As filed with the Securities and Exchange Commission on October 30, 2002
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one) Quarterly Report Pursuant to Section 13 or 15(d)
[ X ] of the Securities Exchange Act of 1934
For the quarterly period ended September 28, 2002
or
Transition Report Pursuant to Section 13 or 15(d)
[ ] of the Securities Exchange Act of 1934
For the transition period from ______ to ________.
Commission file number 333-39813
B&G FOODS, INC.
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(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 October 30, 2002, B&G Foods, Inc. had one (1) share of common
stock, $.01 par value, outstanding, which was owned by an affiliate.
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B&G Foods, Inc. and Subsidiaries
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1.
Consolidated Balance Sheets.................................1
Consolidated Statements of Income...........................2
Consolidated Statements of Cash Flows.......................3
Notes to Consolidated Financial Statements..................4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........9
Item 3. Quantitative and Qualitative Disclosures about
Market Risk............................................16
Item 4. Controls and Procedures................................17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................18
Item 2. Changes in Securities and Use of Proceeds..............18
Item 3. Defaults Upon Senior Securities........................18
Item 4. Submission of Matters to a Vote of Security Holders....18
Item 5. Other Information......................................18
Item 6. Exhibits and Reports on Form 8-K.......................19
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES
Index to Exhibits
i
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except per share data)
Assets September 28, 2002 December 29, 2001
------------------ -----------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 9,737 $ 15,055
Trade accounts receivable, net 20,591 21,621
Inventories 73,695 66,142
Prepaid expenses 2,936 1,790
Deferred income taxes 1,672 1,672
-------------------------------
Total current assets 108,631 106,280
Property, plant and equipment, net 37,813 36,431
Goodwill, net 112,319 112,319
Trademarks, net 162,781 162,781
Other assets 10,033 8,195
-------------------------------
$ 431,577 $ 426,006
===============================
Liabilities and Stockholder's Equity
Current liabilities:
Current installments of long-term debt $ 403 $ 17,436
Trade accounts payable 24,377 21,256
Accrued expenses 15,885 17,494
Due to related party 83 208
-------------------------------
Total current liabilities 40,748 56,394
Long-term debt 278,335 271,839
Deferred income taxes 37,794 34,701
Other liabilities 278 236
-------------------------------
Total liabilities 357,155 363,170
Stockholder's equity:
Common stock, $.01 par value per share. Authorized
1,000 shares; issued and outstanding 1 share - -
Additional paid-in capital 56,392 56,392
Retained earnings 18,030 6,444
-------------------------------
Total stockholder's equity 74,422 62,836
-------------------------------
$ 431,577 $ 426,006
===============================
See notes to consolidated financial statements.
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in thousands)
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 28, September 29, September 28, September 29,
-------------- -------------- -------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Net sales................................... $ 70,900 $ 71,982 $ 214,960 $ 206,473
Cost of goods sold.......................... 48,703 49,202 147,784 140,900
---------- ---------- ---------- ----------
Gross profit............................ 22,197 22,780 67,176 65,573
Sales, marketing and distribution expenses 9,143 9,745 26,482 26,026
General and administrative expenses......... 1,063 3,489 3,652 10,593
Management fees............................. 125 125 375 375
Environmental clean-up...................... - (150) - 950
---------- ---------- ---------- ----------
Operating income........................ 11,866 9,571 36,667 27,629
Gain on sale of assets...................... - - - (3,112)
Derivative gain............................. (1,467) - (2,524) -
Interest expense............................ 6,853 7,150 19,787 23,181
---------- ---------- ---------- ----------
Income before income tax expense ....... 6,480 2,421 19,404 7,560
Income tax expense ......................... 2,619 1,336 7,818 4,173
---------- ---------- ---------- ----------
Net income ............................. $ 3,861 $ 1,085 $ 11,586 $ 3,387
========== ========== ========== ==========
See notes to consolidated financial statements.
2
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
Thirty-nine Weeks Ended
Sep 28, 2002 Sep. 29, 2001
------------ -------------
Cash flows from operating activities:
Net income................................................................ $ 11,586 $ 3,387
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 3,886 10,653
Deferred income tax expense............................................ 3,093 4,173
Amortization of deferred debt issuance costs and bond discount......... 1,944 1,462
Gain on sale of assets................................................. - (3,112)
Changes in assets and liabilities, net of effects of net assets sold:
Trade accounts receivable........................................ 1,030 1,635
Inventories...................................................... (7,553) (7,356)
Prepaid expenses................................................. (1,146) (1,969)
Other assets..................................................... 33 (400)
Trade accounts payable........................................... 3,121 3,016
Accrued expenses................................................. (1,609) (1,850)
Due to related parties........................................... (125) (125)
Other liabilities................................................ 42 73
-------------- -------------
Net cash provided by operating activities............................ 14,302 9,587
Cash flows from investing activities:
Capital expenditures................................................... (5,268) (3,358)
Net cash received for sale of assets................................... - 24,090
-------------- -------------
Net cash (used in) provided by investing activities.................. (5,268) 20,732
Cash flows from financing activities:
Payments of long-term debt............................................. (109,418) (36,450)
Proceeds from issuance of equity....................................... - 50
Proceeds from issuance of long-term debt............................... 98,760 -
Payments of debt issuance costs........................................ (3,694) -
-------------- -------------
Net cash used in financing activities................................ (14,352) (36,400)
-------------- -------------
Decrease in cash and cash equivalents................................ (5,318) (6,081)
Cash and cash equivalents at beginning of period.......................... 15,055 13,433
-------------- -------------
Cash and cash equivalents at end of period................................ $ 9,737 $7,352
============== =============
Supplemental disclosure of cash flow information - Cash paid for:
Interest............................................................. $ 21,872 $ 26,345
Income taxes......................................................... $ 2,175 $ 199
See notes to consolidated financial statements.
3
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(dollars in thousands)
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of B&G
Foods, Inc. and subsidiaries (the "Company") contain all adjustments (consisting
only of normal and recurring adjustments) necessary to present fairly the
Company's consolidated financial position as of September 28, 2002 and the
results of their operations and their cash flows for the thirteen and
thirty-nine week periods ended September 28, 2002 and September 29, 2001.
The results of operations for the thirteen and thirty-nine week periods
ended September 28, 2002 are not necessarily indicative of the results to be
expected for the full year. The accompanying consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes included in the Company's 2001 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
(2) Adoption of New Accounting Standards
In 2001, the Emerging Issues Task Force ("EITF") reached a consensus
with respect to the issue of "Accounting for Certain Sales Incentives,"
including point of sale coupons, rebates and free merchandise, which became
effective for the Company in the first quarter of 2002. The consensus includes a
conclusion that the value of such sales incentives that results in a reduction
of the price paid by the customer should be netted against sales and not
classified as a sales or marketing expense. During 2001, the Company recorded
reductions in price pursuant to coupons as sales, marketing and distribution
expenses. As required, the Company implemented the provisions of such EITF
consensus in the first quarter of fiscal 2002 and, as a result, has reclassified
prior period coupon expense as a reduction of net sales. Coupon expense
reclassified in accordance with the EITF consensus for the thirteen and
thirty-nine week periods ended September 29, 2001 was $0.4 million and $1.1
million, respectively. The implementation of the provisions of such EITF
consensus alters the classification of certain sales incentives in the
consolidated statements of income resulting in a reduction of sales and gross
margins, but does not have any effect on the Company's operating income or net
income. The Company historically has included, and continues to include, free
merchandise in cost of goods sold, as required by the new EITF consensus.
In April 2001, the EITF reached a consensus with respect to EITF Issue
No. 00-25, "Vendor Income Statement Characterization of Consideration to a
Purchaser of the Vendor's Products or Services," which became effective for the
Company in the first quarter of 2002. The consensus includes a conclusion that
consideration from a vendor to a retailer is presumed to be a reduction to the
selling prices of the vendor's products and, therefore, should be characterized
as a reduction of sales when recognized in the vendor's income statement. As
required, the Company implemented the provisions of such EITF consensus in the
first quarter of fiscal 2002 and, as a result, has reclassified certain prior
period expenses as a reduction of net sales. Such reclassification reduces sales
and gross margin, but does not have an impact on the Company's operating income
or net income. Such expenses reclassified in accordance with the EITF consensus
as a reduction of net sales and sales, marketing and distribution expenses for
the thirteen and thirty-nine week periods ended September 29, 2001 were $12.2
million and $37.1 million, respectively.
The following table summarizes the reclassifications of the prior
period amounts as if the two aforementioned new EITF consensuses had been
implemented effective December 31, 2000:
4
Thirteen weeks ended Thirty-nine weeks ended
September 29, 2001 September 29, 2001
As Filed Reclassified As Filed Reclassified
-------- ------------ -------- ------------
Sales $84,632 $71,982 $244,678 $206,473
Gross profit 35,430 22,780 103,778 65,573
Sales, marketing and distribution expenses 22,395 9,745 64,231 26,026
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 142, "Goodwill and Other Intangible Assets." Statement No. 142
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of Statement No. 142. Statement No. 142 also
requires that intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with FASB Statement No. 144, "Accounting
for the Impairment of Disposal of Long-Lived Assets." The Company adopted the
provisions of Statement No. 142 effective as of December 30, 2001.
