B&G FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 28,
2013
|
|
December 29,
2012
|
|
December 31,
2011
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
52,343
|
|
$
|
59,260
|
|
$
|
50,243
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
24,077
|
|
|
18,853
|
|
|
16,229
|
|
Amortization of deferred debt financing costs and bond discount
|
|
|
4,400
|
|
|
5,028
|
|
|
2,251
|
|
Loss on extinguishment of debt
|
|
|
31,291
|
|
|
10,431
|
|
|
|
|
Deferred income taxes
|
|
|
20,800
|
|
|
15,295
|
|
|
13,529
|
|
Contingent consideration expense, including interest accretion
|
|
|
208
|
|
|
|
|
|
|
|
Realized gain on interest rate swap
|
|
|
|
|
|
|
|
|
(612
|
)
|
Reclassification to net interest expense for interest rate swap
|
|
|
|
|
|
|
|
|
3,669
|
|
Share-based compensation expense
|
|
|
3,935
|
|
|
3,777
|
|
|
4,098
|
|
Excess tax benefits from share-based compensation
|
|
|
(4,192
|
)
|
|
(8,031
|
)
|
|
(1,047
|
)
|
Provision for doubtful accounts
|
|
|
257
|
|
|
142
|
|
|
(36
|
)
|
Changes in assets and liabilities, net of effects of business acquired:
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
(13,703
|
)
|
|
(1,106
|
)
|
|
(4,995
|
)
|
Inventories
|
|
|
(3,662
|
)
|
|
(3,065
|
)
|
|
(602
|
)
|
Prepaid expenses and other current assets
|
|
|
(2,743
|
)
|
|
1,793
|
|
|
(5,404
|
)
|
Income tax receivable
|
|
|
5,032
|
|
|
6,298
|
|
|
(1,311
|
)
|
Other assets
|
|
|
(2,695
|
)
|
|
(36
|
)
|
|
(14
|
)
|
Trade accounts payable
|
|
|
9,231
|
|
|
(874
|
)
|
|
8,896
|
|
Accrued expenses
|
|
|
(8,444
|
)
|
|
(4,728
|
)
|
|
1,135
|
|
Interest rate swap
|
|
|
|
|
|
|
|
|
(11,400
|
)
|
Other liabilities
|
|
|
(1,225
|
)
|
|
(2,509
|
)
|
|
(2,596
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
114,910
|
|
|
100,528
|
|
|
72,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(14,649
|
)
|
|
(10,637
|
)
|
|
(10,556
|
)
|
Cash payments for acquisition of businesses, net of cash acquired
|
|
|
(247,281
|
)
|
|
(62,667
|
)
|
|
(326,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(261,930
|
)
|
|
(73,304
|
)
|
|
(336,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
Prepayments and repurchases of long-term debt
|
|
|
(505,154
|
)
|
|
(116,772
|
)
|
|
(130,000
|
)
|
Proceeds from issuance of long-term debt
|
|
|
700,000
|
|
|
30,000
|
|
|
372,000
|
|
Repayments of borrowings under revolving credit facility
|
|
|
(90,000
|
)
|
|
(5,000
|
)
|
|
(25,000
|
)
|
Borrowings under revolving credit facility
|
|
|
105,000
|
|
|
|
|
|
25,000
|
|
Proceeds from issuance of common stock, net
|
|
|
|
|
|
120,355
|
|
|
|
|
Payments for repurchase of common stock
|
|
|
|
|
|
|
|
|
(3,652
|
)
|
Dividends paid
|
|
|
(62,824
|
)
|
|
(50,161
|
)
|
|
(38,238
|
)
|
Excess tax benefits from share-based compensation
|
|
|
4,192
|
|
|
8,031
|
|
|
1,047
|
|
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation
|
|
|
(6,812
|
)
|
|
(10,697
|
)
|
|
(2,236
|
)
|
Payments of debt financing costs
|
|
|
(12,574
|
)
|
|
(500
|
)
|
|
(16,346
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
131,828
|
|
|
(24,744
|
)
|
|
182,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
80
|
|
|
1
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(15,112
|
)
|
|
2,481
|
|
|
(82,000
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
19,219
|
|
|
16,738
|
|
|
98,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
4,107
|
|
$
|
19,219
|
|
$
|
16,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash interest payments
|
|
$
|
43,942
|
|
$
|
53,892
|
|
$
|
31,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash income tax payments
|
|
$
|
2,722
|
|
$
|
10,061
|
|
$
|
14,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and not yet paid
|
|
$
|
17,637
|
|
$
|
15,243
|
|
$
|
10,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
55
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 28, 2013, December 29, 2012 and December 31,
2011
(1) Nature of Operations
B&G Foods, Inc. is a holding company whose principal assets 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, puffed corn and rice snacks, nut clusters, Greek yogurt coated granola bars and bites 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
,
New York Style
,
Old London
,
Original Tings
,
Ortega
,
Pirate's Booty
,
Polaner
,
Red Devil
,
Regina
,
Rickland Orchards
,
Sa-són
,
Sclafani
,
Smart Puffs
,
Sugar Twin
,
Trappey's
,
TrueNorth
,
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 sell and distribute our products directly and 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 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.
We utilize a 52-53 week fiscal year ending on the Saturday closest to December 31. The fiscal years ended
December 28, 2013 (fiscal 2013), December 29, 2012 (fiscal 2012) and December 31, 2011 (fiscal 2011) contained 52 weeks each.
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 48.4%, 50.7% and 51.0% of consolidated net sales
in fiscal 2013, 2012 and 2011, respectively. Our top ten customers accounted for approximately 46.1%, 50.2% and 53.2% of our consolidated trade accounts receivables as of the end of fiscal 2013, 2012
and 2011, respectively. Other than Wal-Mart, which
56
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(1) Nature of Operations (Continued)
accounted
for 18.5%, 19.7% and 17.5% of our consolidated net sales in fiscal 2013, 2012 and 2011, respectively, no single customer accounted for more than 10.0% of consolidated net sales in fiscal
2013, 2012 or 2011. Other than Wal-Mart, which accounted for 12.9%, 14.9% and 14.4% of our consolidated trade accounts receivables as of the end of fiscal 2013, 2012 and 2011, respectively, no single
customer accounted for more than 10.0% of our consolidated trade accounts receivables as of the end of fiscal 2013, 2012 and 2011. As of December 28, 2013, we do not believe we have any
significant concentration of credit risk with respect to our consolidated 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 2013, 2012 and 2011, our sales to foreign countries represented approximately 3.2%, 2.7% and less than 1.0%, respectively, of net sales. Our foreign sales are primarily to
customers in Canada. The increase in our foreign sales as a percentage of our total net sales in fiscal 2013 was primarily attributable to the
New York
Style
acquisition and in fiscal 2012 was primarily attributable to the
Mrs. Dash
acquisition.
