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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended July 4, 2009

or

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

For the transition period from                    to                   .

Commission file number 001-32316

B&G FOODS, INC.

(Exact name of Registrant as specified in its charter)

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

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

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

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

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

As of July 4, 2009, the registrant had 35,867,292 shares of Class A common stock, par value $0.01 per share, issued and outstanding, 18,199,058 of which were held in the form of Enhanced Income Securities (EISs) and 17,668,234 of which were held separate from EISs.  Each EIS represents one share of Class A common stock and $7.15 principal amount of 12% senior subordinated notes due 2016.  As of July 4, 2009, the registrant had no shares of Class B common stock, par value $0.01 per share, issued or outstanding.

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B&G Foods, Inc. and Subsidiaries

Index

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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)

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)

See Notes to Consolidated Financial Statements.

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B&G Foods, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

See Notes to Consolidated Financial Statements.

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Notes to Consolidated Financial Statements

(Unaudited)

(1)                                 Nature of Operations

B&G Foods, Inc. is a holding company, the principal assets of which are the capital stock of its subsidiaries.  Unless the context requires otherwise, references in this report to “B&G Foods,” “our company,” “we,” “us” and “our” refer to B&G Foods, Inc. and its subsidiaries.  We operate in one industry segment and manufacture, sell and distribute a diverse portfolio of high-quality shelf-stable foods across the United States, Canada and Puerto Rico.  Our products include hot cereals, fruit spreads, canned meats and beans, spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican-style sauces, taco shells and kits, salsas, pickles, peppers and other specialty food products.  We compete in the retail grocery, food service, specialty, private label, club and mass merchandiser channels of distribution.  We distribute our products throughout the United States via a nationwide network of independent brokers and distributors to supermarket chains, food service outlets, mass merchants, warehouse clubs, non-food outlets and specialty food distributors.

(2)                                 Summary of Significant Accounting Policies

Fiscal Year

Our financial statements are presented on a consolidated basis.  Typically, our fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to December 31 in the case of our fiscal year and fourth fiscal quarter, and on the Saturday closest to the end of the corresponding calendar quarter in the case of our fiscal quarters.  As a result, a 53rd week is added to our fiscal year every five or six years.  In a 53-week fiscal year our fourth fiscal quarter contains 14 weeks.  Our fiscal year ending January 2, 2010 (fiscal 2009) contains 52 weeks and our fiscal year ended January 3, 2009 (fiscal 2008) contained 53 weeks.  Each quarter of fiscal 2009 and 2008 contains 13 weeks, except the fourth quarter of 2008 which contained 14 weeks.

Basis of Presentation

The accompanying consolidated interim financial statements for the thirteen and twenty-six week periods ended July 4, 2009 (second quarter of 2009 and first two quarters of 2009) and June 28, 2008 (second quarter of 2008 and first two quarters of 2008) have been prepared by our company in accordance with accounting principles generally accepted in the United States of America without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and include the accounts of B&G Foods, Inc. and its subsidiaries.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations.  However, our management believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading.  All intercompany balances and transactions have been eliminated.  The accompanying unaudited consolidated interim financial statements contain all adjustments (consisting only of normal and recurring adjustments) that are, in the opinion of management, necessary to present fairly our consolidated financial position as of July 4, 2009, the results of our operations for the second quarter and first two quarters of 2009 and 2008, and cash flows for the first two quarters of 2009 and 2008.  Our results of operations for the second quarter and first two quarters of 2009 are not necessarily indicative of the results to be expected for the full year.  We have evaluated subsequent events for disclosure through July 28, 2009, the date of issuance of the accompanying consolidated interim financial statements.  The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes for fiscal 2008 included in our Annual Report on Form 10-K for fiscal 2008 filed with the SEC on March 5, 2009.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(2)                                 Summary of Significant Accounting Policies (Continued)

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Some of the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; purchase accounting allocations; the recoverability of goodwill, trademarks, customer relationship intangibles, property, plant and equipment and deferred tax assets; the accounting for our enhanced income securities (EISs); and the accounting for share-based compensation expense.  Actual results could differ significantly from these estimates and assumptions.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, that management believe to be reasonable under the circumstances.  We adjust such estimates and assumptions when facts and circumstances dictate.  Recent volatility in the credit, equity and foreign currency markets has increased the uncertainty inherent in such estimates and assumptions.

