SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 2, 1998
B&G Foods, Inc.
------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 333-39813 13-3916496
----------------- ---------------- ---------------
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation No.)
426 Eagle Rock Avenue, Roseland, New Jersey 07068
-------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 228-2500
Not Applicable
--------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
This form 8-K/A amends and supplements the Form 8-K filed with the
Securities and Exchange Commission (the "Commission") on August 3, 1998,
relating to the acquisition by BGH Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of B&G Foods, Inc., a Delaware corporation, of all of
the issued and outstanding capital stock of Maple Grove Farms of Vermont, Inc.,
a Vermont corporation, Up Country Naturals of Vermont, Inc., a Vermont
corporation, and Les Produits Alimentaires Jacques et Fils Inc., a corporation
organized under the laws of the Province of Quebec, Canada, for an aggregate
purchase price of $15,170,000, plus the assumption of $17,300,000 of debt. This
form 8-K/A contains the information referred to in Item 7 of the Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
2
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
INDEX TO COMBINED FINANCIAL STATEMENTS
--------------------------------------
PAGE NO.
--------
INDEPENDENT AUDITORS' REPORT 4
COMBINED FINANCIAL STATEMENTS
BALANCE SHEETS AS OF JUNE 27, 1998 (UNAUDITED)
AND SEPTEMBER 28, 1997 5
STATEMENTS OF OPERATIONS FOR THE 39-WEEK PERIODS
ENDED JUNE 27, 1998 AND JUNE 27, 1997 (UNAUDITED)
AND THE 52-WEEK PERIOD ENDED SEPTEMBER 28, 1997 6
STATEMENTS OF CASH FLOWS FOR THE 39-WEEK PERIODS
ENDED JUNE 27, 1998 AND JUNE 27, 1997 (UNAUDITED)
AND THE 52-WEEK PERIOD ENDED SEPTEMBER 28, 1997 7
NOTES TO COMBINED FINANCIAL STATEMENTS 8
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders of
B&G Foods, Inc.
We have audited the accompanying combined balance sheet of Maple Grove Farms of
Vermont, Inc. and Affiliated Companies as of September 28, 1997, and the related
combined statements of operations, and cash flows for the 52-week period then
ended. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based upon our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Maple Grove
Farms of Vermont, Inc. and Affiliated Companies as of September 28, 1997, and
the results of their operations and their cash flows for the 52-week period then
ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Short Hills, New Jersey
September 11, 1998
4
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 27, 1998 Sept. 28, 1997
------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 913,127 $ 255,268
Accounts receivable - trade, less allowances of $237,855
at September 28, 1997 2,743,944 2,540,287
Inventories:
Finished goods 2,231,755 2,950,254
Raw materials 12,923,498 4,187,888
Prepaid expenses and other current assets 259,217 399,902
Deferred income taxes 119,881 82,260
-------------- ------------
Total current assets 19,191,422 10,415,859
Property, plant and equipment, net 2,972,628 2,831,528
Intangible assets, net of accumulated amortization
of $8,310 at September 28, 1997 28,433 34,994
Other assets 116,308 181,135
Due from stockholder 617,608 --
-------------- ------------
Total assets $ 22,926,399 $13,463,516
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Note payable - bank $ 12,956,018 $ 5,640,000
Current installments of long-term debt 305,587 305,587
Notes payable - stockholder 3,441,773 3,441,773
Accounts payable 1,847,326 1,773,976
Accrued expenses 831,270 607,561
Income tax payable 222,931 18,003
-------------- -------------
Total current liabilities 19,604,905 11,786,900
Long-term debt 1,903,309 2,132,125
-------------- ------------
Total liabilities 21,508,214 13,919,025
-------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 1,258 1,258
Additional paid-in capital 107,900 107,900
Retained earnings (accumulated deficit) 1,479,027 (394,667)
-------------- ---------------
1,588,185 (285,509)
Less treasury stock at cost, 49 shares 170,000 170,000
-------------- --------------
Total stockholders' equity (deficit) 1,418,185 (455,509)
-------------- ---------------
Commitments and contingencies (notes 6, 9 and 12)
Total liabilities and stockholders' equity (deficit) $ 22,926,399 $13,463,516
============ ==============
See accompanying notes to combined financial statements.
</TABLE>
5
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
39-week 39-week 52-week
Period Ended Period Ended Period Ended
June 27, 1998 June 27, 1997 Sept. 28, 1997
------------- ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net sales $30,224,798 $26,389,836 $35,188,898
Cost of goods sold 22,719,780 20,732,796 27,335,583
------------ ------------ ------------
Gross profit 7,505,018 5,657,040 7,853,315
Selling, general and administrative expenses 4,728,491 5,086,279 7,051,583
------------ ------------ ------------
Income from operations 2,776,527 570,761 801,732
Other expense:
Interest expense 552,883 489,248 699,898
Interest expense - related parties 164,640 141,230 188,306
------------ ----------- ------------
Income (loss) before provision for income taxes 2,059,004 (59,717) (86,472)
Provision for income taxes 185,310 3,220 813
------------ ----------- -----------
Net income (loss) $ 1,873,694 $ (62,937) $ (87,285)
============ ============ ===========
See accompanying notes to combined financial statements.