As required by Statement No. 142, the Company performed an assessment
to determine whether goodwill of the Company was impaired as of December 30,
2001, the date of adoption by the Company of the provisions of Statement No.
142. In connection therewith, the Company determined that its operations
consisted of one reporting unit. Under Statement No. 142, goodwill impairment is
deemed to exist if the net book value of a reporting unit's goodwill exceeds its
estimated fair value. The Company determined that, as of December 30, 2001, the
fair value of the goodwill of the Company's reporting unit exceeded its carrying
amount, and therefore there is no indication that goodwill was impaired as of
such date. Accordingly, the Company is not required to perform any further
transitional impairment tests. The Company will perform its annual impairment
review each fiscal year end in the future.
As of December 30, 2001, the Company had unamortized goodwill in the
amount of $112.3 million, and unamortized identifiable intangible assets
(trademarks) in the amount of $162.8 million. Effective as of December 30, 2001,
the Company ceased the amortization of goodwill and all trademarks having
indefinite useful lives. Amortization expense related to goodwill was $0.8
million and $2.4 million, respectively, for the thirteen and thirty-nine week
periods ended September 29, 2001. Amortization expense related to trademarks was
$1.3 million and $4.0 million, respectively, for the thirteen and thirty-nine
week periods ended September 29, 2001.
The following table reconciles previously reported net income to net
income adjusted as if the provisions of Statement No. 142 were in effect in
fiscal 2001:
Thirteen weeks ended Thirty-nine weeks ended
September 29, 2001 September 29, 2001
------------------ ------------------
Reported net income $1,085 $3,387
Add back: Goodwill amortization 461 1,382
Add back: Trademark amortization 820 2,460
------ ------
Adjusted net income $2,366 $7,229
====== ======
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." Statement No. 144 addresses
financial accounting and reporting for the impairment of disposal of long-lived
assets. This Statement requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Statement No. 144 requires
companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. The Company adopted Statement No. 144 on December
30,
5
2001 and such adoption had no effect on the Company's consolidated financial
statements for the thirteen and thirty-nine week periods ended September 28,
2002.
(3) Derivative Financial Instruments
The Company accounts for its derivative and hedging transactions in
accordance with Statement No. 133, "Accounting for Derivative Instruments and
Hedging Activities," and Statement No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," (collectively referred to as
"Statement No. 133"). Statement No. 133 establishes accounting and reporting
standards for derivative instruments and for hedging activities and requires an
entity to recognize all derivative instruments either as an asset or a liability
in the balance sheet and to measure such instruments at fair value. These fair
value adjustments are to be included either in the determination of net income
or as a component of accumulated other comprehensive income depending on the
nature of the transaction.
(4) Nature of Operations and Business Disposition
Nature of Operations
The Company operates in one industry segment, the manufacturing,
selling and distribution of branded, shelf-stable food products. The Company's
products include pickles, peppers, jams and jellies, canned meats and beans,
spices, syrups, hot sauces, maple syrup, salad dressings and other specialty
food products which are sold to retailers and food service establishments. The
Company distributes these products to retailers in the greater New York
metropolitan area through a direct-store-organization sales and distribution
system and elsewhere in the United States through a nationwide network of
independent brokers and distributors.
Sales of a number of the Company's products tend to be seasonal;
however, in the aggregate, the Company's sales are not heavily weighted to any
particular quarter. The Company purchases most of the produce used to make its
shelf-stable pickles, relishes, peppers, olives and other related specialty
items during the months of July through October, and it purchases all of its
maple syrup requirements during the months of April through July. Consequently,
its liquidity needs are greatest during these periods.
Business Disposition
On January 17, 2001, the Company completed the sale of its wholly-owned
subsidiary, Burns & Ricker, Inc. ("Burns & Ricker"), to Nonni's Food Company,
Inc. ("Nonni's") (the "B&R Disposition") pursuant to a stock purchase agreement
of the same date under which the Company sold all of the issued and outstanding
capital stock of Burns & Ricker to Nonni's for $26.0 million in cash. The gain
on the sale, net of transaction expenses, was approximately $3.1 million. The
Company applied the net cash proceeds from the B&R Disposition toward the
partial prepayment of term loans, as required under the Company's Senior Secured
Credit Facility. See Note 6 below.
(5) Inventories
Inventories consist of the following:
September 28, 2002 December 29, 2001
------------------ -----------------
Raw materials and packaging................................... $ 22,683 $ 15,035
Work in process............................................... 2,521 2,041
Finished goods................................................ 48,491 49,066
------------- ------------
$ 73,695 $ 66,142
============= ============
6
(6) Debt
The Company is a party to a $280,000 Senior Secured Credit Facility
(the "Senior Secured Credit Facility") comprised of a $60,000 five-year
revolving credit facility ("Revolving Credit Facility"), a $70,000 (initial
amount) five-year Term Loan A ("Term Loan A") and a $150,000 (initial amount)
seven-year Term Loan B ("Term Loan B," and together with Term Loan A, the "Term
Loan Facilities"). Interest is determined based on several alternative rates as
stipulated in the Senior Secured Credit Facility, including the base lending
rate per annum plus an applicable margin, or LIBOR plus an applicable margin.
The Senior Secured Credit Facility is secured by substantially all of the
Company's assets. The Senior Secured Credit Facility provides for mandatory
prepayments upon the occurrence of certain events, including material asset
dispositions and issuances of securities. The Senior Secured Credit Facility
contains covenants that will restrict, among other things, the ability of the
Company to incur additional indebtedness, pay dividends and create certain
liens. The Senior Secured Credit Facility also contains certain financial
covenants, which, among other things, specify and define maximum capital
expenditure limits, a minimum fixed charge coverage ratio, a minimum total
interest coverage ratio and a maximum indebtedness to EBITDA ratio. Proceeds of
the Senior Secured Credit Facility are restricted to funding the Company's
working capital requirements, capital expenditures and acquisitions of companies
in the same line of business as the Company, subject to certain additional
criteria. The Senior Secured Credit Facility limits expenditures on acquisitions
to $40,000 per year. There were no borrowings outstanding under the Revolving
Credit Facility at September 28, 2002 and December 29, 2001. The outstanding
balances for Term Loan A and Term Loan B at September 28, 2002 were $0 and
$59,856, respectively.
The Company has outstanding $220,000 of 9.625% Senior Subordinated
Notes (the "Notes") due August 1, 2007 with interest payable semiannually on
February 1 and August 1 of each year, of which $120,000 principal amount was
originally issued in August 1997 and $100,000 principal amount (the "New Notes")
was issued by the Company through a private offering of the notes completed on
March 7, 2002. The Notes contain certain transfer restrictions. The proceeds
from the issuance of the New Notes were used to pay off, in its entirety, the
then outstanding balance under Term Loan A, and to reduce the amount outstanding
under the Term Loan B, and pay related deferred debt issuance costs.
As part of a registration rights agreement dated March 7, 2002, the
Company agreed to offer to exchange an aggregate principal amount of up to
$220,000 of its 9.625% Senior Subordinated Notes due 2007 (the "Exchange Notes")
for a like principal amount of its Notes outstanding (the "Exchange Offer"). The
terms of the Exchange Notes are identical in all material respects to those of
the Notes (including principal amount, interest rate, maturity and guarantees),
except for certain transfer restrictions and registration rights relating to the
New Notes. The Exchange Offer was completed on June 27, 2002.
The indentures for the Notes contain certain covenants that, among
other things, limit the ability of the Company to incur additional debt, issue
preferred stock, pay dividends or make certain other restricted payments, enter
into transactions with affiliates, make certain asset dispositions, merge or
consolidate with, or transfer substantially all of its assets to, another
person, as defined, encumber assets under certain circumstances, restrict
dividends and other payments from subsidiaries, engage in sale and leaseback
transactions, issue capital stock, as defined, or engage in certain business
activities.
The Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after August 1, 2002 at 104.813% of their principal
amount plus accrued and unpaid interest and Liquidated Damages, as defined, if
any, beginning August 1, 2002, and thereafter at prices declining annually to
100% on or after August 1, 2005. Upon the occurrence of a Change in Control, as
defined, the Company will be required to make an offer to repurchase the Notes
at a price equal to 101% of the principal amount, together with accrued and
unpaid interest and Liquidated Damages, as defined, if any, to the date of
repurchase. The Notes are not subject to any sinking fund requirements.
On March 21, 2002, the Company entered into an interest rate swap
agreement with a major financial institution pursuant to which the Company
agreed to pay a variable rate of three-month LIBOR plus 5.65% on
7
a notional amount of $100,000 in exchange for a fixed rate of 9.625%. Because
the interest rate swap did not qualify as an effective hedge, changes in the
fair value are recorded in the consolidated statement of income. The Company
sold the interest rate swap agreement on August 7, 2002 for $2,524. Included in
the consolidated statement of income are derivative gains representing the
change in fair value of the interest rate swap of $1,467 and $2,524,
respectively, for the thirteen and thirty-nine week periods ended September 28,
2002.