Enhanced Income Securities

Each of our EISs represents one share of our Class A common stock and $7.15 principal amount of our senior subordinated notes.  The holders of our EISs may separate each EIS into one share of Class A common stock and $7.15 principal amount of senior subordinated notes at any time.  Upon the occurrence of certain events (including redemption of the senior subordinated notes or upon maturity of the senior subordinated notes), EISs will automatically separate.  Conversely, subject to limitations, a holder of separate shares of Class A common stock and senior subordinated notes can combine such securities to form EISs.  Separation and combination of EISs will automatically result in increases and decreases, respectively, in the number of shares of Class A common stock not held in the form of EISs.  As of July 4, 2009, we had 35,867,292 shares of Class A common stock issued and outstanding, 18,199,058 of which were held in the form of EISs and 17,668,234 of which were held separate from EISs.  As of June 28, 2008 we had 36,796,988 shares of Class A common stock issued and outstanding, 16,764,277 of which were held in the form of EISs and 20,032,711 of which were held separate from EISs.

Recently Issued Accounting Standards

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(2)                                 Summary of Significant Accounting Policies (Continued)

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

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

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

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

In May 2009, the FASB issued Statement No. 165, “Subsequent Events” (SFAS No. 165), which establishes general standards of accounting for, and requires disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  SFAS No. 165 is effective for our second quarter of fiscal 2009.  The adoption of SFAS No. 165 did not have a material effect on our results of operations or financial position.

In June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - A Replacement of FASB Statement No. 162” (SFAS No. 168).  SFAS No. 168 establishes the FASB Accounting Standards CodificationTM (Codification) as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants.  SFAS No. 168 and the Codification are effective for financial statements

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(2)                                 Summary of Significant Accounting Policies (Continued)

issued for interim and annual periods ending after September 15, 2009.  When effective, the Codification will supersede all existing non-SEC accounting and reporting standards.  All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative.  SFAS No. 168 is effective for our third quarter of fiscal 2009.  All references to U.S. GAAP will be updated to conform to the codification.  The adoption of SFAS No. 168 will not have a material impact on our results of operations or financial position.

(3)                                 Inventories

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

(4)                                 Goodwill, Trademarks and Customer Relationship Intangibles

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

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

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

Customer relationship intangibles are presented at cost, net of accumulated amortization, and are amortized on a straight-line basis over their estimated useful lives of 20 years.  Amortization expense associated with customer relationship intangibles for each of the second quarter and first two quarters of 2009 and 2008 was $1.6 million and $3.2 million, respectively, and is recorded in operating expenses.  We expect to recognize an additional $3.3 million of amortization expense associated with our current customer relationship intangibles during the remainder of fiscal 2009, and thereafter $6.5 million per year for each of the next four succeeding fiscal years.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5)                                 Long-term Debt

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

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

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

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

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5)                                 Long-term Debt (Continued)

criteria.  The maximum letter of credit capacity under the revolving credit facility is $10.0 million, with a fronting fee of 3.0% per annum for all outstanding letters of credit.

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

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

We initially designated the swap as a cash flow hedge under the guidelines of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and SFAS No. 149, “Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities” (collectively referred to as SFAS No. 133).  Prior to Lehman’s bankruptcy filing, we recorded changes in the fair value of the swap in other comprehensive income (loss), net of tax in our consolidated balance sheet.  However, as a result of the Lehman bankruptcy filing, we determined in September 2008 that the interest rate swap was no longer an effective hedge as defined by SFAS No. 133 and, accordingly, subsequent changes in the swap’s fair value are being recorded in current earnings in net interest expense in the consolidated statements of operations.  We obtain third-party verification of fair value at the end of each reporting period.  As of July 4, 2009, the fair value of our interest rate swap was $12.4 million and is recorded in other liabilities on our consolidated balance sheet.  The amount recorded in accumulated other comprehensive income (loss) will be reclassified to net interest expense over the remaining life of the term loan borrowings as we make interest payments.  Net interest expense in the second quarter and first two quarters of 2009 includes a benefit of $1.5 million and $0.7 million, respectively, relating to the unrealized gain on our interest rate swap and a reclassification of $0.4 million and $0.8 million, respectively, of the amount recorded in accumulated other comprehensive income (loss) related to the swap.  During the remainder of fiscal 2009, we expect to reclassify to net interest expense $0.9 million of the amount recorded in accumulated other comprehensive income (loss).

