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B&G FOODS, INC.
ANNUAL REPORT 2012
B&G FOODS, INC.
4 GATEHALL DRIVE • PARSIPPANY, NJ 07054
973 • 401 • 6500
www.bgfoods.com
DIVERSITY
STABILITY
GROWTH OPPORTUNITIES
8087_Cov 3/22/13 2:00 PM Page 2
B&G Foods, Inc.
Quality Foods Since 1889
22APR200411360245
®
TO OUR STOCKHOLDERS,
Financial Performance
Fiscal 2012 was another year of very significant accomplishment in our business, with company
records set in net sales, net income, earnings per share and adjusted EBITDA. Net sales increased to a
record $633.8 million, a 16.5% increase over prior year. Gross profit expressed as a percentage of net
sales increased 2.5 percentage points to 35.2% and in dollars increased by 25.6% to $223.3 million.
Cost increases for our company were very modest compared to our industry and were more than offset
by pricing gains. Once again, we were able to delay or minimize the impact of commodity and
packaging cost increases through advance purchase commitments and cost reductions. These efforts
resulted in a 17.9% increase in net income to $59.3 million. Diluted earnings per share posted a similar
15.4% increase. Adjusted EBITDA(1) for fiscal 2012 was a company record of $169.0 million, a
remarkable 28.9% increase. This brought the 3-year improvement in adjusted EBITDA to an
impressive 64.1%. Adjusted EBITDA as a percent of net sales increased from B&G Foods’ already
high 24.1% in fiscal 2011 to a new company record of 26.7%.
Investment Highlights
Since our initial public offering almost nine years ago B&G Foods has maintained a commitment
to providing shareholders with a very tangible return on their investment through a generous cash
dividend and consistent operating performance. It has been gratifying to watch as other companies
move to this philosophy and emphasize dividends and shareholder return more than ever before. We,
meanwhile, have remained consistent. In fiscal 2012 we declared dividends of $1.10 per share, an
increase of nearly 27.9% from 2011. On an annualized basis, our current dividend rate is $1.16 per
share. The quarterly dividend declared in February and payable on April 30, 2013 was the
34th consecutive quarterly dividend declared by B&G Foods.
In addition to dividend growth, stockholders also saw the price of our common stock continue to
rise in fiscal 2012. As we executed on the base business and the Culver Specialty Brands acquisition,
our common stock, which trades on the New York Stock Exchange under the symbol ‘‘BGS,’’ increased
by 14.7% to $27.60 at year-end fiscal 2012, as compared to $24.07 at year-end fiscal 2011. Assuming the
reinvestment of dividends, our total stockholder return for fiscal 2012 was 24.7% and over the past
three fiscal years was 262.5%.
Business Performance
Fiscal 2012 was the fourth consecutive year of record-breaking performance in a wide variety of
measures. Net sales grew for the eleventh consecutive year, increasing by 16.5%. The large majority of
that growth came from the Culver Specialty Brands, which we acquired in November 2011 and which
added $81.0 million to our net sales in 2012, well in line with our projections for the acquisition. We
also achieved over $13.1 million in price increases for the year which, combined with cost reduction
efforts, offset the cost increases seen in fiscal 2012.
1
Adjusted EBITDA is a ‘‘non-GAAP (Generally Accepted Accounting Principles) financial measure.’’ Please see the
discussion in the footnotes to Item 6, ‘‘Selected Financial Data’’ in the following Annual Report on Form 10-K for a more
detailed discussion of adjusted EBITDA and a reconciliation of adjusted EBITDA with the most directly comparable
GAAP measure along with the components of adjusted EBITDA.
The food industry as a whole experienced a pull-back in consumer purchases in 2012, and
B&G Foods was not immune to this phenomenon, although our volume decline was much smaller than
that of many other companies. Even though our base business net sales increased modestly due to price
increases, sales volume in our base (excluding acquisitions) declined by 2.3%. Most of that decline
came from brands with sales skewed toward the Northeastern United States. This region has several
important customers who are struggling, and their difficulties affected our performance in the region.
Despite these headwinds, we achieved brand growth that was consistent with our Tier Strategy. Tier I
brands in our base business — accounting for 44% of total base business net sales and 56% of total
base business adjusted EBITDA — grew by 1.3% for the year on the strength of our outstanding
Hispanic brands, Ortega and Las Palmas. Tier II base business brand net sales — accounting for 20% of
base business net sales and 27% of base business adjusted EBITDA — were flat for the year. Tier III
base business was most affected by the weakness in the Northeast and declined by 1.1%. As in past
years, we were also successful in following consumers as they changed their purchasing habits, and as a
result we saw growth in net sales to both mass merchants and dollar stores. Our company continues to
be very proficient at creating new products or adapting existing products to the formats that are
successful with these outlets.
In 2012 we continued to develop new products as part of our strategy to update the brands in our
existing portfolio and return newly acquired brands to a growth mode. Our R&D group continued to
refine existing products as well, eliminating high fructose corn syrup and reducing sodium in a variety
of products. Conscious of consumer concerns about health and wellness, we launched Reduced Sodium
Chili Seasoning and Reduced Sodium Burrito Seasoning in the Ortega brand. We also introduced three
varieties of Ortega Taco Shells in value-packs to appeal to today’s cost-conscious consumer. Licensing
has been a very cost-effective way for B&G Foods to launch new product lines, and we followed that
path in 2012, expanding the Emeril’s(2) line with two new pasta sauces — Alfredo and Four Cheese. We
also entered into an exciting new licensing partnership with the Crock-Pot(3) brand, and using that
well-known name we introduced three new Crock-Pot seasoning mixes — Pot Roast, Beef Stew and
Pulled Pork — for use in slow cookers. In 2013 we plan to introduce a flurry of over 30 new products
aimed at reinvigorating five of the Culver Specialty Brands. Already in distribution are new Mrs. Dash
Salt-free Slow Cooker Seasoning Mixes and Mrs. Dash Salt-free Dip Mixes.
Cost remained a challenge in the food industry in 2012, but B&G Foods was less affected than
most companies. Our strategy of locking in commodity costs for twelve months or longer served us well
in 2012, deferring many cost increases and providing time to react to cost increases with price increases
where appropriate. Our company-wide continuous improvement effort continued to yield important cost
savings, resulting in cost reductions or cost avoidances in 2012 of over $10 million, surpassing the
improvements made in 2011. This effort reduced our total manufacturing cost increases to just under
1% of net sales or roughly $5 million. Managing cost increases in this manner limited the price
increases we were required to take to offset cost, keeping our company cost-competitive and our
products attractive to a consumer base that has become very sensitive to value.
On October 31st we acquired a snack business from Chipita America that included the
New York Style and Old London brands. We estimate that this business will contribute approximately
$45 to $50 million in annualized net sales to the total net sales of B&G Foods, two months of which
were realized in 2012. We also estimate that the acquisition will add approximately $8 to $9 million in
annualized adjusted EBITDA. Based upon these estimates, the acquisition would increase net sales by
approximately 6% and adjusted EBITDA by approximately 4% in 2013.
2
3
Emeril’s(cid:2) is a registered trademark of MSLO Shared IP Sub LLC used under license.
Crock-Pot(cid:2) logo is a registered trademark of Sunbeam Products, Inc. used under license.
2
Fiscal 2013
We enter 2013 seeing both opportunities and challenges. The food industry faces the challenge of a
consumer hard-pressed by higher costs, higher taxes and an economy that has yet to fully recover. In
the past, challenging times such as these have actually benefitted businesses like ours as consumers look
for economical ways to feed their families. Our brands have met that need. Ortega, for instance,
provides a relatively inexpensive, enjoyable meal occasion for a family. But consumers today are more
stressed than ever before, which means that to meet their needs we must continue to improve the value
proposition of Ortega and our other brands. And we need to do that in a way that provides a healthier
alternative as part of that value proposition.
The opportunity in 2013 lies in our latest acquisition. With the acquisition of the New York Style
and Old London brands we have entered the large and growing snack business. These brands are
well-established but have not taken part in the significant growth snacks have experienced in the past
few years. Our challenge in 2013 is to make these brands relevant to consumers again and to become a
meaningful competitor in the exciting snack category. We are assembling a team dedicated to that goal,
and we believe it is achievable.
Above all else, what investors can expect from B&G Foods in 2013 is consistent performance,
superior margins and strong cash flow that supports an industry-leading dividend rate.
In Closing
Fiscal 2012 began as a year of great promise based on the acquisition of the Culver Specialty
Brands in late 2011, and the year ended with that promise fulfilled as the acquisition performed as
expected. Successful execution on acquisitions has been a key element of our business strategy over the
past fifteen-plus years. By successfully completing over a dozen acquisitions and integrating twenty-five
brands into B&G Foods we have increased our equity value to over $1.5 billion and have brought
tremendous stockholder return to our shareholders. This is a testimony to the strength of our brands
and the talent and skill of our employees who have executed against a highly successful business
strategy, building a company that is even better and stronger every year. We have great brands and we
have tremendous people dedicated to the success of B&G Foods — one cannot ask for a better starting
point to a new year.
Sincerely,
19MAR200820015468
David Wenner
President and Chief Executive Officer
March 25, 2013
3
As filed with the Securities and Exchange Commission on February 26, 2013
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(cid:2) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 29, 2012
(cid:3) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
.
or
Commission file number 001-32316
B&G FOODS, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
Four Gatehall Drive, Parsippany, New Jersey
(Address of principal executive offices)
13-3918742
(I.R.S. Employer
Identification No.)
07054
(Zip Code)
Registrant’s telephone number, including area code: (973) 401-6500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01 per share
Name of exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:2) No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes (cid:3) No (cid:2)
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 (cid:2) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes (cid:2) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ and ‘‘smaller
reporting company’’ in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer (cid:2)
Accelerated filer (cid:3)
Smaller reporting company (cid:3)
Non-accelerated filer (cid:3)
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes (cid:3) No (cid:2)
The aggregate market value of the registrant’s outstanding shares of common stock held by non-affiliates of the
registrant (assuming for these purposes, but without conceding, that all executive officers and directors are affiliates of
the registrant) as of June 29, 2012, the last business day of the registrant’s most recently completed second fiscal quarter,
was $1,255,160,980 (based on the $26.60 per share closing price of the registrant’s common stock on that date as
reported on the New York Stock Exchange).
As of February 26, 2013, the registrant had 52,858,772 shares of common stock outstanding.
Selected designated portions of the registrant’s definitive proxy statement to be filed on or before April 29, 2013 in
connection with the registrant’s 2013 annual meeting of stockholders are incorporated by reference into Part III of this
annual report.
DOCUMENTS INCORPORATED BY REFERENCE
B&G FOODS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 29, 2012
TABLE OF CONTENTS
PART I
Page No.
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results Of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Item 1. Business.
Overview
PART I
The terms ‘‘B&G Foods,’’ ‘‘our,’’ ‘‘we’’ and ‘‘us,’’ as used in this report, refer to B&G Foods, Inc. and
its wholly owned subsidiaries, except where it is clear that the term refers only to the parent company.
Throughout this report, we refer to our fiscal years ended January 3, 2009, January 2, 2010, January 1,
2011, December 31, 2011 and December 29, 2012 as ‘‘fiscal 2008,’’ ‘‘fiscal 2009,’’ ‘‘fiscal 2010,’’ ‘‘fiscal
2011’’ and ‘‘fiscal 2012,’’ respectively.
B&G Foods manufactures, sells and distributes a diverse portfolio of branded, high quality, shelf-
stable food and household products across the United States, Canada and Puerto Rico. Many of our
branded products have leading regional or national market shares. In general, we position our products
to appeal to the consumer desiring a high quality and reasonably priced product. We complement our
branded product retail sales with institutional and food service sales and limited private label sales.
B&G Foods, including our subsidiaries and predecessors, has been in business for over 120 years.
We were incorporated in Delaware on November 25, 1996 under the name B Companies Holdings
Corp. On August 11, 1997, we changed our name to B&G Foods Holdings Corp. On October 14, 2004,
B&G Foods, Inc., then our wholly owned subsidiary, was merged with and into us and we were
renamed B&G Foods, Inc.
Our company has been built upon a successful track record of both organic and acquisition-related
growth. Our goal is to continue to increase sales, profitability and cash flows through organic growth,
disciplined acquisitions of complementary branded businesses and new product development. Since
1996, we have successfully acquired and integrated more than 25 brands into our company.
The table below includes some of the acquisitions we have completed in recent years:
Date
Significant Event
November 2010 Acquisition of the Don Pepino and Sclafani brands from Violet Packing LLC, referred
to as the ‘‘Don Pepino acquisition’’ in the remainder of this document.
November 2011 Acquisition of the Mrs. Dash, Baker’s Joy, Sugar Twin, Static Guard, Molly McButter
and Kleen Guard brands from Conopco, Inc. dba Unilever United States, Inc,
referred to as the ‘‘Culver Specialty Brands acquisition’’ in the remainder of this
document.
October 2012
Acquisition of the New York Style, Devonsheer, JJ Flats and Old London brands from
Chipita America, Inc., referred to as the ‘‘New York Style and Old London
acquisition’’ in the remainder of this document.
Products and Markets
The following is a brief description of some of our brands and product lines:
The Ortega brand has been in existence since 1897; its products span the shelf-stable Mexican food
segment including taco shells, tortillas, seasonings, dinner kits, taco sauces, peppers, refried beans,
salsas and related food products. We continue to expand our product offerings with new products such
as the Ortega whole grain corn taco shells and Ortega reduced sodium taco seasoning.
The Maple Grove Farms of Vermont brand, which originated in 1915, is one of the leading brands
of pure maple syrup sold in the United States. Other products under the Maple Grove Farms of
Vermont label include a line of gourmet salad dressings, sugar free syrups, marinades, fruit syrups,
confections, pancake mixes and organic products.
1
The Cream of Wheat brand was introduced in 1893 and is among the leading brands and one of
the most trusted and widely recognized brands of hot cereals sold in the United States. Cream of Wheat
is available in Original 10-minute, 21⁄2 minute and one-minute versions, and also in instant packets of
Original and other flavors. A whole grain version of Original 21⁄2 minute Cream of Wheat was
introduced by B&G Foods in 2008. In 2009, we introduced a ‘‘Healthy Grain’’ version of instant Cream
of Wheat, which provides consumers with an excellent source of fiber and a good source of protein.
During 2010, pursuant to a licensing agreement, we introduced Cream of Wheat Cinnabon(cid:2) and during
2011, we introduced Cream of Wheat Chocolate flavored instant hot cereal. We also offer Cream of
Rice, a rice-based hot cereal.
The Mrs. Dash brand, which was introduced in 1983 as the original brand in salt-free seasonings, is
available in more than a dozen blends. In 2005, the leading brand in salt-free seasonings introduced 6
salt-free marinades. Mrs. Dash’s brand essence, ‘‘Salt-Free, Flavor-Full,’’ resonates with consumers and
underscores the brand’s commitment to provide healthy products that fulfill consumers’ expectations for
taste.
The Polaner brand was introduced in 1880 and is comprised of a broad array of fruit-based spreads
as well as jarred wet spices such as chopped garlic and oregano. Polaner All Fruit is a leading national
brand of fruit-juice sweetened fruit spread. The spreads are available in more than a dozen flavors.
Polaner Sugar Free preserves are the second leading brand of sugar free preserves nationally. Beginning
in 2009, we reformulated Polaner All Fruit and Polaner Sugar Free to include 3 grams of fiber per
tablespoon.
The Las Palmas brand originated in 1922 and primarily includes authentic Mexican enchilada
sauce, chili sauce and various pepper products.
The Bloch & Guggenheimer (B&G) brand originated in 1889, and its pickle, pepper and relish
products are a leading brand in the New York metropolitan area. This line consists of shelf-stable
pickles, peppers, relishes, olives and other related specialty items.
The B&M brand was introduced in 1927 and is the original brand of brick-oven baked beans and
remains one of the very few authentic baked beans. The B&M line includes a variety of baked beans
and brown bread. The B&M brand currently has a leading market share in the New England region.
The Underwood brand’s ‘‘Underwood Devil’’ logo, which was registered in 1870, is believed to be
the oldest registered trademark still in use for a prepackaged food product in the United States.
Underwood meat spreads, which were introduced in the late 1860s, include deviled ham, white-meat
chicken, roast beef and liverwurst.
The New York Style brand was created in 1985 and now includes Original Bagel Crisps, Mini Bagel
Crisps, Pita Chips and Panetini Italian Toast. New York Style products offer the authentic taste of New
York City’s traditional neighborhood bakeries.
The Ac’cent brand was introduced in 1947 as an all-natural flavor enhancer for meat preparation
and is generally used on beef, poultry, fish and vegetables. We believe that Ac’cent is positioned as a
unique flavor enhancer that provides food with the ‘‘umami’’ flavor sensation.
The Emeril’s brand was introduced in 2000 under a licensing agreement with celebrity chef Emeril
Lagasse. We offer a line of pasta sauces, seasonings, cooking stocks, mustards, salsas, pepper sauces,
dip mixes and cooking sprays under the Emeril’s brand name.
The Old London brand was created in 1932 and offers a wide variety of flavors available in melba
toasts, melba rounds and other snacks. Old London also markets specialty snacks under the Devonsheer
and JJ Flats names.
2
The Trappey’s brand, which was introduced in 1898, has a Louisiana heritage. Trappey’s products
fall into two major categories—high quality peppers and hot sauces, including Trappey’s Red Devil.
The Don Pepino and Sclafani brands originated in 1955 and 1900, respectively, and primarily
include pizza and spaghetti sauces, whole and crushed tomatoes and tomato puree.
The Grandma’s brand of molasses, which was introduced in 1890, is the leading brand of premium-
quality molasses sold in the United States. Grandma’s molasses products are offered in two distinct
styles: Grandma’s Original Molasses and Grandma’s Robust Molasses.
The Joan of Arc brand, which originated in 1895, includes a full range of canned beans including
kidney, chili and other varieties.
The Regina brand, which has been in existence since 1949, includes vinegars and cooking wines.
Regina products are most commonly used in the preparation of salad dressings as well as in a variety of
recipe applications, including sauces, marinades and soups.
The Static Guard brand, the number one brand name in static elimination sprays, created the
anti-static spray category when it was launched in 1978 to fulfill a previously unmet consumer need.
The brand’s ability to consistently deliver on its promise to ‘‘instantly eliminate static cling’’ has
resulted in a loyal consumer following.
The Sugar Twin brand was developed in 1968 and is a calorie free sugar substitute.
The Baker’s Joy brand was introduced in 1982 and is the original brand of no-stick baking spray
with flour. Baker’s Joy’s product proposition has been to ‘‘generate a perfect release from the pan every
time,’’ making baking easier, faster and more successful for everyday bakers.
The Wright’s brand was introduced in 1895 and is an all-natural seasoning that reproduces the
flavor and aroma of pit smoking in meats, chicken and fish. Wright’s is offered in three flavors: Hickory,
Mesquite and Applewood.
The Brer Rabbit brand has been in existence since 1907 and currently offers mild and full-flavored
molasses as well as blackstrap molasses. Mild molasses is designed for table use and full-flavored
molasses is typically used in baking, barbeque sauces and as a breakfast syrup.
The Sa-s´on brand was introduced in 1947 as a flavor enhancer used primarily for Puerto Rican and
Hispanic food preparation. The product is generally used on beef, poultry, fish and vegetables. The
brand’s flavor enhancer is offered in four flavors: Original, Coriander and Achiote, Garlic and Onion,
and Tomato. We also offer reduced sodium versions of Sa-s´on.
The Vermont Maid brand has been in existence since 1919 and we offer maple-flavored syrup under
the brand name. Vermont Maid syrup is available in regular, sugar-free and sugar-free butter varieties.
The Molly McButter brand created the butter sprinkles category in 1987. Molly McButter is an all
natural sprinkle, available in butter and cheese flavors.
Processed Food Industry
The processed food industry is one of the United States’ largest industries. It is characterized by
relatively stable sales growth, based largely on price and population increases. As costs have increased
in recent years, price has gained significance as a factor in sales growth. As large food companies with
a presence in a variety of branded product categories seek tighter focus within their businesses, they
have shed brands or an entire presence in non-core categories. They have also sold smaller brands to
increase focus on the larger brands within their portfolios.
In the past decade, the retail side of the food industry has seen a still on-going shift of sales to
alternate food outlets such as supercenters, warehouse clubs, dollar stores and drug stores. This shift
3
has caused consolidation of traditional grocery chains into larger entities, often spanning the country
under varying banner names. Consolidation has increased the importance of having a number one or
two brand within a category, be that position national or regional. A broad sales and distribution
infrastructure has also become critical for food companies, allowing them to reach all outlets selling
food to consumers and expanding their growth opportunities.
Sales, Marketing and Distribution.
Overview. We sell, market and distribute our products through a multiple-channel sales, marketing
and distribution system to all major U.S. food channels, including sales and shipments to supermarkets,
mass merchants, warehouse clubs, wholesalers, food service distributors and direct accounts, specialty
food distributors, military commissaries and non-food outlets such as drug and dollar store chains.
Certain of our brands, including Cream of Wheat, Ac’cent, Underwood, Polaner, Static Guard, Mrs. Dash,
New York Style and Sugar Twin, are also distributed to similar food channels in Canada. We sell, market
and distribute our two household brands through the same sales, marketing and distribution system to
many of the same customers to whom we sell our food products as well as other household product
retailers and distributors.
We believe our established infrastructure in these channels allows us to distribute our products and
any additional products from acquisitions cost-effectively. We sell our products primarily through broker
sales networks to supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food
outlets and specialty distributors. The broker sales network handles the sale of our products at the
retail level.
Sales. Our sales organization is aligned by distribution channels and consists of regional sales
managers, key account managers and sales persons. Regional sales managers sell our products
nationwide through national and regional brokers, with separate organizations focusing on food service,
grocery chain accounts and special markets. Our sales managers coordinate our broker sales efforts,
make key account calls with buyers or distributors and supervise broker retail coverage of the products
at the store level.
Our sales strategy is centered on individual brands. We allocate promotional spending for each of
our brands and our regional sales managers coordinate promotions with customers. Additionally, our
marketing department works in conjunction with the sales department to coordinate special account
activities and marketing support, such as couponing, public relations and media advertising.
We have a national sales force that is capable of supporting our current brands and quickly
integrating and supporting any newly acquired brands.
Marketing. Our marketing organization is aligned by brand and is responsible for the strategic
planning for each of our brands. We focus on deploying promotional dollars where we believe the
spending will have the greatest impact on sales. Marketing and trade spending support, on a national
basis, typically consists of advertising trade promotions, coupons and cross-promotions with supporting
products. Radio, internet, social media and limited television advertising supplement this activity.
Distribution. We distribute our products through a multiple-channel system that covers every class
of customer nationwide. We believe our distribution system has sufficient capacity to accommodate
incremental product volume in a cost-effective manner. See Item 2, ‘‘Properties’’ for a listing of our
distribution centers and warehouses.
Customers
Our top ten customers accounted for approximately 50.7% of our net sales and 50.2% of our end
of the year receivables for fiscal 2012. Other than Wal-Mart, which accounted for 19.7% of our fiscal
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2012 net sales, no single customer accounted for 10.0% or more of our fiscal 2012 net sales. Other than
Wal-Mart, which accounted for 14.9% of our receivables as of the end of fiscal 2012, no single
customer accounted for more than 10.0% of our receivables as of the end of fiscal 2012. During fiscal
2012, our net sales to foreign countries represented approximately 2.7% of our total net sales. During
fiscal 2011 and fiscal 2010, our net sales to foreign countries represented less than 1.0% of our total
net sales. Our foreign sales are primarily to customers in Canada. The increase in our foreign sales in
fiscal 2012 is primarily attributable to the Culver Specialty Brands acquisition.
Seasonality
Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes
in seasons or other annual events. In the aggregate, however, sales of our products are not heavily
weighted to any particular quarter due to the offsetting nature of demands for our diversified product
portfolio. However, sales during the fourth quarter are generally greater than those of the preceding
three quarters.
We purchase most of the produce used to make our shelf-stable pickles, relishes, peppers,
tomatoes and other related specialty items during the months of July through October, and we
generally purchase substantially all of our maple syrup requirements during the months of April
through August. Consequently, our liquidity needs are greatest during these periods.
Competition
We face competition in each of our product lines. Numerous brands and products compete for
shelf space and sales, with competition based primarily on product quality, convenience, price, trade
promotion, consumer promotion, brand recognition and loyalty, customer service, advertising and other
activities and the ability to identify and satisfy emerging consumer preferences. We compete with
numerous companies of varying sizes, including divisions or subsidiaries of larger companies. Many of
these competitors have multiple product lines, substantially greater financial and other resources and
may have lower fixed costs and/or be substantially less leveraged than we are. Our ability to grow our
business could be impacted by the relative effectiveness of, and competitive response to, our product
initiatives, product innovation, advertising and promotional activities. In addition, from time to time, we
experience margin pressure in certain markets as a result of competitors’ pricing practices.
Our products compete not only against other brands in their respective product categories, but also
against products in similar or related product categories. For example, our shelf-stable pickles compete
not only with other brands of shelf-stable pickles, but also with pickle products found in the
refrigerated sections of grocery stores, and all our brands compete against private label products to
varying degrees.
Raw Materials
We purchase raw materials, including agricultural products, meat, poultry, flour, other raw
materials, ingredients and packaging materials from growers, commodity processors, other food
companies and packaging manufacturers located in U.S. and foreign locations. Our principal raw
materials include maple syrup, wheat, fruits, beans, tomatoes, peppers, meat, sugar, concentrates,
molasses, spices and corn sweeteners. We purchase our agricultural raw materials in bulk or pursuant
to short-term supply contracts. We purchase most of our agricultural products between April 1 and
October 31. We also use packaging materials, particularly glass jars, cans, cardboard and plastic
containers. The profitability of our business relies in substantial part on the prices we and our
co-packers pay for these raw materials and packaging materials, which can fluctuate due to a number
of factors, including changes in crop size, national, state and local government sponsored agricultural
programs, export demand, currency exchange rates, natural disasters, weather conditions during the
growing and harvesting seasons, general growing conditions, the effect of insects, plant diseases and
fungi, and glass, metal and plastic prices.
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Fluctuations in commodity prices can lead to retail price volatility and intensive price competition,
and can influence consumer and trade buying patterns.
The cost of labor, manufacturing, energy, fuel, packaging materials and other costs related to the
production and distribution of our food products can from time to time increase significantly and
unexpectedly. We attempt to manage these risks by entering into short-term supply contracts and
advance commodities purchase agreements from time to time, by implementing cost saving measures
and by raising sales prices. During the past three years, our cost saving measures and sales price
increases have offset increases to our raw material, ingredient and packaging costs. To the extent we
are unable to offset present and future cost increases, our operating results will be negatively impacted.
Production
Manufacturing. We operate seven manufacturing facilities for our products. See Item 2,
‘‘Properties’’ for a listing of our manufacturing facilities.
Co-Packing Arrangements.
In addition to our own manufacturing facilities, we source a significant
portion of our products under ‘‘co-packing’’ agreements, a common industry practice in which
manufacturing is outsourced to other companies. We regularly evaluate our co-packing arrangements to
ensure the most cost-effective manufacturing of our products and to utilize company-owned
manufacturing facilities most effectively. Third parties located in U.S. and foreign locations produce our
Mrs. Dash, Joan of Arc, Static Guard, Sugar Twin, Regina and Baker’s Joy brand products and certain
B&G, Cream of Wheat, Emeril’s, Las Palmas and Ortega brand products under co-packing agreements or
purchase orders. Each of our co-packers produces products for other companies as well. We believe
that there are alternative sources of co-packing production readily available for the majority of our
products, although we may experience short-term disturbances in our operations if we are required to
change our co-packing arrangements unexpectedly.