(7) Environmental Matters
On January 17, 2001, the Company became aware that fuel oil from its
underground storage tank at its Roseland, New Jersey facility had been released
into the ground and into a brook adjacent to such property. The New Jersey
Department of Environmental Protection ("NJDEP") initially engaged an
environmental services firm to address the clean-up of the oil in the brook;
and, with the approval of the NJDEP, the Company retained such environmental
services firm on January 18, 2001 for the same purpose. In addition, the Company
hired another environmental services firm to address the on-site oil impact to
subsurface soils. Since January 17, 2001, together with its environmental
services firms, the Company has worked to clean-up the oil and has cooperated
with the NJDEP. Both environmental services firms have completed the site work
and believe they have remediated the site such that no further clean-up is
warranted. In September 2001, both firms submitted its findings to the NJDEP
along with recommendations for no further action. To date, the Company has not
received a response to such recommendations from the NJDEP. NJDEP could require
additional investigation before acceding to the no further action
recommendations, but the cost of such additional investigation is not expected
to have a material adverse effect on the Company's consolidated financial
condition, results of operations or liquidity.
The Company recorded a charge of $1.1 million in the first quarter of
fiscal 2001 to cover the expected cost of the clean-up, which approximates the
actual amount spent on such clean-up through September 28, 2002. In the third
quarter of fiscal 2001, the Company received an insurance reimbursement of $0.2
million and accrued an additional $0.1 million for certain remaining
miscellaneous expenses. Management believes that substantially all expenses
relating to this matter have been incurred and paid as of September 28, 2002,
although future information and developments may warrant or require the Company
to incur additional expenses. At September 28, 2002, there was no remaining
accrual related to this matter.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. In February
2002, the Company submitted a demand for indemnity, but the indemnitor's initial
response was limited to a request for additional information. The Company
believes that it may also have substantive defenses to the third-party
complaint, and will explore such defenses if the Company is not indemnified for
this liability. Nevertheless, based on the Company's understanding of the volume
of waste White Cap Preserves is alleged to have sent to the site, the large
number of potentially responsible parties and the size of settlements by other
parties with similar volumes, the Company does not believe this liability, if
any, will have a material adverse effect on its consolidated financial
condition, results of operations or liquidity.
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.
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
13 week period ended September 28, 2002 compared to 13 week period
ended September 29, 2001.
Net Sales. Net sales decreased $1.1 million or 1.5% to $70.9 million
for the thirteen week period ended September 28, 2002 (the "2002 Quarterly
Period") from $72.0 million for the thirteen week period ended September 29,
2001 (the "2001 Quarterly Period"). Sales of the Company's line of Emeril's
branded products, Las Palmas brands, Vermont Maid brands and Trappey brands
increased $1.4 million, $0.7 million, $0.4 million and $0.2 million or 30.8%,
15.0%, 48.9% and 6.6%, respectively. These increases were more than offset by a
reduction of sales in B&M Baked Beans, Polaner brands, Underwood brands and
Maple Grove Farms of Vermont products in the amounts of $1.3 million, $1.0
million, $0.6 million and $0.5 million or 20.7%, 10.5%, 9.1% and 4.7%,
respectively. All other brands accounted for an additional decrease of $0.4
million or 2.0%. Trade promotion spending, which is netted against net sales,
expressed as a percentage of gross sales increased to 16.5% in the 2002
Quarterly Period from 16.0% in the 2001 Quarterly Period. This increase is due
to incremental trade spending against the B&M Baked Beans brand.
Gross Profit. Gross profit decreased $0.6 million or 2.6% to $22.2
million for the 2002 Quarterly Period from $22.8 million for the 2001 Quarterly
Period. Gross profit expressed as a percentage of net sales decreased to 31.3%
for the 2002 Quarterly Period from 31.6% for the 2001 Quarterly Period,
primarily due to an increase in trade promotion spending and increased cost on
certain co-pack items.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses decreased $0.6 million or 6.2% to $9.1 million for the
2002 Quarterly Period from $9.7 million for the 2001 Quarterly Period. Such
expenses expressed as a percentage of net sales decreased to 12.9% in the 2002
Quarterly Period from 13.5% in the 2001 Quarterly Period. Marketing costs
decreased $0.6 million or 20.1% and warehousing costs decreased $0.3 million or
21.1%. These decreases were partially offset by an increase in selling expenses
of $0.3 million or 4.7% relating to increased sales compensation and brokerage.
General and Administrative Expenses. General and administrative
expenses (including amortization of intangibles in the 2001 Quarterly Period)
and management fees decreased $2.4 million or 67.1% to $1.2 million for the 2002
Quarterly Period from $3.6 million in the 2001 Quarterly Period. Amortization of
goodwill and other intangibles with indefinite useful lives decreased from $2.1
million in the 2001 Quarterly Period to $0 in the 2002 Quarterly Period as a
result of the implementation of the provisions of FASB Statement No. 142. All
other general and administrative expenses collectively decreased $0.3 million in
the 2002 Quarterly Period.
Environmental Clean-Up. As further described below, the Company
received insurance proceeds of $0.2 million in the 2001 Quarterly Period.
Operating Income. As a result of the foregoing, operating income
increased $2.3 million or 24% to $11.9 million for the 2002 Quarterly Period
from $9.6 million for the 2001 Quarterly Period. Operating income expressed as a
percentage of net sales increased to 16.7% in the 2002 Quarterly Period from
13.3% in the 2001 Quarterly Period.
Derivative Gain. Income of $1.5 million was recorded in the 2002
Quarterly Period reflecting the change in the fair value of the Company's
interest rate swap agreement from June 29, 2002 (the Company's second quarter
end date) through the date the interest rate swap agreement was sold. See "Debt"
below.
Interest Expense. Interest expense decreased $0.3 million to $6.9
million for the 2002 Quarterly Period from $7.2 million in the 2001 Quarterly
Period as a result of lower outstanding loan balances and lower interest rates
in the 2002 Quarterly Period.
9
Income Tax Expense. Income tax expense increased $1.3 million or 96.0%
to $2.6 million for the 2002 Quarterly Period from $1.3 million in the 2001
Quarterly Period. The Company's effective tax rate for the 2002 Quarterly Period
was 40.4% as compared to 55.2% in the 2001 Quarterly Period. The decrease in the
effective rate is due to the non-amortization of goodwill and trademarks in the
2002 Quarterly Period as a result of the adoption of FASB Statement No. 142.
Because of the highly leveraged status of the Company, earnings before
derivative gain, interest, taxes, depreciation and amortization, and
environmental clean-up charges ("Adjusted EBITDA") is an important performance
measure used by the Company and its investors. The Company believes that
Adjusted EBITDA provides additional information for determining its ability to
meet future debt service requirements. However, Adjusted EBITDA is not
indicative of operating income or cash flow from operations as determined under
generally accepted accounting principles. The Company's Adjusted EBITDA for the
thirteen weeks ended September 28, 2002 and September 29, 2001 is calculated as
follows (dollars in millions):
Thirteen weeks ended
--------------------
Sept. 28, 2002 Sept. 29, 2001
-------------- --------------
Net income $ 3.9 $ 1.1
Depreciation and amortization 1.3 3.6
Income tax expense 2.6 1.3
Interest expense 6.9 7.2
-------- --------
EBITDA 14.7 13.2
Environmental clean-up 0.0 (0.2)
Derivative gain (1.5) 0.0
-------- --------
Adjusted EBITDA $ 13.2 $ 13.0
======== ========
39 week period ended September 28, 2002 compared to 39 week period ended
September 29, 2001.
Net Sales. Net sales increased $8.5 million or 4.1% to $215.0 million
for the thirty-nine week period ended September 28, 2002 (the "2002 Year-to-Date
Period") from $206.5 million for the thirty-nine week period ended September 29,
2001 (the "2001 Year-to-Date Period"). Sales of the Company's line of Emeril's
branded products, Las Palmas brands, Ac'cent branded flavor enhancers, Trappey
brands, Wright's brand and Vermont Maid brands increased $6.5 million, $1.9
million, $1.3 million, $0.5 million, $0.3 million and $0.3 million or 54.3%,
15.2%, 11.0%, 5.1%, 8.7% and 11.6%, respectively. These increases were partially
offset by a reduction of sales, in the amount of $0.5 million, relating to the
brands sold in connection with the B&R Disposition and a reduction of sales for
Polaner brands, B&G pickles and peppers and B&M Baked Beans in the amount of
$0.7 million, $0.7 million and $0.6 million or 2.7%, 2.1% and 2.6%. All other
brands accounted for an additional increase of $0.2 million or 0.2%. Trade
promotion spending, which is netted against net sales, expressed as a percentage
of gross sales increased slightly to 17.0% for the 2002 Year-to-Date Period from
16.8% in the 2001 Year-to-Date Period. This increase is due to incremental trade
spending against the B&M Baked Beans brand.
