B&G Foods, Inc. [BGS] Filings

10-Q 1 bgs-20220402x10q.htm QUARTERLY REPORT ON FORM 10-Q

As filed with the Securities and Exchange Commission on May 5, 2022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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


	For the quarterly period ended April 2, 2022 or

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

For the transition period from to .

Commission file number 001-32316

B&G FOODS, INC.

(Exact name of Registrant as specified in its charter)


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

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

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

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


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

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

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

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


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

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

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

As of April 29, 2022, the registrant had 68,884,970 shares of common stock, par value $0.01 per share, issued and outstanding.

Table of Contents

B&G Foods, Inc. and Subsidiaries

Index

r
		Page No.

PART I FINANCIAL INFORMATION		1

	Item 1. Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements	6
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
	Item 4. Controls and Procedures	36

PART II OTHER INFORMATION		37

	Item 1. Legal Proceedings	37
	Item 1A. Risk Factors	37
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37
	Item 3. Defaults Upon Senior Securities	38
	Item 4. Mine Safety Disclosures	38
	Item 5. Other Information	38
	Item 6. Exhibits	38

SIGNATURE		39

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Forward-Looking Statements

This report includes forward-looking statements, including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The words “believes,” “belief,” “expects,” “projects,” “intends,” “anticipates,” “assumes,” “could,” “should,” “estimates,” “potential,” “seek,” “predict,” “may,” “will” or “plans” and similar references to future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by any forward-looking statements. We believe important factors that could cause actual results to differ materially from our expectations include the following:

●

the ultimate impact the COVID-19 pandemic will have on our business, which will depend on many factors, including, without limitation,

o

the ability of our company and our supply chain partners to continue to operate manufacturing facilities, distribution centers and other work locations without material disruption, and to procure ingredients, packaging and other raw materials when needed despite disruptions in the supply chain or labor shortages;

o

the duration of social distancing and stay-at-home and work-from-home mandates, policies and recommendations, and whether, and the extent to which, additional waves or variants of COVID-19 will affect the United States and the rest of North America; and

o

the extent to which macroeconomic conditions resulting from the pandemic and the pace of the subsequent recovery may impact consumer eating and shopping habits;

●

our substantial leverage;

●

the effects of rising costs for commodities, ingredients, packaging, other raw materials, distribution and labor;

●

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

●

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

●

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

●

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

●

our ability to recruit and retain senior management and a highly skilled and diverse workforce at our corporate offices, manufacturing facilities and other work locations despite a very tight labor market and changing employee expectations as to fair compensation, an inclusive and diverse workplace, flexible working and other matters;

●

the risks associated with the expansion of our business;

●

our possible inability to identify new acquisitions or to integrate recent or future acquisitions, or our failure to realize anticipated revenue enhancements, cost savings or other synergies from recent or future acquisitions;

●

our ability to successfully complete the integration of recent or future acquisitions into our enterprise resource planning (ERP) system;

●

tax reform and legislation, including the effects of the Infrastructure Investment and Jobs Act, U.S. Tax Cuts and Jobs Act and the U.S. CARES Act, and any future tax reform or legislation; for example, President Joe Biden has set forth several tax proposals that may affect B&G Foods;

●

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;

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●

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

●

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

●

the effects of international trade disputes, tariffs, quotas, and other import or export restrictions on our international procurement, sales and operations;

●

future impairments of our goodwill and intangible assets;

●

our ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption;

●

our ability to successfully implement our sustainability initiatives and achieve our sustainability goals, and changes to environmental laws and regulations;

●

our ability to successfully transition the operations of our Portland, Maine manufacturing facility to third-party co-manufacturing facilities and existing B&G Foods manufacturing facilities without significant disruption in production or customer service, and our ability to achieve anticipated productivity improvements and cost savings;

●

other factors that affect the food industry generally, including:

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

ocompetitors’ pricing practices and promotional spending levels;

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

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

●

other factors discussed elsewhere in this report and in our other public filings with the Securities and Exchange Commission (SEC), including under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K filed with the SEC on March 1, 2022, and Part, II, Item 1A, “Risk Factors,” in this report.

