B&G Foods, Inc. - Quarter Report: 2009 April (Form 10-Q)

As filed with the Securities and Exchange Commission on April 28, 2009

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 4, 2009

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.)

4 Gatehall Drive, Suite 110, Parsippany, New Jersey (Address of principal executive offices)	07054 (Zip Code)

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

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 x 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 o No o

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 o

Accelerated filer x

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 Exchange Act).
Yes o No x

As of April 4, 2009, the registrant had 36,033,057 shares of Class A common stock, par value $0.01 per share, issued and outstanding, 17,858,539 of which were held in the form of Enhanced Income Securities (EISs) and 18,174,518 of which were held separate from EISs. Each EIS represents one share of Class A common stock and $7.15 principal amount of 12% senior subordinated notes due 2016. As of April 4, 2009, the registrant had no shares of Class B common stock, par value $0.01 per share, issued or outstanding.

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B&G Foods, Inc. and Subsidiaries
Index

		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 Cash Flows	3

	Notes to Consolidated Financial Statements	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures About Market Risk		29

Item 4. Controls and Procedures		31

PART II OTHER INFORMATION		32

Item 1.Legal Proceedings		32

Item 1A. Risk Factors		32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 3. Defaults Upon Senior Securities		32

Item 4. Submission of Matters to a Vote of Security Holders		32

Item 5. Other Information		33

Item 6. Exhibits		33

SIGNATURE		34

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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)

	April 4, 2009			January 3, 2009
Assets
Current assets:
Cash and cash equivalents	$	33,498		$	32,559
Trade accounts receivable, less allowance for doubtful accounts and discounts of $596 in 2009 and $637 in 2008	31,994			36,578
Inventories	93,883			88,899
Prepaid expenses	2,323			2,475
Income tax receivable	1,438			2,221
Deferred income taxes	1,110			1,110
Total current assets	164,246			163,842

Property, plant and equipment, net of accumulated depreciation of $66,442 and $64,510	51,548			51,059
Goodwill	253,353			253,353
Trademarks	227,220			227,220
Customer relationship intangibles, net	114,705			116,318
Net deferred debt issuance costs and other assets	12,725			13,298
Total assets	$	823,797		$	825,090

Liabilities and Stockholders’ Equity

Current liabilities:
Trade accounts payable	$	25,774		$	27,286
Accrued expenses	12,263			16,023
Dividends payable	6,126			6,162
Total current liabilities	44,163			49,471

Long-term debt	535,800			535,800
Other liabilities	24,807			23,671
Deferred income taxes	74,561			71,500
Total liabilities	679,331			680,442

Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding	—			—
Class A common stock, $0.01 par value per share. Authorized 100,000,000 shares; 36,033,057 and 36,246,657 shares issued and outstanding as of April 4, 2009 and January 3, 2009	360			362
Class B common stock, $0.01 par value per share. Authorized 25,000,000 shares; no shares issued or outstanding	—			—
Additional paid-in capital	164,771			171,123
Accumulated other comprehensive loss	(12,099		)	(12,358		)
Accumulated deficit	(8,566		)	(14,479		)
Total stockholders’ equity	144,466			144,648
Total liabilities and stockholders’ equity	$	823,797		$	825,090

See 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)

(Unaudited)

	Thirteen Weeks Ended
	April 4, 2009		March 29, 2008
Net sales	$	118,638	$	116,342
Cost of goods sold	79,889		81,412
Gross profit	38,749		34,930

Operating expenses:
Sales, marketing and distribution expenses	10,987		12,289
General and administrative expenses	2,339		1,358
Amortization expense—customer relationships	1,613		1,613
Operating income	23,810		19,670

Other expenses:
Interest expense, net	14,289		12,571
Income before income tax expense	9,521		7,099
Income tax expense	3,608		2,690
Net income	$	5,913	$	4,409

Basic and diluted weighted average shares outstanding:
Class A common stock	36,197		36,779

Basic and diluted earnings per share:
Class A common stock	$	0.16	$	0.12

Cash dividends declared per share of Class A common stock	$	0.17	$	0.21

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Thirteen Weeks Ended
	April 4, 2009			March 29, 2008

Cash flows from operating activities:
Net income	$	5,913		$	4,409
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,560			3,689
Amortization of deferred debt issuance costs	792			792
Deferred income taxes	2,834			2,177
Unrealized loss on interest rate swap	743			—
Reclassification to interest expense, net from interest rate swap	422			—
Share-based compensation expense	747			—
Changes in assets and liabilities:
Trade accounts receivable	4,584			7,201
Inventories	(4,984		)	(1,956		)
Prepaid expenses	152			1,005
Income tax receivable	783			513
Other assets	(219		)	256
Trade accounts payable	(1,512		)	(6,420		)
Accrued expenses	(3,760		)	(1,134		)
Other liabilities	571			442
Net cash provided by operating activities	10,626			10,974

Cash flows from investing activities:
Capital expenditures	(2,443		)	(6,420		)
Net cash used in investing activities	(2,443		)	(6,420		)

Cash flows from financing activities:
Dividends paid	(6,162		)	(7,797		)
Payments for repurchase of Class A common stock	(975		)	—
Net cash used in financing activities	(7,137		)	(7,797		)

Effect of exchange rate fluctuations on cash and cash equivalents	(107		)	(37		)
Net increase (decrease) in cash and cash equivalents	939			(3,280		)

Cash and cash equivalents at beginning of period	32,559			36,606
Cash and cash equivalents at end of period	$	33,498		$	33,326

Supplemental disclosures of cash flow information:
Cash interest payments	$	17,130		$	7,012
Cash income tax payments	$	17		$	10
Cash income tax refunds	$	(24	)	$	(40	)
Non-cash transactions:
Dividends declared and not yet paid	$	6,126		$	7,797

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

(1) Nature of Operations

B&G Foods, Inc. is a holding company, the principal assets of which are the 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. We operate in one 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, spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas, pickles, peppers and other specialty food products. We compete in the retail grocery, food service, specialty, private label, club and mass merchandiser channels of distribution. We distribute our products throughout the United States via a nationwide network of independent brokers and distributors to supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food outlets and specialty food distributors.

(2) Summary of Significant Accounting Policies

Fiscal Year

Our financial statements are presented on a consolidated basis. 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. In a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending January 2, 2010 (fiscal 2009) contains 52 weeks and our fiscal year ended January 3, 2009 (fiscal 2008) contained 53 weeks. Each quarter of fiscal 2009 and 2008 contains 13 weeks, except the fourth quarter of 2008 which contained 14 weeks.

Basis of Presentation

The accompanying consolidated interim financial statements for the thirteen week periods ended April 4, 2009 (first quarter of 2009) and March 29, 2008 (first quarter of 2008) have been prepared by our company in accordance with accounting principles generally accepted in the United States of America without audit, 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 generally accepted accounting principles 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 (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary to present fairly our consolidated financial position as of April 4, 2009, the results of our operations and cash flows for the first quarter of 2009 and 2008. Our results of operations for the first quarter of 2009 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes for fiscal 2008 included in our Annual Report on Form 10-K for fiscal 2008 filed with the SEC on March 5, 2009.

Use of Estimates

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; purchase accounting allocations; the recoverability of goodwill, trademarks, customer relationship intangibles, property, plant and equipment and deferred tax assets; the accounting for our enhanced income securities (EISs); and 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, including the current economic environment, that management believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. Recent volatility in the credit, equity and foreign currency markets has increased the uncertainty inherent in such estimates and assumptions.

