As filed with the Securities and Exchange Commission on January 19, 2016
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 2, 2015
B&G Foods, Inc.
(Exact name of Registrant as specified in its charter)
Delaware |
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001-32316 |
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13-3918742 |
(State or Other Jurisdiction |
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(Commission |
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(IRS Employer |
of Incorporation) |
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File Number) |
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Identification No.) |
Four Gatehall Drive, Parsippany, New Jersey |
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07054 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrants telephone number, including area code: (973) 401-6500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Explanatory Note
This Amendment No. 1 is being filed by B&G Foods, Inc. to amend the Current Report on Form 8-K originally filed by B&G Foods with the Securities and Exchange Commission (the SEC) on November 6, 2015 to provide the information required by Item 9.01(a) and (b) of Form 8-K relating to B&G Foods acquisition of the Green Giant and Le Sueur shelf-stable and frozen vegetable business from General Mills, Inc. and certain of its affiliates. In this amendment, we refer to this acquisition as the Green Giant acquisition and the Green Giant and Le Sueur shelf-stable and frozen vegetable business as the Green Giant business. The information previously reported and the exhibits previously filed in Items 1.01, 2.01, 2.03, 5.02 and 9.01(d) of the original filing are incorporated by reference into this amendment.
Item 9.01. Financial Statements and Exhibits.
We do not believe that it is practicable to prepare and audit complete stand-alone financial statements of the Green Giant business in satisfaction of Rule 3-05 of Regulation S-X because:
· the Green Giant business was not operated as a stand-alone division or subsidiary of General Mills;
· Stand-alone financial statements relating to the Green Giant business were never previously prepared, and General Mills independent auditors have not historically audited or reported separately on the operations or net assets of the Green Giant business. As a result, the distinct and separate accounts necessary to present a complete stand-alone balance sheet and statements of income and cash flows have not been maintained; and
· General Mills does not believe that it can objectively allocate certain corporate expenses to the Green Giant business.
In addition, we do not believe that such financial statements would provide relevant information to users of our financial statements about the specific assets and operations acquired from General Mills. Among other reasons, because we are integrating the Green Giant business into our organizational structure (and accordingly our cost structure), we believe that a presentation of complete financial statements in accordance with Rule 3-01 and 3-02 of Regulation S-X that includes allocations of certain General Mills corporate expenses would not be meaningful to our investors and not as useful to them as the financial information we are providing in this report.
As a result, in accordance with the relief granted to B&G Foods by the staff of the Division of Corporation Finance of the SEC in a letter dated December 22, 2015, B&G Foods has provided the financial information described below in lieu of the financial information required by Rule 3-05 of Regulation S-X.
(a) Financial Statements of Business Acquired.
The following financial statements of the Green Giant business are being filed with this amendment as Exhibits 99.1 and 99.2 and are incorporated by reference herein:
· Audited Statements of Net Assets to Be Sold of the General Mills Green Giant Business as of May 31, 2015 and May 25, 2014 and the related Statements of Revenues and Direct Operating Expenses for the years ended May 31, 2015, May 25, 2014 and May 26, 2013.
· Unaudited Interim Statements of Net Assets to Be Sold of the General Mills Green Giant
2
Business as of August 30, 2015 and May 31, 2015 and the related Statements of Revenues and Direct Operating Expenses for the quarters ended August 30, 2015 and August 24, 2014.
(b) Pro Forma Financial Information.
The pro forma financial information required by Item 9.01(b) is filed as Exhibit 99.3 to this amendment and is incorporated by reference herein.
(d) Exhibits.
23.1 |
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Consent of KPMG LLP. |
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99.1 |
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Audited Statements of Net Assets to Be Sold of the General Mills Green Giant Business as of May 31, 2015 and May 25, 2014 and the related Statements of Revenues and Direct Operating Expenses for the years ended May 31, 2015, May 25, 2014 and May 26, 2013. |
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99.2 |
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Unaudited Interim Statements of Net Assets to Be Sold of the General Mills Green Giant Business as of August 30, 2015 and May 31, 2015 and the related Statements of Revenues and Direct Operating Expenses for the quarters ended August 30, 2015 and August 24, 2014. |
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99.3 |
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Unaudited Pro Forma Combined Financial Statements of B&G Foods, Inc. and Subsidiaries as of and for the three quarters ended October 3, 2015 and fiscal year ended January 3, 2015. |
3
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 hereunto duly authorized.
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B&G FOODS, INC. |
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Dated: January 19, 2016 |
By: |
/s/ Thomas P. Crimmins |
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Thomas P. Crimmins |
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Executive Vice President of Finance and Chief Financial Officer |
4
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the registration statements (Nos. 333-150903 and 333-168845) on Form S-8 and (Nos. 333-188695 and 333-191624) on Form S-3 of B&G Foods, Inc. of our report dated December 30, 2015, with respect to the statements of net assets to be sold of the General Mills Green Giant business as of May 31, 2015 and May 25, 2014 and the related statements of revenue and direct operating expenses for the fiscal years ended May 31, 2015, May 25, 2014 and May 26, 2013, which report appears in the Current Report on Form 8-K/A of B&G Foods, Inc. filed on January 19, 2016.
/s/ KPMG LLP
Minneapolis, Minnesota
January 19, 2016
Exhibit 99.1
GENERAL MILLS GREEN GIANT BUSINESS
Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(With Independent Auditors Report Thereon)
Independent Auditors Report
The Board of Directors
General Mills, Inc.:
Report on the Financial Statements
We have audited the accompanying abbreviated financial statements of General Mills Green Giant Business, which comprise the statements of net assets to be sold as of May 31, 2015 and May 25, 2014, and the related statements of revenue and direct operating expenses for the fiscal years ended May 31, 2015, May 25, 2014 and May 26, 2013, and the related notes to the abbreviated financial statements.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above and described in Note 1 present fairly, in all material respects, the net assets to be sold of General Mills Green Giant Business as of May 31, 2015 and May 25, 2014, and the revenue and direct operating expenses for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013, in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
As described in Note 1, the abbreviated financial statements have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and are not intended to be a complete presentation of the assets and liabilities or revenues and expenses of General Mills Green Giant Business. Our opinion is not modified with respect to this matter.
