acquisitions, that we will realize a
benefit to our cash taxes payable from the depreciation of our
15
acquired trademarks and goodwill for the taxable years 2004 through 2018.
Acquisitions. Our liquidity and capital resources have been
significantly impacted by acquisitions and may be impacted in the foreseeable
future by additional acquisitions. We have historically financed acquisitions
with borrowings and cash flows from operations. Our interest expense has
increased significantly as a result of additional indebtedness we have incurred
as a result of our recent acquisitions, and will increase with any additional
indebtedness we 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.
On August 21, 2003, we consummated the Ortega acquisition for
approximately $118.2 million in cash, including transaction costs, from Nestle
Prepared Foods Company. In connection with this transaction, we entered into a
$200.0 million senior secured credit facility comprised of a $50.0 million
five-year revolving credit facility and a $150.0 million six-year term loan
facility. The proceeds of such senior secured credit facility were used to fund
the Ortega acquisition and refinance our then-existing credit facility.
In connection with the Ortega acquisition, we paid transaction fees to
Bruckmann, Rosser, Sherrill and Co., Inc., a related party, aggregating $1.0
million for financial advisory services. We recorded such transaction fees as
part of the transaction costs included in the Ortega purchase price.
The Ortega acquisition was accounted for using the purchase method of
accounting and, accordingly, the assets acquired, liabilities assumed, and
results of operations are included in the consolidated financial statements from
the date of the Ortega acquisition. The excess of the Ortega purchase price over
the fair value of identifiable net assets acquired represents goodwill.
Trademarks are deemed to have an indefinite useful life and are not amortized.
The following table sets forth the allocation of the Ortega purchase
price. The cost of the Ortega acquisition has been allocated to tangible and
intangible assets as follows:
(Amounts in thousands)
Property, plant and equipment $ 5,964
Goodwill 76,310
Indefinite-life intangible assets - trademarks 30,700
Other assets, principally net current assets 6,960
Other liabilities, principally net current liabilities (2,039)
Deferred income tax asset 284
---------
Total $ 118,179
=========
Environmental Clean-Up Costs. We have not made any material
expenditures during the thirteen-week period ended April 3, 2004 in order to
comply with environmental laws or regulations. Based on our experience to date,
we believe 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 our consolidated financial condition, results of
operations or liquidity. However, we 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 we 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.
In January 2002, we were named as a third-party defendant in an action
regarding environmental liability under the Comprehensive Environmental
Response, Compensation and Liability Act, or Superfund, for alleged
16
disposal of waste by White Cap Preserves, an alleged predecessor of our company,
at the Combe Fill South Landfill, a Superfund site. In February 2003, we paid
$0.1 million in settlement of all asserted claims arising from this matter, and
in March 2003 a bar order was entered by the United States District Court for
the District of New Jersey protecting us, subject to a limited re-opener clause,
from any claims for contribution, natural resources damages and certain other
claims related to the action until such time that the litigation is dismissed.
Debt. As of April 3, 2004, we have outstanding $220 million 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 million
principal amount was originally issued in August 1997 and $100 million principal
amount (the "new notes") was issued by us through a private offering of the
notes completed on March 7, 2002. The notes contain certain transfer
restrictions.
On August 21, 2003, we entered into a newly amended and restated $200
million senior secured credit facility, which was further amended and restated
as of September 9, 2003, comprised of a $50 million five-year revolving credit
facility and a $150 million six-year term loan facility. The proceeds of the
term loan and of certain drawings under the revolving credit facility were used
(i) to fund the Ortega acquisition and to pay related transaction fees and
expenses and (ii) to fully pay off our remaining obligations under term loan B
of our then-existing term loan agreement dated as of March 15, 1999. In
connection therewith, we capitalized approximately $5.3 million of new deferred
debt issuance costs related to the senior secured credit facility and, in
accordance with the applicable guidance of the FASB's Emerging Issues Task
Force, wrote off $1.8 million of deferred financing costs related to our
then-existing term loan B. With respect to the senior secured credit facility,
interest is determined based on several alternative rates, including the base
lending rate per annum plus an applicable margin, or LIBOR plus an applicable
margin (4.52% at April 3, 2004). The senior secured credit facility is secured
by substantially all of our 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, our
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 total interest coverage ratio and a maximum
leverage ratio. Proceeds of the senior secured credit facility are restricted to
funding our working capital requirements, capital expenditures and acquisitions
of companies in our line of business, subject to certain additional criteria.