Enhanced Income Securities

Each of our EISs represents one share of our Class A common stock and $7.15 principal amount of our senior subordinated notes. The holders of our EISs may separate each EIS into one share of Class A common stock and $7.15 principal amount of senior subordinated notes at any time. Upon the occurrence of certain events (including redemption of the senior subordinated notes or upon maturity of the senior subordinated notes), EISs will automatically separate. Conversely, subject to limitations, a holder of separate shares of Class A common stock and senior subordinated notes can combine such securities to form EISs. Separation and combination of EISs will automatically result in increases and decreases, respectively, in the number of shares of Class A common stock not held in the form of EISs. As of April 4, 2009, we had 36,033,057 shares of Class A common stock issued and outstanding, 17,858,539 of which were held in the form of EISs and 18,174,518 of which were held separate from EISs. As of March 29, 2008 we had 36,778,988 shares of Class A common stock issued and outstanding, 16,680,877 of which were held in the form of EISs and 20,098,111 of which were held separate from EISs.

Recently Issued Accounting Standards

In September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (SFAS No. 157), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of SFAS No. 157 were effective as of the beginning of our fiscal 2008, with the exception of certain provisions deferred until the beginning of our fiscal 2009. In February 2008, the FASB issued FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157,” which delayed the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until the beginning of our fiscal 2009. We adopted SFAS No. 157 effective at the beginning of our fiscal 2008 for financial assets and financial liabilities, which did not have a material impact on our results of operations or financial position. We adopted SFAS No. 157 effective at the beginning of our fiscal 2009 for non-financial assets and non-financial liabilities, which did not have a material impact on our results of operations or financial position.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(2) Summary of Significant Accounting Policies (Continued)

consolidated financial statements. SFAS No. 141R and SFAS No. 160 are effective as of the beginning of our fiscal 2009. SFAS No. 141R will be applied prospectively. The effects of SFAS No. 141R will depend on future acquisitions. SFAS No. 160 requires retroactive adoption. We currently do not have any noncontrolling interests in subsidiaries.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS No. 161).” SFAS No. 161 requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective as of the beginning of our fiscal 2009. Since SFAS No. 161 requires enhanced disclosures, without a change to existing standards relative to measurement and recognition, our adoption of SFAS No. 161 did not have any effect on our results of operations or financial position. See notes 5 and 7 for the required disclosures about our derivative instruments and hedging activities.

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). FSP 142-3 requires companies estimating the useful life of a recognized intangible asset to consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, to consider assumptions that market participants would use about renewal or extension as adjusted for entity-specific factors. FSP 142-3 is effective as of the beginning of our fiscal 2009. We adopted FSP 142-3 effective at the beginning of our fiscal 2009, which did not have a material impact on our results of operations or financial position.

In December 2008, the FASB issued FASB Staff Position No. FAS 132(R)-1, “Employer’s Disclosures about Postretirement Benefit Plan Assets” (FSP 132(R)-1). FSP 132(R)-1 requires additional disclosures about plan assets for defined benefit pension and other postretirement benefit plans. FSP 132(R)-1 will be effective as of the end of our fiscal 2009. Since FSP 132(R)-1 requires enhanced disclosures, without a change to existing standards relative to measurement and recognition, our adoption of FSP 132(R)-1 will not have a material impact on our results of operations or financial position.

(3) Inventories

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

	April 4, 2009		January 3, 2009
Raw materials and packaging	$	18,672	$	19,402
Work in process	1,538		2,658
Finished goods	73,673		66,839

Total	$	93,883	$	88,899

(4) Goodwill, Trademarks and Customer Relationship Intangibles

There has been no change in the carrying amount of goodwill for the period from January 3, 2009 to April 4, 2009.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(4) Goodwill, Trademarks and Customer Relationship Intangibles (Continued)

There has been no change in the carrying amount of trademarks (indefinite-lived intangibles) for the period from January 3, 2009 to April 4, 2009.

The following table reconciles the changes in the carrying amount of customer relationship intangibles for the period from January 3, 2009 to April 4, 2009 (dollars in thousands):

	Customer Relationship Intangibles		Less: Accumulated Amortization			Total
Balance at January 3, 2009	$	129,000	$	(12,682	)	$	116,318
Amortization expense	—		(1,613		)	(1,613		)
Balance at April 4, 2009	$	129,000	$	(14,295	)	$	114,705

Customer relationship intangibles are presented at cost, net of accumulated amortization, and are amortized on a straight-line basis over their estimated useful lives of 20 years. Amortization expense associated with customer relationship intangibles for each of the first quarter of 2009 and 2008 was $1.6 million, and is recorded in operating expenses. We expect to recognize an additional $4.9 million of amortization expense associated with our current customer relationship intangibles during the remainder of fiscal 2009, and thereafter $6.5 million per year for each of the next four succeeding fiscal years.

(5) Long-term Debt

Long-term debt consists of the following, as of the dates indicated (dollars in thousands):

	April 4, 2009		January 3, 2009
Senior secured credit facility:
Revolving credit facility	$	—	$	—
Term loan	130,000		130,000

12% Senior Subordinated Notes due October 30, 2016	165,800		165,800
8% Senior Notes due October 1, 2011	240,000		240,000
Total long-term debt	$	535,800	$	535,800

As of April 4, 2009, the aggregate maturities of long-term debt are as follows (dollars in thousands):

Years ending December:
2009	$	—
2010	—
2011	240,000
2012	—
2013	130,000
Thereafter	165,800
Total	$	535,800

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5) Long-term Debt (Continued)

Senior Secured Credit Facility. Our $25.0 million revolving credit facility matures on January 10, 2011 and our $130.0 million of term loan borrowings matures on February 26, 2013, provided, however, that if we do not repay, redeem or refinance our senior notes prior to April 1, 2011, the outstanding term loan borrowings will become immediately due and payable on April 1, 2011.

Interest under the revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance with the revolving credit facility, including the base lending rate per annum plus an applicable margin, and LIBOR plus an applicable margin. We pay a commitment fee of 0.50% per annum on the unused portion of the revolving credit facility. Interest under the term loan facility is determined based on alternative rates that we may choose in accordance with the credit facility, including the base lending rate per annum plus an applicable margin of 1.00%, and LIBOR plus an applicable margin of 2.00%.

Our obligations under the credit facility are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The credit facility is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property. The credit facility provides for mandatory prepayment upon certain asset dispositions and issuances of securities, as defined. The credit facility contains covenants that restrict, among other things, our ability to incur additional indebtedness, pay dividends and create certain liens. The credit facility also contains certain financial maintenance covenants, which, among other things, specify maximum capital expenditure limits, a minimum interest coverage ratio and a maximum senior and total leverage ratio, each ratio as defined. As of April 4, 2009, we were in compliance with all of the covenants in the credit facility. Proceeds of the revolving credit facility are restricted to funding our working capital requirements, capital expenditures and acquisitions of companies in the same line of business as our company, subject to specified criteria. The maximum letter of credit capacity under the revolving credit facility is $10.0 million, with a fronting fee of 3.0% per annum for all outstanding letters of credit.

On September 15, 2008, Lehman Brothers Holdings Inc. (Lehman) filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Lehman Commercial Paper Inc. (Lehman CPI), a Lehman subsidiary, is the administrative agent under our credit facility. Lehman CPI filed for protection under Chapter 11 of the U.S. Bankruptcy Code on October 3, 2008. None of our $130.0 million of outstanding term loans is currently with Lehman, Lehman CPI or any other subsidiary of Lehman. Lehman CPI is one of the lenders participating in our $25.0 million revolving credit facility. However, Lehman CPI has only $3.1 million of the $25.0 million commitment. The other lenders under the revolving credit facility and their respective commitments are as follows: Bank of America, N.A., $9.4 million; Citibank, N.A., $9.4 million; and Royal Bank of Canada, $3.1 million. We do not believe that Lehman CPI would honor its funding commitment under the revolving credit facility if we were to make a funding request. As a result, the effective available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $0.5 million, was $21.4 million at April 4, 2009. We have not drawn upon the revolving credit facility since its inception in October 2004 and, based upon our cash on hand and working capital requirements, we have no plans to do so for the foreseeable future.