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

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

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

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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 2,		January 1,
	2022		2022
Assets
Current assets:
Cash and cash equivalents	$	41,470	$	33,690
Trade accounts receivable, net		164,190		145,281
Inventories		612,768		609,794
Assets held for sale		—		3,256
Prepaid expenses and other current assets		40,307		38,151
Income tax receivable		1,137		4,284
Total current assets		859,872		834,456

Property, plant and equipment, net of accumulated depreciation of $347,107 and $364,182 as of April 2, 2022 and January 1, 2022, respectively		334,187		341,471
Operating lease right-of-use assets		63,330		65,166
Goodwill		644,949		644,871
Other intangible assets, net		1,922,090		1,927,119
Other assets		7,081		6,916
Deferred income taxes		7,842		8,546
Total assets	$	3,839,351	$	3,828,545

Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	152,309	$	129,861
Accrued expenses		47,719		66,901
Current portion of operating lease liabilities		13,502		12,420
Income tax payable		2,093		2,557
Dividends payable		32,721		32,548
Total current liabilities		248,344		244,287

Long-term debt		2,281,195		2,267,759
Deferred income taxes		312,604		310,641
Long-term operating lease liabilities, net of current portion		52,628		55,607
Other liabilities		30,614		29,997
Total liabilities		2,925,385		2,908,291
Commitments and contingencies (Note 12)

Stockholders’ equity:
Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding		—		—
Common stock, $0.01 par value per share. Authorized 125,000,000 shares; 68,885,801 and 68,521,651 shares issued and outstanding as of April 2, 2022 and January 1, 2022, respectively		689		685
Additional paid-in capital		—		3,547
Accumulated other comprehensive loss		(15,469)		(18,169)
Retained earnings		928,746		934,191
Total stockholders’ equity		913,966		920,254
Total liabilities and stockholders’ equity	$	3,839,351	$	3,828,545

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 2,		April 3,
	2022		2021
Net sales	$	532,407	$	505,134
Cost of goods sold		431,119		387,340
Gross profit		101,288		117,794

Operating (income) and expenses:
Selling, general and administrative expenses		46,840		50,379
Amortization expense		5,223		5,436
Gain on sales of assets		(7,099)		—
Operating income		56,324		61,979

Other income and expenses:
Interest expense, net		26,802		26,969
Other income		(1,839)		(1,091)
Income before income tax expense		31,361		36,101
Income tax expense		7,705		9,223
Net income	$	23,656	$	26,878

Weighted average shares outstanding:
Basic		68,630		64,583
Diluted		69,017		65,210

Earnings per share:
Basic	$	0.34	$	0.42
Diluted	$	0.34	$	0.41

Cash dividends declared per share	$	0.475	$	0.475

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Thirteen Weeks Ended
	April 2,		April 3,
	2022		2021
Net income	$	23,656	$	26,878

Other comprehensive income (loss):
Foreign currency translation adjustments		2,679		(496)
Amortization of unrecognized prior service cost and pension deferrals, net of tax		21		334
Other comprehensive income (loss)		2,700		(162)
Comprehensive income	$	26,356	$	26,716

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of April 2, 2022

(In thousands, except share and per share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Equity
Balance at January 1, 2022	68,521,651	$	685	$	3,547	$	(18,169)	$	934,191	$	920,254
Foreign currency translation	—		—		—		2,679		—		2,679
Change in pension benefit (net of $7 of income taxes)	—		—		—		21		—		21
Net income	—		—		—		—		23,656		23,656
Share-based compensation	—		—		791		—		—		791
Net issuance of common stock for share-based compensation	261,014		3		(3,707)		—		—		(3,704)
Cancellation of restricted stock for tax withholding upon vesting	(10,871)		—		(298)		—		—		(298)
Cancellation of restricted stock upon forfeiture	(573)		—		—		—		—		—
Issuance of common stock in ATM offering	112,353		1		3,227		—		—		3,228
Stock options exercised	2,227		—		60		—		—		60
Dividends declared on common stock, $0.475 per share	—		—		(3,620)		—		(29,101)		(32,721)
Balance at April 2, 2022	68,885,801	$	689	$	—	$	(15,469)	$	928,746	$	913,966

B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

As of April 3, 2021

(In thousands, except share and per share data)

(Unaudited)


						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Retained		Stockholders’
	Shares	Amount		Capital		Loss		Earnings		Equity
Balance at January 2, 2021	64,252,859	$	643	$	—	$	(35,594)	$	866,828	$	831,877
Foreign currency translation	—		—		—		(496)		—		(496)
Change in pension benefit (net of $108 of income taxes)	—		—		—		334		—		334
Net income	—		—		—		—		26,878		26,878
Share-based compensation	—		—		432		—		—		432
Net issuance of common stock for share-based compensation	82,214		1		(1,087)		—		—		(1,086)
Cancellation of restricted stock for tax withholding upon vesting	(21,462)		—		(620)		—		—		(620)
Stock options exercised	438,900		4		14,048		—		—		14,052
Dividends declared on common stock, $0.475 per share	—		—		(12,773)		—		(17,984)		(30,757)
Balance at April 3, 2021	64,752,511	$	648	$	—	$	(35,756)	$	875,722	$	840,614

