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TABLE OF CONTENTS
Item 8. Financial Statements and Supplementary Data.
PART IV

Table of Contents

As filed with the Securities and Exchange Commission on February 26, 2014

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark one)    

ý

 

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 28, 2013

or

o

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                             to                              .

Commission file number 001-32316

B&G FOODS, INC.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  13-3918742
(I.R.S. Employer
Identification No.)

Four Gatehall Drive, Parsippany, New Jersey
(Address of principal executive offices)

 

07054
(Zip Code)

Registrant's telephone number, including area code: (973) 401-6500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class   Name of exchange on which registered
Common Stock, par value $0.01 per share   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller
reporting company)
  Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         The aggregate market value of the registrant's outstanding shares of common stock held by non-affiliates of the registrant (assuming for these purposes, but without conceding, that all executive officers and directors are affiliates of the registrant) as of June 28, 2013, the last business day of the registrant's most recently completed second fiscal quarter, was $1,754,329,037 (based on the $34.05 per share closing price of the registrant's common stock on that date as reported on the New York Stock Exchange).

         As of February 26, 2014, the registrant had 53,649,687 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Selected designated portions of the registrant's definitive proxy statement to be filed on or before April 28, 2014 in connection with the registrant's 2014 annual meeting of stockholders are incorporated by reference into Part III of this annual report.

   


Table of Contents


B&G FOODS, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 28, 2013

TABLE OF CONTENTS

 
   
  Page No.

PART I

   

Item 1.

 

Business

 
2

Item 1A.

 

Risk Factors

  10

Item 1B.

 

Unresolved Staff Comments. 

  21

Item 2.

 

Properties

  21

Item 3.

 

Legal Proceedings

  22

Item 4.

 

Mine Safety Disclosures

  22

PART II

   

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 
23

Item 6.

 

Selected Financial Data

  26

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results Of Operations

  31

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

  46

Item 8.

 

Financial Statements and Supplementary Data

  48

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

  88

Item 9A.

 

Controls and Procedures

  88

Item 9B.

 

Other Information

  89

PART III

   

Item 10.

 

Directors, Executive Officers and Corporate Governance

 
90

Item 11.

 

Executive Compensation

  90

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

  90

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

  91

Item 14.

 

Principal Accountant Fees and Services

  91

PART IV

   

Item 15.

 

Exhibits, Financial Statement Schedules

 
92

Signatures

  95

Table of Contents


PART I

Item 1.    Business.

Overview

        The terms "B&G Foods," "our," "we" and "us," as used in this report, refer to B&G Foods, Inc. and its wholly owned subsidiaries, except where it is clear that the term refers only to the parent company. Throughout this report, we refer to our fiscal years ended January 2, 2010, January 1, 2011, December 31, 2011, December 29, 2012 and December 28, 2013 as "fiscal 2009," "fiscal 2010," "fiscal 2011," "fiscal 2012" and "fiscal 2013," respectively.

        B&G Foods manufactures, sells and distributes a diverse portfolio of branded, high quality, shelf-stable food and household products across the United States, Canada and Puerto Rico. Many of our branded products have leading regional or national market shares. In general, we position our products to appeal to the consumer desiring a high quality and reasonably priced product. We complement our branded product retail sales with institutional and food service sales and limited private label sales.

        B&G Foods, including our subsidiaries and predecessors, has been in business for over 120 years. We were incorporated in Delaware on November 25, 1996 under the name B Companies Holdings Corp. On August 11, 1997, we changed our name to B&G Foods Holdings Corp. On October 14, 2004, B&G Foods, Inc., then our wholly owned subsidiary, was merged with and into us and we were renamed B&G Foods, Inc.

        Our company has been built upon a successful track record of both organic and acquisition-related growth. Our goal is to continue to increase sales, profitability and cash flows through organic growth, disciplined acquisitions of complementary branded businesses and new product development. Since 1996, we have successfully acquired and integrated more than 35 brands into our company.

        The table below includes some of the acquisitions we have completed in recent years:

Date
  Significant Event
November 2010   Acquisition of the Don Pepino and Sclafani brands from Violet Packing LLC, referred to as the "Don Pepino acquisition" in the remainder of this document.

November 2011

 

Acquisition of the Mrs. Dash, Baker's Joy, Sugar Twin, Static Guard, Molly McButter and Kleen Guard brands from Conopco, Inc. dba Unilever United States, Inc., referred to as the "Mrs. Dash acquisition" in the remainder of this document.

October 2012

 

Acquisition of the New York Style, Devonsheer, JJ Flats and Old London brands from Chipita America, Inc., referred to as the "New York Style acquisition" in the remainder of this document.

May 2013

 

Acquisition of the TrueNorth brand from DeMet's Candy Company, referred to as the "TrueNorth acquisition" in the remainder of this document.

July 2013

 

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, referred to as the "Pirate Brands acquisition" in the remainder of this document.

October 2013

 

Acquisition of Rickland Orchards LLC, including the Rickland Orchards brand, from Natural Instincts LLC, referred to as the "Rickland Orchards acquisition" in the remainder of this document.

Products and Markets

        The following is a brief description of some of our brands and product lines:

        The Ortega brand has been in existence since 1897; its products span the shelf-stable Mexican food segment including taco shells, tortillas, seasonings, dinner kits, taco sauces, peppers, refried beans,

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salsas and related food products. We continue to expand our product offerings with new products such as Ortega Fiesta Flats flat bottom taco shells, Ortega whole grain corn taco shells and Ortega reduced sodium taco seasoning.

        Pirate Brands, which includes Pirate's Booty, Smart Puffs and Original Tings, originated in 1987 and offers baked, trans fat free and gluten free snacks.

        The Maple Grove Farms of Vermont brand, which originated in 1915, is one of the leading brands of pure maple syrup sold in the United States. Other products under the Maple Grove Farms of Vermont label include a line of gourmet salad dressings, sugar free syrups, marinades, fruit syrups, confections, pancake mixes and organic products.

        The Cream of Wheat brand was introduced in 1893 and is among the leading brands and one of the most trusted and widely recognized brands of hot cereals sold in the United States. Cream of Wheat is available in Original 10-minute, 21/2 minute and one-minute versions, and also in instant packets of Original and other flavors. A whole grain version of Original 21/2 minute Cream of Wheat was introduced by B&G Foods in 2008. In 2009, we introduced a "Healthy Grain" version of instant Cream of Wheat, which provides consumers with an excellent source of fiber and a good source of protein. During 2010, pursuant to a licensing agreement, we introduced Cream of Wheat Cinnabon® and during 2011, we introduced Cream of Wheat chocolate flavored instant hot cereal. In 2013, we introduced Cream of Wheat bananas and cream flavored instant hot cereal. We also offer Cream of Rice, a gluten-free, rice-based hot cereal.

        The Mrs. Dash brand, which was introduced in 1983 as the original brand in salt-free seasonings, is available in more than a dozen blends. In 2005, the leading brand in salt-free seasonings introduced 6 salt-free marinades. Mrs. Dash's brand essence, "Salt-Free, Flavor-Full," resonates with consumers and underscores the brand's commitment to provide healthy products that fulfill consumers' expectations for taste.

        The Rickland Orchards brand was created in 2012, and its products include Greek yogurt coated granola bars and bites and other Greek yogurt coated snacks.

        The Polaner brand was introduced in 1880 and is comprised of a broad array of fruit-based spreads as well as jarred wet spices such as chopped garlic and oregano. Polaner All Fruit is a leading national brand of fruit-juice sweetened fruit spread. The spreads are available in more than a dozen flavors. Polaner Sugar Free preserves are the second leading brand of sugar free preserves nationally.

        The Las Palmas brand originated in 1922 and primarily includes authentic Mexican enchilada sauce, chili sauce and various pepper products.

        The Bloch & Guggenheimer (B&G) brand originated in 1889, and its pickle, pepper and relish products are a leading brand in the New York metropolitan area. This line consists of shelf-stable pickles, peppers, relishes, olives and other related specialty items.

        The B&M brand was introduced in 1927 and is the original brand of brick-oven baked beans and remains one of the very few authentic baked beans. The B&M line includes a variety of baked beans and brown bread. The B&M brand currently has a leading market share in the New England region.

        The TrueNorth brand was introduced in 2008. TrueNorth nut cluster snacks combine freshly roasted nuts, a dash of sea salt and just a hint of sweetness. TrueNorth varieties include almond pecan crunch, chocolate nut crunch and cashew crunch.

        The Underwood brand's "Underwood Devil" logo, which was registered in 1870, is believed to be the oldest registered trademark still in use for a prepackaged food product in the United States. Underwood meat spreads, which were introduced in the late 1860s, include deviled ham, white-meat chicken, roast beef, corned beef and liverwurst.

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        The New York Style brand was created in 1985 and now includes Original Bagel Crisps, Mini Bagel Crisps, Pita Chips and Panetini Italian Toast. New York Style products offer the authentic taste of New York City's traditional neighborhood bakeries.

        The Ac'cent brand was introduced in 1947 as a flavor enhancer for meat preparation and is generally used on beef, poultry, fish and vegetables. We believe that Ac'cent is positioned as a unique flavor enhancer that provides food with the "umami" flavor sensation.

        The Emeril's brand was introduced in 2000 under a licensing agreement with celebrity chef Emeril Lagasse. We offer a line of pasta sauces, seasonings, cooking stocks, mustards, salsas, pepper sauces, dip mixes and cooking sprays under the Emeril's brand name.

        The Old London brand was created in 1932 and offers a wide variety of flavors available in melba toasts, melba rounds and other snacks. Old London also markets specialty snacks under the Devonsheer and JJ Flats brand names.

        The Trappey's brand, which was introduced in 1898, has a Louisiana heritage. Trappey's products fall into two major categories—high quality peppers and hot sauces, including Trappey's Red Devil.

        The Don Pepino and Sclafani brands originated in 1955 and 1900, respectively, and primarily include pizza and spaghetti sauces, whole and crushed tomatoes and tomato puree.

        The Grandma's brand of molasses, which was introduced in 1890, is the leading brand of premium-quality molasses sold in the United States. Grandma's molasses products are offered in two distinct styles: Grandma's Original Molasses and Grandma's Robust Molasses.

        The Joan of Arc brand, which originated in 1895, includes a full range of canned beans including kidney, chili and other varieties.

        The Regina brand, which has been in existence since 1949, includes vinegars and cooking wines. Regina products are most commonly used in the preparation of salad dressings as well as in a variety of recipe applications, including sauces, marinades and soups.

        The Static Guard brand, the number one brand name in static elimination sprays, created the anti-static spray category when it was launched in 1978 to fulfill a previously unmet consumer need. The brand's ability to consistently deliver on its promise to "instantly eliminate static cling" has resulted in a loyal consumer following.

        The Sugar Twin brand was developed in 1968 and is a calorie free sugar substitute.

        The Baker's Joy brand was introduced in 1982 and is the original brand of no-stick baking spray with flour. Baker's Joy's product proposition has been to "generate a perfect release from the pan every time," making baking easier, faster and more successful for everyday bakers.

        The Wright's brand was introduced in 1895 and is a seasoning that reproduces the flavor and aroma of pit smoking in meats, chicken and fish. Wright's is offered in three flavors: Hickory, Mesquite and Applewood.

        The Brer Rabbit brand has been in existence since 1907 and currently offers mild and full-flavored molasses as well as blackstrap molasses. Mild molasses is designed for table use and full-flavored molasses is typically used in baking, barbeque sauces and as a breakfast syrup.

        The Sa-són brand was introduced in 1947 as a flavor enhancer used primarily for Puerto Rican and Hispanic food preparation. The product is generally used on beef, poultry, fish and vegetables. The brand's flavor enhancer is offered in four flavors: Original, Coriander and Achiote, Garlic and Onion, and Tomato. We also offer reduced sodium versions of Sa-són.

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        The Vermont Maid brand has been in existence since 1919 and we offer maple-flavored syrup under the brand name. Vermont Maid syrup is available in regular, sugar-free and sugar-free butter varieties.

        The Molly McButter brand created the butter-flavored sprinkles category in 1987. Molly McButter is available in butter and cheese flavors.

Processed Food Industry

        The processed food industry is one of the United States' largest industries. It is characterized by relatively stable sales growth, based largely on price and population increases. As costs have increased in recent years, price has gained significance as a factor in sales growth. As large food companies with a presence in a variety of branded product categories seek tighter focus within their businesses, they have shed brands or an entire presence in non-core categories. They have also sold smaller brands to increase focus on the larger brands within their portfolios.

        In the past decade, the retail side of the food industry has seen a continuing shift of sales to alternate food outlets such as supercenters, warehouse clubs, dollar stores and drug stores. This shift has caused consolidation of traditional grocery chains into larger entities, often spanning the country under varying banner names. Consolidation has increased the importance of having a number one or two brand within a category, be that position national or regional. A broad sales and distribution infrastructure has also become critical for food companies, allowing them to reach all outlets selling food to consumers and expanding their growth opportunities.

Sales, Marketing and Distribution.

        Overview.    We sell, market and distribute our products through a multiple-channel sales, marketing and distribution system to all major U.S. food channels, including sales and shipments to supermarkets, mass merchants, warehouse clubs, wholesalers, food service distributors and direct accounts, specialty food distributors, military commissaries and non-food outlets such as drug and dollar store chains. Certain of our brands, including Cream of Wheat, Ac'cent, Crock Pot seasoning mixes, Underwood, Polaner, Static Guard, Mrs. Dash, New York Style, Sugar Twin and Rickland Orchards, are also distributed to similar food channels in Canada. We sell, market and distribute our two household brands through the same sales, marketing and distribution system to many of the same customers who buy our food products as well as to other household product retailers and distributors.

        We believe our established infrastructure in these channels allows us to distribute our products and any additional products from acquisitions cost-effectively. We sell our products primarily through broker sales networks to supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food outlets and specialty distributors. The broker sales network handles the sale of our products at the retail level.

        Sales.    Our sales organization is aligned by distribution channels and consists of regional sales managers, key account managers and sales persons. Regional sales managers sell our products nationwide through national and regional brokers, with separate organizations focusing on food service, grocery chain accounts and special markets. Our sales managers coordinate our broker sales efforts, make key account calls with buyers or distributors and supervise broker retail coverage of the products at the store level.

        Our sales strategy is centered on individual brands. We allocate promotional spending for each of our brands and our regional sales managers coordinate promotions with customers. Additionally, our marketing department works in conjunction with the sales department to coordinate special account activities and marketing support, such as couponing, public relations and media advertising.

        We have a national sales force that is capable of supporting our current brands and quickly integrating and supporting any newly acquired brands.

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        Marketing.    Our marketing organization is aligned by brand and is responsible for the strategic planning for each of our brands. We focus on deploying promotional dollars where we believe the spending will have the greatest impact on sales. Marketing and trade spending support, on a national basis, typically consists of advertising trade promotions, coupons and cross-promotions with supporting products. Radio, internet, social media and limited television advertising supplement this activity.

        Distribution.    We distribute our products through a multiple-channel system that covers every class of customer nationwide. We believe our distribution system has sufficient capacity to accommodate incremental product volume in a cost-effective manner. See Item 2, "Properties" for a listing of our distribution centers and warehouses.

Customers

        Our top ten customers accounted for approximately 48.4% of our net sales and 46.1% of our end of the year receivables for fiscal 2013. Other than Wal-Mart, which accounted for 18.5% of our fiscal 2013 net sales, no single customer accounted for 10.0% or more of our fiscal 2013 net sales. Other than Wal-Mart, which accounted for 12.9% of our receivables as of the end of fiscal 2013, no single customer accounted for more than 10.0% of our receivables as of the end of fiscal 2013. During fiscal 2013, 2012 and 2011, our net sales to foreign countries represented approximately 3.2%, 2.7% and less than 1.0%, respectively, of our total 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.