See note 15 for information regarding a proposed amendment to the senior credit facility.

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(5)                                 Long-term Debt (Continued)

presented for our subsidiaries because management has determined that they would not be material to investors.

Deferred Debt Issuance Costs.  In connection with the issuance of our senior subordinated notes and our senior notes in October, 2004, we capitalized approximately $23.1 million of debt issuance costs, which will be amortized over their respective terms.  In connection with the issuance of term loan borrowings of $25.0 million in January 2006, we capitalized approximately $0.4 million of additional debt issuance costs, which will be amortized over the term of the loan.  In connection with the issuance of additional term loan borrowings of $205.0 million in February 2007 we capitalized approximately $4.0 million of additional debt issuance costs, which will be amortized over the term of the loan.  During the second quarter of 2007 we wrote-off and expensed $1.8 million of deferred debt issuance costs in connection with our May 2007 prepayment of $100.0 million of term loan borrowings.  As of July 4, 2009 and January 3, 2009 we had net deferred debt issuance costs of $11.6 million and $13.2 million, respectively.

At July 4, 2009 and January 3, 2009 accrued interest of $9.0 million and $9.4 million, respectively, is included in accrued expenses in the accompanying consolidated balance sheets.

(6)                                 Fair Value Measurements

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

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

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

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

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

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(6)                                 Fair Value Measurements (Continued)

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

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

(7)                                 Disclosures about Derivative Instruments and Hedging Activities

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(7)                                 Disclosures about Derivative Instruments and Hedging Activities (Continued)

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

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

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

(8)                                 Comprehensive Income

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(8)                                 Comprehensive Income (Continued)

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

(9)                                 Pension Benefits

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

During the first two quarters of 2009, we made approximately $2.1 million in contributions to our defined benefit pension plans, all of which were made during the second quarter.  We anticipate electing to make contributions of approximately $0.5 million to our defined benefit pension plans during the remainder of fiscal 2009.

(10)                          Commitments and Contingencies

Environmental.  We are subject to environmental laws and regulations in the normal course of business.  We did not make any material expenditures during the second quarter and first two quarters of 2009 or in fiscal 2008 in order to comply with environmental laws and regulations.  Based on our experience to date, management believes that the future cost of compliance with existing environmental laws and regulations (and liability for any known environmental conditions) will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.  However, we cannot predict what environmental or health and safety legislation or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with such environmental or health and safety laws or regulations or to respond to such environmental claims.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(10)                          Commitments and Contingencies (Continued)

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

Collective Bargaining Agreements.  Approximately 355 of our 732 employees, or 48.5%, as of July 4, 2009, were covered by collective bargaining agreements.  None of our collective bargaining agreements is scheduled to expire within one year.

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

(11)                          Earnings per Share

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

(12)                          Business and Credit Concentrations and Geographic Information

Our exposure to credit loss in the event of non-payment of accounts receivable by customers is estimated in the amount of the allowance for doubtful accounts.  We perform ongoing credit evaluations of our customers’ financial conditions.  Our top ten customers accounted for approximately 49.6% and 46.1% of consolidated net sales for the first two quarters of 2009 and 2008, respectively.  Our top ten customers accounted for approximately 53.0% and 56.1% of our receivables as of July 4, 2009 and January 3, 2009, respectively.  Other than Wal-Mart, which accounted for 16.4% and 13.3% of our consolidated net sales for the first two quarters of 2009 and 2008, respectively, no single customer accounted for more than 10.0% of our consolidated net sales for the first two quarters of 2009 or 2008.  Other than C&S Wholesale Grocery and Wal-Mart, which accounted for 11.4% and 13.0% of our consolidated receivables, respectively, as of July 4, 2009, no single customer accounted for more than 10.0% of our consolidated receivables as of the end of the first two quarters of 2009.  Other than C&S Wholesale Grocery and Wal-Mart, which accounted for 17.7% and 13.2% of our consolidated receivables, respectively, as of January 3, 2009, no single customer accounted for more than 10.0% of our consolidated receivables as of the end of fiscal 2008.