/s/ KPMG LLP
Minneapolis, Minnesota
December 30, 2015
GENERAL MILLS GREEN GIANT BUSINESS
Statements of Net Assets to be Sold
May 31, 2015 and May 25, 2014
(in thousands)
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2015 |
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2014 |
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Assets: |
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|
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|
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Inventory |
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$ |
165,178 |
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$ |
177,130 |
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Land, Buildings, and Equipment, net |
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29,611 |
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33,008 |
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Brand Intangible Asset |
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124,200 |
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384,200 |
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Total assets |
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318,989 |
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594,338 |
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Net assets to be sold |
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$ |
318,989 |
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$ |
594,338 |
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See accompanying notes to abbreviated financial statements
GENERAL MILLS GREEN GIANT BUSINESS
Statements of Revenue and Direct Operating Expenses
Years ended May 31, 2015, May 25, 2014 and May 26, 2013
(in thousands)
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2015 |
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2014 |
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2013 |
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Revenue |
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$ |
590,892 |
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643,736 |
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699,105 |
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Cost of goods sold |
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448,324 |
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473,870 |
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528,366 |
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Gross Margin |
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142,568 |
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169,866 |
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170,739 |
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Advertising and consumer promotion expenses |
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24,598 |
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30,629 |
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34,803 |
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Selling, administrative, and other expenses |
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41,897 |
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47,445 |
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50,654 |
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Impairment charge |
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260,000 |
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Revenue in excess of (less than) direct operating expenses |
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$ |
(183,927 |
) |
91,792 |
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85,282 |
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See accompanying notes to abbreviated financial statements
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
(1) Description of Business
General Mills, Inc. (GMI) entered into an Asset Purchase Agreement (the Agreement) with B&G Foods North America Inc. (the Buyer), which provides for the sale of certain assets of GMI, pertaining to the General Mills Green Giant Business (the Green Giant Business). The sale closed on November 2, 2015. The Green Giant Business included in the statements of revenue and direct operating expenses consists of the Green Giant and LeSueur branded frozen and shelf stable products, which includes 336 Stock Keeping Units (SKUs) across GMIs U.S. Retail, International, and Convenience Stores and Foodservice segments. The majority of the operations are part of the Meals unit, which is part of the U.S. Retail segment and Canada unit, which is part of the International segment. Products of the Green Giant Business are primarily distributed in the United States and Canada and are primarily sold through grocery stores, and mass retailers. The accompanying statements present the net assets to be sold as of May 31, 2015 and May 25, 2014 and revenue, cost of goods sold, advertising and consumer promotions expenses, selling, administrative, and other expenses, and impairment charge for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013 for the Green Giant Business.
Production for the Green Giant Business is primarily performed at GMIs Irapuato, Mexico and Belvidere, Illinois facilities as well as at four co-packers. GMI owns an asset at one of the co-packing facilities. This asset will be included in the sale and is included in the statements of net assets to be sold.
The accompanying statements of net assets to be sold and the statements of revenue and direct operating expenses of the Green Giant Business were prepared for the purpose of assisting the Buyer in complying with the rules and regulations of the Securities and Exchange Commission and are not intended to be a complete presentation of the Green Giant Business assets, liabilities, equity, revenues, expenses, and cash flows.
(2) Summary of Significant Accounting Policies and Practices
a) Basis of Presentation
The statements of revenues and direct operating expenses of the Green Giant Business was derived from GMIs historical accounting records, which are maintained in accordance with accounting principles generally accepted in the United States (US GAAP). The statements of revenues and direct operating expenses are not intended to be a complete presentation of the result of operations as if the Green Giant Business had operated as a stand-alone entity during the period presented and are not necessarily indicative of the results of operations that would have been achieved if the Green Giant Business had operated as a separate, stand-alone entity as of or for the periods presented nor are they necessarily indicative of the financial condition or results of operations to be expected in the future due to changes in the business and the omission of certain operating expenses as described below. Certain centrally provided services, corporate functions, and other areas which are shared by the Green Giant Business are not tracked or monitored in a manner that would enable the development of full financial statements required by Rule 3-05 of Regulation S-X. Such centrally-incurred costs include, but are not limited to general overhead costs, such as costs related to corporate human resources, accounting, legal, and other administrative services; interest income or expense; and income taxes. As such, only costs directly related to the revenue-generating activities of the Green Giant Business are included in this abbreviated financial statement. The statements of revenue and direct operating expenses includes allocations of certain costs directly related to revenue-generating activities as discussed in note 2(f), 2(g) and 2(h). GMIs management believes that the allocations are reasonable.
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
The Green Giant Business fiscal year ends on the last Sunday in May. Fiscal year 2015 consisted of 53 weeks. Fiscal years 2014 and 2013 each consisted of 52 weeks.
The accompanying statements have been prepared on the accrual basis of accounting.
The statements of net assets to be sold include only the assets of GMIs Green Giant Business to be acquired by the Buyer pursuant to the Agreement. Certain assets and liabilities of the Green Giant Business will not be sold per the terms of the Agreement and, therefore, are not included in the statements of net assets to be sold including, but not limited to, accounts receivable, accounts payable, coupon payables and trade payables. No liabilities, contingent or otherwise, were assumed by the Buyer.