</TABLE>
6
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
39-week 39-week 52-week
Period Ended Period Ended Period Ended
June 27, 1998 June 27, 1997 Sept. 28, 1997
------------- -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,873,694 $ (62,937) $ (87,285)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation and amortization 219,000 252,000 474,632
Amortization of deferred debt issuance costs 6,561 6,233 8,310
Loss from sale of vehicles and equipment -- 2,433 2,433
Deferred income taxes (37,621) (27,990) (17,190)
Changes in assets and liabilities:
Accounts receivable - trade (203,657) (354,435) (583,021)
Inventories (8,017,111) 3,463 1,570,834
Prepaid expenses and other
current assets 140,685 212,759 56,817
Other assets 64,827 (272,839) (74,327)
Accounts payable 73,350 390,025 (304,003)
Accrued expenses 223,709 452,093 183,905
Income tax payable 204,928 33,862 26,359
------------ ----------- ------------
Net cash (used in) provided by
operating activities (5,451,635) 634,667 1,257,464
------------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital expenditures (360,100) (499,650) (648,695)
------------- ---------- -------------
Net cash used in investing activities (360,100) (499,650) (648,695)
------------ ---------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (repayments) from note payable - bank 7,316,018 (853,151) (1,694,445)
Proceeds from issuance of long-term debt -- 187,395 194,605
Principal payments on long-term debt (228,816) (185,362) (247,150)
Net borrowings on notes payable-stockholder -- 262,021 610,042
(Increase) decrease in due from stockholder (617,608) 225,000 225,000
------------- ----------- -------------
Net cash provided by (used in) financing
activities 6,469,594 (334,097) (911,948)
------------ ------------ ------------
Net increase (decrease) in cash 657,859 (199,080) (303,179)
Cash at beginning of period 255,268 558,447 558,447
------------ ------------ ------------
Cash at end of period $ 913,127 $ 359,367 $ 255,268
============ =========== ============
Supplemental Disclosures of Cash Flows Information
- ---------------------------------------------------
Cash paid during the period for:
Interest expense $ 526,177 $ 487,694 $ 707,649
============ ============ ============
Income taxes $ 6,900 $ 300 $ 5,580
============ ============ ============
See accompanying notes to combined financial statements.
</TABLE>
7
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 28, 1997
(1) NATURE OF OPERATIONS
The combined financial statements include the financial statements of
Maple Grove Farms of Vermont, Inc. and two affiliated companies, Up
Country Naturals of Vermont, Inc. and Les Produits Alimentaires Jacques
et Fils, Inc. (collectively, the Company), which are owned by the same
stockholders. Maple Grove Farms of Vermont, Inc. was incorporated under
the laws of the state of Vermont in 1975 for the purpose of
manufacturing and selling specialty foods including salad dressings,
maple syrup and confectionery products. Its products are sold primarily
to wholesale distributors, brokers, and hospitality and food service
markets throughout the United States. Up Country Naturals of Vermont,
Inc. was incorporated under the laws of the state of Vermont in 1996
for the purpose of manufacturing and selling all-natural specialty
foods. Les Produits Alimentaires Jacques et Fils, Inc. is a Canadian
corporation whose primary purpose is to purchase and warehouse syrup
for Maple Grove Farms of Vermont, Inc.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principles of Combination
The combined financial statements include Maple Grove Farms, Inc., Up
Country Naturals, Inc., and Les Produits Alimentaires Jacques et Fils,
Ltd. All intercompany balances and transactions have been eliminated in
combination.
b. Fiscal Year
The Company's fiscal year is the 52-53 week period ending on the Sunday
closest to September 30.
8
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
c. Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally using the first-in, first-out method.
d. Property, Plant and Equipment
Property, plant, and equipment are stated at cost and depreciated using
the straight-line and accelerated methods based on the following
estimated useful lives:
Buildings and improvements 39 years
Machinery and equipment 7 years
Office machinery and equipment 3-7 years
Vehicles 5 years
e. Intangible Assets
The Company amortizes deferred debt issuance costs using the
straight-line method over the term of the related debt agreements.
Amortization of deferred debt issuance costs for the fiscal year ended
September 28, 1997 was $8,310.
f. Income Taxes
Maple Grove Farms of Vermont, Inc. has elected to be taxed under
subchapter S of the Internal Revenue Code. Under this election, most
income and other tax items pass through to the individual stockholders
and are included in their taxable income for the year. Maple Grove
Farms of Vermont, Inc. does, however, pay Vermont corporate taxes on
its earnings. Up Country Naturals of Vermont, Inc. has elected to be
taxed as a C corporation. Les Produits Alimentaires Jacques et Fils,
Inc. is incorporated under Part IA of the Quebec Companies Act.
