<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
(Mark One)
[|X|] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended October 3, 1998.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from______ to ______
Commission file number: 333-39813
B&G Foods, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3916496
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
426 Eagle Rock Avenue
Roseland, New Jersey 07068
(Address of Principal Executive Offices)
(973) 228-2500
(Registrant's Telephone Number, Including Area Code)
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 Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes |X| No __
As of November 1, 1998, there was 1 share of the registrant's common stock, $.01
par value, outstanding, which was owned by an affiliate of the registrant.
================================================================================
<PAGE>
B&G Foods, Inc. and Subsidiaries
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1.
a) Consolidated Balance Sheets 3
b) Consolidated Statements of Operations 4
c) Consolidated Statements of Cash Flows 5
d) Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosure about
Market Risk 13
Item 4. Year 2000 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Change in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURE 16
2
<PAGE>
Item 1. Financial Statements
B&G Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands, except per share data)
Assets October 3, 1998 January 3, 1998
--------------- ---------------
(Unaudited)
Current assets:
Cash and cash equivalents $982 $691
Trade accounts receivable, net 13,704 13,074
Inventories 45,172 31,467
Prepaid expenses and other current assets 2,342 1,792
Deferred income taxes 3,419 2,819
-----------------------------------
Total current assets 65,619 49,843
Propert, plant and equipment, net 25,956 23,619
Intangible assets, net 114,813 100,831
Other assets 5,390 5,742
-----------------------------------
TOTAL ASSETS $211,778 $180,035
===================================
Liabilities and Stockholder's Equity
Current liabilities:
Current installments of long-term debt $347 $293
Trade accounts payable 18,678 15,752
Accrued expenses 8,150 11,990
Due to related parties 1,602 197
-----------------------------------
Total current liabilities 28,777 28,232
Long-term debt 150,258 121,083
Deferred income taxes 12,463 12,033
Other liabilities 0 59
-----------------------------------
Total liabilities 191,498 161,407
Stockholder's equity:
Common stock, $.01 par value per share. Authorized
1,000 shares; issued and outstanding 1 share in
1998 and 1997
Additional paid-in capital 21,231 20,000
Accumulated deficit (951) (1,372)
-----------------------------------
Total stockholder's equity 20,280 18,628
TOTAL LIABILITIES AND -----------------------------------
STOCKHOLDER'S EQUITY $211,778 $180,035
===================================
See notes to consolidated financial statements.
3
<PAGE>
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(dollars in thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
October 3, 1998 September 27, 1997 October 3, 1998 September 27, 1997
--------------- ------------------ --------------- ------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $46,477 $35,934 $127,508 $104,337
Cost of goods sold 28,355 22,439 77,826 70,064
-------------------------------------------------------------------------------------
Gross profit 18,122 13,495 49,682 34,273
Sales, marketing, and distribution expenses 12,430 9,118 34,398 24,350
General and administrative expenses 1,499 1,263 4,166 3,165
Management fee - related parties 62 66 187 191
-------------------------------------------------------------------------------------
Operating income 4,131 3,048 10,931 6,567
Other expense:
Interest expense - related parties 18 7 49 788
Interest expense 3,661 2,868 10,044 5,320
-------------------------------------------------------------------------------------
Income before income tax expense and
extraordinary item 452 173 838 459
Income tax expense 228 147 417 426
-------------------------------------------------------------------------------------
Income before extraordinary item 224 26 421 33
Extraordinary item, net of income tax benefit
of $1,138 0 (1,804) 0 (1,804)
-------------------------------------------------------------------------------------
Net income (loss) $224 ($1,778) $421 ($1,771)
=====================================================================================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
B&G Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(dollars in thousands)
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
October 3, 1998 September 27, 1997
--------------- ------------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $421 ($1,771)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 5,118 3,756
Deferred income tax expense 430 (934)
Amortization of deferred debt issuance costs 466 473
Extraordinary item 0 2,942
Changes in assets and liabilities, net of effects
from businesses acquired:
Trade accounts receivable 1,639 (3,866)
Inventories 83 185
Prepaid expenses and other current assets (264) (1,610)
Other assets 13 (8)
Trade accounts payable 1,632 5,082
Accrued expenses (6,130) 749
Due to related parties 562 121
Other liabilities 0 (399)
-----------------------------------
Net cash provided by operating activities 3,970 4,720
-----------------------------------
Cash flows from investing activities:
Paid for acquisitions (32,622) (63,019)
Paid to former parent 0 (4,009)
Capital expenditures (2,581) (2,976)
Proceeds from sales of property, plant and equipment 396 162
-----------------------------------
Net cash used in investing activities (34,807) (69,842)
-----------------------------------
Cash flows from financing activities:
Payments of long-term debt (320) (68,379)
Proceeds from issuance of long-term debt 30,344 143,000
Proceeds from issuance of equity 1,231 500
Deferred debt issuance costs (127) (6,591)
-----------------------------------
Net cash provided by financing activities 31,128 68,530
-----------------------------------
Increase in cash and cash equivalents 291 3,408
Cash and cash equivalents at beginning of period 691 291
-----------------------------------
Cash and cash equivalents at end of period 982 3,699
===================================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Dollars in Thousands)
(Unaudited)
(1) Basis of Presentation
The accompanying consolidated financial statements of B&G Foods, Inc.