Under GMIs centralized cash management system, cash requirements of the Green Giant Business are provided directly by GMI, and cash generated by the Green Giant Business is remitted directly to GMI. Transaction systems (e.g. payroll, employee benefits, and accounts payable) used to record and account for cash disbursements are provided by centralized GMI organizations. GMI also provides centralized sales, order management, billing, credit, and collection functions to the Green Giant Business. These functions are operated on a regional basis and are customer focused rather than business or product focused. Transaction systems (e.g. billing, accounts receivable, and cash application) used to account for cash receipts are also provided by centralized GMI organizations outside the defined scope of the Green Giant Business. These systems are not designed to track the detail of operating, financing, or investing cash flows necessary to separately disclose these activities related to the Green Giant Business. Therefore, it is impractical to present a statement of cash flows, including cash flows from operating, investing and financing activities.
b) Foreign Currency Translation
The activities of the Irapuato manufacturing operation and the Green Giant Business in the Canada unit are accounted for in the respective local currency. The assets in these operations are translated to U.S. dollars at the period-end exchange rates. Revenue and direct operating expense accounts are translated to U.S. dollars using the average exchange rates prevailing during the period.
c) Inventories
Inventories include raw material, semi-finished, and finished product. Raw materials consist of all ingredients and packaging of the Green Giant Business and are maintained at co-pack facilities and GMIs manufacturing facilities and distribution centers. Finished product inventories are maintained at co-pack facilities and GMIs manufacturing facilities and distribution centers.
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method.
d) Land, Buildings, and Equipment, Net
Land is recorded at historical cost. Buildings are recorded at historical cost and depreciated over 30-40 years. Equipment represents certain manufacturing equipment used in the manufacturing process. Equipment is recorded at historical cost. Alterations and major overhauls, which extend the lives or increase the capacity of the assets, are capitalized as part of the asset. Depreciation is computed on a straight-line method over the estimated useful lives, primarily 10 years.
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
Included in land, building and equipment are certain manufacturing assets located at GMIs Belvidere manufacturing location; the land, building and manufacturing assets at GMIs manufacturing facility location in Irapuato related to the vegetable operation; the land and building located at the LeSueur Agricultural Research Center; and certain manufacturing assets located at a co-pack facility.
e) Brand Intangible Asset
The Green Giant brand intangible asset is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The estimate of the fair value of the brand is based on a discounted cash flow model using inputs which included projected revenues, assumed royalty rates, and a discount rate.
GMI determined that the Green Giant brand intangible asset was an indefinite-lived intangible asset. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, known technological advances, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.
f) Revenue Recognition
Revenue from the sale of products is recognized when the shipment is accepted by the customer. Sales include shipping and handling charges billed to the customer and are reported net of consumer coupon, trade promotion, and other costs, including estimated returns. Revenue also includes royalty income from third-party licensing agreements related specifically to the Green Giant brand. Royalty income was $1.3 million, $1.1 million, and $0.9 million for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013, respectively. Sales, value-added, and other excise taxes are not recognized in revenue; rather, they are included in selling, administrative, and other expenses. Coupons are expensed when distributed, based on estimated redemption rates. Trade promotions are expensed based on estimated participation and performance levels for offered programs. Trade expense incurred for Corporate Events is charged to the Meals and Canada units based on the prior fiscal year share of total operating segment delivery volume. An allocation of Meals and Canada units corporate expenses is then made to the Green Giant Business based on its percentage share of the total variable merchandising expense of the respective unit.
A single customer accounted for 26%, 27%, and 27% of revenue during fiscal years 2015, 2014, and 2013, respectively. In addition, the top five customers accounted for 51%, 51%, and 51%, respectively.
g) Cost of Goods Sold
Cost of goods sold includes direct variable and fixed costs of materials, labor, overhead, distribution, and costs for supporting operations functions, facilities, and services shared by the Green Giant Business with other GMI businesses. Costs for supporting operations include headquarters-related costs, which include logistics and sourcing costs and incentive costs. In addition, these costs include other plant-level cost center expenses related to overhead and administrative costs associated with finance, human resources and information systems that are directly related to the Green Giant Business. Costs for supporting operations are allocated in proportion to the Green Giant Business
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
delivery volume as compared with total volumes for GMI and the Meals unit. Cost for supporting operations were $28.9 million, $32.6 million, and $32.9 million for fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013, respectively.
h) Advertising and Consumer Promotions (A&CP)
A&CP expenses represent advertising and consumer promotions. The production costs of advertising are expensed the first time that the advertising takes place. A&CP include cross-business consumer promotions and events, which are allocated to the Green Giant Business as described below.
The results of the Green Giant Business include allocated A&CP costs of $6.4 million, $6.8 million, and $8.7 million for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013, respectively. Certain other activities only support the Green Giant Business and are charged 100% to the Green Giant Business.
Coupon-related costs associated with coupon processing are allocated to the Meals and Canada units based on prior year coupon redemption in proportion to total operating segment redemption. Amounts are then allocated to the Green Giant Business based on its coupon redemption in proportion to the total redemption of the respective unit.
Other advertising and consumer promotions costs associated with consumer services, media, marketing services, and similar expenses are also allocated to the Green Giant Business. These costs are allocated to the Meals and Canada units based on revenue in proportion to total operating segment consolidated revenue. Amounts are then allocated to the Green Giant Business based on its volume in proportion to the total volume of the respective unit.
i) Selling, Administrative, and Other
Selling, administrative and other expenses include costs related to selling and brokerage, marketing, research and development, trade administration, and non-corporate level administration that is associated with the revenue-generating activities of the Green Giant Business. Selling, administrative, and other expenses represent allocated costs of $41.9 million, $47.4 million, and $50.7 million, for the fiscal years ended May 31, 2015, May 25, 2014 and May 26, 2013, respectively. Amounts are generally allocated to the Meals and Canada units based on their revenue in proportion to the total respective operating segment revenue. These costs are then allocated to the Green Giant Business based on its revenue in proportion to the total revenue of the respective unit. Certain selling costs are allocated to the Meals and Canada units based on their costs in proportion to total respective operating segment costs, volume of participating products, and the number of new SKUs launched. These amounts are then allocated to the Green Giant Business based on its revenue in proportion to the total revenue of the respective unit.