Deferred tax assets and liabilities of the Company are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and 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. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
9
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g. Foreign Currency Translation
Assets and liabilities for Les Produits Alimentaires Jacques et Fils,
Inc. transacted in foreign currencies are translated into dollars at
their appropriate remeasurement rates, current or historical. Revenue
and expenses are translated at average rates for the year. The net
exchange differences resulting from translations are recorded as a
component of stockholders' equity (deficit). There were no adjustments
to stockholders' deficit at September 28, 1997, since the resulting
adjustment was not material to the combined financial statements.
h. Advertising
Advertising costs are generally expensed as incurred. Advertising
expense was $889,004 for fiscal year ended September 28, 1997.
i. Use of Estimates
The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as
of the date of the combined financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net at September 28, 1997 consists of
the following:
Land $ 37,332
Buildings and improvements 2,211,604
Machinery and equipment 2,325,046
Office machinery and equipment 178,851
Vehicles 111,270
------------
4,864,103
Less accumulated depreciation 2,032,575
------------
$ 2,831,528
============
10
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(4) NOTE PAYABLE - BANK
At September 28, 1997, note payable - bank consists of a $10,000,000
line of credit with a bank. Availability, including outstanding letters
of credit, is subject to a borrowing base on eligible accounts
receivable and inventory levels, as defined in the loan agreement.
Availability under the line of credit at September 28, 1997 was
approximately $646,000. Interest is due monthly under several different
arrangements, including a revolving balance at the bank's base rate
(8.50% at September 28, 1997) plus 0.5%, contracts at variable LIBOR
rates plus 2.75%, and a banker's acceptance (9.042% effective rate at
September 28, 1997). The line is due on demand under the agreement,
which expires in March 1998. See note 5 for a description of
collateral, guarantees and loan covenants. Amounts due under the line
of credit as of September 28, 1997 are included in the combined balance
sheet as follows:
Note payable - bank $ 5,820,000
Less amounts refinanced on a long-term basis
subsequent to year end (a) 180,000
-----------
$ 5,640,000
===========
(a) In October 1997, Maple Grove Farms of Vermont, Inc. borrowed
$233,675 under its $500,000 equipment line of credit with a bank.
Of the total amount borrowed, approximately $180,000 was used to
refinance amounts owed under its working capital line of credit on
a long-term basis (see note 5) and the remaining amount was used
to finance new capital acquisitions. The loan is payable in
monthly installments of $3,895 plus interest at the bank's base
rate (8.50% at September 28, 1997) plus 0.75% and is due October
2002.
11
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(5) LONG-TERM DEBT
Long-term debt at September 28, 1997 consists of the following:
<TABLE>
<CAPTION>
<S> <C>
Mortgage note payable to bank in monthly installments of
$9,068, including interest at a fixed rate of 10.45% through
August 2001. Thereafter, variable interest at bank's base rate
plus 1%, or fixed interest at bank's cost of funds plus 3.50%
on the outstanding principal. All remaining principal and
unpaid interest due August 2003. $ 796,918
Term note payable to bank in monthly principal installments of
$13,716, plus interest at the bank's base rate plus 0.75%, due
August 2001. 658,355
Note payable under an equipment line of credit bearing
interest at the bank's base rate plus 0.75%, due in monthly
installments of $2,708 plus interest, due September 2000. 97,500
Note payable under an equipment line of credit bearing
interest at the bank's base rate plus 0.75%, due in monthly
installments of $1,147 plus interest, due October 2001. 56,190
Borrowings under line of credit refinanced on a long-term basis
subsequent to year end (see note 4). 180,000
Note payable to Vermont Economic Development Authority, due in
monthly installments of $2,451, including interest at 5.50%.
Balloon payment of approximately $190,000 due September 2002.
Secured by second mortgage on real estate. 272,762
</TABLE>
12
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(5) LONG-TERM DEBT (continued)
<TABLE>
<CAPTION>
<S> <C>
Note payable to Economic Development Fund of Northern Vermont,
due in monthly installments of $920, including interest at
7.50%, due September 2002. Secured by second mortgage on
machinery and equipment. $ 46,171
Note payable to Pepj, Inc. due in monthly installments of $1,136,
plus interest at 7.50%. Balloon payment of $56,855 due in July
1999. Secured by land and building located in St. Evariste,
Canada. 72,299
Note payable to Caisse Populaire De La Guadeloupe due in
semiannual installments of $4,934, plus interest at 6.55% through
February 1998, at which time interest rate is subject to change.