and subsidiaries (the Company) contain all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the
Company's financial position as of October 3, 1998 and the results of
its operations and its cash flows for the 13 and 39 week periods ended
October 3, 1998 and September 27, 1997.
The results of operations for the 13 and 39 week periods are not
necessarily indicative of the results to be expected for the full year.
The accompanying consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto for 1997 included in the Company's Form 8-K filed with the
Securities and Exchange Commission on May 19, 1998.
(2) Nature of Operations and Business Acquisitions
Nature of Operations
The Company is a manufacturer, marketer and distributor of branded
pickles, peppers, bagel chips, hot sauces, maple syrup, salad dressings
and other specialty food products to retailers and food service
establishments. The Company distributes these products to retailers in
the greater New York metropolitan area through a direct-store-door
sales and distribution system and elsewhere in the United States
through a nationwide network of independent brokers and distributors.
Organization, Acquisition and Financing
B&G Foods, Inc. was incorporated on November 13, 1996 to acquire (the
Acquisition) BGH Holdings, Inc., the holding company of Bloch &
Guggenheimer, Inc. and related companies, and BRH Holdings, Inc., the
holding company of Burns & Ricker, Inc., subsidiaries of Specialty
Foods Corporation (SFC). The Acquisition was structured as a stock
purchase with an aggregate purchase price of approximately $70,000,
including transaction costs, and was consummated on December 27, 1996.
On December 27, 1996, the Company issued one share of common stock to,
and became a wholly-owned subsidiary of B&G Foods Holding Corp., which
in turn is majority owned by Bruckmann, Rosser, Sherrill and Co., L.P.
(BRS), a private equity investment firm, and minority owned by
management and certain other investors.
6
<PAGE>
In addition to initial equity of $12,500, the financing of the
Acquisition was provided through a $50,000 Senior Secured Credit
Facility which consisted of a Revolving Credit Facility of $23,500 and
Term Loan Facilities A and B of $14,500 and $12,000, respectively.
Additionally, the Company issued $13,000 of 12% Senior Subordinated
Notes due 2004 to BRS and other certain investors (the BRS Note).
On June 17, 1997, the Company acquired certain assets from Nabisco,
Inc. (Nabisco) for a purchase price of approximately $50,557, including
transaction 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 due December 16, 1997 (the Interim Notes), with $6,000 used to
repay a portion of the BRS Note.
On August 15, 1997, the Company acquired all of the outstanding capital
stock of JEM Brands, Inc. (the JEM Acquisition), a manufacturer of
peppers and branded hot sauces, 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 on August 11, 1997 of $120,000, 9.625% Senior Subordinated
Notes due August 1, 2007.
On July 2, 1998, BGH Holdings, Inc. (the Buyer), a subsidiary of B&G
Foods, Inc., entered into a Stock Purchase Agreement by and among
Buyer, Maple Grove Farms of Vermont, Inc., Up Country Naturals of
Vermont, Inc. and Les Produits Alimentaires Jacques et Fils, Inc.
(collectively, 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,
1,000 shares of Common Stock of B&G Foods Holdings, Inc. (Holdings, the
Company's parent), having an aggregate value of $10, and 990 shares of
the 13% Series A Cumulative Preferred Stock of Holdings, having an
initial aggregate liquidation preference of $990, plus the assumption
of $17,370 in debt and transaction costs of $1,082. 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
the Buyer or Sellers under certain circumstances. The parties are
currently determining the amount of the post-closing adjustment.