All expenditures for research and development (R&D) are charged against earnings in the year incurred. R&D includes expenditures for new product and manufacturing process innovation, and are comprised primarily of internal salaries, wages, consulting, and other supplies attributable to time spent on R&D activities. Costs include depreciation and maintenance of research facilities, including assets at facilities that are engaged in pilot plant activities.
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
j) Use of Estimates
The preparation of the abbreviated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results could differ from these estimates. Also, as discussed in notes 1 and 2, these financial statements include allocations and estimates that are not necessarily indicative of the costs and expenses that would have resulted if the Green Giant Business had been operated as a separate entity, or the future results of the Green Giant Business.
(3) Inventories
The components of inventories are as follows:
|
|
May 31, 2015 |
|
May 25, 2014 |
|
|
|
|
|
|
|
Raw materials |
|
$ |
3,990 |
|
$ |
3,525 |
|
Finished goods |
|
161,188 |
|
173,605 |
|
Inventories |
|
$ |
165,178 |
|
$ |
177,130 |
|
(4) Land, Buildings and Equipment, Net
Land, Buildings and Equipment consist of the following:
|
|
May 31, 2015 |
|
May 25, 2014 |
|
|
|
|
|
|
|
Land, Buildings and Equipment, Net |
|
$ |
81,569 |
|
$ |
83,301 |
|
Less accumulated depreciation |
|
(51,958 |
) |
(50,293 |
) |
Land, Buildings and Equipment, Net |
|
$ |
29,611 |
|
$ |
33,008 |
|
Depreciation expense at Belvidere and Irapuato assigned to the Green Giant Business for the fiscal years ended May 31, 2015, May 25, 2014, and May 26, 2013 was $8.8 million, $9.2 million, and $9.7 million, respectively, and is included in cost of goods sold in the statements of revenue and direct operating expenses. These amounts include direct depreciation expense related to the assets to be sold for the years ended May 31, 2015, May 25, 2014, and May 26 2013 of $3.5 million, $3.7 million, and $3.9 million, respectively.
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements
May 31, 2015 and May 25, 2014
(in thousands)
(5) Brand Intangible asset
The Green Giant brand intangible asset consists of the following:
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|
Carrying Amount |
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|
|
|
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Balance as of May 26, 2013 |
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$ |
384,200 |
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Balance as of May 25, 2014 |
|
384,200 |
|
Impairment charge |
|
(260,000 |
) |
Balance as of May 31, 2015 |
|
$ |
124,200 |
|
During fiscal 2015, GMI made a strategic decision to redirect certain resources supporting the Green Giant Business in its U.S. Retail segment to other businesses within the segment. Therefore, future sales and profitability projections in GMIs long-range plan for this business were projected to decline. As a result of this triggering event, GMI performed an interim impairment assessment of the Green Giant brand intangible asset as of May 31, 2015, and determined that the fair value of the brand asset no
longer exceeded the carrying value of the asset. Significant assumptions used in that assessment included updated cash flow projections for the Green Giant Business, an updated royalty rate, a weighted-average cost of capital, and a tax rate. A $260 million impairment charge was recorded in the statements of revenue and direct operating expenses in impairment charge during fiscal 2015 related to this asset.
(6) Subsequent Events
Subsequent events have been evaluated through December 30, 2015, the date these abbreviated financial statements were issued.
Exhibit 99.2
GENERAL MILLS GREEN GIANT BUSINESS
Abbreviated Financial Statements (Unaudited)
August 30, 2015 and August 24, 2014
GENERAL MILLS GREEN GIANT BUSINESS
Statements of Net Assets to be Sold (Unaudited)
(in thousands)
|
|
August 30, 2015 |
|
May 31, 2015 |
|
Assets: |
|
|
|
|
|
Inventory |
|
$ |
172,576 |
|
$ |
165,178 |
|
Land, Buildings, and Equipment, net |
|
26,861 |
|
29,611 |
|
Brand Intangible Asset |
|
124,200 |
|
124,200 |
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Total assets |
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323,637 |
|
318,989 |
|
|
|
|
|
|
|
Net assets to be sold |
|
$ |
323,637 |
|
$ |
318,989 |
|
See accompanying notes to abbreviated financial statements
GENERAL MILLS GREEN GIANT BUSINESS
Statements of Revenue and Direct Operating Expenses (Unaudited)
(in thousands)
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Quarter Ended |
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August 30, 2015 |
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August 24, 2014 |
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Revenue |
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$ |
107,750 |
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$ |
108,221 |
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Cost of goods sold |
|
97,513 |
|
93,818 |
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Gross Margin |
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10,237 |
|
14,403 |
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|
|
|
|
|
|
Advertising and consumer promotion expense |
|
1,947 |
|
6,300 |
|
Selling, administrative, and other expense |
|
9,361 |
|
9,183 |
|
Direct operating expenses in excess of revenue |
|
$ |
(1,071 |
) |
$ |
(1,080 |
) |
See accompanying notes to abbreviated financial statements
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements (Unaudited)
August 30, 2015 and August 24, 2014
(in thousands)
(1) Description of Business
General Mills, Inc. (GMI) entered into an Asset Purchase Agreement (the Agreement) with B&G Foods North America Inc. (the Buyer), which provides for the sale of certain assets of GMI, pertaining to the General Mills Green Giant Business (the Green Giant Business). The sale closed on November 2, 2015.