Due in March 2010. Secured by property and equipment located in
St. Evariste, Canada. 120,473
Note payable in monthly installments of $1,242, including
interest at 7.125% through July 1999, at which time interest
rate is subject to change. Due in September 2009. Secured by
property and equipment located in St. Evariste, Canada. 120,561
Note payable in monthly installments of $493, including
interest at 9.50%, due December 2000. Secured by a vehicle. 16,483
-----------
Total long-term debt 2,437,712
Less current installments 305,587
-----------
Long-term debt, excluding current installments $ 2,132,125
===========
</TABLE>
13
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(5) LONG-TERM DEBT (continued)
All bank debt, including the line of credit described in note
4, is collateralized by a first security interest in
substantially all assets of Maple Grove Farms of Vermont,
Inc., the assignment of life insurance policies on the
majority stockholder and the personal guarantee of the
majority stockholder. The loans are subject to loan covenants,
terms of which provide, among other things, the maintenance of
tangible capital base levels, ratios and debt service coverage
ratio, as defined in the master loan agreement.
The aggregate maturities of long-term debt are as follows:
Year Ending
September,
-----------
1998 $ 305,587
1999 373,350
2000 320,655
2001 317,639
2002 325,811
Thereafter $ 794,670
-----------
$ 2,437,712
===========
The Company has an unused letter of credit at September 28, 1997 in the
amount of $75,000.
14
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(6) LEASES
The Company has several noncancelable operating leases for various
pieces of equipment under leases that expire through 2001. Total rent
expense under these agreements charged to operations was $76,127 for
the fiscal year ended September 28, 1997.
Future minimum lease payments for all noncancelable operating leases
having a term in excess of one year at September 28, 1997 are as
follows:
Years Ending
September,
------------
1998 $ 67,034
1999 55,455
2000 40,154
2001 12,275
----------
$ 174,918
==========
(7) COMMON STOCK
Common stock at September 28, 1997 consists of the following:
Maple Grove Farms of Vermont, Inc. - $1 par value per
share voting common stock; 5,000 shares
authorized, 100 shares issued, 51 shares
outstanding. $ 100
Up Country Naturals of Vermont, Inc. - No par
value voting common stock; 2,000 shares
authorized, 1,010 shares issued and
outstanding. 1,010
Les Produits Alimentaires Jacques et Fils, Inc.:
Class H no par value voting common stock; Unlimited
authorized shares, no shares issued or
outstanding. --
15
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(7) COMMON STOCK (continued)
Class I no par value non-voting common stock;
Unlimited authorized shares, 100 shares issued and
outstanding. 74
Class J no par value voting common stock with a
monthly noncumulative, non-preferential dividend of
0.5% of the redemption value, redeemable at an amount
equal to the quotient obtained by dividing the fair
market value of the consideration received by the
Company in respect of the issue of such shares by the
Number of Class J shares issued. The stock contains a
preference over the Class H and I stocks in the event
of liquidation. Unlimited authorized shares, 100
shares issued and outstanding. 74
--------
$ 1,258
========
Treasury stock consists of 49 common shares of Maple Grove Farms
of Vermont, Inc. at cost.
For the fiscal year ended September 28, 1997, the change in
retained earnings (accumulated deficit) is due to the net loss.
16
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(8) RELATED PARTIES
Notes payable to stockholder consists of two notes payable in the
amounts of $251,638 and $3,190,135 with interest at 6.50%, due on
demand, subordinated to all bank debt.
Stockholder's salary of $182,000 has been included in selling, general
and administrative expenses for the fiscal year ended September 28,
1997. During the fiscal year ended September 28, 1997, approximately
$202,000 and $562,000 is included in selling, general and
administrative expenses related to commissions paid to a related entity
owned by the Company's majority stockholder and an annual bonus to the
majority stockholder, respectively.
(9) BUSINESS AND CREDIT CONCENTRATIONS
In 1997, the Company sold a substantial portion of its products to one
customer. Sales for the fiscal year ended September 28, 1997 to this
customer were approximately $8,000,000 (23% of net sales). At September
28, 1997, the amount due from this customer, included in accounts
receivable - trade, was $403,235.
(10) 401(k) PROFIT SHARING PLAN
Maple Grove Farms of Vermont, Inc. maintains a 401(k) profit sharing
plan that covers all of its employees over 21 years of age who have
completed six months of service. Contributions to the plan are
determined annually by the board of directors. Contributions charged to
operations in 1997 were $53,564.
17
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(11) INCOME TAXES
The provision for income taxes for the fiscal year ended September 28,
1997 consists of the following:
Current - State $ 18,003
Deferred - State (17,190)
---------
$ 813
=========
Income tax expense differs from the expected income tax expense
(computed by applying the U.S. federal income tax rate of 34% to
pre-tax income) as a result of the following:
Computed expected tax benefit $ 29,400)
State income taxes 813
S Corporation earnings exempt from federal tax (3,070)
Change in valuation allowance 32,470
---------
$ 813
=========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at September 28, 1997 consists of
the following:
Accounts receivable, principally due to allowance $ 21,330
Inventories 37,530
Net operating loss carryforwards 51,000
Accruals not currently deductible 23,400
---------
Total gross deferred tax assets 133,260
Less valuation allowance 51,000
---------
Net deferred tax assets $ 82,260
=========
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
18
<PAGE>
MAPLE GROVE FARMS OF VERMONT, INC.