Effective as of February 26, 2007, we entered into a six year interest rate swap agreement in order to effectively fix at 7.0925% the interest rate payable for $130.0 million of term loan borrowings through the life of the term loan, ending on February 26, 2013. The counterparty to the swap is Lehman Special Financing Inc. (Lehman SFI). Lehman SFI filed for protection under Chapter 11 of the U.S. Bankruptcy Code on October 3, 2008.

We initially designated the swap as a cash flow hedge under the guidelines of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5) Long-term Debt (Continued)

for Certain Derivative Instruments and Certain Hedging Activities” and SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities” (collectively referred to as SFAS No. 133). Prior to Lehman’s bankruptcy filing, we recorded changes in the fair value of the swap in other comprehensive income (loss), net of tax in our consolidated balance sheet. However, as a result of the Lehman bankruptcy filing, we determined in September 2008 that the interest rate swap was no longer an effective hedge as defined by SFAS No. 133 and, accordingly, subsequent changes in the swap’s fair value are being recorded in current earnings in net interest expense in the consolidated statements of operations. We obtain third-party verification of fair value at the end of each reporting period. As of April 4, 2009, the fair value of our interest rate swap was $13.9 million and is recorded in other liabilities on our consolidated balance sheet. The amount recorded in accumulated other comprehensive income (loss) will be reclassified to net interest expense over the remaining life of the term loan borrowings as we make interest payments. Net interest expense in the first quarter of 2009 includes a $0.7 million charge relating to the unrealized loss on our interest rate swap and a reclassification of $0.4 million of the amount recorded in accumulated other comprehensive income (loss) related to the swap. During fiscal 2009, we expect to reclassify to net interest expense $1.1 million of the amount recorded in accumulated other comprehensive income (loss).

Subsidiary Guarantees. We have no assets or operations independent of our direct and indirect subsidiaries. All of our present domestic subsidiaries jointly and severally and fully and unconditionally guarantee our senior subordinated notes and our senior notes, and management has determined that our Canadian subsidiary, which is our only subsidiary that is not a guarantor of our senior subordinated notes and senior notes, is a “minor subsidiary” as that term is used in Rule 3-10 of Regulation S-X promulgated by the SEC. There are no significant restrictions on our ability and the ability of our subsidiaries to obtain funds from our respective subsidiaries by dividend or loan. Consequently, separate financial statements have not been presented for our subsidiaries because management has determined that they would not be material to investors.

Deferred Debt Issuance Costs. In connection with the issuance of our senior subordinated notes and our senior notes in October, 2004, we capitalized approximately $23.1 million of debt issuance costs, which will be amortized over their respective terms. In connection with the issuance of term loan borrowings of $25.0 million in January 2006, we capitalized approximately $0.4 million of additional debt issuance costs, which will be amortized over the term of the loan. In connection with the issuance of additional term loan borrowings of $205.0 million in February 2007 we capitalized approximately $4.0 million of additional debt issuance costs, which will be amortized over the term of the loan. During the second quarter of 2007 we wrote-off and expensed $1.8 million of deferred debt issuance costs in connection with our May 2007 prepayment of $100.0 million of term loan borrowings. As of April 4, 2009 and January 3, 2009 we had net deferred debt issuance costs of $12.4 million and $13.2 million, respectively.

At April 4, 2009 and January 3, 2009 accrued interest of $4.6 million and $9.4 million, respectively, is included in accrued expenses in the accompanying consolidated balance sheets.

(6) Fair Value Measurements

We adopted SFAS No. 157 on December 30, 2007, the first day of our fiscal 2008. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under generally accepted accounting principles, certain assets and liabilities must be measured at fair value, and SFAS No. 157 details the disclosures that are required for items measured at fair value.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(6) Fair Value Measurements (Continued)

Financial assets and liabilities are measured using inputs from the three levels of the SFAS No. 157 fair value hierarchy. The three levels are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3—Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value hierarchy described above, the following table shows the fair value of our interest rate swap as of April 4, 2009 and January 3, 2009, which is included in other liabilities in our consolidated balance sheet (dollars in thousands):

		Fair Value Measurements
	Description	Level 1		Level 2		Level 3
April 4, 2009	Interest rate swap	$	—	$	13,860	$	—
January 3, 2009	Interest rate swap	$	—	$	13,117	$	—

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

The carrying values and fair values of our term loan borrowings, senior notes and senior subordinated notes as of April 4, 2009 and January 3, 2009 are as follows (dollars in thousands):

	April 4, 2009				January 3, 2009
	Carrying Value		Fair Value(1)(2)		Carrying Value		Fair Value(1)(3)
Senior Secured Term Loan due February 26, 2013	$	130,000	$	119,600	$	130,000	$	107,900
8% Senior Notes due October 1, 2011	240,000		220,800		240,000		207,600
12% Senior Subordinated Notes due October 30, 2016:
— represented by EISs	127,689		101,972		124,793		90,235
— held separately	38,111		30,436		41,007		29,651

(1)	Fair values are estimated based on quoted market prices, except as otherwise noted in footnotes (2) and (3) below.
(2)	Solely for purposes of this presentation, we have assumed that the fair value of each senior subordinated note at April 4, 2009 was $5.71, based upon the $5.09 per share closing price of our separately traded Class A common stock and the $10.80 per EIS closing price of our EISs on the New York Stock Exchange on April 3, 2009 (the last business day of the first quarter of 2009). Each EIS represents one share of Class A common stock and $7.15 principal amount of our senior subordinated notes.
(3)	Solely for purposes of this presentation, we have assumed that the fair value of each senior subordinated note at January 3, 2009 was $5.17, based upon the $5.49 per share closing price of our separately traded Class A common stock and the

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(6) Fair Value Measurements (Continued)

$10.66 per EIS closing price of our EISs on the New York Stock Exchange on January 2, 2009 (the last business day of fiscal 2008).

Our term loan borrowings are subject to an interest rate swap discussed in Note 5.

(7) Disclosures about Derivative Instruments and Hedging Activities

We account for our derivative and hedging transactions in accordance with SFAS No. 133. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities and requires an entity to recognize all derivative instruments either as an asset or a liability in the balance sheet and to measure such instruments at fair value. We do not engage in derivative instruments for trading purposes.

The following table presents the fair value and the location within our consolidated balance sheet of all assets and liabilities associated with derivative instruments not designated as hedging instruments (dollars in thousands):

Derivatives not designated as hedging		Asset Derivatives	Liability Derivatives
instruments under SFAS No. 133	Balance Sheet Location	Fair Value at April 4, 2009	Fair Value at April 4, 2009

Interest rate swap	Other liabilities	—	$	13,860

See notes 5 and 6 for additional information regarding our interest rate swap. We do not currently have any derivatives designated as hedging instruments under SFAS No. 133.

The following tables present the impact of derivative instruments and their location within our consolidated statement of operations (dollars in thousands):

Derivatives not designated as hedging	Amount of (Gain) Loss Recognized in Income on Derivatives			Location of (Gain) Loss Recognized in
instruments under SFAS No. 133	Thirteen Weeks Ended April 4, 2009			Income on Derivatives

Interest rate swap	$	1,165	*	Interest expense, net

The amount included in net interest expense consists of $743 unrealized loss on our interest rate swap, and $422 (pre-tax) reclassified to net interest expense from accumulated other comprehensive income.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(8) Comprehensive Income Recognition

Comprehensive income includes net income, foreign currency translation adjustments relating to assets and liabilities located in our Canadian subsidiary, changes in our pension benefits, net of tax and the change in the fair value of an interest rate swap during the period it was designated as an effective cash flow hedge, net of tax. The amount recorded in accumulated other comprehensive income (loss) related to the swap will be reclassified to net interest expense over the remaining life of the term loan as we make interest payments.