The senior secured credit facility limits expenditures on acquisitions to $50
million per acquisition unless we can satisfy certain leverage ratio
requirements. The outstanding balances for the revolving credit facility and the
term loan at April 3, 2004 were $0.0 million and $149.3 million, respectively.
The available borrowing capacity under the revolving credit facility, net of
outstanding letters of credit of $1.3 million, was approximately $48.7 million
at April 3, 2004.
Future Capital Needs
We are highly leveraged. On April 3, 2004, our total long-term debt
(including current installments) and stockholder's equity was $368.5 million and
$98.5 million, respectively.
Our ability to generate sufficient cash to fund our operations depends
generally on the results of operations and the availability of financing. Our
management believes that cash flow from operations in conjunction with the
available borrowing capacity under the revolving credit facility, net of
outstanding letters of credit, of approximately $48.7 million at April 3, 2004,
will be sufficient for the foreseeable future to fund operations, meet debt
service requirements, make future acquisitions, if any, and fund capital
expenditures. We expect to make capital expenditures of between $7.0 million to
$8.0 million for each of fiscal 2004 and 2005.
17
Seasonality
Sales of a number of our products tend to be seasonal. In the
aggregate, however, our sales are not heavily weighted to any particular quarter
due to the diversity of our product and brand portfolio. Sales during the first
quarter of the fiscal year are generally below that of the following three
quarters.
We purchase most of the produce used to make our shelf-stable pickles,
relishes, peppers and other related specialty items during the months of July
through October, and we purchase all of our maple syrup requirements during the
months of April through July. Consequently, our liquidity needs are greatest
during these periods.
Recent Accounting Pronouncements
In 2003, the FASB revised Statement No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits". The FASB's revision of
Statement No. 132 requires new annual disclosures about the types of plan
assets, investment strategy, measurement date, plan obligations and cash flows
as well as the components of the net periodic benefit cost recognized in interim
periods. In addition, SEC registrants are now required to disclose its estimates
of contributions to the plan during the next fiscal year and the components of
the fair value of total plan assets by type (i.e. equity securities, debt
securities, real estate and other assets). We adopted the provisions of
Statement No. 132 (revised), except for expected future benefit payments, which
must be disclosed for fiscal years ending after June 15, 2004.
Related-Party Transactions
We and B&G Holdings are party to a management services agreement with
Bruckmann, Rosser, Sherrill & Co., Inc., the manager of Bruckmann, Rosser,
Sherrill & Co., L.P., pursuant to which we pay Bruckmann, Rosser, Sherrill &
Co., Inc. $500,000 per annum for management, business and organizational
strategy and merchant and investment banking services rendered to us and B&G
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 our products, development of business plans, the
structure of our debt and equity capitalization and the identification and
development of business opportunities. Bruckmann, Rosser, Sherrill & Co., L.P.
and its affiliates, together with members of the our management and board of
directors, own B&G Holdings, our sole stockholder. Any future increase in
payments under the management agreement with Bruckmann, Rosser, Sherrill & Co.,
L.P. are restricted by the terms of the indentures governing our company's
existing 9 5/8% senior subordinated notes due 2007. We and Bruckmann, Rosser,
Sherrill & Co., Inc. also are party to a transaction services agreement pursuant
to which Bruckmann, Rosser, Sherrill & Co., Inc. will be paid a transaction fee
for management, financial and other corporate advisory services rendered by
Bruckmann, Rosser, Sherrill & Co., Inc. in connection with acquisitions,
divestitures and financings by us, which fee will not exceed 1.0% of the total
transaction value. In connection with the Ortega acquisition in fiscal 2003, we
paid transaction fees to Bruckmann, Rosser, Sherrill & Co., Inc. aggregating
$1.0 million for financial advisory services.
We are a party to a lease for our Roseland facility with 426 Eagle Rock
Avenue Associates, a real estate partnership of which Leonard S. Polaner, our
Chairman, is the general partner. We paid $59,600 per month in rent to 426 Eagle
Rock Avenue Associates pursuant to the Roseland lease. Beginning April 1, 2004,
our monthly rent increased to $68,500. The lease expires in April 2009. In the
opinion of management, the terms of the Roseland lease are at least as favorable
to us as the terms that could have been obtained from an unaffiliated third
party.