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. Unamortizable trademarks are deemed to have an indefinite useful life and are not amortized. Customer relationship intangibles and amortizable
trademarks acquired are amortized over 10 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 7, 2013, we acquired Rickland Orchards LLC, including the
Rickland Orchards
brand, from Natural
Instincts LLC for a purchase price of $57.5 million, of which approximately $37.4 million was paid in cash and approximately $20.1 million was paid in shares of common
stock of B&G Foods (based on the closing price of $35.15 per share on October 4, 2013), plus consideration of up to a maximum of $15.0 million in the aggregate, is payable based upon the
achievement of specified operating results during fiscal 2014, 2015 and 2016. As of the date of acquisition, we estimated the original fair value of
the contingent consideration to be approximately $7.6 million. We are required to reassess the fair value of the contingent consideration on a periodic basis. During the remainder of fiscal
2013, we increased our liability for the contingent consideration and recorded an expense of $0.2 million. The increase in the liability resulted from our current projection as of
December 28, 2013 of the financial results for
Rickland Orchards
for fiscal 2014, 2015 and 2016. See Note 7, "Fair Value Measurements."
We
refer to this acquisition as the "
Rickland Orchards
acquisition." The following table sets forth the preliminary allocation of the
Rickland Orchards
acquisition purchase price to the estimated fair value of the net assets acquired at the date of acquisition. The preliminary purchase
price allocation
57
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(1) Nature of Operations (Continued)
may
be adjusted as a result of the finalization of our purchase price allocation procedures related to intangibles acquired. We anticipate completing the purchase price allocation during the second
quarter of fiscal 2014.
Rickland Orchards
Acquisition (dollars in thousands):
|
|
|
|
|
Purchase Price:
|
|
|
|
|
Cash paid
|
|
$
|
37,376
|
|
Equity issued
|
|
|
20,124
|
|
Fair value of contingent consideration
|
|
|
7,566
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
65,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preliminary Allocation:
|
|
|
|
|
Trademarksamortizable intangible assets
|
|
$
|
35,000
|
|
Goodwill
|
|
|
21,244
|
|
Customer relationship intangiblesamortizable intangible assets
|
|
|
9,000
|
|
Other working capital
|
|
|
(178
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
65,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
July 8, 2013, we completed the acquisition of Pirate Brands, LLC, including the
Pirate's Booty
,
Smart Puffs
and
Original
Tings
brands, from affiliates of VMG Partners and Driven Capital Management,
and certain other entities and individuals for a purchase price of $195.4 million in cash. We refer to this acquisition as the "Pirate Brands acquisition." The following table sets forth the
preliminary allocation of the Pirate Brands 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 first quarter of fiscal 2014.
Pirate
Brands Acquisition (dollars in thousands):
|
|
|
|
|
Purchase Price:
|
|
|
|
|
Cash paid
|
|
$
|
195,417
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
195,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preliminary Allocation:
|
|
|
|
|
Trademarksunamortizable intangible assets
|
|
$
|
152,800
|
|
Goodwill
|
|
|
29,782
|
|
Customer relationship intangiblesamortizable intangible assets
|
|
|
11,400
|
|
Other working capital
|
|
|
1,435
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
195,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
May 6, 2013, we acquired the
TrueNorth
brand from DeMet's Candy Company. We refer to this acquisition as the
"
TrueNorth
acquisition."
58
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(1) Nature of Operations (Continued)
On
October 31, 2012, we completed the acquisition of
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
acquisition." The following table sets forth the allocation of the
New York
Style
acquisition purchase price to the estimated fair value of the net assets acquired at the date of acquisition.
New York Style
Acquisition (dollars in thousands):
|
|
|
|
|
Purchase Price:
|
|
|
|
|
Cash paid
|
|
$
|
62,517
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation:
|
|
|
|
|
Property, Plant and Equipment
|
|
$
|
42,889
|
|
Goodwill
|
|
|
4,963
|
|
Customer relationship intangiblesamortizable intangible assets
|
|
|
5,100
|
|
Trademarksunamortizable intangible assets
|
|
|
5,700
|
|
Other working capital
|
|
|
3,865
|
|
|
|
|
|
|
|
|
|
|
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 "
Mrs. Dash
acquisition." The following table sets forth the allocation of the
Mrs. Dash
acquisition
purchase price to the estimated fair value of the net assets acquired at the date of acquisition.
Mrs. Dash
Acquisition (dollars in thousands):
|
|
|
|
|
Purchase Price:
|
|
|
|
|
Cash paid
|
|
$
|
326,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
326,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation:
|
|
|
|
|
Deferred taxes
|
|
$
|
87
|
|
Equipment
|
|
|
129
|
|
Inventory
|
|
|
7,501
|
|
Goodwill
|
|
|
9,083
|
|
Customer relationship intangiblesamortizable intangible assets
|
|
|
30,800
|
|
Trademarksunamortizable intangible assets
|
|
|
278,400
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
326,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(1) Nature of Operations (Continued)
The following pro forma summary of operations for fiscal 2013 and 2012 presents our operations as if the Pirate Brands and
Rickland Orchards
acquisitions had occurred as of the beginning of fiscal 2012. The pro forma summary of operations for fiscal 2011 presents our
operations as if the
Mrs. Dash
acquisition had occurred as of the beginning of fiscal 2010. In addition to including the results of operations of
these acquisitions, the pro forma information gives effect to the interest on additional borrowings, the amortization of trademark and customer relationship intangibles, and issuance of shares of
common stock. On an actual basis, Pirate Brands and
Rickland Orchards
contributed $32.6 million and $12.9 million, respectively, of our
aggregate $725.0 million of consolidated net sales for fiscal 2013. On an actual basis, the
Mrs. Dash
acquisition contributed
$6.5 million of our aggregate $543.9 million of consolidated net sales for fiscal 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
|
|
(dollars in thousands)
|
|
Net sales
|
|
$
|
805,728
|
|
$
|
721,379
|
|
$
|
623,602
|
|
Net income
|
|
|
51,164
|
|
|
50,149
|
|
|
62,409
|
|
Basic earnings per share
|
|
$
|
0.97
|
|
$
|
1.01
|
|
$
|
1.30
|
|
Diluted earnings per share
|
|
$
|
0.96
|
|
$
|
1.00
|
|
$
|
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 Pirate Brands and
Rickland Orchards
acquisitions had occurred as of
the beginning of fiscal 2012 and if the
Mrs. Dash
acquisition had occurred as of the beginning of fiscal 2010, and is not intended to be a projection of future results.