The components of comprehensive income are as follows (dollars in thousands):

	Thirteen Weeks Ended
	April 4, 2009			March 29, 2008

Net income	$	5,913		$	4,409
Other comprehensive income:
Foreign currency translation adjustments	(114		)	(37		)
Amortization of unrecognized prior service cost and pension deferrals, net of tax	111			5
Cash flow hedge transaction, net of tax	—			(3,417		)
Reclassification to interest expense, net from interest rate swap	262			—
Comprehensive income	$	6,172		$	960

(9) Pension Benefits

Net periodic costs for the first quarter of 2009 and 2008 include the following components (dollars in thousands):

	Thirteen Weeks Ended
	April 4, 2009			March 29, 2008

Service cost—benefits earned during the period	$	419		$	330
Interest cost on projected benefit obligation	431			360
Expected return on plan assets	(376		)	(453		)
Amortization of unrecognized prior service cost	11			11
Amortization of loss (gain)	167			(3		)
Net pension cost	$	652		$	245

During the first quarter of 2009, we made no contributions to our defined benefit pension plans. We anticipate electing to make contributions of approximately $2.1 million to our defined benefit pension plans during the remainder of fiscal 2009.

(10) Commitments and Contingencies

Environmental. We are subject to environmental laws and regulations in the normal course of business. We did not make any material expenditures during the first quarter of 2009 or in fiscal 2008 in order to comply with environmental laws and regulations. Based on our experience to date, management believes that the future cost of compliance with existing environmental laws and regulations (and liability for any known environmental conditions) will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. However, we cannot predict what environmental or health and

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(10) Commitments and Contingencies (Continued)

safety legislation or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with such environmental or health and safety laws or regulations or to respond to such environmental claims.

Legal Proceedings. We are from time to time involved in various claims and legal actions arising in the ordinary course of business, including proceedings involving product liability claims, worker’s compensation and other employee claims, and tort and other general liability claims, as well as trademark, copyright, patent infringement and related claims and legal actions. In the opinion of our management, the ultimate disposition of any currently pending claims or actions will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Collective Bargaining Agreements. Approximately 354 of our 734 employees, or 48.2%, as of April 4, 2009, were covered by collective bargaining agreements. None of our collective bargaining agreements is scheduled to expire within one year. During the first quarter of 2009, we reached an agreement with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America (Local No. 863) to renew the collective bargaining agreement covering our Roseland, New Jersey facility for the period April 1, 2009 through March 31, 2014.

Severance and Change of Control Agreements. We have employment agreements with each of our five executive officers. The agreements generally continue until terminated by the executive or by us, and provide for severance payments under certain circumstances, including termination by us without cause (as defined) or as a result of the employees’ disability, or termination by us or a deemed termination upon a change of control (as defined). Severance benefits include payments for salary continuation, continuation of health care and insurance benefits, present value of additional pension credits and, in the case of a change of control, accelerated vesting under compensation plans and potential excise tax liability and gross up payments.

(11) Earnings per Share

We currently have only one class of common stock issued and outstanding, designated as Class A common stock. During the periods presented there were no shares of Class B common stock issued or outstanding. Basic earnings per share for the Class A common stock is calculated by dividing net income by the weighted average number of shares of Class A common stock outstanding. Diluted earnings per share for each of the periods presented are equal to basic earnings per share because no potentially dilutive securities were outstanding during either period.

(12) Business and Credit Concentrations and Geographic Information

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 conditions. Our top ten customers accounted for approximately 49.4% and 46.7% of consolidated net sales for the first quarter of 2009 and 2008, respectively. Our top ten customers accounted for approximately 52.2% and 56.1% of our receivables as of April 4, 2009 and January 3, 2009, respectively. Other than Wal-Mart, which accounted for 17.3% and 12.9% of our consolidated net sales for the first quarter of 2009 and 2008, respectively, no single customer accounted for more than 10.0% of our consolidated net sales for the first quarter of 2009 or 2008. Other than C&S Wholesale Grocery and Wal-Mart, which accounted for 13.6% and 12.3% of our consolidated receivables, respectively, as of April 4, 2009, no single customer accounted for more than 10.0% of our consolidated receivables as of the end of the first quarter of 2009. Other than C&S Wholesale Grocery and Wal-Mart, which accounted for 17.7% and 13.2% of our

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(12) Business and Credit Concentrations and Geographic Information (Continued)

consolidated receivables, respectively, as of January 3, 2009, no single customer accounted for more than 10.0% of our consolidated receivables as of the end of fiscal 2008.

During the first quarter of 2009 and 2008, our sales to foreign countries represented less than 1.0% of net sales. Our foreign sales are primarily to customers in Canada.

(13) Share-Based Compensation

The recognition of compensation expense for our performance share long-term incentive awards (LTIAs) is initially based on the probable outcome of the applicable 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. Our company’s performance against the performance goal defined in the award agreements will be re-evaluated on a quarterly basis throughout the applicable performance period and the recognition of compensation expense will be adjusted for subsequent changes in the estimated or actual outcome. The cumulative effect on current and prior periods of a change in the estimated number of performance share awards is recognized as an adjustment to earnings in the period of the revision.

During the first quarter of 2009, we recognized $0.7 million of compensation expense related to performance share LTIAs for the 2008 to 2009, 2008 to 2010 and 2009 to 2011 performance periods, which is reflected in general and administrative and sales, marketing and distribution expenses in our consolidated statements of operations. As of April 4, 2009, there was $3.5 million of unrecognized compensation expense related to performance share LTIAs, which is expected to be recognized over the next 33 months.

The following table details the activity in our performance share LTIAs for the first quarter of 2009:

	Number of Performance Shares (1)	Weighted Average Grant Date Fair Value (per share)(2)

Beginning of year(3)	273,814	$	7.25
Granted(4)	392,824	$	1.88
Vested	—	—
Forfeited	—	—
End of first quarter 2009	666,638	$	4.09

(1)	The number of unvested performance shares is based on the participants earning their target number of performance shares at 100%. The ultimate award, which we determine at the end of the applicable performance period, can range from zero to 300% of the target number of performance shares.
(2)	The fair value of the awards was determined based upon the closing price of our Class A common stock on the applicable measurement dates 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.
(3)	Represents unvested 2008 to 2009 and 2008 to 2010 performance share LTIAs granted in fiscal 2008.
(4)	Represents unvested 2009 to 2011 performance share LTIAs granted in the first quarter of 2009.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(14) Stock and Debt Repurchase Plan

Stock and Debt Repurchase Plan. On October 27, 2008, our board of directors authorized a stock and debt repurchase program for the repurchase of up to $10.0 million of our Class A common stock and/or senior notes over the next twelve months. Under the authorization, we may purchase shares of Class A common stock and/or senior notes from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the SEC.

The timing and amount of such repurchases, if any, will be at the discretion of management, and will depend on market conditions and other considerations. Therefore, there can be no assurance as to the number or aggregate dollar amount of shares that will be repurchased under the stock and debt repurchase program. Likewise, there can be no assurance as to the principal amount of senior notes, if any, that will be repurchased. We may discontinue the program at any time. Any shares repurchased pursuant to the stock repurchase program will be retired. Likewise, any senior notes repurchased will be cancelled. In general, our credit agreement prohibits us from repurchasing our senior subordinated notes.