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 2,		April 3,
	2022		2021
Cash flows from operating activities:
Net income	$	23,656	$	26,878
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,825		20,291
Amortization of operating lease right-of-use assets		3,860		3,158
Amortization of deferred debt financing costs and bond discount/premium		1,169		1,141
Deferred income taxes		2,913		6,188
Gain on sales of assets		(7,113)		(26)
Share-based compensation expense		1,090		723
Changes in assets and liabilities, net of effects of businesses acquired:
Trade accounts receivable		(18,710)		(3,222)
Inventories		(1,578)		(4,295)
Prepaid expenses and other current assets		(1,736)		5,041
Income tax receivable/payable		2,634		2,334
Other assets		(405)		(145)
Trade accounts payable		22,707		6,462
Accrued expenses		(23,723)		(40,100)
Other liabilities		642		1,592
Net cash provided by operating activities		25,231		26,020

Cash flows from investing activities:
Capital expenditures		(7,129)		(11,785)
Proceeds from sales of assets		10,310		38
Net cash provided by (used in) investing activities		3,181		(11,747)

Cash flows from financing activities:
Repayments of borrowings under revolving credit facility		(67,500)		(50,000)
Borrowings under revolving credit facility		80,000		45,000
Proceeds from issuance of common stock, net		3,234		—
Dividends paid		(32,548)		(30,520)
Proceeds from exercise of stock options		60		14,052
Payments of tax withholding on behalf of employees for net share settlement of share-based compensation		(4,001)		(1,706)
Payments of debt financing costs		—		(275)
Net cash used in financing activities		(20,755)		(23,449)

Effect of exchange rate fluctuations on cash and cash equivalents		123		122
Net increase (decrease) in cash and cash equivalents		7,780		(9,054)

Cash and cash equivalents at beginning of period		33,690		52,182
Cash and cash equivalents at end of period	$	41,470	$	43,128

Supplemental disclosures of cash flow information:
Cash interest payments	$	44,411	$	44,577
Cash income tax payments	$	2,148	$	682
Non-cash investing and financing transactions:
Dividends declared and not yet paid	$	32,721	$	30,757
Accruals related to purchases of property, plant and equipment	$	1,461	$	1,059
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,592	$	1,586

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

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

(2)

Summary of Significant Accounting Policies

Fiscal Year

Typically, our fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters. As a result, a 53^rdweek is added to our fiscal year every five or six years. Generally, in a 53-week fiscal year our fourth fiscal quarter contains 14 weeks. Our fiscal year ending December 31, 2022 (fiscal 2022) and our fiscal year ended January 1, 2022 (fiscal 2021) each contains 52 weeks. Each quarter of fiscal 2022 and 2021 contains 13 weeks.

Basis of Presentation

The accompanying unaudited consolidated interim financial statements for the thirteen week periods ended April 2, 2022 (first quarter of 2022) and April 3, 2021 (first quarter of 2021) have been prepared by our company in accordance with generally accepted accounting principles in the United States (GAAP) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. All intercompany balances and transactions have been eliminated. The accompanying unaudited consolidated interim financial statements contain all adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of April 2, 2022, and the results of our operations, comprehensive income, changes in stockholders’ equity and cash flows for the first quarter of 2022 and 2021. Our results of operations for the first quarter of 2022 are not necessarily indicative of the results to be expected for the full year. We have evaluated subsequent events for disclosure through the date of issuance of the accompanying unaudited consolidated interim financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for fiscal 2021 filed with the SEC on March 1, 2022 (which we refer to as our 2021 Annual Report on Form 10-K).

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Use of Estimates

The preparation of financial statements in accordance with GAAP requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management involve revenue recognition as it relates to trade and consumer promotion expenses; pension benefits; acquisition accounting fair value allocations; the recoverability of goodwill, other intangible assets, property, plant and equipment and deferred tax assets; and the determination of the useful life of customer relationship and finite-lived trademark intangible assets. Actual results could differ significantly from these estimates and assumptions.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. Volatility in the credit and equity markets can increase the uncertainty inherent in such estimates and assumptions.