The
TrueNorth
acquisition and the
New York Style
acquisition were not 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. Certain prior
year amounts have been reclassified to conform to the current year's presentation.
(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 and amortizable trademark intangibles; and
60
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(2) Summary of Significant Accounting Policies (Continued)
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 to be reasonable under the circumstances,
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 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 2013, 2012 and 2011 we capitalized $0.2 million each year.
(g) Goodwill and Other Intangible Assets
Goodwill
and unamortizable intangible assets (trademarks) are tested for impairment at least annually and whenever events or circumstances occur indicating that goodwill or unamortizable
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 unamortizable intangibles by comparing the fair value with the carrying value and recognize a loss for the difference. We estimate the fair value of our unamortizable
intangibles based on discounted cash flows that reflect certain third party market value indicators or net sales.
61
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 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 2013, 2012 and 2011 with no
adjustments to the carrying values of goodwill and unamortizable intangibles. Each test confirmed that the market capitalization and fair values of our goodwill and unamortizable intangibles,
respectively, exceeded their carrying values.
Customer
relationship intangibles and amortizable trademarks are presented at cost, net of accumulated amortization, and are amortized on a straight-line basis over their estimated
useful lives of 10 to 20 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 2013, 2012 and 2011 was $4.0 million, $4.2 million and $1.9 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 net cash flows
expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future net 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 2013, 2012 and 2011, we amortized $9.9 million, $8.1 million and $6.7 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.
(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
62
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(2) Summary of Significant Accounting Policies (Continued)
on
the nature of the hedge. We do not engage in derivative instruments for trading purposes. As of December 28, 2013 and December 29, 2012, there were no derivatives outstanding.
(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 $4.3 million, $5.9 million and $4.3 million, for the fiscal years 2013, 2012 and 2011, 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
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.
63
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(2) Summary of Significant Accounting Policies (Continued)
(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
64
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2013
|
|
Fiscal
2012
|
|
Fiscal
2011
|
|
|
|
(In thousands, except share and per share data)
|
|
Net income
|
|
$
|
52,343
|
|
$
|
59,260
|
|
$
|
50,243
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
52,998,263
|
|
|
49,238,759
|
|
|
47,855,666
|
|
Net effect of dilutive share-based compensation awards
|
|
|
184,043
|
|
|
318,067
|
|
|
684,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
53,182,306
|
|
|
49,556,826
|
|
|
48,540,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.99
|
|
$
|
1.20
|
|
$
|
1.05
|
|
Diluted
|
|
$
|
0.98
|
|
$
|
1.20
|
|
$
|
1.04
|
|
(s) Recently Issued Accounting Standards
In
July 2012, the Financial Accounting Standards Board (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. We adopted this update in fiscal 2013, however we
did not elect the qualitative assessment permitted under the amendment and therefore the adoption did not have an impact on our consolidated financial position, results of operations or liquidity.
In
February 2013, FASB issued an accounting standards update relating to the disclosure of items reclassified out of accumulated other comprehensive income (AOCI). The update requires
that for those items that are reclassified out of AOCI and into net income in their entirety, the effect of the reclassification on each affected net income line item be disclosed. For AOCI
reclassification items that are not reclassified in their entirety into net income, a cross reference must be made to other required disclosures. The update is effective for fiscal 2013 and interim
periods within fiscal 2013, and accordingly, we adopted it prospectively beginning with the first quarter of 2013. 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. See Note 8, "Accumulated Other Comprehensive Loss."
65
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(3) Inventories
Inventories consist of the following as of the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
Raw materials and packaging
|
|
$
|
25,075
|
|
$
|
20,263
|
|
Finished goods
|
|
|
76,176
|
|
|
69,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
101,251
|
|
$
|
89,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Property, Plant and Equipment, net
Property, plant and equipment, net consists of the following as of the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
Land
|
|
$
|
3,512
|
|
$
|
3,515
|
|
Buildings and improvements
|
|
|
51,618
|
|
|
50,283
|
|
Machinery and equipment
|
|
|
153,815
|
|
|
139,432
|
|
Office furniture and vehicles
|
|
|
14,319
|
|
|
11,236
|
|
Construction-in-progress
|
|
|
1,795
|
|
|
905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225,059
|
|
|
205,371
|
|
Less: accumulated depreciation
|
|
|
(114,685
|
)
|
|
(100,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
110,374
|
|
$
|
104,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense was $14.2 million, $10.7 million and $9.5 million for fiscal 2013, 2012 and 2011, respectively.
(5) Goodwill and Other Intangible Assets
The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 28, 2013
|
|
As of December 29, 2012
|
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Amortizable Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
$
|
41,800
|
|
$
|
1,031
|
|
$
|
40,769
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Customer relationships
|
|
|
187,569
|
|
|
49,097
|
|
|
138,472
|
|
|
165,340
|
|
|
40,244
|
|
|
125,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
229,369
|
|
$
|
50,128
|
|
$
|
179,241
|
|
$
|
165,340
|
|
$
|
40,244
|
|
$
|
125,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortizable Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$
|
319,292
|
|
|
|
|
|
|
|
$
|
267,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
$
|
664,900
|
|
|
|
|
|
|
|
$
|
512,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The increases in carrying amounts are attributable to the
TrueNorth
, Pirate Brands and
Rickland
Orchards
acquisitions.
66
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(5) Goodwill and Other Intangible Assets (Continued)
We
expect to recognize $13.0 million of amortization expense in fiscal 2014 and for each of the next four fiscal years thereafter associated with our current other intangible
assets and amortizable trademarks.