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

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(13)                          Share-Based Compensation

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

During the second quarter and first two quarters of 2009, we recognized $0.9 million and $1.6 million, respectively, of compensation expense related to performance share LTIAs for the 2008 to 2009, 2008 to 2010 and 2009 to 2011 performance periods, which is reflected in general and administrative and sales, marketing and distribution expenses in our consolidated statements of operations.  As of July 4, 2009, there was $3.6 million of unrecognized compensation expense related to performance share LTIAs, which is expected to be recognized over the next 30 months.

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

Non-Employee Director Stock Grants.  Each of our non-employee directors receives an annual equity grant of approximately $35,000 of Class A Common Stock as part of his or her non-employee director compensation.  These shares fully vest when issued.  On June 1, 2009, 24,135 shares of Class A common stock in the aggregate were issued to the non-employee directors based upon the closing price of our Class A common stock on May 29, 2009 (the business day immediately prior to the date of grant) of $7.25 per share.  Share-based compensation expense of $0.2 million relating to the non-employee director grants is reflected in general and administrative expenses in our consolidated statements of operations.

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B&G Foods, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(14)                          Stock and Debt Repurchase Plan

Stock and Debt Repurchase Plan.  On October 27, 2008, our board of directors authorized a stock and debt repurchase program for the repurchase of up to $10.0 million of our Class A common stock and/or senior notes over the next twelve months.  On May 5, 2009, the board of directors authorized an increase in the authorization to $25.0 million and extended the authorization through May 4, 2010.  Under the authorization, we may purchase shares of Class A common stock and/or senior notes from time to time in the open market or in privately negotiated transactions in compliance with the applicable rules and regulations of the SEC.

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

During the first two quarters of 2009 we repurchased and retired 403,500 shares of Class A common stock at an average cost per share (excluding fees and commissions) of $5.76, or $2.3 million in the aggregate.  As of July 4, 2009, we had $20.1 million available for any future repurchases of Class A common stock and/or senior notes under the stock and debt repurchase plan.

(15)                          Subsequent Events

In July 2009, B&G Foods has proposed to our lenders an amendment to our senior credit facility.  The purpose of the proposed amendment is to:

The proposed amendment requires the consent of a majority of the lenders under the credit facility and, with respect to the extension of the revolving credit facility, all of the revolving credit lenders.  No assurance can be given that the proposed amendment will be consummated on the terms contemplated or at all.

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties.  Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading “Forward-Looking Statements” below and elsewhere in this report.  The following discussion should be read in conjunction with the unaudited consolidated interim financial statements and related notes for the thirteen and twenty-six weeks ended July 4, 2009 (second quarter of 2009 and first two quarters of 2009) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal year ended January 3, 2009 (fiscal 2008) included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 5, 2009 (which we refer to as our 2008 Annual Report on Form 10-K).

General

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

Our goal is to continue to increase sales, profitability and cash flows by enhancing our existing portfolio of branded shelf stable products and by capitalizing on our competitive strengths.  We intend to implement our growth strategy through the following initiatives: expanding our brand portfolio with acquisitions of complementary branded businesses, continuing to develop innovative new products and delivering them to market quickly, leveraging our unique multiple channel sales and distribution system and continuing to focus on higher growth customers and distribution channels.  Since 1996, we have successfully acquired and integrated 18 separate brands into our operations.

We are subject to a number of challenges that may adversely affect our businesses.  These challenges, which are discussed below and under the heading “Forward-Looking Statements,” include:

Fluctuations in Commodity Prices and Production and Distribution Costs:  We purchase raw materials, including agricultural products, meat, poultry, other raw materials, ingredients and packaging materials from growers, commodity processors, other food companies and packaging manufacturers.  Raw materials, ingredients and packaging materials are subject to fluctuations in price attributable to a number of factors.  Fluctuations in commodity prices can lead to retail price volatility and intensive price competition, and can influence consumer and trade buying patterns.  Although our commodity prices for wheat were lower in the first two quarters of 2009 than those incurred during the first two quarters of 2008, our commodity prices for beans and packaging were higher than those incurred during the first two quarters of 2008.

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

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

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

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

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

Consumer Concern Regarding Food Safety, Quality and Health:  The food industry is subject to consumer concerns regarding the safety and quality of certain food products.

Fluctuations in Currency Exchange Rates:  We purchase the majority of our maple syrup requirements from suppliers located in Québec, Canada.  Any weakening of the U.S. dollar against the Canadian dollar, could significantly increase our costs relating to the production of our maple syrup products to the extent that we have not purchased Canadian dollars in advance of any such weakening of the U.S. dollar.