The accompanying statements of net assets to be sold and the statements of revenue and direct operating expenses of the Green Giant Business were prepared for the purpose of assisting the Buyer in complying with the rules and regulations of the Securities and Exchange Commission and are not intended to be a complete presentation of the Green Giant Business assets, liabilities, equity, revenues, expenses, and cash flows.
These statements should be read in conjunction with the Financial Statements and footnotes included on Form 8-K for the fiscal year ended May 31, 2015. The accounting policies used in preparing these Financial Statements are the same as those described in Note 2 to the Financial Statements in that Form 8-K.
The preparation of the abbreviated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results could differ from these estimates. These financial statements include allocations and estimates that are not necessarily indicative of the costs and expenses that would have resulted if the Green Giant Business had been operated as a separate entity, or the future results of the Green Giant Business.
(2) Inventories
The components of inventories are as follows:
|
|
August 30, 2015 |
|
May 31, 2015 |
|
|
|
|
|
|
|
Raw materials |
|
$ |
3,404 |
|
$ |
3,990 |
|
Finished goods |
|
169,172 |
|
161,188 |
|
Inventories |
|
$ |
172,576 |
|
$ |
165,178 |
|
(3) Land, Buildings and Equipment, Net
Land, Buildings and Equipment consist of the following:
|
|
August 30, 2015 |
|
May 31, 2015 |
|
|
|
|
|
|
|
Land, Buildings and Equipment, Net |
|
$ |
76,994 |
|
$ |
81,569 |
|
Less accumulated depreciation |
|
(50,133 |
) |
(51,958 |
) |
Land, Buildings and Equipment, Net |
|
$ |
26,861 |
|
$ |
29,611 |
|
Depreciation expense at Belvidere and Irapuato assigned to the Green Giant business for the quarters ended August 30, 2015 and August 24, 2014 was $2.0 million and $2.2 million, respectively, and is included in cost of goods sold in the statements of revenue and direct operating expenses. These amounts include direct
GENERAL MILLS GREEN GIANT BUSINESS
Notes to Abbreviated Financial Statements (Unaudited)
August 30, 2015 and August 24, 2014
(in thousands)
depreciation expense related to the assets transferring with the sale for the quarters ended August 30, 2015 and August 24, 2014, of $0.9 million and $1.1 million, respectively.
(4) Subsequent Events
Subsequent events have been evaluated through December 30, 2015, the date these abbreviated financial statements were issued.
Exhibit 99.3
B&G Foods, Inc. and Subsidiaries
Unaudited Pro Forma Combined Financial Statements
On November 2, 2015, pursuant to an agreement entered into on September 2, 2015, B&G Foods, Inc. and its subsidiaries completed the acquisition of the Green Giant and Le Sueur shelf-stable and frozen vegetable business from General Mills, Inc. and certain of its affiliates, for $765.0 million in cash plus an inventory adjustment at closing of $57.7 million. We refer to this acquisition as the Green Giant acquisition and the Green Giant and Le Sueur shelf-stable and frozen vegetable business as the Green Giant business. In connection with the Green Giant acquisition, we amended and restated our senior secured credit agreement. Among other things, the amendment provided for an incremental $750.0 million tranche B term loan facility, the net proceeds of which we used to finance a portion of the purchase price for the Green Giant acquisition. We used revolving loan borrowings under the amended and restated credit agreement and cash on hand to fund the remainder of the purchase price and pay related transaction fees and expenses.
The unaudited pro forma combined balance sheet at October 3, 2015 combines our historical consolidated balance sheet at October 3, 2015 with the statement of assets acquired of the Green Giant business at August 29, 2015, and gives effect to the Green Giant acquisition and related financing as if such transactions occurred on October 3, 2015. The inventory of the Green Giant business fluctuates with the production cycle driven by the timing of vegetable harvests, and as a result the inventory at November 2, 2015 was greater than the historical period for the Green Giant business presented in the unaudited pro forma combined balance sheet below. As a result, the goodwill reflected in this pro forma presentation is greater than we anticipate it will be when we complete our initial opening balance sheet in connection with the preparation of our Annual Report on Form 10-K for the fiscal year ended January 2, 2016.
The unaudited pro forma combined statements of operations for the three quarters ended October 3, 2015 and the fiscal year ended January 3, 2015 combines our historical consolidated statements of operations for the periods then ended with the statements of net revenues and direct expenses of the Green Giant business for the three quarters ended August 30, 2015 and its four quarter period ended February 28, 2015, respectively, and gives effect to the Green Giant acquisition and related financing as if such transactions occurred on January 3, 2015. General Mills has a May fiscal year end. These periods were presented to comply with Item 9.01(b) reporting rules when an acquired business has a different fiscal year than the acquiring company. The fiscal quarter for the Green Giant business ended February 28, 2015 is repeated and presented in both operating periods. Net sales in that fiscal quarter totaled approximately $144 million. In the fiscal quarter for the Green Giant business ended May 30, 2015, General Mills recorded an impairment charge of $260 million related to certain intangibles assets, which is reflected on the historical financial statements for the Green Giant business. The charge is therefore included in our pro forma results of operations for the three quarters ended October 3, 2015. The impact of the reversal of the inventory step up to be recorded in our acquisition accounting is not reflected in our pro forma results of operations because it is directly related to the acquisition and is non-recurring. It will, however, be recorded in our actual results of operations in the period following the acquisition closing date based on estimated inventory turnover for the Green Giant business.