(6) Long-Term Debt
Long-term debt consists of the following as of the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
Senior secured credit agreement:
|
|
|
|
|
|
|
|
Revolving credit facility
|
|
$
|
40,000
|
|
$
|
25,000
|
|
Tranche A term loan due 2016, net of unamortized discount of $365 and $545 at December 28, 2013 and December 29, 2012
|
|
|
130,885
|
|
|
143,830
|
|
Tranche B term loan due 2018, net of unamortized discount of $1,809 at December 29, 2012
|
|
|
|
|
|
221,504
|
|
4.625% senior notes due 2021
|
|
|
700,000
|
|
|
|
|
7.625% senior notes due 2018, net of unamortized discount of $1,145 at December 29, 2012
|
|
|
|
|
|
247,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt, net of unamortized discount
|
|
|
870,885
|
|
|
637,689
|
|
Current portion of long-term debt
|
|
|
(26,250
|
)
|
|
(40,375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net of unamortized discount and excluding current portion
|
|
$
|
844,635
|
|
$
|
597,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit Agreement.
At December 28, 2013, $131.3 million of tranche A term loans were outstanding and
$40.0 million of revolving loans were outstanding under our senior secured credit agreement. We used a portion of the proceeds of the issuance of the 4.625% senior notes described below to
repay all $222.2 million of tranche B term loans then outstanding on June 4, 2013.
On
July 3, 2013, we amended our credit agreement. The amendment, among other things: (i) increased the revolving credit facility commitment of our lenders from
$200 million to $300 million; and (ii) increased the maximum permissible consolidated leverage ratio from 6.00 to 1.00 to 7.00 to 1.00 for each quarter through the fourth quarter
of 2014; 6.75 to 1.00 for the first quarter of 2015 through the fourth quarter of 2015; and 6.50 to 1.00 for the first quarter of 2016 and thereafter. At December 28, 2013, the available
borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $0.5 million, was $259.5 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 revolving credit facility. The maximum letter of credit capacity under the revolving credit facility is $50.0 million, with a fronting fee
67
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(6) Long-Term Debt (Continued)
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. $13.1 million and $5.6 million was due and paid in fiscal 2013 and 2012, respectively.
$26.3 million is due and payable in fiscal 2014 and $22.5 million is due and payable in fiscal 2015. The balance of all borrowings under the tranche A term loan facility, or
$82.5 million, is due and payable at maturity on November 30, 2016. The revolving credit facility matures on November 30, 2016.
We
may prepay the tranche A 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). Subject to certain exceptions, the credit agreement provides for mandatory prepayment upon certain asset dispositions
and issuances of subsidiary securities. The credit agreement is also subject to mandatory annual prepayments 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 2013, the tranche A term loan interest rate was approximately 3.16%.
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) may not exceed 7.00 to 1.00 for the
second quarter of 2013 through the fourth quarter of 2014; 6.75 to 1.00 for the first quarter of 2015 through the fourth quarter of 2015; and 6.50 to 1.00 for the first quarter of 2016 and thereafter.
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. As of December 28, 2013,
we were in compliance with all of the covenants, including financial covenants, in the credit agreement.
68
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(6) Long-Term Debt (Continued)
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.
4.625% Senior Notes due 2021.
On June 4, 2013, we issued $700.0 million aggregate principal amount of 4.625% senior notes due
2021 at a
price to the public of 100% of their face value. Interest on the 4.625% senior notes is payable on June 1 and December 1 of each year, commencing December 1, 2013. The 4.625%
senior notes will mature on June 1, 2021, unless earlier retired or redeemed as described below.
We
used the net proceeds from the issuance of the 4.625% senior notes to purchase or redeem all $248.5 million principal amount of our then existing 7.625% senior notes due 2018,
to repay $222.2 million principal amount of tranche B term loans and approximately $40.0 million principal amount of revolving loans under our credit agreement, and to pay related
premiums, fees and expenses. We used the remaining net proceeds for the Pirate Brands acquisition.
On
or after June 1, 2016, we may redeem some or all of the 4.625% senior notes at a redemption price of 103.469% beginning June 1, 2016 and thereafter at prices declining
annually to 100% on or after June 1, 2019, in each case plus accrued and unpaid interest to the date of redemption. We may redeem up to 35% of the aggregate principal amount of the 4.625%
senior notes prior to June 1, 2016 with the net proceeds from certain equity offerings at a redemption price of 104.625% plus accrued and unpaid interest to the date of redemption. We may also
redeem some or all of the 4.625% senior notes at any time prior to June 1, 2016 at a redemption price equal to the make-whole amount set forth in the indenture governing the 4.625% senior
notes. In addition, if we undergo a change of control or upon
certain asset sales, we may be required to offer to repurchase the 4.625% senior notes at the repurchase price set forth in the indenture plus accrued and unpaid interest to the date of repurchase.
We
may also, from time to time, seek to retire the 4.625% senior notes through cash repurchases of the 4.625% senior notes and/or exchanges of the 4.625% 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 4.625% 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 4.625% 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 all existing and future 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 the 4.625% senior notes.
69
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(6) Long-Term Debt (Continued)
The
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; creation of specified liens, certain sale-leaseback transactions and sales
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 28, 2013, we were in compliance with all of the covenants in the indenture governing the 4.625%
senior notes.
7.625% Senior Notes due 2018.
In June 2013, we repurchased $218.3 million aggregate principal amount of our outstanding 7.625%
senior notes
due 2018 with a portion of the proceeds of our public offering of 4.625% senior notes at a weighted average repurchase price of 108.09% of such principal amount plus accrued and unpaid interest to the
date of repurchase, and set aside sufficient proceeds of the offering to redeem the remaining 7.625% senior notes. In July 2013, we redeemed all $30.2 million aggregate principal amount of
7.625% senior notes that remained outstanding as of such date at a redemption price of 107.499% of such principal amount, plus accrued and unpaid interest to the date of redemption.
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.
Deferred Debt Financing Costs.
During fiscal 2013, we wrote-off and expensed $8.3 million of deferred debt financing costs
relating to the
repayment of the $248.5 million aggregate principal amount of 7.625% senior notes and our repayment of $222.2 million aggregate principal amount of tranche B term loans. During
fiscal 2013, we also capitalized $12.2 million of debt financing costs, which will be amortized over the eight year scheduled term of the 4.625% senior notes and we also capitalized
$0.4 million of debt financing costs in connection with an amendment to our credit facility, which will be amortized over the remainder of the five year scheduled term of our revolving credit
facility. During 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 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. 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.
70
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(6) Long-Term Debt (Continued)
As
of December 28, 2013 and December 29, 2012 we had net deferred debt financing costs of $17.8 million and $17.5 million, respectively, included in other
assets in the accompanying consolidated balance sheets.
