0001558370-21-014587.txt : 20211104 0001558370-21-014587.hdr.sgml : 20211104 20211104160915 ACCESSION NUMBER: 0001558370-21-014587 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 86 CONFORMED PERIOD OF REPORT: 20211002 FILED AS OF DATE: 20211104 DATE AS OF CHANGE: 20211104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: B&G Foods, Inc. CENTRAL INDEX KEY: 0001278027 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 133918742 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32316 FILM NUMBER: 211379987 BUSINESS ADDRESS: STREET 1: FOUR GATEHALL DRIVE STREET 2: SUITE 110 CITY: PARSIPPANY STATE: NJ ZIP: 07054 BUSINESS PHONE: 9734016500 MAIL ADDRESS: STREET 1: FOUR GATEHALL DRIVE STREET 2: SUITE 110 CITY: PARSIPPANY STATE: NJ ZIP: 07054 FORMER COMPANY: FORMER CONFORMED NAME: B&G FOODS HOLDINGS CORP DATE OF NAME CHANGE: 20040129 10-Q 1 bgs-20211002x10q.htm QUARTERLY REPORT ON FORM 10-Q
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As filed with the Securities and Exchange Commission on November 4, 2021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended October 2, 2021

or

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

For the transition period from                to                .

Commission file number 001-32316

B&G FOODS, INC.

(Exact name of Registrant as specified in its charter)

Delaware

13-3918742

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

Four Gatehall Drive, Parsippany, New Jersey

07054

(Address of principal executive offices)

(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

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

BGS

New York Stock Exchange

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  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

As of October 29, 2021, the registrant had 64,896,909 shares of common stock, par value $0.01 per share, issued and outstanding.

B&G Foods, Inc. and Subsidiaries

Index

r

Page No.

PART I FINANCIAL INFORMATION

1

Item 1. Financial Statements (Unaudited)

1

Consolidated Balance Sheets

1

Consolidated Statements of Operations

2

Consolidated Statements of Comprehensive Income

3

Consolidated Statements of Changes in Stockholders’ Equity

4

Consolidated Statements of Cash Flows

6

Notes to Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk

44

Item 4. Controls and Procedures

45

PART II OTHER INFORMATION

46

Item 1. Legal Proceedings

46

Item 1A. Risk Factors

46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3. Defaults Upon Senior Securities

47

Item 4. Mine Safety Disclosures

47

Item 5. Other Information

47

Item 6. Exhibits

47

SIGNATURE

48

- i -

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,” “belief,” “expects,” “projects,” “intends,” “anticipates,” “assumes,” “could,” “should,” “estimates,” “potential,” “seek,” “predict,” “may,” “will” or “plans” and similar references to future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by any forward-looking statements. We believe important factors that could cause actual results to differ materially from our expectations include the following:

the ultimate impact the COVID-19 pandemic will have on our business, which will depend on many factors, including, without limitation,
othe ability of our company and our supply chain partners to continue to operate manufacturing facilities, distribution centers and other work locations without material disruption, and to procure ingredients, packaging and other raw materials when needed despite disruptions in the supply chain or labor shortages;
othe duration of social distancing and stay-at-home and work-from-home policies and recommendations, and whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America; and
othe extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits;
our substantial leverage;
the effects of rising costs for our raw materials, packaging, ingredients and distribution;
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 identify new acquisitions or to integrate recent or future acquisitions, including the Crisco acquisition, or our failure to realize anticipated revenue enhancements, cost savings or other synergies from recent or future acquisitions;
our ability to successfully complete the integration of recent or future acquisitions into our enterprise resource planning (ERP) system;
tax reform and legislation, including the effects of the U.S. Tax Cuts and Jobs Act and the U.S. CARES Act;
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 and the Mexican peso as compared to the U.S. dollar;
the effects of international trade disputes, tariffs, quotas, and other import or export restrictions on our international procurement, sales and operations;

- ii -

future impairments of our goodwill and intangible assets;
our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;
our sustainability initiatives and changes to environmental laws and regulations;
our ability to successfully transition the operations of our Portland, Maine manufacturing facility to third-party co-manufacturing facilities and existing B&G Foods manufacturing facilities without significant disruption in production or customer service, and our ability to achieve anticipated productivity improvements and cost savings;
other factors that affect the food industry generally, including:
orecalls 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;
ocompetitors’ pricing practices and promotional spending levels;
ofluctuations 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
othe 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 and in our other public filings with the Securities and Exchange Commission (SEC), including under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K filed with the SEC on March 2, 2021, and Part, II, Item 1A, “Risk Factors,” in this report.