Accounting Standards Adopted in Fiscal 2022 or Fiscal 2021

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

Recently Issued Accounting Standards – Pending Adoption

In October 2021, the FASB issued a new ASU which provides an exception to fair value measurement for revenue contracts acquired in business combinations. This ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2022. We currently expect to adopt the standard during fiscal 2023 for any business combinations that occur in fiscal 2023 or after. Currently, we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements.

In March 2020, the FASB issued a new ASU which provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR, which is set to cease after June 30, 2023. The update may be applied as of the beginning of the interim period that includes March 12, 2020 through December 31, 2022. We currently expect to adopt the standard during fiscal 2022. We are in the process of evaluating the impact of the adoption of this ASU. LIBOR is used to determine interest under our revolving credit facility and our tranche B term loans due 2026. Currently, however, we do not expect the adoption of this ASU to have a material impact to our consolidated financial statements.

(3)

Acquisitions

We did not complete any acquisitions during fiscal 2021 or the first quarter of 2022.

(4)

Inventories

Inventories are stated at the lower of cost or net realizable value and include direct material, direct labor, overhead, warehousing and product transfer costs. Cost is determined using the first-in, first-out and average cost methods. Inventories have been reduced by an allowance for excess, obsolete and unsaleable inventories. The allowance is an estimate based on management’s review of inventories on hand compared to estimated future usage and sales.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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


	April 2, 2022		January 1, 2022
Raw materials and packaging	$	105,443	$	94,799
Work-in-process		113,126		145,102
Finished goods		394,199		369,893
Inventories	$	612,768	$	609,794

(5)

Goodwill and Other Intangible Assets

The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands):


	April 2, 2022						January 1, 2022
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Finite-Lived Intangible Assets
Trademarks	$	6,800	$	4,042	$	2,758	$	6,800	$	3,929	$	2,871
Customer relationships		406,991		172,972		234,019		406,963		167,860		239,103
Total finite-lived intangible assets	$	413,791	$	177,014	$	236,777	$	413,763	$	171,789	$	241,974

Indefinite-Lived Intangible Assets
Goodwill	$	644,949					$	644,871
Trademarks	$	1,685,313					$	1,685,145

Amortization expense associated with finite-lived intangible assets was $5.2 million and $5.4 million for the first quarter of 2022 and the first quarter of 2021, respectively, and is recorded in operating expenses. We expect to recognize an additional $15.7 million of amortization expense associated with our finite-lived intangible assets during the remainder of fiscal 2022, and thereafter $20.8 million of amortization expense in fiscal 2023, $20.7 million in each of fiscal 2024 and fiscal 2025, $20.0 million in fiscal 2026, and $15.2 million in fiscal 2027.

We did not recognize any impairment charges for indefinite-lived intangible assets for the first quarter of 2022 or 2021. If, however, operating results for any of our brands, including recently impaired brands and newly acquired brands, deteriorate, at rates in excess of our current projections, we may be required to record non-cash impairment charges to certain intangible assets. In addition, any significant decline in our market capitalization, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, goodwill and indefinite-lived intangible assets (trademarks), see Note 2(g), “Summary of Significant Accounting Policies—Goodwill and Other Intangible Assets” to our 2021 Annual Report on Form 10-K.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(6)

Long-Term Debt

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


	April 2, 2022		January 1, 2022
Revolving credit loans	$	177,500	$	165,000
Tranche B term loans due 2026		671,625		671,625
5.25% senior notes due 2025		900,000		900,000
5.25% senior notes due 2027		550,000		550,000
Unamortized deferred debt financing costs		(15,911)		(16,805)
Unamortized discount/premium		(2,019)		(2,061)
Total long-term debt, net of unamortized deferred debt financing costs and discount/premium		2,281,195		2,267,759

As of April 2, 2022, the aggregate contractual maturities of long-term debt were as follows (in thousands):


	Aggregate Contractual Maturities
Fiscal year:
2022 remaining	$	—
2023		—
2024		—
2025		1,077,500
2026		671,625
Thereafter		550,000
Total	$	2,299,125

Senior Secured Credit Agreement. Our senior secured credit agreement includes a term loan facility and a revolving credit facility.