Trademarks and Licensing Agreements
We consider our trademarks, in the aggregate, to be material to our business. We protect our
trademarks by registration in the United States, Canada and in other countries where we sell our
products. We also oppose any infringement in key markets. Trademark protection continues in some
countries for as long as the mark is used and in other countries for as long as it is registered.
Registrations generally are for renewable, fixed terms. Examples of our trademarks and registered
trademarks include Ac’cent, B&G, B&G Sandwich Toppers, B&M, Baker’s Joy, Brer Rabbit, Cream of
Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s, JJ Flats, Joan of Arc, Kleen Guard,
Las Palmas, Maple Grove Farms of Vermont, Molly McButter, Mrs. Dash, New York Style, Old London,
Ortega, Polaner, Regina, Sa-s´on, Sclafani, Static Guard, Sugar Twin, Trappey’s, Underwood, Vermont Maid
and Wright’s.
In June 2000 we entered into a license agreement with Emeril’s Food of Love Productions, L.L.C.
(EFLP). This license agreement grants us an exclusive license to use the intellectual property owned by
the licensor relating to Mr. Lagasse, including the name ‘‘Emeril Lagasse’’ and pictures, photographs
and other personality material, in connection with the manufacturing, marketing and distribution of dry
seasoning, liquid seasoning, condiments, sauces, dressings and certain other products through retail
channels in the United States, the Caribbean and Canada. We also have the right of first negotiation
with respect to other shelf-stable grocery products. Under the license agreement, the licensor owns all
of the recipes that it provides to us and all of our Emeril’s brand products and related marketing
materials are subject to the prior approval of the licensor, which approval may not be unreasonably
withheld. In addition, we are prohibited from entering into similar arrangements with other chefs or
celebrities in connection with any of the products covered by the agreement with the licensor.
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The license agreement has been extended through May 2015 and thereafter is subject to extension
and renewal at our option for additional three-year periods if we meet specified annual net sales
results. Under the license agreement, we are, among other things, obligated to introduce and market
new products in each year of the license agreement and to pay the licensor royalties based on annual
net sales of our Emeril’s brand products. The license agreement may be terminated by the licensor if
we are in breach or default of any of our material obligations thereunder. We have also agreed to
indemnify the licensor with respect to claims under the license agreement, including claims relating to
any alleged unauthorized use of any mark, personality or recipe by us in connection with the products
in the Emeril’s line of products.
In February 2008, Martha Stewart Living Omnimedia, Inc. (MSLO) announced that it was
acquiring certain assets related to the business of Emeril Lagasse. In connection with the closing of that
transaction and with our consent, EFLP assigned its rights under the license agreement to a subsidiary
of MSLO.
From time to time we also enter into other licensing agreements. For example, we sell Cream of
Wheat Cinnabon(cid:2), a co-branded product, pursuant to a licensing agreement with Cinnabon, Inc. and
Crock Pot(cid:2) Seasoning Mixes pursuant to a licensing agreement with Sunbeam Products, Inc. dba
Jarden Consumer Solutions.
Employees and Labor Relations
As of December 29, 2012, our workforce consisted of 999 employees. Of that total, 794 employees
were engaged in manufacturing, 59 were engaged in marketing and sales, 114 were engaged in
warehouse and distribution and 32 were engaged in administration. Approximately 34% of our
employees, located at three facilities, are covered by collective bargaining agreements. These
agreements, which vary in term depending on the location, expire on March 31, 2014 (Roseland, New
Jersey; International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America,
Local No. 863), April 25, 2015 (Portland, Maine; Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union, AFL-CIO, Local No. 334) and March 31, 2016 (Stoughton, Wisconsin;
Drivers, Salesmen, Warehousemen, Milk Processors, Cannery, Dairy Employees and Helpers Union,
Local No. 695). None of our collective bargaining agreements expire in the next twelve months.
Government Regulation
As a manufacturer and marketer of food and household products, our operations are subject to
extensive regulation by the United States Food and Drug Administration (FDA), the United States
Department of Agriculture (USDA), the Federal Trade Commission (FTC), the Consumer Product
Safety Commission (CPSC), the United States Department of Labor, the Environmental Protection
Agency and various other federal, state, local and foreign authorities regarding the manufacturing,
processing, packaging, storage, labeling, sale and distribution of our products and the health and safety
of our employees. Our manufacturing facilities and products are subject to periodic inspection by
federal, state, local and foreign authorities. In addition, our meat processing operation in Portland,
Maine is subject to daily inspection by the USDA.
We are subject to the Food, Drug and Cosmetic Act and the Food Safety Modernization Act and
the regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs,
among other things, the manufacturing, composition and ingredients, labeling, packaging and safety of
food. We are also subject to the U.S. Bio-Terrorism Act of 2002 which imposes on us import and export
regulations. Under the Bio-Terrorism Act, among other things, we are required to provide specific
information about the food products we ship into the United States and to register our manufacturing,
warehouse and distribution facilities with the FDA.
7
We believe that we are currently in substantial compliance with all material governmental laws and
regulations and maintain all material permits and licenses relating to our operations. Nevertheless,
there can be no assurance that we are in full compliance with all such laws and regulations or that we
will be able to comply with any future laws and regulations in a cost-effective manner. Failure by us to
comply with applicable laws and regulations could subject us to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions, all of which could have a
material adverse effect on our business, consolidated financial condition, results of operations or
liquidity.
Environmental Matters
We are subject to environmental laws and regulations in the normal course of business. We have
not made any material expenditures during the last three fiscal years in order to comply with
environmental laws or regulations. Based on our experience to date, we believe that the future cost of
compliance with existing environmental laws and regulations (and liability for known environmental
conditions) will not have a material adverse effect on our business, consolidated financial condition,
results of operations or liquidity. However, we cannot predict what environmental laws or regulations
will be enacted in the future or how existing or future laws or regulations will be enforced,
administered or interpreted, nor can we predict the amount of future expenditures that may be
required in order to comply with such environmental laws or regulations or to respond to such
environmental claims.
Available Information
Under the Securities Exchange Act of 1934, as amended, we are required to file with or furnish to
the SEC annual, quarterly and current reports, proxy and information statements and other
information. You may read and copy any document we file with the SEC at the SEC’s Public Reference
Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference room. The SEC maintains an internet site at http://www.sec.gov
that contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC. We file electronically with the SEC.
We make available, free of charge, through the investor relations section of our web site, our
reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, filed with or furnished to the
SEC as soon as reasonably practicable after they are filed with the SEC. The address for the investor
relations section of our web site is http://ir.bgfoods.com.
The full text of the charters for each of the audit, compensation and nominating and governance
committees of our board of directors as well as our Code of Business Conduct and Ethics is available
at the investor relations section of our web site, http://ir.bgfoods.com. Our Code of Business Conduct
and Ethics applies to all of our employees, officers and directors, including our chief executive officer
and our chief financial officer and principal accounting officer. We intend to disclose any amendment
to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to our chief
executive officer or chief financial officer and principal accounting officer in the investor relations
section of our web site.
The information contained on our web site is not part of, and is not incorporated in, this or any
other report we file with or furnish to the SEC.
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Item 1A. Risk Factors.
Any investment in our company will be subject to risks inherent to our business. Before making an
investment decision, investors should carefully consider the risks described below together with all of
the other information included in this report. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties that we are not aware of or focused
on or that we currently deem immaterial may also impair our business operations. This report is
qualified in its entirety by these risk factors.
Any of the following risks could materially and adversely affect our business, consolidated financial
condition, results of operations or liquidity. In that case, holders of our securities may lose all or part
of their investment.
Risks Specific to Our Company
The packaged food industry is highly competitive.
The packaged food industry is highly competitive. Numerous brands and products, including
private label products, compete for shelf space and sales, with competition based primarily on product
quality, convenience, price, trade promotion, brand recognition and loyalty, customer service, effective
consumer advertising and promotional activities and the ability to identify and satisfy emerging
consumer preferences. We compete with a significant number of companies of varying sizes, including
divisions or subsidiaries of larger companies. Many of these competitors have multiple product lines,
substantially greater financial and other resources available to them and may have lower fixed costs
and/or are substantially less leveraged than our company. If we are unable to continue to compete
successfully with these companies or if competitive pressures or other factors cause our products to lose
market share or result in significant price erosion, our business, consolidated financial condition, results
of operations or liquidity could be materially and adversely affected.
We may be unable to maintain our profitability in the face of a consolidating retail environment.
Our largest customer, Wal-Mart, accounted for 19.7% of our fiscal 2012 net sales, and our ten
largest customers together accounted for approximately 50.7% of our fiscal 2012 net sales. As the retail
grocery trade continues to consolidate and our retail customers grow larger and become more
sophisticated, our retail customers may demand lower pricing and increased promotional programs.
Further, these customers are reducing their inventories and increasing their emphasis on products that
hold either the number one or number two market position and private label products. If we fail to use
our sales and marketing expertise to maintain our category leadership positions to respond to these
trends, or if we lower our prices or increase promotional support of our products and are unable to
increase the volume of our products sold, our profitability and financial condition may be adversely
affected.
We are vulnerable to decreases in the supply and increases in the price of raw materials and labor,
manufacturing, distribution and other costs, and we may not be able to offset increasing costs by increasing
prices to our customers.
We purchase agricultural products, meat, poultry, other raw materials, ingredients and packaging
materials from growers, commodity processors, other food companies and packaging manufacturers.
Raw materials, ingredients and packaging materials are subject to increases in price attributable to a
number of factors, including changes in crop size, federal and state agricultural programs, export
demand, currency exchange rates, energy and fuel costs, weather conditions during the growing and
harvesting seasons, insects, plant diseases and fungi, and glass, metal and plastic prices. Fluctuations in
commodity prices can lead to retail price volatility and intensive price competition, and can influence
consumer and trade buying patterns. The cost of labor, manufacturing, energy, fuel, packaging materials
9
and other costs related to the production and distribution of our products can from time to time
increase significantly and unexpectedly. We attempt to manage these risks by entering into short-term
supply contracts and advance commodities purchase agreements from time to time, by implementing
cost saving measures and by raising sales prices. During the past three years, our cost saving measures
and sales price increases offset increases to our raw material, ingredient and packaging costs. To the
extent we are unable to offset present and future cost increases, our operating results will be negatively
impacted.
We may be unable to offset any reduction in net sales in our mature food product categories through an
increase in trade spending for these categories or an increase in net sales in other categories.
Most of our food product categories are mature and certain categories have experienced declining
consumption rates from time to time. If consumption rates and sales in our mature food product
categories decline, our revenue and operating income may be adversely affected, and we may not be
able to offset this decrease in business with increased trade spending or an increase in sales or
profitability of other products and product categories.
We may have difficulties integrating future acquisitions or identifying new acquisitions.
Part of our strategy is to grow through acquisition and we intend to pursue additional acquisitions
of food and household product lines and businesses. However, we may be unable to identify and
consummate additional acquisitions or may be unable to successfully integrate and manage the product
lines or businesses that we have recently acquired or may acquire in the future. In addition, we may be
unable to achieve a substantial portion of any anticipated cost savings from future acquisitions or other
anticipated benefits in the timeframe we anticipate, or at all. Moreover, any acquired product lines or
businesses may require a greater than anticipated amount of trade, promotional and capital spending.
Acquisitions involve numerous risks, including difficulties in the assimilation of the operations,
technologies, services and products of the acquired companies, personnel turnover and the diversion of
management’s attention from other business concerns. Any inability by us to integrate and manage any
product lines or businesses that we have recently acquired or may acquire in the future in a timely and
efficient manner, any inability to achieve a substantial portion of any anticipated cost savings or other
anticipated benefits from these acquisitions in the time frame we anticipate or any unanticipated
required increases in trade, promotional or capital spending could adversely affect our business,
consolidated financial condition, results of operations or liquidity. Moreover, future acquisitions by us
could result in our incurring substantial additional indebtedness, being exposed to contingent liabilities
or incurring the impairment of goodwill and other intangible assets, all of which could adversely affect
our financial condition, results of operations and liquidity.
We have substantial indebtedness, which could restrict our ability to pay dividends and impact our financing
options and liquidity position.
At December 29, 2012, we had total long-term indebtedness of $641.2 million (before debt
discount), including $392.7 million principal amount of senior secured indebtedness and $248.5 million
principal amount of senior unsecured indebtedness. Our ability to pay dividends is subject to
contractual restrictions contained in the instruments governing our indebtedness. Although our credit
agreement and the first supplemental indenture relating to our senior notes (which we refer to as the
senior notes indenture) contain covenants that restrict our ability to incur debt, as long as we meet
these covenants we will be able to incur additional indebtedness. The degree to which we are leveraged
on a consolidated basis could have important consequences to the holders of our securities, including:
(cid:129) our ability in the future to obtain additional financing for working capital, capital expenditures
or acquisitions may be limited;
10
(cid:129) we may not be able to refinance our indebtedness on terms acceptable to us or at all;
(cid:129) a significant portion of our cash flow is likely to be dedicated to the payment of interest on our
indebtedness, thereby reducing funds available for future operations, capital expenditures,
acquisitions and/or dividends on our common stock; and
(cid:129) we may be more vulnerable to economic downturns and be limited in our ability to withstand
competitive pressures.
We are subject to restrictive debt covenants and other requirements related to our debt that limit our business
flexibility by imposing operating and financial restrictions on our operations.
The agreements governing our indebtedness impose significant operating and financial restrictions
on us. These restrictions prohibit or limit, among other things:
(cid:129) the incurrence of additional indebtedness and the issuance of certain preferred stock or
redeemable capital stock;
(cid:129) the payment of dividends on, and purchase or redemption of, capital stock;
(cid:129) a number of restricted payments, including investments;
(cid:129) specified sales of assets;
(cid:129) specified transactions with affiliates;
(cid:129) the creation of certain types of liens;
(cid:129) consolidations, mergers and transfers of all or substantially all of our assets; and
(cid:129) entry into certain sale and leaseback transactions.
Our credit agreement requires us to maintain specified financial ratios and satisfy financial
condition tests, including, without limitation, the following: a maximum leverage ratio and a minimum
interest coverage ratio.
Our ability to comply with the ratios or tests may be affected by events beyond our control,
including prevailing economic, financial and industry conditions. A breach of any of these covenants, or
failure to meet or maintain ratios or tests could result in a default under our credit agreement and/or
our senior notes indenture. Certain events of default under our credit agreement and our senior notes
indenture would prohibit us from paying dividends on our common stock. In addition, upon the
occurrence of an event of default under our credit agreement or our senior notes indenture, the
lenders could elect to declare all amounts outstanding under the credit agreement and the senior notes,
together with accrued interest, to be immediately due and payable. If we were unable to repay those
amounts, the credit agreement lenders could proceed against the security granted to them to secure
that indebtedness. If the lenders accelerate the payment of the indebtedness, our assets may not be
sufficient to repay in full this indebtedness and our other indebtedness.
To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on
many factors beyond our control.
Our ability to make interest payments on and to refinance our indebtedness, and to fund planned
capital expenditures and potential acquisitions depends on our ability to generate cash flow from
operations in the future. This ability, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control.
11
A significant portion of our cash flow from operations is dedicated to servicing our debt
requirements. In addition, in accordance with our current dividend policy we intend to continue
distributing a significant portion of any remaining cash flow to our stockholders as dividends.
Our ability to continue to expand our business is, to a certain extent, dependent upon our ability
to borrow funds under our credit agreement and to obtain other third-party financing, including
through the issuance and sale of additional debt or equity securities.
Financial market conditions may impede our access to, or increase the cost of, financing for acquisitions.
Any future financial market disruptions or tightening of the credit markets, may make it more
difficult for us to obtain financing for acquisitions or increase the cost of obtaining financing. In
addition, our borrowing costs can be affected by short and long-term debt ratings assigned by
independent rating agencies that are based, in significant part, on our performance as measured by
credit metrics such as interest coverage and leverage ratios. A decrease in these ratings could increase
our cost of borrowing or make it more difficult for us to obtain financing.
Future disruptions in the credit markets or other factors, could impair our ability to refinance our debt upon
terms acceptable to us or at all.
Our $200.0 million revolving credit facility and our $144.4 million of tranche A term loan
borrowings mature on November 30, 2016, our $248.5 million of senior notes mature on January 15,
2018 and our $223.3 million of tranche B term loan borrowings mature on November 30, 2018
(provided that the maturity date of the tranche B term loans will be accelerated to October 17, 2017 if
our senior notes are not refinanced on or prior to that date). Our ability to raise debt or equity capital
in the public or private markets in order to effect a refinancing of our debt at or prior to maturity
could be impaired by various factors, including factors beyond our control. For example, in recent years
U.S. credit markets experienced significant dislocations and liquidity disruptions that caused the spreads
on prospective debt financings to widen considerably. These circumstances materially impacted liquidity
in the debt markets, making financing terms for borrowers less attractive, and in certain cases resulted
in the unavailability of certain types of debt financing. Any future uncertainty in the credit markets
could negatively impact our ability to access additional debt financing or to refinance existing
indebtedness on favorable terms, or at all. In addition, any future uncertainty in other financial markets
in the U.S. could make it more difficult or costly for us to raise capital through the issuance of
common stock or other equity securities. Any of these risks could impair our ability to fund our
operations or limit our ability to expand our business or increase our interest expense, which could
have a material adverse effect on our financial results.
If we are unable to refinance our indebtedness at or prior to maturity on commercially reasonable
terms or at all, we would be forced to seek other alternatives, including:
(cid:129) sales of assets;
(cid:129) sales of equity; and
(cid:129) negotiations with our lenders or noteholders to restructure the applicable debt.
If we are forced to pursue any of the above options, our business and/or the value of an
investment in our securities could be adversely affected.
We rely on co-packers for a significant portion of our manufacturing needs, and the inability to enter into
additional or future co-packing agreements may result in our failure to meet customer demand.
We rely upon co-packers for a significant portion of our manufacturing needs. The success of our
business depends, in part, on maintaining a strong sourcing and manufacturing platform. We believe
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that there are a limited number of competent, high-quality co-packers in the industry, and if we were
required to obtain additional or alternative co-packing agreements or arrangements in the future, we
can provide no assurance that we would be able to do so on satisfactory terms or in a timely manner.
Our inability to enter into satisfactory co-packing agreements could limit our ability to implement our
business plan or meet customer demand.
We rely on the performance of major retailers, wholesalers, specialty distributors and mass merchants for the
success of our business, and should they perform poorly or give higher priority to other brands or products,
our business could be adversely affected.
We sell our products principally to retail outlets and wholesale distributors including, traditional
supermarkets, mass merchants, warehouse clubs, wholesalers, food service distributors and direct
accounts, specialty food distributors, military commissaries and non-food outlets such as drug store
chains and dollar stores. The replacement by or poor performance of our major wholesalers, retailers
or chains or our inability to collect accounts receivable from our customers could materially and
adversely affect our results of operations and financial condition. In addition, our customers offer
branded and private label products that compete directly with our products for retail shelf space and
consumer purchases. Accordingly, there is a risk that our customers may give higher priority to their
own products or to the products of our competitors. In the future, our customers may not continue to
purchase our products or provide our products with adequate levels of promotional support.
We may be unable to anticipate changes in consumer preferences, which may result in decreased demand for
our products.
Our success depends in part on our ability to anticipate and offer products that appeal to the
changing tastes, dietary habits and product packaging preferences of consumers in the market
categories in which we compete. If we are not able to anticipate, identify or develop and market
products that respond to these changes in consumer preferences, demand for our products may decline
and our operating results may be adversely affected. In addition, we may incur significant costs related
to developing and marketing new products or expanding our existing product lines in reaction to what
we perceive to be increased consumer preference or demand. Such development or marketing may not
result in the volume of sales or profitability anticipated.
Severe weather conditions and natural disasters can affect crop supplies and reduce our operating results.
Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or
pestilence, may affect the supply of the raw materials that we use for our products. Our maple syrup
products, for instance, are particularly susceptible to severe freezing conditions in Qu´ebec, Canada and
Vermont during the season in which maple syrup is produced. Competing manufacturers can be
affected differently by weather conditions and natural disasters depending on the location of their
supplies. If our supplies of raw materials are reduced, we may not be able to find supplemental supply
sources on favorable terms or at all, which could adversely affect our business and operating results.
Most of our products are sourced from single manufacturing sites.
Our products are manufactured at many different manufacturing facilities, including our seven
manufacturing facilities and manufacturing facilities operated by our co-packers. However, in most
cases, individual products are produced only at a single location. If any of these manufacturing
locations experiences a disruption for any reason, including a work stoppage, power failure, fire, or
weather related condition or natural disaster, etc., this could result in a significant reduction or
elimination of the availability of some of our products. If we were not able to obtain alternate
production capability in a timely manner or on satisfactory terms, this could have a material adverse
effect on our business, consolidated financial condition, results of operations or liquidity.
13
Our operations are subject to numerous laws and governmental regulations, exposing us to potential claims
and compliance costs that could adversely affect our business.
Our operations are subject to extensive regulation by the U.S. Food and Drug Administration
(FDA), the United States Department of Agriculture (USDA), the Federal Trade Commission (FTC),
the Consumer Product Safety Commission (CPSC), the United States Department of Labor, the
Environmental Protection Agency and various other federal, state, local and foreign authorities. Any
changes in these laws and regulations, or any changes in how existing or future laws or regulations will
be enforced, administered or interpreted could increase the cost of developing, manufacturing and
distributing our products or otherwise increase the cost of conducting our business, or expose us to
additional risk of liabilities and claims, which could have a material adverse effect on our business,
consolidated financial condition, results of operations or liquidity. In addition, failure by us to comply
with applicable laws and regulations, including future laws and regulations, could subject us to civil
remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which
could have a material adverse effect on our business, consolidated financial condition, results of
operations or liquidity. See Item 1, ‘‘Business—Government Regulation’’ and ‘‘—Environmental
Matters.’’
Failure by third-party co-packers or suppliers of raw materials to comply with food safety, environmental or
other regulations may disrupt our supply of certain products and adversely affect our business.
We rely on co-packers to produce certain of our products and on other suppliers to supply raw
materials. Such co-packers and other suppliers, whether in the United States or outside the United
States, are subject to a number of regulations, including food safety and environmental regulations.
Failure by any of our co-packers or other suppliers to comply with regulations, or allegations of
compliance failure, may disrupt their operations. Disruption of the operations of a co-packer or other
suppliers could disrupt our supply of product or raw materials, which could have an adverse effect on
our business, consolidated financial condition, results of operations or liquidity. Additionally, actions we
may take to mitigate the impact of any such disruption or potential disruption, including increasing
inventory in anticipation of a potential production or supply interruption, may adversely affect our
business, consolidated financial condition, results of operations or liquidity.
We may be subject to significant liability should the consumption of any of our products cause injury, illness
or death.
The sale of food products for human consumption involves the risk of injury to consumers. Such
injuries may result from mislabeling, tampering by unauthorized third parties or product contamination
or spoilage, including the presence of foreign objects, substances, chemicals, other agents or residues
introduced during the growing, manufacturing, storage, handling or transportation phases of production.
Under certain circumstances, we may be required to recall products, leading to a material adverse
effect on our business. Even if a situation does not necessitate a recall, product liability claims might be
asserted against us. We have from time to time been involved in product liability lawsuits, none of
which have been material to our business. While we are subject to governmental inspection and
regulations and believe our facilities comply in all material respects with all applicable laws and
regulations, if the consumption of any of our products causes, or is alleged to have caused, a health-
related illness in the future we may become subject to claims or lawsuits relating to such matters. Even
if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any
assertion that our products caused injury, illness or death could adversely affect our reputation with
existing and potential customers and our corporate and brand image. Moreover, claims or liabilities of
this sort might not be covered by our insurance or by any rights of indemnity or contribution that we
may have against others. We maintain product liability insurance in an amount that we believe to be
adequate. However, we cannot be sure that we will not incur claims or liabilities for which we are not
14
insured or that exceed the amount of our insurance coverage. Additionally, we do not maintain product
recall insurance. A product liability judgment against us or a product recall could have a material
adverse effect on our business, consolidated financial condition, results of operations or liquidity.
Consumer concern regarding the safety and quality of food products or health concerns could adversely affect
sales of certain of our products.
If consumers in our principal markets lose confidence in the safety and quality of our food
products even without a product liability claim or a product recall, our business could be adversely
affected. Consumers have been increasingly focused on food safety and health and wellness with respect
to the food products they buy. We have been and will continue to be impacted by publicity concerning
the health implications of food products generally, which could negatively influence consumer
perception and acceptance of our products and marketing programs. Developments in any of these
areas could cause our results to differ materially from results that have been or may be projected.
Risk associated with foreign suppliers and co-packers, including changes in import/export duties, wage rates,
political or economic climates, or exchange rates, may adversely affect our operations.
Our relationships with foreign suppliers and co-packers subject us to the risks of doing business
outside the United States. The countries from which we source our products may be subject to political
and economic instability, and may periodically enact new or revise existing laws, taxes, duties, quotas,
tariffs, currency controls or other restrictions to which we are subject. Our products are subject to
import duties and other restrictions, and the U.S. government may periodically impose new or revise
existing duties, quotas, tariffs or other restrictions to which we are subject. In addition, changes in
respective wage rates among the countries from which we and our competitors source product could
substantially impact our competitive position. Changes in exchange rates, import/export duties or
relative international wage rates applicable to us or our competitors could adversely impact our
business, financial condition and results of operations. These changes may impact us in a different
manner than our competitors.
A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future costs
relating to the production of maple syrup products.
We purchase the majority of our maple syrup requirements from suppliers in Qu´ebec, Canada. A
weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future
costs relating to the production of our maple syrup products to the extent we have not purchased
Canadian dollars or otherwise entered into a currency hedging arrangement in advance of any such
weakening of the U.S. dollar.
Litigation regarding our trademarks and any other proprietary rights and intellectual property infringement
claims may have a significant negative impact on our business.
We maintain an extensive trademark portfolio that we consider to be of significant importance to
our business. If the actions we take to establish and protect our trademarks and other proprietary
rights are not adequate to prevent imitation of our products by others or to prevent others from
seeking to block sales of our products as an alleged violation of their trademarks and proprietary rights,
it may be necessary for us to initiate or enter into litigation in the future to enforce our trademark
rights or to defend ourselves against claimed infringement of the rights of others. Any legal proceedings
could result in an adverse determination that could have a material adverse effect on our business,
consolidated financial condition, results of operations or liquidity.
15
We face risks associated with our defined benefit pension plans and multiemployer pension plan obligations.
We maintain three defined benefit pension plans that cover substantially all of our employees. A
deterioration in the value of plan assets resulting from poor market performance, a general financial
downturn or otherwise could cause an increase in the amount of contributions we are required to make
to these plans. For example, our defined benefit pension plans may from time to time move from an
overfunded to underfunded status driven by decreases in plan asset values that may result from changes
in long-term interests rates and disruptions in U.S. or global financial markets. Additionally, historically
low interest rates coupled with poor market performance has the effect of decreasing the funded status
of these plans which results in greater contributions. For a more detailed description of these plans, see
Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Critical Accounting Policies; Use of Estimates—Pension Expenses’’ and Note 11, ‘‘Pension Benefits,’’ to
our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
We also participate in a multiemployer pension plan maintained by the labor union representing
certain of our employees at our Portland, Maine facility. We make periodic contributions to this plan
pursuant to the terms of a collective bargaining agreement. In the event that we withdraw from
participation in this plan or substantially reduce our participation in this plan (such as due to a
workforce reduction), applicable law could require us to make withdrawal liability payments to the
plan, and we would have to reflect that liability on our balance sheet. The amount of our withdrawal
liability would depend on the extent of this plan’s funding of vested benefits at the time of our
withdrawal. Furthermore, our withdrawal liability could increase as the number of employers
participating in this plan decreases.