AND AFFILIATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(11) INCOME TAXES (continued)
historical taxable income and projections for future taxable income
over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will
realize the benefits of these deductible differences, net of the
existing valuation allowances at September 28, 1997. The amount of the
deferred tax asset considered realizable, however, could be reduced in
the near term if estimates of future taxable income during the
carryforward period are reduced. The Company established a valuation
allowance for the deferred tax assets associated with federal net
operating loss carryforwards at September 28, 1997 because management
believes that based upon historical and projected taxable income, it is
not more likely than not that the deferred tax asset related to such
net operating loss carryforwards will be realized. The change in the
valuation allowance in fiscal 1997 was primarily due to additional
federal net operating loss carryforwards.
Les Produits Alimentaires Jacques et Fils, Inc. and Up Country Naturals
of Vermont, Inc. have net operating loss carryforwards of approximately
$38,000 and $112,000, respectively, available to reduce future taxable
income. Such deferred tax asset has been fully offset by a valuation
allowance for deferred taxes.
(12) CONTINGENCIES
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse
effect on the Company's combined financial position, results of
operations or liquidity. In July 1998, the Company settled a wrongful
termination claim for approximately $95,000 which was accrued for at
September 28, 1997.
(13) SUBSEQUENT EVENT
On July 2, 1998, the Company entered into a stock purchase agreement to
sell all of its issued and outstanding capital stock to BGH Holdings,
Inc., a subsidiary of B&G Foods, Inc., for an aggregate consideration
of $15,170,000, consisting of $14,170,000 in cash and $1,000,000 of
capital stock of B&G Foods Holdings, Inc. (Holdings, the parent company
of B&G Foods, Inc.), consisting of 1,000 shares of common stock having
an aggregate value of $10,000 and 990 shares of 13% Series A cumulative
preferred stock of Holdings having an aggregate liquidation preference
of $990,000, plus the assumption of $17,300,000 of the Company's debt.
The closing under the stock purchase agreement occurred on July 17,
1998.
19
<PAGE>
(b) Pro Forma Financial Information.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following presents certain unaudited pro forma condensed consolidated
financial information of B&G Foods, Inc. and subsidiaries (the Company or B&G)
as of and for the periods ended as indicated. The unaudited proforma condensed
consolidated statements of operations data give effect to (i) the acquisition of
certain assets relating to the Nabisco Brands (the "Nabisco Brands Acquisition")
from Nabisco, Inc. which occurred on June 17, 1997, (ii) the acquisition of all
of the outstanding capital stock of JEM Brands, Inc. ("JEM") the holding company
of Trappey's Fine Foods, Inc. (together with JEM, "Trappey's") from McIlhenny
(the "Trappey's Acquisition) on August 15, 1997, (iii) the acquisition of all
the issued and outstanding capital stock of Maple Grove Farms of Vermont, Inc.,
Up Country Naturals of Vermont, Inc. and Les Produits Alimentaires Jacques et
Fils, Inc. (collectively, "Maple Grove") (the "Maple Grove Acquisition"), which
occurred on July 17, 1998, and (iv) the related financing, in each case, as if
such transaction had occurred on December 29, 1996 for the fiscal year ended
January 3, 1998 and for the 26-week period ended July 4, 1998. The unaudited pro
forma condensed consolidated balance sheet gives effect to the Nabisco Brands
Acquisition, the Trappey's Acquisition and the Maple Grove Acquisition as if
they occurred as of July 4, 1998.
The unaudited pro forma condensed consolidated financial information set forth
below reflects pro forma adjustments that are based upon available information
and certain assumptions that the Company believes are reasonable. The unaudited
pro forma condensed consolidated financial information does not purport to
represent the Company's results of operations or financial position that would
have resulted had the transactions to which pro forma effect is given been
consummated as of the dates or for the periods indicated. The Nabisco Brands
Acquisition, Trappey's Acquisition and the Maple Grove Acquisition have been
accounted for herein by the purchase method of accounting. The pro forma
information reflects preliminary estimates of the allocation of the purchase
price for the Maple Grove Acquisition and is subject to final determination.
The unaudited pro forma condensed consolidated financial statements and
accompanying notes should be read in conjunction with the historical financial
statements of the Company, the Nabisco Brands, Trappey's, and Maple Grove and
with other information pertaining to the Company in the Prospectus dated
February 6, 1998.