On December 16, 2020, we amended our amended and restated credit agreement, dated as of October 2, 2015, and previously amended on March 30, 2017, November 20, 2017 and October 10, 2019. Among other things, the amendment provides for a $300.0 million add-on tranche B term loan facility, which closed and funded on December 16, 2020. The add-on tranche B term loans were issued at a price equal to 99.00% of their face value. The add-on term loans have the same terms as, and are fungible with, $371.6 million of tranche B term loans. We used the net proceeds of the add-on term loans to repay a portion of the revolving credit facility borrowings used to finance the Crisco acquisition. As of April 2, 2022, $671.6 million of tranche B term loans remained outstanding. The tranche B term loans mature on October 10, 2026.

Interest under the tranche B term loan facility is determined based on alternative rates that we may choose in accordance with our credit agreement, including a base rate per annum plus an applicable margin of 1.00%, and LIBOR plus an applicable margin of 2.50%.

The December 2020 amendment also increased the revolver capacity from $700.0 million to $800.0 million and extended the maturity date of our revolving credit facility from November 21, 2022 to December 16, 2025. As of April 2, 2022, the available borrowing capacity under the revolving credit facility, net of outstanding letters of credit of $4.6 million, was $617.9 million. Proceeds of the revolving credit facility may be used for general corporate purposes, including acquisitions of targets in the same or a similar line of business as our company, subject to specified criteria. The revolving credit facility matures on December 16, 2025.

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 credit agreement, including a base rate per annum plus an applicable margin ranging from 0.25% to 0.75%, and LIBOR plus an applicable margin ranging from 1.25% to 1.75%, in each case depending on our consolidated leverage ratio.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

We are required to pay a commitment fee of 0.50% per annum on the unused portion of the revolving credit facility. The maximum letter of credit capacity under the revolving credit facility is $50.0 million, with a fronting fee of 0.25% per annum for all outstanding letters of credit and a letter of credit fee equal to the applicable margin for revolving loans that are Eurodollar (LIBOR) loans.

We may prepay term loans or permanently reduce the revolving credit facility commitment under the credit agreement at any time without premium or penalty (other than customary “breakage” costs with respect to the early termination of LIBOR loans). Subject to certain exceptions, the credit agreement provides for mandatory prepayment upon certain asset dispositions or casualty events and issuances of indebtedness.

Our obligations under the credit agreement are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries (other than a domestic subsidiary that is a holding company for one or more foreign subsidiaries). The credit agreement is secured by substantially all of our and our domestic subsidiaries’ assets except our and our domestic subsidiaries’ real property. The credit agreement contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting our ability to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our outstanding stock and create certain liens.

The credit agreement also contains certain financial maintenance covenants, which, among other things, specify a maximum consolidated leverage ratio and a minimum interest coverage ratio, each ratio as defined in the credit agreement. Our consolidated leverage ratio (defined as the ratio, determined on a pro forma basis, of our consolidated net debt, as of the last day of any period of four consecutive fiscal quarters to our adjusted EBITDA (as defined in the credit agreement) before share-based compensation for such period) may not exceed 7.00 to 1.00. We are also required to maintain a consolidated interest coverage ratio (defined as the ratio, determined on a pro forma basis, of our adjusted EBITDA (before share-based compensation) for any period of four consecutive fiscal quarters to our consolidated interest expense for such period payable in cash) of at least 1.75 to 1.00. As of April 2, 2022, we were in compliance with all of the covenants, including the financial covenants, in the credit agreement.

The credit agreement also provides for an incremental term loan and revolving loan facility, pursuant to which we may request that the lenders under the credit agreement, and potentially other lenders, provide unlimited additional amounts of term loans or revolving loans or both on terms substantially consistent with those provided under the credit agreement. Among other things, the utilization of the incremental facility is conditioned on our ability to meet a maximum senior secured leverage ratio of 4.00 to 1.00, and a sufficient number of lenders or new lenders agreeing to participate in the facility.

5.25% Senior Notes due 2025. On April 3, 2017, we issued $500.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public of 100% of their face value. On November 20, 2017, we issued an additional $400.0 million aggregate principal amount of 5.25% senior notes due 2025 at a price to the public 101% of their face value plus accrued interest from October 1, 2017. The notes issued in November 2017 were issued as additional notes under the same indenture as our 5.25% senior notes due 2025 that were issued in April 2017, and, as such, form a single series and trade interchangeably with the previously issued 5.25% senior notes due 2025.

We used the net proceeds of the April 2017 offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility and tranche A term loans, to pay related fees and expenses and for general corporate purposes. We used the net proceeds of the November 2017 offering to repay all of the then outstanding borrowings and amounts due under our revolving credit facility, to pay related fees and expenses and for general corporate purposes.