Seasonality

        Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes in seasons or other annual events. In the aggregate, however, sales of our products are not heavily weighted to any particular quarter due to the offsetting nature of demands for our diversified product portfolio. However, sales during the fourth quarter are generally greater than those of the preceding three quarters.

        We purchase most of the produce used to make our shelf-stable pickles, relishes, peppers, tomatoes and other related specialty items during the months of July through October, and we generally purchase substantially all of our maple syrup requirements during the months of April through August. Consequently, our liquidity needs are greatest during these periods.

Competition

        We face competition in each of our product lines. Numerous brands and products compete for shelf space and sales, with competition based primarily on product quality, convenience, price, trade promotion, consumer promotion, brand recognition and loyalty, customer service, advertising and other activities and the ability to identify and satisfy emerging consumer preferences. We compete with numerous companies of varying sizes, including divisions or subsidiaries of larger companies. Many of these competitors have multiple product lines, substantially greater financial and other resources and may have lower fixed costs and/or be substantially less leveraged than we are. Our ability to grow our business could be impacted by the relative effectiveness of, and competitive response to, our product initiatives, product innovation, advertising and promotional activities. In addition, from time to time, we experience margin pressure in certain markets as a result of competitors' pricing practices.

        Our products compete not only against other brands in their respective product categories, but also against products in similar or related product categories. For example, our shelf-stable pickles compete not only with other brands of shelf-stable pickles, but also with pickle products found in the

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refrigerated sections of grocery stores, and all our brands compete against private label products to varying degrees.

Raw Materials

        We purchase raw materials, including agricultural products, meat, poultry, flour, other raw materials, ingredients and packaging materials from growers, commodity processors, other food companies and packaging manufacturers located in U.S. and foreign locations. The principal raw materials for our products include maple syrup, wheat, corn, nuts, cheese, fruits, beans, tomatoes, peppers, meat, sugar, concentrates, Greek yogurt coating, molasses, spices and corn sweeteners. We purchase our agricultural raw materials in bulk or pursuant to short-term supply contracts. We purchase most of our agricultural products between April 1 and October 31. We also use packaging materials, particularly glass jars, cans, cardboard and plastic containers. The profitability of our business relies in substantial part on the prices we and our co-packers pay for these raw materials and packaging materials, which can fluctuate due to a number of factors, including changes in crop size, national, state and local government sponsored agricultural programs, export demand, currency exchange rates, natural disasters, weather conditions during the growing and harvesting seasons, general growing conditions, the effect of insects, plant diseases and fungi, and glass, metal and plastic prices.

        Fluctuations in commodity prices can lead to retail price volatility and intensive price competition, and can influence consumer and trade buying patterns.

        The cost of labor, manufacturing, energy, fuel, packaging materials and other costs related to the production and distribution of our food products can from time to time increase significantly and unexpectedly. We attempt to manage these risks by entering into short-term supply contracts and advance commodities purchase agreements, implementing cost saving measures and raising sales prices. During the past three years, our cost saving measures and sales price increases have substantially offset increases to our raw material, ingredient and packaging costs. To the extent we are unable to offset present and future cost increases, our operating results will be negatively impacted.

Production

        Manufacturing.    We operate seven manufacturing facilities for our products. See Item 2, "Properties" for a listing of our manufacturing facilities.

        Co-Packing Arrangements.    In addition to our own manufacturing facilities, we source a significant portion of our products under "co-packing" arrangements, a common industry practice in which manufacturing is outsourced to other companies. We regularly evaluate our co-packing arrangements to ensure the most cost-effective manufacturing of our products and to utilize company-owned manufacturing facilities most effectively. Third parties located in U.S. and foreign locations produce our Baker's Joy, Crock Pot, JJ Flats, Joan of Arc, Mrs. Dash, Pirate Brands, Regina, Rickland Orchards, Static Guard, Sugar Twin and TrueNorth products and certain B&G, Cream of Wheat, Emeril's, Las Palmas and Ortega products under co-packing agreements or purchase orders. Each of our co-packers produces products for other companies as well. We believe that there are alternative sources of co-packing production readily available for the majority of our products, although we may experience short-term disturbances in our operations if we are required to change our co-packing arrangements unexpectedly.

Trademarks and Licensing Agreements

        We consider our trademarks, in the aggregate, to be material to our business. We protect our trademarks by registration in the United States, Canada and in other countries where we sell our products. We also oppose any infringement in key markets. Trademark protection continues in some countries for as long as the mark is used and in other countries for as long as it is registered. Registrations generally are for renewable, fixed terms. Examples of our trademarks and registered

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trademarks include Ac'cent, B&G, B&G Sandwich Toppers, B&M, Baker's Joy, Brer Rabbit, Cream of Rice, Cream of Wheat, Devonsheer, Don Pepino, Emeril's, Grandma's, Greek on the go!, JJ Flats, Joan of Arc, Kleen Guard, Las Palmas, Maple Grove Farms of Vermont, Molly McButter, Mrs. Dash, New York Style, Old London, Original Tings, Ortega, Pirate's Booty, Polaner, Regina, Rickland Orchards, Sa-són, Sclafani, Smart Puffs, Static Guard, Sugar Twin, Trappey's, TrueNorth, Underwood, Vermont Maid and Wright's.

        In June 2000 we entered into a license agreement with Emeril's Food of Love Productions, L.L.C. (EFLP). This license agreement grants us an exclusive license to use the intellectual property owned by the licensor relating to Mr. Lagasse, including the name "Emeril Lagasse" and pictures, photographs and other personality material, in connection with the manufacturing, marketing and distribution of dry seasoning, liquid seasoning, condiments, sauces, dressings and certain other products through retail channels in the United States, the Caribbean and Canada. We also have the right of first negotiation with respect to other shelf-stable grocery products. Under the license agreement, the licensor owns all of the recipes that it provides to us and all of our Emeril's brand products and related marketing materials are subject to the prior approval of the licensor, which approval may not be unreasonably withheld. In addition, we are prohibited from entering into similar arrangements with other chefs in connection with any of the products covered by the agreement with the licensor.

        The license agreement has been extended through May 2015 and thereafter is subject to extension and renewal at our option for additional three-year periods if we meet specified annual net sales results. Under the license agreement, we are, among other things, obligated to introduce and market new products in each year of the license agreement and to pay the licensor royalties based on annual net sales of our Emeril's brand products. The license agreement may be terminated by the licensor if we are in breach or default of any of our material obligations thereunder. We have also agreed to indemnify the licensor with respect to claims under the license agreement, including claims relating to any alleged unauthorized use of any mark, personality or recipe by us in connection with the products in the Emeril's line of products.

        In February 2008, Martha Stewart Living Omnimedia, Inc. (MSLO) announced that it was acquiring certain assets related to the business of Emeril Lagasse. In connection with the closing of that transaction and with our consent, EFLP assigned its rights under the license agreement to a subsidiary of MSLO.

        From time to time we also enter into other licensing agreements. For example, we sell Cream of Wheat Cinnabon®, a co-branded product, pursuant to a licensing agreement with Cinnabon, Inc. and Crock Pot® Seasoning Mixes pursuant to a licensing agreement with Sunbeam Products, Inc. dba Jarden Consumer Solutions.

Employees and Labor Relations

        As of December 28, 2013, our workforce consisted of 984 employees. Of that total, 767 employees were engaged in manufacturing, 74 were engaged in marketing and sales, 113 were engaged in warehouse and distribution and 30 were engaged in administration. Approximately 34% of our employees, located at three facilities, are covered by collective bargaining agreements. These agreements, which vary in term depending on the location, expire on March 31, 2014 (Roseland, New Jersey; International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Local No. 863), April 25, 2015 (Portland, Maine; Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, AFL-CIO, Local No. 334) and March 31, 2016 (Stoughton, Wisconsin; Drivers, Salesmen, Warehousemen, Milk Processors, Cannery, Dairy Employees and Helpers Union, Local No. 695). The collective bargaining agreement covering our Roseland facility, which covers approximately 46 employees, is the only collective bargaining agreement expiring in the next twelve months. While we believe that our relations with our union employees are in general good, we cannot

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assure you that we will be able to negotiate a new collective bargaining agreement for our Roseland facility on terms satisfactory to us, or at all, and without production interruptions, including labor stoppages. At this time, however, management does not expect that the outcome of these negotiations will have a material adverse impact on our business, financial condition or results of operations.

Government Regulation

        As a manufacturer and marketer of food and household products, our operations are subject to extensive regulation by the United States Food and Drug Administration (FDA), the United States Department of Agriculture (USDA), the Federal Trade Commission (FTC), the Consumer Product Safety Commission (CPSC), the United States Department of Labor, the Environmental Protection Agency and various other federal, state, local and foreign authorities regarding the manufacturing, processing, packaging, storage, labeling, sale and distribution of our products and the health and safety of our employees. Our manufacturing facilities and products are subject to periodic inspection by federal, state, local and foreign authorities. In addition, our meat processing operation in Portland, Maine is subject to daily inspection by the USDA.

        We are subject to the Food, Drug and Cosmetic Act and the Food Safety Modernization Act and the regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, labeling, packaging and safety of food. We are also subject to the U.S. Bio-Terrorism Act of 2002 which imposes on us import and export regulations. Under the Bio-Terrorism Act we are required, among other things, to provide specific information about the food products we ship into the United States and to register our manufacturing, warehouse and distribution facilities with the FDA.

        We believe that we are currently in substantial compliance with all material governmental laws and regulations and maintain all material permits and licenses relating to our operations. Nevertheless, there can be no assurance that we are in full compliance with all such laws and regulations or that we will be able to comply with any future laws and regulations in a cost-effective manner. Failure by us to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, all of which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Environmental Matters

        We are subject to environmental laws and regulations in the normal course of business. We have not made any material expenditures during the last three fiscal years in order to comply with environmental laws or regulations. Based on our experience to date, we believe that the future cost of compliance with existing environmental laws and regulations (and liability for known environmental conditions) will not have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. However, we cannot predict what environmental laws or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with such environmental laws or regulations or to respond to such environmental claims.

Available Information

        Under the Securities Exchange Act of 1934, as amended, we are required to file with or furnish to the SEC annual, quarterly and current reports, proxy and information statements and other information. You may read and copy any document we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further

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information about the public reference room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We file electronically with the SEC.

        We make available, free of charge, through the investor relations section of our web site, our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, filed with or furnished to the SEC as soon as reasonably practicable after they are filed with the SEC. The address for the investor relations section of our web site is http://ir.bgfoods.com.

        The full text of the charters for each of the audit, compensation and nominating and governance committees of our board of directors as well as our Code of Business Conduct and Ethics is available at the investor relations section of our web site, http://ir.bgfoods.com. Our Code of Business Conduct and Ethics applies to all of our employees, officers and directors, including our chief executive officer and our chief financial officer and principal accounting officer. We intend to disclose any amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to our chief executive officer or chief financial officer and principal accounting officer in the investor relations section of our web site.

        The information contained on our web site is not part of, and is not incorporated in, this or any other report we file with or furnish to the SEC.

Item 1A.    Risk Factors.

        Any investment in our company will be subject to risks inherent to our business. Before making an investment decision, investors should carefully consider the risks described below together with all of the other information included in this report. The risks and uncertainties described below are not the only ones facing our company. Additional risks and uncertainties that we are not aware of or focused on or that we currently deem immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors.

        Any of the following risks could materially and adversely affect our business, consolidated financial condition, results of operations or liquidity. In that case, holders of our securities may lose all or part of their investment.

Risks Specific to Our Company

The packaged food industry is highly competitive.

        The packaged food industry is highly competitive. Numerous brands and products, including private label products, compete for shelf space and sales, with competition based primarily on product quality, convenience, price, trade promotion, brand recognition and loyalty, customer service, effective consumer advertising and promotional activities and the ability to identify and satisfy emerging consumer preferences. We compete with a significant number of companies of varying sizes, including divisions or subsidiaries of larger companies. Many of these competitors have multiple product lines, substantially greater financial and other resources available to them and may have lower fixed costs and/or are substantially less leveraged than our company. If we are unable to continue to compete successfully with these companies or if competitive pressures or other factors cause our products to lose market share or result in significant price erosion, our business, consolidated financial condition, results of operations or liquidity could be materially and adversely affected.

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We may be unable to maintain our profitability in the face of a consolidating retail environment.

        Our largest customer, Wal-Mart, accounted for 18.5% of our fiscal 2013 net sales, and our ten largest customers together accounted for approximately 48.4% of our fiscal 2013 net sales. As the retail grocery trade continues to consolidate and our retail customers grow larger and become more sophisticated, our retail customers may demand lower pricing and increased promotional programs. Further, these customers are reducing their inventories and increasing their emphasis on products that hold either the number one or number two market position and private label products. If we fail to use our sales and marketing expertise to maintain our category leadership positions to respond to these trends, or if we lower our prices or increase promotional support of our products and are unable to increase the volume of our products sold, our profitability and financial condition may be adversely affected.

We are vulnerable to decreases in the supply and increases in the price of raw materials and labor, manufacturing, distribution and other costs, and we may not be able to offset increasing costs by increasing prices to our customers.

        We purchase agricultural products, meat, poultry, other raw materials, ingredients and packaging materials from growers, commodity processors, other food companies and packaging manufacturers. Raw materials, ingredients and packaging materials are subject to increases in price attributable to a number of factors, including changes in crop size, federal and state agricultural programs, export demand, currency exchange rates, energy and fuel costs, weather conditions during the growing and harvesting seasons, insects, plant diseases and fungi, and glass, metal and plastic prices. Fluctuations in commodity prices can lead to retail price volatility and intensive price competition, and can influence consumer and trade buying patterns. The cost of labor, manufacturing, energy, fuel, packaging materials and other costs related to the production and distribution of our products can from time to time increase significantly and unexpectedly. We attempt to manage these risks by entering into short-term supply contracts and advance commodities purchase agreements from time to time, by implementing cost saving measures and by raising sales prices. During the past three years, our cost saving measures and sales price increases substantially offset increases to our raw material, ingredient and packaging costs. To the extent we are unable to offset present and future cost increases, our operating results will be negatively impacted.

We may be unable to offset any reduction in net sales in our mature food product categories through an increase in trade spending for these categories or an increase in net sales in other categories.

        Most of our food product categories are mature and certain categories have experienced declining consumption rates from time to time. If consumption rates and sales in our mature food product categories decline, our revenue and operating income may be adversely affected, and we may not be able to offset this decrease in business with increased trade spending or an increase in sales or profitability of other products and product categories.

We may have difficulties integrating future acquisitions or identifying new acquisitions.

        A major part of our strategy is to grow through acquisition and we intend to pursue additional acquisitions of food product lines and businesses. However, we may be unable to identify and consummate additional acquisitions or may be unable to successfully integrate and manage the product lines or businesses that we have recently acquired or may acquire in the future. In addition, we may be unable to achieve a substantial portion of any anticipated cost savings from future acquisitions or other anticipated benefits in the timeframe we anticipate, or at all. Moreover, any acquired product lines or businesses may require a greater than anticipated amount of trade, promotional and capital spending. Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, technologies, services and products of the acquired companies, personnel turnover and the diversion of

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management's attention from other business concerns. Any inability by us to integrate and manage any product lines or businesses that we have recently acquired or may acquire in the future in a timely and efficient manner, any inability to achieve a substantial portion of any anticipated cost savings or other anticipated benefits from these acquisitions in the time frame we anticipate or any unanticipated required increases in trade, promotional or capital spending could adversely affect our business, consolidated financial condition, results of operations or liquidity. Moreover, future acquisitions by us could result in our incurring substantial additional indebtedness, being exposed to contingent liabilities or incurring the impairment of goodwill and other intangible assets, all of which could adversely affect our financial condition, results of operations and liquidity.

We have substantial indebtedness, which could restrict our ability to pay dividends and impact our financing options and liquidity position.