The multiemployer plan, to which we contribute, has significant underfunded liabilities. Due to the
level of underfunding, this plan has been determined to be in ‘‘critical’’ status. While this plan is in
critical status, we are required to make additional plan contributions until we agree to a new collective
bargaining agreement that implements a rehabilitation plan to improve the plan’s funded status.
Accordingly, our required contributions to this plan may increase substantially when our next collective
bargaining agreement is executed.
For a more detailed description of this multiemployer plan, see Note 11, ‘‘Pension Benefits,’’ to
our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
An obligation to make additional, unanticipated contributions to our defined benefit plans or the
multiemployer plan described above could reduce the cash available for working capital and other
corporate uses, and may have a material adverse effect on our business, consolidated financial position,
results of operations and liquidity.
Our financial well-being could be jeopardized by unforeseen changes in our employees’ collective bargaining
agreements, shifts in union policy or labor disruptions in the food industry.
As of December 29, 2012, approximately 34% of our 999 employees were covered by collective
bargaining agreements. A prolonged work stoppage or strike at any of our facilities with union
employees or a significant work disruption from other labor disputes in the food or related industries
could have a material adverse effect on our business, consolidated financial condition, results of
operations or liquidity. If prior to the expiration of any of our collective bargaining agreements we are
unable to reach new agreements without union action or any such new agreements are not on terms
satisfactory to us, our business, consolidated financial condition, results of operations or liquidity could
be materially and adversely affected.
16
If we are unable to retain our key management personnel, our growth and future success may be impaired
and our results of operations could suffer as a result.
Our success depends to a significant degree upon the continued contributions of senior
management, certain of whom would be difficult to replace. As a result, departure by members of our
senior management could have a material adverse effect on our business and results of operations. In
addition, we do not maintain key-man life insurance on any of our executive officers.
We are a holding company and we rely on dividends, interest and other payments, advances and transfers of
funds from our subsidiaries to meet our obligations.
We are a holding company, with all of our assets held by our direct and indirect subsidiaries, and
we rely on dividends and other payments or distributions from our subsidiaries to meet our debt service
obligations and to enable us to pay dividends. The ability of our subsidiaries to pay dividends or make
other payments or distributions to us depends on their respective operating results and may be
restricted by, among other things, the laws of their jurisdiction of organization (which may limit the
amount of funds available for the payment of dividends), agreements of those subsidiaries, our credit
agreement, our senior notes indenture and the covenants of any future outstanding indebtedness we or
our subsidiaries incur.
Future changes that increase cash taxes payable by us could significantly decrease our future cash flow
available to make interest and dividend payments with respect to our securities.
We are able to amortize goodwill and certain intangible assets within the meaning of Section 197
of the Internal Revenue Code of 1986. We expect to be able to amortize for tax purposes
approximately $497.3 million between 2012 and 2027. The expected annual deductions are
approximately $50.6 million for fiscal 2013, approximately $45.8 million for fiscal 2014, approximately
$44.7 million per year for fiscal 2015 through 2017, approximately $42.1 million for fiscal 2018,
approximately $37.7 million per year for fiscal 2019 and 2020, approximately $35.6 million for fiscal
2021, approximately $24.7 million for fiscal 2022, approximately $22.5 million per year for fiscal 2023
through 2025, approximately $20.6 million for fiscal 2026 and approximately $0.9 million for fiscal 2027.
If there is a change in U.S. federal tax policy that reduces any of these available deductions or results
in an increase in our corporate tax rate, our cash taxes payable may increase, which could significantly
reduce our future cash and impact our ability to make interest and dividend payments.
A change in the assumptions used to value our goodwill or our indefinite-lived intangible assets could
negatively affect our consolidated results of operations and net worth.
Our total assets include substantial goodwill and indefinite-lived intangible assets (trademarks).
These assets are tested for impairment at least annually and whenever events or circumstances occur
indicating that goodwill or indefinite-lived intangibles might be impaired. The annual goodwill
impairment test involves a two-step process. The first step of the impairment test involves comparing
our company’s market capitalization with our company’s carrying value, including goodwill. If the
carrying value of our company exceeds our market capitalization, we perform the second step of the
impairment test to determine the amount of the impairment loss. The second step of the goodwill
impairment test involves comparing the implied fair value of goodwill with the carrying value and
recognizing a loss for the difference. We test our indefinite-lived intangibles by comparing the fair value
with the carrying value and recognize a loss for the difference. We estimate the fair value of our
indefinite-lived intangibles by applying third party market value indicators to our adjusted EBITDA or
net sales. Calculating our fair value for these purposes requires significant estimates and assumptions
by management. We completed our annual impairment tests for fiscal 2012, 2011 and 2010 with no
adjustments to the carrying values of goodwill and indefinite-lived intangibles. However, materially
different, assumptions regarding the future performance of our businesses could result in significant
17
impairment losses. In addition, any significant decline in our market capitalization, even if due to
macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that
all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash
charge to operations, could have a material adverse effect on our business, consolidated financial
condition and results of operations.
Any future financial market disruptions or tightening of the credit markets could expose us to additional
credit risks from customers and supply risks from suppliers and co-packers.
Any future financial market disruptions or tightening of the credit markets could result in some of
our customers experiencing a significant decline in profits and/or reduced liquidity. A significant
adverse change in the financial and/or credit position of a customer could require us to assume greater
credit risk relating to that customer and could limit our ability to collect receivables. A significant
adverse change in the financial and/or credit position of a supplier or co-packer could result in an
interruption of supply. This could have a material adverse effect on our business, consolidated financial
condition, results of operations and liquidity.
Risks Relating to our Securities
Holders of our common stock may not receive the level of dividends provided for in our dividend policy or any
dividends at all.
Dividend payments are not mandatory or guaranteed and holders of our common stock do not
have any legal right to receive, or require us to pay, dividends. Our board of directors may, in its sole
discretion, decrease the level of dividends provided for in our dividend policy or entirely discontinue
the payment of dividends. Future dividends with respect to shares of our capital stock, if any, depend
on, among other things, our results of operations, cash requirements, financial condition, contractual
restrictions (including restrictions in our credit agreement and senior notes indenture), business
opportunities, provisions of applicable law (including certain provisions of the Delaware General
Corporation Law) and other factors that our board of directors may deem relevant.
If our cash flows from operating activities were to fall below our minimum expectations (or if our
assumptions as to capital expenditures or interest expense were too low or our assumptions as to the
sufficiency of our revolving credit facility to finance our working capital needs were to prove incorrect),
we may need either to reduce or eliminate dividends or, to the extent permitted under our credit
agreement and senior notes indenture, fund a portion of our dividends with borrowings or from other
sources. If we were to use working capital or permanent borrowings to fund dividends, we would have
less cash and/or borrowing capacity available for future dividends and other purposes, which could
negatively impact our financial condition, results of operations, liquidity and ability to maintain or
expand our business.
Our dividend policy may negatively impact our ability to finance capital expenditures, operations or
acquisition opportunities.
Under our dividend policy, a substantial portion of our cash generated by our business in excess of
operating needs, interest and principal payments on indebtedness, and capital expenditures sufficient to
maintain our properties and assets is in general distributed as regular quarterly cash dividends to the
holders of our common stock. As a result, we may not retain a sufficient amount of cash to finance
growth opportunities or unanticipated capital expenditure needs or to fund our operations in the event
of a significant business downturn. We may have to forego growth opportunities or capital expenditures
that would otherwise be necessary or desirable if we do not find alternative sources of financing. If we
do not have sufficient cash for these purposes, our financial condition and our business will suffer.
18
Our certificate of incorporation authorizes us to issue without stockholder approval preferred stock that may
be senior to our common stock in certain respects.
Our certificate of incorporation authorizes the issuance of preferred stock without stockholder
approval and, in the case of preferred stock, upon such terms as the board of directors may determine.
The rights of the holders of shares of our common stock will be subject to, and may be adversely
affected by, the rights of holders of any class or series of preferred stock that may be issued in the
future, including any preferential rights that we may grant to the holders of preferred stock. The terms
of any preferred stock we issue may place restrictions on the payment of dividends to the holders of
our common stock. If we issue preferred stock that is senior to our common stock in right of dividend
payment, and our cash flows from operating activities or surplus are insufficient to support dividend
payments to the holders of preferred stock, on the one hand, and to the holders common stock, on the
other hand, we may be forced to reduce or eliminate dividends to the holders of our common stock.
Future sales or the possibility of future sales of a substantial number of shares of our common stock or other
securities convertible or exchangeable into common stock may depress the price of our common stock.
We may issue shares of our common stock or other securities convertible or exchangeable into
common stock from time to time in future financings or as consideration for future acquisitions and
investments. In the event any such future financing, acquisition or investment is significant, the number
of shares of our common stock or other securities convertible or exchangeable into common stock that
we may issue may in turn be significant. In addition, we may grant registration rights covering shares of
our common stock or other securities convertible or exchangeable into common stock, as applicable,
issued in connection with any such future financing, acquisitions and investments.
Future sales or the availability for sale of a substantial number of shares of our common stock or
other securities convertible or exchangeable into common stock, whether issued and sold pursuant to
our currently effective shelf registration statement or otherwise, would dilute our earnings per share
and the voting power of each share of common stock outstanding prior to such sale or distribution,
could adversely affect the prevailing market price of our securities and could impair our ability to raise
capital through future sales of our securities.
Our certificate of incorporation and bylaws and several other factors could limit another party’s ability to
acquire us and deprive our investors of the opportunity to obtain a takeover premium for their securities.
Our certificate of incorporation and bylaws contain certain provisions that may make it difficult for
another company to acquire us and for holders of our securities to receive any related takeover
premium for their securities. For example, our certificate of incorporation authorizes the issuance of
preferred stock without stockholder approval and upon such terms as the board of directors may
determine. The rights of the holders of shares of our common stock will be subject to, and may be
adversely affected by, the rights of holders of any class or series of preferred stock that may be issued
in the future.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate headquarters are located at Four Gatehall Drive, Parsippany, NJ 07054. Our
manufacturing plants are generally located near major customer markets and raw materials. Of our
seven manufacturing facilities, six are owned and one is leased. Management believes that our
manufacturing plants have sufficient capacity to accommodate our planned growth. As of December 29,
19
2012, we owned or leased the offices, manufacturing and warehouse facilities and distribution centers
described in the table below:
Facility Location
Owned/Leased
Description
Hurlock, Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portland, Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stoughton, Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
St. Johnsbury, Vermont
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Williamstown, New Jersey . . . . . . . . . . . . . . . . . . . . . . . . .
Yadkinville, North Carolina . . . . . . . . . . . . . . . . . . . . . . . .
St. Evariste, Qu´ebec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sharptown, Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parsippany, New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . .
Roseland, New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Antioch, Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Houston, Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Easton, Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bentonville, Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chicago, Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Manufacturing/Warehouse
Manufacturing/Warehouse
Manufacturing/Warehouse
Manufacturing/Warehouse
Manufacturing/Warehouse
Manufacturing/Warehouse
Storage Facility
Storage Facility
Corporate Headquarters
Manufacturing/Warehouse
Distribution Center
Distribution Center
Distribution Center
Sales Office
Sales Office
Item 3. Legal Proceedings.
The information set forth under the heading ‘‘Legal Proceedings’’ in Note 12 of Notes to
Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K is
incorporated herein by reference.
Item 4. Mine Safety Disclosures.
Not applicable.
20
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
PART II
of Equity Securities.
Market Information
Shares of our common stock are traded on the New York Stock Exchange under the symbol
‘‘BGS’’ and have been so traded since May 23, 2007. The following table sets forth the high and low
sales prices of shares of our common stock for each of the quarterly periods indicated.
Fiscal 2012
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2011
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High
Low
$31.99
$32.84
$27.54
$24.60
$24.64
$21.31
$21.29
$19.60
$26.83
$24.69
$20.99
$22.07
$15.29
$15.67
$16.71
$13.23
Holders
According to the records of our transfer agent, we had 45 holders of record of our common stock
as of February 14, 2013, including Cede & Co. as nominee for The Depository Trust Company (DTC).
Cede & Co. as nominee for DTC holds shares of our common stock on behalf of participants in the
DTC system, which in turn hold the shares of common stock on behalf of beneficial owners.
Performance Graph
Set forth below is a line graph comparing the change in the cumulative total shareholder return on
our company’s common stock with the cumulative total return of the Russell MicroCap Index, the
Russell 2000 Index and the S&P Packaged Foods & Meats Index for the period from December 29,
2007 to December 29, 2012, assuming the investment of $100 on December 29, 2007 and the
reinvestment of dividends. The common stock price performance shown on the graph only reflects the
change in our company’s common stock price relative to the noted indices and is not necessarily
indicative of future price performance.
21
Comparison of 5 Year Cumulative Total Return
Among B&G Foods, Inc. Common Stock, the Russell 2000 Index
and the S&P Packaged Foods & Meats Index
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
12/29/07
1/3/09
1/2/10
1/1/11
12/31/11
12/29/12
B&G Foods Inc
Russell 2000
S&P Packaged Foods & Meats
20FEB201317522571
Copyright(cid:3) 2013 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
Copyright(cid:3) 2013 Russell Investment Group. All rights reserved.
B&G Foods, Inc. (NYSE: BGS) . . . . .
Russell 2000 Index . . . . . . . . . . . . . . .
S&P Packaged Foods & Meats Index . .
$100.00
100.00
100.00
$60.30
66.21
87.54
$110.45
84.20
103.16
$175.36
106.82
120.04
$321.07
102.36
140.68
$400.42
119.09
155.30
12/29/2007
1/3/2009
1/2/2010
1/1/2011
12/31/2011
12/29/2012
*
$100 invested on December 29, 2007 in B&G Foods’ common stock or December 31, 2007 in index, including reinvestment
of dividends. Indexes calculated on month-end basis.
Dividend Policy
General
Our dividend policy reflects a basic judgment that our stockholders would be better served if we
distributed a substantial portion of our cash available to pay dividends to them instead of retaining it in
our business. Under this policy, a substantial portion of the cash generated by our company in excess of
operating needs, interest and principal payments on indebtedness, capital expenditures sufficient to
maintain our properties and other assets is distributed as regular quarterly cash dividends to the
holders of our common stock and not retained by us. We have paid dividends every quarter since our
initial public offering in October 2004.
For fiscal 2012 and fiscal 2011, we had cash flows from operating activities of $100.5 million and
$72.0 million, respectively, and distributed $50.2 million and $38.2 million as dividends, respectively. At
our current dividend rate of $1.16 per share per annum, we expect our aggregate dividend payments in
2013 to be approximately $61.2 million.
22
The following table sets forth the dividends per share we have declared in each of the quarterly
periods of 2012 and 2011:
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.29
$0.27
$0.27
$0.27
$0.23
$0.21
$0.21
$0.21
Fiscal 2012
Fiscal 2011
Under U.S. federal income tax law, distributions to holders of our common stock are taxable to
the extent they are paid out of current or accumulated earnings and profits. Generally, the portion of
the distribution treated as a return of capital should reduce the tax basis in the shares of common stock
up to a holder’s adjusted basis in the common stock, with any excess treated as capital gains. Qualifying
dividend income and the return of capital, if any, will be allocated on a pro-forma basis to all
distributions for each fiscal year. Based on U.S. federal income tax laws, B&G Foods has determined
that for fiscal 2012 and fiscal 2011, 58.2% and 29.6%, respectively, of distributions paid on common
stock will be treated as a return of capital and 41.8% and 70.4%, respectively, will be treated as a
taxable dividend paid from earnings and profits.
Our dividend policy is based upon our current assessment of our business and the environment in
which we operate, and that assessment could change based on competitive or other developments
(which could, for example, increase our need for capital expenditures or working capital), new
acquisition opportunities or other factors. Our board of directors is free to depart from or change our
dividend policy at any time and could do so, for example, if it was to determine that we have
insufficient cash to take advantage of growth opportunities.
Restrictions on Dividend Payments
Our ability to pay future dividends, if any, with respect to shares of our capital stock will depend
on, among other things, our results of operations, cash requirements, financial condition, contractual
restrictions, provisions of applicable law and other factors that our board of directors may deem
relevant. Under Delaware law, our board of directors may declare dividends only to the extent of our
‘‘surplus’’ (which is defined as total assets at fair market value minus total liabilities, minus statutory
capital), or if there is no surplus, out of our net profits for the then current and/or immediately
preceding fiscal years. Our board of directors will periodically and from time to time assess the
appropriateness of the then current dividend policy before actually declaring any dividends.
In general, our senior notes indenture restricts our ability to declare and pay dividends on our
common stock as follows:
(cid:129) we may use up to 100% of our excess cash (as defined below) for the period (taken as one
accounting period) from and including the fiscal quarter beginning January 3, 2010 to the end of
our most recently ended fiscal quarter for which internal financial statements are available at the
time of such payment plus certain incremental funds described in the indenture for the payment
of dividends so long as the fixed charge coverage ratio for the four most recent fiscal quarters
for which internal financial statements are available is not less than 1.6 to 1.0; and
(cid:129) we may not pay any dividends on any dividend payment date if a default or event of default
under our indenture has occurred or is continuing.
Excess cash is defined in our senior notes indenture and under the terms of our credit agreement.
Excess cash is calculated as ‘‘consolidated cash flow,’’ as defined in the indenture and under the terms
of our credit agreement (which, in each case, allows for the add-back of restructuring charges and
which is equivalent to the term adjusted EBITDA), minus the sum of cash tax expense, cash interest
expense, certain capital expenditures, excess tax benefit from issuance of LTIA shares, certain
repayment of indebtedness and the cash portion of the restructuring charges.
23
In addition, the terms of our credit agreement also restrict our ability to declare and pay dividends
on our common stock. In accordance with the terms of our credit agreement, we are not permitted to
declare or pay dividends unless we are permitted to do so under our senior notes indenture. In
addition, our credit agreement does not permit us to pay dividends unless we maintain:
(cid:129) a ‘‘consolidated interest coverage ratio’’ (defined as the ratio of our adjusted EBITDA for any
period of four consecutive fiscal quarters to our consolidated interest expense for such period
payable in cash) of not less than 1.75 to 1.0; and
(cid:129) a ‘‘consolidated total leverage ratio’’ (defined as the ratio of our consolidated total debt, as of
the last day of any period of four consecutive fiscal quarters to our adjusted EBITDA for such
period) of not more than 6.0 to 1.0.
Recent Sales of Unregistered Securities
We did not issue any unregistered securities in fiscal 2012.
Issuer Purchases of Equity Securities
We did not repurchase any shares of our common stock during the fourth quarter of fiscal 2012.
Item 6. Selected Financial Data.
The following selected historical consolidated financial data should be read in conjunction with
Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ and
our audited consolidated financial statements and related notes to those statements included in this
report. The selected historical consolidated financial data as of and for the years ended December 29,
2012 (fiscal 2012), December 31, 2011 (fiscal 2011), January 1, 2011 (fiscal 2010), January 2, 2010
(fiscal 2009) and January 3, 2009 (fiscal 2008) have been derived from our audited consolidated
financial statements. Fiscal 2008 contained 53 weeks and the fiscal years 2012, 2011, 2010 and 2009
each contained 52 weeks.
24
Consolidated Statement of Operations Data(1):
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold(2)
. . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
. . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses(3)
Amortization expense(4)
Operating income . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net(5) . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt(6) . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2012
Fiscal 2011
Fiscal 2010
Fiscal 2009
Fiscal 2008
(In thousands, except per share data and ratios)
$ 633,812
410,469
$ 543,866
366,090
$513,337
345,668
223,343
66,212
8,126
149,005
47,660
10,431
90,914
31,654
177,776
57,618
6,679
113,479
36,675
—
76,804
26,561
167,669
56,495
6,457
104,717
40,342
15,224
49,151
16,772
$501,016
352,283
148,733
53,966
6,450
88,317
49,432
10,220
28,665
11,224
$486,896
352,967
133,929
53,595
6,450
73,884
58,067
—
15,817
6,084
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
59,260
$
50,243
$ 32,379
$ 17,441
$
9,733
Earnings per share data:
Weighted average basic common shares outstanding . . .
Weighted average diluted common shares outstanding . .
Cash dividends declared per common share . . . . . . . .
Basic earnings per common share . . . . . . . . . . . . . . .
Diluted earnings per common share . . . . . . . . . . . . .
$
$
$
49,239
49,557
1.10
1.20
1.20
47,856
48,541
0.86
1.05
1.04
$
$
$
Other Financial Data:
Net cash provided by operating activities . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisition of businesses . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . .
EBITDA(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio of earnings to fixed charges(8)
. . . . . . . . . . . . .
Senior debt / EBITDA(9)
. . . . . . . . . . . . . . . . . . . .
Total debt / EBITDA . . . . . . . . . . . . . . . . . . . . . .
EBITDA / cash interest expense(10) . . . . . . . . . . . . . .
Consolidated Balance Sheet Data (at end of period)(1):
Cash and cash equivalents
. . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . .
$ 100,528
(10,637)
(62,667)
(24,744)
$ 167,858
2.8x
3.9x
3.9x
3.9x
$
72,033
(10,556)
(326,000)
182,575
$ 129,708
3.0x
5.6x
5.6x
4.1x
$
19,219
1,191,968
637,689
$ 361,175
$
16,738
1,132,923
720,107
$ 235,547
47,584
48,284
$
$
$
0.68
0.68
0.67
$ 98,877
(10,965)
(14,602)
(14,534)
$119,740
2.2x
4.0x
4.0x
3.3x
$ 98,738
871,723
477,748
$230,585
39,325
39,358
$
$
$
0.68
0.44
0.44
$ 62,854
(10,704)
—
(44,877)
$103,012
1.5x
3.6x
4.3x
2.2x
$ 39,930
816,894
439,541
$225,608
36,715
36,715
$
$
$
0.81
0.27
0.27
$ 40,496
(10,631)
—
(33,747)
$ 89,436
1.3x
4.1x
6.0x
1.8x
$ 32,559
825,090
535,800
$144,648
(1) We completed the New York Style and Old London acquisition from Chipita America on October 31, 2012. We completed
the Culver Specialty Brands acquisition from Unilever on November 30, 2011. We completed the Don Pepino acquisition
from Violet Packing on November 18, 2010. Each of these acquisitions has been accounted for using the acquisition method
of accounting and, accordingly, the assets acquired, liabilities assumed and results of operations of the acquired business is
included in our consolidated financial statements from the date of acquisition.
(2)
(3)
Included in cost of goods sold for fiscal 2010 is a gain of $1.3 million relating to a legal settlement.
Selling, general and administrative expenses for fiscal 2012 include $1.2 million of transaction costs for the New York Style
and Old London acquisition. Selling, general and administrative expenses for fiscal 2011 include $1.4 million of transaction
costs for the Culver Specialty Brands acquisition. Selling, general and administrative expenses for fiscal 2008 include
$0.7 million of severance and termination charges we incurred relating to a workforce reduction.
(4) Amortization expense includes the amortization of customer relationship and other intangible assets acquired in the New
York Style and Old London acquisition, Culver Specialty Brands, Don Pepino and prior acquisitions.
(5) Fiscal 2011 net interest expense includes a benefit of $0.6 million related to the realized gain on an interest rate swap, a
charge of $1.6 million for the reclassification of the amount recorded in accumulated other comprehensive loss related to
an interest rate swap and a $2.1 million charge relating to the write-off of the remaining amount recorded in accumulated
other comprehensive loss on the interest rate swap due to our early termination of $130.0 million term loan borrowings.
Fiscal 2010 net interest expense includes a charge of $0.4 million relating to the unrealized loss on the interest rate swap,
and a charge of $1.7 million for the reclassification of the amount recorded in accumulated other comprehensive loss
related to the swap. Fiscal 2009 net interest expense includes a $1.5 million benefit relating to the unrealized gain on the
interest rate swap, more than offset by a $1.7 million charge for the reclassification of the amount recorded in accumulated
other comprehensive loss related to the swap. Fiscal 2008 net interest expense includes a $5.6 million charge relating to the
unrealized loss on the interest rate swap subsequent to our determination that the swap was no longer an effective hedge
for accounting purposes and a $0.5 million charge for the reclassification of the amount recorded in accumulated other
comprehensive loss related to the swap.
25
(6) Fiscal 2012 loss on extinguishment of debt includes costs relating to our partial redemption of $101.5 million aggregate
principal amount of our 7.625% senior notes, including the repurchase premium and other expenses of $7.7 million, the
write-off of deferred debt financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on
extinguishment during fiscal 2012 also includes costs related to the amendment and restatement of our credit agreement,
including the write-off of deferred debt financing costs of $0.4 million, unamortized discount of $0.1 million and other
expenses of $0.2 million. Fiscal 2010 loss on extinguishment of debt includes costs relating to our repurchase of senior
subordinated notes, including the repurchase premium of $10.7 million and the write-off of deferred financing costs of
$4.5 million. Fiscal 2009 loss on extinguishment of debt includes costs relating to our repurchase of senior subordinated
notes, including the repurchase premium of $5.8 million and the write-off of deferred debt financing costs of $4.4 million.
(7) EBITDA is a non-GAAP financial measure used by management to measure operating performance. A non-GAAP
financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as
to be different than the most directly comparable measure calculated and presented in accordance with GAAP in our
consolidated balance sheets and related consolidated statements of operations, comprehensive income, changes in
stockholders’ equity and cash flows. EBITDA is defined as net income before net interest expense, income taxes,
depreciation and amortization and loss on extinguishment of debt (see (6) above). We define adjusted EBITDA as
EBITDA adjusted for acquisition-related transaction costs, which include outside fees and expenses and restructuring and
consolidation costs of acquisitions. Management believes that it is useful to eliminate net interest expense, income taxes,
depreciation and amortization, loss on extinguishment of debt and acquisition-related transaction costs because it allows
management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to
generate cash flow from operations. We use EBITDA and adjusted EBITDA in our business operations, among other
things, to evaluate our operating performance, develop budgets and measure our performance against those budgets,
determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA and adjusted
EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and
because covenants in our credit agreement and our senior notes indenture contain ratios based on these measures. As a
result, internal management reports used during monthly operating reviews feature the EBITDA and adjusted EBITDA
metrics. However, management uses these metrics in conjunction with traditional GAAP operating performance and
liquidity measures as part of its overall assessment of company performance and liquidity and therefore does not place
undue reliance on these measures as its only measures of operating performance and liquidity.
EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be an alternative to
operating income or net income as an indicator of operating performance or any other GAAP measure. EBITDA and
adjusted EBITDA are not complete net cash flow measures because EBITDA and adjusted EBITDA are measures of
liquidity that do not include reductions for cash payments for an entity’s obligation to service its debt, fund its working
capital, capital expenditures and acquisitions and pay its income taxes and dividends. Rather, EBITDA and adjusted
EBITDA are two potential indicators of an entity’s ability to fund these cash requirements. EBITDA and adjusted EBITDA
are not complete measures of an entity’s profitability because they do not include costs and expenses for depreciation and
amortization, interest and related expenses, loss on extinguishment of debt, acquisition-related transaction costs and income
taxes. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be
comparable to other similarly titled measures of other companies. However, EBITDA and adjusted EBITDA can still be
useful in evaluating our performance against our peer companies because management believes these measures provide
users with valuable insight into key components of GAAP amounts.