Loss on Extinguishment of Debt.
Loss on extinguishment of debt for fiscal 2013 includes costs relating to our repurchase of
$248.5 million
aggregate principal amount of 7.625% senior notes and our repayment of $222.2 million aggregate principal amount of tranche B term loans, including the repurchase premium and other
expenses of $20.2 million, the write-off of deferred debt financing costs of $8.3 million and the write-off of unamortized discount of $2.8 million. 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.
Contractual Maturities.
As of December 28, 2013, the aggregate contractual maturities of long-term debt are as follows (in
thousands):
|
|
|
|
|
Fiscal Year:
|
|
|
|
2014
|
|
$
|
26,250
|
|
2015
|
|
|
22,500
|
|
2016
|
|
|
122,500
|
|
2017
|
|
|
|
|
2018
|
|
|
|
|
Thereafter
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
871,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Interest.
At December 28, 2013 and December 29, 2012 accrued interest of $3.3 million and $9.9 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.
71
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(7) Fair Value Measurements (Continued)
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 1Inputs
are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2Observable
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 3Unobservable
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.
The
carrying values and fair values of our revolving credit loans, term loans and senior notes as of December 28, 2013 and December 29, 2012 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Revolving Credit Loans
|
|
|
40,000
|
|
|
40,000
|
(1)
|
|
25,000
|
|
|
25,000
|
(1)
|
Tranche A Term Loans due 2016
|
|
|
130,885
|
(2)
|
|
131,250
|
(1)
|
|
143,830
|
(2)
|
|
144,375
|
(1)
|
Tranche B Term Loans due 2018
|
|
|
|
|
|
|
|
|
221,504
|
(2)
|
|
226,662
|
(1)
|
7.625% Senior Notes due 2018
|
|
|
|
|
|
|
|
|
247,355
|
(2)
|
|
269,001
|
(3)
|
4.625% Senior Notes due 2021
|
|
|
700,000
|
|
|
672,000
|
(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 loans, tranche B term loans and 7.625% senior notes are net of discount. At December 28,
2013, the face amount of the tranche A term loans was $131.3 million. At December 29, 2012, the face amounts of the tranche A term loans, tranche B term loans and
senior notes were $144.4 million, $223.3 million and $248.5 million, respectively.
-
(3)
-
Fair
values are estimated based on quoted market prices.
For
the
Rickland Orchards
acquisition, payment of $15.0 million of the purchase price is contingent upon the achievement of certain
operating results. We estimated the original fair value of the contingent consideration as the present value of the expected contingent payments, determined using the weighted probabilities of the
possible payments. As of the date of acquisition, we estimated the original fair value of the contingent consideration to be approximately $7.6 million. We are required to reassess the fair
value of contingent payments on a periodic basis. The significant inputs used in these estimates include numerous possible scenarios for the payments based on the contractual terms of the contingent
consideration, for which probabilities are assigned to each scenario, which are then discounted based on an individual risk analysis of the respective liabilities. Although we believe our assumptions
are reasonable, different assumptions or changes in the future may result in different
72
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(7) Fair Value Measurements (Continued)
estimated
amounts. A one percentage point change in the discount rates used would result in a change to the recorded liability of approximately $0.1 million as of December 28, 2013.
The
following table summarized the Level 3 activity (in thousands):
|
|
|
|
|
|
|
December 28,
2013
|
|
Balance at beginning of year
|
|
$
|
|
|
Original fair value of contingent consideration
|
|
|
7,566
|
|
Contingent consideration accretion of interest expense, net
|
|
|
208
|
|
Contingent consideration paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
7,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Accumulated Other Comprehensive Loss
The reclassification from accumulated other comprehensive loss for fiscal 2013 and 2012 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Amount Reclassified
From AOCL
|
|
|
Details about AOCL Components
|
|
December 28,
2013
|
|
December 29,
2012
|
|
Affected Line Item in the
Statement Where Net Income
(loss) is Presented
|
Defined benefit pension plan items
|
|
|
|
|
|
|
|
|
Amortization of prior service cost
|
|
$
|
44
|
|
$
|
45
|
|
See (1) below
|
Amortization of unrecognized loss
|
|
|
815
|
|
|
921
|
|
See (1) below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
859
|
|
|
966
|
|
Total before tax
|
|
|
|
(315
|
)
|
|
(307
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassification
|
|
$
|
544
|
|
$
|
659
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
These
items are included in the computation of net periodic pension cost. See Note 11, "Pension Benefits," for additional information.
Changes
in accumulated other comprehensive loss for fiscal 2013 and 2012 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit
Pension Plan Items
|
|
Foreign Currency
Translation
Adjustments
|
|
Total
|
|
Balance at December 31, 2011
|
|
$
|
(10,354
|
)
|
$
|
(76
|
)
|
$
|
(10,430
|
)
|
Other comprehensive loss before reclassifications
|
|
|
(1,341
|
)
|
|
17
|
|
|
(1,324
|
)
|
Amounts reclassified from AOCL
|
|
|
659
|
|
|
|
|
|
659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss)
|
|
|
(682
|
)
|
|
17
|
|
|
(665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 29, 2012
|
|
$
|
(11,036
|
)
|
$
|
(59
|
)
|
$
|
(11,095
|
)
|
Other comprehensive loss before reclassifications
|
|
|
8,152
|
|
|
(72
|
)
|
|
8,080
|
|
Amounts reclassified from AOCL
|
|
|
544
|
|
|
|
|
|
544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss)
|
|
|
8,696
|
|
|
(72
|
)
|
|
8,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 28, 2013
|
|
$
|
(2,340
|
)
|
$
|
(131
|
)
|
$
|
(2,471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(9) Income Taxes
The components of income before income tax expense consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
U.S.