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

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

We caution that the foregoing list of important factors is not exclusive. There may be other factors that may cause our actual results to differ materially from the forward-looking statements in this report, including factors disclosed under the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties. We urge investors not to unduly rely on forward-looking statements contained in this report.

- iii -

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

B&G Foods, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

October 2,

    

January 2,

2021

    

2021

Assets

Current assets:

Cash and cash equivalents

$

27,062

$

52,182

Trade accounts receivable, net

 

179,655

 

132,935

Inventories

 

670,305

 

492,804

Assets held for sale

3,262

Prepaid expenses and other current assets

 

45,153

 

43,619

Income tax receivable

 

7,341

 

15,761

Total current assets

 

932,778

 

737,301

Property, plant and equipment, net of accumulated depreciation of $357,658 and $314,359 as of October 2, 2021 and January 2, 2021, respectively

 

346,537

 

371,854

Operating lease right-of-use assets

54,700

32,216

Goodwill

 

644,869

 

644,747

Other intangible assets, net

 

1,955,597

 

1,971,326

Other assets

 

6,240

 

5,948

Deferred income taxes

 

5,417

 

4,178

Total assets

$

3,946,138

$

3,767,570

Liabilities and Stockholders’ Equity

Current liabilities:

Trade accounts payable

$

202,675

$

126,537

Accrued expenses

 

54,437

 

77,460

Current portion of operating lease liabilities

11,060

11,034

Income tax payable

463

101

Dividends payable

 

30,826

 

30,520

Total current liabilities

 

299,461

 

245,652

Long-term debt

 

2,406,830

 

2,334,086

Deferred income taxes

 

309,698

 

293,121

Long-term operating lease liabilities, net of current portion

46,535

23,959

Other liabilities

 

52,992

 

38,875

Total liabilities

 

3,115,516

 

2,935,693

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; 64,896,909 and 64,252,859 shares issued and outstanding as of October 2, 2021 and January 2, 2021, respectively

 

649

 

643

Additional paid-in capital

 

 

Accumulated other comprehensive loss

 

(35,405)

 

(35,594)

Retained earnings

 

865,378

 

866,828

Total stockholders’ equity

 

830,622

 

831,877

Total liabilities and stockholders’ equity

$

3,946,138

$

3,767,570

See Notes to Consolidated Financial Statements.

- 1 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Thirteen Weeks Ended

Fourteen Weeks Ended

Thirty-nine Weeks Ended

Forty Weeks Ended

October 2,

    

October 3,

    

October 2,

    

October 3,

2021

    

2020

    

2021

    

2020

Net sales

$

514,965

$

495,759

$

1,484,474

$

1,457,668

Cost of goods sold

 

409,300

 

359,733

 

1,149,425

 

1,082,625

Gross profit

 

105,665

 

136,026

 

335,049

 

375,043

Operating expenses:

Selling, general and administrative expenses

 

46,409

 

43,395

 

143,864

 

127,715

Amortization expense

 

5,396

 

4,735

 

16,231

 

14,197

Operating income

 

53,860

 

87,896

 

174,954

 

233,131

Other income and expenses:

Interest expense, net

 

26,630

 

26,430

 

80,312

 

77,318

Other income

(1,130)

(702)

(3,338)

(1,856)

Income before income tax expense

 

28,360

 

62,168

 

97,980

 

157,669

Income tax expense

 

7,613

 

15,355

 

25,804

 

37,853

Net income

$

20,747

$

46,813

$

72,176

$

119,816

Weighted average shares outstanding:

Basic

64,845

64,217

64,735

64,133

Diluted

65,493

64,801

65,371

64,434

Earnings per share:

Basic

$

0.32

$

0.73

$

1.11

$

1.87

Diluted

$

0.32

$

0.72

$

1.10

$

1.86

Cash dividends declared per share

$

0.475

$

0.475

$

1.425

$

1.425

See Notes to Consolidated Financial Statements.