26
A reconciliation of EBITDA and adjusted EBITDA to net income and to net cash provided by operating activities for fiscal
2012, 2011, 2010, 2009 and 2008 along with the components of EBITDA and adjusted EBITDA follows:
Fiscal 2012
Fiscal 2011
Fiscal 2010
Fiscal 2009
Fiscal 2008
Net income . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . .
Interest expense, net(A) . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . .
Loss on extinguishment of debt(B)
. . . . . .
EBITDA . . . . . . . . . . . . . . . . . . . .
. . . .
Acquisition-related transaction costs
Adjusted EBITDA . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . .
Interest expense, net(A) . . . . . . . . . . . . .
. . . .
Acquisition-related transaction costs
Deferred income taxes . . . . . . . . . . . . .
Amortization of deferred financing costs
and bond discount . . . . . . . . . . . . . .
Unrealized loss (gain) on interest rate
$ 59,260
31,654
47,660
18,853
10,431
167,858
1,159
169,017
(31,654)
(47,660)
(1,159)
15,295
$ 50,243
26,561
36,675
16,229
—
129,708
1,418
131,126
(26,561)
(36,675)
(1,418)
13,529
(In thousands)
$ 32,379
16,772
40,342
15,023
15,224
119,740
—
119,740
(16,772)
(40,342)
—
9,452
$ 17,441
11,224
49,432
14,695
10,220
103,012
—
103,012
(11,224)
(49,432)
—
9,445
5,028
2,251
2,016
2,759
swap(A)
. . . . . . . . . . . . . . . . . . . . .
Realized gain on interest rate swap(A)
. . .
Reclassification to net interest expense for
. . . . . . . . . . . . .
Share-based compensation expense . . . . .
Excess tax benefits from share-based
interest rate swap(A)
—
—
—
3,777
—
(612)
3,669
4,098
436
—
1,693
3,747
compensation . . . . . . . . . . . . . . . . .
(8,031)
(1,047)
(326)
Changes in assets and liabilities, net of
(1,541)
—
1,693
4,599
—
$ 9,733
6,084
58,067
15,552
—
89,436
—
89,436
(6,084)
(58,067)
—
7,250
3,169
5,569
—
494
1,032
—
effects of business combinations . . . . . .
(4,085)
(16,327)
19,233
3,543
(2,303)
Net cash provided by operating activities
.
$100,528
$ 72,033
$ 98,877
$ 62,854
$ 40,496
(A) See footnote (5) above.
(B) See footnote (6) above.
(8) We have calculated the ratio of earnings to fixed charges by dividing earnings by fixed charges. For the purpose of this
computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of the sum of interest
on indebtedness, amortized expenses related to indebtedness, reclassification to net interest expense of a portion of the
amount recorded in accumulated other comprehensive loss related to an interest rate swap and an interest component of
lease rental expense. Fixed charges exclude the unrealized loss (gain) on the interest rate swap.
(9) As of the end of each fiscal year presented, senior debt is defined as the face amount all of our outstanding debt, excluding
in the case of fiscal 2009 and 2008, our then outstanding senior subordinated notes.
Fiscal 2012
Fiscal 2011
Fiscal 2010
Fiscal 2009
Fiscal 2008
(In thousands, except ratios)
Current and former senior secured credit
agreement:
Revolving credit facility . . . . . . . . . . . . . .
Term loan due 2013 . . . . . . . . . . . . . . . .
Tranche A term loan due 2016 . . . . . . . . .
Tranche B term loan due 2018 . . . . . . . . .
8% senior notes due 2011 . . . . . . . . . . . . . .
7.625% senior notes due 2018 . . . . . . . . . . .
$ 25,000
—
144,375
233,313
—
248,500
$
—
—
150,000
225,000
—
350,000
$
—
130,000
—
—
—
350,000
$
—
130,000
—
—
240,000
—
$
—
130,000
—
—
240,000
—
Senior debt
. . . . . . . . . . . . . . . . . . . . .
$651,188
$725,000
$480,000
$370,000
$370,000
EBITDA . . . . . . . . . . . . . . . . . . . . . . . .
Senior debt / EBITDA . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . .
Senior debt /adjusted EBITDA . . . . . . . . . .
$167,858
3.9x
$169,017
3.9x
$129,708
5.6x
$131,126
5.5x
$119,740
4.0x
$119,740
4.0x
$103,012
3.6x
$103,012
3.6x
$ 89,436
4.1x
$ 89,436
4.1x
27
(10) Cash interest expense, calculated below, is equal to net interest expense less amortization of deferred financing and bond
discount, unrealized loss on an interest rate swap, realized gain on the interest rate swap and reclassification to net interest
expense of a portion of the amount recorded in accumulated other comprehensive loss related to an interest rate swap.
Fiscal 2012
Fiscal 2011
Fiscal 2010
Fiscal 2009
Fiscal 2008
$58,067
(3,169)
(5,569)
—
(494)
$48,835
$89,436
1.8x
$89,436
1.8x
Interest expense, net . . . . . . . . . . . . . . . . .
Amortization of deferred financing and bond
discount . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain on interest rate swap . .
Realized gain on interest rate swap . . . . . . . .
. . . . .
Reclassification to interest expense, net
$ 47,660
(5,028)
—
—
—
(In thousands, except ratios)
$ 40,342
$ 36,675
$ 49,432
(2,251)
—
612
(3,669)
(2,016)
(436)
—
(1,693)
(2,759)
1,541
—
(1,693)
Cash interest expense . . . . . . . . . . . . . . .
$ 42,632
$ 31,367
$ 36,197
$ 46,521
EBITDA . . . . . . . . . . . . . . . . . . . . . . . .
EBITDA / cash interest expense . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . .
Adjusted EBITDA / cash interest expense . . . .
$167,858
3.9x
$169,017
4.0x
$129,708
4.1x
$131,126
4.2x
$119,740
3.3x
$119,740
3.3x
$103,012
2.2x
$103,012
2.2x
28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following Management’s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under Item 1A, ‘‘Risk Factors’’ and under the heading ‘‘Forward-
Looking Statements’’ below and elsewhere in this report. The following discussion should be read in
conjunction with the consolidated financial statements and related notes included elsewhere in this
report.
General
We manufacture, sell and distribute a diverse portfolio of branded, high quality, shelf-stable foods
and household products, many of which have leading regional or national market shares. In general, we
position our branded products to appeal to the consumer desiring a high quality and reasonably priced
product. We complement our branded product retail sales with institutional and food service sales and
limited private label sales.
Our company has been built upon a successful track record of both organic and acquisition-related
growth. Our goal is to continue to increase sales, profitability and cash flows through organic growth,
strategic acquisitions and new product development. We intend to implement our growth strategy
through the following initiatives: expanding our brand portfolio with disciplined acquisitions of
complementary branded businesses, continuing to develop new products and delivering them to market
quickly, leveraging our multiple channel sales and distribution system and continuing to focus on higher
growth customers and distribution channels.
Since 1996, we have successfully acquired and integrated more than 25 brands into our company.
Most recently, on October 31, 2012, we completed the acquisition of the New York Style, Old London, JJ
Flats and Devonsheer brands from Chipita America, Inc., which we refer to in this report as the ‘‘New
York Style and Old London acquisition.’’ On November 30, 2011, we completed the acquisition of the
Mrs. Dash, Sugar Twin, Baker’s Joy, Molly McButter, Static Guard and Kleen Guard brands from
Conopco, Inc. dba Unilever United States, Inc., which we refer to in this report as the ‘‘Culver
Specialty Brands acquisition.’’ We completed the acquisition of the Don Pepino and Sclafani brands
from Violet Packing LLC on November 18, 2010, which we refer to in this report as the ‘‘Don Pepino
acquisition.’’ Each of these three recent acquisitions has been accounted for using the acquisition
method of accounting and, accordingly, the assets acquired and results of operations of the acquired
businesses are included in our consolidated financial statements from the respective dates of
acquisition. These acquisitions and the application of the acquisition method of accounting affect
comparability between periods.
We are subject to a number of challenges that may adversely affect our businesses. These
challenges, which are discussed above under Item 1A, ‘‘Risk Factors’’ and below under the heading
‘‘Forward-Looking Statements’’ include:
Fluctuations in Commodity Prices and Production and Distribution Costs: We purchase raw
materials, including agricultural products, meat, poultry, ingredients and packaging materials from
growers, commodity processors, other food companies and packaging suppliers located in U.S. and
foreign locations. Raw materials and other input costs, such as fuel and transportation, are subject to
fluctuations in price attributable to a number of factors. Fluctuations in commodity prices can lead to
retail price volatility and intensive price competition, and can influence consumer and trade buying
patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations
can increase from time to time significantly and unexpectedly.
29
We attempt to manage cost inflation risks by locking in prices through short-term supply contracts
and advance commodities purchase agreements and by implementing cost saving measures. We also
attempt to offset rising input costs by raising sales prices to our customers. However, increases in the
prices we charge our customers may lag behind rising input costs. Competitive pressures also may limit
our ability to quickly raise prices in response to rising costs.
We expect minimal cost decreases for raw materials in the market place during 2013 and are
currently locked into our supply and prices for a majority of our most significant commodities
(excluding, among others, maple syrup) through 2013 at a cost decrease of approximately $1.0 million.
During fiscal 2012, we had cost increases (net of cost savings) for raw materials of less than 2% of cost
of goods sold, which were more than offset by our sales price increases. To the extent we are unable to
avoid or offset present and future cost increases by locking in our costs, implementing cost saving
measures or increasing prices to our customers, our operating results could be materially adversely
affected. In addition, should input costs begin to further decline, customers may look for price
reductions in situations where we have locked into purchases at higher costs.
Consolidation in the Retail Trade and Consequent Inventory Reductions: As the retail grocery trade
continues to consolidate and our retail customers grow larger and become more sophisticated, our
retail customers may demand lower pricing and increased promotional programs. These customers are
also reducing their inventories and increasing their emphasis on private label products.
Changing Customer Preferences: Consumers in the market categories in which we compete
frequently change their taste preferences, dietary habits and product packaging preferences.
Consumer Concern Regarding Food Safety, Quality and Health: The food industry is subject to
consumer concerns regarding the safety and quality of certain food products. If consumers in our
principal markets lose confidence in the safety and quality of our food products, even as a result of a
product liability claim or a product recall by a food industry competitor, our business could be
adversely affected.
Fluctuations in Currency Exchange Rates: We purchase the majority of our maple syrup
requirements from suppliers located in Qu´ebec, Canada. Any weakening of the U.S. dollar against the
Canadian dollar, could significantly increase our costs relating to the production of our maple syrup
products to the extent we have not purchased Canadian dollars in advance of any such weakening of
the U.S. dollar.
To confront these challenges, we continue to take steps to build the value of our brands, to
improve our existing portfolio of products with new product and marketing initiatives, to reduce costs
through improved productivity, to address consumer concerns about food safety, quality and health and
to favorably manage currency fluctuations.
Critical Accounting Policies; Use of Estimates
The preparation of financial statements in accordance with accounting principles generally
accepted in the United States requires our management to make a number of estimates and
assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Some of the more significant estimates and assumptions
made by management involve trade and consumer promotion expenses; allowances for excess, obsolete
and unsaleable inventories; pension benefits; acquisition accounting allocations; the recoverability of
goodwill, other intangible assets, property, plant and equipment, and deferred tax assets; the
determination of the useful life of customer relationship intangibles; and the accounting for share-based
compensation expense. Actual results could differ significantly from these estimates and assumptions.
30
Our significant accounting policies are described more fully in note 2 to our consolidated financial
statements included elsewhere in this report. We believe the following critical accounting policies
involve the most significant judgments and estimates used in the preparation of our consolidated
financial statements.
Trade and Consumer Promotion Expenses
We offer various sales incentive programs to customers and consumers, such as price discounts, in-
store display incentives, slotting fees and coupons. The recognition of expense for these programs
involves the use of judgment related to performance and redemption estimates. Estimates are made
based on historical experience and other factors. Actual expenses may differ if the level of redemption
rates and performance vary from our estimates.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined using the first in, first out
and average cost methods. Inventories have been reduced by an allowance for excess, obsolete and
unsaleable inventories. The allowance is an estimate based on our management’s review of inventories
on hand compared to estimated future usage and sales.
Long-Lived Assets
Long-lived assets, such as property, plant and equipment, and intangibles with estimated useful
lives are depreciated or amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated
undiscounted future cash flows, an impairment charge is recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Recoverability of assets held for sale is
measured by a comparison of the carrying amount of an asset or asset group to their fair value less
estimated costs to sell. Estimating future cash flows and calculating fair value of assets requires
significant estimates and assumptions by management.
Goodwill and Other Intangible Assets
Our total assets include substantial goodwill and indefinite-lived intangible assets (trademarks).
These assets are tested for impairment at least annually and whenever events or circumstances occur
indicating that goodwill or indefinite-lived intangibles might be impaired. We perform the annual
impairment tests as of the last day of each fiscal year. The annual goodwill impairment test involves a
two-step process. The first step of the impairment test involves comparing our company’s market
capitalization with our company’s carrying value, including goodwill. If the carrying value of our
company exceeds our market capitalization, we perform the second step of the impairment test to
determine the amount of the impairment loss. The second step of the goodwill impairment test involves
comparing the implied fair value of goodwill with the carrying value and recognizing a loss for the
difference.
We test our indefinite-lived intangibles by comparing the fair value with the carrying value and
recognize a loss for the difference. We estimate the fair value of our indefinite-lived intangibles by
applying third party market value indicators to our adjusted EBITDA or net sales.
Calculating our fair value for these purposes require significant estimates and assumptions by
management. We completed our annual impairment tests for fiscal 2012, 2011 and 2010 with no
adjustments to the carrying values of goodwill and indefinite-lived intangibles. However, materially
31
different, assumptions regarding the future performance of our businesses could result in significant
impairment losses. In addition, any significant decline in our market capitalization, even if due to
macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that
all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash
charge to operations, could have a material adverse effect on our business, consolidated financial
condition and results of operations.
Income Tax Expense Estimates and Policies
As part of the income tax provision process of preparing our consolidated financial statements, we
are required to estimate our income taxes. This process involves estimating our current tax expenses
together with assessing temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and liabilities. We then assess the
likelihood that our deferred tax assets will be recovered from future taxable income and to the extent
we believe the recovery is not likely, we establish a valuation allowance. Further, to the extent that we
establish a valuation allowance or increase this allowance in a financial accounting period, we include
such charge in our tax provision, or reduce our tax benefits in our consolidated statements of
operations. We use our judgment to determine our provision or benefit for income taxes, deferred tax
assets and liabilities and any valuation allowance recorded against our deferred tax assets.
There are various factors that may cause these tax assumptions to change in the near term, and we
may have to record a valuation allowance against our deferred tax assets. We cannot predict whether
future U.S. federal and state income tax laws and regulations might be passed that could have a
material effect on our results of operations. We assess the impact of significant changes to the U.S.
federal and state income tax laws and regulations on a regular basis and update the assumptions and
estimates used to prepare our consolidated financial statements when new regulations and legislation
are enacted. We recognize the benefit of an uncertain tax position that we have taken or expect to take
on the income tax returns we file if it is more likely than not that such tax position will be sustained
based upon its technical merits.
Share-based Compensation Expense
Performance share long-term incentive awards (LTIAs) granted to our executive officers and
certain other members of senior management entitle each participant to earn shares of common stock
upon the attainment of certain performance goals over the applicable performance period. The
recognition of compensation expense for the LTIAs is initially based on the probable outcome of the
performance goals based on the fair value of the award on the date of grant and the anticipated
number of shares to be awarded on a straight-line basis over the applicable performance period. The
fair value of the awards on the date of grant is determined based upon the closing price of our
common stock on the applicable measurement dates (i.e., the deemed grant dates for accounting
purposes) reduced by the present value of expected dividends using the risk-free interest-rate as the
award holders are not entitled to dividends or dividend equivalents during the vesting period. Our
company’s performance against the defined performance goals are re-evaluated on a quarterly basis
throughout the applicable performance period and the recognition of compensation expense is adjusted
for subsequent changes in the estimated or actual outcome. The cumulative effect of a change in the
estimated number of shares of common stock to be issued in respect of performance share awards is
recognized as an adjustment to earnings in the period of the revision.
Pension Expense
We have defined benefit pension plans covering substantially all of our employees. Our funding
policy is to contribute annually not less than the amount recommended by our actuaries. The funded
status of our pension plans is dependent upon many factors, including returns on invested assets and
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the level of certain market interest rates. We review pension assumptions regularly and we may from
time to time make voluntary contributions to our pension plans, which exceed the amounts required by
statute. During fiscal 2012, we made total pension contributions to our pension plans of $4.8 million
compared with $4.2 million in fiscal 2011. Changes in interest rates and the market value of the
securities held by the plans could materially change, positively or negatively, the underfunded status of
the plans and affect the level of pension expense and required contributions in fiscal 2013 and beyond.
Our discount rate assumption for our three defined benefit plans changed from 4.34% at
December 31, 2011 to 3.91% at December 29, 2012. While we do not presently anticipate a change in
our fiscal 2013 assumptions, as a sensitivity measure, a 0.25% decline or increase in our discount rate
would increase or decrease our pension expense by approximately $0.3 million. Similarly, a 0.25%
decrease or increase in the expected return on pension plan assets would increase or decrease our
pension expense by approximately $0.1 million. We expect to make $4.8 million of defined benefit
pension plan contributions during fiscal 2013.
Acquisition Accounting
Our consolidated financial statements and results of operations include an acquired business’s
operations after the completion of the acquisition. We account for acquired businesses using the
acquisition method of accounting, which requires that the assets acquired and liabilities assumed be
recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over
the estimated fair values of the net assets acquired is recorded as goodwill. Transaction costs are
expensed as incurred.
The judgments made in determining the estimated fair value assigned to each class of assets
acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.
Accordingly, for significant items, we typically obtain assistance from third party valuation specialists.
Determining the useful life of an intangible asset also requires judgment as different types of intangible
assets will have different useful lives and certain assets may even be considered to have indefinite
useful lives. All of these judgments and estimates can materially impact our results of operations.
Results of Operations
The following table sets forth the percentages of net sales represented by selected items reflected
in our consolidated statements of operations. The comparisons of financial results are not necessarily
indicative of future results:
Statement of Operations:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2012
Fiscal 2011
Fiscal 2010
100.0%
64.8%
100.0%
67.3%
100.0%
67.3%
35.2%
10.4%
1.3%
23.5%
7.5%
1.7%
14.3%
5.0%
9.3%
32.7%
10.6%
1.2%
20.9%
6.8%
—
14.1%
4.9%
9.2%
32.7%
11.0%
1.3%
20.4%
7.9%
3.0%
9.5%
3.2%
6.3%
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As used in this section the terms listed below have the following meanings:
Net Sales. Our net sales represents gross sales of products shipped to customers plus amounts
charged to customers for shipping and handling, less cash discounts, coupon redemptions, slotting fees
and trade promotional spending.
Gross Profit. Our gross profit is equal to our net sales less cost of goods sold. The primary
components of our cost of goods sold are cost of internally manufactured products, purchases of
finished goods from co-packers plus freight costs to our distribution centers and to our customers.
Selling, General and Administrative Expenses. Our selling, general and administrative expenses
include costs related to selling our products, as well as all other general and administrative expenses.
Some of these costs include administrative, marketing and internal sales force employee compensation
and benefits costs, consumer advertising programs, brokerage costs, warehouse facility and distribution
costs, information technology and communication costs, office rent, utilities, supplies, professional
services and other general corporate expenses. In fiscal 2012, selling, general and administrative
expenses include $1.2 million of transaction costs for the New York Style and Old London acquisition. In
fiscal 2011, selling, general and administrative expenses include $1.4 million of transaction costs for the
Culver Specialty Brands acquisition.
Amortization Expense. Amortization expense includes the amortization expense associated with
customer relationship and other intangibles.
Net Interest Expense. Net interest expense includes interest relating to our outstanding
indebtedness, amortization of bond discount and amortization of deferred debt financing costs, net of
interest income and subsequent to our determination in September 2008 that an interest rate swap was
no longer an effective hedge for accounting purposes, unrealized gains or losses on the interest rate
swap and the reclassification of amounts recorded in accumulated other comprehensive loss related to
the swap and a write-off of the remaining amount recorded in accumulated other comprehensive loss
related to the interest rate swap due to our early termination of $130.0 million term loan borrowings.
Loss on Extinguishment of Debt. Loss on extinguishment of debt includes costs relating to the
retirement of indebtedness, including any repurchase premium and write-off of deferred debt financing
costs and unamortized discount.
Fiscal 2012 Compared to Fiscal 2011
Net Sales. Net sales increased $89.9 million or 16.5% to $633.8 million for fiscal 2012 from $543.9
million for fiscal 2011. Net sales of the Culver Specialty Brands, which we acquired at the end of
November 2011, contributed $81.0 million to the overall increase, and net sales of the New York Style
and Old London brands, which we acquired at the end of October 2012, contributed $8.4 million to the
overall increase. Net sales for our base business increased $0.5 million, attributable to sales price
increases of $13.1 million offset by a unit volume decline of $12.6 million.
Net sales of our Ortega, Las Palmas, Maple Grove Farms of Vermont, B&M and Ac’cent products
increased by $3.8 million, $1.8 million, $1.2 million, $1.0 million and $0.9 million or 2.9%, 5.2%, 1.6%,
4.8% and 4.8%, respectively. These increases were offset by a reduction in net sales of B&G, Cream of
Wheat, Don Pepino and Underwood products of $4.2 million, $2.5 million, $0.8 million and $0.7 million
or 12.7%, 3.8%, 5.2% and 3.3%, respectively. In the aggregate, net sales for all other brands remained
consistent.
Gross Profit. Gross profit increased $45.6 million or 25.6% to $223.3 million in fiscal 2012 from
$177.8 million in fiscal 2011. Gross profit expressed as a percentage of net sales increased 2.5
percentage points to 35.2% for fiscal 2012 from 32.7% in fiscal 2011, attributable to a sales mix shift to
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higher margin products (primarily due to the Culver Specialty Brands acquisition) and pricing gains of
$13.1 million, partially offset by commodity and packaging cost increases.
Selling, General and Administrative Expenses. Selling, general and administrative expenses
increased $8.6 million or 14.9% to $66.2 million for fiscal 2012 from $57.6 million for fiscal 2011. This
increase is primarily due to increases in consumer marketing of $5.4 million, selling expenses of $2.7
million (including $2.0 million of brokerage expenses) and warehousing expenses of $0.6 million, offset
by a decrease in all other expenses of $0.1 million. Expressed as a percentage of net sales, our selling,
general and administrative expenses decreased 0.2 percentage points to 10.4% in fiscal 2012 from
10.6% in fiscal 2011.
Amortization Expense. Amortization expense increased $1.4 million to $8.1 million for fiscal 2012
from $6.7 million in fiscal 2011. The increase is due to the New York Style and Old London acquisition.
Operating Income. As a result of the foregoing, operating income increased $35.5 million or
31.3% to $149.0 million in fiscal 2012 from $113.5 million in fiscal 2011. Operating income expressed as
a percentage of net sales increased to 23.5% in fiscal 2012 from 20.9% in fiscal 2011.
Net Interest Expense. Net interest expense increased $11.0 million to $47.7 million in fiscal 2012
from $36.7 million in fiscal 2011 attributable to an increase in our indebtedness to finance the Culver
Specialty Brands acquisition, and an additional $2.8 million of amortization of deferred debt financing
costs and bond discount relating to the acquisition financing. See ‘‘—Liquidity and Capital Resources—
Debt’’ below.
Loss on Extinguishment of Debt. Loss on extinguishment of debt for fiscal 2012 includes costs
relating to our partial redemption of $101.5 million aggregate principal amount of our 7.625% senior
notes, including the repurchase premium and other expenses of $7.7 million, the write-off of deferred
debt financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on
extinguishment during fiscal 2012 also includes costs related to the amendment and restatement of our
credit agreement, including the write-off of deferred debt financing costs of $0.4 million, unamortized
discount of $0.1 million and other expenses of $0.2 million. During fiscal 2011, we did not have any loss
on extinguishment of debt.
Income Tax Expense.
Income tax expense increased $5.1 million to $31.7 million in fiscal 2012
from $26.6 million in fiscal 2011. Our effective tax rate before state deferred tax rate adjustments for
fiscal 2012 was 35.7% as compared with 36.1% for fiscal 2011. Due to changes in state apportionments,
our blended statutory state rate change created a deferred tax benefit of $0.9 million (0.9%) in fiscal
2012. In fiscal 2011 changes in state apportionment laws resulted in a deferred tax benefit of $1.2
million (1.5%). This one-time benefit reduced our effective tax rate for fiscal 2012 and fiscal 2011 to
34.8% and 34.6%, respectively.
Fiscal 2011 Compared to Fiscal 2010
Net Sales. Net sales increased $30.5 million or 6.0% to $543.9 million for fiscal 2011 from $513.3
million for fiscal 2010. The increase was attributable to unit volume and sales price increases of $29.6
million and $1.7 million, respectively, offset by an increase in coupon and slotting expenses of $0.8
million. Net sales of our Don Pepino and Sclafani brands, which we acquired in late November 2010,
contributed $12.5 million to the overall increase and net sales of the Culver Specialty Brands, which we
acquired at the end of November 2011, contributed $6.5 million to the overall increase.
Net sales of our Ortega, Maple Grove Farms of Vermont, Cream of Wheat, Las Palmas and
Underwood products increased by $5.1 million, $5.0 million, $3.1 million, $2.5 million and $0.7 million
or 4.0%, 7.2%, 4.8%, 8.0% and 3.0%, respectively. These increases were offset by a reduction in net
sales of B&G, Joan of Arc, Trappey’s, Grandma’s and Emeril’s products of $1.2 million, $0.8 million, $0.7
35
million, 0.7 million and $0.7 million or 3.4%, 6.6%, 4.4%, 5.0% and 3.6%, respectively. In the
aggregate, net sales for all other brands decreased $0.8 million or 0.6%.
Gross Profit. Gross profit increased $10.1 million or 6.0% to $177.8 million in fiscal 2011 from
$167.7 million in fiscal 2010. Gross profit expressed as a percentage of net sales remained consistent at
32.7% in fiscal 2011 and fiscal 2010, attributable to pricing gains of $1.7 million and a sales mix shift to
higher margin products offset by higher input and distribution costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses
increased $1.1 million or 2.0% to $57.6 million for fiscal 2011 from $56.5 million for fiscal 2010. This
increase is primarily due to $1.4 million of transaction costs for the Culver Specialty Brands acquisition
and increases in compensation expense of $0.5 million and brokerage expense of $0.5 million, offset by
decreases in consumer marketing and trade spending of $1.3 million. Expressed as a percentage of net
sales, our selling, general and administrative expenses decreased 0.4 percentage points to 10.6% in
fiscal 2011 from 11.0% in fiscal 2010.
Amortization Expense. Amortization expense increased $0.2 million to $6.7 million for fiscal 2011
from $6.5 million in fiscal 2010. The increase is due to the Culver Specialty Brands acquisition.
Operating Income. As a result of the foregoing, operating income increased $8.8 million or 8.4%
to $113.5 million in fiscal 2011 from $104.7 million in fiscal 2010. Operating income expressed as a
percentage of net sales increased to 20.9% in fiscal 2011 from 20.4% in fiscal 2010.