The Green Giant acquisition has been accounted for by the acquisition method of accounting. The pro forma combined financial information sets forth the preliminary allocation of the purchase price for the Green Giant acquisition based upon the estimated fair value of the assets acquired at the date of acquisition using available information. The preliminary purchase price allocation may be adjusted as a result of the finalization of our purchase price allocation procedures.
The unaudited pro forma combined financial information set forth below reflects pro forma adjustments that are based upon available information and certain assumptions that we believe are reasonable. The unaudited pro forma combined financial information does not purport to represent our results of operations or financial position that would have resulted had the Green Giant acquisition and related financing transaction to which pro forma effect is given been consummated as of the dates indicated.
Additionally, the unaudited pro forma combined statements of operations should not be considered indicative of expected future results. Furthermore, no effect has been given in the unaudited pro forma combined statements of operations for synergistic benefits that may be realized through the combination of B&G Foods and the Green Giant business or the costs that will be incurred in integrating the operations of the Green Giant business.
On July 10, 2015, we acquired Spartan Foods of America, Inc. dba Mama Marys and related entities from Linsalata Capital Partners and certain other sellers for a purchase price of $51.0 million in cash. We refer to this acquisition as the Mama Marys acquisition. The Mama Marys acquisition was not deemed to be material at that time and therefore, no estimated impact of the acquired business before the closing date has been added to the pro forma statement of operations data presented in this Exhibit 99.3. Actual results for the Mama Marys business are included in the actual results of B&G Foods since that closing date of that acquisition.
The unaudited pro forma combined financial statements and accompanying notes should be read in conjunction with the historical financial statements and the notes thereto for B&G Foods that are included in our Annual Report on Form 10-K for the Year Ended January 3, 2015 filed with the Securities and Exchange Commission (SEC) on March 4, 2015, our Quarterly Report on Form 10-Q for the period ended October 3, 2015 filed with the SEC on October 30, 2015, and the historical financial statements of the Green Giant business that are filed as Exhibits 99.1 and 99.2 to our Current Report on Form 8-K/A filed on January 19, 2016.
2
B&G Foods, Inc. and Subsidiaries
Unaudited Pro Forma Combined Balance Sheet
October 3, 2015
(Dollars in thousands, except per share amounts)
|
|
Historical |
|
|
|
|
|
|
|
B&G Foods(1) |
|
Green Giant(2) |
|
Pro Forma Adjustments |
|
Pro Forma Combined |
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
45,943 |
|
$ |
|
|
$ |
(45,943 |
)(3) |
$ |
|
|
Trade accounts receivable, net |
|
63,419 |
|
|
|
|
|
63,419 |
|
Inventories |
|
133,209 |
|
172,576 |
|
14,958 |
(4) |
320,743 |
|
Prepaid expenses and other current assets |
|
9,389 |
|
|
|
|
|
9,389 |
|
Income tax receivable |
|
3,057 |
|
|
|
|
|
3,057 |
|
Deferred income taxes |
|
3,185 |
|
|
|
|
|
3,185 |
|
Total current assets |
|
258,202 |
|
172,576 |
|
(30,985 |
) |
399,793 |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
118,311 |
|
26,861 |
|
14,928 |
(4) |
160,100 |
|
Goodwill |
|
388,044 |
|
|
|
106,420 |
(4) |
494,464 |
|
Other intangibles, net |
|
982,622 |
|
124,200 |
|
362,800 |
(4) |
1,469,622 |
|
Other assets |
|
15,888 |
|
|
|
14,547 |
(5) |
30,435 |
|
Total assets |
|
$ |
1,763,067 |
|
$ |
323,637 |
|
$ |
467,710 |
|
$ |
2,554,414 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable |
|
$ |
34,163 |
|
$ |
|
|
$ |
|
|
$ |
34,163 |
|
Current portion of long-term debt |
|
24,375 |
|
|
|
5,625 |
(3) |
30,000 |
|
Accrued expenses |
|
27,066 |
|
|
|
|
|
27,066 |
|
Dividends payable |
|
20,292 |
|
|
|
|
|
20,292 |
|
Total current liabilities |
|
105,896 |
|
|
|
5,625 |
|
111,521 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
954,491 |
|
|
|
787,722 |
(3) |
1,742,213 |
|
Other liabilities |
|
5,339 |
|
|
|
|
|
5,339 |
|
Deferred income taxes |
|
230,638 |
|
|
|
|
|
230,638 |
|
Total liabilities |
|
1,296,364 |
|
|
|
793,347 |
|
2,089,711 |
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued and outstanding |
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value per share. Authorized 125,000,000 shares; issued and outstanding 57,976,744 shares |
|
580 |
|
|
|
|
|
580 |
|
Additional paid-in-capital |
|
180,726 |
|
|
|
|
|
180,726 |
|
Accumulated other comprehensive loss |
|
(10,876 |
) |
|
|
|
|
(10,876 |
) |
Retained earnings |
|
296,273 |
|
|
|
(2,000 |
)(3) |
294,273 |
|
Total stockholders equity |
|
466,703 |
|
|
|
(2,000 |
) |
464,703 |
|
Total liabilities and stockholders equity |
|
|
|
|
|
|
|
|
|
|
|
$ |
1,763,067 |
|
$ |
|
|
$ |
791,347 |
|
$ |
2,554,414 |
|
See accompanying notes to unaudited pro forma combined financial statements.