20
<PAGE>
B&G Foods, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
July 4, 1998
(Dollars in thousands)
Historical
----------
<TABLE>
<CAPTION>
Pro Forma
B&G Maple Grove Pro Forma Consolidated
July 4, 1998 June 27, 1998 Adjustments July 4, 1998
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 4,431 $ 913 $ -- $ 5,344
Trade accounts receivable, net 12,404 2,744 -- 15,148
Inventories 24,463 15,155 -- 39,618
Prepaid expenses and other current 1,628 259 -- 1,887
assets
Deferred income taxes 2,819 120 -- 2,939
-------------- ---------------- ------------ --------------
Total current assets 45,745 19,191 -- 64,936
Property, plant and equipment, net 23,429 2,973 -- 26,402
Intangible assets, net 99,338 28 13,752 (4) 113,118
Other assets 5,537 116 -- 5,653
Due from stockholder -- 618 (618)(5) --
-------------- ---------------- ------------ -------------
TOTAL ASSETS $ 174,049 $ 22,926 $ 13,134 $ 210,109
============== ================ ============ =============
Liabilities and Stockholder's equity
Current Liabilities:
Current installments of long-term debt $ 341 $ 16,704 $ (16,704)(5) $ 341
Trade accounts payable 11,095 1,847 -- 12,942
Accrued expenses 9,898 831 -- 10,729
Due to related parties 1,166 -- -- 1,166
Income tax payable -- 223 -- 223
-------------- ----------------- ------------ ------------
Total current liabilities 22,500 19,605 (16,704) 25,401
Long-term debt 120,258 1,903 30,256 (5) 152,417
Deferred income taxes 12,235 -- -- 12,235
-------------- ----------------- ------------ ------------
Total liabilities 154,993 21,508 13,552 190,053
Stockholder's equity:
Common stock -- 1 (1)(6) --
Additional paid in capital 20,231 108 892 (6) 21,231
Treasury stock -- (170) 170 (6) --
Related earnings (accumulated deficit) (1,175) 1,479 (1,479)(6) (1,175)
-------------- ----------------- ------------ -------------
Total stockholder's equity 19,056 1,418 (418) 20,056
-------------- ----------------- ------------ -------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 174,049 $ 22,926 $ 13,134 $ 210,109
============== ================ ============= =============
</TABLE>
21
<PAGE>
B&G Foods, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Fiscal Year Ended January 3, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Historical
-----------------------------------------------
Nabisco Brands Pro Forma Pro Forma
B&G(1) and Trappey's(2) Maple Grove(3) Adjustments Consolidated
--- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Statement of Operations:
Net sales $ 151,615 $ 20,504 $ 37,351 $ - $ 209,470
Cost of goods sold 98,950 10,199 28,634 (24) (7) 137,759
---------- ------------ ------------ ----------- ------------
Gross profit 52,665 10,305 8,717 24 71,711
Sales, general and
administrative expenses 41,572 6,532 6,896 436 (8) 55,436
Management fees 250 -- -- -- 250
---------- ------------ ------------ ------------ ------------
Operating income 10,843 3,773 1,821 (412) 16,025
Other (income) expense:
Interest and other income -- (151) -- 151 (9) --
Interest expense - related 811 -- 188 (942)(10) 57
parties
Interest expense 8,767 4 705 5,217 (11) 14,693
---------- ------------ ------------ ---------- ------------
Income before income tax
expense and extraordinary 1,265 3,920 928 (4,838) 1,275
item
Income tax expense 833 282 84 (487)(12) 712
---------- ------------ ------------ ---------- ------------
Income before extraordinary item $ 432 $ 3,638 $ 844 $ (4,351) $ 563
========== ============ ============ ========== ============
</TABLE>
22
<PAGE>
B&G Foods, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the 26-Week Period Ended July 4, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Historical
---------------------------
Pro Forma Pro Forma
B&G Maple Grove(3) Adjustments Consolidated
--- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Statement of Operations:
Net sales $ 81,031 $ 18,133 $ -- $ 99,164
Cost of goods sold 49,471 13,967 -- 63,438
-------------- --------------- -------- ------------
Gross profit 31,560 4,166 -- 35,726
Sales, general and administrative expenses 24,635 2,906 147 (8) 27,688
Management fees 125 - -- 125
-------------- --------------- -------- -----------
Operating income 6,800 1,260 (147) 7,913
Other (income) expense:
Interest expense - related parties 31 110 (110)(10) 31
Interest expense 6,383 366 879 (11) 7,628
-------------- --------------- --------- -----------
Income before income tax expense 386 784 (916) 254
Income tax expense 189 71 (42) (12) 218
-------------- --------------- --------- -----------
Net income $ 197 $ 713 $ (874) $ 36
============== =============== ========= ===========
</TABLE>
23
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements
(Dollars in thousands)
The following pro forma adjustments give effect to (i) the Nabisco Brands
Acquisition, (ii) the Trappey's Acquisition, (iii) the Maple Grove Acquisition,
and (iv) the related financings. The above acquisitions have been accounted for
using the purchase method of accounting.