Net Interest Expense. Net interest expense decreased $3.7 million to $36.7 million in fiscal 2011
from $40.3 million in fiscal 2010 due to the termination of an interest rate swap, which reduced the
effective interest rate on $130.0 million of term loan borrowings under our prior credit agreement and
eliminated the unfavorable fair market value adjustment relating to the interest rate swap. This was
partially offset by an increase in interest expense from additional debt incurred for the Culver Specialty
Brands acquisition and a $2.1 million charge relating to the write-off of the remaining amount recorded
in accumulated other comprehensive loss on the interest rate swap due to our early termination of the
$130.0 million of term loan borrowings under our prior credit agreement. See ‘‘—Liquidity and Capital
Resources—Debt’’ below.
Loss on Extinguishment of Debt. Loss on extinguishment of debt for fiscal 2010 includes costs
relating to our repurchase and redemption of $69.5 million aggregate principal amount of senior
subordinated notes and $240.0 million aggregate principal amount of senior notes, including $10.7
million for the payment of a repurchase premium and a non-cash charge of $4.5 million for the
write-off of unamortized deferred debt financing costs associated with the notes repurchased. During
fiscal 2011, we did not have any loss on extinguishment of debt.
Income Tax Expense.
Income tax expense increased $9.8 million to $26.6 million in fiscal 2011
from $16.8 million in fiscal 2010. Our effective tax rate before state deferred tax rate adjustments for
fiscal 2011 was 36.1% as compared with 36.0% for fiscal 2010. Due to changes in state apportionment
laws, our blended statutory state rate change created a deferred tax benefit of $1.2 million in fiscal
2011 and $1.1 million in fiscal 2010. This one-time benefit reduced our effective tax rate for fiscal 2011
and fiscal 2010 down to 34.6% and 34.1%, respectively.
Liquidity and Capital Resources
Our primary liquidity requirements include debt service, capital expenditures and working capital
needs. See also, ‘‘Dividend Policy’’ and ‘‘Commitments and Contractual Obligations’’ below. We fund
our liquidity requirements, as well as our dividend payments and financing for acquisitions, primarily
through cash generated from operations and external sources of financing, including, our revolving
credit facility.
36
Cash Flows
Net Cash Provided by Operating Activities. Net cash provided by operating activities increased
$28.5 million to $100.5 million in fiscal 2012 from $72.0 million in fiscal 2011. Net cash provided by
operating activities for fiscal 2010 was $98.9 million. The increase in net cash provided by operating
activities in fiscal 2012 as compared to fiscal 2011 was due to our payment in January 2011 of $12.4
million, including $1.0 million of accrued interest, to terminate our interest rate swap, which we did not
incur in 2012, an increase in net income of $9.0 million, primarily attributable to the Culver Specialty
Brands acquisition and the New York Style and Old London acquisition partially offset by an increase in
working capital of approximately $4.1 million. The decrease in net cash provided by operating activities
in fiscal 2011 as compared to fiscal 2010 was primarily due to our payment in January 2011 of $12.4
million, including $1.0 million of accrued interest, to terminate an interest rate swap, an increase in our
working capital of $4.0 million resulting from the Culver Specialty Brands acquisition and an increase
in inventory unrelated to the Culver Specialty Brands acquisition due primarily to an increase in
finished goods.
Net Cash Used in Investing Activities. Net cash used in investing activities was $73.3 million in
fiscal 2012 as compared to $336.6 million in fiscal 2011 and $25.6 million for fiscal 2010. During fiscal
2012, our net cash used in investing activities included $62.5 million for the New York Style and Old
London acquisition, $0.2 million for the acquisition of a business and $10.6 million of capital
expenditures. During fiscal 2011, our net cash used in investing activities included $326.0 million for the
Culver Specialty Brands acquisition and $10.6 million of capital expenditures. During fiscal 2010, our
net cash used in investing activities included $14.6 million for the Don Pepino acquisition and $11.0
million of capital expenditures. Our capital expenditures typically include expenditures for building
improvements, purchases of manufacturing and computer equipment and capitalized interest. We
expect to make capital expenditures of approximately $13.0 million in fiscal 2013.
Net Cash (Used in) Provided by Financing Activities. Net cash used in financing activities was $24.7
million and $14.5 million in fiscal 2012 and fiscal 2010, respectively. Net cash provided by financing
activities was $182.6 million in fiscal 2011.
For fiscal 2012, net cash used in financing activities includes $109.5 million in payments for the
repurchase and redemption of $101.5 million aggregate principal amount of our 7.625% senior notes,
$50.2 million of dividend payments, $10.7 million for the payment of tax withholding on behalf of
employees for net share settlement of share-based compensation, $7.3 million of scheduled principal
payments of tranche A and tranche B term loans, $5.0 million of principal payments of revolving credit
loans and $0.5 million of deferred financing costs. Net cash used in financing activities was partially
offset by $120.4 million of net proceeds from our public offering of common stock, $30.0 million of
proceeds from borrowings under our revolving credit facility and $8.0 million of excess tax benefits
from share-based compensation.
For fiscal 2011, net cash provided by financing activities includes $372.0 million of net proceeds
from borrowings under our credit agreement (net of $25.0 million of borrowings and repayments of
revolving loans) and $1.0 million of excess tax benefits from share-based compensation. Net cash
provided by financing activities was reduced by $130.0 million due to the repayment of all term loan
borrowings under our prior credit agreement, $38.2 million of dividend payments, $16.3 million for the
payment of deferred financing costs, $3.7 million for the repurchase of common stock and $2.2 million
for the payment of tax withholding on behalf of employees for net share settlement of share-based
compensation.
For fiscal 2010, net cash used in financing activities includes $320.3 million in payments for the
repurchase and redemption of $69.5 million principal amount of our 12% senior subordinated notes
and $240.0 million principal amount of our 8% senior notes, $32.3 million of dividend payments, $8.2
million of deferred financing costs and $1.5 million for the payment of tax withholding on behalf of
37
employees for net share settlement of share-based compensation. Net cash used in financing activities
was reduced by net proceeds of $347.4 million from the issuance of our 7.625% senior notes and $0.3
million of excess tax benefits from share-based compensation.
Cash Income Tax Payments. Based on a number of factors, including our trademark, goodwill and
other intangible assets amortization for tax purposes from our prior acquisitions, we realized a
significant reduction in cash taxes in fiscal 2012, 2011 and 2010 as compared to our tax expense for
financial reporting purposes. We believe that we will realize a benefit to our cash taxes payable from
amortization of our trademarks, goodwill and other intangible assets for the taxable years 2013 through
2027. If there is a change in U.S. federal tax policy that reduces any of these available deductions or
results in an increase in our corporate tax rate, our cash taxes payable may increase further, which
could significantly reduce our future cash and impact our ability to make interest and dividend
payments.
Dividend Policy
For a discussion of our dividend policy, see the information set forth under the heading ‘‘Dividend
Policy’’ in Part II, Item 5 of this report.
Acquisitions
Our liquidity and capital resources have been significantly impacted by acquisitions and may be
impacted in the foreseeable future by additional acquisitions. As discussed elsewhere in this report, as
part of our growth strategy we plan to expand our brand portfolio with disciplined acquisitions of
complementary brands. We have historically financed acquisitions with borrowings and cash flows from
operating activities. As a result, our interest expense has in the past increased as a result of additional
indebtedness we have incurred in connection with acquisitions, including in connection with the Culver
Specialty Brands acquisition, and will increase with any additional indebtedness we may incur to finance
future acquisitions. The impact of future acquisitions, whether financed with additional indebtedness or
otherwise, may have a material impact on our liquidity.
Debt
Senior Secured Credit Agreement. On December 12, 2012, we amended and restated our credit
agreement dated as of November 30, 2011. The amendment, among other things, reduced the interest
rate payable on the tranche B term loans by 0.5 percentage points, fixed the maximum permissible
consolidated leverage ratio at 6.0 to 1.0 and increased the maximum size of any potential incremental
term loan facility to an unlimited amount provided that certain conditions are met, including our senior
secured leverage ratio being less than or equal to 4.0 to 1.0 after giving effect to borrowings under the
incremental term loan facility.
At December 29, 2012, there were $144.4 million of tranche A term loans, $223.3 million of
tranche B term loans and $25.0 million of revolving loans outstanding. At December 29, 2012, the
available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of
$0.5 million, was $174.5 million. The credit agreement is secured by substantially all of our and our
domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property.
The tranche A term loans are subject to principal amortization at the following rates: 5% in the
first year, 10% in the second year and 15% in each of the third and fourth years. The balance of all
borrowings under the tranche A term loan facility are due and payable at maturity on November 30,
2016. The tranche B term loans are subject to principal amortization at the rate of 1% annually with
the balance due at maturity on November 30, 2018. The revolving credit facility matures on
November 30, 2016.
38
Interest under the revolving credit facility, including any outstanding letters of credit, and under
the tranche A term loan facility, is determined based on alternative rates that we may choose in
accordance with the credit agreement, including a base rate per annum plus an applicable margin
ranging from 1.50% to 2.00%, and LIBOR plus an applicable margin ranging from 2.50% to 3.00%, in
each case depending on our consolidated leverage ratio. Interest under the tranche B term loan facility
is determined based on alternative rates that we may choose in accordance with the credit agreement,
including a base rate per annum plus an applicable margin of 2.00%, and LIBOR plus an applicable
margin of 3.00%, in each case subject to a 1.0% LIBOR floor.
For further information regarding our senior secured credit agreement, including a description of
optional and mandatory prepayment terms and financial and restrictive covenants, see Note 6,
‘‘Long-Term Debt’’ to our consolidated financial statements in Part II, Item 8 of this report.
7.625% Senior Notes due 2018.
In January 2010, we issued $350.0 million aggregate principal
amount of 7.625% senior notes due 2018 at a public offering price of 99.271% of face value. In
December 2012, we redeemed $101.5 million principal amount of senior notes at a cash redemption
price of 107.625% of the principal amount of the notes being redeemed, plus accrued and unpaid
interest on such amount of $3.5 million. The remaining original issue discount of $1.1 million and debt
financing costs are being amortized over the life of the senior notes as interest expense. Interest on the
senior notes is payable on January 15 and July 15 of each year. The senior notes will mature on
January 15, 2018, unless earlier retired or redeemed as permitted or required by the terms of the
indenture governing the senior notes as described in Note 6 to our consolidated financial statements in
Part II, Item 8 of this report. We may also, from time to time, seek to retire senior notes through cash
repurchases of senior notes and/or exchanges of senior notes for equity securities, in open market
purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will
depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other
factors. The amounts involved may be material. See Note 6 to our consolidated financial statements for
a more detailed description of the senior notes.
Loss on Extinguishment of Debt. Loss on extinguishment of debt for fiscal 2012 includes costs
relating to the partial redemption of $101.5 million aggregate principal amount of our senior notes,
including the repurchase premium and other expenses of $7.7 million, the write-off of deferred debt
financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on
extinguishment during fiscal 2012 also includes costs related to the amendment and restatement of our
credit agreement, including the write-off of deferred debt financing costs of $0.4 million, unamortized
discount of $0.1 million and other expenses of $0.2 million. During fiscal 2011, we did not have any loss
on extinguishment of debt. In connection with the retirement of the remaining 12% senior
subordinated notes and our 8% senior notes during the first quarter of 2010, we incurred a loss on
extinguishment of debt of approximately $15.2 million during fiscal 2010, including the repurchase
premium and other expenses of $10.7 million and a write-off and expense of $4.5 million of deferred
debt financing costs.
Future Capital Needs
On December 29, 2012, our total long-term debt of $637.7 million, net of our cash and cash
equivalents of $19.2 million was $618.5 million. Stockholders’ equity as of that date was $361.2 million.
Our ability to generate sufficient cash to fund our operations depends generally on our results of
operations and the availability of financing. Our management believes that our cash and cash
equivalents on hand, cash flow from operating activities and available borrowing capacity under our
revolving credit facility will be sufficient for the foreseeable future to fund operations, meet debt
service requirements, fund capital expenditures, make future acquisitions, if any, and pay our
anticipated quarterly dividends on our common stock.
39
Seasonality
Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes
in seasons or other annual events. In the aggregate, however, sales of our products are not heavily
weighted to any particular quarter due to the offsetting nature of demands for our diversified product
portfolio. Sales during the fourth quarter are generally greater than those of the preceding three
quarters.
We purchase most of the produce used to make our shelf-stable pickles, relishes, peppers,
tomatoes and other related specialty items during the months of July through October, and we
generally purchase substantially all of our maple syrup requirements during the months of April
through August. Consequently, our liquidity needs are greatest during these periods.
Inflation
We expect a minimal cost decrease for raw materials in the market place during 2013 and will
continue to manage this risk by entering into short-term supply contracts and advance commodities
purchase agreements from time to time, and if necessary, by raising prices. We are currently locked into
pricing and supply for substantially all of our major commodities (other than maple syrup) through
2013 at a cost decrease of approximately $1.0 million. During 2012, 2011 and 2010, through sales price
increases and cost saving efforts we have been more than able to offset the impact of recent commodity
and transportation cost increases. However, to the extent we are unable to offset present and future
cost increases, our operating results will be negatively impacted.
Contingencies
See Note 12, ‘‘Commitments and Contingencies,’’ to our consolidated financial statements in
Part II, Item 8 of this report.
Recent Accounting Pronouncements
See Note 2(s), ‘‘Summary of Significant Accounting Policies—Recently Issued Accounting
Standards,’’ to our consolidated financial statements in Part II, Item 8 of this report.
Off-balance Sheet Arrangements
As of December 29, 2012, we did not have any off-balance sheet arrangements as defined in
Item 303(a)(4)(ii) of Regulation S-K.
40
Commitments and Contractual Obligations
Our contractual obligations and commitments principally include obligations associated with our
outstanding indebtedness, future minimum operating lease obligations, future purchase obligations and
future pension obligations as set forth in the following table as of December 29, 2012.
Contractual Obligations:
Payments Due by Period
Total
Fiscal
2013
Fiscal 2014
and 2015
Fiscal 2016
and 2017
Fiscal 2018
and Thereafter
Long-term debt—principal(1) . . . . . . . . . . . .
Long-term debt—interest(2)
. . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . .
Purchase obligations(3) . . . . . . . . . . . . . . . .
Pension obligations(4) . . . . . . . . . . . . . . . . .
$641,188
162,883
17,453
51,400
4,750
$15,375
33,935
5,566
31,146
4,750
(In thousands)
$ 53,813
65,521
6,506
15,114
—
$111,438
57,607
3,780
5,140
—
$460,562
5,820
1,601
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$877,674
$90,772
$140,954
$177,965
$467,983
(1) The fiscal 2016 and 2017 column includes $25.0 million of outstanding revolving loans that mature in 2016. However, on
our consolidated balance sheet this amount appears within current portion of long-term debt because we expect to reduce
our revolving credit borrowings to zero by the end of fiscal 2013.
(2) Expected interest payments on long-term debt are based on principal amounts outstanding, scheduled maturity dates and
interest rates at December 29, 2012. See Note 6, ‘‘Long-Term Debt,’’ to our consolidated financial statements in Part II,
Item 8 for further information as to our long-term debt interest obligations.
(3) For the purposes of this table, purchase obligations means agreements to purchase goods or services (such as raw materials,
commodities, packaging, other materials and supplies and co-manufacturing arrangements) that are enforceable and legally
binding on B&G Foods and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed,
minimum or variable price provisions; and the approximate timing of the transaction. The purchase obligations in the above
table do not represent our entire expected future purchases for goods and services, which are significantly higher than the
amounts set forth above. The table does not include purchase obligations under contracts that may be cancelled by B&G
Foods without material penalty. Any amounts reflected on our consolidated balance sheet as accounts payable and accrued
liabilities are excluded from the purchase obligations set forth in the table above. Penalties, if any, related to molds and
equipment based upon failure to meet minimum volume requirements are also excluded from the table because we are
unable to determine whether such penalties will be incurred and, if incurred, over what time period they will be paid.
(4) We expect to make $4.8 million of defined pension benefit contributions during fiscal 2013. We are unable to reliably
estimate the timing of pension contributions and contribution amounts beyond fiscal 2013.
Forward-Looking Statements
This report includes forward-looking statements, including without limitation the statements under
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’ The words
‘‘believes,’’ ‘‘anticipates,’’ ‘‘plans,’’ ‘‘expects,’’ ‘‘intends,’’ ‘‘estimates,’’ ‘‘projects’’ and similar expressions
are intended to identify forward-looking statements. These forward looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results, performance and
achievements, or industry results, to be materially different from any future results, performance, or
achievements expressed or implied by any forward-looking statements. We believe important factors
that could cause actual results to differ materially from our expectations include the following:
(cid:129) our substantial leverage;
(cid:129) the effects of rising costs for our raw materials, packaging and ingredients;
(cid:129) crude oil prices and their impact on distribution, packaging and energy costs;
(cid:129) our ability to successfully implement sales price increases and cost saving measures to offset any
cost increases;
41
(cid:129) intense competition, changes in consumer preferences, demand for our products and local
economic and market conditions;
(cid:129) our continued ability to promote brand equity successfully, to anticipate and respond to new
consumer trends, to develop new products and markets, to broaden brand portfolios in order to
compete effectively with lower priced products and in markets that are consolidating at the retail
and manufacturing levels and to improve productivity;
(cid:129) the risks associated with the expansion of our business;
(cid:129) our possible inability to integrate any businesses we acquire;
(cid:129) our ability to access the credit markets and our borrowing costs and credit ratings, which may be
influenced by credit markets generally and the credit ratings of our competitors;
(cid:129) the effects of currency movements of the Canadian dollar as compared to the U.S. dollar;
(cid:129) other factors that affect the food industry generally, including:
— recalls if products become adulterated or misbranded, liability if product consumption
causes injury, ingredient disclosure and labeling laws and regulations and the possibility
that consumers could lose confidence in the safety and quality of certain food products;
— competitors’ pricing practices and promotional spending levels;
— fluctuations in the level of our customers’ inventories and credit and other business risks
related to our customers operating in a challenging economic and competitive
environment; and
— the risks associated with third-party suppliers and co-packers, including the risk that any
failure by one or more of our third-party suppliers or co-packers to comply with food
safety or other laws and regulations may disrupt our supply of raw materials or certain
finished goods products or injure our reputation; and
(cid:129) other factors discussed elsewhere in this report, including under Item 1A, ‘‘Risk Factors,’’ and in
our other public filings with the SEC.
Developments in any of these areas could cause our results to differ materially from results that
have been or may be projected by or on our behalf.
All forward-looking statements included in this report are based on information available to us on
the date of this report. We undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise. All subsequent written
and oral forward-looking statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained in this report.
We caution that the foregoing list of important factors is not exclusive. We urge investors not to
unduly rely on forward-looking statements contained in this report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Our principal market risks are exposure to changes in commodity prices, interest rates on
borrowings and foreign currency exchange rates.
Commodity Prices and Inflation. The information under the heading ‘‘Inflation’’ in Item 7,
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ is
incorporated herein by reference.
42
Interest Rate Risk.
In the normal course of operations, we are exposed to market risks relating to
our long-term debt arising from adverse changes in interest rates. Market risk is defined for these
purposes as the potential change in the fair value of a financial asset or liability resulting from an
adverse movement in interest rates.
Changes in interest rates impact our fixed and variable rate debt differently. For fixed rate debt, a
change in interest rates will only impact the fair value of the debt, whereas for variable rate debt, a
change in the interest rates will impact interest expense and cash flows. At December 29, 2012, we had
$248.5 million of fixed rate debt and $392.7 million of variable rate debt.
Based upon our principal amount of long-term debt outstanding at December 29, 2012, a
hypothetical 1.0% increase in interest rates would have affected our annual interest expense by
approximately $2.2 million and a 1.0% decrease in interest rates would have affected our annual
interest expense by approximately $1.7 million.
The carrying values and fair values of our term loan borrowings and senior notes as of
December 29, 2012 and December 31, 2011 are as follows (in thousands):
Revolving Credit Facility . . . . . . . . . . . . . . . . . . . .
Tranche A Term Loan due 2016 . . . . . . . . . . . . . . .
Tranche B Term Loan due 2018 . . . . . . . . . . . . . . .
7.625% Senior Notes due 2018 . . . . . . . . . . . . . . . .
25,000
143,830(2)
221,504(2)
247,355(2)
25,000(1)
144,375(1)
226,662(1)
269,001(3)
—
149,266(2)
222,773(2)
348,068(2)
—
150,000(1)
226,125(1)
372,750(3)
December 29, 2012
December 31, 2011
Carrying Value
Fair Value
Carrying Value
Fair Value
(1) Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets
that are not active.
(2) The carrying values of the tranche A term loan, tranche B term loan and 7.625% senior notes are net of discount. At
December 29, 2012, the face amounts of the tranche A term loan, tranche B term loan and senior notes were
$144.4 million, $223.3 million and $248.5 million, respectively. At December 31, 2011, the face amounts of the tranche A
term loan, tranche B term loan and senior notes were $150.0 million, $225.0 million and $350.0 million, respectively.
(3) Fair values are estimated based on quoted market prices.
Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts
payable, accrued expenses and dividends payable are reflected on our consolidated balance sheets at
carrying value, which approximates fair value due to the short-term nature of these instruments.
For more information, see Note 6, ‘‘Long-Term Debt,’’ to our consolidated financial statements in
Part II, Item 8 of this report.
Foreign Currency Risk. Our sales of finished goods and purchases of raw materials and supplies
from outside the U.S. are generally denominated in U.S. dollars. During fiscal 2012, our net sales to
foreign countries represented approximately 2.7% of our total net sales. During fiscal 2011 and fiscal
2010, our net sales to foreign countries represented less than 1.0% of our total net sales. The increase
in our foreign sales in fiscal 2012 was primarily attributable to the Culver Specialty Brands acquisition.
Our foreign sales, including the incremental sales related to the Culver Specialty Brands acquisition,
are primarily to customers in Canada. We also purchase certain raw materials from foreign suppliers.
For example, we purchase the majority of our maple syrup requirements from suppliers in Qu´ebec,
Canada. A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase
our future costs relating to the production of our maple syrup products to the extent we have not
purchased Canadian dollars or otherwise entered into a currency hedging arrangement in advance of
any such weakening of the U.S. dollar.
43
As a result, certain revenues and expenses have been, and are expected to be, subject to the effect
of foreign currency fluctuations, and these fluctuations may have a material impact on operating results.
Market Fluctuation Risks Relating to our Defined Benefit Pension Plans. See Item 7,
‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical
Accounting Policies; Use of Estimates—Pension Expenses’’ and Note 11, ‘‘Pension Benefits,’’ to our
consolidated financial statements in Part II, Item 8 of this report for a discussion of the exposure of
our defined benefit pension plan assets to risks related to market fluctuations.
44
Item 8. Financial Statements and Supplementary Data.
The consolidated balance sheets at December 29, 2012 and December 31, 2011 and the
consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash
flows for fiscal 2012, 2011 and 2010 and related notes are set forth below.
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011 . . . . . . . . . . . .
Consolidated Statements of Operations for the years ended December 29, 2012, December 31,
2011 and January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the years ended December 29, 2012,
December 31, 2011 and January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders’ Equity for the years ended
December 29, 2012, December 31, 2011 and January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 29, 2012, December 31,
2011 and January 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule II—Schedule of Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . .
Page
46
48
49
50
51
52
53
83
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
B&G Foods, Inc.:
We have audited the accompanying consolidated balance sheets of B&G Foods, Inc. and
subsidiaries as of December 29, 2012 and December 31, 2011, and the related consolidated statements
of operations, comprehensive income, changes in stockholders’ equity and cash flows for the years
ended December 29, 2012, December 31, 2011 and January 1, 2011. In connection with our audits of
the consolidated financial statements, we also have audited the schedule of valuation and qualifying
accounts. These consolidated financial statements and financial statement schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of B&G Foods, Inc. and subsidiaries as of December 29, 2012
and December 31, 2011, and the results of their operations and their cash flows for the years ended
December 29, 2012, December 31, 2011 and January 1, 2011, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), B&G Foods, Inc.’s internal control over financial reporting as of
December 29, 2012, based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report
dated February 26, 2013 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
/s/ KPMG LLP
Short Hills, New Jersey
February 26, 2013
46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
B&G Foods, Inc.:
We have audited B&G Foods, Inc.’s internal control over financial reporting as of December 29,
2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). B&G Foods, Inc.’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in ‘‘Management’s Report on
Internal Control Over Financial Reporting.’’ Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion B&G Foods, Inc. maintained, in all material respects, effective internal control over
financial reporting as of December 29, 2012, based on criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of B&G Foods, Inc. and subsidiaries
as of December 29, 2012 and December 31, 2011, and the related consolidated statements of
operations, comprehensive income, changes in stockholders’ equity and cash flows for the years ended
December 29, 2012, December 31, 2011 and January 1, 2011, and our report dated February 26, 2013
expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Short Hills, New Jersey
February 26, 2013
47
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
December 29,
2012
December 31,
2011
Current assets:
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts receivable, less allowance for doubtful accounts and
discounts of $831 and $723 in 2012 and 2011 . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
19,219
$
16,738
43,357
89,757
5,326
4,262
2,175
164,096
104,746
267,940
637,196
17,990
39,476
82,666
7,119
2,529
1,696
150,224
61,930
262,827
634,522
23,420
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,191,968
$1,132,923
Current liabilities:
Liabilities and Stockholders’ Equity
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses
Current portion of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25,050
23,610
40,375
15,243
104,278
597,314
8,038
121,163
830,793
$
24,427
26,719
9,750
10,971
71,867
710,357
9,409
105,743
897,376
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares;
no shares issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.01 par value per share. Authorized 125,000,000 shares;
52,560,765 and 47,700,132 issued and outstanding as of December 29,
2012 and December 31, 2011, respectively . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
526
226,900
(11,095)
144,844
361,175
477
159,916
(10,430)
85,584
235,547
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . .
$1,191,968
$1,132,923
See accompanying Notes to Consolidated Financial Statements.
48
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
Year Ended
December 29,
2012
December 31,
2011
January 1,
2011
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$633,812
410,469
$543,866
366,090
$513,337
345,668
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
223,343
177,776
167,669
Operating expenses:
Selling, general and administrative expenses . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66,212
8,126
57,618
6,679
56,495
6,457
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149,005
113,479
104,717
Other expenses:
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47,660
10,431
90,914
31,654
36,675
—
76,804
26,561
40,342
15,224
49,151
16,772
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 59,260
$ 50,243
$ 32,379
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
1.20
1.20
1.10
$
$
$
1.05
1.04
0.86
$
$
$
0.68
0.67
0.68
See accompanying Notes to Consolidated Financial Statements.
49
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
Year Ended
December 29,
2012
December 31,
2011
January 1,
2011
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$59,260
$50,243
$32,379
Other comprehensive income:
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in pension benefit, net of taxes . . . . . . . . . . . . . . . . . .
Reclassification to interest expense, net of taxes . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . .
17
(682)
—
(665)
(69)
(5,655)
2,296
(3,428)
72
1,270
1,033
2,375
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$58,595
$46,815
$34,754
See accompanying Notes to Consolidated Financial Statements.
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S
B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Year Ended
December 29,
2012
December 31,
2011
January 1,
2011
$ 59,260
$ 50,243
$ 32,379
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred debt financing costs and bond discount . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on extinguishment of debt
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized gain on interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss on interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification to net interest expense for interest rate swap . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from share-based compensation . . . . . . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities, net of effects of business acquired:
Trade accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,853
5,028
10,431
15,295
—
—
—
3,777
(8,031)
142
(1,106)
(3,065)
1,793
6,298
(36)
(874)
(4,728)
—
(2,509)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . .
100,528
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment for acquisition of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities
. . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
. . . . . . . . . . . . . . . . . . . .
Prepayments and repurchases of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of long-term debt
Proceeds from issuance of common stock, net . . . . . . . . . . . . . . . . . . . . . .
Payments for repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefits from share-based compensation . . . . . . . . . . . . . . . . . .
Payments of tax withholding on behalf of employees for net share settlement of
share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of debt financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . .
Effect of exchange rate fluctuations on cash and cash equivalents
. . . . . . . . .
Net increase (decrease) in cash and cash equivalents
. . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . .
(10,637)
(62,667)
(73,304)
(121,772)
30,000
120,355
—
(50,161)
8,031
(10,697)
(500)
(24,744)
1
2,481
16,738
16,229
2,251
—
13,529
(612)
—
3,669
4,098
(1,047)
(36)
(4,995)
(602)
(5,404)
(1,311)
(14)
8,896
1,135
(11,400)
(2,596)
72,033
(10,556)
(326,000)
(336,556)
(155,000)
397,000
—
(3,652)
(38,238)
1,047
(2,236)
(16,346)
182,575
(52)
(82,000)
98,738
15,023
2,016
15,224
9,452
—
436
1,693
3,747
(326)
127
1,174
18,548
808
1,019
(1,136)
(7,118)
7,164
—
(1,353)
98,877
(10,965)
(14,602)
(25,567)
(320,259)
347,448
—
—
(32,343)
326
(1,460)
(8,246)
(14,534)
32
58,808
39,930
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . .
$ 19,219
$ 16,738
$ 98,738
Supplemental disclosures of cash flow information:
Cash interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 53,892
$ 31,380
$ 30,302
Cash income tax payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,061
$ 14,342
Non-cash transactions:
Dividends declared and not yet paid . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15,243
$ 10,971
$
$
6,371
8,099
See accompanying Notes to Consolidated Financial Statements.
52
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 29, 2012, December 31, 2011 and January 1, 2011
(1) Nature of Operations
Organization and Nature of Operations
B&G Foods, Inc. is a holding company, the principal assets of which are the shares of capital stock
of its subsidiaries. Unless the context requires otherwise, references in this report to ‘‘B&G Foods,’’
‘‘our company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to B&G Foods, Inc. and its subsidiaries. Our financial
statements are presented on a consolidated basis.
We operate in a single industry segment and manufacture, sell and distribute a diverse portfolio of
high-quality shelf-stable foods across the United States, Canada and Puerto Rico. Our products include
hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine
vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas,
pickles, peppers, tomato-based products and other specialty products. Our products are marketed under
many recognized brands, including Ac’cent, B&G, B&M, Baker’s Joy, Brer Rabbit, Cream of Rice, Cream
of Wheat, Devonsheer, Don Pepino, Emeril’s, Grandma’s Molasses, JJ Flats, Joan of Arc, Las Palmas,
Maple Grove Farms of Vermont, Molly McButter, Mrs. Dash, Old London, New York Style, Ortega, Polaner,
Red Devil, Regina, Sa-s´on, Sclafani, Sugar Twin, Trappey’s, Underwood, Vermont Maid and Wright’s. We
also sell and distribute two branded household products, Static Guard and Kleen Guard. We compete in
the retail grocery, food service, specialty, private label, club and mass merchandiser channels of
distribution. We distribute our products via a network of independent brokers and distributors to
supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food outlets and
specialty distributors.
Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes
in seasons or other annual events. In the aggregate, however, sales of our products are not heavily
weighted to any particular quarter due to the offsetting nature of demands for our diversified product
portfolio. Sales during the fourth quarter are generally higher than those of the preceding three
quarters. We purchase most of the produce used to make our shelf-stable pickles, relishes, peppers,
tomatoes and other related specialty items during the months of July through October, and we
generally purchase substantially all of our maple syrup requirements during the months of April
through August. Consequently, our liquidity needs are greatest during these periods.
Fiscal Year
We utilize a 52-53 week fiscal year ending on the Saturday closest to December 31. The fiscal
years ended December 29, 2012 (fiscal 2012), December 31, 2011 (fiscal 2011) and January 1, 2011
(fiscal 2010) contained 52 weeks each.
Business and Credit Concentrations
Our exposure to credit loss in the event of non-payment of accounts receivable by customers is
estimated in the amount of the allowance for doubtful accounts. We perform ongoing credit evaluations
of our customers’ financial condition. Our top ten customers accounted for approximately 50.7%,
51.0% and 50.6% of consolidated net sales in fiscal 2012, 2011 and 2010, respectively. Our top ten
customers accounted for approximately 50.2%, 53.2% and 53.2% of our receivables as of the end of
fiscal 2012, 2011 and 2010. Other than Wal-Mart, which accounted for 19.7%, 17.5% and 16.2% of our
consolidated net sales in fiscal 2012, 2011 and 2010, respectively, no single customer accounted for
53
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(1) Nature of Operations (Continued)
more than 10.0% of consolidated net sales in fiscal 2012, 2011 or 2010. Other than Wal-Mart, which
accounted for 14.9%, 14.4% and 15.0% of our consolidated receivables as of the end of fiscal 2012,
2011 and 2010, respectively, no single customer accounted for more than 10.0% of our consolidated
receivables as of the end of fiscal 2012, 2011 and 2010. As of December 29, 2012, we do not believe we
have any significant concentration of credit risk with respect to our trade accounts receivable with any
single customer whose failure or nonperformance would materially affect our results other than as
described above with respect to Wal-Mart.
During fiscal 2012 our sales to foreign countries represented approximately 2.7% of net sales.
During fiscal 2011 and 2010 our sales to foreign countries represented less than 1.0% of net sales. Our
foreign sales are primarily to customers in Canada. The increase in our foreign sales in fiscal 2012 was
primarily attributable to the Culver Specialty Brands acquisition.
Acquisitions
We have accounted for each of the following acquisitions using the acquisition method of
accounting and, accordingly, have included the assets acquired, liabilities assumed and results of
operations in our consolidated financial statements from the respective dates of acquisition. The excess
of the purchase price over the fair value of identifiable net assets acquired represents goodwill.
Trademarks are deemed to have an indefinite useful life and are not amortized. Customer relationship
intangibles acquired are amortized over 18 to 20 years. Goodwill and other intangible assets are
deductible for income tax purposes. Inventory has been recorded at estimated selling price less costs of
disposal and a reasonable profit and the property, plant and equipment and other intangible assets
(including trademarks, customer relationships and other intangibles) acquired have been recorded at
fair value as determined by our management with the assistance of a third-party valuation specialist.
See Note 5, ‘‘Goodwill and Other Intangible Assets.’’
On October 31, 2012, we completed the acquisition of the New York Style, Old London, Devonsheer
and JJ Flats brands from Chipita America, Inc. for $62.5 million in cash. We refer to this acquisition as
the ‘‘New York Style and Old London acquisition.’’ The following table sets forth the preliminary
allocation of the New York Style and Old London acquisition purchase price to the estimated fair value
of the net assets acquired at the date of acquisition. The preliminary purchase price allocation may be
adjusted as a result of the finalization of our purchase price allocation procedures related to accounts
receivable acquired and liabilities assumed. We anticipate completing the purchase price allocation
during the second quarter of fiscal 2013.
54
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(1) Nature of Operations (Continued)
New York Style and Old London Acquisition (dollars in thousands):
Property, Plant and Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationship intangibles—amortizable intangible assets . . . . . . . .
Trademarks—indefinite life intangible assets . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other working capital
$42,889
4,026
4,963
5,100
5,700
38
(199)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$62,517
On November 30, 2011, we completed the acquisition of the Mrs. Dash, Sugar Twin, Baker’s Joy,
Molly McButter, Static Guard and Kleen Guard brands from Conopco, Inc. dba Unilever United
States, Inc. for $326.0 million in cash. We refer to this acquisition as the ‘‘Culver Specialty Brands
acquisition.’’ The following table sets forth the allocation of the Culver Specialty Brands purchase price
to the estimated fair value of the net assets acquired at the date of acquisition.
Culver Specialty Brands Acquisition (dollars in thousands):
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationship intangibles—amortizable intangible assets . . . . . . .
Trademarks—indefinite life intangible assets . . . . . . . . . . . . . . . . . . . . . .
$
87
129
7,501
9,083
30,800
278,400
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$326,000
On November 18, 2010, we acquired the Don Pepino and Sclafani brands from Violet Packing LLC
for $14.6 million in cash. We refer to this acquisition as the ‘‘Don Pepino acquisition.’’ The following
table sets forth the allocation of the Don Pepino acquisition purchase price to the estimated fair value
of the net assets acquired at the date of acquisition.
Don Pepino Acquisition (dollars in thousands):
Property, Plant and Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other working capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationship and other intangibles—amortizable intangible assets .
Trademarks—indefinite life intangible assets . . . . . . . . . . . . . . . . . . . . . . .
$ 4,775
6,977
1,089
391
590
780
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$14,602
55
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(1) Nature of Operations (Continued)
Unaudited Pro Forma Summary of Operations
The following pro forma summary of operations for fiscal 2011 presents our operations as if the
Culver Specialty Brands acquisition had occurred as of the beginning of fiscal 2010 (January 3, 2010).
In addition to including the results of operations of the Culver Specialty Brands acquisition, the pro
forma information gives effect to interest on additional borrowings and amortization of customer
relationship intangibles. We also adjusted our unaudited pro forma net income for fiscal 2011 to
exclude $1.4 million of acquisition-related transaction costs incurred in fiscal 2011. On an actual basis,
the Culver Specialty Brands contributed $6.5 million of our aggregate $543.9 million of net sales for
fiscal 2011.
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2011
(dollars in thousands)
$623,602
62,409
1.30
1.29
$
$
The pro forma information presented above does not purport to be indicative of the results that
actually would have been attained if the Culver Specialty Brands acquisition had occurred as of the
beginning of fiscal 2010 and is not intended to be a projection of future results.
Neither the New York Style and Old London acquisition nor the Don Pepino acquisition was
material to our consolidated results of operations or financial position and, therefore, pro forma
financial information is not presented.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of B&G Foods, Inc. and its subsidiaries.
All intercompany balances and transactions have been eliminated.
(b) Use of Estimates
The preparation of financial statements in accordance with accounting principles generally
accepted in the United States requires our management to make a number of estimates and
assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Some of the more significant estimates and assumptions
made by management involve trade and consumer promotion expenses; allowances for excess, obsolete
and unsaleable inventories; pension benefits; acquisition accounting allocations; the recoverability of
goodwill, other intangible assets, property, plant and equipment and deferred tax assets; the
determination of the useful life of customer relationship intangibles; and the accounting for share-based
compensation expense. Actual results could differ significantly from these estimates and assumptions.
Management evaluates its estimates and assumptions on an ongoing basis using historical
experience and other factors that management believes are reasonable under the circumstances,
56
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
including the current economic environment. We adjust such estimates and assumptions when facts and
circumstances dictate. Volatility in the credit and equity markets can increase the uncertainty inherent
in such estimates and assumptions.
(c) Subsequent Events
We have evaluated subsequent events for disclosure through the date of issuance of the
accompanying consolidated financial statements.
(d) Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, all highly liquid debt instruments with
maturities of three months or less when acquired are considered to be cash and cash equivalents.
(e)
Inventories
Inventories are stated at the lower of cost or market and include direct material, direct labor,
overhead, warehousing and product transfer costs. Cost is determined using the first-in, first-out and
average cost methods. Inventories have been reduced by an allowance for excess, obsolete and
unsaleable inventories. The allowance is an estimate based on our management’s review of inventories
on hand compared to estimated future usage and sales.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation on plant and equipment is
calculated using the straight-line method over the estimated useful lives of the assets, 10 to 30 years for
buildings and improvements, 5 to 12 years for machinery and equipment, and 2 to 5 years for office
furniture and vehicles. Leasehold improvements are amortized on a straight-line basis over the shorter
of the lease term or estimated useful life of the asset. Expenditures for maintenance, repairs and minor
replacements are charged to current operations. Expenditures for major replacements and betterments
are capitalized. We capitalize interest on qualifying assets based on our effective interest rate. During
fiscal 2012, 2011 and 2010 we capitalized $0.2 million, $0.2 million and $0.1 million, respectively.
(g) Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangible assets (trademarks) are tested for impairment at least
annually and whenever events or circumstances occur indicating that goodwill or indefinite-lived
intangibles might be impaired. We perform the annual impairment tests as of the last day of each fiscal
year. The annual goodwill impairment test involves a two-step process. The first step of the impairment
test involves comparing our company’s market capitalization with our company’s carrying value,
including goodwill. If the carrying value of our company exceeds our market capitalization, we perform
the second step of the impairment test to determine the amount of the impairment loss. The second
step of the goodwill impairment test involves comparing the implied fair value of goodwill with the
carrying value and recognizing a loss for the difference.
We test our indefinite-lived intangibles by comparing the fair value with the carrying value and
recognize a loss for the difference. We estimate the fair value of our indefinite-lived intangibles by
applying third party market value indicators to our net income before net interest expense, loss on
extinguishment of debt, income taxes, depreciation and amortization and acquisition-related transaction
costs (which we define as adjusted EBITDA) or net sales.
57
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
Calculating our fair value for these purposes require significant estimates and assumptions by
management. We completed our annual impairment tests for fiscal 2012, 2011 and 2010 with no
adjustments to the carrying values of goodwill and indefinite-lived intangibles. Each test confirmed that
the market capitalization and fair values of our goodwill and indefinite-lived intangibles, respectively,
significantly exceeded their carrying values.
Customer relationship intangibles are presented at cost, net of accumulated amortization, and are
amortized on a straight-line basis over their estimated useful lives of 18 to 20 years. Other intangible
assets are presented at cost, net of accumulated amortization, and are amortized on a straight-line basis
over their estimated useful lives of two years.
(h) Deferred Debt Financing Costs
Debt financing costs are capitalized and amortized over the term of the related debt agreements
and are classified as other assets. Amortization of deferred debt financing costs for fiscal years 2012,
2011 and 2010 was $4.2 million, $1.9 million and $1.7 million, respectively.
(i) Long-Lived Assets
Long-lived assets, such as property, plant and equipment, and intangibles with estimated useful
lives are depreciated or amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated
undiscounted future cash flows, an impairment charge is recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Recoverability of assets held for sale is
measured by a comparison of the carrying amount of an asset or asset group to their fair value less
estimated costs to sell. Estimating future cash flows and calculating fair value of assets requires
significant estimates and assumptions by management.
Assets to be disposed of are separately presented in the consolidated balance sheets and are no
longer depreciated.
During fiscal 2012, 2011 and 2010, we amortized $8.1 million, $6.7 million and $6.5 million,
respectively, of the customer relationship and other intangibles.
(j) Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss includes foreign currency translation adjustments relating to
assets and liabilities located in our foreign subsidiaries and changes in our pension benefits due to the
initial adoption and ongoing application of the authoritative accounting literature relating to pensions,
net of tax. The components of accumulated other comprehensive loss are as follows (in thousands):
December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 29, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(76)
(59)
$(10,354) $(10,430)
(11,095)
(11,036)
Foreign
Currency
Translation
Pensions,
Net of Tax
Total
58
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
(k) Derivative Instruments
We recognize all derivative instruments either as an asset or a liability in the balance sheet and
measure such instruments at fair value. The fair value adjustment is included either in the
determination of net income or as a component of accumulated other comprehensive loss depending
on the nature of the hedge. We do not engage in derivative instruments for trading purposes.
(l) Revenue Recognition
Revenues are recognized when products are shipped. We report all amounts billed to a customer
in a sale transaction as revenue, including those amounts related to shipping and handling. Shipping
and handling costs are included in cost of goods sold. Consideration from a vendor to a retailer is
presumed to be a reduction to the selling prices of the vendor’s products and, therefore, is
characterized as a reduction of sales when recognized in the vendor’s income statement. As a result,
coupon incentives, slotting and promotional expenses are recorded as a reduction of sales.
(m) Selling, General and Administrative Expenses
We promote our products with advertising, consumer incentives and trade promotions. These
programs include, but are not limited to, discounts, slotting fees, coupons, rebates, in-store display
incentives and volume-based incentives. We expense our advertising costs either in the period the
advertising first takes place or as incurred. Consumer incentive and trade promotion activities are
recorded as a reduction to revenues based on amounts estimated as being due to customers and
consumers at the end of a period. We base these estimates principally on historical utilization and
redemption rates. Advertising expenses were approximately $5.9 million, $4.3 million and $4.9 million,
for the fiscal years 2012, 2011 and 2010, respectively.
(n) Pension Plans
We have defined benefit pension plans covering substantially all of our employees. Our funding
policy is to contribute annually the amount recommended by our actuaries. From time to time,
however, we voluntarily contribute greater amounts based on pension asset performance, tax
considerations and other relevant factors.
(o) Share Based Compensation Expense
Performance share long-term incentive awards (LTIAs) granted to our executive officers and
certain other members of senior management entitle each participant to earn shares of common stock
upon the attainment of certain performance goals over the applicable performance period. The
recognition of compensation expense for the LTIAs is initially based on the probable outcome of the
performance condition based on the fair value of the award on the date of grant and the anticipated
number of shares to be awarded on a straight-line basis over the applicable performance period. The
fair value of the awards on the date of grant is determined based upon the closing price of our
common stock on the applicable measurement dates (i.e., the deemed grant dates for accounting
purposes) reduced by the present value of expected dividends using the risk-free interest-rate as the
award holders are not entitled to dividends or dividend equivalents during the vesting period. Our
company’s performance against the defined performance goals are re-evaluated on a quarterly basis
throughout the applicable performance period and the recognition of compensation expense is adjusted
59
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
for subsequent changes in the estimated or actual outcome. The cumulative effect of a change in the
estimated number of shares of common stock to be issued in respect of performance share awards is
recognized as an adjustment to earnings in the period of the revision.
(p) Income Tax Expense Estimates and Policies
Income taxes are accounted for under the asset and liability method. Deferred tax assets and
liabilities of our company are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. A valuation allowance is provided when
it is more likely than not that all or some portion of the deferred tax asset will not be realized. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the
period that includes the enactment date.
As part of the income tax provision process of preparing our consolidated financial statements, we
are required to estimate our income taxes. This process involves estimating our current tax expenses
together with assessing temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and liabilities. We then assess the
likelihood that our deferred tax assets will be recovered from future taxable income and to the extent
we believe the recovery is not likely, we establish a valuation allowance. Further, to the extent that we
establish a valuation allowance or increase this allowance in a financial accounting period, we include
such charge in our tax provision, or reduce our tax benefits in our consolidated statements of
operations. We use our judgment to determine our provision or benefit for income taxes, deferred tax
assets and liabilities and any valuation allowance recorded against our deferred tax assets.
There are various factors that may cause these tax assumptions to change in the near term, and we
may have to record a valuation allowance against our deferred tax assets. We cannot predict whether
future U.S. federal and state income tax laws and regulations might be passed that could have a
material effect on our results of operations. We assess the impact of significant changes to the U.S.
federal and state income tax laws and regulations on a regular basis and update the assumptions and
estimates used to prepare our consolidated financial statements when new regulations and legislation
are enacted. We recognize the benefit of an uncertain tax position that we have taken or expect to take
on our income tax returns we file if it is ‘‘more likely than not’’ that such tax position will be sustained
based on its technical merits.
(q) Dividends
Cash dividends, if any, are accrued as a liability on our consolidated balance sheets and recorded
as a decrease to additional paid-in capital when declared.
(r) Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of
shares of common stock outstanding. Diluted earnings per share is calculated by dividing net income by
the weighted average number of shares of common stock outstanding plus all additional shares of
common stock that would have been outstanding if potentially dilutive shares of common stock related
60
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
to performance shares that may be earned under long-term incentive awards had been issued as of the
beginning of the period using the treasury stock method.
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net effect of dilutive share-based compensation
Fiscal
2012
Fiscal
2011
Fiscal
2010
(In thousands, except share and per share data)
$
59,260
$
50,243
$
32,379
49,238,759
47,855,666
47,584,260
awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
318,067
684,878
699,660
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,556,826
48,540,544
48,283,920
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1.20
1.20
$
$
1.05
1.04
$
$
0.68
0.67
(s) Recently Issued Accounting Standards
In May 2011, the Financial Accounting Standards Board (FASB) issued updated accounting
guidance related to fair value measurements and disclosures that result in common fair value
measurements and disclosures between accounting principles generally accepted in the United States
(GAAP) and International Financial Reporting Standards (IFRS). This guidance includes amendments
that clarify the intent about the application of existing fair value measurements and disclosures, the
determination of the principle market and the requirement for additional fair value measurements or
disclosures. This guidance is effective for interim and annual periods beginning after December 15,
2011. The adoption of this guidance did not have a material impact on our consolidated financial
statements.
In June 2011, the FASB issued an accounting standards update relating to the presentation of
comprehensive income. The objective of this update is to improve the comparability, consistency, and
transparency of financial reporting and to increase the prominence of items reported in other
comprehensive income. To increase the prominence of items reported in other comprehensive income
and to facilitate convergence of GAAP and IFRS, the FASB decided, to eliminate the option to present
components of other comprehensive income as part of the statement of changes in stockholders’ equity,
among other amendments in the update. The update require that all nonowner changes in stockholders’
equity be presented either in a single continuous statement of comprehensive income or in two
separate but consecutive statements. In the two-statement approach, the first statement should present
total net income and its components followed consecutively by a second statement that should present
total other comprehensive income, the components of other comprehensive income, and the total of
comprehensive income. For public entities, the update is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. We adopted this update in fiscal 2012, however
the update impacts presentation and disclosure only, and therefore adoption did not have an impact on
our consolidated financial position, results of operations or liquidity.
61
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(2) Summary of Significant Accounting Policies (Continued)
In September 2011, the FASB amended its guidance regarding goodwill impairment. This
amendment is intended to reduce the cost and complexity of the annual goodwill impairment test by
providing entities an option to perform a qualitative assessment to determine whether further
impairment testing is necessary. The amended provisions are effective for reporting periods beginning
on or after December 15, 2011. We adopted this amendment in fiscal 2012, however we did not elect
the qualitative assessment permitted under the amendment and therefore adoption did not have an
impact on our consolidated financial position, results of operations or liquidity.
In July 2012, the FASB issued an accounting standards update relating to the testing of indefinite-
lived intangible assets for impairment. This update, which amends the guidance on testing indefinite-
lived intangible assets other than goodwill, for impairment, provides companies with the option to first
perform a qualitative assessment before performing the quantitative impairment test. If a company
determines, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset
is more likely than not to exceed its carrying amount, then the company would not need to perform the
quantitative impairment test. This update does not revise the requirement to test indefinite-lived
intangible assets annually for impairment. This update is effective for annual and interim impairment
tests performed for fiscal years beginning after September 15, 2012. The adoption of this standard is
not expected to have a material effect on our consolidated financial position, results of operations or
liquidity.
(3) Inventories
Inventories consist of the following as of the dates indicated (in thousands):
Raw materials and packaging . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$19,828
435
69,494
$89,757
$20,254
347
62,065
$82,666
December 29, 2012
December 31, 2011
62
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(4) Property, Plant and Equipment, net
Property, plant and equipment, net consists of the following as of the dates indicated (in
thousands):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . .
Machinery and equipment
. . . . . . . . . . . . . . . . .
Office furniture and vehicles . . . . . . . . . . . . . . . .
Construction-in-progress . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . .
December 29, 2012
December 31, 2011
$
3,515
50,283
139,432
11,236
905
205,371
(100,625)
$
2,989
36,347
100,689
10,062
1,699
151,786
(89,856)
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 104,746
$ 61,930
Depreciation expense was $10.7 million, $9.5 million and $8.6 million for fiscal 2012, fiscal 2011
and fiscal 2010, respectively.
(5) Goodwill and Other Intangible Assets
The carrying amount of goodwill changed as follows during fiscal 2012 and fiscal 2011 (in
thousands):
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York Style and Old London acquisition . . . . . . . . . . . . . .
Other acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Culver Specialty Brands acquisition . . . . . . . . . . . . . . . . . . . .
$262,827
4,963
150
—
$253,744
—
—
9,083
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$267,940
$262,827
Fiscal 2012
Fiscal 2011
The carrying amount of trademarks, which have an indefinite life, changed as follows during fiscal
2012 and fiscal 2011 (in thousands):
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York Style and Old London acquisition . . . . . . . . . . . . . .
Culver Specialty Brands acquisition . . . . . . . . . . . . . . . . . . . .
$506,400
5,700
$228,000
—
— 278,400
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$512,100
$506,400
Fiscal 2012
Fiscal 2011
63
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(5) Goodwill and Other Intangible Assets (Continued)
The carrying amount of other intangible assets changed as follows during fiscal 2012 and 2011 (in
thousands):
Customer
Relationship
Intangibles
Other
Intangible
Assets
Total Other
Intangible Assets
Less:
Accumulated
Amortization
Total
Balance at January 1, 2011 . . . . . . . . .
Culver Specialty Brands acquisition . . .
Amortization expense . . . . . . . . . . . . .
Balance at December 31, 2011 . . . . . .
New York Style and Old London
acquisition . . . . . . . . . . . . . . . . . . .
Write-off of fully amortized assets . . . .
Amortization expense . . . . . . . . . . . . .
$129,440
30,800
—
$160,240
5,100
—
—
$ 150
—
—
$ 150
—
(150)
—
$129,590
30,800
—
$160,390
$(25,589)
—
(6,679)
$104,001
30,800
(6,679)
$(32,268)
$128,122
5,100
(150)
—
—
150
(8,126)
5,100
—
(8,126)
Balance at December 29, 2012 . . . . . .
$165,340
$ —
$165,340
$(40,244)
$125,096
We expect to recognize $8.3 million of amortization expense in fiscal 2013 and for each of the next
four fiscal years thereafter associated with our current other intangible assets.
(6) Long-Term Debt
Long-term debt consists of the following as of the dates indicated (in thousands):
Current and former senior secured credit
agreement:
Revolving credit facility . . . . . . . . . . . . . . . . . .
Tranche A term loan due 2016, net of
unamortized discount of $545 and $734 at
December 29, 2012 and December 31, 2011 .
Tranche B term loan due 2018, net of
unamortized discount of $1,809 and $2,227 at
December 29, 2012 and December 31, 2011 .
7.625% senior notes due 2018, net of
unamortized discount of $1,145 and $1,932 at
December 29, 2012 and December 31, 2011 . . .
Total long-term debt, net of unamortized
December 29, 2012
December 31, 2011
$ 25,000
$
—
143,830
149,266
221,504
222,773
247,355
348,068
discount . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . .
637,689
(40,375)
720,107
(9,750)
Long-term debt, net of unamortized discount
and excluding current portion . . . . . . . . . . .
$597,314
$710,357
64
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(6) Long-Term Debt (Continued)
Senior Secured Credit Agreement. On December 12, 2012, we amended and restated our credit
agreement dated as of November 30, 2011. The amendment, among other things, reduces the interest
rate payable on the tranche B term loans by 0.5 percentage points, fixes the maximum permissible
consolidated leverage ratio at 6.0 to 1.0 and increases the maximum size of any potential incremental
term loan facility to an unlimited amount provided that certain conditions are met, including our senior
secured leverage ratio being less than or equal to 4.0 to 1.0 after giving effect to borrowings under the
incremental term loan facility.