        At December 28, 2013, we had total long-term indebtedness of $871.3 million (before debt discount), including $171.3 million principal amount of senior secured indebtedness and $700.0 million principal amount of senior unsecured indebtedness. Our ability to pay dividends is subject to contractual restrictions contained in the instruments governing our indebtedness. Although our credit agreement and the indenture governing our senior notes (which we refer to as the senior notes indenture) contain covenants that restrict our ability to incur debt, as long as we meet these covenants we will be able to incur additional indebtedness. The degree to which we are leveraged on a consolidated basis could have important consequences to the holders of our securities, including:

    our ability in the future to obtain additional financing for working capital, capital expenditures or acquisitions may be limited;

    we may not be able to refinance our indebtedness on terms acceptable to us or at all;

    a significant portion of our cash flow is likely to be dedicated to the payment of interest on our indebtedness, thereby reducing funds available for future operations, capital expenditures, acquisitions and/or dividends on our common stock; and

    we may be more vulnerable to economic downturns and be limited in our ability to withstand competitive pressures.

We are subject to restrictive debt covenants and other requirements related to our debt that limit our business flexibility by imposing operating and financial restrictions on our operations.

        The agreements governing our indebtedness impose significant operating and financial restrictions on us. These restrictions prohibit or limit, among other things:

    the incurrence of additional indebtedness and the issuance of certain preferred stock or redeemable capital stock;

    the payment of dividends on, and purchase or redemption of, capital stock;

    a number of restricted payments, including investments;

    specified sales of assets;

    specified transactions with affiliates;

    the creation of certain types of liens;

    consolidations, mergers and transfers of all or substantially all of our assets; and

    entry into certain sale and leaseback transactions.

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        Our credit agreement requires us to maintain specified financial ratios and satisfy financial condition tests, including, without limitation, a maximum leverage ratio and a minimum interest coverage ratio.

        Our ability to comply with the ratios or tests may be affected by events beyond our control, including prevailing economic, financial and industry conditions. A breach of any of these covenants, or failure to meet or maintain ratios or tests could result in a default under our credit agreement and/or our senior notes indenture. Certain events of default under our credit agreement and our senior notes indenture would prohibit us from paying dividends on our common stock. In addition, upon the occurrence of an event of default under our credit agreement or our senior notes indenture, the lenders could elect to declare all amounts outstanding under the credit agreement and the senior notes, together with accrued interest, to be immediately due and payable. If we were unable to repay those amounts, the credit agreement lenders could proceed against the security granted to them to secure that indebtedness. If the lenders accelerate the payment of the indebtedness, our assets may not be sufficient to repay in full this indebtedness and our other indebtedness.

To service our indebtedness, we require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

        Our ability to make interest payments on and to refinance our indebtedness, and to fund planned capital expenditures and potential acquisitions depends on our ability to generate cash flow from operations in the future. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

        A significant portion of our cash flow from operations is dedicated to servicing our debt requirements. In addition, in accordance with our current dividend policy we intend to continue distributing a significant portion of any remaining cash flow to our stockholders as dividends.

        Our ability to continue to expand our business is, to a certain extent, dependent upon our ability to borrow funds under our credit agreement and to obtain other third-party financing, including through the issuance and sale of additional debt or equity securities.

Financial market conditions may impede our access to, or increase the cost of, financing for acquisitions.

        Any future financial market disruptions or tightening of the credit markets, may make it more difficult for us to obtain financing for acquisitions or increase the cost of obtaining financing. In addition, our borrowing costs can be affected by short and long-term debt ratings assigned by independent rating agencies that are based, in significant part, on our performance as measured by credit metrics such as interest coverage and leverage ratios. A decrease in these ratings could increase our cost of borrowing or make it more difficult for us to obtain financing.

Future disruptions in the credit markets or other factors, could impair our ability to refinance our debt upon terms acceptable to us or at all.

        Our $300.0 million revolving credit facility and our $131.3 million of tranche A term loan borrowings mature on November 30, 2016 and our $700.0 million of senior notes mature on June 1, 2021. Our ability to raise debt or equity capital in the public or private markets in order to effect a refinancing of our debt at or prior to maturity could be impaired by various factors, including factors beyond our control. For example, in recent years U.S. credit markets experienced significant dislocations and liquidity disruptions that caused the spreads on prospective debt financings to widen considerably. These circumstances materially impacted liquidity in the debt markets, making financing terms for borrowers less attractive, and in certain cases resulted in the unavailability of certain types of debt financing. Any future uncertainty in the credit markets could negatively impact our ability to access additional debt financing or to refinance existing indebtedness on favorable terms, or at all. In

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addition, any future uncertainty in other financial markets in the U.S. could make it more difficult or costly for us to raise capital through the issuance of common stock or other equity securities. Any of these risks could impair our ability to fund our operations or limit our ability to expand our business or increase our interest expense, which could have a material adverse effect on our financial results.

        If we are unable to refinance our indebtedness at or prior to maturity on commercially reasonable terms or at all, we would be forced to seek other alternatives, including:

    sales of assets;

    sales of equity; and

    negotiations with our lenders or noteholders to restructure the applicable debt.

        If we are forced to pursue any of the above options, our business and/or the value of an investment in our securities could be adversely affected.

We rely on co-packers for a significant portion of our manufacturing needs, and the inability to enter into additional or future co-packing agreements may result in our failure to meet customer demand.

        We rely upon co-packers for a significant portion of our manufacturing needs. The success of our business depends, in part, on maintaining a strong sourcing and manufacturing platform. We believe that there are a limited number of competent, high-quality co-packers in the industry, and if we were required to obtain additional or alternative co-packing agreements or arrangements in the future, we can provide no assurance that we would be able to do so on satisfactory terms or in a timely manner. Our inability to enter into satisfactory co-packing agreements could limit our ability to implement our business plan or meet customer demand.

We rely on the performance of major retailers, wholesalers, specialty distributors and mass merchants for the success of our business, and should they perform poorly or give higher priority to other brands or products, our business could be adversely affected.

        We sell our products principally to retail outlets and wholesale distributors including, traditional supermarkets, mass merchants, warehouse clubs, wholesalers, food service distributors and direct accounts, specialty food distributors, military commissaries and non-food outlets such as drug store chains and dollar stores. The replacement by or poor performance of our major wholesalers, retailers or chains or our inability to collect accounts receivable from our customers could materially and adversely affect our results of operations and financial condition. In addition, our customers offer branded and private label products that compete directly with our products for retail shelf space and consumer purchases. Accordingly, there is a risk that our customers may give higher priority to their own products or to the products of our competitors. In the future, our customers may not continue to purchase our products or provide our products with adequate levels of promotional support.

We may be unable to anticipate changes in consumer preferences, which may result in decreased demand for our products.

        Our success depends in part on our ability to anticipate and offer products that appeal to the changing tastes, dietary habits and product packaging preferences of consumers in the market categories in which we compete. If we are not able to anticipate, identify or develop and market products that respond to these changes in consumer preferences, demand for our products may decline and our operating results may be adversely affected. In addition, we may incur significant costs related to developing and marketing new products or expanding our existing product lines in reaction to what we perceive to be increased consumer preference or demand. Such development or marketing may not result in the volume of sales or profitability anticipated.

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Severe weather conditions and natural disasters can affect crop supplies and reduce our operating results.

        Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or pestilence, may affect the supply of the raw materials that we use for our products. Our maple syrup products, for instance, are particularly susceptible to severe freezing conditions in Québec, Canada and Vermont during the season in which maple syrup is produced. Competing manufacturers can be affected differently by weather conditions and natural disasters depending on the location of their supplies. If our supplies of raw materials are reduced, we may not be able to find supplemental supply sources on favorable terms or at all, which could adversely affect our business and operating results.

Most of our products are sourced from single manufacturing sites.

        Our products are manufactured at many different manufacturing facilities, including our seven manufacturing facilities and manufacturing facilities operated by our co-packers. However, in most cases, individual products are produced only at a single location. If any of these manufacturing locations experiences a disruption for any reason, including a work stoppage, power failure, fire, or weather related condition or natural disaster, etc., this could result in a significant reduction or elimination of the availability of some of our products. If we were not able to obtain alternate production capability in a timely manner or on satisfactory terms, this could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Our operations are subject to numerous laws and governmental regulations, exposing us to potential claims and compliance costs that could adversely affect our business.

        Our operations are subject to extensive regulation by the U.S. Food and Drug Administration (FDA), the United States Department of Agriculture (USDA), the Federal Trade Commission (FTC), the Consumer Product Safety Commission (CPSC), the United States Department of Labor, the Environmental Protection Agency and various other federal, state, local and foreign authorities. Any changes in these laws and regulations, or any changes in how existing or future laws or regulations will be enforced, administered or interpreted could increase the cost of developing, manufacturing and distributing our products or otherwise increase the cost of conducting our business, or expose us to additional risk of liabilities and claims, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. In addition, failure by us to comply with applicable laws and regulations, including future laws and regulations, could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. See Item 1, "Business—Government Regulation" and "—Environmental Matters."

Failure by third-party co-packers or suppliers of raw materials to comply with food safety, environmental or other regulations may disrupt our supply of certain products and adversely affect our business.

        We rely on co-packers to produce certain of our products and on other suppliers to supply raw materials. Such co-packers and other suppliers, whether in the United States or outside the United States, are subject to a number of regulations, including food safety and environmental regulations. Failure by any of our co-packers or other suppliers to comply with regulations, or allegations of compliance failure, may disrupt their operations. Disruption of the operations of a co-packer or other suppliers could disrupt our supply of product or raw materials, which could have an adverse effect on our business, consolidated financial condition, results of operations or liquidity. Additionally, actions we may take to mitigate the impact of any such disruption or potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect our business, consolidated financial condition, results of operations or liquidity.

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We may be subject to significant liability should the consumption of any of our products cause injury, illness or death.

        The sale of food products for human consumption involves the risk of injury to consumers. Such injuries may result from mislabeling, tampering by unauthorized third parties or product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents or residues introduced during the growing, manufacturing, storage, handling or transportation phases of production. Under certain circumstances, we may be required to recall products, leading to a material adverse effect on our business. Even if a situation does not necessitate a recall, product liability claims might be asserted against us. We have from time to time been involved in product liability lawsuits, none of which have been material to our business. While we are subject to governmental inspection and regulations and believe our facilities comply in all material respects with all applicable laws and regulations, if the consumption of any of our products causes, or is alleged to have caused, a health-related illness in the future we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused injury, illness or death could adversely affect our reputation with existing and potential customers and our corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. We maintain product liability insurance and product contamination insurance in amounts we believe to be adequate. However, we cannot assure you that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a product recall could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Pending and future litigation may lead us to incur significant costs.

        We are, or may become, party to various lawsuits and claims arising in the normal course of business, which may include lawsuits or claims relating to contracts, intellectual property, product recalls, product liability, the marketing and labeling of products, employment matters, environmental matters or other aspects of our business. Even when not merited, the defense of these lawsuits may divert our management's attention, and we may incur significant expenses in defending these lawsuits. In addition, we may be required to pay damage awards or settlements or become subject to injunctions or other equitable remedies, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. The outcome of litigation is often difficult to predict, and the outcome of pending or future litigation may have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Consumer concern regarding the safety and quality of food products or health concerns could adversely affect sales of certain of our products.

        If consumers in our principal markets lose confidence in the safety and quality of our food products even without a product liability claim or a product recall, our business could be adversely affected. Consumers have been increasingly focused on food safety and health and wellness with respect to the food products they buy. We have been and will continue to be impacted by publicity concerning the health implications of food products generally, which could negatively influence consumer perception and acceptance of our products and marketing programs. Developments in any of these areas could cause our results to differ materially from results that have been or may be projected.

Risk associated with foreign suppliers and co-packers, including changes in import/export duties, wage rates, political or economic climates, or exchange rates, may adversely affect our operations.

        Our relationships with foreign suppliers and co-packers subject us to the risks of doing business outside the United States. The countries from which we source our products may be subject to political

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and economic instability, and may periodically enact new or revise existing laws, taxes, duties, quotas, tariffs, currency controls or other restrictions to which we are subject. Our products are subject to import duties and other restrictions, and the U.S. government may periodically impose new or revise existing duties, quotas, tariffs or other restrictions to which we are subject. In addition, changes in respective wage rates among the countries from which we and our competitors source product could substantially impact our competitive position. Changes in exchange rates, import/export duties or relative international wage rates applicable to us or our competitors could adversely impact our business, financial condition and results of operations. These changes may impact us in a different manner than our competitors.

A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future costs relating to the production of maple syrup products.

        We purchase the majority of our maple syrup requirements from suppliers in Québec, Canada. A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar.

Litigation regarding our trademarks and any other proprietary rights and intellectual property infringement claims may have a significant negative impact on our business.

        We maintain an extensive trademark portfolio that we consider to be of significant importance to our business. If the actions we take to establish and protect our trademarks and other proprietary rights are not adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as an alleged violation of their trademarks and proprietary rights, it may be necessary for us to initiate or enter into litigation in the future to enforce our trademark rights or to defend ourselves against claimed infringement of the rights of others. Any legal proceedings could result in an adverse determination that could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

We face risks associated with our defined benefit pension plans and multiemployer pension plan obligations.

        We maintain three defined benefit pension plans that cover substantially all of our employees. A deterioration in the value of plan assets resulting from poor market performance, a general financial downturn or otherwise could cause an increase in the amount of contributions we are required to make to these plans. For example, our defined benefit pension plans may from time to time move from an overfunded to underfunded status driven by decreases in plan asset values that may result from changes in long-term interests rates and disruptions in U.S. or global financial markets. Additionally, historically low interest rates coupled with poor market performance would have the effect of decreasing the funded status of these plans which would result in greater required contributions. For a more detailed description of these plans, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies; Use of Estimates—Pension Expense" and Note 11, "Pension Benefits," to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

        We also participate in a multiemployer pension plan maintained by the labor union representing certain of our employees at our Portland, Maine facility. We make periodic contributions to this plan pursuant to the terms of a collective bargaining agreement. In the event that we withdraw from participation in this plan or substantially reduce our participation in this plan (such as due to a workforce reduction), applicable law could require us to make withdrawal liability payments to the plan, and we would have to reflect that liability on our balance sheet. The amount of our withdrawal liability would depend on the extent of this plan's funding of vested benefits at the time of our withdrawal. Furthermore, our withdrawal liability could increase as the number of employers participating in this plan decreases.

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        The multiemployer plan, to which we contribute, has significant underfunded liabilities. Due to the level of underfunding, this plan has been determined to be in "critical" status. While this plan is in critical status, we are required to make additional plan contributions until we agree to a new collective bargaining agreement that implements a rehabilitation plan to improve the plan's funded status. Accordingly, our required contributions to this plan may increase substantially when our next collective bargaining agreement is executed.

        For a more detailed description of this multiemployer plan, see Note 11, "Pension Benefits," to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

        An obligation to make additional, unanticipated contributions to our defined benefit plans or the multiemployer plan described above could reduce the cash available for working capital and other corporate uses, and may have a material adverse effect on our business, consolidated financial position, results of operations and liquidity.

Our financial well-being could be jeopardized by unforeseen changes in our employees' collective bargaining agreements, shifts in union policy or labor disruptions in the food industry.

        As of December 28, 2013, approximately 34% of our 984 employees were covered by collective bargaining agreements. A prolonged work stoppage or strike at any of our facilities with union employees or a significant work disruption from other labor disputes in the food or related industries could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity. We are currently in negotiations for a new collective bargaining agreement to replace the existing collective bargaining agreement for our Roseland, New Jersey manufacturing facility, which covers approximately 46 employees, that is scheduled to expire on March 31, 2014. However, we cannot assure you that we will be able to negotiate a new collective bargaining agreement for our Roseland facility on terms satisfactory to us, or at all, and without production interruptions, including labor stoppages. If prior to the expiration of the collective bargaining agreement for the Roseland facility or prior to the expiration of any of our other existing collective bargaining agreements we are unable to reach new agreements without union action or any such new agreements are not on terms satisfactory to us, our business, consolidated financial condition, results of operations or liquidity could be materially and adversely affected.