- 2 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

Thirteen Weeks Ended

Fourteen Weeks Ended

Thirty-nine Weeks Ended

Forty Weeks Ended

    

October 2,

    

October 3,

    

October 2,

    

October 3,

    

2021

    

2020

    

2021

    

2020

Net income

$

20,747

$

46,813

$

72,176

$

119,816

Other comprehensive income (loss):

Foreign currency translation adjustments

 

(4,153)

 

4,660

 

(753)

 

(8,018)

Amortization of unrecognized prior service cost and pension deferrals, net of tax

 

304

 

220

 

942

 

735

Other comprehensive income (loss)

 

(3,849)

 

4,880

 

189

 

(7,283)

Comprehensive income

$

16,898

$

51,693

$

72,365

$

112,533

See Notes to Consolidated Financial Statements.

- 3 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of October 2, 2021

(In thousands, except share and per share data)

(Unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Earnings

    

Equity

Balance at January 2, 2021

 

64,252,859

$

643

$

$

(35,594)

$

866,828

$

831,877

Foreign currency translation

 

(496)

 

(496)

Change in pension benefit (net of $108 of income taxes)

 

334

 

334

Net income

 

26,878

 

26,878

Share-based compensation

 

432

 

432

Net issuance of common stock for share-based compensation

 

82,214

1

(1,087)

 

(1,086)

Cancellation of restricted stock for tax withholding upon vesting

(21,462)

(620)

(620)

Stock options exercised

438,900

4

14,048

14,052

Dividends declared on common stock, $0.475 per share

 

(12,773)

(17,984)

 

(30,757)

Balance at April 3, 2021

64,752,511

$

648

$

$

(35,756)

$

875,722

$

840,614

Foreign currency translation

 

3,896

 

3,896

Change in pension benefit (net of $99 of income taxes)

 

304

 

304

Net income

 

24,551

 

24,551

Share-based compensation

 

2,305

 

2,305

Net issuance of common stock for share-based compensation

 

46,377

 

Cancellation of restricted stock for tax withholding upon vesting

(66)

(3)

 

(3)

Cancellation of restricted stock upon forfeiture

(956)

 

Stock options exercised

27,212

730

730

Dividends declared on common stock, $0.475 per share

 

(3,032)

(27,760)

 

(30,792)

Balance at July 3, 2021

64,825,078

$

648

$

$

(31,556)

$

872,513

$

841,605

Foreign currency translation

 

(4,153)

 

(4,153)

Change in pension benefit (net of $99 of income taxes)

 

304

 

304

Net income

 

20,747

 

20,747

Share-based compensation

 

804

 

804

Net issuance of common stock

70,791

1

2,111

2,112

Stock options exercised

1,040

29

29

Dividends declared on common stock, $0.475 per share

 

(2,944)

(27,882)

 

(30,826)

Balance at October 2, 2021

 

64,896,909

$

649

$

$

(35,405)

$

865,378

$

830,622

- 4 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of October 3, 2020

(In thousands, except share and per share data)

(Unaudited)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Retained

Stockholders’

    

Shares

    

Amount

    

Capital

    

Loss

    

Earnings

    

Equity

Balance at December 28, 2019

 

64,044,649

$

640

$

$

(31,894)

$

843,796

$

812,542

Foreign currency translation

 

(14,349)

 

(14,349)

Change in pension benefit (net of $104 of income taxes)

 

296

 

296

Net income

 

28,092

 

28,092

Share-based compensation

 

163

 

163

Net issuance of common stock for share-based compensation

 

75,848

1

(1)

 

Dividends declared on common stock, $0.475 per share

 

(30,457)

 

(30,457)

Balance at March 28, 2020

64,120,497

$

641

$

$

(45,947)

$

841,593

$

796,287

Foreign currency translation

 

1,671

 

1,671

Change in pension benefit (net of $77 of income taxes)

 

219

 

219

Net income

 

44,911

 

44,911

Share-based compensation

 

4,601

 

4,601

Net issuance of common stock for share-based compensation

 

39,956

1

(65)

 

(64)

Dividends declared on common stock, $0.475 per share

 

(30,476)

 

(30,476)

Balance at June 27, 2020

64,160,453

$

642

$

$

(44,057)

$

860,564

$

817,149

Foreign currency translation

 

4,660

 

4,660

Change in pension benefit (net of $77 of income taxes)

 

220

 

220

Net income

 

46,813

 

46,813

Share-based compensation

 

2,640

 

2,640

Net issuance of common stock for share-based compensation

 

4,115

(5)

 

(5)

Stock options exercised

88,291

1

2,418

2,419

Dividends declared on common stock, $0.475 per share

 

(30,520)

 

(30,520)

Balance at October 3, 2020

 

64,252,859

$

643

$

$

(39,177)

$

881,910

$

843,376

See Notes to Consolidated Financial Statements.