Interest on the 5.25% senior notes due 2025 is payable on April 1 and October 1 of each year, commencing October 1, 2017. The 5.25% senior notes due 2025 will mature on April 1, 2025, unless earlier retired or redeemed as described below.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

We may redeem some or all of the 5.25% senior notes due 2025 at a redemption price of 102.6250% beginning April 1, 2021, 101.3125% beginning April 1, 2022 and 100% on or after April 1, 2023, in each case plus accrued and unpaid interest to the date of redemption. In addition, if we undergo a change of control or upon certain asset sales, we may be required to offer to repurchase the 5.25% senior notes due 2025 at the repurchase price set forth in the indenture plus accrued and unpaid interest to the date of repurchase.

We may also, from time to time, seek to retire the 5.25% senior notes due 2025 through cash repurchases of the 5.25% senior notes due 2025 and/or exchanges of the 5.25% senior notes due 2025 for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Our obligations under the 5.25% senior notes due 2025 are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The 5.25% senior notes due 2025 and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of the 5.25% senior notes due 2025.

The indenture governing the 5.25% senior notes due 2025 contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; creation of specified liens, certain sale-leaseback transactions and sales of certain specified assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of April 2, 2022, we were in compliance with all of the covenants in the indenture governing the 5.25% senior notes due 2025.

5.25% Senior Notes due 2027. On September 26, 2019, we issued $550.0 million aggregate principal amount of 5.25% senior notes due 2027 at a price to the public of 100% of their face value.

We used the proceeds of the offering, together with the proceeds of incremental term loans made during the fourth quarter of 2019, to redeem all of our outstanding 4.625% senior notes due 2021, repay a portion of our borrowings under our revolving credit facility, pay related fees and expenses and for general corporate purposes.

Interest on the 5.25% senior notes due 2027 is payable on March 15 and September 15 of each year, commencing March 15, 2020. The 5.25% senior notes due 2027 will mature on September 15, 2027, unless earlier retired or redeemed as described below.

We may redeem some or all of the 5.25% senior notes due 2027 at a redemption price of 103.938% beginning March 1, 2022 and thereafter at prices declining annually to 100% on or after March 1, 2025, in each case plus accrued and unpaid interest to the date of redemption. In addition, if we undergo a change of control or upon certain asset sales, we may be required to offer to repurchase the 5.25% senior notes due 2027 at the repurchase price set forth in the indenture plus accrued and unpaid interest to the date of repurchase.

We may also, from time to time, seek to retire the 5.25% senior notes due 2027 through cash repurchases of the 5.25% senior notes due 2027 and/or exchanges of the 5.25% senior notes due 2027 for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Our obligations under the 5.25% senior notes due 2027 are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of our existing and certain future domestic subsidiaries. The 5.25% senior notes due

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

2027 and the subsidiary guarantees are our and the guarantors’ general unsecured obligations and are effectively junior in right of payment to all of our and the guarantors’ secured indebtedness and to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries; are pari passu in right of payment to all of our and the guarantors’ existing and future unsecured senior debt; and are senior in right of payment to all of our and the guarantors’ future subordinated debt. Our foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of the 5.25% senior notes due 2027.

The indenture governing the 5.25% senior notes due 2027 contains covenants with respect to us and the guarantors and restricts the incurrence of additional indebtedness and the issuance of capital stock; the payment of dividends or distributions on, and redemption of, capital stock; a number of other restricted payments, including certain investments; creation of specified liens, certain sale-leaseback transactions and sales of certain specified assets; fundamental changes, including consolidation, mergers and transfers of all or substantially all of our assets; and specified transactions with affiliates. Each of the covenants is subject to a number of important exceptions and qualifications. As of April 2, 2022, we were in compliance with all of the covenants in the indenture governing the 5.25% senior notes due 2027.

Subsidiary Guarantees. We have no assets or operations independent of our direct and indirect subsidiaries. All of our present domestic subsidiaries jointly and severally and fully and unconditionally guarantee our long-term debt. 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. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Financial Information about B&G Foods and Guarantor Subsidiaries.”

Accrued Interest. At April 2, 2022 and January 1, 2022, accrued interest of $1.9 million and $20.7 million, respectively, is included in accrued expenses in the accompanying unaudited consolidated balance sheets.

(7)

Fair Value Measurements

The authoritative accounting literature relating to fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The accounting literature outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and the accounting literature details the disclosures that are required for items measured at fair value. Financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy under the accounting literature. The three levels are as follows:

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

Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable for the asset or liability, either directly or indirectly.