3
B&G Foods, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
Year Ended January 3, 2015
(In thousands, except per share data)
|
|
Historical |
|
|
|
|
|
|
|
B&G Foods(6) |
|
Green Giant(7) |
|
Pro Forma Adjustments |
|
Pro Forma Combined |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
848,017 |
|
$ |
580,666 |
|
$ |
|
|
$ |
1,428,683 |
|
Cost of goods sold |
|
600,246 |
|
445,609 |
|
1,244 |
(4) |
1,047,099 |
|
Gross profit |
|
247,771 |
|
135,057 |
|
(1,244 |
) |
381,584 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Sales, general and administrative expenses |
|
93,033 |
|
68,271 |
|
|
|
161,304 |
|
Amortization expense |
|
12,692 |
|
|
|
2,600 |
(4) |
15,292 |
|
Impairment of intangible assets |
|
34,154 |
|
|
|
|
|
34,154 |
|
Gain on change in fair value of contingent consideration |
|
(8,206 |
) |
|
|
|
|
(8,206 |
) |
Operating income |
|
116,098 |
|
66,786 |
|
(3,844 |
) |
179,040 |
|
|
|
|
|
|
|
|
|
|
|
Other expenses: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
46,573 |
|
|
|
32,292 |
(8) |
78,865 |
|
Loss on extinguishment of debt |
|
5,748 |
|
|
|
|
|
5,748 |
|
Income before income tax expense |
|
63,777 |
|
66,786 |
|
(36,136 |
) |
94,427 |
|
Income tax expense |
|
22,821 |
|
|
|
11,173 |
(9) |
33,994 |
|
Net income |
|
$ |
40,956 |
|
$ |
66,786 |
|
$ |
(47,309 |
) |
$ |
60,433 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
53,658 |
|
|
|
|
|
53,658 |
|
Diluted |
|
53,747 |
|
|
|
|
|
53,747 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.76 |
|
N/A |
|
N/A |
|
$ |
1.13 |
|
Diluted |
|
$ |
0.76 |
|
N/A |
|
N/A |
|
$ |
1.12 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
|
$ |
1.36 |
|
N/A |
|
N/A |
|
$ |
1.36 |
|
See accompanying notes to unaudited pro forma combined financial statements.
4
B&G Foods, Inc. and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
Three Quarters Ended October 3, 2015
(In thousands, except per share data)
|
|
Historical |
|
|
|
|
|
|
|
B&G Foods(6) |
|
Green Giant(7) |
|
Pro Forma Adjustments |
|
Pro Forma Combined |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
624,067 |
|
$ |
392,903 |
|
$ |
|
|
$ |
1,016,970 |
|
Cost of goods sold |
|
423,066 |
|
308,419 |
|
933 |
(4) |
732,418 |
|
Gross profit |
|
201,001 |
|
84,484 |
|
(933 |
) |
284,552 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Sales, general and administrative expenses |
|
69,352 |
|
42,727 |
|
|
|
112,079 |
|
Amortization expense |
|
8,072 |
|
|
|
1,950 |
(4) |
10,022 |
|
Impairment of intangible assets |
|
|
|
260,000 |
|
|
|
260,000 |
|
Gain on change in fair value of contingent consideration |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
123,577 |
|
(218,243 |
) |
(2,883 |
) |
(97,549 |
) |
|
|
|
|
|
|
|
|
|
|
Other expenses: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
33,873 |
|
|
|
24,211 |
(8) |
58,084 |
|
Income (loss) before income tax expense (benefit) |
|
89,704 |
|
(218,243 |
) |
(27,094 |
) |
(155,633 |
) |
Income tax expense (benefit) |
|
31,574 |
|
|
|
(87,602 |
)(9) |
(56,028 |
) |
Net income (loss) |
|
$ |
58,130 |
|
$ |
(218,243 |
) |
$ |
60,508 |
|
$ |
(99,605 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
56,121 |
|
|
|
|
|
56,121 |
|
Diluted |
|
56,180 |
|
|
|
|
|
56,180 |
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.04 |
|
N/A |
|
N/A |
|
$ |
(1.77 |
) |
Diluted |
|
$ |
1.03 |
|
N/A |
|
N/A |
|
$ |
(1.77 |
) |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share |
|
$ |
1.03 |
|
N/A |
|
N/A |
|
$ |
1.03 |
|
See accompanying notes to unaudited pro forma combined financial statements.
5
B&G Foods, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined Financial Statements
Year Ended January 3, 2015 and Three Quarters Ended October 3, 2015
(1) Represents our historical unaudited consolidated balance sheet as of October 3, 2015.
(2) Represents the historical statement of net assets to be sold of General Mills Green Giant business as of August 30, 2015.
(3) Net change in cash is as follows:
(Dollars in thousands) |
|
|
|
Debt incurred under new credit agreement for the acquisition: |
|
|
|
Tranche B term loans due 2022, net of debt discount of $3,750 |
|
$ |
746,250 |
|
Revolving credit facility |
|
47,097 |
|
Incremental borrowings, net |
|
793,347 |
|
|
|
|
|
Cash purchase price |
|
822,743 |
|
Acquisition-related transaction costs |
|
2,000 |
|
Deferred debt financing charges |
|
14,547 |
|
Total reductions |
|
839,290 |
|
|
|
|
|
Net cash used for the acquisition and related financing transaction |
|
$ |
(45,943 |
) |
Approximately $5.6 million of the $793.3 million of incremental borrowings is due in the next twelve months.
(4) The total purchase price for the Green Giant acquisition was approximately $822.7 million, inclusive of an inventory adjustment at closing of $57.7 million. The following table sets forth the preliminary allocation of the Green Giant purchase price to the estimated fair value of the net assets acquired assuming an acquisition date of August 30, 2015, based upon currently available information. Inventory has been recorded at estimated selling price less costs of disposal and a reasonable profit. Equipment has been recorded at estimated fair value. A third party valuation specialist assisted us with our determination of the valuation for the intangible assets acquired (including trademarks, customer relationship intangibles and technology-related intangibles). The preliminary purchase price allocation will be adjusted as a result of the finalization of our purchase price allocation procedures. We anticipate completing the purchase price allocation as of November 2, 2015, the actual closing date of the acquisition, in the second quarter of fiscal 2016.