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

Critical Accounting Policies; Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires our management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Some of the more significant estimates and assumptions made by management involve trade and consumer promotion expenses; allowances for excess, obsolete and unsaleable inventories; pension benefits; purchase accounting allocations; the recoverability of goodwill, trademarks, customer relationship intangibles, property, plant and equipment, and deferred tax assets; the accounting for our EISs; and the accounting for share-based compensation expense.  Actual results could differ significantly from these estimates and assumptions.

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

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Results of Operations

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

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

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

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

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

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

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

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

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Non-GAAP Financial Measures

Certain disclosures in this report include “non-GAAP (generally accepted accounting principles) financial measures.”  A non-GAAP financial measure is defined as a numerical measure of our financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in our consolidated balance sheets and related consolidated statements of operations, changes in stockholders’ equity and comprehensive income, and cash flows.

EBITDA is a measure used by management to measure operating performance.  EBITDA is defined as net income before net interest expense, income taxes, depreciation, and amortization. Management believes that it is useful to eliminate net interest expense, income taxes, depreciation and amortization because it allows management to focus on what it deems to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations. We use EBITDA in our business operations, among other things, to evaluate our operating performance, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We also present EBITDA because we believe it is a useful indicator of our historical debt capacity and ability to service debt and because covenants in our credit facility, our senior notes indenture and our senior subordinated notes indenture contain ratios based on this measure.  As a result, internal management reports used during monthly operating reviews feature the EBITDA metric. However, management uses this metric in conjunction with traditional GAAP operating performance and liquidity measures as part of its overall assessment of company performance and liquidity and therefore does not place undue reliance on this measure as its only measure of operating performance and liquidity.

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

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

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Second quarter of 2009 compared to the second quarter of 2008.

Net Sales.  Net sales increased $3.7 million or 3.1% to $122.9 million for the second quarter of 2009 from $119.2 million for the second quarter of 2008.  Net sales for the second quarter of 2009 were negatively impacted by the poor maple syrup crop in Canada in 2008 that led to a global shortfall of pure maple syrup.  Net sales of our Maple Grove Farms pure maple syrup products decreased by $0.6 million, consisting of a unit volume decline of $1.4 million, partially offset by sales price increases of $0.8 million.  Excluding net sales of our pure maple syrup products, net sales for the second quarter of 2009 increased $4.3 million or 4.0%.  The $4.3 million increase was attributable to sales price increases of $8.5 million partially offset by a decrease in unit volume of $4.2 million.

Net sales of our lines of Ortega, B&M, Accent and Joan of Arc products increased in the amounts of $3.4 million, $0.5 million, $0.4 million and $0.4 million or 13.1%, 4.5%, 10.5% and 26.4%, respectively.  These increases were offset by a reduction in net sales of our private label pickles and peppers of $0.3 million or 23.8%.  In the aggregate, net sales for all other brands decreased $0.1 million, or 0.1%.

Gross Profit.  Gross profit increased $3.3 million or 9.9% to $36.9 million for the second quarter of 2009 from $33.6 million for the second quarter of 2008.  Gross profit expressed as a percentage of net sales increased 1.8 percentage points to 30.0% in the second quarter of 2009 from 28.2% in the second quarter of 2008.  This increase in gross profit expressed as a percentage of net sales was primarily attributable to increased sales prices of $9.3 million partially offset by increased costs for beans and packaging and an increased accrual for performance-based compensation.

Sales, Marketing and Distribution Expenses.  Sales, marketing and distribution expenses decreased $0.6 million or 4.6% to $10.9 million for the second quarter of 2009 from $11.5 million for the second quarter of 2008.  This decrease is primarily due to a decrease in consumer marketing and trade spending of $1.2 million and selling expense of $0.1 million offset by an increase in warehousing expense of $0.4 million and an increased accrual for performance-based compensation of $0.4 million.  Expressed as a percentage of net sales, our sales, marketing and distribution expenses decreased to 8.9% for the second quarter of 2009 from 9.6% for the second quarter of 2008.

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General and Administrative Expenses.  General and administrative expenses increased $0.6 million or 31.7% to $2.5 million for the second quarter of 2009 from $1.9 million in the second quarter of 2008.  The increase in general and administrative expenses primarily resulted from an increased accrual for performance-based compensation of $0.8 million, partially offset by decreases in other expenses.

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