- 5 -

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Thirty-nine Weeks Ended

Forty Weeks Ended

    

October 2,

    

October 3,

    

2021

    

2020

Cash flows from operating activities:

Net income

$

72,176

$

119,816

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

61,257

 

46,508

Amortization of operating lease right-of-use assets

9,901

8,937

Amortization of deferred debt financing costs and bond discount/premium

 

3,444

 

3,764

Deferred income taxes

 

14,894

 

19,868

Net gain on sales and disposals of property, plant and equipment

(61)

Share-based compensation expense

 

3,228

 

7,061

Changes in assets and liabilities, net of effects of businesses acquired:

Trade accounts receivable

 

(46,702)

 

(20,558)

Inventories

 

(177,785)

 

(7,390)

Prepaid expenses and other current assets

 

(1,559)

 

(12,508)

Income tax receivable/payable

 

8,705

 

12,612

Other assets

 

(746)

 

(175)

Trade accounts payable

 

83,530

 

71,210

Accrued expenses

 

(32,921)

 

(16,503)

Other liabilities

 

15,364

 

(278)

Net cash provided by operating activities

 

12,786

 

232,303

Cash flows from investing activities:

Capital expenditures

 

(31,679)

 

(16,488)

Proceeds and deposits received from asset sales and assets held for sale

632

304

Payments for acquisition of businesses, net of cash acquired

 

 

(3,227)

Net cash used in investing activities

 

(31,047)

 

(19,411)

Cash flows from financing activities:

Repayments of long-term debt

 

 

(78,375)

Repayments of borrowings under revolving credit facility

 

(85,000)

 

(160,000)

Borrowings under revolving credit facility

 

155,000

 

160,000

Proceeds from issuance of common stock, net

 

2,112

 

Dividends paid

 

(92,069)

 

(91,354)

Proceeds from exercise of stock options

14,811

2,419

Payments of tax withholding on behalf of employees for net share settlement of share-based compensation

 

(1,708)

 

(69)

Payments of debt financing costs

(276)

Net cash used in financing activities

 

(7,130)

 

(167,379)

Effect of exchange rate fluctuations on cash and cash equivalents

 

271

 

139

Net (decrease) increase in cash and cash equivalents

 

(25,120)

 

45,652

Cash and cash equivalents at beginning of period

 

52,182

 

11,315

Cash and cash equivalents at end of period

$

27,062

$

56,967

Supplemental disclosures of cash flow information:

Cash interest payments

$

95,771

$

92,941

Cash income tax payments

$

2,155

$

5,323

Non-cash investing and financing transactions:

Dividends declared and not yet paid

$

30,826

$

30,520

Accruals related to purchases of property, plant and equipment

$

1,803

$

2,505

Right-of-use assets obtained in exchange for new operating lease liabilities

$

32,202

$

1,475

See Notes to Consolidated Financial Statements.

- 6 -

Table of Contents

B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

(1)

Nature of Operations

B&G Foods, Inc. is a holding company whose principal assets are the shares of capital stock of its subsidiaries. Unless the context requires otherwise, references in this report to “B&G Foods,” “our company,” “we,” “us” and “our” refer to B&G Foods, Inc. and its subsidiaries. Our financial statements are presented on a consolidated basis.

We operate in a single industry segment and manufacture, sell and distribute a diverse portfolio of high-quality shelf-stable and frozen foods across the United States, Canada and Puerto Rico. Our products include frozen and canned vegetables, vegetable, canola and other cooking oils, vegetable shortening, cooking sprays, oatmeal and other hot cereals, fruit spreads, canned meats and beans, bagel chips, spices, seasonings, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, pizza crusts, Mexican-style sauces, dry soups, taco shells and kits, salsas, pickles, peppers, tomato-based products, cookies and crackers, baking powder, baking soda, corn starch, nut clusters and other specialty products. Our products are marketed under many recognized brands, including Ac’cent, B&G, B&M, Back to Nature, Baker’s Joy, Bear Creek Country Kitchens, Brer Rabbit, Canoleo, Cary’s, Clabber Girl, Cream of Rice, Cream of Wheat, Crisco, Dash, Davis, Devonsheer, Don Pepino, Durkee, Emeril’s, Farmwise, Grandma’s Molasses, Green Giant, Joan of Arc, Las Palmas, Le Sueur, MacDonald’s, Mama Mary’s, Maple Grove Farms of Vermont, McCann’s, Molly McButter, New York Flatbreads, New York Style, Old London, Ortega, Polaner, Red Devil, Regina, Rumford, Sa-són, Sclafani, SnackWell’s, Spice Islands, Spring Tree, Sugar Twin, Tone’s, Trappey’s, TrueNorth, Underwood, Vermont Maid, Victoria, Weber and Wright’s. We also sell and distribute Static Guard, a household product brand. We compete in the retail grocery, foodservice, 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, foodservice outlets, mass merchants, warehouse clubs, non-food outlets and specialty distributors.