(Dollars in thousands) |
|
|
|
Inventory |
|
$ |
187,534 |
|
Property, plant and equipment, net |
|
41,789 |
|
Trademarks - nonamortizable intangible asset |
|
450,000 |
|
Goodwill |
|
106,420 |
|
Customer relationship intangibles - amortizable intangible asset |
|
32,000 |
|
Technology-related intangibles - amortizable intangible asset |
|
5,000 |
|
Total preliminary purchase price |
|
$ |
822,743 |
|
The following table provides a reconciliation of the pro forma adjustment to other intangibles, net:
(Dollars in thousands) |
|
|
|
Trademarks |
|
$ |
450,000 |
|
Customer relationship intangibles |
|
32,000 |
|
Technology-related intangibles |
|
5,000 |
|
Less: Historical Green Giant intangibles |
|
(124,200 |
) |
Total other intangibles, net |
|
$ |
362,800 |
|
6
B&G Foods, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined Financial Statements
Year Ended January 3, 2015 and Three Quarters Ended October 3, 2015
The excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired represents goodwill. Trademarks are deemed to have an indefinite useful life and are not amortized.
The pro forma combined statement of operations reflects an adjustment for acquired intangible asset amortization expense as follows (dollars in thousands):
|
|
|
|
Amortization |
|
|
|
Amortization Period (Years) |
|
Year Ended January 3, 2015 |
|
Three Quarters Ended October 3, 2015 |
|
Customer relationship intangibles |
|
20 |
|
$ |
1,600 |
|
$ |
1,200 |
|
Technology-related intangibles |
|
5 |
|
1,000 |
|
750 |
|
|
|
|
|
$ |
2,600 |
|
$ |
1,950 |
|
Acquired property, plant and equipment will be depreciated over the estimated remaining useful life, which is approximately 12 years on a weighted average basis. Cost of goods sold in our pro forma combined statement of operations has been adjusted to reflect incremental depreciation expense in the year ended January 3, 2015 and the three quarters ended October 3, 2015 of $1.3 million and $0.9 million, respectively, for the step-up in fair value of certain property, plant and equipment acquired in the acquisition.
(5) Reflects deferred financing charges incurred in connection with the tranche B term loan borrowings under our amended and restated credit agreement used finance the acquisition. The deferred financing charges will be amortized as interest expense over seven years.
(6) Represents our consolidated results of operations for our fiscal year ended January 3, 2015 and the three quarters ended October 3, 2015.
(7) Represents the historical statements of net revenues and direct expenses for the Green Giant business for its four quarters ended February 28, 2015 and its three quarters ended August 30, 2015. The historical statements of net revenues and direct expenses for the Green Giant business for these periods were derived from the historical statements of net revenues and direct expenses for the Green Giant business for its fiscal years ended May 31, 2015 and May 25, 2014 and its first quarter ended August 30, 2015.
(8) Adjustment to reflect our incurrence of an incremental $793.3 million of borrowings, amortization of debt discount and amortization of deferred financing costs relating to such additional borrowings (dollars in thousands):
|
|
Year Ended |
|
Three Quarters Ended October 3, |
|
|
|
January 3, 2015 |
|
2015 |
|
Tranche B term loans due 2022 ($750,000 at 3.75%) |
|
$ |
28,125 |
|
$ |
21,094 |
|
Amortization of debt discount |
|
641 |
|
479 |
|
Amortization of deferred debt issuance costs |
|
2,485 |
|
1,857 |
|
Revolving loans ($47,097 at 2.21%) |
|
1,041 |
|
781 |
|
Adjustment to interest expense |
|
$ |
32,292 |
|
$ |
24,211 |
|
In connection with the Green Giant acquisition, we amended and restated our senior secured credit
7
B&G Foods, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Combined Financial Statements
Year Ended January 3, 2015 and Three Quarters Ended October 3, 2015
agreement. Among other things, the amendment provided for an incremental $750.0 million tranche B term loan facility, which was funded on November 2, 2015 and the net proceeds of which we used to finance a portion of the purchase price for the Green Giant acquisition. We used revolving loan borrowings under the amended and restated credit agreement and cash on hand to fund the remainder of the purchase price and pay related transaction fees and expenses.
The tranche B term loans mature on November 2, 2022 and are subject to amortization at the rate of 1% per year with the balance due and payable on the maturity date. Interest under the tranche B term loan facility is determined based on alternative rates that we may choose in accordance with the amended and restated credit agreement, including a base rate per annum plus an applicable margin of 2.00%, and LIBOR plus an applicable margin of 3.00%.
Interest under the revolving credit facility is determined based on alternative rates that we may choose in accordance with the amended and restated credit agreement, including a base rate per annum plus an applicable margin ranging from 0.50% to 1.00%, and LIBOR plus an applicable margin ranging from 1.50% to 2.00%, in each case depending on our consolidated leverage ratio. At October 3, 2015, the revolving credit facility interest rate was approximately 2.21%.
If the interest rates were to increase or decrease by 0.125% from the rates assumed in the table above, pro forma interest expense would change by approximately $9.9 million for the fiscal year ended January 3, 2015 and $7.5 million for the three quarters ended October 3, 2015.
(9) Adjustment to reflect income tax expense on the results of operations of the Green Giant business and the pro forma adjustments for the year ended January 3, 2015 and three quarters ended October 3, 2015 using estimated statutory income tax rates of 36.0% (federal and state) for both periods. Income tax expense was not allocated to the Green Giant business in the pre-acquisition statements of net revenues and direct expenses.
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