If we are unable to retain our key management personnel, our growth and future success may be impaired and our results of operations could suffer as a result.

        Our success depends to a significant degree upon the continued contributions of senior management, certain of whom would be difficult to replace. As a result, departure by members of our senior management could have a material adverse effect on our business and results of operations. In addition, we do not maintain key-man life insurance on any of our executive officers.

We are a holding company and we rely on dividends, interest and other payments, advances and transfers of funds from our subsidiaries to meet our obligations.

        We are a holding company, with all of our assets held by our direct and indirect subsidiaries, and we rely on dividends and other payments or distributions from our subsidiaries to meet our debt service obligations and to enable us to pay dividends. The ability of our subsidiaries to pay dividends or make other payments or distributions to us depends on their respective operating results and may be restricted by, among other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for the payment of dividends), agreements of those subsidiaries, our credit agreement, our senior notes indenture and the covenants of any future outstanding indebtedness we or our subsidiaries incur.

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Future changes that increase cash taxes payable by us could significantly decrease our future cash flow available to make interest and dividend payments with respect to our securities.

        We are able to amortize goodwill and certain intangible assets within the meaning of Section 197 of the Internal Revenue Code of 1986. We expect to be able to amortize for tax purposes approximately $699.6 million between 2014 and 2028. The expected annual deductions are approximately $63.2 million for fiscal 2014, approximately $62.1 million per year for fiscal 2015 through 2017, approximately $59.4 million for fiscal 2018, approximately $55.1 million per year for fiscal 2019 and 2020, approximately $53.1 million for fiscal 2021, approximately $42.0 million for fiscal 2022, approximately $39.9 million per year for fiscal 2023 through 2025, approximately $38.0 million for fiscal 2026, approximately $18.3 million for fiscal 2027 and approximately $9.4 million for fiscal 2028. If there is a change in U.S. federal tax policy that reduces any of these available deductions or results in an increase in our corporate tax rate, our cash taxes payable may increase, which could significantly reduce our future cash and impact our ability to make interest and dividend payments.

A change in the assumptions used to value our goodwill or our unamortizable intangible assets could negatively affect our consolidated results of operations and net worth.

        Our total assets include substantial goodwill and unamortizable intangible assets (trademarks). These assets are tested for impairment at least annually and whenever events or circumstances occur indicating that goodwill or unamortizable intangibles might be impaired. The annual goodwill impairment test involves a two-step process. The first step of the impairment test involves comparing our company's market capitalization with our company's carrying value, including goodwill. If the carrying value of our company exceeds our market capitalization, we perform the second step of the impairment test to determine the amount of the impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of goodwill with the carrying value and recognizing a loss for the difference. We test our 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. Calculating our fair value for these purposes requires 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. However, materially different assumptions regarding the future performance of our businesses, including the performance of newly acquired brands, could result in significant impairment losses. In addition, any significant decline in our market capitalization, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or unamortizable intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, consolidated financial condition and results of operations.

Any future financial market disruptions or tightening of the credit markets could expose us to additional credit risks from customers and supply risks from suppliers and co-packers.

        Any future financial market disruptions or tightening of the credit markets could result in some of our customers experiencing a significant decline in profits and/or reduced liquidity. A significant adverse change in the financial and/or credit position of a customer could require us to assume greater credit risk relating to that customer and could limit our ability to collect receivables. A significant adverse change in the financial and/or credit position of a supplier or co-packer could result in an interruption of supply. This could have a material adverse effect on our business, consolidated financial condition, results of operations and liquidity.

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Risks Relating to our Securities

Holders of our common stock may not receive the level of dividends provided for in our dividend policy or any dividends at all.

        Dividend payments are not mandatory or guaranteed and holders of our common stock do not have any legal right to receive, or require us to pay, dividends. Our board of directors may, in its sole discretion, decrease the level of dividends provided for in our dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to shares of our capital stock, if any, depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions (including restrictions in our credit agreement and senior notes indenture), business opportunities, provisions of applicable law (including certain provisions of the Delaware General Corporation Law) and other factors that our board of directors may deem relevant.

        If our cash flows from operating activities were to fall below our minimum expectations (or if our assumptions as to capital expenditures or interest expense were too low or our assumptions as to the sufficiency of our revolving credit facility to finance our working capital needs were to prove incorrect), we may need either to reduce or eliminate dividends or, to the extent permitted under our credit agreement and senior notes indenture, fund a portion of our dividends with borrowings or from other sources. If we were to use working capital or permanent borrowings to fund dividends, we would have less cash and/or borrowing capacity available for future dividends and other purposes, which could negatively impact our financial condition, results of operations, liquidity and ability to maintain or expand our business.

Our dividend policy may negatively impact our ability to finance capital expenditures, operations or acquisition opportunities.

        Under our dividend policy, a substantial portion of our cash generated by our business in excess of operating needs, interest and principal payments on indebtedness, and capital expenditures sufficient to maintain our properties and assets is in general distributed as regular quarterly cash dividends to the holders of our common stock. As a result, we may not retain a sufficient amount of cash to finance growth opportunities or unanticipated capital expenditure needs or to fund our operations in the event of a significant business downturn. We may have to forego growth opportunities or capital expenditures that would otherwise be necessary or desirable if we do not find alternative sources of financing. If we do not have sufficient cash for these purposes, our financial condition and our business will suffer.

Our certificate of incorporation authorizes us to issue without stockholder approval preferred stock that may be senior to our common stock in certain respects.

        Our certificate of incorporation authorizes the issuance of preferred stock without stockholder approval and, in the case of preferred stock, upon such terms as the board of directors may determine. The rights of the holders of shares of our common stock will be subject to, and may be adversely affected by, the rights of holders of any class or series of preferred stock that may be issued in the future, including any preferential rights that we may grant to the holders of preferred stock. The terms of any preferred stock we issue may place restrictions on the payment of dividends to the holders of our common stock. If we issue preferred stock that is senior to our common stock in right of dividend payment, and our cash flows from operating activities or surplus are insufficient to support dividend payments to the holders of preferred stock, on the one hand, and to the holders common stock, on the other hand, we may be forced to reduce or eliminate dividends to the holders of our common stock.

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Future sales or the possibility of future sales of a substantial number of shares of our common stock or other securities convertible or exchangeable into common stock may depress the price of our common stock.

        We may issue shares of our common stock or other securities convertible or exchangeable into common stock from time to time in future financings or as consideration for future acquisitions and investments. In the event any such future financing, acquisition or investment is significant, the number of shares of our common stock or other securities convertible or exchangeable into common stock that we may issue may in turn be significant. In addition, we may grant registration rights covering shares of our common stock or other securities convertible or exchangeable into common stock, as applicable, issued in connection with any such future financing, acquisitions and investments.

        Future sales or the availability for sale of a substantial number of shares of our common stock or other securities convertible or exchangeable into common stock, whether issued and sold pursuant to our currently effective shelf registration statement or otherwise, would dilute our earnings per share and the voting power of each share of common stock outstanding prior to such sale or distribution, could adversely affect the prevailing market price of our securities and could impair our ability to raise capital through future sales of our securities.

Our certificate of incorporation and bylaws and several other factors could limit another party's ability to acquire us and deprive our investors of the opportunity to obtain a takeover premium for their securities.

        Our certificate of incorporation and bylaws contain certain provisions that may make it difficult for another company to acquire us and for holders of our securities to receive any related takeover premium for their securities. For example, our certificate of incorporation authorizes the issuance of preferred stock without stockholder approval and upon such terms as the board of directors may determine. The rights of the holders of shares of our common stock will be subject to, and may be adversely affected by, the rights of holders of any class or series of preferred stock that may be issued in the future.

Item 1B.    Unresolved Staff Comments.

        None.

Item 2.    Properties.

        Our corporate headquarters are located at Four Gatehall Drive, Parsippany, NJ 07054. Our manufacturing facilities are generally located near major customer markets and raw materials. Of our seven manufacturing facilities, six are owned and one is leased. Management believes that our manufacturing facilities have sufficient capacity to accommodate our planned growth. Listed below are

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our manufacturing facilities and the principal warehouses, distribution centers and offices that we own or lease.

Facility Location
  Owned/Leased   Description

Hurlock, Maryland

  Owned   Manufacturing/Warehouse

Portland, Maine

  Owned   Manufacturing/Warehouse

Stoughton, Wisconsin

  Owned   Manufacturing/Warehouse

St. Johnsbury, Vermont

  Owned   Manufacturing/Warehouse

Williamstown, New Jersey

  Owned   Manufacturing/Warehouse

Yadkinville, North Carolina

  Owned   Manufacturing/Warehouse

St. Evariste, Québec

  Owned   Storage Facility

Parsippany, New Jersey

  Leased   Corporate Headquarters

Roseland, New Jersey

  Leased   Manufacturing/Warehouse

Antioch, Tennessee

  Leased   Distribution Center

Houston, Texas

  Leased   Distribution Center

Easton, Pennsylvania

  Leased   Distribution Center

Bentonville, Arkansas

  Leased   Sales Office

Fairfield, New Jersey

  Leased   Sales Office

Item 3.    Legal Proceedings.

        The information set forth under the heading "Legal Proceedings" in Note 12 of Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K is incorporated herein by reference.

Item 4.    Mine Safety Disclosures.

        Not applicable.

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

        Shares of our common stock are traded on the New York Stock Exchange under the symbol "BGS" and have been so traded since May 23, 2007. The following table sets forth the high and low sales prices of shares of our common stock for each of the quarterly periods indicated.

 
  High   Low  

Fiscal 2013

             

Fourth Quarter

  $ 37.66   $ 32.85  

Third Quarter

  $ 36.49   $ 33.36  

Second Quarter

  $ 34.49   $ 27.61  

First Quarter

  $ 33.14   $ 27.52  

Fiscal 2012

   
 
   
 
 

Fourth Quarter

  $ 31.99   $ 26.83  

Third Quarter

  $ 32.84   $ 24.69  

Second Quarter

  $ 27.54   $ 20.99  

First Quarter

  $ 24.60   $ 22.07  

Holders

        According to the records of our transfer agent, we had 51 holders of record of our common stock as of February 14, 2014, including Cede & Co. as nominee for The Depository Trust Company (DTC). Cede & Co. as nominee for DTC holds shares of our common stock on behalf of participants in the DTC system, which in turn hold the shares of common stock on behalf of beneficial owners.

Performance Graph

        Set forth below is a line graph comparing the change in the cumulative total shareholder return on our company's common stock with the cumulative total return of the Russell 2000 Index and the S&P Packaged Foods & Meats Index for the period from January 3, 2009 to December 28, 2013, assuming the investment of $100 on January 3, 2009 and the reinvestment of dividends. The common stock price performance shown on the graph only reflects the change in our company's common stock price relative to the noted indices and is not necessarily indicative of future price performance.

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Comparison of 5 Year Cumulative Total Return
Among B&G Foods, Inc. Common Stock, the Russell 2000 Index
and the S&P Packaged Foods & Meats Index

GRAPHIC

Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
Copyright© 2014 Russell Investment Group. All rights reserved.

 
  1/3/2009*   1/2/2010   1/1/2011   12/31/2011   12/29/2012   12/28/2013  

B&G Foods, Inc. (NYSE: BGS)

  $ 100.00   $ 183.16   $ 290.80   $ 532.43   $ 635.91   $ 811.15  

Russell 2000 Index

    100.00     127.17     161.32     154.59     179.86     249.69  

S&P Packaged Foods & Meats Index

    100.00     117.85     137.13     160.70     177.40     232.11  

*
$100 invested on January 3, 2009 in B&G Foods' common stock or index, including reinvestment of dividends. Indexes calculated on month-end basis.

Dividend Policy

    General

        Our dividend policy reflects a basic judgment that our stockholders would be better served if we distributed a substantial portion of our cash available to pay dividends to them instead of retaining it in our business. Under this policy, a substantial portion of the cash generated by our company in excess of operating needs, interest and principal payments on indebtedness, capital expenditures sufficient to maintain our properties and other assets is distributed as regular quarterly cash dividends to the holders of our common stock and not retained by us. We have paid dividends every quarter since our initial public offering in October 2004.

        For fiscal 2013 and fiscal 2012, we had cash flows from operating activities of $114.9 million and $100.5 million, respectively, and distributed $62.8 million and $50.2 million as dividends, respectively. At our current dividend rate of $1.36 per share per annum, we expect our aggregate dividend payments in 2014 to be approximately $72.4 million.

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        The following table sets forth the dividends per share we have declared in each of the quarterly periods of 2013 and 2012:

 
  Fiscal 2013   Fiscal 2012  

Fourth Quarter

  $ 0.33   $ 0.29  

Third Quarter

  $ 0.32   $ 0.27  

Second Quarter

  $ 0.29   $ 0.27  

First Quarter

  $ 0.29   $ 0.27  

        Under U.S. federal income tax law, distributions to holders of our common stock are taxable to the extent they are paid out of current or accumulated earnings and profits. Generally, the portion of the distribution treated as a return of capital should reduce the tax basis in the shares of common stock up to a holder's adjusted basis in the common stock, with any excess treated as capital gains. Qualifying dividend income and the return of capital, if any, will be allocated on a pro-forma basis to all distributions for each fiscal year. Based on U.S. federal income tax laws, B&G Foods has determined that for fiscal 2013 and fiscal 2012, 75.8% and 58.2%, respectively, of distributions paid on common stock will be treated as a return of capital and 24.2% and 41.8%, respectively, will be treated as a taxable dividend paid from earnings and profits.

        Our dividend policy is based upon our current assessment of our business and the environment in which we operate, and that assessment could change based on competitive or other developments (which could, for example, increase our need for capital expenditures or working capital), new acquisition opportunities or other factors. Our board of directors is free to depart from or change our dividend policy at any time and could do so, for example, if it was to determine that we have insufficient cash to take advantage of growth opportunities.

    Restrictions on Dividend Payments

        Our ability to pay future dividends, if any, with respect to shares of our capital stock will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, provisions of applicable law and other factors that our board of directors may deem relevant. Under Delaware law, our board of directors may declare dividends only to the extent of our "surplus" (which is defined as total assets at fair market value minus total liabilities, minus statutory capital), or if there is no surplus, out of our net profits for the then current and/or immediately preceding fiscal years. Our board of directors will periodically and from time to time assess the appropriateness of the then current dividend policy before actually declaring any dividends.

        In general, our senior notes indenture restricts our ability to declare and pay dividends on our common stock as follows:

    we may use up to 100% of our excess cash (as defined below) for the period (taken as one accounting period) from and including March 31, 2013 to the end of our most recent fiscal quarter for which internal financial statements are available at the time of such payments, plus certain incremental funds described in the indenture for the payment of dividends so long as the fixed charge coverage ratio for the four most recent fiscal quarters for which internal financial statements are available is not less than 1.6 to 1.0; and

    we may not pay any dividends on any dividend payment date if a default or event of default under our indenture has occurred or is continuing.

        Excess cash is defined in our senior notes indenture and under the terms of our credit agreement. Excess cash is calculated as "consolidated cash flow," as defined in the indenture and under the terms of our credit agreement (which, in each case, allows for the add-back of restructuring charges and which is equivalent to the term adjusted EBITDA), minus the sum of cash tax expense, cash interest

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expense, certain capital expenditures, excess tax benefit from issuance of LTIA shares, certain repayment of indebtedness and the cash portion of the restructuring charges.