In order to attract, retain and motivate selected employees and
officers of our company, B&G Holdings adopted the B&G Foods Holdings Corp. 1997
Incentive Stock Option Plan for our and our subsidiaries' key employees. The
option plan authorizes for grant to key employees and officers options for up
18
to 6,700 shares of common stock of B&G Holdings. The option plan authorizes B&G
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 option plan provides that it may be administered by B&G Holdings'
board of directors. Options granted under the option plan will be exercisable in
accordance with the terms established by B&G Holding's board of directors. Upon
the occurrence of a change in control as defined in the option plan any unvested
outstanding options accelerate and become immediately exercisable in full. Under
the option plan, B&G Holding's 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 with an exercise price
equal to the fair value of B&G Holdings common stock as determined by a third
party valuation. Options will expire on the date determined by B&G Holdings'
board of directors, which may not be later than the tenth anniversary of the
date of grant. The options vest ratably over five years. No options were granted
during fiscal 2003 or during the 2004 thirteen week first quarter period. As of
April 3, 2004, options to purchase 6,625 shares of common stock of B&G Holdings,
all of which were incentive stock options, had been granted since the inception
of the option plan.
Off-balance Sheet Arrangements
As of April 3, 2004, we did not have any off-balance sheet arrangements
as defined in Item 303(a)(4)(ii) of Regulation S-K.
Commitments and Contractual Obligations
Our contractual obligations and commitments principally include
obligations associated with our outstanding indebtedness, future minimum
operating lease obligations and management fees as set forth in the following
table as of April 3, 2004:
Actual Payments Due by Period
(Dollars in thousands)
Contractual Obligations: Total Year 1 Year 2 Year 3 Year 4 Year 5 and
- ------------------------ ----- ------ ------ ------ ------ ----------
Thereafter
----------
Long-term debt $368,479 $1,500 $1,500 $1,500 $220,729 $143,250
Operating leases 11,399 3,605 3,001 1,660 1,441 1,692
Management fees-related party 1,375 500 500 375 0 0
Purchase commitments 6,482 6,482 0 0 0 0
-------- ------- ------ ------ -------- --------
Total contractual cash obligations $387,735 $12,087 $5,001 $3,535 $222,170 $144,942
======== ======= ====== ====== ======== ========
Forward-Looking Statements
This report includes forward-looking statements, including without
limitation the statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The words "believes,"
"anticipates," "plans," "expects," "intends," "estimates," "projects" and
similar expressions are intended to identify forward-looking statements. These
forward looking statements
19
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance and achievements, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by any forward-looking statements. We believe important
factors that could cause actual results to differ materially from our
expectations include the following:
o our substantial leverage;
o intense competition, changes in consumer preferences, demand for our
products, the effects of changing prices for our raw materials and
local economic and market conditions;
o our continued ability to promote brand equity successfully, to
anticipate and respond to new consumer trends, to develop new products
and markets, to broaden brand portfolios in order to compete
effectively with lower priced products and markets in a consolidating
environment at the retail and manufacturing levels, to improve
productivity and to maintain access to credit markets;
o the risks associated with the expansion of our business;
o our possible inability to integrate any businesses we acquire;
o our borrowing costs and credit ratings, which may be influenced by the
credit ratings of our competitors; o factors that affect the food
industry generally, including:
o recalls if products become adulterated or misbranded, liability if
product consumption causes injury, ingredient disclosure and
labeling laws and regulations and the possibility that consumers
could lose confidence in the safety and quality of certain food
products, as well as recent publicity concerning the health
implications of obesity and trans fatty acids; and
o the effects of currency movements in Canada and fluctuations in
the level of our customers' inventories and credit and other
business risks related to our customers operating in a challenging
economic and competitive environment; and
o other factors discussed elsewhere in this report.
Developments in any of these areas, which are more fully described
elsewhere in this report and which descriptions are incorporated into this
section by reference, could cause our results to differ materially from results
that have been or may be projected by or on our behalf.
All forward-looking statements included in this report are based on
information available to us on the date of this report. We undertake no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise. All subsequent
written and oral forward-looking statements attributable to us or persons acting
on our behalf are expressly qualified in their entirety by the cautionary
statements contained in this report.