|
|
$
|
80,291
|
|
$
|
90,646
|
|
$
|
76,745
|
|
Foreign
|
|
|
601
|
|
|
268
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80,892
|
|
$
|
90,914
|
|
$
|
76,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense (benefit) consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
6,853
|
|
$
|
15,024
|
|
$
|
11,726
|
|
State
|
|
|
728
|
|
|
1,260
|
|
|
1,289
|
|
Foreign
|
|
|
168
|
|
|
75
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
7,749
|
|
|
16,359
|
|
|
13,032
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
20,200
|
|
|
15,438
|
|
|
13,897
|
|
State
|
|
|
600
|
|
|
(143
|
)
|
|
(368
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
20,800
|
|
|
15,295
|
|
|
13,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
28,549
|
|
$
|
31,654
|
|
$
|
26,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2013, 2012 and 2011 to income before income
tax expense) as a result of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
Expected tax expense
|
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease):
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of federal income tax benefit
|
|
|
1.8
|
%
|
|
1.8
|
%
|
|
2.2
|
%
|
Impact on deferred taxes from changes in state tax rates
|
|
|
(0.4
|
)%
|
|
(0.9
|
)%
|
|
(1.5
|
)%
|
Foreign income taxes
|
|
|
|
|
|
0.1
|
%
|
|
|
|
Permanent differences
|
|
|
(1.1
|
)%
|
|
(1.2
|
)%
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
35.3
|
%
|
|
34.8
|
%
|
|
34.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
fiscal 2013, 2012 and 2011, changes in state apportionments or state tax laws resulted in a decrease of our blended state rate, resulting in a tax benefit of $0.3 million,
$0.9 million and $1.2 million, respectively.
74
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 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):
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
Accounts receivable, principally due to allowance
|
|
$
|
37
|
|
$
|
37
|
|
Inventories, principally due to additional costs capitalized for tax purposes
|
|
|
1,088
|
|
|
868
|
|
Accruals and other liabilities
|
|
|
301
|
|
|
6,164
|
|
Deferred debt financing costs
|
|
|
|
|
|
433
|
|
Other liabilities
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
|
1,502
|
|
|
7,502
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
Plant and equipment
|
|
|
(9,908
|
)
|
|
(7,469
|
)
|
Goodwill and other intangible assets
|
|
|
(135,341
|
)
|
|
(118,398
|
)
|
Prepaid expenses
|
|
|
(1,077
|
)
|
|
(623
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities
|
|
|
(146,326
|
)
|
|
(126,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liability
|
|
$
|
(144,824
|
)
|
$
|
(118,988
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 28, 2013. 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 28, 2013 and December 29, 2012 was $0.
At
December 28, 2013 we had intangibles of $699.6 million for tax purposes, which are amortizable through 2028.
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
75
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(9) Income Taxes (Continued)
December 28,
2013, a summary of the tax years that remain subject to examination in our major tax jurisdictions are:
|
|
|
United StatesFederal
|
|
2010 and forward
|
United StatesStates
|
|
2009 and forward
|
Canada
|
|
2009 and forward
|
As
of December 28, 2013, 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 15, "Quarterly
Financial Data (unaudited)," for dividends declared for each quarter of fiscal 2013 and 2012.
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 2013 or 2012. 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 Issued.
In October 2013, as partial consideration for the
Rickland Orchards
acquisition, we issued to 572,546 shares of common stock valued at
$20.1 million to the seller. See Note 1, "Nature of
Operations
Acquisitions.
"
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
76
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(10) Capital Stock (Continued)
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.
(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 28, 2013 and December 29, 2012 measurement dates for fiscal 2013 and 2012, respectively, to calculate end of year benefit obligations, fair value of plan assets and annual net
periodic benefit cost.
|
|
|
|
|
|
|
|
|
|
December 28,
2013
|
|
December 29,
2012
|
|
|
|
(in thousands)
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year
|
|
$
|
54,549
|
|
$
|
47,119
|
|
Actuarial (gain) loss
|
|
|
(7,672
|
)
|
|
4,013
|
|
Service cost
|
|
|
3,285
|
|
|
2,393
|
|
Interest cost
|
|
|
2,111
|
|
|
2,036
|
|
Benefits paid
|
|
|
(1,594
|
)
|
|
(1,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of year
|
|
|
50,679
|
|
|
54,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
|
47,709
|
|
|
39,004
|
|
Actual gain on plan assets
|
|
|
8,836
|
|
|
4,967
|
|
Employer contributions
|
|
|
4,750
|
|
|
4,750
|
|
Benefits paid
|
|
|
(1,594
|
)
|
|
(1,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
59,701
|
|
|
47,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount recognized:
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
9,022
|
|
$
|
139
|
|
Other long-term liabilities
|
|
|
|
|
|
(6,979
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at the end of the year
|
|
$
|
9,022
|
|
$
|
(6,840
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount recognized in accumulated other comprehensive loss consist of:
|
|
|
|
|
|
|
|
Prior service cost
|
|
$
|
(171
|
)
|
$
|
(215
|
)
|
Actuarial loss
|
|
|
(3,518
|
)
|
|
(17,206
|
)
|
Deferred taxes
|
|
|
1,349
|
|
|
6,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
$
|
(2,340
|
)
|
$
|
(11,036
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
77
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(11) Pension Benefits (Continued)
aggregate,
have accumulated benefit obligations and fair value of plan assets of $44.1 million and $43.8 million, respectively.
The
amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost in fiscal 2014 are as follows (in thousands):
|
|
|
|
|
Prior service cost
|
|
$
|
45
|
|
Actuarial loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28,
2013
|
|
December 29,
2012
|
|
Weighted-average assumptions:
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.815
|
%
|
|
3.91
|
%
|
Rate of compensation increase
|
|
|
3.00
|
%
|
|
3.00
|
%
|
Expected long-term rate of return
|
|
|
7.25
|
%
|
|
7.25
|
%
|
The
discount rate used to determine year-end fiscal 2013 and fiscal 2012 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.
78
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(11) Pension Benefits (Continued)
Net
periodic cost includes the following components (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
Service costbenefits earned during the period
|
|
$
|
3,284
|
|
$
|
2,393
|
|
$
|
1,943
|
|
Interest cost on projected benefit obligation
|
|
|
2,111
|
|
|
2,036
|
|
|
2,052
|
|
Expected return on plan assets
|
|
|
(3,635
|
)
|
|
(2,918
|
)
|
|
(2,630
|
)
|
Amortization of unrecognized prior service cost
|
|
|
44
|
|
|
45
|
|
|
45
|
|
Amortization of loss
|
|
|
815
|
|
|
921
|
|
|
405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net pension cost
|
|
$
|
2,619
|
|
$
|
2,477
|
|
$
|
1,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
asset allocation for our pension plans at the end of fiscal 2013 and fiscal 2012, and the target allocation for fiscal 2014, by asset category, follows.