On June 17, 1997, the Company acquired certain assets from Nabisco, Inc. for a
purchase price of approximately $50,557, including transactions costs. Financing
for this acquisition and certain related transaction fees and expenses was
provided by $35,000 of new borrowings on an amended and restated Senior Secured
Credit Facility, and $17,000 of the proceeds from the issuance of $23,000 of 12%
Senior Subordinated Notes (the Interim Notes).
On August 15, 1997, the Company acquired all of the outstanding capital stock of
JEM for approximately $12,462, including transaction costs. Financing for this
acquisition and certain related transaction fees and expenses was provided by
the proceeds from the issuance of $120,000 Senior Subordinated Notes (the
Existing Notes) on August 11, 1997.
The costs of the Nabisco Brands Acquisition and the Trappey's Acquisition have
been allocated to tangible and intangible assets as follows:
Property, plant and equipment $ 7,111 (a)
Intangible assets - trademarks 24,500
Intangible assets - goodwill 28,045
Other assets, principally net current assets 4,621
Deferred income tax liabilities, net (1,258)
---------
$63,019
-------------
(a) As part of the allocation of the purchase price, property,
plant and equipment was written-up by $3,234 to estimated fair
market value.
On July 2, 1998, BGH Holdings, Inc. (the Buyer) a subsidiary of B&G, entered
into a Stock Purchase Agreement by and among Buyer, Maple Grove and William F.
Callahan and Ruth M. Callahan (collectively, the Sellers), pursuant to which
Buyer would acquire all of the issued and outstanding capital stock of Maple
Grove for aggregate consideration of $15,170, consisting of $14,170 in cash and
$1,000 of capital stock of B&G Foods Holdings, Inc. (Holdings, the Company's
parent) consisting of 1,000 shares of Common Stock having an aggregate value of
$10 and 990 shares of 13% Series A Cumulative Preferred Stock having an
aggregate liquidation preference of $990, plus the assumption of $17,300 of
debt. The closing under the Stock Purchase Agreement occurred on July 17, 1998.
The Stock Purchase Agreement provides for a post-closing adjustment to be paid
by either Buyer or Sellers under certain circumstances. Financing for this
acquisition and certain related transaction fees and expenses was provided by
borrowings from the Company's $50 million Credit Facility (the Credit Facility).
24
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands)
The unaudited pro forma condensed consolidated financial statements have been
adjusted for the items set forth below. Such adjustments reflect Management's
estimates of the fair value of the assets acquired and the liabilities assumed
relating to the Nabisco Brands Acquisition, the Trappey's Acquisition and the
Maple Grove Acquisition.
1. The Company's results of operations for the fiscal year ended January
3, 1998 include the results of operations of the Nabisco Brands and
Trappey's since their respective dates of acquisition.
2. Represents the historical combined statements of product contribution
of the Nabisco Brands for the 24-week period ended June 17, 1997 and
the historical consolidated statements of earnings of Trappey's for the
33-week period ended August 15, 1997.
3. Represents the combined statements of operations of Maple Grove for the
year ended December 27, 1997 and the 26-week period ended June 27,
1998.
Balance Sheet
4. To adjust to the excess of cost over the fair value of the
net assets acquired in the Maple Grove Acquisition
which will be amortized over 40 years. $ 13,752
=========
5. Reflects the borrowings under the Credit Facility to finance the Maple
Grove Acquisition as follows:
Cash paid for Maple Grove Acquisition $ 14,170
Repayment of Maple Grove existing debt 8,607
----------
Total payment 32,777
Receipt of shareholder receivable upon closing (618)
Total increase in long-term debt $ 32,159
==========
6. Reflects the elimination of Maple Grove's historical stockholders'
equity and includes an additional $1,000 of new equity.
25
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands)
Statements of Operations
<TABLE>
<CAPTION>
Fiscal 26-Week
Year Ended Period Ended
Jan. 3, 1998 July 4, 1998
------------ -------------
<S> <C> <C>
7. Adjustment to depreciation and amortization expense
relating to estimated fair values of property, plant and
equipment. Property, plant and equipment is depreciated
over 3 to 20 years.
--- Nabisco Brands Acquisition $ (10) $ --
--- Trappey's Acquisition (14) --
----------- -------------
$ (24) $ --
=========== =============
8. Adjustment to amortization expense for the excess cost
over fair value of net assets acquired and other intangible
assets. Excess cost over fair value of net assets acquired
(goodwill) and other intangible assets (trademarks) are
being amortized over 40 years and 20 to 40 years,
respectively.