(2)

Summary of Significant Accounting Policies

Fiscal Year

Typically, our fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters. As a result, a 53rd week is added to our fiscal year every five or six years. Our fiscal year ending January 1, 2022 (fiscal 2021) contains 52 weeks and each quarter of fiscal 2021 contains 13 weeks. Our fiscal year ended January 2, 2021 (fiscal 2020) contained 53 weeks. Generally, when a 53rd week occurs, our fourth fiscal quarter contains 14 weeks. However, based upon a third quarter end date of October 3, 2020 (the Saturday closest to September 30) and a fourth quarter end date of January 2, 2021 (the Saturday closest to December 31), the third quarter of fiscal 2020 contained 14 weeks and the fourth quarter of 2020 contained 13 weeks.

Basis of Presentation

The accompanying unaudited consolidated interim financial statements for the thirteen and thirty-nine week periods ended October 2, 2021 (third quarter and first three quarters of 2021) and the fourteen and forty week periods ended October 3, 2020 (third quarter and first three quarters of 2020) have been prepared by our company in accordance with generally accepted accounting principles in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated interim financial statements contain all adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of October 2, 2021, and the results of our operations, comprehensive income, changes in stockholders’ equity and cash flows for the third quarter and first three quarters of 2021 and 2020. Our results of operations for the third quarter and first three quarters of 2021 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on

- 7 -

Table of Contents

B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Form 10-K for fiscal 2020 filed with the SEC on March 2, 2021 (which we refer to as our 2020 Annual Report on Form 10-K).

Use of Estimates

The preparation of financial statements in accordance with GAAP 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 revenue recognition as it relates to trade and consumer promotion expenses; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment and deferred tax assets; and the determination of the useful life of customer relationship and finite-lived trademark intangible assets. 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.

Accounting Standards Adopted in Fiscal 2020 or Fiscal 2021

In December 2019, the Financial Accounting Standards Board (FASB) issued a new accounting standards update (ASU) that removes certain exceptions for recognizing deferred taxes for certain investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group. This guidance became effective during the first quarter of 2021. The adoption of this ASU did not have a material impact to our consolidated financial statements and related disclosures.

In May 2020, the SEC issued a final rule that amends the financial statement requirements for acquisitions and dispositions of businesses. The amendments primarily relate to disclosures required by Rule 3-05 and Article 11 of Regulation S-X. Among other things, the final rule modifies the tests provided in Rule 1-02(w) of Regulation S-X used to determine whether a subsidiary or an acquired or disposed business is significant and modifies the number of years of audited financial statements required for acquisitions with significance levels greater than specified percentages. We early adopted the rule in the fourth quarter of fiscal 2020 and we applied the rule to our financial statement disclosure requirements for the Crisco acquisition. See Note 3, “Acquisitions.”

In June 2016, the FASB issued a new ASU which modifies the measurement of expected credit losses of certain financial instruments. This ASU replaces the incurred loss methodology for recognizing credit losses with a current expected credit losses model and applies to all financial assets, including trade accounts receivables. The amendments in this ASU should be applied on a modified retrospective basis to all periods presented. This guidance became effective during the first quarter of 2020. The adoption of the new standard did not have a material impact to our consolidated financial statements and related disclosures.

In January 2017, the FASB issued an amendment to the standards of goodwill impairment testing. The new guidance simplifies the test for goodwill impairment, by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance became effective during the first quarter of 2020 and was applied during our annual goodwill impairment testing for fiscal 2020. The adoption of this ASU did not have an impact to our consolidated financial statements.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

In March 2020, the SEC adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered in Rule 3-10 of Regulation S-X, and affiliates whose securities collateralize securities registered or being registered in Rule 3-16 of Regulation S-X (SEC Release No. 33-10762). We adopted the amendments to the disclosure requirements during the third quarter of 2020. This amendment did not have an impact on our consolidated financial statements as this amendment simplifies the financial disclosures required in our guarantor and non-guarantor financial information. The amendment replaces the requirement to present condensed consolidating financial statements, comprised of balance sheets and statements of operations, comprehensive income and cash flows for all periods presented, with summarized financial information of the guarantor only for the most recently completed fiscal year and any subsequent interim period. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Financial Information about B&G Foods and Guarantor Subsidiaries.”