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). As a result of the Maple Grove
Acquisition, a consent, waiver and first amendment of the Credit
Facility was entered into, which included among other things, a
prospective change in certain financial covenants and a consent by the
lender regarding the purchase of Maple Grove.
The above acquisitions have been accounted for using the purchase
method and, accordingly, the excess of the purchase price over the fair
value of identifiable net assets acquired, representing goodwill, is
included in intangible assets.
Pro Forma Summary of Operations
The following unaudited pro forma summary of operations for the
thirty-nine weeks ended October 3, 1998 and September 27, 1997 presents
the results of operations of the Company as if the acquisition of
certain assets from Nabisco, the JEM Acquisition (collectively, the
Acquired Brands) and the Maple Grove Acquisition had occurred at the
beginning of the periods presented.
7
<PAGE>
In addition to including the results of operations of the
aforementioned entities, the pro forma information gives effect
primarily to interest on additional borrowings and changes in
depreciation and amortization of intangible assets.
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
October 3, 1998 September 27, 1997
--------------- ------------------
<S> <C> <C>
Net sales $148,177 $150,113
Income (loss) before extraordinary item 778 (4,132)
</TABLE>
The pro forma information presented above does not purport to be
indicative of the results that actually would have been attained if the
aforementioned acquisitions, and related financing transactions had
occurred at the beginning of the periods presented and is not intended
to be a projection of future results.
(3) Inventories
Inventories are stated at the lower of cost (determined by the
first-in, first-out and average cost methods) or market.
Inventories consist of the following:
October 3, 1998 January 3, 1998
--------------- ---------------
Raw materials and packaging $ 14,868 $ 6,146
Work in progress 2,845 1,924
Finished goods 27,459 23,397
-------- ----------
$ 45,172 $ 31,467
========= ==========
(4) Debt
On August 11, 1997, the Company issued $120,000 of 9.625% Senior
Subordinated Notes (the Notes) due August 1, 2007 with interest payable
semiannually on February 1 and August 1 of each year, commencing
February 1, 1998. The proceeds of the Notes were used to repay the
outstanding balances together with accrued and unpaid interest with
respect to the Company's $50 million Credit Facility and the Interim
Notes, to finance the acquisition of JEM and to pay certain related
fees and expenses and for general corporate purposes.
As part of the registration rights agreement dated August 11, 1997
entered into with the initial purchasers of the Notes, the Company
agreed to offer to exchange an aggregate principal amount of up to
$120,000 of its 9.625% Senior Subordinated Notes due 2007 (the New
Notes) for a like principal amount of its Notes outstanding (the
Exchange Offer).
The terms of the New Notes are identical in all material respects to
those of the Notes (including principal amount, interest rate, maturity
and guarantees), except for certain transfer restrictions and
registration rights relating to the Notes. The Exchange Offer was
completed on February 6, 1998.
8
<PAGE>
(5) Commitment and Contingencies
The Company produces fruit spreads under an Amended and Restated Jams
Manufacturing Agreement dated March 3, 1997 and wet spices under a
Spice Supply Agreement dated March 19, 1993 with International Home
Foods, Inc. (IHF) which expire in March 1999 and March 1998,
respectively. Additionally, the Company distributes certain IHF
products under a Sales and Distribution Agreement dated March 19, 1993,
which expires on March 31, 1999. Sales under these contracts during the
39 week periods ended October 3, 1998 and September 27, 1997 were
$28,554 and $34,114, respectively. Sales under these contracts during
the 13 week periods ended October 3, 1998 and September 27, 1997 were
$9,127 and $8,260, respectively. Receivables due from IHF included in
trade accounts receivable at October 3, 1998 and January 3, 1998 were
$1,461 and $1,820, respectively.
By letter dated February 18, 1998, the Company received notice from IHF
that (a) IHF would not renew the Amended and Restated Jams
Manufacturing Agreement dated March 3, 1997 after its expiration on
March 31, 1999, and (b) IHF was terminating, effective March 31, 1999,
the Sales and Distribution Agreement dated March 19, 1993. With respect
to the Spice Supply Agreement, which expired on March 31, 1998, the
Company renewed the agreement on May 18, 1998 without a specific term,
terminable by either party upon 90 days written notice.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
13 Week period ended October 3, 1998 compared to 13 Week period ended
September 27, 1997.