We caution that the foregoing list of important factors is not
exclusive. We urge you not to unduly rely on forward-looking statements
contained in this report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of operations, we are 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 April 3,
2004, our only variable rate borrowings were under the term loan 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 our borrowings at April 3, 2004, would
result in an annual increase in interest expense and a corresponding reduction
in cash flow of approximately $1.0 million.
We also have 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
20
amount was originally issued in August 1997 and $100 million principal amount
was issued by us through a private offering of the notes completed on March 7,
2002. The fair value of the $220 million senior subordinated notes at April 3,
2004, based on quoted market prices, was $226.6 million.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. As required by Rule
13a-15(b) under the Exchange Act, our management, including our chief executive
officer and our chief financial officer, conducted an evaluation as of the end
of the period covered by this report, of the effectiveness of the design and
operation of our disclosure controls and procedures. As defined in Rule
13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and
procedures are controls and other procedures that we use that are designed to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is accumulated and communicated
to our management, including our chief executive officer and our chief financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.
Based on that evaluation, our chief executive officer and our chief
financial officer concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this report. It should be noted
that any system of controls, however well designed and operated, is based in
part upon certain assumptions and can provide only reasonable, and not absolute,
assurance that the objectives of the system are met.
Changes in Internal Control Over Financial Reporting. As required by
Rule 13a-15(d) under the Exchange Act, our management, including our chief
executive officer and our chief financial officer, also conducted an evaluation
of our internal control over financial reporting to determine whether any change
occurred during the quarter covered by this report that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting. As defined in Rule 13a-15(f) and 15d-15(f) under the
Exchange Act, internal control over financial reporting is a process designed
by, or under the supervision of, our management, including the chief executive
officer and chief financial officer, and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles.
Based on that evaluation, our chief executive officer and our chief
financial officer concluded that there has been no change during the quarter
covered by this report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are involved in various legal
proceedings. We do not believe the outcome of these proceedings will have a
material adverse effect on our consolidated financial condition, results of
operations or liquidity.
In January 2002, we were named as a third-party defendant in an action
regarding environmental
21
liability under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste by White Cap
Preserves, an alleged predecessor of our company, at the Combe Fill South
Landfill, a Superfund site. In February 2003, we paid $0.1 million in settlement
of all asserted claims arising from this matter, and in March 2003 a bar order
was entered by the United States District Court for the District of New Jersey
protecting us, subject to a limited re-opener clause, from any claims for
contribution, natural resources damages and certain other claims related to the
action until such time that the litigation is dismissed.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
22
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)
2.4 Asset Purchase Agreement dated as of July 29, 2003 by and
among Nestle Prepared Foods Company (formerly known as Nestle
USA - Prepared Foods Division, Inc.), Ortega Holdings Inc.
(formerly known as O Brand Acquisition Corp.) and B&G Foods,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 2.1 to the Company's Report on Form 8-K filed August
22, 2003 and incorporated herein by reference)
2.5 Intellectual Property Purchase Agreement dated as of August
21, 2003 between Societe des Produits Nestle S.A., Nestec
Ltd., and O Brand Acquisition Corp. (Filed with the
Securities and Exchange Commission as Exhibit 2.5 to
Registration Statement No. 333-112680 on February 11, 2004
and incorporated herein by reference)
3.1 Certificate of Incorporation of B&G Foods, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.2 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.3 Certificate of Incorporation of BGH Holdings, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.3 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.4 Bylaws of BGH Holdings, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.4 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.5 Certificate of Incorporation of Maple Groves Farms of
Vermont, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.5 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated
herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.6 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.7 Certificate of Incorporation of Trappey's Fine Foods, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.7 to Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated herein by
reference)
3.8 Bylaws of Trappey's Fine Foods, Inc. (Filed with the
Securities and Exchange Commission
23
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 Ortega Holdings Inc.
(formerly known as O Brand Acquisition Corp.). (Filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Current Report on Form 8-K on November 13, 2003 and
incorporated herein by reference)
3.12 Bylaws of Ortega Holdings Inc. (formerly known as O Brand
Acquisition Corp.). (Filed with the Securities and Exchange
Commission as Exhibit 3.2 to Current Report on Form 8-K on
November 13, 2003 and incorporated herein by reference)
3.13 Certificate of Incorporation of Les Produits Alimentaires
Jacques Et Fils, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.13 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated
herein by reference)
3.14 Bylaws of Les Produits Alimentaires Jacques Et Fils, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.14 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by
reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a Roseland
Distribution Company). (Filed with the Securities and
Exchange Commission as Exhibit 3.15 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.16 Bylaws of Polaner, Inc. (f/k/a Roseland Distribution
Company). (Filed with the Securities and Exchange Commission
as Exhibit 3.16 to Amendment No. 1 to Registration Statement
No. 333-39813 on January 14, 1998 and incorporated herein by
reference)
3.17 Certificate of Incorporation of Heritage Acquisition Corp.
(Filed with the Securities and Exchange Commission as Exhibit
3.17 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by
reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the
Securities and Exchange Commission as Exhibit 3.18 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed
with the Securities and Exchange Commission as Exhibit 3.19
to Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the
Securities and Exchange Commission as Exhibit 3.20 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 among 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) among B&G Foods, Inc.,
BGH Holdings, Inc., RWBV Acquisition
24
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
among 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 Third Supplemental Indenture dated as of October 30, 2003 (to
the Indenture dated as of August 11, 1997) among B&G Foods,
Inc., BGH Holdings, Inc., 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., Ortega
Holdings Inc. and the Bank of New York. (Filed with the
Securities and Exchange Commission as Exhibit 4.4 to
Registration Statement No. 333-112680 on February 11, 2004
and incorporated herein by reference)
4.5 Indenture dated as of March 7, 2002 among 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)
4.6 First Supplemental Indenture dated as of October 30, 2003 (to
the Indenture dated as of March 7, 2002) among B&G Foods,
Inc, BGH Holdings, Inc., 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,
Ortega Holdings Inc. and The Bank of New York, as trustee.
(Filed with the Securities and Exchange Commission as Exhibit
4.6 to Registration Statement No. 333-112680 on February 11,
2004 and incorporated herein by reference)
4.7 Form of the Company's 9 5/8% Senior Notes due 2007. (Included
in Exhibits 4.1 and 4.5)
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,
25
1999 and incorporated herein by reference)
10.4 Amended and Restated Revolving Credit Agreement, dated as of
August 21, 2003, among B&G Foods Holdings Corp., B&G Foods,
Inc., as borrower, the several banks and other financial
institutions or entities from time to time parties thereto,
Lehman Brothers Inc., as Arranger, Lehman Commercial Paper
Inc., as Administrative Agent, and the Other Agents named
therein. (Included in Exhibit 10.5, as further amended and
restated as of September 9, 2003)
10.5 First Amendment, dated as of September 9, 2003, to the
Amended and Restated Revolving Credit Agreement, dated as of
August 21, 2003, 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 arranger, Lehman
Commercial Paper Inc., as administrative agent, and The Bank
of New York, as the Existing Issuing Lender. (Filed with the
Securities and Exchange Commission as Exhibit 10.1 to Current
Report on Form 8-K on November 13, 2003 and incorporated
herein by reference)
10.6 Amended and Restated Term Loan Agreement, dated as of August
21, 2003, among B&G Foods Holdings Corp., B&G Foods, Inc., as
borrower, the several banks and other financial institutions
or entities from time to time parties thereto, Lehman
Brothers Inc., as Arranger, Lehman Commercial Paper Inc., as
Administrative Agent, and the Other Agents named therein.
(Included in Exhibit 10.7, as further amended and restated as
of September 9, 2003)
10.7 First Amendment, dated as of September 9, 2003, to the
Amended and Restated Term Loan Agreement, dated as of August
21, 2003, among B&G Foods Holdings Corp., B&G Foods, Inc.,
the several banks and other financial institutions or
entities from time to time parties thereto, Lehman Brothers
Inc., as arranger, and Lehman Commercial Paper Inc., as
administrative agent. (Filed with the Securities and Exchange
Commission as Exhibit 10.2 to Current Report on Form 8-K on
November 13, 2003 and incorporated herein by reference)
10.8 Amended and Restated Guarantee and Collateral Agreement,
dated as of August 21, 2003, 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 with the Securities and Exchange Commission as Exhibit
10.3 to Current Report on Form 8-K on November 13, 2003 and
incorporated herein by reference)
10.9 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)
10.10 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)
10.11 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
26
the Securities and Exchange Commission as Exhibit 10.13 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference)
31.1 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934 of the Chief Executive
Officer. (Filed herewith)
31.2 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934 of the Chief Financial
Officer. (Filed herewith)
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
the Chief Executive Officer. (Filed herewith)
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
the Chief Financial Officer. (Filed herewith)
(b) Reports on Form 8-K
Current Report on Form 8-K, dated and filed February 11, 2004, to file
the Company's press release announcing its financial results for the
quarter ended January 3, 2004 and the fiscal year ended January 3,
2004.
Current Report on Form 8-K, dated and filed February 11, 2004, to file
the Company's press release announcing that B&G Holdings Corp. filed a
registration statement on Form S-1 in respect of its initial public
offering of Enhanced Income Securities.
27
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 19, 2004 B&G FOODS, INC.
By: /s/ Robert C. Cantwell
------------------------------------------
Robert C. Cantwell
Executive Vice President and Chief
Financial Officer (Principal Financial and
Accounting Officer and Authorized Officer)
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------------- -------------------------------------------------------------
2.1 Stock Purchase Agreement, dated July 2, 1998, by and among
BGH Holdings, Inc., Maple Grove Farms of Vermont, Inc., Up
Country Naturals of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils Inc., William F. Callahan and Ruth M.
Callahan. (Filed with the Securities and Exchange Commission
as Exhibit 2.1 to Commission Filing No. 333-39813 on August
3, 1998 and incorporated herein by reference)
2.2 Asset Purchase Agreement, dated as of January 12, 1999, by
and among Roseland Distribution Company, International Home
Foods, Inc. and M. Polaner, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 1 to the Company's Report
on Form 8-K filed February 19, 1999 and incorporated herein
by reference)
2.3 Asset and Stock Purchase Agreement, dated as of January 28,
1999, by and among The Pillsbury Company, Indivined B.V., IC
Acquisition Company, Heritage Acquisition Corp. and, as
guarantor, B&G Foods, Inc. (Filed as Exhibit 2.1 to the
Company's Report on Form 8-K filed April 1, 1999 and
incorporated herein by reference)
2.4 Asset Purchase Agreement dated as of July 29, 2003 by and
among Nestle Prepared Foods Company (formerly known as Nestle
USA - Prepared Foods Division, Inc.), Ortega Holdings Inc.
(formerly known as O Brand Acquisition Corp.) and B&G Foods,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 2.1 to the Company's Report on Form 8-K filed August
22, 2003 and incorporated herein by reference)
2.5 Intellectual Property Purchase Agreement dated as of August
21, 2003 between Societe des Produits Nestle S.A., Nestec
Ltd., and O Brand Acquisition Corp. (Filed with the
Securities and Exchange Commission as Exhibit 2.5 to
Registration Statement No. 333-112680 on February 11, 2004
and incorporated herein by reference)
3.1 Certificate of Incorporation of B&G Foods, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.2 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.3 Certificate of Incorporation of BGH Holdings, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.3 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.4 Bylaws of BGH Holdings, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.4 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.5 Certificate of Incorporation of Maple Groves Farms of
Vermont, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.5 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated
herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.6 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.7 Certificate of Incorporation of Trappey's Fine Foods, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.7 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.8 Bylaws of Trappey's Fine Foods, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.8 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.9 Certificate of Incorporation for Bloch & Guggenheimer, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.9 to Amendment No. 1 to Registration Statement No.
333-39813 on January 14, 1998 and incorporated herein by
reference)
3.10 Bylaws of Bloch & Guggenheimer, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.10 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.11 Certificate of Incorporation of Ortega Holdings Inc.
(formerly known as O Brand Acquisition Corp.). (Filed with
the Securities and Exchange Commission as Exhibit 3.1 to
Current Report on Form 8-K on November 13, 2003 and
incorporated herein by reference)
3.12 Bylaws of Ortega Holdings Inc. (formerly known as O Brand
Acquisition Corp.). (Filed with the Securities and Exchange
Commission as Exhibit 3.2 to Current Report on Form 8-K on
November 13, 2003 and incorporated herein by reference)
3.13 Certificate of Incorporation of Les Produits Alimentaires
Jacques Et Fils, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.13 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated
herein by reference)
3.14 Bylaws of Les Produits Alimentaires Jacques Et Fils, Inc.
(Filed with the Securities and Exchange Commission as Exhibit
3.14 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by
reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a Roseland
Distribution Company). (Filed with the Securities and
Exchange Commission as Exhibit 3.15 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.16 Bylaws of Polaner, Inc. (f/k/a Roseland Distribution
Company). (Filed with the Securities and Exchange Commission
as Exhibit 3.16 to Amendment No. 1 to Registration Statement
No. 333-39813 on January 14, 1998 and incorporated herein by
reference)
3.17 Certificate of Incorporation of Heritage Acquisition Corp.
(Filed with the Securities and Exchange Commission as Exhibit
3.17 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by
reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the
Securities and Exchange Commission as Exhibit 3.18 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed
with the Securities and Exchange Commission as Exhibit 3.19
to Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the
Securities and Exchange Commission as Exhibit 3.20 to
Amendment No. 1 to Registration Statement No. 333-86062 on
May 9, 2002 and incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 among 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) among 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
among 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 Third Supplemental Indenture dated as of October 30, 2003 (to
the Indenture dated as of August 11, 1997) among B&G Foods,
Inc., BGH Holdings, Inc., 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., Ortega
Holdings Inc. and the Bank of New York. (Filed with the
Securities and Exchange Commission as Exhibit 4.4 to
Registration Statement No. 333-112680 on February 11, 2004
and incorporated herein by reference)
4.5 Indenture dated as of March 7, 2002 among 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)
4.6 First Supplemental Indenture dated as of October 30, 2003 (to
the Indenture dated as of March 7, 2002) among B&G Foods,
Inc, BGH Holdings, Inc., 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,
Ortega Holdings Inc. and The Bank of New York, as trustee.
(Filed with the Securities and Exchange Commission as Exhibit
4.6 to Registration Statement No. 333-112680 on February 11,
2004 and incorporated herein by reference)
4.7 Form of the Company's 9 5/8% Senior Notes due 2007. (Included
in Exhibits 4.1 and 4.5)
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 Amended and Restated Revolving Credit Agreement, dated as of
August 21, 2003,
among B&G Foods Holdings Corp., B&G Foods, Inc., as borrower,
the several banks and other financial institutions or
entities from time to time parties thereto, Lehman Brothers
Inc., as Arranger, Lehman Commercial Paper Inc., as
Administrative Agent, and the Other Agents named therein.
(Included in Exhibit 10.5, as further amended and restated as
of September 9, 2003)
10.5 First Amendment, dated as of September 9, 2003, to the
Amended and Restated Revolving Credit Agreement, dated as of
August 21, 2003, 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 arranger, Lehman
Commercial Paper Inc., as administrative agent, and The Bank
of New York, as the Existing Issuing Lender. (Filed with the
Securities and Exchange Commission as Exhibit 10.1 to Current
Report on Form 8-K on November 13, 2003 and incorporated
herein by reference)
10.6 Amended and Restated Term Loan Agreement, dated as of August
21, 2003, among B&G Foods Holdings Corp., B&G Foods, Inc., as
borrower, the several banks and other financial institutions
or entities from time to time parties thereto, Lehman
Brothers Inc., as Arranger, Lehman Commercial Paper Inc., as
Administrative Agent, and the Other Agents named therein.
(Included in Exhibit 10.7, as further amended and restated as
of September 9, 2003)
10.7 First Amendment, dated as of September 9, 2003, to the
Amended and Restated Term Loan Agreement, dated as of August
21, 2003, among B&G Foods Holdings Corp., B&G Foods, Inc.,
the several banks and other financial institutions or
entities from time to time parties thereto, Lehman Brothers
Inc., as arranger, and Lehman Commercial Paper Inc., as
administrative agent. (Filed with the Securities and Exchange
Commission as Exhibit 10.2 to Current Report on Form 8-K on
November 13, 2003 and incorporated herein by reference)
10.8 Amended and Restated Guarantee and Collateral Agreement,
dated as of August 21, 2003, 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 with the Securities and Exchange Commission as Exhibit
10.3 to Current Report on Form 8-K on November 13, 2003 and
incorporated herein by reference)
10.9 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)
10.10 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)
10.11 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)
31.1 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934 of the Chief Executive
Officer. (Filed herewith)
31.2 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934 of the Chief Financial
Officer. (Filed herewith)
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
the Chief Executive Officer. (Filed herewith)
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
the Chief Financial Officer. (Filed herewith)