At December 29, 2012, there were $144.4 million of tranche A term loans, $223.3 million of
tranche B term loans and $25.0 million of revolving loans outstanding. At December 29, 2012, the
available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of
$0.5 million, was $174.5 million. Proceeds of the revolving credit facility are restricted for use solely for
general corporate purposes and acquisitions of targets in the same or a similar line of business as our
company, subject to specified criteria. We are required to pay a commitment fee of 0.50% per annum
on the unused portion of the new revolving credit facility. The maximum letter of credit capacity under
the new revolving credit facility is $50.0 million, with a fronting fee of 0.25% per annum for all
outstanding letters of credit and a letter of credit fee equal to the applicable margin for revolving loans
that are Eurodollar (LIBOR) loans.
The tranche A term loans are subject to principal amortization at the following rates: 5% in the
first year, 10% in the second year and 15% in each of the third and fourth years. The balance of all
borrowings under the tranche A term loan facility are due and payable at maturity on November 30,
2016. The tranche B term loans are subject to principal amortization at the rate of 1% annually with
the balance due at maturity on November 30, 2018. The revolving credit facility matures on
November 30, 2016.
We may prepay the term loans or permanently reduce the revolving credit facility commitment
under the credit agreement at any time without premium or penalty (other than customary breakage
costs with respect to the early termination of LIBOR loans, and only in the case of the tranche B term
loans, a 1% prepayment penalty to be paid in the event of a repricing transaction (as defined in the
credit agreement) that occurs prior to December 12, 2013). Subject to certain exceptions, the credit
agreement provides for mandatory prepayment upon certain asset dispositions and issuances of
securities. The credit agreement is also subject to mandatory annual prepayments commencing in April
2013 if our senior secured leverage (defined as the ratio of our consolidated senior secured debt, as of
the last day of any period of four consecutive fiscal quarters to our adjusted EBITDA for such period)
exceeds certain ratios as follows: 50% of our adjusted excess cash flow (as defined in the credit
agreement and which takes into account certain dividend payments and other adjustments) if our senior
secured leverage ratio is greater than or equal to 3.00 to 1.00 (with step-downs to 25% and 0% if our
senior secured leverage ratio is less than 3.00 to 1.00 and 2.50 to 1.00, respectively).
Interest under the revolving credit facility, including any outstanding letters of credit, and under
the tranche A term loan facility, is determined based on alternative rates that we may choose in
accordance with the credit agreement, including a base rate per annum plus an applicable margin
ranging from 1.50% to 2.00%, and LIBOR plus an applicable margin ranging from 2.50% to 3.00%, in
each case depending on our consolidated leverage ratio. At the end of fiscal 2012, the tranche A term
loan interest rate was 3.209%. Interest under the tranche B term loan facility is determined based on
65
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(6) Long-Term Debt (Continued)
alternative rates that we may choose in accordance with the credit agreement, including a base rate per
annum plus an applicable margin of 2.00%, and LIBOR plus an applicable margin of 3.00%, in each
case subject to a 1.0% LIBOR floor. At the end of fiscal 2012, the tranche B term loan interest rate
was 4.00%.
Our obligations under the credit agreement are jointly and severally and fully and unconditionally
guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The credit
agreement is secured by substantially all of our and our domestic subsidiaries’ assets except our and our
domestic subsidiaries’ real property. The credit agreement contains customary restrictive covenants,
subject to certain permitted amounts and exceptions, including covenants limiting our ability to incur
additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our
outstanding stock and create certain liens.
The credit agreement also contains certain financial maintenance covenants, which, among other
things, specify maximum capital expenditure limits, a maximum consolidated leverage ratio and a
minimum interest coverage ratio, each ratio as defined in the credit agreement. Our consolidated
leverage ratio (defined as the ratio of our consolidated total debt, as of the last day of any period of
four consecutive fiscal quarters to our adjusted EBITDA for such period), commencing with the four
quarter period ending December 29, 2012, may not exceed 6.00 to 1.00. We are also required to
maintain a consolidated interest coverage ratio of at least 1.75 to 1.00 as of the last day of any period
of four consecutive fiscal quarters, commencing with the four quarter period ending December 29,
2012. As of December 29, 2012, we were in compliance with all of the covenants in the credit
agreement.
The credit agreement also provides for an incremental term loan facility, pursuant to which we
may request that the lenders under the credit agreement, and potentially other lenders, provide
incremental term loans on terms substantially consistent with those provided under the credit
agreement. Among other things, the utilization of the incremental facility is conditioned on our ability
to meet a maximum senior secured leverage ratio of 4.00 to 1.00, and a sufficient number of lenders or
new lenders agreeing to participate in the facility.
7.625% Senior Notes due 2018.
In January 2010, we issued $350.0 million aggregate principal
amount of 7.625% senior notes due 2018 at a public offering price of 99.271% of face value. In
December 2012, we redeemed $101.5 million principal amount of our outstanding senior notes with the
proceeds of our common stock offering completed in October 2012, at a cash redemption price of
107.625% of the principal amount of the notes being redeemed, plus accrued and unpaid interest on
such amount of $3.5 million. The remaining original issue discount of $1.1 million and debt financing
costs are being amortized over the life of the senior notes as interest expense. Interest on the senior
notes is payable on January 15 and July 15 of each year. The senior notes will mature on January 15,
2018, unless earlier retired or redeemed as described below.
Beginning January 15, 2014, we may redeem some or all of the senior notes at a redemption price
of 103.813%, and thereafter at prices declining annually to 100% on or after January 15, 2017, plus
accrued and unpaid interest to the date of redemption. We may also redeem some or all of the notes
at any time prior to January 15, 2014 at a redemption price equal to a specified make-whole amount
plus accrued and unpaid interest to the date of redemption. In addition, if we undergo a change of
control, we may be required to offer to repurchase the notes at the repurchase price of 101% plus
accrued and unpaid interest to the date of redemption.
66
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(6) Long-Term Debt (Continued)
We may also, from time to time, seek to retire senior notes through cash repurchases of senior
notes and/or exchanges of senior notes for equity securities, in open market purchases, privately
negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing
market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts
involved may be material.
Our obligations under the senior notes are jointly and severally and fully and unconditionally
guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The senior
notes and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are
effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to the
indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment
to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of
payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not
guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of
our senior notes.
Our senior notes indenture contains covenants with respect to us and the guarantors and restricts
the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or
distributions on, and redemption of, capital stock; a number of other restricted payments, including
certain investments; specified creation of liens, certain sale-leaseback transactions and sale of certain
specified assets; fundamental changes, including consolidation, mergers and transfers of all or
substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject
to a number of important exceptions and qualifications. As of December 29, 2012, we were in
compliance with all of the covenants in the senior notes indenture.
Subsidiary Guarantees. We have no assets or operations independent of our direct and indirect
subsidiaries. All of our present domestic subsidiaries jointly and severally and fully and unconditionally
guarantee our long-term debt, and management has determined that our Canadian subsidiaries, which
are our only subsidiaries that are not guarantors of our long-term debt are ‘‘minor subsidiaries’’ as that
term is used in Rule 3-10 of Regulation S-X promulgated by the SEC. There are no significant
restrictions on our ability and the ability of our subsidiaries to obtain funds from our respective
subsidiaries by dividend or loan. Consequently, separate financial statements have not been presented
for our subsidiaries because management has determined that they would not be material to investors.
Prior Senior Secured Credit Agreement. On November 30, 2011, we used a portion of the proceeds
of our credit agreement described above to repay in full $130.0 million of term loan borrowings under
our prior credit agreement. We did not incur any early termination penalties in connection with the
prepayment.
12% Senior Subordinated Notes due 2016.
In January 2010, we repurchased $44.7 million
aggregate principal amount of our 12% senior subordinated notes at a repurchase price of 106.5% of
such principal amount plus accrued and unpaid interest. In February 2010, we repurchased or
redeemed the remaining $24.8 million aggregate principal amount of the senior subordinated notes at a
price equal to 106.0% of such principal amount, plus accrued and unpaid interest.
67
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(6) Long-Term Debt (Continued)
8% Senior Notes due 2011.
In January 2010, we repurchased $238.9 million aggregate principal
amount of our 8% senior notes at a repurchase price of 102.375% of such principal amount plus
accrued and unpaid interest. In February 2010, we repurchased or redeemed the remaining $1.1 million
aggregate principal amount of the 8% senior notes at a price equal to 102.0% of such principal
amount, plus accrued and unpaid interest.
Deferred Debt Financing Costs.
In connection with the issuance of our 7.625% senior notes in
January 2010, we capitalized approximately $8.2 million of debt financing costs during the first quarter
of 2010, which will be amortized over the term of the senior notes. During the first quarter of 2010, we
wrote-off and expensed $4.5 million of deferred debt financing costs relating to the retirement of our
remaining $69.5 million principal amount of 12% senior subordinated notes and $240.0 million
principal amount of 8% senior notes. During fiscal 2011, we capitalized approximately $16.3 million of
debt financing costs, which will be amortized over the five year term of the revolving credit facility and
tranche A term loans and the seven year term of the tranche B term loans. During the fourth quarter
of fiscal 2012, we wrote-off and expensed $1.5 million of deferred debt financing costs relating to the
partial redemption of $101.5 million aggregate principal amount of our 7.625% senior notes and
wrote-off and expensed $0.4 million of deferred debt financing costs relating to the amendment and
restatement of our credit agreement. During fiscal 2012, we also capitalized $0.5 million of debt
financing costs, which will be amortized over the five year term of the revolving credit facility and
tranche A term loans and the seven year term of the tranche B term loans.
As of December 29, 2012 and December 31, 2011 we had net deferred debt financing costs of
$17.5 million and $23.1 million, respectively.
Loss on Extinguishment of Debt. Loss on extinguishment of debt for fiscal 2012 includes costs
relating to our partial redemption of $101.5 million aggregate principal amount of our 7.625% senior
notes, including the repurchase premium and other expenses of $7.7 million, the write-off of deferred
debt financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on
extinguishment during fiscal 2012 also includes costs related to the amendment and restatement of our
credit agreement, including the write-off of deferred debt financing costs of $0.4 million, unamortized
discount of $0.1 million and other expenses of $0.2 million. During fiscal 2011, we did not have any loss
on extinguishment of debt. In connection with the retirement of the remaining 8% senior notes and
12% senior subordinated notes, we incurred a loss on extinguishment of debt of approximately
$15.2 million during the first quarter of 2010, including the repurchase premium and other expenses of
$10.7 million and as mentioned above, a write-off and expense of $4.5 million of deferred debt
financing costs.
68
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(6) Long-Term Debt (Continued)
Contractual Maturities. As of December 29, 2012, the aggregate contractual maturities of
long-term debt are as follows (in thousands):
Fiscal Year:
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15,375
29,063
24,750
109,750
1,688
460,562
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$641,188
*
Included in fiscal 2016 is $25.0 million of revolving loans that mature in 2016. However, because we expect to
reduce our revolving loan borrowings to zero during 2013, this amount is reflected in our consolidated balance
sheet within current portion of long-term debt.
Accrued Interest. At December 29, 2012 and December 31, 2011 accrued interest of $9.9 million
and $13.2 million, respectively, is included in accrued expenses in the accompanying consolidated
balance sheets.
(7) Fair Value Measurements
The authoritative accounting literature relating to fair value measurements defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (an exit price). The accounting literature outlines
a valuation framework and creates a fair value hierarchy in order to increase the consistency and
comparability of fair value measurements and the related disclosures. Under generally accepted
accounting principles, certain assets and liabilities must be measured at fair value, and the accounting
literature details the disclosures that are required for items measured at fair value.
Financial assets and liabilities are measured using inputs from the three levels of the fair value
hierarchy under the accounting literature. The three levels are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not
active; and model-derived valuations whose inputs are observable or whose significant value driver is
observable for the asset or liability, either directly or indirectly.
Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market
participants would use in pricing the asset or liability.
Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts
payable, accrued expenses and dividends payable are reflected in the consolidated balance sheets at
carrying value, which approximates fair value due to the short-term nature of these instruments.
69
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(7) Fair Value Measurements (Continued)
The carrying values and fair values of our revolving credit facility, term loan borrowings and senior
notes as of December 29, 2012 and December 31, 2011 are as follows (in thousands):
December 29, 2012
December 31, 2011
Carrying Value
Fair Value
Carrying Value
Fair Value
Revolving Credit Facility . . . . . . . . . . . . . . . . . . . .
Tranche A Term Loan due 2016 . . . . . . . . . . . . . . .
Tranche B Term Loan due 2018 . . . . . . . . . . . . . . .
7.625% Senior Notes due 2018 . . . . . . . . . . . . . . . .
25,000
143,830(2)
221,504(2)
247,355(2)
25,000(1)
144,375(1)
226,662(1)
269,001(3)
—
149,266(2)
222,773(2)
348,068(2)
—
150,000(1)
226,125(1)
372,750(3)
(1) Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets
that are not active.
(2) The carrying values of the tranche A term loan, tranche B term loan and 7.625% senior notes are net of discount. At
December 29, 2012, the face amounts of the tranche A term loan, tranche B term loan and senior notes were
$144.4 million, $223.3 million and $248.5 million, respectively. At December 31, 2011, the face amounts of the tranche A
term loan, tranche B term loan and senior notes were $150.0 million, $225.0 million and $350.0 million, respectively.
(3) Fair values are estimated based on quoted market prices.
(8) Disclosures about Derivative Instruments and Hedging Activities
As of December 29, 2012, we did not have any derivatives designated as a hedging instrument.
From February 2007 until January 2011, we maintained an interest rate swap that was designated as a
hedging instrument. The following table presents the impact of that interest rate swap and its location
within our consolidated statement of operations (in thousands):
Derivatives not designated as hedging instruments
Amount of Loss
Recognized in Income
on Derivatives
Fiscal Year Ended
December 31, 2011
Location of Loss
Recognized in Income
on Derivatives
Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,057*
Interest expense, net
*
The amount included in net interest expense for fiscal 2011 consists of a realized gain of $612 on the interest rate swap, a
$1,552 charge (pre-tax) for the reclassification to net interest expense from accumulated other comprehensive income and a
write-off (pre-tax charge) of $2,117 of the remaining accumulated other comprehensive income due to our early termination
of the $130.0 million term loan borrowings.
(9) Income Taxes
The components of income before income tax expense consist of the following (in thousands):
U.S.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$90,646
268
$76,745
59
$49,103
48
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$90,914
$76,804
$49,151
Fiscal 2012
Fiscal 2011
Fiscal 2010
70
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(9) Income Taxes (Continued)
Income tax expense (benefit) consists of the following (in thousands):
Fiscal 2012
Fiscal 2011
Fiscal 2010
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15,024
1,260
75
$11,726
1,289
17
$ 6,806
505
9
Subtotal
. . . . . . . . . . . . . . . . . . . . . . . . . . .
16,359
13,032
7,320
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,438
(143)
Subtotal
. . . . . . . . . . . . . . . . . . . . . . . . . . .
15,295
13,897
(368)
13,529
9,824
(372)
9,452
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$31,654
$26,561
$16,772
Income tax expense differs from the expected income tax expense (computed by applying the U.S.
federal income tax rate of 35% for fiscal years 2012, 2011 and 2010 to income before income tax
expense) as a result of the following:
Expected tax expense . . . . . . . . . . . . . . . . . . . . .
Increase (decrease):
State income taxes, net of federal income tax
Fiscal 2012
Fiscal 2011
Fiscal 2010
35.0%
35.0%
35.0%
benefit/expense . . . . . . . . . . . . . . . . . . . . . .
1.8%
2.2%
2.3%
Impact on deferred taxes from changes in state
tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign income taxes . . . . . . . . . . . . . . . . . . . .
Permanent differences . . . . . . . . . . . . . . . . . . .
Other differences . . . . . . . . . . . . . . . . . . . . . .
(0.9)%
0.1%
(1.2)%
—
(1.5)%
—
(1.1)%
—
(2.1)%
—
(0.8)%
(0.3)%
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34.8%
34.6%
34.1%
In fiscal 2012, 2011 and 2010, changes in state apportionments or state tax laws resulted in a
decrease of our blended state rate, resulting in a tax benefit of $0.9 million, $1.2 million and
$1.1 million, respectively.
71
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(9) Income Taxes (Continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities are presented below (in thousands):
Deferred tax assets:
Accounts receivable, principally due to
allowance . . . . . . . . . . . . . . . . . . . . . . . . . .
$
37
$
37
December 29, 2012
December 31, 2011
Inventories, principally due to additional costs
capitalized for tax purposes . . . . . . . . . . . . .
Accruals and other liabilities . . . . . . . . . . . . . .
Net operating loss and tax credit carryforwards .
Deferred debt financing costs . . . . . . . . . . . . .
Total gross deferred tax assets . . . . . . . . . . .
Deferred tax liabilities:
868
6,164
—
433
7,502
Plant and equipment . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangible assets . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . .
Total gross deferred tax liabilities . . . . . . . . .
(7,469)
(118,398)
(623)
(126,490)
979
6,409
24
—
7,449
(7,217)
(103,460)
(819)
(111,496)
Net deferred tax liability . . . . . . . . . . . . . .
$(118,988)
$(104,047)
In assessing the realizability of deferred tax assets, management considers whether it is more likely
than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making
this assessment. Based upon the level of historical taxable income and projections for future taxable
income and reversal of deferred tax liabilities over the periods in which the deferred tax assets are
deductible, management believes it is more likely than not that we will realize the benefits of these
deductible differences, at December 29, 2012. The amount of the deferred tax assets considered
realizable, however, could be reduced in the near term if estimates of future taxable income during
future periods are reduced.
The valuation allowance at December 29, 2012 and December 31, 2011 was $0.
At December 29, 2012 we had intangibles of $497.3 million for tax purposes, which are amortizable
through 2027.
We operate in multiple taxing jurisdictions within the United States and Canada and from time to
time face audits from various tax authorities regarding the deductibility of certain expenses, state
income tax nexus, intercompany transactions, transfer pricing and other matters. Although we do not
believe that we are currently under examination in any of our major tax jurisdictions, we remain subject
to examination in all of our tax jurisdictions until the applicable statutes of limitations expire. As of
72
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(9) Income Taxes (Continued)
December 29, 2012, a summary of the tax years that remain subject to examination in our major tax
jurisdictions are:
United States—Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States—States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 and forward
2008 and forward
2008 and forward
As of December 29, 2012, we do not have any reserves for uncertain tax positions. Our policy is to
classify interest and penalties that result from any income tax uncertainties as income tax expense.
(10) Capital Stock
Voting Rights. The holders of our common stock are entitled to one vote per share with respect to
each matter on which the holders of our common stock are entitled to vote. The holders of our
common stock are not entitled to cumulate their votes in the election of our directors.
Dividends. The holders of our common stock are entitled to receive dividends, if any, as they may
be lawfully declared from time to time by our board of directors, subject to any preferential rights of
holders of any outstanding shares of preferred stock. In the event of any liquidation, dissolution or
winding up of our company, common stockholders are entitled to share ratably in our assets available
for distribution to the stockholders, subject to the prior rights of holders of any outstanding preferred
stock. See Note 14, ‘‘Quarterly Financial Data (unaudited)’’ for dividends declared for each quarter of
fiscal 2012 and 2011.
Additional Issuance of Our Authorized Common Stock and Preferred Stock. Additional shares of
our authorized common stock and preferred stock may be issued, as determined by our board of
directors from time to time, without approval of holders of our common stock, except as may be
required by applicable law or the rules of any stock exchange or automated quotation system on which
our securities may be listed or traded. Our board of directors has the authority by resolution to
determine and fix, with respect to each series of preferred stock prior to the issuance of any shares of
the series to which such resolution relates, the designations, powers, preferences and rights of the
shares of preferred stock of such series and any qualifications, limitations or restrictions thereof.
Stock Repurchases. We did not repurchase any shares of common stock during fiscal 2012 or fiscal
2010. During fiscal 2011 we repurchased and retired 217,901 shares of common stock at an average cost
per share (excluding fees and commissions) of $16.73, or $3.6 million in the aggregate. These
repurchases were made pursuant to a stock and debt repurchase program authorized by our Board of
Directors that expired pursuant to its terms at the end of the first quarter of 2012.
Common Stock Offering.
In October 2012, we completed an underwritten public offering of
4,173,540 shares of our common stock at a price to the public of $30.25 per share. The proceeds of the
offering were approximately $120.4 million, after deducting underwriting discounts and commissions
and other estimated offering expenses. The offering was made by means of a prospectus and related
prospectus supplement included as part of an effective shelf registration statement previously filed with
the SEC. We used the net proceeds of the offering, together with cash on hand, for the partial
redemption of the 7.625% senior notes plus accrued and unpaid interest and general corporate
purposes.
73
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(11) Pension Benefits
We have three defined benefit pension plans covering substantially all of our employees. The
benefits are based on years of service and the employee’s compensation, as defined.
The following table sets forth our defined benefit pension plans’ benefit obligation, fair value of
plan assets and funded status recognized in the consolidated balance sheets. We used December 29,
2012 and December 31, 2011 measurement dates for fiscal 2012 and 2011, respectively, to calculate end
of year benefit obligations, fair value of plan assets and annual net periodic benefit cost.
Change in projected benefit obligation:
Projected benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 29,
2012
December 31,
2011
(in thousands)
$ 47,119
4,013
2,393
2,036
(1,012)
$ 35,942
8,081
1,943
2,052
(899)
Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . .
54,549
47,119
Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Actual gain on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,004
4,967
4,750
(1,012)
47,709
34,333
1,345
4,225
(899)
39,004
Net amount recognized:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
139
(6,979)
$
—
(8,115)
Funded status at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (6,840)
$ (8,115)
Amount recognized in accumulated other comprehensive loss consist of:
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(215)
(17,206)
6,385
$
(260)
(16,162)
6,068
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . .
$(11,036)
$(10,354)
At December 29, 2012, we had one defined pension plan with accumulated benefit obligations and
fair value of plan assets of $3.8 million and $3.9 million, respectively. Our other two plans, in the
aggregate, have accumulated benefit obligations and fair value of plan assets of $44.1 million and
$43.8 million, respectively.
74
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(11) Pension Benefits (Continued)
The amounts in accumulated other comprehensive loss that are expected to be recognized as
components of net periodic benefit cost in fiscal 2013 are as follows (in thousands):
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 45
921
$966
Weighted-average assumptions:
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . .
Expected long-term rate of return . . . . . . . . . . . . . . . . . .
3.91%
3.00%
7.25%
4.34%
3.00%
7.25%
December 29,
2012
December 31,
2011
The discount rate used to determine year-end fiscal 2012 and fiscal 2011 pension benefit
obligations was derived by matching the plans’ expected future cash flows to the corresponding yields
from the Citigroup Pension Discount Curve. This yield curve has been constructed to represent the
available yields on high-quality fixed-income investments across a broad range of future maturities.
The overall expected long-term rate of return on plan assets assumption is based upon a building-
block method, whereby the expected rate of return on each asset class is broken down into the
following components: (1) inflation; (2) the real risk-free rate of return (i.e., the long-term estimate of
future returns on default-free U.S. government securities); and (3) the risk premium for each asset
class (i.e., the expected return in excess of the risk-free rate).
All three components are based primarily on historical data, with modest adjustments to take into
account additional relevant information that is currently available. For the inflation and risk-free return
components, the most significant additional information is that provided by the market for nominal and
inflation-indexed U.S. Treasury securities. That market provides implied forecasts of both the inflation
rate and risk-free rate for the period over which currently-available securities mature. The historical
data on risk premiums for each asset class is adjusted to reflect any systemic changes that have
occurred in the relevant markets; e.g., the higher current valuations for equities, as a multiple of
earnings, relative to the longer-term average for such valuations.
While the precise expected long-term return derived using the above approach will fluctuate
somewhat from year to year, our policy is to hold this long-term assumption constant as long as it
remains within a reasonable tolerance from the derived rate.
75
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(11) Pension Benefits (Continued)
Net periodic cost includes the following components (in thousands):
Fiscal 2012
Fiscal 2011
Fiscal 2010
Service cost—benefits earned during the period . .
Interest cost on projected benefit obligation . . . . .
Expected return on plan assets . . . . . . . . . . . . . .
Amortization of unrecognized prior service cost . .
Amortization of loss . . . . . . . . . . . . . . . . . . . . . .
$ 2,393
2,036
(2,918)
45
921
$ 1,943
2,052
(2,630)
45
405
$ 1,498
1,817
(2,052)
45
311
Net pension cost . . . . . . . . . . . . . . . . . . . . . . .
$ 2,477
$ 1,815
$ 1,619
The asset allocation for our pension plans at the end of fiscal 2012 and fiscal 2011, and the target
allocation for fiscal 2013, by asset category, follows. The fair value of plan assets for these plans is
$47.7 million and $39.0 million at the end of fiscal 2012 and fiscal 2011, respectively. The expected
long-term rate of return on these plan assets was 7.25% in fiscal 2012 and fiscal 2011.
Our pension plan assets are managed by outside investment managers; assets are rebalanced at the
end of each quarter. Our investment strategy with respect to pension assets is to maximize return while
protecting principal. The investment manager has the flexibility to adjust the asset allocation and move
funds to the asset class that offers the most opportunity for investment returns.
Asset Category
Percentage of Plan Assets
at Year End
Target
Allocation
December 29,
2012
December 31,
2011
Equity securities . . . . . . . . . . . . . . . . . . . . . . .
Fixed income securities . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60%
40%
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59%
32%
9%
100%
64%
29%
7%
100%
The general investment objective of each of the pension plans is to grow the plan assets in relation
to the plan liabilities while prudently managing the risk of a decrease in the plan’s assets relative to
those liabilities. To meet this objective, our management has adopted the above target allocations that
it reconsiders from time to time as circumstances change. The actual plan asset allocations may be
within a range around these targets. The actual asset allocations are reviewed and rebalanced on a
periodic basis.
76
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(11) Pension Benefits (Continued)
The fair values of our pension plan assets at December 29, 2012 and December 31, 2011, utilizing
the fair value hierarchy discussed in Note 7, ‘‘Fair Value Measurements’’ follow (in thousands):
Asset Category
Cash . . . . . . . . . . . . . . . . . . . . . . . . .
Equity securities:
December 29, 2012
December 31, 2011
Level 1
Levels 2 & 3
Level 1
Levels 2 & 3
$ 4,373
$—
$ 2,705
$—
U.S. mutual funds . . . . . . . . . . . . . .
Foreign mutual funds . . . . . . . . . . . .
U.S. common stocks . . . . . . . . . . . .
Foreign common stocks . . . . . . . . . .
14,248
—
12,979
1,085
Fixed income securities:
U.S. mutual funds . . . . . . . . . . . . . .
15,024
—
—
—
—
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . .
$47,709
$—
11,124
—
13,203
630
11,342
$39,004
—
—
—
—
—
$—
The investment portfolio contains a diversified blend of common stocks, bonds, cash equivalents
and other investments, which may reflect varying rates of return. The investments are further
diversified within each asset classification. The portfolio diversification provides protection against a
single security or class of securities having a disproportionate impact on aggregate performance. Of the
$13.2 million of U.S. common stocks in the investment portfolio at the end of fiscal 2012, $4.6 million
was invested in B&G Foods’ common stock. Of the $13.2 million of U.S. common stocks in the
investment portfolio at the end of fiscal 2011, $3.8 million was invested in B&G Foods’ common stock.
Information about the expected cash flows for the pension plan follows (in thousands):
Benefit payments:
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 to 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,252
1,414
1,629
1,750
2,018
14,119
Pension Payments
We currently anticipate making contributions of approximately $4.8 million to our pension plan in
fiscal 2013.
We also sponsor a defined contribution plan covering substantially all of our employees. Employees
may contribute to this plan and these contributions are matched by us at varying amounts.