During the first quarter of 2009 we repurchased and retired 213,600 shares of Class A common stock at an average cost per share (excluding fees and commissions) of $4.53, or $1.0 million in the aggregate. As of April 4, 2009, we had $6.5 million available for any future repurchases of Class A common stock and/or senior notes under the stock and debt repurchase plan.

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Item 2. 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 the heading “Forward-Looking Statements” below and elsewhere in this report. The following discussion should be read in conjunction with the unaudited consolidated interim financial statements and related notes for the thirteen weeks ended April 4, 2009 (first quarter of 2009) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal year ended January 3, 2009 (fiscal 2008) included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 5, 2009 (which we refer to as our 2008 Annual Report on Form 10-K).

General

We manufacture, sell and distribute a diverse portfolio of branded, high quality, shelf-stable food 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 goal is to continue to increase sales, profitability and cash flows by enhancing our existing portfolio of branded shelf stable products and by capitalizing on our competitive strengths. We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with acquisitions of complementary branded businesses, continuing to develop innovative new products and delivering them to market quickly, leveraging our unique 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 18 separate brands into our operations.

We are subject to a number of challenges that may adversely affect our businesses. These challenges, which are discussed below and 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, 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 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. Although our commodity prices for wheat were lower in the first quarter of 2009 than those incurred during the thirteen weeks ended March 29, 2008 (the first quarter of 2008), our commodity prices for maple syrup, beans and packaging were higher than those incurred during the first quarter of 2008.

We purchase maple syrup primarily from Canada and Vermont. In 2008, maple syrup production in Canada, which represents the great majority of global production, was significantly below industry needs due to growing global demand and one of the worst crop yields in nearly 40 years. As a result, the price we paid for maple syrup increased significantly and we were faced with a shortfall in supply as compared to our needs, which had a negative impact on our sales volume of maple syrup products during fiscal 2008 that continued through the first quarter of 2009. Early indications suggest that the 2009 maple syrup crop yield is expected to be more consistent with historic levels. This together with the granting of additional production quotas by the Federation of Québec Maple Syrup Producers, is expected to bring global supply more in line with global demand and reduce the price we pay for maple syrup during the remainder of 2009.

The cost of labor, manufacturing, energy, fuel, packaging materials and other costs related to the production and distribution of our food products have also risen significantly in recent years. We attempt to

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manage these risks by entering into short-term supply contracts and advance commodities purchase agreements from time to time, implementing cost saving measures and by raising sales prices. To date, our cost saving measures and sales price increases have offset increases to our raw material, ingredient and packaging costs, although in certain cases on a lagging basis. To the extent we are unable to offset present and future cost increases, our operating results will be negatively impacted.

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.

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 that we have not purchased Canadian dollars in advance of any such weakening of the U.S. dollar.

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 and 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 U.S. generally accepted accounting principles 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; purchase accounting allocations; the recoverability of goodwill, trademarks, customer relationship intangibles, property, plant and equipment, and deferred tax assets; the accounting for our EISs; and the accounting for share-based compensation expense. Actual results could differ significantly from these estimates and assumptions.

In our 2008 Annual Report on Form 10-K, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no significant changes to these policies since January 3, 2009.

Results of Operations

The following table sets forth the percentages of net sales represented by selected items for the first quarter of 2009 and 2008 reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:

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	Thirteen Weeks Ended
	April 4, 2009		March 29, 2008
Statement of Operations:
Net sales	100.0	%	100.0	%
Cost of goods sold	67.3	%	70.0	%
Gross profit	32.7	%	30.0	%

Sales, marketing and distribution expenses	9.3	%	10.6	%
General and administrative expenses	2.0	%	1.1	%
Amortization expense—customer relationships	1.3	%	1.4	%
Operating income	20.1	%	16.9	%

Interest expense, net	12.1	%	10.8	%
Income before income tax expense	8.0	%	6.1	%

Income tax expense	3.0	%	2.3	%
Net income	5.0	%	3.8	%

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.

Sales, Marketing and Distribution Expenses. Our sales, marketing and distribution expenses include costs for marketing personnel, consumer advertising programs, internal sales forces, brokerage costs and warehouse facilities.

General and Administrative Expenses. Our general and administrative expenses include administrative employee compensation and benefit costs, as well as information technology infrastructure and communication costs, office rent and supplies, professional services and other general corporate expenses.

Amortization Expense—Customer Relationships. Amortization expense—customer relationships includes the amortization expense associated with customer relationship intangibles, which are amortized over their useful lives of 20 years.

Net Interest Expense. Net interest expense includes interest relating to our outstanding indebtedness and amortization of deferred debt issuance costs, net of interest income and subsequent to our determination in September 2008, that our interest rate swap is no longer an effective hedge as defined by SFAS No.133, unrealized losses on the interest rate swap and the reclassification of amounts recorded in accumulated other comprehensive income (loss) related to the swap.

Non-GAAP Financial Measures

Certain disclosures in this report include “non-GAAP (generally accepted accounting principles) financial measures.” 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, changes in stockholders’ equity and comprehensive income, and cash flows.

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EBITDA is a measure used by management to measure operating performance. EBITDA is defined as net income before net interest expense, income taxes, depreciation, and amortization. Management believes that it is useful to eliminate net interest expense, income taxes, depreciation and amortization 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 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 because we believe it is a useful indicator of our historical debt capacity and ability to service debt and because covenants in our credit facility, our senior notes indenture and our senior subordinated notes indenture contain ratios based on this measure. As a result, internal management reports used during monthly operating reviews feature the EBITDA metric. However, management uses this metric 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 this measure as its only measure of operating performance and liquidity.

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

A reconciliation of EBITDA to net income and to net cash provided by operating activities for the first quarter of 2009 and 2008 along with the components of EBITDA follows:

	Thirteen Weeks Ended
	April 4, 2009			March 29, 2008
	(dollars in thousands)
Net income	$	5,913		$	4,409
Income tax expense	3,608			2,690
Interest expense, net	14,289			12,571
Depreciation and amortization	3,560			3,689
EBITDA	27,370			23,359
Income tax expense	(3,608		)	(2,690		)
Interest expense, net	(14,289		)	(12,571		)
Deferred income taxes	2,834			2,177
Amortization of deferred financing costs	792			792
Unrealized loss on interest rate swap	743			—
Reclassification to interest expense, net from interest rate swap	422			—
Share-based compensation expense	747			—
Changes in assets and liabilities, net of effects of business combination	(4,385		)	(93		)
Net cash provided by operating activities	$	10,626		$	10,974

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First quarter of 2009 compared to the first quarter of 2008

Net Sales. Net sales increased $2.3 million or 2.0% to $118.6 million for the first quarter of 2009 from $116.3 million for the first quarter of 2008. Net sales were negatively impacted by the poor maple syrup crop in Canada in 2008 that led to a global shortfall of pure maple syrup. Net sales of our Maple Grove Farms pure maple syrup products decreased by $1.9 million, consisting of a unit volume decline of $3.3 million, partially offset by sales price increases of $1.4 million. Excluding net sales of our pure maple syrup products, net sales for the first quarter of 2009 increased $4.2 million or 3.8%. The $4.2 million increase was attributable to sales price increases of $6.4 million, partially offset by a decrease in unit volume of $2.2 million.

Net sales of our lines of Ortega, B&M, Las Palmas, Emeril’s, Regina and Joan of Arc products increased by $3.5 million, $1.1 million, $1.0 million, $0.8 million, $0.4 million and $0.4 million or 13.7%, 27.1%, 15.9%, 21.3%, 17.2% and 13.9%, respectively. These increases were offset by a reduction in net sales of Cream of Wheat and B&G products of $1.9 million and $0.7 million or 10.6% and 8.7%, respectively, and a reduction in net sales of our private label pickles and peppers of $0.4 million or 37.5%. In the aggregate, net sales for all other brands remained constant.

Gross Profit. Gross profit increased $3.8 million or 10.9% to $38.7 million for the first quarter of 2009 from $34.9 million for the first quarter of 2008. Gross profit expressed as a percentage of net sales increased 2.7 percentage points to 32.7% in the first quarter of 2009 from 30.0% in the first quarter of 2008. This increase in gross profit expressed as a percentage of net sales was primarily attributable to increased sales prices and decreased costs for trade spending, slotting, wheat and transportation, partially offset by increased costs for maple syrup, beans and packaging.

Sales, Marketing and Distribution Expenses. Sales, marketing and distribution expenses decreased $1.3 million or 10.6% to $11.0 million for the first quarter of 2009 from $12.3 million for the first quarter of 2008. This decrease is primarily due to a decrease in consumer and trade marketing of $0.8 million, a reduction in compensation expense and warehouse spending of $0.3 million and a decrease in other expenses of $0.2 million. Expressed as a percentage of net sales, our sales, marketing and distribution expenses decreased to 9.3% for the first quarter of 2009 from 10.6% for the first quarter of 2008.

General and Administrative Expenses. General and administrative expenses increased $0.9 million or 72.2% to $2.3 million for the first quarter of 2009 from $1.4 million in the first quarter of 2008. The increase in general and administrative expenses primarily resulted from an increased accrual for performance-based equity compensation.

Amortization Expense—Customer Relationships. Amortization expense—customer relationships remained consistent at $1.6 million for the first quarter of 2009 as compared to the first quarter of 2008.

Operating Income. As a result of the foregoing, operating income increased $4.1 million or 21.1% to $23.8 million for the first quarter of 2009 from $19.7 million for the first quarter of 2008. Operating income expressed as a percentage of net sales increased to 20.1% in the first quarter of 2009 from 16.9% in the first quarter of 2008.

Net Interest Expense. Net interest expense increased $1.7 million or 13.7% to $14.3 million for the first quarter of 2009 from $12.6 million in the first quarter of 2008. Net interest expense in the first quarter of 2009 included a $0.7 million charge relating to the unrealized loss on our interest rate swap resulting from our determination in September 2008 following the Lehman bankruptcy filing that the swap was no longer an effective hedge under the guidelines of SFAS No. 133, and a reclassification of $0.4 million of the amount recorded in accumulated other comprehensive income (loss) related to the swap. Net interest expense in the first quarter of 2009 also includes a reduction in interest income primarily due to lower interest rates. See “—Liquidity and Capital Resources—Debt” below.

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Income Tax Expense. Income tax expense increased $0.9 million to $3.6 million for the first quarter of 2009 from $2.7 million for the first quarter of 2008. Our effective tax rate was 37.9% for the first quarter of 2009 and 2008.

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 to the extent necessary, through borrowings under our credit facility.

Cash Flows. Cash provided by operating activities decreased $0.4 million to $10.6 million for the first quarter of 2009 from $11.0 million for the first quarter of 2008. Net income, excluding non-cash items such as depreciation and amortization, amortization of deferred debt issuance costs, deferred income taxes, unrealized loss on our interest rate swap, a reclassification to net interest expense and share-based compensation increased by $3.9 million. This increase was offset by a increase in net changes in assets and liabilities of $4.3 million due in large part to an increase in working capital primarily attributable to a decrease in accrued expenses relating primarily to the timing of the payment of our semi-annual interest payment on our senior notes partially offset by a decrease in trade accounts receivable. Our $9.6 million semi-annual interest payment on our senior notes is due on April 1 of each year. During 2009, April 1 was part of our first quarter and during fiscal 2008, April 1 was part of our second quarter.

Net cash used in investing activities for the first quarter of 2009 decreased $4.0 million to $2.4 million from $6.4 million for the first quarter of 2008. Net cash used in investing activities for the first quarter of 2009 and 2008 consisted entirely of capital spending. Capital expenditures in the first quarter of 2009 and 2008 included expenditures for building improvements, purchases of manufacturing and computer equipment and capitalized interest. Capital expenditures for the first quarter of 2008 also included expenditures for the expansion of our Stoughton, Wisconsin facility and the transfer of a portion of the Cream of Wheat production to that facility. That project was completed during fiscal 2008 and is the primary reason that capital spending decreased in the first quarter of 2009 as compared to the first quarter of 2008.

Net cash used in financing activities for the first quarter of 2009 was $7.1 million as compared to $7.8 million for the first quarter of 2008. Net cash used in financing activities for the first quarter of 2009 consisted of the payment of dividends and the repurchase of Class A common stock. Net cash used in financing activities for the first quarter of 2008 was entirely for the payment of dividends to holders of our Class A common stock.

Based on a number of factors, including our trademark, goodwill and customer relationship intangibles amortization for tax purposes from our prior acquisitions, we realized a significant reduction in cash taxes in fiscal 2008 and 2007 as compared to our tax expense for financial reporting purposes. While we expect our cash taxes to continue to increase in fiscal 2009 as compared to the prior two years, we believe that we will realize a benefit to our cash taxes payable from amortization of our trademarks, goodwill and customer relationship intangibles for the taxable years 2009 through 2022.

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Dividend Policy

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 in general distributed as regular quarterly cash dividends (up to the intended dividend rate as determined by our board of directors) to the holders of our common stock and not retained by us. From the date of our initial public offering of EISs in October 2004 through the dividend payment we made on October 30, 2008, the dividend rate for our Class A common stock was $0.848 per share per annum. Beginning with the dividend payment we made on January 30, 2009, the current intended dividend rate for our Class A common stock is $0.68 per share per annum.

Dividend payments, however, 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. Furthermore, our board of directors may, in its sole discretion, amend or repeal this dividend policy. Our board of directors may decrease the level of dividends below the intended dividend rate or discontinue entirely the payment of dividends. Future dividends with respect to shares of our common stock depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, business opportunities, acquisition opportunities, the condition of the debt and equity financing markets, provisions of applicable law and other factors that our board of directors may deem relevant. 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. In addition, over time, our EBITDA and capital expenditure, working capital and other cash needs will be subject to uncertainties, which could impact the level of dividends, if any, we pay in the future. Our senior subordinated notes indenture, the terms of our revolving credit facility and our senior notes indenture contain significant restrictions on our ability to make dividend payments. In addition, certain provisions of the Delaware General Corporation Law may limit our ability to pay dividends.

As a result of our dividend policy, 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.

For the first quarter of 2009 and 2008, we had cash flows provided by operating activities of $10.6 million and $11.0 million, and distributed $6.2 million and $7.8 million, respectively, as dividends. If our cash flows from operating activities for future periods 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 would need either to further reduce or eliminate dividends or, to the extent permitted under our senior notes indenture, our senior subordinated notes indenture and the terms of our credit facility, 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 position, our results of operations, our liquidity and our ability to maintain or expand our business.

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Acquisitions

Our liquidity and capital resources have been significantly impacted by acquisitions and may be impacted in the foreseeable future by additional acquisitions. We have historically financed acquisitions with borrowings and cash flows from operating activities. Historically, our interest expense has increased as a result of additional indebtedness we have incurred in connection with acquisitions, and will increase with any additional indebtedness we may incur to finance future acquisitions, if any. To the extent future acquisitions are financed by additional indebtedness, the resulting increase in debt and interest expense could have a negative impact on liquidity.

Environmental and Health and Safety Costs

We have not made any material expenditures during the first quarter of 2009 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 consolidated financial condition, results of operations or liquidity. However, we cannot predict what environmental or health and safety legislation or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with such environmental or health and safety laws or regulations or to respond to such environmental claims.