        In addition, the terms of our credit agreement also restrict our ability to declare and pay dividends on our common stock. In accordance with the terms of our credit agreement, we are not permitted to declare or pay dividends unless we are permitted to do so under our senior notes indenture. In addition, our credit agreement does not permit us to pay dividends unless we maintain:

    a "consolidated interest coverage ratio" (defined as the ratio of our adjusted EBITDA for any period of four consecutive fiscal quarters to our consolidated interest expense for such period payable in cash) of not less than 1.75 to 1.0; and

    a "consolidated total leverage ratio" (defined as the ratio of our consolidated total debt, as of the last day of any period of four consecutive fiscal quarters to our adjusted EBITDA for such period) of not more than 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.

Recent Sales of Unregistered Securities

        We have made no recent sales of unregistered securities that have not been previously disclosed in a quarterly report on Form 10-Q or current report on Form 8-K.

Issuer Purchases of Equity Securities

        We did not repurchase any shares of our common stock during the fourth quarter of fiscal 2013.

Item 6.    Selected Financial Data.

        The following selected historical consolidated financial data should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited consolidated financial statements and related notes to those statements included in this report. The selected historical consolidated financial data as of and for the years ended December 28, 2013 (fiscal 2013), December 29, 2012 (fiscal 2012), December 31, 2011 (fiscal 2011), January 1, 2011 (fiscal 2010) and January 2, 2010 (fiscal 2009) have been derived from our audited consolidated financial statements.

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  Fiscal 2013   Fiscal 2012   Fiscal 2011   Fiscal 2010   Fiscal 2009  
 
  (In thousands, except per share data and ratios)
 

Consolidated Statement of Operations Data(1):

                               

Net sales

  $ 724,973   $ 633,812   $ 543,866   $ 513,337   $ 501,016  

Cost of goods sold(2)

    482,050     410,469     366,090     345,668     352,283  
                       

Gross profit

    242,923     223,343     177,776     167,669     148,733  

Selling, general and administrative expenses(3)

    79,043     66,212     57,618     56,495     53,966  

Amortization expense(4)

    9,884     8,126     6,679     6,457     6,450  
                       

Operating income

    153,996     149,005     113,479     104,717     88,317  

Interest expense, net(5)

    41,813     47,660     36,675     40,342     49,432  

Loss on extinguishment of debt(6)

    31,291     10,431         15,224     10,220  
                       

Income before income tax expense

    80,892     90,914     76,804     49,151     28,665  

Income tax expense

    28,549     31,654     26,561     16,772     11,224  
                       

Net income

  $ 52,343   $ 59,260   $ 50,243   $ 32,379   $ 17,441  
                       
                       

Earnings per share data:

                               

Weighted average basic common shares outstanding

    52,998     49,239     47,856     47,584     39,325  

Weighted average diluted common shares outstanding

    53,182     49,557     48,541     48,284     39,358  

Cash dividends declared per common share

 
$

1.23
 
$

1.10
 
$

0.86
 
$

0.68
 
$

0.68
 

Basic earnings per common share

  $ 0.99   $ 1.20   $ 1.05   $ 0.68   $ 0.44  

Diluted earnings per common share

  $ 0.98   $ 1.20   $ 1.04   $ 0.67   $ 0.44  

Other Financial Data(1):

   
 
   
 
   
 
   
 
   
 
 

Net cash provided by operating activities

  $ 114,910   $ 100,528   $ 72,033   $ 98,877   $ 62,854  

Capital expenditures

    (14,649 )   (10,637 )   (10,556 )   (10,965 )   (10,704 )

Cash payments for acquisition of businesses

    (247,281 )   (62,667 )   (326,000 )   (14,602 )    

Net cash provided by (used in) financing activities

    131,828     (24,744 )   182,575     (14,534 )   (44,877 )

EBITDA(7)

  $ 178,073   $ 167,858   $ 129,708   $ 119,740   $ 103,012  

Ratio of earnings to fixed charges(8)

    2.8x     2.8x     3.0x     2.2x     1.5x  

Senior debt / EBITDA(9)

    4.9x     3.8x     5.6x     4.0x     3.6x  

Total debt / EBITDA

    4.9x     3.8x     5.6x     4.0x     4.3x  

EBITDA / cash interest expense(10)

    4.8x     3.9x     4.1x     3.3x     2.2x  

Consolidated Balance Sheet Data (at end of period)(1):

   
 
   
 
   
 
   
 
   
 
 

Cash and cash equivalents

  $ 4,107   $ 19,219   $ 16,738   $ 98,738   $ 39,930  

Total assets

    1,484,343     1,191,968     1,132,923     871,723     816,894  

Total debt

    870,885     637,689     720,107     477,748     439,541  

Total stockholders' equity

  $ 378,363   $ 361,175   $ 235,547   $ 230,585   $ 225,608  

(1)
We completed the Rickland Orchards acquisition from Natural Instincts LLC on October 7, 2013. We completed the Pirate Brands acquisition from affiliates of VMG Partners and Driven Capital Management, and certain other entities and individuals, on July 8, 2013. We completed the TrueNorth acquisition from DeMet's Candy Company on May 6, 2013. We completed the New York Style acquisition from Chipita America on October 31, 2012. We completed the Mrs. Dash acquisition from Unilever on November 30, 2011. We completed the Don Pepino acquisition from Violet Packing on November 18, 2010. Each of these acquisitions has been accounted for using the acquisition method of accounting and, accordingly, the assets acquired, liabilities assumed and results of operations of the acquired business is included in our consolidated financial statements from the date of acquisition.

(2)
Included in cost of goods sold for fiscal 2010 is a gain of $1.3 million relating to a legal settlement.

(3)
Selling, general and administrative expenses for fiscal 2013 include $5.9 million of transaction costs for the Rickland Orchards, TrueNorth and Pirate Brands acquisitions and a gain of $1.5 million relating to a legal settlement. Selling, general and administrative expenses for fiscal 2012 include $1.2 million of transaction costs for the New York Style acquisition. Selling, general and administrative expenses for fiscal 2011 include $1.4 million of transaction costs for the Mrs. Dash acquisition.

(4)
Amortization expense includes the amortization of customer relationships, amortizable trademarks and other intangible assets acquired in the Rickland Orchards, Pirate Brands, TrueNorth, New York Style, Mrs. Dash, Don Pepino and prior acquisitions.

(5)
Fiscal 2011 net interest expense includes a benefit of $0.6 million related to the realized gain on an interest rate swap, a charge of $1.6 million for the reclassification of the amount recorded in accumulated other comprehensive loss related to an interest rate swap and a $2.1 million charge relating to the write-off of the remaining amount recorded in accumulated other comprehensive loss on the interest rate swap due to our early termination of $130.0 million term loan borrowings. Fiscal 2010 net interest expense includes a charge of $0.4 million relating to the unrealized loss on the interest rate swap, and a charge of $1.7 million for the reclassification of the amount recorded in accumulated other comprehensive loss related to the swap. Fiscal 2009 net interest expense includes a $1.5 million benefit relating to the unrealized gain on the

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    interest rate swap, more than offset by a $1.7 million charge for the reclassification of the amount recorded in accumulated other comprehensive loss related to the swap.

(6)
Fiscal 2013 loss on extinguishment of debt 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. Fiscal 2012 loss on extinguishment of debt includes costs relating to our partial redemption of $101.5 million aggregate principal amount of 7.625% senior notes, including the repurchase premium and other expenses of $7.7 million, the write-off of deferred debt financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on extinguishment during fiscal 2012 also includes costs related to the amendment and restatement of our credit agreement, including the write-off of deferred debt financing costs of $0.4 million, unamortized discount of $0.1 million and other expenses of $0.2 million. Fiscal 2010 loss on extinguishment of debt includes costs relating to our repurchase of senior subordinated notes, including the repurchase premium of $10.7 million and the write-off of deferred financing costs of $4.5 million. Fiscal 2009 loss on extinguishment of debt includes costs relating to our repurchase of senior subordinated notes, including the repurchase premium of $5.8 million and the write-off of deferred debt financing costs of $4.4 million.

(7)
EBITDA is a non-GAAP financial measure used by management to measure operating performance. A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in our consolidated balance sheets and related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows. EBITDA is defined as net income before net interest expense, income taxes, depreciation and amortization and loss on extinguishment of debt (see (6) above). We define adjusted EBITDA as EBITDA adjusted for acquisition-related transaction costs, which include outside fees and expenses, contingent consideration expense and restructuring and consolidation costs of acquisitions. Management believes that it is useful to eliminate net interest expense, income taxes, depreciation and amortization, loss on extinguishment of debt and acquisition-related transaction costs because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. We use EBITDA and adjusted EBITDA in our business operations, among other things, to evaluate our operating performance, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA and adjusted EBITDA because we believe they are useful indicators of our historical debt capacity and ability to service debt and because covenants in our credit agreement and our senior notes indenture contain ratios based on these measures. As a result, internal management reports used during monthly operating reviews feature the EBITDA and adjusted EBITDA metrics. However, management uses these metrics in conjunction with traditional GAAP operating performance and liquidity measures as part of its overall assessment of company performance and liquidity and therefore does not place undue reliance on these measures as its only measures of operating performance and liquidity.


EBITDA and adjusted EBITDA are not recognized terms under GAAP and do not purport to be an alternative to operating income or net income as an indicator of operating performance or any other GAAP measure. EBITDA and adjusted EBITDA are not complete net cash flow measures because EBITDA and adjusted EBITDA are measures of liquidity that do not include reductions for cash payments for an entity's obligation to service its debt, fund its working capital, capital expenditures and acquisitions and pay its income taxes and dividends. Rather, EBITDA and adjusted EBITDA are two potential indicators of an entity's ability to fund these cash requirements. EBITDA and adjusted EBITDA are not complete measures of an entity's profitability because they do not include costs and expenses for depreciation and amortization, interest and related expenses, loss on extinguishment of debt, acquisition-related transaction costs and income taxes. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. However, EBITDA and adjusted EBITDA can still be useful in evaluating our performance against our peer companies because management believes these measures provide users with valuable insight into key components of GAAP amounts.

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A reconciliation of EBITDA and adjusted EBITDA to net income and to net cash provided by operating activities for fiscal 2013, 2012, 2011, 2010 and 2009 along with the components of EBITDA and adjusted EBITDA follows:

 
  Fiscal 2013   Fiscal 2012   Fiscal 2011   Fiscal 2010   Fiscal 2009  
 
  (In thousands)
 

Net income

  $ 52,343   $ 59,260   $ 50,243   $ 32,379   $ 17,441  

Income tax expense

    28,549     31,654     26,561     16,772     11,224  

Interest expense, net(A)

    41,813     47,660     36,675     40,342     49,432  

Depreciation and amortization

    24,077     18,853     16,229     15,023     14,695  

Loss on extinguishment of debt(B)

    31,291     10,431         15,224     10,220  
                       

EBITDA

    178,073     167,858     129,708     119,740     103,012  

Acquisition-related transaction costs

    5,932     1,159     1,418          
                       

Adjusted EBITDA

    184,005     169,017     131,126     119,740     103,012  

Income tax expense

    (28,549 )   (31,654 )   (26,561 )   (16,772 )   (11,224 )

Interest expense, net(A)

    (41,813 )   (47,660 )   (36,675 )   (40,342 )   (49,432 )

Acquisition-related transaction costs

    (5,932 )   (1,159 )   (1,418 )        

Deferred income taxes

    20,800     15,295     13,529     9,452     9,445  

Amortization of deferred financing costs and bond discount

    4,400     5,028     2,251     2,016     2,759  

Unrealized loss (gain) on interest rate swap(A)

                436     (1,541 )

Realized gain on interest rate swap(A)

            (612 )        

Reclassification to net interest expense for interest rate swap(A)

            3,669     1,693     1,693  

Share-based compensation expense

    3,935     3,777     4,098     3,747     4,599  

Excess tax benefits from share-based compensation

    (4,192 )   (8,031 )   (1,047 )   (326 )    

Acquisition-related contingent consideration expense, including interest accretion

    208                  

Changes in assets and liabilities, net of effects of business combinations

    (17,952 )   (4,085 )   (16,327 )   19,233     3,543  
                       

Net cash provided by operating activities

  $ 114,910   $ 100,528   $ 72,033   $ 98,877   $ 62,854  
                       
                       

(A)
See footnote (5) above.

(B)
See footnote (6) above.
(8)
We have calculated the ratio of earnings to fixed charges by dividing earnings by fixed charges. For the purpose of this computation, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of the sum of interest on indebtedness, amortized expenses related to indebtedness, reclassification to net interest expense of a portion of the amount recorded in accumulated other comprehensive loss related to an interest rate swap and an interest component of lease rental expense. Fixed charges exclude the unrealized loss (gain) on the interest rate swap.

(9)
As of the end of each fiscal year presented, senior debt is defined as the face amount all of our outstanding debt, excluding in the case of fiscal 2009, our then outstanding senior subordinated notes.

   
  Fiscal 2013   Fiscal 2012   Fiscal 2011   Fiscal 2010   Fiscal 2009  
   
  (In thousands, except ratios)
 
 

Current and former senior secured credit agreement:

                               
 

Revolving credit facility

  $ 40,000   $ 25,000   $   $   $  
 

Term loan due 2013

                130,000     130,000  
 

Tranche A term loan due 2016

    131,250     144,375     150,000          
 

Tranche B term loan due 2018

        223,313     225,000          
 

8% senior notes due 2011

                    240,000  
 

7.625% senior notes due 2018

        248,500     350,000     350,000      
 

4.625% senior notes due 2021

    700,000                  
                         
 
 

Senior debt

  $ 871,250   $ 641,188   $ 725,000   $ 480,000   $ 370,000  
                         
 
 
                         
 

EBITDA

  $ 178,073   $ 167,858   $ 129,708   $ 119,740   $ 103,012  
 

Senior debt / EBITDA

    4.9x     3.8x     5.6x     4.0x     3.6x  
                         
 
 
                         
 

Adjusted EBITDA

  $ 184,005   $ 169,017   $ 131,126   $ 119,740   $ 103,012  
 

Senior debt /adjusted EBITDA

    4.7x     3.8x     5.5x     4.0x     3.6x  

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(10)
Cash interest expense, calculated below, is equal to net interest expense less amortization of deferred financing and bond discount, unrealized loss on an interest rate swap, realized gain on the interest rate swap and reclassification to net interest expense of a portion of the amount recorded in accumulated other comprehensive loss related to an interest rate swap.

   
  Fiscal 2013   Fiscal 2012   Fiscal 2011   Fiscal 2010   Fiscal 2009  
   
  (In thousands, except ratios)
 
 

Interest expense, net

  $ 41,813   $ 47,660   $ 36,675   $ 40,342   $ 49,432  
 

Amortization of deferred financing and bond discount

    (4,400 )   (5,028 )   (2,251 )   (2,016 )   (2,759 )
 

Unrealized (loss) gain on interest rate swap

                (436 )   1,541  
 

Realized gain on interest rate swap

            612          
 

Reclassification to interest expense, net

            (3,669 )   (1,693 )   (1,693 )
                         
 
 

Cash interest expense

  $ 37,413   $ 42,632   $ 31,367   $ 36,197   $ 46,521  
                         
 
 
                         
 

EBITDA

  $ 178,073   $ 167,858   $ 129,708   $ 119,740   $ 103,012  
 

EBITDA / cash interest expense

    4.8x     3.9x     4.1x     3.3x     2.2x  
                         
 
 
                         
 

Adjusted EBITDA

  $ 184,005   $ 169,017   $ 131,126   $ 119,740   $ 103,012  
 

Adjusted EBITDA / cash interest expense

    4.9x     4.0x     4.2x     3.3x     2.2x  

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

        The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Item 1A, "Risk Factors" and under the heading "Forward-Looking Statements" below and elsewhere in this report. The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report.

General

        We manufacture, sell and distribute a diverse portfolio of branded, high quality, shelf-stable foods and household products, many of which have leading regional or national market shares. In general, we position our branded products to appeal to the consumer desiring a high quality and reasonably priced product. We complement our branded product retail sales with institutional and food service sales and limited private label sales.

        Our company has been built upon a successful track record of both organic and acquisition-driven growth. Our goal is to continue to increase sales, profitability and cash flows through organic growth, strategic acquisitions and new product development. We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with disciplined acquisitions of complementary branded businesses, continuing to develop new products and delivering them to market quickly, leveraging our multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels.

        Since 1996, we have successfully acquired and integrated more than 35 brands into our company. Most recently, on October 7, 2013, we acquired Rickland Orchards LLC, including the Rickland Orchards brand, from Natural Instincts LLC. On July 8, 2013, we completed the acquisition of Pirate Brands, LLC, including the Pirate's Booty, Smart Puffs and Original Tings brands, from a group of private sellers. On May 7, 2013, we acquired the TrueNorth nut cluster brand from DeMet's Candy Company. On October 31, 2012, we completed the acquisition of the New York Style, Old London, JJ Flats and Devonsheer brands from Chipita America, Inc. And 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. We refer to these acquisitions in this report as the "Rickland Orchards acquisition," "Pirate Brands acquisition," "TrueNorth acquisition," "New York Style acquisition" and "Mrs. Dash acquisition," respectively. Each of these five recent acquisitions has been accounted for using the acquisition method of accounting and, accordingly, the assets acquired and results of operations of the acquired businesses are included in our consolidated financial statements from the respective dates of acquisition. These acquisitions and the application of the acquisition method of accounting affect comparability between periods.

        We are subject to a number of challenges that may adversely affect our businesses. These challenges, which are discussed above under Item 1A, "Risk Factors" and below under the heading "Forward-Looking Statements," include:

        Fluctuations in Commodity Prices and Production and Distribution Costs.    We purchase raw materials, including agricultural products, meat, poultry, ingredients and packaging materials from growers, commodity processors, other food companies and packaging suppliers located in U.S. and foreign locations. Raw materials and other input costs, such as fuel and transportation, are subject to fluctuations in price attributable to a number of factors. Fluctuations in commodity prices can lead to retail price volatility and intensive price competition, and can influence consumer and trade buying patterns. The cost of raw materials, fuel, labor, distribution and other costs related to our operations can increase from time to time significantly and unexpectedly.

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        We attempt to manage cost inflation risks by locking in prices through short-term supply contracts and advance commodities purchase agreements and by implementing cost saving measures. We also attempt to offset rising input costs by raising sales prices to our customers. However, increases in the prices we charge our customers may lag behind rising input costs. Competitive pressures also may limit our ability to quickly raise prices in response to rising costs.

        We expect cost decreases for raw materials in the marketplace during 2014 and are currently locked into our supply and prices for a majority of our most significant commodities (excluding, among others, maple syrup) through 2014 at a cost decrease of less than 1% of cost of goods sold. During fiscal 2013, we had a minimal cost increase. To the extent we are unable to avoid or offset present or future cost increases by locking in our costs, implementing cost saving measures or increasing prices to our customers, our operating results could be materially adversely affected. In addition, should input costs begin to decline further, customers may look for price reductions in situations where we have locked into purchases at higher costs.

        Consolidation in the Retail Trade and Consequent Inventory Reductions.    As the retail grocery trade continues to consolidate and our retail customers grow larger and become more sophisticated, our retail customers may demand lower pricing and increased promotional programs. These customers are also reducing their inventories and increasing their emphasis on private label products.

        Changing Customer Preferences.    Consumers in the market categories in which we compete frequently change their taste preferences, dietary habits and product packaging preferences.

        Consumer Concern Regarding Food Safety, Quality and Health.    The food industry is subject to consumer concerns regarding the safety and quality of certain food products. If consumers in our principal markets lose confidence in the safety and quality of our food products, even as a result of a product liability claim or a product recall by a food industry competitor, our business could be adversely affected.

        Fluctuations in Currency Exchange Rates.    We purchase the majority of our maple syrup requirements from suppliers located in Québec, Canada. Any weakening of the U.S. dollar against the Canadian dollar could significantly increase our costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars in advance of any such weakening of the U.S. dollar or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars.

        To confront these challenges, we continue to take steps to build the value of our brands, to improve our existing portfolio of products with new product and marketing initiatives, to reduce costs through improved productivity, to address consumer concerns about food safety, quality and health and to favorably manage currency fluctuations.

Critical Accounting Policies; Use of Estimates

        The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; acquisition accounting allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment, and deferred tax assets; the determination of the useful life of customer relationship and amortizable trademark intangibles; and

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the accounting for share-based compensation expense. Actual results could differ significantly from these estimates and assumptions.

        Our significant accounting policies are described more fully in note 2 to our consolidated financial statements included elsewhere in this report. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial statements.

    Trade and Consumer Promotion Expenses

        We offer various sales incentive programs to customers and consumers, such as price discounts, in-store display incentives, slotting fees and coupons. The recognition of expense for these programs involves the use of judgment related to performance and redemption estimates. Estimates are made based on historical experience and other factors. Actual expenses may differ if the level of redemption rates and performance vary from our estimates.

    Inventories

        Inventories are stated at the lower of cost or market. Cost is determined using the first in, first out and average cost methods. Inventories have been reduced by an allowance for excess, obsolete and unsaleable inventories. The allowance is an estimate based on our management's review of inventories on hand compared to estimated future usage and sales.

    Long-Lived Assets

        Long-lived assets, such as property, plant and equipment, and intangibles with estimated useful lives are depreciated or amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted net future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted net future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Recoverability of assets held for sale is measured by a comparison of the carrying amount of an asset or asset group to their fair value less estimated costs to sell. Estimating future cash flows and calculating fair value of assets requires significant estimates and assumptions by management.

    Goodwill and Other Intangible Assets

        Our total assets include substantial goodwill and unamortizable intangible assets (trademarks). These assets 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.

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        Calculating our fair value for these purposes requires 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. However, materially different assumptions regarding the future performance of our businesses could result in significant impairment losses. In addition, any significant decline in our market capitalization, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or unamortizable intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, consolidated financial condition and results of operations.

    Income Tax Expense Estimates and Policies

        As part of the income tax provision process of preparing our consolidated financial statements, we are required to estimate our income taxes. This process involves estimating our current tax expenses together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe the recovery is not likely, we establish a valuation allowance. Further, to the extent that we establish a valuation allowance or increase this allowance in a financial accounting period, we include such charge in our tax provision, or reduce our tax benefits in our consolidated statements of operations. We use our judgment to determine our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our deferred tax assets.

        There are various factors that may cause these tax assumptions to change in the near term, and we may have to record a valuation allowance against our deferred tax assets. We cannot predict whether future U.S. federal and state income tax laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes to the U.S. federal and state income tax laws and regulations on a regular basis and update the assumptions and estimates used to prepare our consolidated financial statements when new regulations and legislation are enacted. We recognize the benefit of an uncertain tax position that we have taken or expect to take on the income tax returns we file if it is more likely than not that such tax position will be sustained based upon its technical merits.

    Share-based Compensation Expense

        Performance share long-term incentive awards (LTIAs) granted to our executive officers and certain other members of senior management entitle each participant to earn shares of common stock upon the attainment of certain performance goals over the applicable performance period. The recognition of compensation expense for the LTIAs is initially based on the probable outcome of the performance goals based on the fair value of the award on the date of grant and the anticipated number of shares to be awarded on a straight-line basis over the applicable performance period. The fair value of the awards on the date of grant is determined based upon the closing price of our common stock on the applicable measurement dates (i.e., the deemed grant dates for accounting purposes) reduced by the present value of expected dividends using the risk-free interest-rate as the award holders are not entitled to dividends or dividend equivalents during the vesting period. Our company's performance against the defined performance goals are re-evaluated on a quarterly basis throughout the applicable performance period and the recognition of compensation expense is adjusted for subsequent changes in the estimated or actual outcome. The cumulative effect of a change in the estimated number of shares of common stock to be issued in respect of performance share awards is recognized as an adjustment to earnings in the period of the revision.

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    Pension Expense

        We have defined benefit pension plans covering substantially all of our employees. Our funding policy is to contribute annually not less than the amount recommended by our actuaries. The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. We review pension assumptions regularly and we may from time to time make voluntary contributions to our pension plans, which exceed the amounts required by statute. During fiscal 2013 and 2012, we made total pension contributions to our pension plans of $4.8 million per year. Changes in interest rates and the market value of the securities held by the plans could materially change, positively or negatively, the funded status of the plans and affect the level of pension expense and required contributions in fiscal 2014 and beyond.

        Our discount rate assumption for our three defined benefit plans changed from 3.91% at December 29, 2012 to 4.815% at December 28, 2013. While we do not presently anticipate a change in our fiscal 2014 assumptions, as a sensitivity measure, a 0.25% decline or increase in our discount rate would increase or decrease our pension expense by approximately $0.1 million. Similarly, a 0.25% decrease or increase in the expected return on pension plan assets would increase or decrease our pension expense by approximately $0.2 million. We expect to make $1.8 million of defined benefit pension plan contributions during fiscal 2014.

    Acquisition Accounting

        Our consolidated financial statements and results of operations include an acquired business's operations after the completion of the acquisition. We account for acquired businesses using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred.

        The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations. Accordingly, for significant items, we typically obtain assistance from third party valuation specialists. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives. All of these judgments and estimates can materially impact our results of operations.

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Results of Operations

        The following table sets forth the percentages of net sales represented by selected items reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:

 
  Fiscal 2013   Fiscal 2012   Fiscal 2011  

Statement of Operations:

                   

Net sales

    100.0 %   100.0 %   100.0 %

Cost of goods sold

    66.5 %   64.8 %   67.3 %
               

Gross profit

    33.5 %   35.2 %   32.7 %

Selling, general and administrative expenses

    10.9 %   10.4 %   10.6 %

Amortization expense

    1.4 %   1.3 %   1.2 %
               

Operating income

    21.2 %   23.5 %   20.9 %

Interest expense, net

    5.8 %   7.5 %   6.8 %

Loss on extinguishment of debt

    4.3 %   1.7 %    
               

Income before income tax expense

    11.1 %   14.3 %   14.1 %

Income tax expense

    3.9 %   5.0 %   4.9 %
               

Net income

    7.2 %   9.3 %   9.2 %
               
               

        As used in this section the terms listed below have the following meanings:

        Net Sales.    Our net sales represents gross sales of products shipped to customers plus amounts charged to customers for shipping and handling, less cash discounts, coupon redemptions, slotting fees and trade promotional spending.

        Gross Profit.    Our gross profit is equal to our net sales less cost of goods sold. The primary components of our cost of goods sold are cost of internally manufactured products, purchases of finished goods from co-packers plus freight costs to our distribution centers and to our customers.

        Selling, General and Administrative Expenses.    Our selling, general and administrative expenses include costs related to selling our products, as well as all other general and administrative expenses. Some of these costs include administrative, marketing and internal sales force employee compensation and benefits costs, consumer advertising programs, brokerage costs, warehouse facility and distribution costs, information technology and communication costs, office rent, utilities, supplies, professional services, acquisition-related transaction costs and other general corporate expenses.

        Amortization Expense.    Amortization expense includes the amortization expense associated with customer relationships, amortizable trademarks and other intangibles.

        Net Interest Expense.    Net interest expense includes interest relating to our outstanding indebtedness, amortization of bond discount and amortization of deferred debt financing costs (net of interest income), and (subsequent to our determination in September 2008 that an interest rate swap was no longer an effective hedge for accounting purposes) unrealized gains or losses on the interest rate swap and the reclassification of amounts recorded in accumulated other comprehensive loss related to the swap and a write-off of the remaining amount recorded in accumulated other comprehensive loss related to the interest rate swap due to our early termination of $130.0 million term loan borrowings.

        Loss on Extinguishment of Debt.    Loss on extinguishment of debt includes costs relating to the retirement of indebtedness, including repurchase premium, if any, and write-off of deferred debt financing costs and unamortized discount, if any.

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    Fiscal 2013 Compared to Fiscal 2012

        Net Sales.    Net sales increased $91.2 million, or 14.4%, to $725.0 million for fiscal 2013 from $633.8 million for fiscal 2012. An additional ten months of net sales of the New York Style and Old London brands, which we acquired at the end of October 2012, contributed $36.5 million to the overall increase. Net sales of Pirate Brands, which we acquired in July 2013, contributed $32.6 million to the overall increase. Net sales of the TrueNorth brand, which we acquired in May 2013, contributed $13.0 million to the overall increase. And net sales of the Rickland Orchards brand, which we acquired in October 2013, contributed $12.9 million to the overall increase.

        Net sales for our base business decreased $3.8 million, or 0.6%, attributable to a net price decrease of $6.7 million partially offset by a unit volume increase of $2.9 million. Approximately 75% of the net price decrease is attributable to net price decreases for our Cream of Wheat, Ortega, Polaner, Don Pepino and Emeril's products of $1.7 million, $1.6 million, $0.7 million, $0.6 million and $0.5 million, respectively, as we increased promotional activity in response to the competitive environment. See Note 14, "Net Sales by Brand," to our consolidated financial statements in Part II, Item 8 of this report, for detailed information regarding total net sales by brand for fiscal 2013 and fiscal 2012 for each of our brands that exceed approximately 2% of our fiscal 2013 net sales and for all other brands in the aggregate. The following chart sets forth the most significant net sales increases and decreases by brand for our base business for fiscal 2013 as compared to fiscal 2012:

 
  Base Business
Net Sales Increase
(Decrease)
 
 
  Dollars   Percentage  
 
  (in millions)
   
 

Brand:

             

Maple Grove Farms of Vermont

  $ 2.2     3.0 %

Ortega

    2.0     1.5 %

Baker's Joy

    1.5     23.3 %

Crock Pot seasoning mixes

    1.4     124.5 %

B&M

   
(1.8

)
 
(8.0

)%

Bloch & Guggenheimer (B&G)

    (1.8 )   (6.1 )%

Emeril's

    (1.6 )   (8.8 )%

Polaner

    (1.4 )   (3.5 )%

Underwood

    (1.3 )   (6.3 )%

Las Palmas

    (1.0 )   (3.0 )%

All other brands

   
(2.0

)
 
(0.8

)%
           

Total

  $ (3.8 )   (0.6 )%
           
           

        Gross Profit.    Gross profit increased $19.6 million, or 8.8%, to $242.9 million in fiscal 2013 from $223.3 million in fiscal 2012. Gross profit expressed as a percentage of net sales decreased 1.7 percentage points to 33.5% for fiscal 2013 from 35.2% in fiscal 2012, primarily attributable to a net price decrease of $6.7 million, a sales mix shift to lower margin products and an increase in distribution costs.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased $12.8 million, or 19.4%, to $79.0 million for fiscal 2013 from $66.2 million for fiscal 2012. This increase is primarily due to increases in consumer marketing of $4.3 million, selling expenses of $3.5 million (including increases of $1.9 million for salesperson compensation and $1.2 million for brokerage expenses), acquisition-related transaction costs of $4.8 million and warehousing expenses of $1.9 million, which were partially offset by a $1.5 million gain relating to a legal settlement and a decrease in all other expenses of $0.2 million. Expressed as a percentage of net sales, our selling, general and administrative expenses increased 0.5 percentage points to 10.9% in fiscal 2013 from 10.4% in fiscal 2012.

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        Amortization Expense.    Amortization expense increased $1.8 million to $9.9 million for fiscal 2013 from $8.1 million in fiscal 2012. The increase is due to the Rickland Orchards, Pirate Brands, TrueNorth and New York Style acquisitions.

        Operating Income.    As a result of the foregoing, operating income increased $5.0 million, or 3.3%, to $154.0 million in fiscal 2013 from $149.0 million in fiscal 2012. Operating income expressed as a percentage of net sales decreased 2.3 percentage points to 21.2% in fiscal 2013 from 23.5% in fiscal 2012.