Contributions for the matching component of this plan amounted to $0.8 million, $0.7 million and
$0.7 million for fiscal 2012, 2011 and 2010, respectively.
We also contribute to the Bakery and Confectionary Union and Industry International Pension
Fund (EIN 52-6118572, Plan No. 001), a multi-employer pension plan, sponsored by the Bakery,
77
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(11) Pension Benefits (Continued)
Confectionary, Tobacco Workers and Grain Millers International Union (BCTGM). The plan provides
multiple plan benefits with corresponding contribution rates that are collectively bargained between
participating employers and their affiliated BCTGM local unions. The collective bargaining agreement
for our Portland, Maine employees participating in the plan expires on April 25, 2015.
In April 2012, we were notified that for the plan year ended December 31, 2011, the plan was not
in endangered nor in critical status as the most recent annual period, no surcharge was imposed, and it
was classified in the Green Zone. The plan was also not in endangered nor critical status for the plan
year ending December 31, 2010. We were also notified that for the plan year beginning January 1,
2012, the plan is in critical status and classified in the Red Zone. The law requires that all contributing
employers pay to a plan a surcharge to help correct the plan’s financial situation. The amount of the
surcharge is equal to a percentage of the amount an employer is otherwise required to contribute to
the plan under the applicable collective bargaining agreement. A 5% surcharge payable on hours
worked on and after June 1, 2012 until December 31, 2012 was charged for plan year 2012, the initial
critical year. A 10% surcharge payable on hours worked on and after January 1, 2013 will be applicable
for each succeeding plan year that the plan is in critical status until we agree to a collective bargaining
agreement that implements a rehabilitation plan. There were no significant changes in the contractual
employer contribution rate or number of employees for 2011 or 2010. B&G Foods made contributions
to the plan of $1.0 million, $1.0 million and $1.1 million for fiscal 2012, 2011 and 2010, respectively.
These contributions represented less than five percent of total contributions made to the plan. In fiscal
2012, we paid less than $0.1 million in surcharges and expect to pay surcharges of less than $0.1 million
in fiscal 2013 assuming consistent hours are worked.
(12) Commitments and Contingencies
Operating Leases. We have several noncancelable operating leases, primarily for our corporate
headquarters, one of our manufacturing facilities, warehouses, transportation equipment and machinery.
These leases generally require us to pay all executory costs such as maintenance, taxes and insurance.
Total rental expense for our operating leases was $5.5 million, $5.5 million and $6.1 million, for fiscal
2012, 2011 and 2010, respectively.
As of December 29, 2012, future minimum lease payments under non-cancelable operating leases
(with initial or remaining lease terms in excess of one year) for the periods set forth below are as
follows (in thousands):
Fiscal year ending:
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Parties
$ 5,566
3,483
3,023
3,063
717
1,601
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$17,453
78
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(12) Commitments and Contingencies (Continued)
Legal Proceedings. We are from time to time involved in various claims and legal actions arising
in the ordinary course of business, including proceedings involving product liability claims, worker’s
compensation and other employee claims, and tort and other general liability claims, as well as
trademark, copyright, patent infringement and related claims and legal actions. In the opinion of our
management, the ultimate disposition of any currently pending claims or actions will not have a
material adverse effect on our consolidated financial condition, results of operations or liquidity.
Environmental. We are subject to environmental laws and regulations in the normal course of
business. We did not make any material expenditures during fiscal 2012, 2011 or 2010 in order to
comply with environmental laws and regulations. Based on our experience to date, management
believes that the future cost of compliance with existing environmental laws and regulations (and
liability for any known environmental conditions) will not have a material adverse effect on our
consolidated financial condition, results of operations or liquidity. However, we cannot predict what
environmental or health and safety legislation or regulations will be enacted in the future or how
existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict
the amount of future expenditures that may be required in order to comply with such environmental or
health and safety laws or regulations or to respond to such environmental claims.
Collective Bargaining Agreements. As of December 29, 2012, approximately 342 of our 999
employees, or 34.2%, were covered by collective bargaining agreements. None of our collective
bargaining agreements is scheduled to expire within the next 12 months.
Severance and Change of Control Agreements. We have employment agreements with each of our
six executive officers. The agreements generally continue until terminated by the executive or by us,
and provide for severance payments under certain circumstances, including termination by us without
cause (as defined in the agreements) or as a result of the employees’ death or disability, or termination
by us or a deemed termination upon a change of control (as defined in the agreements). Severance
benefits include payments for salary continuation, continuation of health care and insurance benefits,
present value of additional pension credits and, in the case of a change of control, accelerated vesting
under compensation plans and potential excise tax liability and gross up payments.
(13) Incentive Plans
Annual Bonus Plan. Annually, our board of directors establishes a bonus plan that provides for
cash awards to be made to our executive officers and other senior managers upon our company’s
attainment of pre-set annual financial objectives. Awards are normally paid in cash in a lump sum
following the close of each plan year. At December 29, 2012 and December 31, 2011, accrued expenses
in the accompanying consolidated balance sheets include annual bonus accruals of $3.8 million per
year.
2008 Omnibus Incentive Compensation Plan. Upon the recommendation of our compensation
committee, our board of directors on March 10, 2008 adopted (subject to stockholder approval) the
B&G Foods, Inc. 2008 Omnibus Incentive Compensation Plan, which we refer to as the 2008 Omnibus
Plan. Our stockholders approved the 2008 Omnibus Plan at our annual meeting on May 6, 2008.
79
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(13) Incentive Plans (Continued)
The 2008 Omnibus Plan authorizes the grant of performance share awards, restricted stock,
options, stock appreciation rights, deferred stock, stock units and cash-based awards to employees,
non-employee directors and consultants. Subject to adjustment as provided in the plan, the total
number of shares of common stock available for awards under the plan is 4,500,000, of which 3,220,031
were available for future issuance as of December 29, 2012. Some of those shares are subject to
outstanding performance share long-term incentive awards (LTIAs) as described in the table below.
Performance Share Awards. Beginning in fiscal 2008, our compensation committee has made
annual grants of performance share LTIAs to our executive officers and certain other members of
senior management under the 2008 Omnibus Plan. The LTIAs entitle the participants to earn shares of
common stock upon the attainment of certain performance goals over the applicable performance
period. The performance period is typically three years.
The LTIAs, each have a threshold, target and maximum payout. The awards are settled based
upon our performance over the applicable performance period. For the LTIAs granted to date, the
applicable performance metric is and has been ‘‘excess cash’’ (as defined in the award agreements). If
our performance fails to meet the performance threshold, then the awards will not vest and no shares
will be issued pursuant to the awards. If our performance meets or exceeds the performance threshold,
then a varying amount of shares from the threshold amount (50% of the target number of shares) up
to the maximum amount (200% or 300% of the target number of shares) may be earned.
Subject to the performance goal for the applicable performance period being certified in writing by
our compensation committee as having been achieved, shares of common stock are issued prior to
March 15 following the completion of the performance period.
The following table details the activity in our performance share LTIAs for fiscal 2012:
Number of
Performance Shares(1)
Weighted Average
Grant Date Fair
Value (per share)(2)
Beginning of fiscal 2012 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,985,697
159,722
(1,124,205)
(8,485)
End of fiscal 2012 . . . . . . . . . . . . . . . . . . . .
1,012,729
$ 5.25
$20.34
$ 2.30
$14.69
$10.83
(1)
Solely for purposes of this table, the number of performance shares is based on the participants earning the
maximum number of performance shares (i.e., 200% or 300% of the target number of performance shares).
(2) The fair value of the awards was determined based upon the closing price of our common stock on the applicable
measurement dates (i.e., the deemed grant dates for accounting purposes) reduced by the present value of
expected dividends using the risk-free interest-rate as the award holders are not entitled to dividends or dividend
equivalents during the vesting period.
Non-Employee Director Stock Grants. Each of our non-employee directors receives an annual
equity grant as part of his or her non-employee director compensation. These shares fully vest when
issued.
80
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(13) Incentive Plans (Continued)
The following table details the number of shares of common stock issued by our company during
fiscal 2012, 2011 and 2010 upon the vesting of performance share long-term incentive awards and for
non-employee director annual equity grants and other share based compensation:
Number of performance shares vested . . . . . . .
Shares withheld to fund statutory minimum tax
withholding . . . . . . . . . . . . . . . . . . . . . . . .
Shares of common stock issued for
performance share long-term incentive
awards . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares of common stock issued to
non-employee directors for annual equity
grants . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares of common stock issued for other
share based compensation, net of shares
withheld to fund statutory minimum tax
withholding . . . . . . . . . . . . . . . . . . . . . . .
December 29,
2012
December 31,
2011
January 1,
2011
1,124,205
403,431
399,842
463,942
152,126
148,474
660,263
251,305
251,368
17,436
17,796
21,264
9,394
9,008
—
Total shares of common stock issued . . . .
687,093
278,109
272,632
Excess tax benefit recorded to additional paid
in capital . . . . . . . . . . . . . . . . . . . . . . . . . .
$
8,031
$
1,047
$
326
The following table sets forth the compensation expense recognized for share-based payments
(LTIAs, non-employee director stock grants and other share based payments) during the last three
fiscal years and where that expense is reflected in our consolidated statements of operations
(in thousands):
Consolidated Statements of Operations Location
Fiscal 2012 Fiscal 2011 Fiscal 2010
Compensation expense included in cost of goods sold . . .
Compensation expense included in selling, general and
administrative expenses . . . . . . . . . . . . . . . . . . . . . .
$ 772
$ 767
$ 626
3,005
3,331
3,121
Total compensation expense for share-based
payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,777
$4,098
$3,747
As of December 29, 2012, there was $2.9 million of unrecognized compensation expense related to
LTIAs, which is expected to be recognized over the next two years.
81
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 29, 2012, December 31, 2011 and January 1, 2011
(14) Quarterly Financial Data (unaudited)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(in thousands, expect per share data)
Net sales
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$157,339
$131,405
$148,612
$129,453
$154,155
$133,010
$173,706
$149,998
Gross profit
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 56,825
$ 44,867
$ 51,756
$ 42,169
$ 55,279
$ 41,450
$ 59,483
$ 49,290
Net income
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 16,778
$ 13,305
$ 16,026
$ 12,599
$ 16,897
$ 12,084
$
9,559
$ 12,255
Earnings per share
2012—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
$
0.35
0.35
0.28
0.27
0.27
0.21
$
$
$
$
$
$
0.33
0.33
0.26
0.26
0.27
0.21
$
$
$
$
$
$
0.35
0.35
0.25
0.25
0.27
0.21
$
$
$
$
$
$
0.18
0.18
0.26
0.25
0.29
0.23
Earnings per share were computed individually for each of the quarters presented using the
weighted average number of shares outstanding during each quarterly period, while earnings per share
for the full year were computed using the weighted average number of shares outstanding during the
full year; therefore, the sum of the earnings per share amounts for the quarters may not equal the total
for the full year.
82
B&G FOODS, INC. AND SUBSIDIARIES
Schedule of Valuation and Qualifying Accounts
(In thousands)
Schedule II
Column A
Column B
Column C
Additions
Column D
Column E
Description
Year ended January 1, 2011:
Allowance for doubtful accounts
and discounts . . . . . . . . . . . . . . .
Inventory reserve . . . . . . . . . . . . . .
Year ended December 31, 2011:
Allowance for doubtful accounts
and discounts . . . . . . . . . . . . . . .
Inventory reserve . . . . . . . . . . . . . .
Year ended December 29, 2012:
Allowance for doubtful accounts
and discounts . . . . . . . . . . . . . . .
Inventory reserve . . . . . . . . . . . . . .
(a) Represents bad-debt write-offs (recoveries).
(b) Represents inventory write-offs.
Balance at
beginning of
period
Charged to
costs and
expenses
Charged to
other accounts— Deductions—
describe
describe
Balance at
end of period
$631
$450
$765
$425
$723
$550
$127
$ —
$ (36)
$125
$142
$ —
—
—
—
—
—
—
$
$
(7)(a)
25(b)
6(a)
$
$ —
34(a)
$
$ —
$765
$425
$723
$550
$831
$550
83
Item 9. Changes in and Disagreement With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, our
management, including our chief executive officer and our chief financial officer, conducted an
evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as
of the end of the period covered by this report. As defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, disclosure controls and procedures are controls and other procedures that we use that
are designed to ensure that information required to be disclosed by us in the reports we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is accumulated and communicated to our
management, including our chief executive officer and our chief financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
Based on that evaluation, our chief executive officer and our chief financial officer concluded that
our disclosure controls and procedures were effective as of the end of the period covered by this
report.
Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Our management, including our chief executive officer and chief financial officer, conducted an
evaluation of our internal control over financial reporting based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Based on our evaluation under the framework of Internal Control—Integrated Framework, our
management concluded that our internal control over financial reporting was effective at December 29,
2012. The effectiveness of our internal control over financial reporting as of December 29, 2012 was
audited by KPMG LLP, an independent registered public accounting firm, as stated in their report
which is included in Part II, Item 8, ‘‘Financial Statements and Supplementary Data’’ of this report.
Our internal control system is designed to provide reasonable assurance to our management and
board of directors regarding the preparation and fair presentation of published consolidated financial
statements in accordance with generally accepted accounting principles. All internal control systems, no
matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and
presentation and may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Changes in Internal Control Over Financial Reporting.
As required by Rule 13a-15(d) under the Exchange Act, our management, including our chief
executive officer and our chief financial officer, also conducted an evaluation of our internal control
over financial reporting to determine whether any change occurred during the last quarter of fiscal
84
2012 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting. Based on that evaluation, our chief executive officer and our chief financial officer
concluded that there has been no change during the last quarter of fiscal 2012 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls.
Our company’s management, including the chief executive officer and chief financial officer, does
not expect that our disclosure controls or our internal control over financial reporting will prevent or
detect all errors and all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The
design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud, if any, within our
company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of any system of controls is based in
part on certain assumptions about the likelihood of future events, and there can be no assurance that
any design will succeed in achieving its stated goals under all potential future conditions. Projections of
any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may
become inadequate because of changes in conditions or deterioration in the degree of compliance with
policies or procedures.
Item 9B. Other Information.
None.
85
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
With the exception of the information relating to our Code of Business Conduct and Ethics that is
presented in Part I, Item 1 of this report under the heading ‘‘Available Information,’’ the information
required by this Item will appear in the sections entitled ‘‘Corporate Governance,’’ ‘‘Proposal 1—
Election of Directors,’’ ‘‘Our Management,’’ ‘‘Section 16(a) Beneficial Ownership Reporting
Compliance,’’ ‘‘Compensation Committee Interlocks and Insider Participation’’ and ‘‘Report of the
Compensation Committee’’ included in our definitive proxy statement to be filed on or before April 29,
2013, relating to the 2013 annual meeting of stockholders, which information is incorporated herein by
reference.
Item 11. Executive Compensation.
The information required by this item will appear in the section entitled ‘‘Executive
Compensation’’ and ‘‘Compensation Discussion and Analysis’’ included in our definitive proxy
statement to be filed on or before April 29, 2013, relating to the 2013 annual meeting of stockholders,
which information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Securities Authorized for Issuance Under Equity Compensation Plans. The following table
summarizes information, as of December 29, 2012, relating to the 2008 Omnibus Incentive
Compensation Plan, which was approved by the company’s stockholders and under which restricted
stock, options, stock appreciation rights, deferred stock, stock units and cash-based awards to
employees, non-employee directors and consultants may be granted from time to time.
Equity Compensation Plan Information
Plan Category
Equity compensation plans approved by
security holders . . . . . . . . . . . . . . . . .
Equity compensation plans not approved
by security holders . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Total
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
1,012,729(1)
—
1,012,729(1)
(2)
—
—
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
2,207,302(1)(3)
—
2,207,302(1)(3)
(1) For the 2010 to 2012 performance share long-term incentive awards (LTIAs), 2011 to 2013 performance share LTIAs and
2012 to 2014 performance share LTIAs, includes the maximum number of shares (i.e., 200% or 300% of the target number
of shares) of common stock that may be issued under the 2008 Omnibus Incentive Compensation Plan in respect of the
LTIAs, subject to the achievement of specified performance goals. There is, however, no guarantee that all or any part of
these performance based awards will actually be earned and that shares of common stock will be issued upon completion of
the performance cycles. 298,007 shares of common stock (which is net of shares withheld for minimum statutory tax
withholding) were issued in February 2013 in respect of the 2010 to 2012 LTIAs.
(2) Not applicable.
(3) As of the end of fiscal 2012, of the 4,500,000 shares authorized for issuance under the 2008 Omnibus Plan, 3,220,031
remained available for issuance. This number exceeds the number set forth in column (c) because the actual number of
shares to be issued under the LTIAs is likely to be substantially lower than the number of shares listed in column
(a) because plan participants are likely to have shares withheld by our company to satisfy tax withholding requirements. In
addition, as noted in footnote (1) above, the chart assumes maximum awards (i.e., 200% or 300% of the target number of
shares) will be earned for the performance share LTIAs. There is no certainty, however, that awards will in fact be achieved
at the maximum level or at all. Shares not issued due to withholding and shares not issued due to failure to satisfy
performance goals do not count against the maximum number of remaining authorized shares under the plan.
86
The remaining information required by this item will appear in the section entitled ‘‘Security
Ownership of Certain Beneficial Owners and Management’’ included in our definitive proxy statement
to be filed on or before April 29, 2013, relating to the 2013 annual meeting of stockholders, which
information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will appear in the section entitled ‘‘Certain Relationships
and Related Transactions’’ and ‘‘Corporate Governance’’ included in our definitive proxy statement to
be filed on or before April 29, 2013, relating to the 2013 annual meeting of stockholders, which
information is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this item will appear in the section entitled ‘‘Independent Registered
Public Accounting Firm Fees’’ included in our definitive proxy statement to be filed on or before
April 29, 2013, relating to the 2013 annual meeting of stockholders, which information is incorporated
herein by reference.
87
Item 15. Exhibits, Financial Statement Schedules.
(a) The following documents are filed as part of this report.
PART IV
(1) Consolidated Financial Statements: The following consolidated financial
statements are included in Part II, Item 8 of this report.
Reports of Independent Registered Public Accounting Firm.
. . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 29, 2012 and December 31, 2011.
Consolidated Statements of Operations for the years ended December 29, 2012,
. . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2011 and January 1, 2011.
Page
46
48
49
Consolidated Statements of Comprehensive Income for the years ended
December 29, 2012, December 31, 2011 and January 1, 2011.
. . . . . . . . . . . .
50
Consolidated Statements of Changes in Stockholders’ Equity for the years
ended December 29, 2012, December 31, 2011 and January 1, 2011.
. . . . . . .
Consolidated Statements of Cash Flows for the years ended December 29, 2012,
. . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2011 and January 1, 2011.
Notes to Consolidated Financial Statements.
. . . . . . . . . . . . . . . . . . . . . . . . . .
51
52
53
(2) Financial Statement Schedule. The following financial statement schedule is
included in Part II, Item 8 of this report.
Schedule II—Schedule of Valuation and Qualifying Accounts.
. . . . . . . . . . . . .
83
(3) Exhibits.
EXHIBIT
NO.
2.1
2.2
3.1
3.2
4.1
DESCRIPTION
Asset Purchase Agreement, dated as of October 28, 2011, among Conopco, Inc., B&G
Foods North America, Inc., and B&G Foods, Inc. (Filed as Exhibit 2.1 to B&G Foods’
Current Report on Form 8-K filed on October 31, 2011, and incorporated by reference
herein)
Asset Purchase Agreement, dated as of September 19, 2012, among Chipita America, Inc.,
B&G Foods North America, Inc., and, for purposes of Articles X and XI thereof only,
Chipita S.A. (Filed as Exhibit 2.1 to B&G Foods’ Current Report on Form 8-K filed on
September 25, 2012)
Second Amended and Restated Certificate of Incorporation of B&G Foods, Inc. (Filed as
Exhibit 3.1 to B&G Foods’ Current Report on Form 8-K filed on August 13, 2010, and
incorporated by reference herein)
Amended and Restated Bylaws of B&G Foods, Inc. (Filed as Exhibit 3.1 to B&G Foods’
Current Report on Form 8-K filed on May 25, 2007, and incorporated by reference herein)
Indenture, dated as of January 25, 2010, between B&G Foods, Inc. and The Bank of New
York Mellon, as trustee (Filed as Exhibit 4.1 to B&G Foods’ Current Report on Form 8-K
filed on January 25, 2010, and incorporated by reference herein)
88
EXHIBIT
NO.
4.2
4.3
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
DESCRIPTION
First Supplemental Indenture, dated as of January 25, 2010, between B&G Foods, Inc.,
BGH Holdings, Inc., Bloch & Guggenheimer, Inc. Burnham & Morrill Company, William
Underwood Company, and The Bank of New York Mellon, as trustee, relating to the
7.625% senior notes due 2018 (Filed as Exhibit 4.2 to B&G Foods’ Current Report on
Form 8-K filed on January 25, 2010, and incorporated by reference herein)
Form of 7.625% Senior Note due 2018 (included in Exhibit 4.2)
Form of stock certificate for common stock (Filed as Exhibit 4.1 to B&G Foods’ Current
Report on Form 8-K filed on August 13, 2010, and incorporated by reference herein)
Amended and Restated Credit Agreement, dated as of December 12, 2012, among B&G
Foods, Inc., as borrower, the several banks and other financial institutions or entities from
time to time party thereto as lenders and Credit Suisse AG, as administrative agent and
collateral agent, with Credit Suisse Securities (USA) LLC, Barclays Bank PLC, and RBC
Capital Markets, as joint lead arrangers and joint bookrunners, Barclays Bank PLC and
RBS Citizens, N.A., as co-syndication agents, and Royal Bank of Canada, as
documentation agent (Filed as Exhibit 10.1 to B&G Foods’ Current Report on Form 8-K
filed on December 14, 2012, and incorporated by reference herein)
Guarantee and Collateral Agreement, dated as of November 30, 2011, among B&G
Foods, Inc., B&G Foods North America, Inc., William Underwood Company, each other
subsidiary of B&G Foods, Inc. party thereto from time to time, and Credit Suisse AG, as
collateral agent (Filed as Exhibit 10.2 to B&G Foods’ Current Report on Form 8-K filed
on December 6, 2011, and incorporated by reference herein)
Agreement by and between MSLO Emeril Acquisition Sub LLC (successor by assignment
to Emeril’s Food of Love Productions, L.L.C.) and B&G Foods, Inc. dated June 9, 2000
(Filed with as Exhibit 10.13 to Amendment No. 2 to Registration Statement on Form S-1
(file no. 333-112680) filed on May 3, 2004, and incorporated herein by reference)
Amended and Restated Employment Agreement by and between David L. Wenner and
B&G Foods, Inc., dated as of December 31, 2008 (Filed as Exhibit 10.1 to B&G Foods’
Current Report on Form 8-K filed on January 6, 2009, and incorporated by reference
herein)
Amended and Restated Employment Agreement by and between Robert C. Cantwell and
B&G Foods, Inc., dated as of December 31, 2008 (Filed as Exhibit 10.2 to B&G Foods’
Current Report on Form 8-K filed on January 6, 2009, and incorporated by reference
herein)
Amended and Restated Employment Agreement by and between Vanessa E. Maskal and
B&G Foods, Inc., dated as of December 31, 2008 (Filed as Exhibit 10.3 to B&G Foods’
Current Report on Form 8-K filed on January 6, 2009, and incorporated by reference
herein)
Amended and Restated Employment Agreement by and between Scott E. Lerner and
B&G Foods, Inc., dated as of December 31, 2008 (Filed as Exhibit 10.5 to B&G Foods’
Current Report on Form 8-K filed on January 6, 2009, and incorporated by reference
herein)
Employment Agreement, dated as of August 6, 2009, between William F. Herbes and B&G
Foods, Inc. (Filed as Exhibit 10.2 to B&G Foods’ Current Report on Form 8-K filed on
August 10, 2009, and incorporated by reference herein)
89
EXHIBIT
NO.
10.9
12.1
21.1
23.1
31.1
31.2
32.1
101.1
Employment Agreement, dated as of March 5, 2010, between William H. Wright and B&G
Foods, Inc. (Filed as Exhibit 10.12 to B&G Foods’ Annual Report on Form 10-K filed on
March 1, 2011, and incorporated by reference herein)
DESCRIPTION
Computation of Ratio of Earnings to Fixed Charges.
Subsidiaries of B&G Foods, Inc.
Consent of KPMG LLP.
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934 of the Chief Executive Officer.
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934 of the Chief Financial Officer.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer and Chief Financial
Officer.
The following financial information from B&G Foods’ Annual Report for the year ended
December 29, 2012, formatted in XBRL (eXtensible Business Reporting Language):
(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations,
(iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated
Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash
Flows, (vi) Notes to Consolidated Financial Statements, and (vii) document and entity
information.
90
SIGNATURES
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: February 26, 2013
B&G FOODS, INC.
By: /s/ ROBERT C. CANTWELL
Robert C. Cantwell
Executive Vice President of Finance and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
NAME
TITLE
DATE
/s/ STEPHEN C. SHERRILL
Stephen C. Sherrill
Chairman of the Board of Directors
February 26, 2013
/s/ DAVID L. WENNER
David L. Wenner
President, Chief Executive Officer and
Director (Principal Executive Officer)
February 26, 2013
/s/ ROBERT C. CANTWELL
Robert C. Cantwell
Executive Vice President of Finance,
Chief Financial Officer and Director
(Principal Financial and Accounting
Officer)
/s/ CYNTHIA T. JAMISON
Cynthia T. Jamison
/s/ CHARLES F. MARCY
Charles F. Marcy
/s/ DENNIS M. MULLEN
Dennis M. Mullen
/s/ CHERYL M. PALMER
Cheryl M. Palmer
/s/ ALFRED POE
Alfred Poe
Director
Director
Director
Director
Director
91
February 26, 2013
February 26, 2013
February 26, 2013
February 26, 2013
February 26, 2013
February 26, 2013
Exhibit 31.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, David L. Wenner, certify that:
1.
I have reviewed this annual report on Form 10-K of B&G Foods, Inc.;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial information included in
this 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 report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2013
/s/ DAVID L. WENNER
David L. Wenner
Chief Executive Officer
Exhibit 31.2
I, Robert C. Cantwell, certify that:
CERTIFICATION BY CHIEF FINANCIAL OFFICER
1.
I have reviewed this annual report on Form 10-K of B&G Foods, Inc.;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial information included in
this 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 report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
Date: February 26, 2013
/s/ ROBERT C. CANTWELL
Robert C. Cantwell
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
Exhibit 32.1
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of B&G Foods, Inc. (the ‘‘Company’’) on Form 10-K for
the period ended December 29, 2012 as filed with the Securities and Exchange Commission on the
date hereof (the ‘‘Report’’), I, David L. Wenner, Chief Executive Officer of the Company and I,
Robert C. Cantwell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as
adopted pursuant t o §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ DAVID L. WENNER
David L. Wenner
Chief Executive Officer
February 26, 2013
/s/ ROBERT C. CANTWELL
Robert C. Cantwell
Chief Financial Officer
February 26, 2013
A signed original of this written statement required by Section 906 has been provided to the Company and will
be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
8087_Cov 3/26/13 1:50 PM Page 2
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B&G FOODS, INC.
ANNUAL REPORT 2012
B&G FOODS, INC.
4 GATEHALL DRIVE • PARSIPPANY, NJ 07054
973 • 401 • 6500
www.bgfoods.com
DIVERSITY
STABILITY
GROWTH OPPORTUNITIES