Debt

Our obligations under the credit facility are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The credit facility is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property. The credit facility provides for mandatory prepayment based on asset dispositions and certain issuances of securities, as defined. The credit facility contains covenants that restrict, among other things, our ability to incur additional indebtedness, pay dividends and create certain liens. The credit facility also contains certain financial maintenance covenants, which, among other things, specify maximum capital expenditure limits, a minimum interest coverage ratio and a maximum senior and total leverage ratio, each ratio as defined. As of April 4, 2009, we were in compliance with all of the covenants in the credit facility. Proceeds of the revolving credit facility are restricted to funding our working capital requirements, capital expenditures and acquisitions of companies in the same line of business as our company, subject to specified criteria. The maximum letter of credit capacity under the revolving credit facility is $10.0 million, with a fronting fee of 3.0% per annum for all outstanding letters of credit.

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Bankruptcy Code on October 3, 2008. None of our $130.0 million of outstanding term loans is currently held by Lehman, Lehman CPI or any other subsidiary of Lehman. Lehman CPI is one of the lenders participating in our $25.0 million revolving credit facility. However, Lehman CPI has only $3.1 million of the $25.0 million commitment. The other lenders under the revolving credit facility and their respective commitments are as follows: Bank of America, N.A., $9.4 million; Citibank, N.A., $9.4 million; and Royal Bank of Canada, $3.1 million. We do not believe that Lehman CPI would honor its funding commitment under the revolving credit facility if we were to make a funding request. As a result, the effective available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $0.5 million, was $21.4 million at April 4, 2009. We have not drawn upon the revolving credit facility since its inception in October 2004 and, based upon our cash on hand and working capital requirements, we have no plans to do so for the foreseeable future.

Effective as of February 26, 2007, we entered into a six year interest rate swap agreement in order to effectively fix at 7.0925% the interest rate payable for $130.0 million of term loan borrowings through the life of the term loan, ending on February 26, 2013. The counterparty to the swap is Lehman Special Financing Inc (Lehman SFI). Lehman SFI filed for protection under Chapter 11 of the U.S. Bankruptcy Code on October 3, 2008.

We initially designated the swap as a cash flow hedge under the guidelines of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” as amended (SFAS No. 133). Prior to Lehman’s bankruptcy filing, we recorded changes in the fair value of the swap in other comprehensive income (loss), net of tax in our consolidated balance sheet. However, as a result of the Lehman bankruptcy filing, we determined in September 2008 that the interest rate swap was no longer an effective hedge as defined by SFAS No. 133 and, accordingly, subsequent changes in the swap’s fair value are being recorded in current earnings in net interest expense in the consolidated statements of operations. We obtain third-party verification of fair value at the end of each reporting period. As of April 4, 2009, the fair value of our interest rate swap was $13.9 million and is recorded in other liabilities on our consolidated balance sheet. The amount recorded in accumulated other comprehensive income (loss) will be reclassified to net interest expense over the remaining life of the term loan borrowings as we make interest payments. Net interest expense in the first quarter of 2009 includes a $0.7 million charge relating to the unrealized loss on our interest rate swap and a reclassification of $0.4 million of the amount recorded in accumulated other comprehensive income (loss) related to the swap. During fiscal 2009, we expect to reclassify to net interest expense $1.1 million of the amount recorded in accumulated other comprehensive income (loss).

12% Senior Subordinated Notes due 2016. In October 2004, we issued $165.8 million aggregate principal amount of 12% senior subordinated notes due 2016, $143.0 million of which in the form of EISs and $22.8 million separate from EISs. As of April 4, 2009, $127.7 million aggregate principal amount of senior subordinated notes was held in the form of EISs and $38.1 million aggregate principal amount of senior subordinated notes was held separate from EISs.

Interest on the senior subordinated notes is payable quarterly in arrears on each January 30, April 30, July 30 and October 30 through the maturity date. The senior subordinated notes will mature on October 30, 2016, unless earlier retired or redeemed as described below.

Upon the occurrence of a change of control (as defined in the indenture), unless we have retired the senior subordinated notes or exercised our right to redeem all senior subordinated notes as described below, each holder of the senior subordinated notes has the right to require us to repurchase that holder’s senior subordinated notes at a price equal to 101.0% of the principal amount of the senior subordinated notes being repurchased, plus any accrued and unpaid interest to the date of repurchase. In order to exercise this right, a holder must separate the senior subordinated notes and Class A common stock represented by such holder’s EISs.

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We may not redeem the senior subordinated notes prior to October 30, 2009. However, we may, from time to time, seek to retire the senior subordinated notes through cash repurchases of EISs or separate senior subordinated notes and/or exchanges of EISs or separate senior subordinated notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, would first require an amendment to or a waiver under our credit agreement and, in any event, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. On and after October 30, 2009, we may redeem for cash all or part of the senior subordinated notes at a redemption price of 106.0% beginning October 30, 2009 and thereafter at prices declining annually to 100% on or after October 30, 2012. If we redeem any senior subordinated notes, the senior subordinated notes and Class A common stock represented by each EIS will be automatically separated.

The senior subordinated notes are unsecured obligations and are subordinated in right of payment to all of our existing and future senior secured and senior unsecured indebtedness, including the indebtedness under our credit facility and our senior notes. The senior subordinated notes rank pari passu in right of payment with any of our other subordinated indebtedness.

Our obligations under the senior subordinated notes are jointly and severally and fully and unconditionally guaranteed by all of our existing domestic subsidiaries and certain future domestic subsidiaries on an unsecured and subordinated basis on the terms set forth in our senior subordinated notes indenture. The senior subordinated note guarantees are subordinated in right of payment to all existing and future senior indebtedness of the guarantors, including the indebtedness under our credit facility and the senior notes. Our foreign subsidiary is not a guarantor, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of our senior subordinated notes.

Our senior subordinated notes indenture contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; specified creation of liens, sale-leaseback transactions and sales of assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of April 4, 2009, we were in compliance with all of the covenants in the senior subordinated notes indenture.

8% Senior Notes due 2011. In October 2004, we issued $240.0 million aggregate principal amount of 8% senior notes due 2011. Interest on the senior notes is payable on April 1 and October 1 of each year. The senior notes will mature on October 1, 2011, unless earlier retired or redeemed as described below.

We may redeem some or all of the senior notes at a redemption price of 104.0% beginning October 1, 2008 and thereafter at prices declining annually to 100.0% on or after October 1, 2010. If we or any of the guarantors sell certain assets or experience specific kinds of changes in control, we must offer to purchase the senior notes at the prices as described in our senior notes indenture plus accrued and unpaid interest to the date of redemption.

We may also, from time to time, seek to retire senior notes through cash repurchases of senior notes and/or exchanges of senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

Our obligations under the senior notes are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The senior notes and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to the indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the

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guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt, including the senior subordinated notes. Our foreign subsidiary is not a guarantor, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of our senior notes.

Our senior notes indenture contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; specified creation of liens, sale-leaseback transactions and sales of assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of April 4, 2009, we were in compliance with all of the covenants in the senior notes indenture.

Stock and Debt Repurchase Plan

On October 27, 2008, our board of directors authorized a stock and debt repurchase program for the repurchase of up to $10.0 million of our Class A common stock and/or senior notes over the next twelve months. Under the authorization, we may purchase shares of Class A common stock and/or senior notes from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the SEC.

During the first quarter of 2009, we repurchased and retired 213,600 shares of Class A common stock at an average cost per share (excluding fees and commissions) of $4.53, or $1.0 million in the aggregate. As of April 4, 2009, we had $6.5 million available for any future repurchases of Class A common stock and/or senior notes under the stock and debt repurchase plan.

Future Capital Needs

We are highly leveraged. On April 4, 2009, our total long-term debt and stockholders’ equity was $535.8 million and $144.5 million, respectively.