--- Nabisco Brands Acquisition $ 915 $ --
--- Trappey's Acquisition (67) --
--- Maple Grove Acquisition 410 205
------------ ----------
1,258 205
Adjustment to eliminate the salary of the majority stockholder and to
record the salary and consulting arrangement with the majority
stockholder pursuant to the Maple Grove Stock Purchase Agreement
dated July 2, 1998. (58) (58)
Adjustment to eliminate commissions paid to a related entity owned by
Maple Grove's majority stockholder and an annual bonus to the majority
stockholder pursuant to the Maple Grove Purchase
Agreement dated July 2, 1998 (764) --
----------- ---------
$ 436 $ 147
=========== =========
</TABLE>
26
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal 26-Week
Year Ended Period Ended
Jan. 3, 1998 July 4, 1998
------------ ------------
<S> <C> <C>
9. Adjustment to eliminate Trappey's historical interest
and other income as amounts represent interest
on intercompany balances with a subsidiary of JEM's
parent, primarily related to sales to the subsidiary,
which will not exist subsequent to the Trappey's
Acquisition. The intercompany balances were not
settled during the year and therefore JEM charged the
subsidiary of the parent an intercompany interest charge.
$ 151 $ --
=========== ============
10. Adjustment to eliminate the Company's historical
interest expense with related parties. For the
fiscal year ended January 3, 1998, the $811
includes interest expense with
BRS of $754 and L. Polaner interest expense of $57. $ (754) $ --
Adjustment to eliminate Maple Grove's historical interest
expense with related parties. (188) (110)
---------- ---------
$ (942) $ (110)
========== =========
11. Adjustment to eliminate the Company's historical interest
expense and to reflect the Company's pro forma interest
expense and amortization of deferred debt issuance costs
as shown below. The net proceeds from the sale of the
Existing Notes were used to repay approximately $76.5
million of then existing bank debt under the Company's
prior credit facility (weighted average interest rate of
approximately 8.95%) and $23.5 million of the Interim
Notes (12%) which were incurred in conjunction with the
acquisition of B&G on December 27, 1996 and the Nabisco
Brands Acquisition.
--- Historical interest expense $ (8,767) $ --
--- Other debt, including capital leases 58 --
--- Existing Notes (9.625%) 11,550 --
----------- --------------
2,841 --
----------- --------------
</TABLE>
27
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal 26-Week
Year Ended Period Ended
Jan. 3, 1998 July 4, 1998
------------ -------------
<S> <C> <C>
Adjustment to eliminate Maple Grove's historical interest expense and
to reflect Maple Grove's pro forma interest expense as shown below. The
net proceeds from the Company's Credit Facility was used to repay Maple
Grove's existing debt.
--- Historical interest expense $ (705) $ (366)
--- Borrowings under the Credit Facility (8.50%) 2,380 1,190
--- Commitment fee on the aggregate unused
portion of the Credit Facility (0.50%) 110 55
---------- ----------
1,785 879
---------- ----------
Amortization of deferred debt issuance costs. In connection with the
issuance of the Existing Notes, the Company incurred approximately $5.9
million in deferred debt issuance costs which are being amortized over
the
life of the Existing Notes. 600 --
Adjustment to eliminate Trappey's historical interest
expense. (9) --
---------- ----------
$ 5,217 879
=========== ==========
12. Adjustment to income tax expense to reflect the Company's
effective tax rate. The primary difference between the
expense calculated at the statutory rate (34%) and the
amount reflected in the pro forma statements is
attributable primarily to non-deductible goodwill and the
provision for state income taxes. As Maple Grove had
elected to be taxed as an S corporation under the
provisions of the Internal Revenue Code, income tax
expense has been adjusted to reflect the effective C
corporation income tax rate of the Company for all
periods presented. $ (487) $ (42)
=========== ==========
</TABLE>
28
<PAGE>
B&G Foods, Inc.
Notes to Unaudited Pro Forma
Condensed Consolidated Financial Statements (Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal 26-Week
Year Ended Period Ended
Jan. 3, 1998 July 4, 1998
------------ ------------
<S> <C> <C>
13. Other unaudited pro forma data:
Pro forma earnings before interest, taxes, depreciation
and amortization (Pro forma EBITDA) $ 23,499 $ 11,579
========== =========
</TABLE>
Pro forma EBITDA is defined as pro forma earnings before interest,
taxes, depreciation and amortization and is presented because it is
commonly used by certain investors and analysts to analyze and compare
companies on the basis of operating performance and to determine a
company's ability to service and incur debt. Pro forma EBITDA should
not be considered in isolation from or as a substitute for net income,
cash flows from operating activities or other consolidated income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity.
29
<PAGE>
(c) Exhibits.
The exhibits are contained in the Form 8-K for B&G Foods, Inc., filed on August
3, 1998, which this filing amends.
30
<PAGE>
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 hereunto duly authorized.
B&G Foods, Inc.
(Registrant)
By: /s/ Robert C. Cantwell
----------------------
Robert C. Cantwell
Executive Vice President of Finance and
Chief Financial Officer
Date: October 2, 1998
31