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

Cash and cash equivalents, trade accounts receivable, income tax receivable, trade accounts payable, accrued expenses, income tax payable 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.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The carrying values and fair values of our revolving credit loans, term loans and senior notes as of April 2, 2022 and January 1, 2022 were as follows (in thousands):


		April 2, 2022						January 1, 2022
	Carrying Value			Fair Value			Carrying Value			Fair Value
Revolving credit loans	$	177,500		$	177,500	⁽¹⁾	$	165,000		$	165,000	⁽¹⁾
Tranche B term loans due 2026		667,988	⁽²⁾		653,793	⁽³⁾		667,811	⁽²⁾		666,141	⁽³⁾
5.25% senior notes due 2025		901,618	⁽⁴⁾		885,840	⁽³⁾		901,753	⁽⁴⁾		920,915	⁽³⁾
5.25% senior notes due 2027	$	550,000		$	523,875	⁽³⁾	$	550,000		$	567,875	⁽³⁾

(1)	Fair values are estimated based on Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active.

(2)	The carrying value of the tranche B term loans includes a discount. At April 2, 2022 and January 1, 2022, the face amount of the tranche B term loans was $671.6 million.

(3)	Fair values are estimated based on quoted market prices.

(4)	The carrying value of the 5.25% senior notes due 2025 includes a premium. At April 2, 2022 and January 1, 2022, the face amount of the 5.25% senior notes due 2025 was $900.0 million.

There was no Level 3 activity during the first quarter of 2022 or 2021.

(8)

Accumulated Other Comprehensive Loss

The reclassifications from accumulated other comprehensive loss (AOCL) for the first quarter of 2022 and 2021 were as follows (in thousands):


	Amounts Reclassified from AOCL
	Thirteen Weeks Ended				Affected Line Item in
	April 2,		April 3,		the Statement Where
Details about AOCL Components	2022		2021		Net Income is Presented
Defined benefit pension plan items
Amortization of unrecognized loss	$	28	$	442	See (1) below
Accumulated other comprehensive loss before tax		28		442	Total before tax
Tax expense		(7)		(108)	Income tax expense
Total reclassification	$	21	$	334	Net of tax

(1)	These items are included in the computation of net periodic pension cost. See Note 10, “Pension Benefits,” for additional information.

Changes in AOCL for the first quarter of 2022 were as follows (in thousands):


			Foreign Currency
	Defined Benefit		Translation
	Pension Plan Items		Adjustments		Total
Balance at January 1, 2022	$	(9,344)	$	(8,825)	$	(18,169)
Other comprehensive income before reclassifications		—		2,679		2,679
Amounts reclassified from AOCL		21		—		21
Net current period other comprehensive income		21		2,679		2,700
Balance at April 2, 2022	$	(9,323)	$	(6,146)	$	(15,469)

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(9)Stockholders’ Equity

Stock Repurchase Program. On March 9, 2021, our board of directors authorized an extension of our stock repurchase program from March 15, 2021 to March 15, 2022. In extending the repurchase program, our board of directors also reset the repurchase authority to up to $50.0 million.

We did not repurchase any shares of our common stock during the first quarter of 2022 or the first quarter of 2021. The stock repurchase program authorization expired on March 15, 2022.

At-The-Market Equity Offering Program. On August 23, 2021, we entered into an “at-the-market” (ATM) equity offering sales agreement with BofA Securities, Inc., Barclays Capital Inc., Deutsche Bank Securities Inc., RBC Capital Markets, LLC, BMO Capital Markets Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Citizens Capital Markets, Inc., SMBC Nikko Securities America, Inc. and TD Securities (USA) LLC, as sales agents to sell up to 7.5 million shares of our common stock from time to time through an ATM equity offering program.

During fiscal 2021, we sold 3,965,706 shares of our common stock under the ATM equity offering program. We generated $112.5 million in gross proceeds, or $30.44 per share, from the sales and paid commissions to the sales agents of approximately $2.2 million and incurred other fees and expenses of approximately $0.4 million. During the first quarter of 2021, we did not sell any shares of our common stock under the ATM equity offering program.

During the first quarter of 2022, we sold 112,353 shares of our common stock under the ATM equity offering program. We generated $3.3 million in gross proceeds, or $29.37 per share, from the sales and paid commissions to the sales agents of approximately $0.1 million.