Net Sales. Net sales increased by $10.5 million or 29.3%, to $46.5
million for the 13-weeks ended October 3, 1998 (the "1998 Period") from
$35.9 million for the 13-weeks ended September 27, 1997 (the "1997
Period"). The net sales increase included $3.6 million of sales from
the Acquired Brands, and $8.0 million of sales from Maple Grove. The
Acquired Brands increased 14.9% in the 1998 Period over sales in the
1997 Period and Maple Grove increased 19.6% in the 1998 Period over
sales in the 1997 Period. Sales of Burns & Ricker Snack Food products
decreased $1.2 million or 15.9% and sales of B&G pickle and pepper
products decreased $0.8 million or 5.8%. These sales decreases were
partially offset by an $0.9 million or 10.5% increase in sales of
co-packed Polaner products to IHF and sales of Polaner products
distributed by the Company in the northeastern U.S.
Gross Profit. Gross profit increased by $4.6 million or 34.3% to
$18.1 million for the 1998 Period from $13.5 million in the 1997
Period. Gross profit expressed as a percentage of net sales increased
to 39.0% in the 1998 Period from 37.6% in the 1997 Period due to lower
manufacturing costs experienced by Burns & Ricker Snack Food products,
B&G pickle and pepper products, and the Acquired Brands.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $3.3 million, or 36.3%, to $12.4
million for the 1998 Period from $9.1 million in the 1997 Period. Such
expenses as a percentage of net sales increased to 26.7% in the 1998
Period from 25.4% in the 1997 Period due primarily to the addition of
the Acquired Brands and the Maple Grove Acquisition. The Acquired
Brands accounted for $0.5 million and Maple Grove accounted for $1.5
million of the increase. Promotional spending increased $1.3 million on
B&G pickle and pepper products and the Acquired Brands.
General and Administrative Expenses. General and administrative
expenses (including amortization of intangibles and management fees)
increased by $0.2 million, or 17.5%, to $1.5 million for the 1998
Period from $1.3 million in the 1997 Period due primarily to expenses
associated with the management of Maple Grove. Such expenses as a
percentage of net sales decreased to 3.4% in the 1998 Period from 3.7%
in the 1997 Period.
Operating Income. As a result of the foregoing, operating income
increased by $1.1 million, or 35.5%, to $4.1 million for the 1998
Period from $3.0 million for the 1997 Period. Operating income
expressed as a percentage of net sales increased to 8.9% in the 1998
Period from 8.5% in the 1997 Period.
Interest Expense. Interest expense increased $0.8 million to $3.7
million for the 1998 Period from $2.9 million in the 1997 Period as a
result of the additional debt incurred by the Company to fund the Maple
Grove Acquisition.
10
<PAGE>
39 Week period ended October 3, 1998 compared to the 39 Week period
ended September 27, 1997.
Net Sales. Net sales increased by $23.2 million or 22.2%, to
$127.5 million for the 39 week period ended October 3, 1998 (the "1998
Period") from $104.3 million for the 39 week period ended September 27,
1997 (the "1997 Period"). The net sales increase included $22.9 million
for the Acquired Brands, and $8.0 million of sales from Maple Grove.
The Acquired Brands increased 8.3% in the 1998 Period over sales in the
1997 Period and Maple Grove increased 13.4% in the 1998 Period over
sales in the 1997 Period. Sales of B&G pickle and pepper products
increased $0.4 million or 1.1% from the 1997 Period. These sales
increases were partially offset by a decrease of $5.5 million or 16.3%,
in sales of co-packed Polaner products to IHF and sales of Polaner
products distributed by the Company in the northeastern U.S., and a
decrease in sales of $2.6 million or 12.1% of Burns & Ricker Snack Food
products.
Gross Profit. Gross profit increased by $15.4 million, or 45.0%,
to $49.7 million for the 1998 Period from $34.3 million in the 1997
Period. Gross profit expressed as a percentage of net sales increased
to 39.0% in the 1998 Period from 32.8% in the 1997 Period due to a
favorable shift in the sales mix to higher gross profit margin B&G
pickle and pepper product sales and Acquired Brands sales from lower
gross profit margin Polaner co-packing sales.
Sales, Marketing and Distribution Expenses. Sales, marketing and
distribution expenses increased $10.0 million, or 41.3%, to $34.4
million for the 1998 Period from $24.4 million for the 1997 Period.
Such expenses as a percentage of net sales increased to 27.0% in the
1998 Period from 23.3% in the 1997 Period. The Acquired Brands
accounted for $6.9 million and Maple Grove accounts for $1.5 million of
the increase. Marketing spending increased $0.7 million and
distribution spending increased $0.9 million.
General and Administrative Expenses. General and administrative
expenses (including amortization of intangibles and management fees)
increased by $1.0 million, or 29.7% to $4.4 million for the 1998 Period
from $3.4 million in the 1997 Period, primarily due to increased
amortization of intangibles of $0.6 million associated with the
acquisitions of the Acquired Brands and Maple Grove.
Operating Income. As a result of the foregoing, operating income
increased by $4.4 million, or 66.5%, to $10.9 million for the 1998
Period from $6.6 million for the 1997 Period. Operating income
expressed as a percentage of net sales increased to 8.6% in the 1998
Period from 6.3% in the 1997 Period.
Interest Expense. Interest expense increased $4.0 million to $10.1
million for the 1998 Period from $6.1 million in the 1997 Period as a
result of the additional debt incurred by the Company to fund the
acquisitions of the Acquired Brands and Maple Grove.
11
<PAGE>
Liquidity and Capital Resources
Cash provided by operations decreased by $0.7 million or 15.9%, to $4.0
million for the 1998 Period from $4.7 million in the 1997 Period.
Working capital at October 3, 1998 was $36.8 million, an increase of
$15.2 million over working capital at January 3, 1998 of $21.6 million.
This increase is primarily a result of increases in accounts receivable
and decreases in accrued expenses.
Net cash used in investing activities for the 1998 Period was $34.8
million as compared to $69.8 million for the 1997 Period. The change
primarily related to a final $4.0 million payment to SFC for the
Acquisition and the purchase of the Acquired Brands of $63.0 million.
This was offset by the purchase of Maple Grove. Capital expenditures
during the 1998 Period included purchases of manufacturing and computer
equipment.
Net cash provided by financing activities for the 1998 Period was $31.1
million as compared to net cash provided by financing activities for
the 1997 Period of $68.5 million. The change related primarily to the
proceeds from the issuance of long-term debt in the 1997 Period to
finance the acquisition of the Acquired Brands offset by the proceeds
from the issuance of long-term debt in the 1998 Period to finance the
Maple Grove Acquisition.
The Company's primary source of capital are cash flows from operations
and borrowings under a $50 million revolving debt facility. The
Company's primary capital requirements include debt service, capital
expenditures, working capital needs and financing acquisitions.
Management believes that available borrowing capacity under the
revolving credit facility of approximately $20.0 million at October 3,
1998, combined with cash provided by operations, will provide the
Company with sufficient cash to fund current operations as well as to
meet its obligations.
Seasonality
Sales of a number of the Company's products tend to be seasonal, but
the effect of seasonality on the Company's liquidity is tempered by the
Company's relatively varied product mix. The Company purchases most of
the produce used to make the B&G Pickle and Pepper Products during the
period from May to October and, consequently, its liquidity needs are
greatest during this period.
Recent Accounting Pronouncements
In June 1997, Statement of Financial Accounting Standards (SFAS) No.
130 (SFAS 130), "Reporting Comprehensive Income," was issued to
establish standards of reporting and displaying of comprehensive income
and its components in a full set of general-purpose financial
statements. This statement requires disclosure of the components of
comprehensive income including, among other things, foreign currency
translation adjustments, minimum pension liability items and unrealized
gains and losses on certain investments in debt and equity securities.
The Company would be required to show components of comprehensive
income in a financial statement displayed as prominently as the other
required financial statements. The statement is effective for fiscal
years beginning after December 15, 1997. The Company anticipates
compliance with this Statement in 1998.
12
<PAGE>
In June 1997, SFAS 131 "Disclosures About Segments of an Enterprise and
Related Information", was issued to establish standards for public
business enterprises reporting information regarding operating segments
in annual and interim financial statements issued to shareholders. It
also establishes standards for related disclosures about products and
services, geographic areas and major customers. This statement is
effective for financial statements for periods beginning after December
15, 1997. In the initial year of application, comparative information
for earlier years is to be restated. The Company operates in one
business segment in which it manufactures and markets a diversified
portfolio of food products, and accordingly, does not believe that
segment reporting will impact disclosures in the financial statements.
The Company anticipates compliance with this Statement in 1998.
In June, 1998, SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities", was used to standardize the accounting for
derivative instruments by requiring that an entity recognize
derivatives as assets or liabilities in the statement of financial
position and measure them at fair value. This Statement is effective
for all quarters of all fiscal years beginning after June 15, 1999.
This Statement should have no impact on the Company's consolidated
financial statements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Not applicable.
Item 4. Year 2000
The Year 2000 ("Y2K") issue is the result of computer programs being
written using two digits, rather than four, to define the applicable
year. Mistaking "00" for the year 1900 could result in miscalculations
and errors and cause significant business interruptions for the
Company, as well as for the government and most other companies. The
Company has instituted a plan to assess its state of readiness for Y2K,
to remediate those systems that are non-compliant and to assure that
material third parties will be Y2K compliant.
The Company has assessed its mainframe, operating and application
systems for Y2K readiness, giving the highest priority to those
information technology applications (IT) systems that are considered
critical to its business operations. At present, approximately 50
percent of the IT systems have been remediated. For the IT systems not
yet remediated, the Company has purchased third party software that
will be operational by March 31, 1999. The final phase of the Company's
remediation is its manufacturing systems which is expected to be
completed by June 30, 1999.
In 1998, the Company has installed throughout its business units a Wide
Area Network encompassing merchandising, logistics, finance and human
resources. The Wide Area Network project was undertaken for business
reasons unrelated to Y2K.
The Company has compiled an inventory of its non-IT systems, which
include those systems containing embedded chip technology commonly
found in buildings and manufacturing equipment. Preliminary
investigations of the embedded chip systems indicate that Y2K will not
affect these systems.
13
<PAGE>
The Company is in the process of distributing a comprehensive Y2K
compliance questionnaire to key vendors, service providers and
co-packers. Management will be addressing the responses as part of the
Company's Y2K plan.
The Company is utilizing both internal and external resources to
address the Y2K issue. Internal resources reflect the reallocation of
IT personnel to the Y2K project from other IT projects. In the opinion
of management, the deferral of such other projects will not have a
significant adverse effect on continuing operations. The total
estimated direct cost to remediate the Y2K issue, excluding the Wide
Area Network which was undertaken for reasons unrelated to Y2K, is not
expected to be material to the Company's results of operations or
financial condition. All Y2K costs are expensed as incurred.
The Company is in the process of developing contingency plans for those
areas which might be affected by Y2K. Although the full consequences
are unknown, the failure of either the Company's critical systems or
those of its material third parties to be Y2K compliant could result in
the interruption of its business, which could have a material adverse
effect on the results of operations or financial condition of the
Company.
Part II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time involved in legal proceedings arising
in the normal course of business. The Company believes there is no
outstanding litigation which could have a material impact on its
financial position or results of operations.
Item 2. Change in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holdings
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
6(a) Exhibits
14
<PAGE>
Exhibit Number Description
-------------- -----------
Exhibit 27 Financial Data Schedule (filed
Electronically with SEC only)
6(b) Reports on Form 8-K
Form 8-K filed May 19, 1998
Form 8-K filed August 3, 1998
Form 8-K/A filed October 2, 1998
15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 11, 1998 B&G FOODS, INC.
By: /s/Robert C. Cantwell
---------------------
Robert C. Cantwell
Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer and Authorized officer)
16
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> OCT-03-1998
<CASH> 982
<SECURITIES> 0
<RECEIVABLES> 13,704
<ALLOWANCES> (1,054)
<INVENTORY> 45,172
<CURRENT-ASSETS> 65,619
<PP&E> 25,956
<DEPRECIATION> (5,828)
<TOTAL-ASSETS> 211,778
<CURRENT-LIABILITIES> 28,777
<BONDS> 150,605
<COMMON> 0
0
0
<OTHER-SE> 20,280
<TOTAL-LIABILITY-AND-EQUITY> 211,778
<SALES> 127,508
<TOTAL-REVENUES> 127,508
<CGS> 77,826
<TOTAL-COSTS> 38,751
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,093
<INCOME-PRETAX> 838
<INCOME-TAX> 417
<INCOME-CONTINUING> 421
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