Gross Profit. Gross profit increased $1.6 million or 2.4% to $67.2
million for the 2002 Year-to-Date Period from $65.6 million in the 2001
Year-to-Date Period. Gross profit expressed as a percentage of net sales
decreased to 31.3% for the 2002 Year-to-Date Period from 31.8% in the 2001
Year-to-Date Period, primarily due to an increase in the cost of maple syrup and
certain co-pack items offset partially by a reduction of delivery expenses in an
amount equal to 0.4% of net sales.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $0.5 million or 1.8% to $26.5 million for the
2002 Year-to-Date Period from $26.0 million for the 2001 Year-to-Date Period.
Such expenses expressed as a percentage of net sales decreased to 12.3% in the
2002 Year-to-Date Period from 12.6% in the 2001 Year-to-Date Period. Selling
expenses increased $0.7 million or 4.5%
10
relating to sales compensations and brokerage and marketing costs increased $0.4
million or 6.3%. These increases were offset by a decrease in warehousing costs
of $0.6 million or 15.9%.
General and Administrative Expenses. General and administrative
expenses (including amortization of intangibles in the 2001 Year-to-Date Period)
and management fees decreased $6.9 million or 63.3% to $4.0 million for the 2002
Year-to-Date Period from $11.0 million in the 2001 Year-to-Date Period.
Amortization of goodwill and other intangibles with indefinite useful lives
decreased from $6.4 million in the 2001 Year-to-Date Period to $0 in the 2002
Year-to-Date Period as a result of the implementation of the provisions of FASB
Statement No. 142. All other general and administrative expenses collectively
decreased $0.5 million in the 2002 Year-to-Date Period.
Environmental Clean-Up. As further described below, the Company
recorded a charge of $1.0 million in the 2001 Year-to-Date Period.
Operating Income. As a result of the foregoing, operating income
increased $9.0 million or 32.7% to $36.7 million for the 2002 Year-to-Date
Period from $27.6 million for the 2001 Year-to-Date Period. Operating income
expressed as a percentage of net sales increased to 17.1% in the 2002
Year-to-Date Period from 13.4% in the 2001 Year-to-Date Period.
Gain of Sale of Assets. As further described in Note 2 of the
consolidated financial statements, the Company recorded a $3.1 million gain on
the B&R Disposition in the 2001 Year-to-Date Period.
Derivative Gain. Income of $2.5 million was recorded for the 2002
Year-to-Date Period reflecting the change in fair value of the Company's
interest rate swap agreement since the Company entered into such agreement
(March 21, 2002). See "Debt" below.
Interest Expense. Interest expense decreased $3.4 million to $19.8
million for the 2002 Year-to-Date Period from $23.2 million in the 2001
Year-to-Date Period as a result of lower outstanding loan balances and lower
interest rates in the 2002 Year-to-Date Period.
Income Tax Expense. Income tax expense increased $3.6 million or 87.3%
to $7.8 million for the 2002 Year-to-Date Period from $4.2 million in the 2001
Year-to-Date Period. The Company's effective tax rate for the 2002 Year-to-Date
Period was 40.3% as compared to 55.2% in the 2001 Year-to-Date Period. The
decrease in the effective rate is due to the non-amortization of goodwill and
trademarks in the 2002 Year-to-Date Period as a result of the adoption of FASB
Statement No. 142.
Because of the highly leveraged status of the Company, earnings before
derivative gain, interest, taxes, depreciation and amortization, environmental
clean-up charges and gain on sale of assets ("Adjusted EBITDA") is an important
performance measure used by the Company and its investors. The Company believes
that Adjusted EBITDA provides additional information for determining its ability
to meet future debt service requirements. However, Adjusted EBITDA is not
indicative of operating income or cash flow from operations as determined under
generally accepted accounting principles. The Company's Adjusted EBITDA for the
thirty-nine weeks ended September 28, 2002 and September 29, 2001 is calculated
as follows (dollars in millions):
Thirty-nine weeks ended
------------------------
Sept. 28, 2002 Sept. 29, 2001
-------------- --------------
Net income $ 11.6 $ 3.4
Depreciation and amortization 3.9 10.6
Income tax expense 7.8 4.2
Interest expense 19.8 23.2
--------- --------
EBITDA 43.1 41.4
Environmental clean-up 0.0 0.9
Derivative gain (2.5) 0.0
Gain on sale of assets 0.0 (3.1)
--------- ---------
Adjusted EBITDA $ 40.6 $ 39.2
========= =========
11
Liquidity and Capital Resources
Cash Flows
Cash provided by operating activities increased $4.7 million to $14.3
million for the 2002 Year-to-Date Period from cash provided by operating
activities of $9.6 million in the 2001 Year-to-Date Period. The increase was due
primarily to an increase in net income. Working capital at September 28, 2002
was $67.9 million, an increase of $18.0 million over working capital at December
29, 2001 of $49.9 million. The increase in working capital was primarily due to
the refinancing of long-term debt described below.
Net cash used in investing activities for the 2002 Year-to-Date Period
was $5.3 million as compared to net cash provided by investing activities of
$20.7 million for the 2001 Year-to-Date Period. The net cash provided by
investing activities in the 2001 Year-to-Date Period reflects the proceeds
received from the B&R Disposition in the amount of $24.1 million. Capital
expenditures during the 2002 Year-to-Date Period of $5.3 million included
purchases of manufacturing and computer equipment and were $1.9 million above
the $3.4 million in similar capital expenditures for the 2001 Year-to-Date
Period. The Company has budgeted approximately $6.0 million for capital
expenditures for fiscal 2002.
Net cash used in financing activities for the 2002 Year-to-Date Period
was $14.4 million as compared to $36.4 million for the 2001 Year-to-Date Period.
The net cash used by financing activities for the 2002 Year-to-Date Period
included a payment of $38.3 million toward the remaining balance of the Term
Loan A and a partial prepayment of $70.8 million toward the Term Loan B. These
payments totaled $109.1 million, and included $95.8 million in prepayments of
Term Loan A and Term Loan B, the Company's required $0.3 million quarterly
payments under Term Loan B and an additional prepayment of $13.0 million under
Term Loan B. The net cash used by financing activities for the 2001 Year-to-Date
Period included payments of $17.2 million due on the Term Loan A and $19.1
million due on the Term Loan B. These payments included a mandatory prepayment
made in January 2001 of an aggregate of $26.0 million required under the Senior
Secured Credit Facility in connection with the B&R Disposition. In addition, a
payment of $0.3 million was made toward capital leases in the 2002 Year-to-Date
Period.
Acquisitions
The Company's liquidity and capital resources may be impacted in the
foreseeable future by additional acquisitions. The Company has historically
financed acquisitions with borrowings and cash flow from operations. The
Company's future interest expense will increase with any additional indebtedness
the Company may incur to finance future acquisitions, if any. To the extent
future acquisitions, if any, are financed by additional indebtedness, the
resulting increase in debt and interest expense could have a negative impact on
liquidity.
Environmental Clean-Up
On January 17, 2001, the Company became aware that fuel oil from its
underground storage tank at its Roseland, New Jersey facility had been released
into the ground and into a brook adjacent to such property. The New Jersey
Department of Environmental Protection ("NJDEP") initially engaged an
environmental services firm to address the clean-up of the oil in the brook;
and, with the approval of the NJDEP, the Company retained such environmental
services firm on January 18, 2001 for the same purpose. In addition, the Company
hired another environmental services firm to address the on-site oil impact to
subsurface soils. Since January 17, 2001, together with its environmental
services firms, the Company has worked to clean-up the oil and has cooperated
with the NJDEP. Both environmental services firms have completed the site work
12
and believe they have remediated the site such that no further clean-up is
warranted. In September 2001, both firms submitted its findings to the NJDEP
along with recommendations for no further action. To date, the Company has not
received a response to such recommendations from the NJDEP. NJDEP could require
additional investigation before acceding to the no further action
recommendations, but the cost of such additional investigation is not expected
to have a material adverse effect on the Company's consolidated financial
condition, results of operations or liquidity.
The Company recorded a charge of $1.1 million in the first quarter of
fiscal 2001 to cover the expected cost of the clean-up, which approximates the
actual amount spent on such clean-up through September 28, 2002. In the third
quarter of fiscal 2001, the Company received an insurance reimbursement of $0.2
million and accrued an additional $0.1 million for certain remaining
miscellaneous expenses. Management believes that substantially all expenses
relating to this matter have been incurred and paid as of September 28, 2002,
although future information and developments may warrant or require the Company
to incur additional expenses. At September 28, 2002, there was no remaining
accrual related to this matter.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. In February
2002, the Company submitted a demand for indemnity, but the indemnitor's initial
response was limited to a request for additional information. The Company
believes that it may also have substantive defenses to the third-party
complaint, and will explore those defenses if the Company is not indemnified for
this liability. Nevertheless, based on the Company's understanding of the volume
of waste White Cap Preserves is alleged to have sent to the site, the large
number of potentially responsible parties and the size of settlements by other
parties with similar volumes, the Company does not believe this liability, if
any, will have a material adverse effect on its consolidated financial
condition, results of operations or liquidity.
Debt
The Company is a party to a $280,000 Senior Secured Credit Facility
(the "Senior Secured Credit Facility") comprised of a $60,000 five-year
revolving credit facility ("Revolving Credit Facility"), a $70,000 (initial
amount) five-year Term Loan A ("Term Loan A") and a $150,000 (initial amount)
seven-year Term Loan B ("Term Loan B," and together with Term Loan A, the "Term
Loan Facilities"). Interest is determined based on several alternative rates as
stipulated in the Senior Secured Credit Facility, including the base lending
rate per annum plus an applicable margin, or LIBOR plus an applicable margin.
The Senior Secured Credit Facility is secured by substantially all of the
Company's assets. The Senior Secured Credit Facility provides for mandatory
prepayments upon the occurrence of certain events, including material asset
dispositions and issuances of securities. The Senior Secured Credit Facility
contains covenants that will restrict, among other things, the ability of the
Company to incur additional indebtedness, pay dividends and create certain
liens. The Senior Secured Credit Facility also contains certain financial
covenants, which, among other things, specify and define maximum capital
expenditure limits, a minimum fixed charge coverage ratio, a minimum total
interest coverage ratio and a maximum indebtedness to EBITDA ratio. Proceeds of
the Senior Secured Credit Facility are restricted to funding the Company's
working capital requirements, capital expenditures and acquisitions of companies
in the same line of business as the Company, subject to certain additional
criteria. The Senior Secured Credit Facility limits expenditures on acquisitions
to $40,000 per year. There were no borrowings outstanding under the Revolving
Credit Facility at September 28, 2002 and December 29, 2001. The outstanding
balances for Term Loan A and Term Loan B at September 28, 2002 were $0 and
$59,856, respectively.
The Company has outstanding $220,000 of 9.625% Senior Subordinated
Notes (the "Notes") due August 1, 2007 with interest payable semiannually on
February 1 and August 1 of each year, of which $120,000 principal amount was
originally issued in August 1997 and $100,000 principal amount (the "New
13
Notes") was issued by the Company through a private offering of the notes
completed on March 7, 2002. The Notes contain certain transfer restrictions. The
proceeds from the issuance of the New Notes were used to pay off, in its
entirety, the then outstanding balance under Term Loan A, and to reduce the
amount outstanding under the Term Loan B, and pay related deferred debt issuance
costs.
As part of a registration rights agreement dated March 7, 2002, the
Company agreed to offer to exchange an aggregate principal amount of up to
$220,000 of its 9.625% Senior Subordinated Notes due 2007 (the "Exchange Notes")
for a like principal amount of its Notes outstanding (the "Exchange Offer"). The
terms of the Exchange Notes are identical in all material respects to those of
the Notes (including principal amount, interest rate, maturity and guarantees),
except for certain transfer restrictions and registration rights relating to the
New Notes. The Exchange Offer was completed on June 27, 2002.
The indentures for the Notes contain certain covenants that, among
other things, limit the ability of the Company to incur additional debt, issue
preferred stock, pay dividends or make certain other restricted payments, enter
into transactions with affiliates, make certain asset dispositions, merge or
consolidate with, or transfer substantially all of its assets to, another
person, as defined, encumber assets under certain circumstances, restrict
dividends and other payments from subsidiaries, engage in sale and leaseback
transactions, issue capital stock, as defined, or engage in certain business
activities.
The Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after August 1, 2002 at 104.813% of their principal
amount plus accrued and unpaid interest and Liquidated Damages, as defined, if
any, beginning August 1, 2002, and thereafter at prices declining annually to
100% on or after August 1, 2005. Upon the occurrence of a Change in Control, as
defined, the Company will be required to make an offer to repurchase the Notes
at a price equal to 101% of the principal amount, together with accrued and
unpaid interest and Liquidated Damages, as defined, if any, to the date of
repurchase. The Notes are not subject to any sinking fund requirements.
On March 21, 2002, the Company entered into an interest rate swap
agreement with a major financial institution pursuant to which the Company
agreed to pay a variable rate of three-month LIBOR plus 5.65% on a notional
amount of $100,000 in exchange for a fixed rate of 9.625%. The Company sold the
interest rate swap agreement on August 7, 2002 for $2,524. Included in the
consolidated statement of income are derivative gains representing the change in
fair value of the interest rate swap of $1,467 and $2,524, respectively, for the
thirteen and thirty-nine week periods ended September 28, 2002.
Future Capital Needs
The Company is highly leveraged. On September 28, 2002, the Company's
total long-term debt (including current installments) and stockholder's equity
was $278.7 million and $74.4 million, respectively.
The Company's primary sources of capital are cash flows from operations
and borrowings under the Revolving Credit Facility. The Company's primary
capital requirements include debt service, capital expenditures, working capital
needs and financing for acquisitions. The Company's ability to generate
sufficient cash to fund its operations depends generally on the results of its
operations and the availability of financing. Management believes that cash
flows from operations in conjunction with the available borrowing capacity under
the Revolving Credit Facility, net of outstanding letters of credit, of
approximately $59.0 million at September 28, 2002, and possible future debt
financing will be sufficient for the foreseeable future to meet debt service
requirements, make future acquisitions, if any, and fund capital expenditures.
However, there can be no assurance in this regard or that the terms available
for any future financing, if required, would be favorable to the Company.
Seasonality
Sales of a number of the Company's products tend to be seasonal. In the
aggregate, however, the Company's sales are not heavily weighted to any
particular quarter. The Company purchases most of the
14
produce used to make its shelf-stable pickles, relishes, peppers, olives and
other related specialty items during the months of July through October, and it
purchases all of its maple syrup requirements during the months of April through
July. Consequently, its liquidity needs are greatest during these periods.
Recent Accounting Pronouncements
In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" ("EITF 94-3").
Statement No. 146 replaces EITF 94-3. The Company is required to adopt the
provisions of this Statement for any exit or disposal activities initiated after
December 31, 2002. As this Statement will be applied prospectively after the
adoption date and will depend on future actions initiated by management, the
Company cannot determine the impact, if any, that the adoption of this Statement
will have on its consolidated financial statements.
Related-Party Transactions
The Company is party to a management agreement (the "Management
Agreement") with Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS & Co."), the
manager of Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS"), pursuant to which
BRS & Co. is paid an annual fee of $500 per year for certain management,
business and organizational strategy, and merchant and investment banking
services. BRS and its affiliates, together with members of the Company's
management and Board of Directors, own B&G Foods Holding Corp., the sole
stockholder of the Company. The Management Agreement will expire on the earlier
of December 27, 2006 and the date that BRS owns less than 20% of the outstanding
common stock of B&G Foods Holding Corp. The Company is also party to a
transaction services agreement pursuant to which BRS & Co. will be paid a
transaction fee for management, financial and other corporate advisory services
rendered by BRS & Co. in connection with acquisitions by the Company, which fee
will not exceed 1.0% of the total transaction value.
The Company leases a manufacturing and warehouse facility from the
Chairman of the Board of Directors of the Company.
Critical Accounting Policies
The Securities and Exchange Commission recently issued disclosure
guidance for "critical accounting policies." The SEC defines "critical
accounting policies" as those that require application of management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods.
The significant accounting policies are described in Note 1 of the
notes to consolidated financial statements included in the Company's 2001 Annual
Report on Form 10-K. Not all of these significant accounting policies require
management to make difficult, subjective or complex judgments or estimates.
However, the following policies could be deemed to be critical within the SEC
definition.
Management is required to make certain estimates and assumptions during
the preparation of consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America. These
estimates and assumptions impact the reported amount of assets and liabilities
and disclosures of contingent assets and liabilities as of the date of the
consolidated financial statements. Estimates and assumptions are reviewed
periodically and the effects of revisions are reflected in the consolidated
financial statements in the period they are determined to be necessary. Actual
results could differ from those estimates.
15
Significant estimates underlying the accompanying consolidated
financial statements include inventory valuation, allowance for doubtful
accounts, trade and promotional expense accruals, useful lives of certain
tangible and intangibles assets, valuation allowance for deferred tax assets,
and certain environmental and other accruals.
Commitments and Contractual Obligations
Our contractual obligations and commitments principally include
obligations associated with our outstanding indebtedness and future minimum
operating lease obligations as set forth in the following table:
- --------------------------------------------------------------------------------
Payments Due by Period
- --------------------------------------------------------------------------------
(In thousands)
- ----------------------------------------- --------------- ---------------- ------------ ------------ -----------------
Contractual Obligations:
- ----------------------------------------- --------------- ---------------- ------------ ------------ -----------------
Total Within 1Year 1-2 Years 3-4 Years After 4 Years
- ----------------------------------------- --------------- ---------------- ------------ ------------ -----------------
Long-term debt $278,738 $ 403 $14,712 $29,626 $233,997
- ----------------------------------------- --------------- ---------------- ------------ ------------ -----------------
Operating leases 14,375 3,079 2,422 2,154 6,720
-------- ------ ------- ------- --------
- ----------------------------------------- --------------- ---------------- ------------ ------------ -----------------
Total contractual cash obligations $293,113 $3,482 $17,134 $31,780 $240,717
======== ====== ======= ======= ========
- ----------------------------------------------------------------------------------------------------------------------
Forward-Looking Statements
This report includes "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding future events or conditions, including statements
regarding industry prospects and the Company's expected financial position,
business and financing plans, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations are disclosed in this report
as well as the Company's most recent annual report on Form 10-K, and include the
Company's substantial leverage, the risks associated with the expansion of the
Company's business, the possible inability of the Company to integrate the
businesses it has acquired, lower sales volumes for the Company's products and
higher costs of food product raw materials, as well as factors that affect the
food industry generally. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of their dates. The
Company undertakes no obligations to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of operations, the Company is exposed to market
risks arising from adverse changes in interest rates. Market risk is defined for
these purposes as the potential change in the fair value resulting from an
adverse movement in interest rates. As of September 28, 2002, the Company's only
variable rate borrowings were under Term Loan B and the Revolving Credit
Facility, which bear interest at several alternative variable rates as
stipulated in the Senior Secured Credit Facility. A 100 basis point increase in
interest rates, applied to the Company's borrowings at September 28, 2002, would
result in an annual increase in interest expense and a corresponding reduction
in cash flow of approximately $0.4 million.
16
Item 4. Control and Procedures
As required by Rule 13a-15 under the Exchange Act, within the 90 days
prior to the filing date of this report, the Company carried out an evaluation
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. This evaluation was carried out under the supervision
and with the participation of the Company's management, including the Company's
President and Chief Executive Officer and the Company's Chief Financial Officer.
Based upon that evaluation, the Company's President and Chief Executive Officer
and the Company's Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective. Subsequent to the date the
Company carried out its evaluation, there have been no significant changes in
the Company's internal controls or in other factors which could significantly
affect internal controls.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act is accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
17
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company, in the ordinary course of business, is involved in various
legal proceedings. The Company does not believe the outcome of these proceedings
will have a material adverse effect on the Company's consolidated financial
condition, results of operations or liquidity.
In January 2002, the Company was named as a third-party defendant in an
action regarding environmental liability at the Combe Fill South Landfill in New
Jersey under the Comprehensive Environmental Response, Compensation and
Liability Act, or Superfund, for alleged disposal of waste from White Cap
Preserves, a former subsidiary of M. Polaner, Inc. M. Polaner, Inc. was sold by
one of the Company's former parent companies and was ultimately acquired by
International Home Foods, Inc. The Company believes that it is indemnified by an
affiliate of International Home Foods, Inc. for this liability. In February
2002, the Company submitted a demand for indemnity, but the indemnitor's initial
response was limited to a request for additional information. The Company
believes that it may also have substantive defenses to the third-party
complaint, and will explore such defenses if the Company is not indemnified for
this liability. Nevertheless, based on the Company's understanding of the volume
of waste White Cap Preserves is alleged to have sent to the site, the large
number of potentially responsible parties and the size of settlements by other
parties with similar volumes, the Company does not believe this liability, if
any, will have a material adverse effect on its consolidated financial
condition, results of operations or liquidity.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
18
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Stock Purchase Agreement, dated July 2, 1998, by and among BGH
Holdings, Inc., Maple Grove Farms of Vermont, Inc., Up Country
Naturals of Vermont, Inc., Les Produits Alimentaires Jacques et
Fils Inc., William F. Callahan and Ruth M. Callahan. (Filed with
the Securities and Exchange Commission as Exhibit 2.1 to
Commission Filing No. 333-39813 on August 3, 1998 and
incorporated herein by reference)
2.2 Asset Purchase Agreement, dated as of January 12, 1999, by and
among Roseland Distribution Company, International Home Foods,
Inc. and M. Polaner, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 1 to the Company's Report on Form 8-K filed
February 19, 1999 and incorporated herein by reference)
2.3 Asset and Stock Purchase Agreement, dated as of January 28, 1999,
by and among The Pillsbury Company, Indivined B.V., IC
Acquisition Company, Heritage Acquisition Corp. and, as
guarantor, B&G Foods, Inc. (Filed as Exhibit 2.1 to the Company's
Report on Form 8-K filed April 1, 1999 and incorporated herein by
reference).
3.1 Certificate of Incorporation of B&G Foods, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.1 to Amendment
No. 1 to Registration Statement No. 333-39813 on January 14, 1998
and incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.2 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.3 Certificate of Incorporation of BGH Holdings, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.3 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.4 Bylaws of BGH Holdings, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.4 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.5 Certificate of Incorporation of Maple Groves Farms of Vermont,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.5 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.6 to Amendment
No. 1 to Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.7 Certificate of Incorporation of Trappey's Fine Foods, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.7 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.8 Bylaws of Trappey's Fine Foods, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.8 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.9 Certificate of Incorporation for Bloch & Guggenheimer, Inc.
(Filed with the Securities and Exchange Commission as Exhibit 3.9
to Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.10 Bylaws of Bloch & Guggenheimer, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.10 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.11 Certificate of Incorporation of RWBW Acquisition Corp. (Filed
with the Securities
19
and Exchange Commission as Exhibit 3.11 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.12 Bylaws of RWBW Acquisition Corp. (Filed with the Securities and
Exchange Commission as Exhibit 3.12 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.13 Certificate of Incorporation of Les Produits Alimentaires Jacques
Et Fils, Inc. (Filed with the Securities and Exchange Commission
as Exhibit 3.13 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.14 Bylaws of Les Produits Alimentaires Jacques Et Fils, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.14 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a Roseland
Distribution Company). (Filed with the Securities and Exchange
Commission as Exhibit 3.15 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.16 Bylaws of Polaner, Inc. (f/k/a Roseland Distribution Company).
(Filed with the Securities and Exchange Commission as Exhibit
3.16 to Amendment No. 1 to Registration Statement No. 333-39813
on January 14, 1998 and incorporated herein by reference)
3.17 Certificate of Incorporation of Heritage Acquisition Corp. (Filed
with the Securities and Exchange Commission as Exhibit 3.17 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the Securities
and Exchange Commission as Exhibit 3.18 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed with
the Securities and Exchange Commission as Exhibit 3.19 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the Securities
and Exchange Commission as Exhibit 3.20 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc.,
BGH Holdings, Inc., RWBW Acquisition Corp., BRH Holdings, Inc.,
Bloch & Guggenheimer, Inc., Roseland Distribution Company, Burns
& Ricker, Inc., Roseland Manufacturing, Inc., and RWBW Brands
Company, and The Bank of New York, as trustee. (Filed with the
Securities and Exchange Commission as Exhibit 4.1 to Registration
Statement No. 333-39813 on November 7, 1997 and incorporated
herein by reference)
4.2 First Supplemental Indenture dated as of May 31, 2000 (to the
Indenture dated as of August 11, 1997) between B&G Foods, Inc.,
BGH Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc. (f.k.a. Roseland Distribution Company), Burns
& Ricker, Inc., Trappey's Fine Foods, Inc., Maple Groves Farms of
Vermont, Inc., William Underwood Company, Heritage Acquisition
Corp. and the Bank of New York. (Filed with the Securities and
Exchange Commission as Exhibit 4.2 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.3 Second Supplemental Indenture dated as of February 28, 2002
between B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition
Corp., Bloch & Guggenheimer, Inc., Polaner, Inc. (f.k.a. Roseland
Distribution Company), Trappey's Fine Foods, Inc., Maple Groves
Farms of Vermont, Inc., William Underwood Company, Heritage
Acquisition Corp., Les Produits Alimentaires Jacques Et Fils,
Inc. and the Bank of New York. (Filed with the Securities and
Exchange Commission as Exhibit 4.3 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
20
incorporated herein by reference)
4.4 Indenture dated as of March 7, 2002 between B&G Foods, Inc, BGH
Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc., Maple Groves Farms of Vermont, Inc., Les
Produits Alimentaires Jacques Et Fils, Inc., Heritage Acquisition
Corp., Trappey's Fine Foods, Inc., William Underwood Company and
The Bank of New York, as trustee (Filed with the Securities and
Exchange Commission as Exhibit 4.4 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)
4.5 Form of the Company's 9 5/8% Senior Notes due 2007. (Included in
Exhibit 4.1 and 4.4)
10.1 Registration Rights Agreement dated as of August 11, 1997 by and
among the Company, the Guarantors party thereto, Lehman Brothers,
Inc. and Lazard Freres & Co., LLC. (Filed with the Securities and
Exchange Commission as Exhibit 10.1 to Registration Statement No.
333-39813 on November 7, 1997 and incorporated herein by
reference)
10.2 Purchase Agreement dated August 6, 1997 among the Company, the
Guarantors party thereto, Lehman Brothers, Inc., and Lazard
Freres & Co., LLC. (Filed with the Securities and Exchange
Commission as Exhibit 10.2 to Registration Statement No.
333-39813 on November 7, 1997 and incorporated herein by
reference)
10.3 Guaranty, dated as of January 12, 1999, of B&G Foods, Inc. in
favor of International Home Foods, Inc. and M. Polaner, Inc.
(Filed with the Securities and Exchange Commission as Exhibit 3
to the Company's Report on Form 8-K filed February 19, 1999 and
incorporated herein by reference)
10.4 Revolving Credit Agreement, dated as of March 15, 1999 among B&G
Foods Holdings Corp., B&G Foods, Inc., as borrower, the several
lenders from time to time party thereto, Lehman Brothers Inc., as
Arranger, The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and Lehman Commercial
Paper Inc. as Syndication Agent and Administrative Agent (Filed
as Exhibit 10.1 to the Company's Report on Form 10-Q filed May
17, 1999 and incorporated herein by reference).
10.5 Term Loan Agreement, dated as of March 15, 1999, among B&G Foods
Holdings Corp., B&G Foods, Inc., as borrower, the several lenders
from time to time party thereto, Lehman Brothers Inc., as
Arranger, The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and Lehman Commercial
Paper, Inc., as Syndication Agent and Administrative Agent (Filed
as Exhibit 10.2 to the Company's Report on Form 10-Q filed May
17, 1999 and incorporated herein by reference).
10.6 Guarantee and Collateral Agreement, dated as of March 15, 1999,
by B&G Foods Holdings Corp., B&G Foods, Inc., and certain of its
subsidiaries in favor of Lehman Commercial Paper, Inc., as
Administrative Agent (Filed as Exhibit 10.3 to the Company's
Report on Form 10-Q filed May 17, 1999 and incorporated herein by
reference)
10.7 Amended and Restated Securities Holders Agreement dated December
22, 1999 among B&G Foods Holdings Corp., Bruckmann, Rosser,
Sherrill & Co., L.P., Canterbury Mezzanine Capital II, L.P., The
CIT Group/Equity Investments, Inc. and the Management
Stockholders named therein (Filed as Exhibit 10.14 to the
Company's Report on Form 10-K filed March 3, 2000 and
incorporated herein by reference)
10.8 Amendment, dated as of May 12, 2000, to Revolving Credit
Agreement, dated as of March 15, 1999, among B&G Foods Holdings
Corp., B&G Foods, Inc., as borrower, the several lenders from
time to time party thereto, Lehman Brothers Inc., as Arranger,
The Bank of New York, as Documentation Agent, Heller Financial,
Inc., as Co-Documentation Agent, and Lehman Commercial Paper Inc.
as Syndication Agent and Administrative Agent (Filed as Exhibit
10.15 to the Company's Report on Form
21
10-Q filed May 15, 2000 and incorporated herein by reference)
10.9 Amendment, dated as of May 12, 2000, to Term Loan Agreement,
dated as of March 15, 1999, among B&G Foods Holdings Corp., B&G
Foods, Inc., as borrower, the several lenders from time to time
party thereto, Lehman Brothers Inc., as Arranger, The Bank of New
York, as Documentation Agent, Heller Financial, Inc., as
Co-Documentation Agent, and Lehman Commercial Paper, Inc., as
Syndication Agent and Administrative Agent (Filed as Exhibit
10.16 to the Company's Report on Form 10-Q filed May 15, 2000 and
incorporated herein by reference)
10.10 Second Amendment, dated as of March 5, 2002, to Revolving Credit
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several banks and other financial
institutions or entities from time to time parties to the
Revolving Credit Agreement, Lehman Brothers Inc., as advisor,
lead arranger and book manager, The Bank of New York, as
documentation agent, Heller Financial, Inc., as co-documentation
agent, and Lehman Commercial Paper Inc. as syndication agent and
administrative agent (Filed with the Securities and Exchange
Commission as Exhibit 10.10 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated herein by
reference.)
10.11 Second Amendment, dated as of March 5, 2002, to Term Loan
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several financial institutions or
entities from time to time parties to the Term Loan Agreement
thereto, Lehman Brothers Inc., as advisor, lead arranger and book
manager, The Bank of New York, as documentation agent, Heller
Financial, Inc., as co-documentation agent, and Lehman Commercial
Paper, Inc., as syndication agent and administrative agent (Filed
with the Securities and Exchange Commission as Exhibit 10.11 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference.)
10.12 Purchase Agreement dated as of March 4, 2002 between B&G Foods,
Inc., BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods, Inc.,
Maple Grove Farms of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils, Inc., Heritage Acquisition Corp., William
Underwood Company and The Bank of New York (Filed with the
Securities and Exchange Commission as Exhibit 10.12 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
10.13 Registration Rights Agreement dated as of March 7, 2002 between
B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition Corp.,
Bloch & Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods,
Inc., Maple Grove Farms of Vermont, Inc., Les Produits
Alimentaires Jacques et Fils, Inc., Heritage Acquisition Corp.,
William Underwood Company, Lehman Brothers Inc. and Fleet
Securities, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.13 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)
99.1 Chief Executive Officer's certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Filed herewith).
99.2 Chief Financial Officer's certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Filed herewith).
(b) Reports on Form 8-K
None.
22
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: October 30, 2002 B&G FOODS, INC.
By: /s/ Robert C. Cantwell
--------------------------------------------
Robert C. Cantwell
Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer and Authorized Officer)
CERTIFICATION BY DAVID L. WENNER
--------------------------------
I, David L. Wenner, certify that:
1. I have reviewed this quarterly report on Form 10-Q of B&G Foods, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: October 30, 2002
/s/ David L. Wenner
- -----------------------
David L. Wenner
Chief Executive Officer
CERTIFICATION BY ROBERT C. CANTWELL
-----------------------------------
I, Robert C. Cantwell, certify that:
1. I have reviewed this quarterly report on Form 10-Q of B&G Foods, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: October 30, 2002
/s/ Robert C. Cantwell
- -----------------------
Robert C. Cantwell
Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Stock Purchase Agreement, dated July 2, 1998, by and among BGH
Holdings, Inc., Maple Grove Farms of Vermont, Inc., Up Country
Naturals of Vermont, Inc., Les Produits Alimentaires Jacques et
Fils Inc., William F. Callahan and Ruth M. Callahan. (Filed with
the Securities and Exchange Commission as Exhibit 2.1 to
Commission Filing No. 333-39813 on August 3, 1998 and
incorporated herein by reference)
2.2 Asset Purchase Agreement, dated as of January 12, 1999, by and
among Roseland Distribution Company, International Home Foods,
Inc. and M. Polaner, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 1 to the Company's Report on Form 8-K filed
February 19, 1999 and incorporated herein by reference)
2.3 Asset and Stock Purchase Agreement, dated as of January 28, 1999,
by and among The Pillsbury Company, Indivined B.V., IC
Acquisition Company, Heritage Acquisition Corp. and, as
guarantor, B&G Foods, Inc. (Filed as Exhibit 2.1 to the Company's
Report on Form 8-K filed April 1, 1999 and incorporated herein by
reference).
3.1 Certificate of Incorporation of B&G Foods, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.1 to Amendment
No. 1 to Registration Statement No. 333-39813 on January 14, 1998
and incorporated herein by reference)
3.2 Bylaws of B&G Foods, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 3.2 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.3 Certificate of Incorporation of BGH Holdings, Inc. (Filed with
the Securities and Exchange Commission as Exhibit 3.3 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.4 Bylaws of BGH Holdings, Inc. (Filed with the Securities and
Exchange Commission as Exhibit 3.4 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.5 Certificate of Incorporation of Maple Groves Farms of Vermont,
Inc. (Filed with the Securities and Exchange Commission as
Exhibit 3.5 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.6 Bylaws of Maple Groves Farms of Vermont, Inc. (Filed with the
Securities and Exchange Commission as Exhibit 3.6 to Amendment
No. 1 to Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.7 Certificate of Incorporation of Trappey's Fine Foods, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.7 to
Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.8 Bylaws of Trappey's Fine Foods, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.8 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.9 Certificate of Incorporation for Bloch & Guggenheimer, Inc.
(Filed with the Securities and Exchange Commission as Exhibit 3.9
to Amendment No. 1 to Registration Statement No. 333-39813 on
January 14, 1998 and incorporated herein by reference)
3.10 Bylaws of Bloch & Guggenheimer, Inc. (Filed with the Securities
and Exchange Commission as Exhibit 3.10 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.11 Certificate of Incorporation of RWBW Acquisition Corp. (Filed
with the Securities and Exchange Commission as Exhibit 3.11 to
Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.12 Bylaws of RWBW Acquisition Corp. (Filed with the Securities and
Exchange Commission as Exhibit 3.12 to Amendment No. 1 to
Registration Statement No. 333-39813 on January 14, 1998 and
incorporated herein by reference)
3.13 Certificate of Incorporation of Les Produits Alimentaires Jacques
Et Fils, Inc. (Filed with the Securities and Exchange Commission
as Exhibit 3.13 to Amendment No. 1 to Registration Statement No.
333-86062 on May 9, 2002 and incorporated herein by reference)
3.14 Bylaws of Les Produits Alimentaires Jacques Et Fils, Inc. (Filed
with the Securities and Exchange Commission as Exhibit 3.14 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.15 Certificate of Incorporation of Polaner, Inc. (f/k/a Roseland
Distribution Company). (Filed with the Securities and Exchange
Commission as Exhibit 3.15 to Amendment No. 1 to Registration
Statement No. 333-39813 on January 14, 1998 and incorporated
herein by reference)
3.16 Bylaws of Polaner, Inc. (f/k/a Roseland Distribution Company).
(Filed with the Securities and Exchange Commission as Exhibit
3.16 to Amendment No. 1 to Registration Statement No. 333-39813
on January 14, 1998 and incorporated herein by reference)
3.17 Certificate of Incorporation of Heritage Acquisition Corp. (Filed
with the Securities and Exchange Commission as Exhibit 3.17 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.18 Bylaws of Heritage Acquisition Corp. (Filed with the Securities
and Exchange Commission as Exhibit 3.18 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
3.19 Declaration of Trust of William Underwood Company. (Filed with
the Securities and Exchange Commission as Exhibit 3.19 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference)
3.20 Bylaws of William Underwood Company. (Filed with the Securities
and Exchange Commission as Exhibit 3.20 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.1 Indenture dated as of August 11, 1997 between B&G Foods, Inc.,
BGH Holdings, Inc., RWBW Acquisition Corp., BRH Holdings, Inc.,
Bloch & Guggenheimer, Inc., Roseland Distribution Company, Burns
& Ricker, Inc., Roseland Manufacturing, Inc., and RWBW Brands
Company, and The Bank of New York, as trustee. (Filed with the
Securities and Exchange Commission as Exhibit 4.1 to Registration
Statement No. 333-39813 on November 7, 1997 and incorporated
herein by reference)
4.2 First Supplemental Indenture dated as of May 31, 2000 (to the
Indenture dated as of August 11, 1997) between B&G Foods, Inc.,
BGH Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc. (f.k.a. Roseland Distribution Company), Burns
& Ricker, Inc., Trappey's Fine Foods, Inc., Maple Groves Farms of
Vermont, Inc., William Underwood Company, Heritage Acquisition
Corp. and the Bank of New York. (Filed with the Securities and
Exchange Commission as Exhibit 4.2 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.3 Second Supplemental Indenture dated as of February 28, 2002
between B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition
Corp., Bloch & Guggenheimer, Inc., Polaner, Inc. (f.k.a. Roseland
Distribution Company), Trappey's Fine Foods, Inc., Maple Groves
Farms of Vermont, Inc., William Underwood Company, Heritage
Acquisition Corp., Les Produits Alimentaires Jacques Et Fils,
Inc. and the Bank of New York. (Filed with the Securities and
Exchange Commission as Exhibit 4.3 to Amendment No. 1 to
Registration Statement No. 333-86062 on May 9, 2002 and
incorporated herein by reference)
4.4 Indenture dated as of March 7, 2002 between B&G Foods, Inc, BGH
Holdings, Inc., RWBV Acquisition Corp., Bloch & Guggenheimer,
Inc., Polaner, Inc., Maple Groves Farms of Vermont, Inc., Les
Produits Alimentaires Jacques Et Fils, Inc., Heritage Acquisition
Corp., Trappey's Fine Foods, Inc., William Underwood Company and
The Bank of New York, as trustee (Filed with the Securities and
Exchange Commission as Exhibit 4.4 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)
4.5 Form of the Company's 9 5/8% Senior Notes due 2007. (Included in
Exhibit 4.1 and 4.4)
10.1 Registration Rights Agreement dated as of August 11, 1997 by and
among the Company, the Guarantors party thereto, Lehman Brothers,
Inc. and Lazard Freres & Co., LLC. (Filed with the Securities and
Exchange Commission as Exhibit 10.1 to Registration Statement No.
333-39813 on November 7, 1997 and incorporated herein by
reference)
10.2 Purchase Agreement dated August 6, 1997 among the Company, the
Guarantors party thereto, Lehman Brothers, Inc., and Lazard
Freres & Co., LLC. (Filed with the Securities and Exchange
Commission as Exhibit 10.2 to Registration Statement No.
333-39813 on November 7, 1997 and incorporated herein by
reference)
10.3 Guaranty, dated as of January 12, 1999, of B&G Foods, Inc. in
favor of International Home Foods, Inc. and M. Polaner, Inc.
(Filed with the Securities and Exchange Commission as Exhibit 3
to the Company's Report on Form 8-K filed February 19, 1999 and
incorporated herein by reference)
10.4 Revolving Credit Agreement, dated as of March 15, 1999 among B&G
Foods Holdings Corp., B&G Foods, Inc., as borrower, the several
lenders from time to time party thereto, Lehman Brothers Inc., as
Arranger, The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and Lehman Commercial
Paper Inc. as Syndication Agent and Administrative Agent (Filed
as Exhibit 10.1 to the Company's Report on Form 10-Q filed May
17, 1999 and incorporated herein by reference).
10.5 Term Loan Agreement, dated as of March 15, 1999, among B&G Foods
Holdings Corp., B&G Foods, Inc., as borrower, the several lenders
from time to time party thereto, Lehman Brothers Inc., as
Arranger, The Bank of New York, as Documentation Agent, Heller
Financial, Inc., as Co-Documentation Agent, and Lehman Commercial
Paper, Inc., as Syndication Agent and Administrative Agent (Filed
as Exhibit 10.2 to the Company's Report on Form 10-Q filed May
17, 1999 and incorporated herein by reference).
10.6 Guarantee and Collateral Agreement, dated as of March 15, 1999,
by B&G Foods Holdings Corp., B&G Foods, Inc., and certain of its
subsidiaries in favor of Lehman Commercial Paper, Inc., as
Administrative Agent (Filed as Exhibit 10.3 to the Company's
Report on Form 10-Q filed May 17, 1999 and incorporated herein by
reference)
10.7 Amended and Restated Securities Holders Agreement dated December
22, 1999 among B&G Foods Holdings Corp., Bruckmann, Rosser,
Sherrill & Co., L.P., Canterbury Mezzanine Capital II, L.P., The
CIT Group/Equity Investments, Inc. and the Management
Stockholders named therein (Filed as Exhibit 10.14 to the
Company's Report on Form 10-K filed March 3, 2000 and
incorporated herein by reference)
10.8 Amendment, dated as of May 12, 2000, to Revolving Credit
Agreement, dated as of March 15, 1999, among B&G Foods Holdings
Corp., B&G Foods, Inc., as borrower, the several lenders from
time to time party thereto, Lehman Brothers Inc., as Arranger,
The Bank of New York, as Documentation Agent, Heller Financial,
Inc., as Co-Documentation Agent, and Lehman Commercial Paper Inc.
as Syndication Agent and Administrative Agent (Filed as Exhibit
10.15 to the Company's Report on Form 10-Q filed May 15, 2000 and
incorporated herein by reference)
10.9 Amendment, dated as of May 12, 2000, to Term Loan Agreement,
dated as of March 15, 1999, among B&G Foods Holdings Corp., B&G
Foods, Inc., as borrower, the several lenders from time to time
party thereto, Lehman Brothers Inc., as Arranger, The Bank of New
York, as Documentation Agent, Heller Financial, Inc., as
Co-Documentation Agent, and Lehman Commercial Paper, Inc., as
Syndication Agent and Administrative Agent (Filed as Exhibit
10.16 to the Company's Report on Form 10-Q filed May 15, 2000 and
incorporated herein by reference)
10.10 Second Amendment, dated as of March 5, 2002, to Revolving Credit
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several banks and other financial
institutions or entities from time to time parties to the
Revolving Credit Agreement, Lehman Brothers Inc., as advisor,
lead arranger and book manager, The Bank of New York, as
documentation agent, Heller Financial, Inc., as co-documentation
agent, and Lehman Commercial Paper Inc. as syndication agent and
administrative agent (Filed with the Securities and Exchange
Commission as Exhibit 10.10 to Amendment No. 1 to Registration
Statement No. 333-86062 on May 9, 2002 and incorporated herein by
reference.)
10.11 Second Amendment, dated as of March 5, 2002, to Term Loan
Agreement, dated as of March 15, 1999, as Amended by the
Amendment dated as of May 12, 2000, among B&G Foods Holdings
Corp., B&G Foods, Inc., the several financial institutions or
entities from time to time parties to the Term Loan Agreement
thereto, Lehman Brothers Inc., as advisor, lead arranger and book
manager, The Bank of New York, as documentation agent, Heller
Financial, Inc., as co-documentation agent, and Lehman Commercial
Paper, Inc., as syndication agent and administrative agent (Filed
with the Securities and Exchange Commission as Exhibit 10.11 to
Amendment No. 1 to Registration Statement No. 333-86062 on May 9,
2002 and incorporated herein by reference.)
10.12 Purchase Agreement dated as of March 4, 2002 between B&G Foods,
Inc., BGH Holdings, Inc., RWBV Acquisition Corp., Bloch &
Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods, Inc.,
Maple Grove Farms of Vermont, Inc., Les Produits Alimentaires
Jacques et Fils, Inc., Heritage Acquisition Corp., William
Underwood Company and The Bank of New York (Filed with the
Securities and Exchange Commission as Exhibit 10.12 to
Registration Statement No. 333-86062 on April 11, 2002 and
incorporated herein by reference.)
10.13 Registration Rights Agreement dated as of March 7, 2002 between
B&G Foods, Inc., BGH Holdings, Inc., RWBV Acquisition Corp.,
Bloch & Guggenheimer, Inc., Polaner, Inc., Trappey's Fine Foods,
Inc., Maple Grove Farms of Vermont, Inc., Les Produits
Alimentaires Jacques et Fils, Inc., Heritage Acquisition Corp.,
William Underwood Company, Lehman Brothers Inc. and Fleet
Securities, Inc. (Filed with the Securities and Exchange
Commission as Exhibit 10.13 to Registration Statement No.
333-86062 on April 11, 2002 and incorporated herein by
reference.)
99.1 Chief Executive Officer's certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Filed herewith).
99.2 Chief Financial Officer's certification pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (Filed herewith).