        Net Interest Expense.    Net interest expense decreased $5.9 million to $41.8 million in fiscal 2013 from $47.7 million in fiscal 2012 attributable to the refinancing of our long-term debt, including our issuance of our 4.625% senior notes, our repurchase of our 7.625% senior notes and our repayment of our tranche B term loans. See "—Liquidity and Capital Resources—Debt" below.

        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.

        Income Tax Expense.    Income tax expense decreased $3.2 million to $28.5 million in fiscal 2013 from $31.7 million in fiscal 2012. Our effective tax rate before state deferred tax rate adjustments for both fiscal 2013 and 2012 was 35.7%. Due to changes in state apportionments, our blended statutory state rate change created a deferred tax benefit of $0.3 million (0.4%) and $0.9 million (0.9%) in fiscal 2013 and 2012, respectively. These benefits reduced our effective tax rate for fiscal 2013 and fiscal 2012 to 35.3% and 34.8%, respectively.

    Fiscal 2012 Compared to Fiscal 2011

        Net Sales.    Net sales increased $89.9 million, or 16.5%, to $633.8 million for fiscal 2012 from $543.9 million for fiscal 2011. Net sales of the brands acquired in the Mrs. Dash acquisition, which was completed at the end of November 2011, contributed $81.0 million to the overall increase, and net sales of the brands acquired in the New York Style acquisition, which was completed at the end of October 2012, contributed $8.4 million to the overall increase.

        Net sales for our base business increased $0.5 million, attributable to a net sales price increase of $13.1 million offset by a unit volume decline of $12.6 million. See Note 14, "Net Sales by Brand," to our consolidated financial statements in Part II, Item 8 of this report, for detailed information regarding total net sales by brand for fiscal 2012 and fiscal 2011 for each of our brands that that exceed approximately 2% of our fiscal 2013 net sales and for all other brands in the aggregate. The following

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chart sets forth the most significant net sales increases and decreases for our base business by brand for fiscal 2012 as compared to fiscal 2011:

 
  Base Business
Net Sales Increase
(Decrease)
 
 
  Dollars   Percentage  
 
  (in millions)
   
 

Brand:

             

Ortega

  $ 3.8     2.9 %

Las Palmas

    1.8     5.2 %

Maple Grove Farms of Vermont

    1.2     1.6 %

B&M

    1.0     4.8 %

Ac'cent

    0.9     4.8 %

Bloch & Guggenheimer (B&G)

   
(4.2

)
 
(12.7

)%

Cream of Wheat

    (2.5 )   (3.8 )%

Don Pepino

    (0.8 )   (5.2 )%

Underwood

    (0.7 )   (3.3 )%

All other brands

   
0.0
   
0.0

%
           

Total

  $ 0.5     0.1 %
           
           

        Gross Profit.    Gross profit increased $45.6 million, or 25.6%, to $223.3 million in fiscal 2012 from $177.8 million in fiscal 2011. Gross profit expressed as a percentage of net sales increased 2.5 percentage points to 35.2% for fiscal 2012 from 32.7% in fiscal 2011, attributable to a sales mix shift to higher margin products (primarily due to the Mrs. Dash acquisition) and pricing gains of $13.1 million, partially offset by commodity and packaging cost increases.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased $8.6 million, or 14.9%, to $66.2 million for fiscal 2012 from $57.6 million for fiscal 2011. This increase was primarily due to increases in consumer marketing of $5.4 million, selling expenses of $2.7 million (including $2.0 million of brokerage expenses) and warehousing expenses of $0.6 million, offset by a decrease in all other expenses of $0.1 million. Expressed as a percentage of net sales, our selling, general and administrative expenses decreased 0.2 percentage points to 10.4% in fiscal 2012 from 10.6% in fiscal 2011.

        Amortization Expense.    Amortization expense increased $1.4 million to $8.1 million for fiscal 2012 from $6.7 million in fiscal 2011. The increase was due to the New York Style acquisition.

        Operating Income.    As a result of the foregoing, operating income increased $35.5 million, or 31.3%, to $149.0 million in fiscal 2012 from $113.5 million in fiscal 2011. Operating income expressed as a percentage of net sales increased to 23.5% in fiscal 2012 from 20.9% in fiscal 2011.

        Net Interest Expense.    Net interest expense increased $11.0 million to $47.7 million in fiscal 2012 from $36.7 million in fiscal 2011 attributable to an increase in our indebtedness to finance the Mrs. Dash acquisition, and an additional $2.8 million of amortization of deferred debt financing costs and bond discount relating to the acquisition financing. See "—Liquidity and Capital Resources—Debt" below.

        Loss on Extinguishment of Debt.    Loss on extinguishment of debt for fiscal 2012 includes costs relating to our partial redemption of $101.5 million aggregate principal amount of our 7.625% senior notes, including the repurchase premium and other expenses of $7.7 million, the write-off of deferred debt financing costs of $1.5 million and the write-off of unamortized discount of $0.5 million. Loss on

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extinguishment during fiscal 2012 also includes costs related to the amendment of our credit agreement, including the write-off of deferred debt financing costs of $0.4 million, unamortized discount of $0.1 million and other expenses of $0.2 million. During fiscal 2011, we did not have any loss on extinguishment of debt.

        Income Tax Expense.    Income tax expense increased $5.1 million to $31.7 million in fiscal 2012 from $26.6 million in fiscal 2011. Our effective tax rate before state deferred tax rate adjustments for fiscal 2012 was 35.7% as compared with 36.1% for fiscal 2011. Due to changes in state apportionments, our blended statutory state rate change created a deferred tax benefit of $0.9 million (0.9%) in fiscal 2012. In fiscal 2011 changes in state apportionment laws resulted in a deferred tax benefit of $1.2 million (1.5%). These benefits reduced our effective tax rate for fiscal 2012 and fiscal 2011 to 34.8% and 34.6%, respectively.

Liquidity and Capital Resources

        Our primary liquidity requirements include debt service, capital expenditures and working capital needs. See also, "Dividend Policy" and "Commitments and Contractual Obligations" below. We fund our liquidity requirements, as well as our dividend payments and financing for acquisitions, primarily through cash generated from operations and external sources of financing, including our revolving credit facility.

    Cash Flows

        Net Cash Provided by Operating Activities.    Net cash provided by operating activities increased $14.4 million to $114.9 million in fiscal 2013 from $100.5 million in fiscal 2012. Net cash provided by operating activities for fiscal 2011 was $72.0 million. The increase in net cash provided by operating activities in fiscal 2013 as compared to fiscal 2012 was due to an increase in net income (after non-cash adjustments) of $28.4 million, offset by an increase in cash used for working capital of $14.0 million. The increase in net cash provided by operating activities in fiscal 2012 as compared to fiscal 2011 was due to our payment in January 2011 of $12.4 million, including $1.0 million of accrued interest, to terminate our interest rate swap, which we did not incur in 2012, an increase in net income (after non-cash adjustments) of $16.4 million, primarily attributable to the Mrs. Dash acquisition, the New York Style acquisition and loss on extinguishment of debt attributable to the refinancing of our debt.

        Net Cash Used in Investing Activities.    Net cash used in investing activities was $261.9 million in fiscal 2013 as compared to $73.3 million in fiscal 2012 and $336.6 million for fiscal 2011. During fiscal 2013, our net cash used in investing included $247.3 million for the TrueNorth, Pirate Brands and Rickland Orchards acquisitions and $14.6 million of capital expenditures. During fiscal 2012, our net cash used in investing activities included $62.5 million for the New York Style acquisition, $0.2 million for the acquisition of a business and $10.6 million of capital expenditures. During fiscal 2011, our net cash used in investing activities included $326.0 million for the Mrs. Dash acquisition and $10.6 million of capital expenditures. Our capital expenditures typically include expenditures for building improvements, purchases of manufacturing and computer equipment and capitalized interest. During fiscal 2014, we plan to install additional production lines in our Yadkinville, North Carolina manufacturing facility to improve efficiency and manufacturing capacity. As a result, we expect that our capital expenditures for fiscal 2014 will increase to approximately $20.0 million.

        Net Cash Provided by (Used in) Financing Activities.    Net cash provided by financing activities was $131.8 million and $182.6 million in fiscal 2013 and fiscal 2011, respectively. Net cash used in financing activities was $24.7 million in fiscal 2012. The change of $156.5 million from fiscal 2012 to fiscal 2013 was primarily attributable to the refinancing of our long-term debt in fiscal 2013, including our issuance of our 4.625% senior notes, partially offset by our repurchase of our 7.625% senior notes and our repayment of our tranche B term loans.

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        For fiscal 2013, net cash provided by financing activities includes $700.0 million of proceeds from the issuance of our 4.625% senior notes, $15.0 million of proceeds from borrowings under our revolving credit facility (net of $90.0 million of repayments of revolving loans) and $4.2 million of excess tax benefits from share-based compensation. Net cash provided by financing activities was reduced for the repurchase and redemption of $248.5 million aggregate principal amount of 7.625% senior notes, the repayment of $222.2 million aggregate principal amount of tranche B term loans, including the repurchase premiums and other expenses of $20.2 million and $14.2 of scheduled principal payments of tranche A and tranche B term loans; $62.8 million of dividend payments; $12.6 million for the payment of deferred financing costs and $6.8 million for the payment of tax withholding on behalf of employees for net share settlement of share-based compensation.

        For fiscal 2012, net cash used in financing activities includes $109.5 million in payments for the repurchase and redemption of $101.5 million aggregate principal amount of our 7.625% senior notes, $50.2 million of dividend payments, $10.7 million for the payment of tax withholding on behalf of employees for net share settlement of share-based compensation, $7.3 million of scheduled principal payments of tranche A and tranche B term loans, $5.0 million of principal payments of revolving credit loans and $0.5 million of deferred financing costs. Net cash used in financing activities was partially offset by $120.4 million of net proceeds from our public offering of common stock, $30.0 million of proceeds from borrowings under our revolving credit facility and $8.0 million of excess tax benefits from share-based compensation.

        For fiscal 2011, net cash provided by financing activities includes $372.0 million of net proceeds from borrowings under our credit agreement and $1.0 million of excess tax benefits from share-based compensation. Net cash provided by financing activities was reduced by $130.0 million due to the repayment of all term loan borrowings under our prior credit agreement, $38.2 million of dividend payments, $16.3 million for the payment of deferred financing costs, $3.7 million for the repurchase of common stock and $2.2 million for the payment of tax withholding on behalf of employees for net share settlement of share-based compensation.

        Cash Income Tax Payments.    Based on a number of factors, including our trademark, goodwill and other intangible assets amortization for tax purposes from our prior acquisitions, we realized a significant reduction in cash taxes in fiscal 2013, 2012 and 2011 as compared to our tax expense for financial reporting purposes. We believe that we will realize a benefit to our cash taxes payable from amortization of our trademarks, goodwill and other intangible assets for the taxable years 2014 through 2028. If there is a change in U.S. federal tax policy that reduces any of these available deductions or results in an increase in our corporate tax rate, our cash taxes payable may increase further, which could significantly reduce our future cash and impact our ability to make interest and dividend payments.

    Dividend Policy

        For a discussion of our dividend policy, see the information set forth under the heading "Dividend Policy" in Part II, Item 5 of this report.

    Acquisitions

        Our liquidity and capital resources have been significantly impacted by acquisitions and may be impacted in the foreseeable future by additional acquisitions. As discussed elsewhere in this report, as part of our growth strategy we plan to expand our brand portfolio with disciplined acquisitions of complementary brands. We have historically financed acquisitions with borrowings and cash flows from operating activities. As a result, our interest expense has in the past increased as a result of additional indebtedness we have incurred in connection with acquisitions and will increase with any additional

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indebtedness we may incur to finance future acquisitions. The impact of future acquisitions, whether financed with additional indebtedness or otherwise, may have a material impact on our liquidity.

    Debt

        Senior Secured Credit Agreement.    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.

        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. The credit agreement is secured by substantially all of our and our domestic subsidiaries' assets except our and our domestic subsidiaries' real property.

        The tranche A term loans are subject to principal amortization. $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.

        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%.

        On July 3, 2013, we amended the credit agreement to, among other things, increase the revolving credit facility commitment of our lenders from $200 million to $300 million and increase the maximum permissible consolidated leverage ratio. For further information regarding our senior secured credit agreement, including a description of optional and mandatory prepayment terms, financial and restrictive covenants, and the July 2013 amendment to the credit agreement, see Note 6, "Long-Term Debt," to our consolidated financial statements in Part II, Item 8 of this report.

        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. 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.

        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 permitted or required by the terms of the indenture governing the 4.625% senior notes as described in Note 6 to our consolidated financial statements. We may also, from time to time, seek to retire the 4.625% senior notes through cash repurchases of the 4.625% senior notes or exchanges of the 4.625% senior notes for equity securities or both, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. See Note 6, "Long-Term Debt," to our consolidated financial statements for a more detailed description of the 4.625% senior notes.

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        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.

Future Capital Needs

        On December 28, 2013, our total long-term debt of $870.9 million, net of our cash and cash equivalents of $4.1 million, was $866.8 million. Stockholders' equity as of that date was $378.4 million.

        Our ability to generate sufficient cash to fund our operations depends generally on our results of operations and the availability of financing. Our management believes that our cash and cash equivalents on hand, cash flow from operating activities and available borrowing capacity under our revolving credit facility will be sufficient for the foreseeable future to fund operations, meet debt service requirements, fund capital expenditures, make future acquisitions, if any, and pay our anticipated quarterly dividends on our common stock.

Seasonality

        Sales of a number of our products tend to be seasonal and may be influenced by holidays, changes in seasons or other annual events. In the aggregate, however, sales of our products are not heavily weighted to any particular quarter due to the offsetting nature of demands for our diversified product portfolio. Sales during the fourth quarter are generally greater than those of the preceding three quarters.

        We purchase most of the produce used to make our shelf-stable pickles, relishes, peppers, tomatoes and other related specialty items during the months of July through October, and we generally purchase substantially all of our maple syrup requirements during the months of April through August. Consequently, our liquidity needs are greatest during these periods.

Inflation

        We are currently locked into our supply and prices for a majority of our most significant commodities (excluding, among others, maple syrup) through 2014 at a cost decrease of less than 1% of cost of goods sold and we will continue to manage this risk by entering into short-term supply contracts and advance commodities purchase agreements from time to time, and, if necessary, by raising prices. During fiscal 2013, 2012 and 2011, we had cost increases (net of cost savings) for raw materials of less than 2% of cost of goods sold. To the extent we are unable to avoid or offset present or future cost increases by locking in our costs, implementing cost saving measures or increasing prices to our customers, our operating results could be materially adversely affected. In addition, should input costs begin to further decline, customers may look for price reductions in situations where we have locked into purchases at higher costs.

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Contingencies

        See Note 12, "Commitments and Contingencies," to our consolidated financial statements in Part II, Item 8 of this report.

Recent Accounting Pronouncements

        See Note 2(s), "Summary of Significant Accounting Policies—Recently Issued Accounting Standards," to our consolidated financial statements in Part II, Item 8 of this report.

Off-balance Sheet Arrangements

        As of December 28, 2013, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Commitments and Contractual Obligations

        Our contractual obligations and commitments principally include obligations associated with our outstanding indebtedness, future minimum operating lease obligations, future purchase obligations and future pension obligations as set forth in the following table as of December 28, 2013.

 
  Payments Due by Period  
Contractual Obligations:
  Total   Fiscal
2014
  Fiscal 2015
and 2016
  Fiscal 2017
and 2018
  Fiscal 2019
and Thereafter
 
 
  (In thousands)
 

Long-term debt—principal

  $ 871,250   $ 26,250   $ 145,000   $   $ 700,000  

Long-term debt—interest(1)

    257,446     39,370     75,086     64,750     78,240  

Operating leases

    13,507     4,309     6,639     1,657     902  

Purchase obligations(2)

    71,033     41,454     20,939     5,760     2,880  

Pension obligations(3)

    1,750     1,750              
                       

Total

  $ 1,214,986   $ 113,133   $ 247,664   $ 72,167   $ 782,022  
                       
                       

(1)
Expected interest payments on long-term debt are based on principal amounts outstanding, scheduled maturity dates and interest rates at December 28, 2013. See Note 6, "Long-Term Debt," to our consolidated financial statements in Part II, Item 8 for further information as to our long-term debt interest obligations.