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Plan Assets
at Year End
|
|
Asset Category
|
|
Target
Allocation
|
|
December 28,
2013
|
|
December 29,
2012
|
|
Equity securities
|
|
|
75
|
%
|
|
79
|
%
|
|
59
|
%
|
Fixed income securities
|
|
|
25
|
%
|
|
17
|
%
|
|
32
|
%
|
Other
|
|
|
|
|
|
4
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
100
|
%
|
|
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.
79
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(11) Pension Benefits (Continued)
The fair values of our pension plan assets at December 28, 2013 and December 29, 2012, utilizing the fair value hierarchy discussed in Note 7, "Fair Value
Measurements" follow (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2013
|
|
December 29, 2012
|
|
|
|
Level 1
|
|
Levels 2 & 3
|
|
Level 1
|
|
Levels 2 & 3
|
|
Asset Category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,480
|
|
$
|
|
|
$
|
4,373
|
|
$
|
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. mutual funds
|
|
|
25,921
|
|
|
|
|
|
14,248
|
|
|
|
|
Foreign mutual funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. common stocks
|
|
|
17,832
|
|
|
|
|
|
12,979
|
|
|
|
|
Foreign common stocks
|
|
|
3,374
|
|
|
|
|
|
1,085
|
|
|
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. mutual funds
|
|
|
10,094
|
|
|
|
|
|
15,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
59,701
|
|
$
|
|
|
$
|
47,709
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $17.8 million of U.S. common stocks in the investment portfolio at the end of fiscal 2013, $5.5 million was invested in B&G Foods' common stock. Of the
$13.0 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.
Information
about the expected cash flows for the pension plan follows (in thousands):
|
|
|
|
|
|
|
Pension Payments
|
|
Benefit payments:
|
|
|
|
|
2014
|
|
$
|
1,471
|
|
2015
|
|
|
1,679
|
|
2016
|
|
|
1,799
|
|
2017
|
|
|
2,066
|
|
2018
|
|
|
2,322
|
|
2019 to 2023
|
|
|
15,627
|
|
We
currently anticipate making contributions of approximately $1.8 million to our pension plan in fiscal 2014.
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 $1.0 million, $0.8 million and $0.7 million for fiscal 2013, 2012 and 2011, 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,
80
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 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.
We
were 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 in each of fiscal 2013, 2012 and 2011, respectively. These contributions represented less than five percent of total contributions made to
the plan. In each of fiscal 2013 and 2012, we paid less than $0.1 million in surcharges and expect to pay surcharges of less than $0.1 million in fiscal 2014 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 $6.9 million, $5.5 million and
$5.5 million, for fiscal 2013, 2012 and 2011, respectively.
As
of December 28, 2013, 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:
|
|
Third Parties
|
|
2014
|
|
$
|
4,309
|
|
2015
|
|
|
3,350
|
|
2016
|
|
|
3,289
|
|
2017
|
|
|
883
|
|
2018
|
|
|
774
|
|
Thereafter
|
|
|
902
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, product labeling 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. While
81
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(12) Commitments and Contingencies (Continued)
we
cannot predict with certainty the results of these claims and legal actions in which we are currently or in the future may be involved, we do not expect that the ultimate disposition of any
currently pending claims or actions will have a material adverse effect on our consolidated financial position, results of operations or liquidity.
Pirate
Brands has been named as a defendant in six duplicative putative class actions, two of which were filed prior to our ownership of Pirate Brands. The cases allege that Pirate
Brands' products are improperly labeled as "natural" because they contain "genetically modified" and processed ingredients. The first case was filed in December 2012 in New York. A duplicative case
was then filed in February 2013 in California, which has been transferred to New York. Identical actions were then filed in July 2013 in Florida, Washington, California and New Jersey. Pirate Brands
was successful in its efforts to have all six cases transferred to New York to be coordinated before a single judge. No discovery has commenced in any of the cases, and a motion to dismiss the claims
is pending. Based upon information currently available, we do not believe the ultimate resolution of these actions will have a material adverse effect on B&G Foods' consolidated financial position,
results of operations or liquidity.
Selling,
general and administrative expenses for fiscal 2013 include a gain of $1.5 million relating to a legal settlement.
Environmental.
We are subject to environmental laws and regulations in the normal course of business. We did not make any material
expenditures
during fiscal 2013, 2012 or 2011 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 position, 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 28, 2013, approximately 330 of our 984 employees, or 33.5%, were covered by
collective
bargaining agreements, of which 46 were covered by a collective bargaining agreement expiring within one year. Our collective bargaining agreement with the Local 863 International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America that covers certain employees at our Roseland, New Jersey manufacturing facility is scheduled to expire on March 31, 2014. As of the
date of issuance of the accompanying consolidated financial statements, we are in negotiations for a new collective bargaining agreement for our Roseland, New Jersey facility. While we believe that
our relations with our union employees are in general good, we cannot assure you that we will be able to negotiate the Roseland, New Jersey collective bargaining agreement on terms satisfactory to us,
or at all, and without production interruptions, including labor stoppages. At this time, however, management does not expect the outcome of these negotiations to have a material adverse effect on our
business, financial condition or results of operations. None of our other collective bargaining agreements is scheduled to expire within one year.
Severance and Change of Control Agreements.
We have employment agreements with each of our seven executive officers. The agreements
generally
continue until terminated by the executive or by us,
82
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(12) Commitments and Contingencies (Continued)
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 employee's 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 28,
2013 and December 29, 2012, accrued expenses in the accompanying consolidated balance sheets include annual bonus accruals of $4.7 million and $3.8 million, respectively.
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. Our stockholders reapproved the material terms of the performance goals in our 2008 Omnibus Plan at our annual meeting on May 16, 2013.
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
2,907,432 were available for future issuance as of December 28, 2013. 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.
Each
LTIA has 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.
83
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(13) Incentive Plans (Continued)
The
following table details the activity in our performance share LTIAs for fiscal 2013:
|
|
|
|
|
|
|
|
|
|
Number of
Performance Shares
|
|
Weighted Average
Grant Date Fair
Value (per share)
(2)
|
|
Beginning of fiscal 2013
|
|
|
1,012,729
|
(1)
|
$
|
10.83
|
|
Granted
|
|
|
116,048
|
(1)
|
$
|
28.24
|
|
Vested
|
|
|
(512,885
|
)
|
$
|
7.29
|
|
Forfeited
|
|
|
(4,035
|
)
|
$
|
18.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of fiscal 2013
|
|
|
611,857
|
(1)
|
$
|
17.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(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.