In August 2018, the FASB issued a new ASU that aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies by changing disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. This guidance became effective during the fourth quarter of fiscal 2020 and we updated our defined benefit pension plan disclosures accordingly. The adoption of this ASU did not have an impact to our consolidated financial statements as this ASU only modified disclosure requirements. See Note 10, “Pension Benefits.”

Recently Issued Accounting Standards – Pending Adoption

In March 2020, the FASB issued a new ASU which provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR. The update may be applied as of the beginning of the interim period that includes March 12, 2020 through December 31, 2022. We currently expect to adopt the standard during fiscal 2022. We are in the process of evaluating the impact of the adoption of this ASU. LIBOR is used to determine interest under our revolving credit facility and our tranche B term loans due 2026. Currently, however, we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements.

(3)

Acquisitions

Crisco Acquisition

On December 1, 2020, we completed the acquisition of the Crisco oils and shortening business from The J.M. Smucker Company and certain of its affiliates, for approximately $539.3 million in cash. We refer to this acquisition as the “Crisco acquisition” and the Crisco oils and shortening business as the “Crisco business.”

The following table sets forth the allocation of the Crisco acquisition purchase price to the estimated fair value of the net assets acquired at the date of acquisition:

Purchase Price Allocation (in thousands):

December 1, 2020

Inventories

$

37,137

Prepaid expenses and other current assets

113

Property, plant and equipment, net

81,405

Operating lease right-of-use assets

1,477

Trademarks — indefinite-lived intangible assets

322,000

Customer relationships — finite-lived intangible assets

52,800

Current portion of operating lease liabilities

(565)

Long-term operating lease liabilities, net of current portion

(912)

Goodwill

45,806

Total purchase price (paid in cash)

$

539,261

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Farmwise Acquisition

On February 19, 2020, we acquired Farmwise LLC, maker of Farmwise Veggie Fries, Farmwise Veggie Tots and Farmwise Veggie Rings. We refer to this acquisition as the “Farmwise acquisition.”

Unaudited Pro Forma Summary of Operations

The following pro forma summary of operations presents our operations as if the Crisco acquisition had occurred as of the beginning of fiscal 2020. In addition to including the results of operations of this acquisition, the pro forma information gives effect to the interest on additional borrowings and the amortization of trademark and customer relationship intangibles. On an actual basis, Crisco contributed $187.7 million of our aggregate $1,484.5 million of consolidated net sales for the first three quarters of 2021 (in thousands, except per share data):

Forty Weeks Ended

October 3,

2020

Net sales(1)

$

1,694,025

Net income(1)

$

159,465

Basic earnings per share(1)

$

2.49

Diluted earnings per share(1)

$

2.47

(1)The pro forma financial information presented above does not purport to be indicative of the results that actually would have been attained had the Crisco acquisition occurred as of the beginning of fiscal 2020, and is not intended to be a projection of future results.

The Farmwise acquisition was not material to our consolidated results of operations or financial position and, therefore, pro forma financial information is not presented.

(4)

Inventories

Inventories are stated at the lower of cost or net realizable value 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 management’s review of inventories on hand compared to estimated future usage and sales.

Inventories consist of the following, as of the dates indicated (in thousands):

    

October 2, 2021

    

January 2, 2021

Raw materials and packaging

$

107,053

$

87,843

Work-in-process

182,804

95,207

Finished goods

 

380,448

 

309,754

Inventories

$

670,305

$

492,804

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Table of Contents

B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(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):

October 2, 2021

January 2, 2021

    

Gross Carrying

    

Accumulated

    

Net Carrying

    

Gross Carrying

    

Accumulated

    

Net Carrying

    

Amount

    

Amortization

    

Amount

    

Amount

    

Amortization

    

Amount

Finite-Lived Intangible Assets

Trademarks

$

20,100

$

6,455

$

13,645

$

20,100

$

5,597

$

14,503

Customer relationships

 

406,962

 

162,750