(2)
For the purposes of this table, purchase obligations means agreements to purchase goods or services (such as raw materials, commodities, packaging, other materials and supplies and co-manufacturing arrangements) that are enforceable and legally binding on B&G Foods and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The purchase obligations in the above table do not represent our entire expected future purchases for goods and services, which are significantly higher than the amounts set forth above. The table does not include purchase obligations under contracts that may be cancelled by B&G Foods without material penalty. Any amounts reflected on our consolidated balance sheet as accounts payable and accrued liabilities are excluded from the purchase obligations set forth in the table above. Penalties, if any, related to molds and equipment based upon failure to meet minimum volume requirements are also excluded from the table because we are unable to determine whether such penalties will be incurred and, if incurred, over what time period they will be paid.

(3)
We expect to make $1.8 million of defined pension benefit contributions during fiscal 2014. We are unable to reliably estimate the timing of pension contributions and contribution amounts beyond fiscal 2014.

Forward-Looking Statements

        This report includes forward-looking statements, including without limitation the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations." The words "believes," "anticipates," "plans," "expects," "intends," "estimates," "projects" and similar expressions are intended to identify forward-looking statements. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and

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achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by any forward-looking statements. We believe important factors that could cause actual results to differ materially from our expectations include the following:

    our substantial leverage;

    the effects of rising costs for our raw materials, packaging and ingredients;

    crude oil prices and their impact on distribution, packaging and energy costs;

    our ability to successfully implement sales price increases and cost saving measures to offset any cost increases;

    intense competition, changes in consumer preferences, demand for our products and local economic and market conditions;

    our continued ability to promote brand equity successfully, to anticipate and respond to new consumer trends, to develop new products and markets, to broaden brand portfolios in order to compete effectively with lower priced products and in markets that are consolidating at the retail and manufacturing levels and to improve productivity;

    the risks associated with the expansion of our business;

    our possible inability to integrate any businesses we acquire;

    our ability to access the credit markets and our borrowing costs and credit ratings, which may be influenced by credit markets generally and the credit ratings of our competitors;

    unanticipated expenses, including, without limitation, litigation or legal settlement expenses;

    the effects of currency movements of the Canadian dollar as compared to the U.S. dollar;

    other factors that affect the food industry generally, including:

    recalls if products become adulterated or misbranded, liability if product consumption causes injury, ingredient disclosure and labeling laws and regulations and the possibility that consumers could lose confidence in the safety and quality of certain food products;

    competitors' pricing practices and promotional spending levels;

    fluctuations in the level of our customers' inventories and credit and other business risks related to our customers operating in a challenging economic and competitive environment; and

    the risks associated with third-party suppliers and co-packers, including the risk that any failure by one or more of our third-party suppliers or co-packers to comply with food safety or other laws and regulations may disrupt our supply of raw materials or certain finished goods products or injure our reputation; and

    other factors discussed elsewhere in this report, including under Item 1A, "Risk Factors," and in our other public filings with the SEC.

        Developments in any of these areas could cause our results to differ materially from results that have been or may be projected by or on our behalf.

        All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.

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        We caution that the foregoing list of important factors is not exclusive. We urge investors not to unduly rely on forward-looking statements contained in this report.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

        Our principal market risks are exposure to changes in commodity prices, interest rates on borrowings and foreign currency exchange rates and market fluctuation risks related to our defined benefit pension plans.

        Commodity Prices and Inflation.    The information under the heading "Inflation" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" is incorporated herein by reference.

        Interest Rate Risk.    In the normal course of operations, we are exposed to market risks relating to our long-term debt arising from adverse changes in interest rates. Market risk is defined for these purposes as the potential change in the fair value of a financial asset or liability resulting from an adverse movement in interest rates.

        Changes in interest rates impact our fixed and variable rate debt differently. For fixed rate debt, a change in interest rates will only impact the fair value of the debt, whereas for variable rate debt, a change in the interest rates will impact interest expense and cash flows. At December 28, 2013, we had $700.0 million of fixed rate debt and $171.3 million of variable rate debt.

        Based upon our principal amount of long-term debt outstanding at December 28, 2013, a hypothetical 1.0% increase or decrease in interest rates would have affected our annual interest expense by approximately $1.7 million.

        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.

        Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts payable, accrued expenses and dividends payable are reflected on our consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these instruments.

        For more information, see Note 6, "Long-Term Debt," to our consolidated financial statements in Part II, Item 8 of this report.

        Foreign Currency Risk.    Our foreign sales are primarily to customers in Canada. Our sales to Canada are generally denominated in Canadian dollars and our sales for export to other countries are

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generally denominated in U.S. dollars. During fiscal 2013, 2012 and 2011, our net sales to foreign countries represented approximately 3.2%, 2.7% and less than 1.0%, respectively, of our total net sales. We also purchase certain raw materials from foreign suppliers. For example, we purchase the majority of our maple syrup requirements from suppliers in Québec, Canada. These purchases are made in Canadian dollars. A weakening of the U.S. dollar in relation to the Canadian dollar would significantly increase our future costs relating to the production of our maple syrup products to the extent we have not purchased Canadian dollars or otherwise entered into a currency hedging arrangement in advance of any such weakening of the U.S. dollar. Our purchases of raw materials from other foreign suppliers are generally denominated in U.S. dollars.

        As a result, certain revenues and expenses have been, and are expected to be, subject to the effect of foreign currency fluctuations, and these fluctuations may have an adverse impact on operating results.

        Market Fluctuation Risks Relating to our Defined Benefit Pension Plans.    See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies; Use of Estimates—Pension Expenses" and Note 11, "Pension Benefits," to our consolidated financial statements in Part II, Item 8 of this report for a discussion of the exposure of our defined benefit pension plan assets to risks related to market fluctuations.

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Item 8.    Financial Statements and Supplementary Data.

        The consolidated balance sheets at December 28, 2013 and December 29, 2012 and the consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows for fiscal 2013, 2012 and 2011 and related notes are set forth below.

 
  Page

Reports of Independent Registered Public Accounting Firm

  49

Consolidated Balance Sheets as of December 28, 2013 and December 29, 2012

  51

Consolidated Statements of Operations for the years ended December 28, 2013, December 29, 2012 and December 31, 2011

  52

Consolidated Statements of Comprehensive Income for the years ended December 28, 2013, December 29, 2012 and December 31, 2011

  53

Consolidated Statements of Changes in Stockholders' Equity for the years ended December 28, 2013, December 29, 2012 and December 31, 2011

  54

Consolidated Statements of Cash Flows for the years ended December 28, 2013, December 29, 2012 and December 31, 2011

  55

Notes to Consolidated Financial Statements

  56

Schedule II—Schedule of Valuation and Qualifying Accounts

  87

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
B&G Foods, Inc.:

        We have audited the accompanying consolidated balance sheets of B&G Foods, Inc. and subsidiaries as of December 28, 2013 and December 29, 2012, and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows for the years ended December 28, 2013, December 29, 2012 and December 31, 2011. In connection with our audits of the consolidated financial statements, we also have audited the schedule of valuation and qualifying accounts. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of B&G Foods, Inc. and subsidiaries as of December 28, 2013 and December 29, 2012, and the results of their operations and their cash flows for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), B&G Foods, Inc.'s internal control over financial reporting as of December 28, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2014 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Short Hills, New Jersey
February 26, 2014

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
B&G Foods, Inc.:

        We have audited B&G Foods, Inc.'s internal control over financial reporting as of December 28, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). B&G Foods, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's Report on Internal Control Over Financial Reporting." Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion B&G Foods, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 28, 2013, based on criteria established in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of B&G Foods, Inc. and subsidiaries as of December 28, 2013 and December 29, 2012, and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, and our report dated February 26, 2014 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Short Hills, New Jersey
February 26, 2014

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B&G FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share data)

 
  December 28,
2013
  December 29,
2012
 

Assets

             

Current assets:

             

Cash and cash equivalents

  $ 4,107   $ 19,219  

Trade accounts receivable, less allowance for doubtful accounts and discounts of $1,081 and $831 in 2013 and 2012, respectively

    62,763     43,357  

Inventories

    101,251     89,757  

Prepaid expenses and other current assets

    8,079     5,326  

Income tax receivable

    3,422     4,262  

Deferred income taxes

    2,115     2,175  
           

Total current assets

    181,737     164,096  

Property, plant and equipment, net

   
110,374
   
104,746
 

Goodwill

    319,292     267,940  

Other intangibles, net

    844,141     637,196  

Other assets

    28,799     17,990  
           

Total assets

  $ 1,484,343   $ 1,191,968  
           
           

Liabilities and Stockholders' Equity

   
 
   
 
 

Current liabilities:

             

Trade accounts payable

  $ 42,638   $ 25,050  

Accrued expenses

    19,189     23,610  

Current portion of long-term debt

    26,250     40,375  

Dividends payable

    17,637     15,243  
           

Total current liabilities

    105,714     104,278  

Long-term debt

   
844,635
   
597,314
 

Other liabilities

    8,692     8,038  

Deferred income taxes

    146,939     121,163  
           

Total liabilities

    1,105,980     830,793  

Commitments and contingencies (Note 12)

             

Stockholders' equity:

   
 
   
 
 

Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding

         

Common stock, $0.01 par value per share. Authorized 125,000,000 shares; 53,445,910 and 52,560,765 issued and outstanding as of December 28, 2013 and December 29, 2012, respectively

    534     526  

Additional paid-in capital

    183,113     226,900  

Accumulated other comprehensive loss

    (2,471 )   (11,095 )

Retained earnings

    197,187     144,844  
           

Total stockholders' equity

    378,363     361,175  
           

Total liabilities and stockholders' equity

  $ 1,484,343   $ 1,191,968  
           
           

   

See accompanying Notes to Consolidated Financial Statements.

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B&G FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share data)

 
  Year Ended  
 
  December 28,
2013
  December 29,
2012
  December 31,
2011
 

Net sales

  $ 724,973   $ 633,812   $ 543,866  

Cost of goods sold

    482,050     410,469     366,090  
               

Gross profit

    242,923     223,343     177,776  

Operating expenses:

   
 
   
 
   
 
 

Selling, general and administrative expenses

    79,043     66,212     57,618  

Amortization expense

    9,884     8,126     6,679  
               

Operating income

    153,996     149,005     113,479  

Other expenses:

   
 
   
 
   
 
 

Interest expense, net

    41,813     47,660     36,675  

Loss on extinguishment of debt

    31,291     10,431      
               

Income before income tax expense

    80,892     90,914     76,804  

Income tax expense

    28,549     31,654     26,561  
               

Net income

  $ 52,343   $ 59,260   $ 50,243  
               
               

Earnings per share:

                   

Basic

  $ 0.99   $ 1.20   $ 1.05  

Diluted

  $ 0.98   $ 1.20   $ 1.04  

Cash dividends declared per share

  $ 1.23   $ 1.10   $ 0.86  

   

See accompanying Notes to Consolidated Financial Statements.

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B&G FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

 
  Year Ended  
 
  December 28,
2013
  December 29,
2012
  December 31,
2011
 

Net income

  $ 52,343   $ 59,260   $ 50,243  

Other comprehensive income:

   
 
   
 
   
 
 

Foreign currency translation

    (72 )   17     (69 )

Change in pension benefit, net of taxes

    8,696     (682 )   (5,655 )

Reclassification to interest expense, net of taxes

            2,296  
               

Other comprehensive income (loss)

    8,624     (665 )   (3,428 )
               

Comprehensive income

  $ 60,967   $ 58,595   $ 46,815  
               
               

   

See accompanying Notes to Consolidated Financial Statements.

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B&G FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity

(In thousands, except share and per share data)

 
  Common Stock    
  Accumulated
Other
Comprehensive
Loss
   
   
 
 
  Additional
Paid-in
Capital
  Retained
Earnings
  Total
Stockholders'
Equity
 
 
  Shares   Amount  

Balance at January 1, 2011

    47,639,924   $ 476   $ 201,770   $ (7,002 ) $ 35,341   $ 230,585  

Foreign currency translation

                (69 )       (69 )

Reclassification to interest expense (net of $1,373 of taxes)

                2,296         2,296  

Change in pension benefit (net of $3,261 of taxes)

                (5,655 )       (5,655 )

Net income

                    50,243     50,243  

Issuance of common stock for share-based compensation

    278,109     3     (2,239 )           (2,236 )

Share-based compensation

            4,098             4,098  

Repurchase of common stock

    (217,901 )   (2 )   (3,650 )           (3,652 )

Tax benefit from issuance of common stock for share-based compensation

            1,047             1,047  

Dividends declared on common stock, $0.86 per share

            (41,110 )           (41,110 )
                           

Balance at December 31, 2011

    47,700,132   $ 477   $ 159,916   $ (10,430 ) $ 85,584   $ 235,547  

Foreign currency translation

                17         17  

Change in pension benefit (net of $317 of taxes)

                (682 )       (682 )

Net income

                    59,260     59,260  

Share-based compensation

            3,777             3,777  

Issuance of common stock for share-based compensation

    687,093     7     (10,704 )           (10,697 )

Issuance of common stock

    4,173,540     42     120,313             120,355  

Tax benefit from issuance of common stock for share-based compensation

            8,031             8,031  

Dividends declared on common stock, $1.10 per share

            (54,433 )           (54,433 )
                           

Balance at December 29, 2012

    52,560,765   $ 526   $ 226,900   $ (11,095 ) $ 144,844   $ 361,175  

Foreign currency translation

                (72 )       (72 )

Change in pension benefit (net of $5,036 of taxes)

                8,696         8,696  

Net income

                    52,343     52,343  

Share-based compensation

            3,935             3,935  

Issuance of common stock for share-based compensation

    312,599     3     (6,815 )           (6,812 )

Issuance of common stock

    572,546     5     20,119             20,124  

Tax benefit from issuance of common stock for share-based compensation

            4,192             4,192  

Dividends declared on common stock, $1.23 per share

            (65,218 )           (65,218 )
                           

Balance at December 28, 2013

    53,445,910   $ 534   $ 183,113   $ (2,471 ) $ 197,187   $ 378,363  
                           
                           

See accompanying Notes to Consolidated Financial Statements.

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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.

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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

    Organization and 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.

    Fiscal Year

        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.

    Business and Credit Concentrations

        Our exposure to credit loss in the event of non-payment of accounts receivable by customers is estimated in the amount of the allowance for doubtful accounts. We perform ongoing credit evaluations of our customers' financial condition. Our top ten customers accounted for approximately 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

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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.

    Acquisitions

        We have accounted for each of the following acquisitions using the acquisition method of accounting and, accordingly, have included the assets acquired, liabilities assumed and results of operations in our consolidated financial statements from the respective dates of acquisition. The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill. 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

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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:

       

Trademarks—amortizable intangible assets

  $ 35,000  

Goodwill

    21,244  

Customer relationship intangibles—amortizable 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:

       

Trademarks—unamortizable intangible assets

  $ 152,800  

Goodwill

    29,782  

Customer relationship intangibles—amortizable 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."

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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 intangibles—amortizable intangible assets

    5,100  

Trademarks—unamortizable 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 intangibles—amortizable intangible assets

    30,800  

Trademarks—unamortizable intangible assets

    278,400  
       

Total

  $ 326,000  
       
       

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Notes to Consolidated Financial Statements (Continued)

December 28, 2013, December 29, 2012 and December 31, 2011

(1) Nature of Operations (Continued)

    Unaudited Pro Forma Summary of Operations

        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

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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.

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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

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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.

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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

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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."

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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.

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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