The
following table details the number of shares of common stock issued by our company during fiscal 2013, 2012 and 2011 upon the vesting of performance share long-term incentive awards
and for non-employee director annual equity grants and other share based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28,
2013
|
|
December 29,
2012
|
|
December 31,
2011
|
|
Number of performance shares vested
|
|
|
512,885
|
|
|
1,124,205
|
|
|
403,431
|
|
Shares withheld to fund statutory minimum tax withholding
|
|
|
214,878
|
|
|
463,942
|
|
|
152,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of common stock issued for performance share long-term incentive awards
|
|
|
298,007
|
|
|
660,263
|
|
|
251,305
|
|
Shares of common stock issued to non-employee directors for annual equity grants
|
|
|
14,592
|
|
|
17,436
|
|
|
17,796
|
|
Shares of common stock issued for other share based compensation, net of shares withheld to fund statutory minimum tax withholding
|
|
|
|
|
|
9,394
|
|
|
9,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares of common stock issued
|
|
|
312,599
|
|
|
687,093
|
|
|
278,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess tax benefit recorded to additional paid in capital
|
|
$
|
4,192
|
|
$
|
8,031
|
|
$
|
1,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(13) Incentive Plans (Continued)
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 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
Compensation expense included in cost of goods sold
|
|
$
|
855
|
|
$
|
772
|
|
$
|
767
|
|
Compensation expense included in selling, general and administrative expenses
|
|
|
3,080
|
|
|
3,005
|
|
|
3,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total compensation expense for share-based payments
|
|
$
|
3,935
|
|
$
|
3,777
|
|
$
|
4,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of December 28, 2013, there was $3.0 million of unrecognized compensation expense related to LTIAs, which is expected to be recognized over the next two years.
(14) Net Sales by Brand
The following table sets forth net sales by brand (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2013
|
|
Fiscal 2012
|
|
Fiscal 2011
|
|
Brand
(1)
:
|
|
|
|
|
|
|
|
|
|
|
Ortega
|
|
$
|
137,192
|
|
$
|
135,147
|
|
$
|
131,371
|
|
Maple Grove Farms of Vermont
|
|
|
77,084
|
|
|
74,846
|
|
|
73,679
|
|
Cream of Wheat
|
|
|
65,202
|
|
|
64,850
|
|
|
67,380
|
|
Mrs. Dash
(2)
|
|
|
61,846
|
|
|
62,089
|
|
|
3,653
|
|
Polaner
|
|
|
37,036
|
|
|
38,394
|
|
|
38,579
|
|
Las Palmas
|
|
|
34,486
|
|
|
35,541
|
|
|
33,784
|
|
New York Style
(3)
|
|
|
33,000
|
|
|
5,910
|
|
|
|
|
Pirate Brands
(4)
|
|
|
32,545
|
|
|
|
|
|
|
|
Bloch & Guggenheimer
|
|
|
26,988
|
|
|
28,746
|
|
|
32,937
|
|
B&M
|
|
|
21,210
|
|
|
23,061
|
|
|
22,005
|
|
Underwood
|
|
|
19,996
|
|
|
21,348
|
|
|
22,075
|
|
Ac'cent
|
|
|
18,824
|
|
|
19,326
|
|
|
19,544
|
|
Emeril's
|
|
|
16,247
|
|
|
17,809
|
|
|
17,728
|
|
TrueNorth
(5)
|
|
|
13,045
|
|
|
|
|
|
|
|
Rickland Orchards
(6)
|
|
|
12,867
|
|
|
|
|
|
|
|
All other brands
(7)
|
|
|
117,405
|
|
|
106,745
|
|
|
81,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
724,973
|
|
$
|
633,812
|
|
$
|
543,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Net
sales for each brand also includes branded net sales and, if applicable, any private label and food service net sales attributable to the brand.
-
(2)
-
We
completed the acquisition of the
Mrs. Dash
brand on November 30, 2011.
85
Table of Contents
B&G FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
December 28, 2013, December 29, 2012 and December 31, 2011
(14) Net Sales by Brand (Continued)
-
(3)
-
We
completed the acquisition of the
New York Style
brand on October 31, 2012.
-
(4)
-
We
completed the acquisition of Pirate Brands on July 8, 2013.
-
(5)
-
We
acquired the
TrueNorth
brand on May 6, 2013.
-
(6)
-
We
acquired the
Rickland Orchards
brand on October 7, 2013.
-
(7)
-
Net
sales for "all other brands" has been impacted by the acquisition of the
Sugar Twin
,
Baker's Joy
,
Molly McButter
,
Static Guard
and
Kleen Guard
brands acquired as part of the
Mrs. Dash
acquisition, which was
completed on
November 30, 2011.
(15) Quarterly Financial Data (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
|
|
(in thousands, expect per share data)
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
171,194
|
|
$
|
160,882
|
|
$
|
181,350
|
|
$
|
211,547
|
|
2012
|
|
$
|
157,339
|
|
$
|
148,612
|
|
$
|
154,155
|
|
$
|
173,706
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
58,812
|
|
$
|
55,697
|
|
$
|
61,266
|
|
$
|
67,148
|
|
2012
|
|
$
|
56,825
|
|
$
|
51,756
|
|
$
|
55,279
|
|
$
|
59,483
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
19,634
|
|
$
|
(1,433
|
)
|
$
|
15,350
|
|
$
|
18,792
|
|
2012
|
|
$
|
16,778
|
|
$
|
16,026
|
|
$
|
16,897
|
|
$
|
9,559
|
|
Basic and diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
0.37
|
|
$
|
(0.03
|
)
|
$
|
0.29
|
|
$
|
0.35
|
|
2012
|
|
$
|
0.35
|
|
$
|
0.33
|
|
$
|
0.35
|
|
$
|
0.18
|
|
Cash dividends declared per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
$
|
0.29
|
|
$
|
0.29
|
|
$
|
0.32
|
|
$
|
0.33
|
|
2012
|
|
$
|
0.27
|
|
$
|
0.27
|
|
$
|
0.27
|
|
$
|
0.29
|
|
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.
(16) Subsequent Events.
On February 24, 2014, our Board of Directors increased our company's quarterly dividend from $0.33 to $0.34 per share of common stock. On an annualized basis, the dividend
increased from $1.32 to $1.36 per share. The next quarterly dividend will be payable on April 30, 2014 to shareholders of record as of March 31, 2014.
86
Table of Contents