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 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, and pay our anticipated dividends on our Class A common stock. We expect to make capital expenditures of approximately $11.0 million in the aggregate during fiscal 2009, $2.4 million of which have already been made during the first quarter.

Seasonality

Sales of a number of our products tend to be seasonal. In the aggregate, however, our sales are not heavily weighted to any particular quarter due to the diversity of our product and brand portfolio. Sales during the first quarter of the fiscal year are generally below those of the following three quarters.

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

Inflation

During fiscal the past several years, we have been faced with increasing prices in certain commodities and packaging materials. We 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. We believe that through sales price increases and our cost saving efforts we have to a large degree been able to offset the impact of recent raw material, packaging and transportation cost increases, although in certain cases on a lagging basis. There can be no assurance, however, that we will be able to offset any present or future increases in the cost of raw materials, packaging and transportation, with additional sales price increases or cost reductions.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of SFAS No. 157 were effective as of the beginning of our fiscal 2008, with the exception of certain provisions deferred until the beginning of our fiscal 2009. In February 2008, the FASB issued FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157,” which delayed the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until the beginning of our fiscal 2009. We adopted SFAS No. 157 effective at the beginning of our fiscal 2008 for financial assets and financial liabilities, which did not have a material impact on our results of operations or financial position. We adopted SFAS No. 157 effective at the beginning of our fiscal 2009 for non-financial assets and non-financial liabilities, which did not have a material impact on our results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (SFAS No. 141R) and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (SFAS No. 160). SFAS No. 141R requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 141R and SFAS No. 160 are effective as of the beginning of our fiscal 2009. SFAS No. 141R will be applied prospectively. The effects of SFAS No. 141R will depend on future acquisitions. SFAS No. 160 requires retroactive adoption. We currently do not have any noncontrolling interests in subsidiaries.

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recognized intangible asset to consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, to consider assumptions that market participants would use about renewal or extension as adjusted for entity-specific factors. FSP 142-3 is effective as of the beginning of our fiscal 2009. We adopted FSP 142-3 effective at the beginning of our fiscal 2009, which did not have a material impact on our results of operations or financial position.

Off-balance Sheet Arrangements

As of April 4, 2009, 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 and future pension obligations. During the first quarter of 2009, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in our 2008 Annual Report on Form 10-K, except that we entered into a new warehouse lease that will require us to make additional rent payments of approximately $11.5 million in the aggregate over the course of the lease, which expires in 2016. These additional rent payments are expected to be partially offset by a reduction in rent payments relating to certain expiring warehouse leases that will no longer be needed. In addition, our expected contributions to our defined benefit pension plans for fiscal 2009 have increased from $1.2 million to $2.1 million because, although not obligated to do so, we expect to make $0.9 million of voluntary contributions to our defined benefit pension plans during the remainder of fiscal 2009.

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 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;

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· 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;

· 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, as well as recent publicity concerning the health implications of obesity and trans fatty acids;

· competitors’ pricing practices and promotional spending levels;

· 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; and

· 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

· other factors discussed elsewhere in this report and in our other public filings with the SEC, including under Item 1A, “Risk Factors” in our 2008 Annual Report on Form 10-K.

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.

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 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of operations, we are exposed to market risks 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.

Interest under our $25.0 million revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance with the revolving credit facility, including the base lending rate per annum plus an applicable margin, and LIBOR plus an applicable margin. Interest under our term loan facility is determined based on alternative rates that we may choose in accordance with the credit facility, including the base lending rate per annum plus an applicable margin of 1.00%, and LIBOR plus an applicable margin of 2.00%. The revolving credit facility was undrawn at April 4, 2009, and we currently have no plans to draw upon the facility for the foreseeable future. If we were to make a funding

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request, we do not believe that Lehman CPI would honor its $3.1 million funding commitment under the revolving credit facility. As a result, the effective available borrowing capacity under our revolving credit facility, net of outstanding letters of credit of $0.5 million, was $21.4 million at April 4, 2009.

We have outstanding $130.0 million of term loan borrowings at April 4, 2009 and January 3, 2009. The term loan borrowings are fixed at 7.0925% based upon a six year interest rate swap agreement that we entered into on February 26, 2007 with an affiliate of Lehman. See the discussion of the interest rate swap and the Lehman bankruptcy filing above under the heading “Liquidity and Capital Resources-Debt-Senior Secured Credit Facility” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information.

The carrying values and fair values of our term loan borrowings, senior notes and senior subordinated notes as of April 4, 2009 and January 3, 2009 are as follows (dollars in thousands):

	April 4, 2009				January 3, 2009
	Carrying Value		Fair Value(1)(2)		Carrying Value		Fair Value(1)(3)
Senior Secured Term Loan due February 26, 2013	$	130,000	$	119,600	$	130,000	$	107,900
8% Senior Notes due October 1, 2011	240,000		220,800		240,000		207,600
12% Senior Subordinated Notes due October 30, 2016:
— represented by EISs	127,689		101,972		124,793		90,235
— held separately	38,111		30,436		41,007		29,651

(1) Fair values are estimated based on quoted market prices, except as otherwise noted in footnotes (2) and (3) below.

(2) Solely for purposes of this presentation, we have assumed that the fair value of each senior subordinated note at April 4, 2009 was $5.71, based upon the $5.09 per share closing price of our separately traded Class A common stock and the $10.80 per EIS closing price of our EISs on the New York Stock Exchange on April 3, 2009 (the last business day of the first quarter of 2009). Each EIS represents one share of Class A common stock and $7.15 principal amount of our senior subordinated notes.

(3) Solely for purposes of this presentation, we have assumed that the fair value of each senior subordinated note at January 3, 2009 was $5.17, based upon the $5.49 per share closing price of our separately traded Class A common stock and the $10.66 per EIS closing price of our EISs on the New York Stock Exchange on January 2, 2009 (the last business day of fiscal 2008).

The recent volatility in the global financial markets could negatively impact the fair value of our debt obligations.

The information under the heading “Inflation” in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” is incorporated herein by reference.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, our management, including our chief executive officer and our chief financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures that we use that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting. As required by Rule 13a-15(d) under the Exchange Act, our management, including our chief executive officer and our chief financial officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our chief executive officer and our chief financial officer concluded that there has been no change during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls. Our company’s management, including the chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time involved in various claims and legal actions arising in the ordinary course of business, including proceedings involving product liability claims, worker’s compensation and other employee claims, and tort and other general liability claims, as well as trademark, copyright, patent infringement and related claims and legal actions. In the opinion of our management, the ultimate disposition of any currently pending claims or actions will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Item 1A. Risk Factors

We do not believe there have been any material changes in our risk factors as previously disclosed in our 2008 Annual Report on Form 10-K.

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

Issuer Purchases of Equity Securities

The following table sets forth information with respect to shares of our Class A common stock that we purchased during the first quarter of 2009:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(a)

January 4, 2009 to January 26, 2009	—	—		—	—

January 27, 2009 to February 23, 2009	—	—		—	—

February 24, 2009 to April 4, 2009	213,600	$	4.53	213,600	$	6,497,552

Total	213,600	$	4.53	213,600	$	6,497,552

(a) On October 27, 2008, our board of directors authorized a stock and debt repurchase program for the repurchase of up to $10.0 million of our Class A common stock and/or senior notes over the next twelve months. Under the authorization, we may purchase shares of Class A common stock and/or senior notes from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the SEC.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

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Item 5. Other Information

Not applicable.

Item 6. Exhibits

EXHIBIT NO.		DESCRIPTION

31.1		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer.
31.2		Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer.
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer and Chief Financial Officer.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: April 28, 2009	B&G FOODS, INC.


	By:	/s/ Robert C. Cantwell
		Robert C. Cantwell
		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer and Authorized Officer)