Future sales of shares, if any, under the ATM equity offering program will be made by means of transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including block trades and sales made in ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of the sale, at prices related to prevailing market prices or at negotiated prices. The timing and amount of any sales will be determined by a variety of factors considered by us.

We used the net proceeds from shares sold under the ATM equity offering program during fiscal 2021 and the first quarter of 2022 to repay revolving credit loans, to pay offering fees and expenses, and for general corporate purposes. We intend to use the net proceeds from any future sales of our common stock under the ATM offering for general corporate purposes, which could include, among other things, repayment, refinancing, redemption or repurchase of long-term debt or possible acquisitions.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(10)

Pension Benefits

Company-Sponsored Defined Benefit Pension Plans. As of April 2, 2022, we had four company-sponsored defined benefit pension plans covering approximately 31% of our employees. Three of these defined benefit pension plans are for the benefit of certain of our union employees and one is for the benefit of salaried and certain hourly employees. The benefits in the salaried and hourly plan are based on each employee’s years of service and compensation, as defined. Newly hired employees are no longer eligible to participate in any of our four company-sponsored defined benefit pension plans. Net periodic pension cost for our four company-sponsored defined benefit pension plans for the first quarter of 2022 and 2021 includes the following components (in thousands):


	Thirteen Weeks Ended
	April 2,		April 3,
	2022		2021
Service cost—benefits earned during the period	$	2,296	$	2,626
Interest cost on projected benefit obligation		1,371		1,225
Expected return on plan assets		(3,237)		(2,757)
Amortization of unrecognized loss		28		442
Net periodic pension cost	$	458	$	1,536

During the first quarter of 2022 and 2021, we did not make any contributions to our company-sponsored defined benefit pension plans. During the remainder of fiscal 2022, we expect to make approximately $2.5 million of contributions.

Multi-Employer Defined Benefit Pension Plan. Prior to the closure of our Portland, Maine manufacturing facility during the fourth quarter of 2021, we also contributed to the Bakery and Confectionery Union and Industry International Pension Fund (EIN 52-6118572, Plan No. 001), a multi-employer defined benefit pension plan, sponsored by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) on behalf of certain employees at our Portland, Maine manufacturing facility. The plan provides multiple plan benefits with corresponding contribution rates that are collectively bargained between participating employers and their affiliated BCTGM local unions.

B&G Foods made contributions to the plan of approximately $0.2 million during the first quarter of 2021. These contributions represented less than five percent of total contributions made to the plan.

In connection with the closure and sale of the Portland, Maine manufacturing facility, we withdrew from participation in the plan during the fourth quarter of 2021. As a result, we are required to make monthly withdrawal liability payments to the plan over 20 years. These payments amount to approximately $0.9 million on an annual basis beginning March 1, 2022. Accordingly, we have reflected the present value of such payments amounting to $13.9 million as a liability on our unaudited consolidated balance sheet.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(11)

Leases

Operating Leases. Operating leases are included in the accompanying unaudited consolidated balance sheets in the following line items:


	April 2,		January 1,
	2022		2022
Right-of-use assets:
Operating lease right-of-use assets	$	63,330	$	65,166

Operating lease liabilities:
Current portion of operating lease liabilities	$	13,502	$	12,420
Long-term operating lease liabilities, net of current portion		52,628		55,607
Total operating lease liabilities	$	66,130	$	68,027

We determine whether an arrangement is a lease at inception. We have operating leases for certain of our manufacturing facilities, distribution centers, warehouse and storage facilities, machinery and equipment, and office equipment. Our leases have remaining lease terms of one year to seven years, some of which include options to extend the lease term for up to five years, and some of which include options to terminate the lease within one year. We consider these options in determining the lease term used to establish our right-of use assets and lease liabilities.

The following table shows supplemental information related to leases:


	Thirteen Weeks Ended
	April 2,		April 3,
	2022		2021
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,921	$	3,350

The components of lease costs were as follows:
Cost of goods sold	$	2,254	$	1,184
Selling, general and administrative expenses		1,606		1,974
Total lease costs	$	3,860	$	3,158

Total rent expense was $4.5 million, including the operating lease costs of $3.9 million stated above, for the first quarter of 2022. Total rent expense was $4.0 million, including the operating lease costs of $3.2 million stated above, for the first quarter of 2021.

Because our operating leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have lease agreements that contain both lease and non-lease components. With the exception of our real estate leases, we account for our leases as a single lease component.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The following table shows the weighted average lease term and weighted average discount rate for our ROU assets: