As filed with the Securities and Exchange Commission on May 7, 2007.



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|(Mark One)                                                    |                                                                                         
|------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                             | Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 
|For the Quarterly Period Ended March 31, 2007                
|or                                                           
|o                                                             | Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
|For the transition period
from                             to

Commission file number 001-32316

B&G FOODS, INC.(Exact name of Registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization)                      |  | 13-3918742(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|4 Gatehall Drive, Suite 110,
Parsippany, New Jersey(Address of principal executive offices) |  | 07054(Zip Code)                               
|Registrant's telephone number, including area code:(973) 401-6500                          

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large
accelerated filer o                Accelerated filer ý                Non-accelerated
filer o

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

As of May 7, 2007, the registrant had 20,000,000 shares of Class A common stock, par value $0.01 per share, and 7,556,443 shares of Class B common
stock, par value $0.01 per share, outstanding.



---





B&G Foods, Inc. and Subsidiaries

Index

|                             |          |                                            |                                                                                       | Page No.
|---------------------------- | -------- | ------------------------------------------ | ------------------------------------------------------------------------------------- | --------
|PART I FINANCIAL INFORMATION |          | 1                                         
|                             | Item 1.  |                                            | Financial Statements (Unaudited)                                                      |         
|                             |          | Consolidated Balance Sheets                |                                                                                       | 1       
|                             |          | Consolidated Statements of Operations      |                                                                                       | 2       
|                             |          | Consolidated Statements of Cash Flows      |                                                                                       | 3       
|                             |          | Notes to Consolidated Financial Statements |                                                                                       | 4       
|                             | Item 2.  |                                            | Management's Discussion and Analysis of Financial Condition and Results of Operations |         
|                             | Item 3.  |                                            | Quantitative and Qualitative Disclosures About Market Risk                            |         
|                             | Item 4.  |                                            | Controls and Procedures                                                               |         
|PART II OTHER INFORMATION    |          | 35                                        
|                             | Item 1.  |                                            | Legal Proceedings                                                                     |         
|                             | Item 1A. |                                            | Risk Factors                                                                          |         
|                             | Item 2.  |                                            | Unregistered Sales of Equity Securities and Use of Proceeds                           |         
|                             | Item 3.  |                                            | Defaults Upon Senior Securities                                                       |         
|                             | Item 4.  |                                            | Submission of Matters to a Vote of Security Holders                                   |         
|                             | Item 5.  |                                            | Other Information                                                                     |         
|                             | Item 6.  |                                            | Exhibits                                                                              |         
|SIGNATURE                    |          | 37                                        

i

---





PART I  FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

B&G Foods, Inc. and Subsidiaries  Consolidated Balance Sheets  (Dollars in thousands, except per share data)  (Unaudited)

|                                                                                      |                                                                                                                          | March 31, 2007                 |                                            | December 30, 2006 |       
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | ------------------------------ | ------------------------------------------ | ----------------- | ------
|Assets                                                                                |                                                                                                                          |                                |                                            |                   |       
|Current assets:                                                                       |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          | Cash and cash equivalents      |                                            | $                 | 28,046
|                                                                                      |                                                                                                                          | Trade accounts receivable, net |                                            |                   | 35,425
|                                                                                      |                                                                                                                          | Inventories                    |                                            |                   | 87,606
|                                                                                      |                                                                                                                          | Prepaid expenses               |                                            |                   | 2,653 
|                                                                                      |                                                                                                                          | Deferred income taxes          |                                            |                   | 2,574 
|                                                                                      |                                                                                                                          | Income tax receivable          |                                            |                   | 591   
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total current assets                       |                   |       
|Property, plant and equipment, net of accumulated depreciation of $49,520 and $47,720 |                                                                                                                          |                                | 43,619                                     |                   |       
|Goodwill                                                                              |                                                                                                                          |                                | 253,714                                    |                   |       
|Trademarks                                                                            |                                                                                                                          |                                | 227,220                                    |                   |       
|Customer relationship intangibles, net                                                |                                                                                                                          |                                | 127,606                                    |                   |       
|Net deferred financing costs and other assets                                         |                                                                                                                          |                                | 21,171                                     |                   |       
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total assets                               |                   | $     
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|Liabilities and Stockholders' Equity                                                  |                                                                                                                          |                                |                                            |                   |       
|Current liabilities:                                                                  |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          | Trade accounts payable         |                                            | $                 | 21,938
|                                                                                      |                                                                                                                          | Accrued expenses               |                                            |                   | 22,326
|                                                                                      |                                                                                                                          | Dividends payable              |                                            |                   | 4,240 
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total current liabilities                  |                   |       
|Long-term debt                                                                        |                                                                                                                          |                                | 635,800                                    |                   |       
|Other liabilities                                                                     |                                                                                                                          |                                | 6,959                                      |                   |       
|Deferred income taxes                                                                 |                                                                                                                          |                                | 64,323                                     |                   |       
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total liabilities                          |                   |       
|Stockholders' equity:                                                                 |                                                                                                                          |                                |                                            |                   |       
|                                                                                      | Preferred stock, $0.01 par value per share. Authorized 1,000,000 shares; no shares issued or outstanding                 |                                |                                            |                  |       
|                                                                                      | Class A common stock, $0.01 par value per share. Authorized 100,000,000 shares; issued and outstanding 20,000,000 shares |                                |                                            | 200               |       
|                                                                                      | Class B common stock, $0.01 par value per share. Authorized 25,000,000 shares; issued and outstanding 7,556,443 shares   |                                |                                            | 76                |       
|Additional paid-in capital                                                            |                                                                                                                          |                                | 114,912                                    |                   |       
|Accumulated other comprehensive loss                                                  |                                                                                                                          |                                | (2,586                                     | )                 |       
|Accumulated deficit                                                                   |                                                                                                                          |                                | (37,963                                    | )                 |       
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total stockholders' equity                 |                   |       
|                                                                                      |                                                                                                                          |                                |                                            |                   |       
|                                                                                      |                                                                                                                          |                                | Total liabilities and stockholders' equity |                   | $     
|                                                                                      |                                                                                                                          |                                |                                            |                   |       

See
Notes to Consolidated Financial Statements.

1

---



B&G Foods, Inc. and Subsidiaries  Consolidated Statements of Operations  (Dollars in thousands, except per share data)  (Unaudited)

|                                            |                                                   | Thirteen Weeks Ended |        
|------------------------------------------- | ------------------------------------------------- | -------------------- | -------
|
|Net sales                                   |                                                   | $                    | 103,745
|Cost of goods sold                          |                                                   |                      | 71,062 
|                                            |                                                   |                      |        
|                                            | Gross profit                                      |                      |        
|Operating expenses:                         |                                                   |                      |        
|Sales, marketing and distribution expenses  |                                                   |                      | 11,504 
|General and administrative expenses         |                                                   |                      | 1,830  
|Amortization expensecustomer relationships |                                                   |                      | 663    
|                                            |                                                   |                      |        
|                                            | Operating income                                  |                      |        
|Other expenses:                             |                                                   |                      |        
|                                            | Interest expense, net                             |                      |        
|                                            |                                                   |                      |        
|Income before income tax expense            |                                                   |                      | 6,561  
|Income tax expense                          |                                                   |                      | 2,487  
|                                            |                                                   |                      |        
|                                            | Net income                                        |                      | $      
|                                            |                                                   |                      |        
|Earnings per share calculations:            |                                                   |                      |        
|                                            | Basic and diluted distributed earnings per share: |                      |        
|                                            |                                                   | Class A common stock |        
|                                            | Basic and diluted earnings (loss) per share:      |                      |        
|                                            |                                                   | Class A common stock |        
|                                            |                                                   | Class B common stock |        

See
Notes to Consolidated Financial Statements.

2

---





B&G Foods, Inc. and Subsidiaries  Consolidated Statements of Cash Flows  (Dollars in thousands)  (Unaudited)

|                                                   |                                                                                   | Thirteen Weeks Ended                         |                          
|-------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------
|
|Cash flows from operating activities:              |                                                                                   |                                              |                          
|                                                   | Net income                                                                        |                                              | $                        
|                                                   | Adjustments to reconcile net income to net cash provided by operating activities: |                                              |                          
|                                                   |                                                                                   | Depreciation and amortization                |                          
|                                                   |                                                                                   | Amortization of deferred debt issuance costs |                          
|                                                   |                                                                                   | Deferred income taxes                        |                          
|                                                   | Changes in assets and liabilities, net of effects of business acquired:           |                                              |                          
|                                                   |                                                                                   |                                              | Trade accounts receivable
|                                                   |                                                                                   |                                              | Inventories              
|                                                   |                                                                                   |                                              | Prepaid expenses         
|                                                   |                                                                                   |                                              | Income tax receivable    
|                                                   |                                                                                   |                                              | Other assets             
|                                                   |                                                                                   |                                              | Trade accounts payable   
|                                                   |                                                                                   |                                              | Accrued expenses         
|                                                   |                                                                                   |                                              | Other liabilities        
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   | Net cash provided by operating activities    |                          
|Cash flows from investing activities:              |                                                                                   |                                              |                          
|                                                   | Capital expenditures                                                              |                                              |                          
|                                                   | Payments for acquisition of businesses                                            |                                              |                          
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   | Net cash used in investing activities        |                          
|Cash flows from financing activities:              |                                                                                   |                                              |                          
|                                                   | Proceeds from issuance of long-term debt                                          |                                              |                          
|                                                   | Dividends paid                                                                    |                                              |                          
|                                                   | Payment of debt issuance costs                                                    |                                              |                          
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   | Net cash provided by financing activities    |                          
|                                                   | Effect of exchange rate fluctuations on cash and cash equivalents                 |                                              |                          
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   | Net decrease in cash and cash equivalents    |                          
|                                                   | Cash and cash equivalents at beginning of period                                  |                                              |                          
|                                                   |                                                                                   |                                              |                          
|                                                   | Cash and cash equivalents at end of period                                        |                                              | $                        
|                                                   |                                                                                   |                                              |                          
|Supplemental disclosures of cash flow information: |                                                                                   |                                              |                          
|                                                   |                                                                                   |                                              | Cash interest payments   
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   |                                              | Cash income tax payments 
|                                                   |                                                                                   |                                              |                          
|                                                   |                                                                                   |                                              | Cash income tax refunds  
|                                                   |                                                                                   |                                              |                          
|                                                   | Non-cash transactions:                                                            |                                              |                          
|                                                   |                                                                                   | Dividends declared and unpaid                |                          
|                                                   |                                                                                   |                                              |                          

See
Notes to Consolidated Financial Statements.

3

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)
(Unaudited)

(1)    Nature of Operations and Recent Acquisitions

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 diversified portfolio of high-quality shelf-stable foods across the United States, Canada and Puerto Rico. Our products include jams, jellies and fruit spreads, canned meats
and beans, spices, seasonings, marinades, hot sauces, wine vinegar, hot cereals, molasses, maple syrup, 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 store, private label, club and mass merchandiser channels of distribution. We distribute these products to retailers
in the greater New York metropolitan area through a direct-store-delivery sales and distribution system and elsewhere in the United States through a nationwide network of independent brokers and
distributors.

On
January 10, 2006, we acquired theGrandma'smolasses business for approximately $30,102 in cash, including transaction costs,
from Mott's LLP, a Cadbury Schweppes Americas Beverages company. Effective February 25, 2007, we completed the acquisition of theCream of WheatandCream of Ricebusiness for approximately $200,887, including transaction costs, from Kraft Foods Global, Inc. We refer
to theCream of WheatandCream of Riceacquisition as theCream of
Wheatacquisition and theCream of WheatandCream of Ricebusinesses
collectively as the "Cream of Wheatbusiness." In connection with theCream of Wheatacquisition, we
amended and restated our credit facility to provide for, among other things, an additional $205,000 of term loan borrowings. The proceeds of the term loan together with cash on hand were used to fund
theCream of Wheatacquisition and pay related transaction costs.

The
acquisitions described above were accounted for using the purchase method of accounting and, accordingly, the assets acquired and results of operations are included in our
consolidated financial statements from the respective dates of the acquisitions. The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill.
Trademarks are deemed to have an indefinite useful life and are not amortized. Customer relationship intangibles are amortized over 20 years. Goodwill, customer relationship intangibles and
trademarks are deductible for income tax purposes.

The
following table sets forth the preliminary allocation of theCream of Wheatpurchase price to the estimated fair value of the net
assets acquired at the date of acquisition based upon currently available information. Inventory has been recorded at estimated selling price less costs of disposal and a reasonable profit. Equipment
has been recorded at estimated fair value as determined by a third-party valuation. We have also obtained a third-party valuation of the intangible assets acquired (including trademarks and customer
relationship intangibles). The preliminary purchase price allocation may be adjusted as a result of the finalization of our purchase price allocation procedures. Management does not expect such
adjustments to be material. We anticipate completing the purchase price allocation in the second quarter of fiscal 2007.



Inventory

$
1,489Equipment


2,860Goodwill


55,638Trademarksindefinite life intangible assets


27,000Customer relationship intangiblesamortizable intangible assets


113,900Total

$
200,887


During
the second quarter of fiscal 2006, we obtained a third-party valuation of certain acquired assets, including intangible assets, and finalized our internal assessments of the
purchase price

4

---



B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(1)    Nature of Operations and Recent Acquisitions (Continued)

allocation
for theGrandma'smolasses acquisition. The following table sets forth the purchase price allocation:



Equipment

$
25Goodwill


9,877Trademarksindefinite life intangible assets


5,100Customer relationship intangiblesamortizable intangible assets


15,100Total

$
30,102




The following pro forma summary of operations for the first quarter of fiscal 2007 and the first quarter of fiscal 2006 presents our operations as if the Cream of
Wheatacquisition had occurred as of the beginning of each period presented. In addition to including the results of operations of the Cream of Wheatbusiness, the pro forma
information gives effect to interest on additional borrowings and changes in depreciation of property, plant and
equipment and amortization of customer relationship intangibles.

Thirteen weeks endedMarch 31, 2007

April 1, 2006Net sales

$
115,178

$
110,089Net income


6,082


6,284Basic and diluted earnings per share Class A common stock

$
0.28

$
0.28Basic and diluted earnings per share Class B common stock

$
0.07

$
0.07


The
pro forma information presented above does not purport to be indicative of the results that actually would have been attained if theCream of
Wheatbusiness had occurred as of the beginning of each period presented and is not intended to be a projection of future results.

The
acquisition of theGrandma'smolasses business did not meet any of the significance tests pursuant to
Rule 11-01(b)(1) of Regulation S-X. As such, no pro forma financial information has been presented.

(2)    Summary of Significant Accounting Policies



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. The fiscal years ending
December 29, 2007 (fiscal 2007) and December 30, 2006 (fiscal 2006) each contain 52 weeks. Each quarter of fiscal 2007 and fiscal 2006 contains 13 weeks.



The accompanying consolidated interim financial statements for the thirteen week periods ended March 31, 2007 (first quarter of fiscal 2007) and
April 1, 2006 (first quarter of fiscal 2006) 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

5

---



B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(2)    Summary of Significant Accounting Policies (Continued)

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
March 31, 2007, the results of our operations and cash flows for the first quarter of fiscal 2007 and the first quarter of fiscal 2006. Our results of operations for the first quarter of fiscal
2007 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited
consolidated financial statements and notes for fiscal 2006 included in our Annual Report on Form 10-K/A for the fiscal year ended December 30, 2006 filed with the SEC on
March 9, 2007.



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; and the accounting for our enhanced income securities (EISs), including their treatment in computing our income tax expense and the accounting for earnings per share. Actual
results could differ from those estimates and assumptions.



In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes" (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions
that the company has taken or expects to take on a tax return. FIN 48 states that a tax benefit from an uncertain tax position may be recognized only if it is "more likely than not" that the position
is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a
taxing authority having full knowledge of all relevant information. A tax benefit from an uncertain position was previously recognized if it was probable of being sustained. Under FIN 48, the
liability for unrecognized tax benefits is classified as
non-current unless the liability is expected to be settled in cash within 12 months of the reporting date. FIN 48 is effective as of the beginning of the first fiscal year beginning
after December 15, 2006. We adopted the provisions of FIN 48 on December 31, 2006. On May 2, 2007, the FASB issued FASB Staff Position No. 48-1,
"Definition of Settlement in FASB Interpretation 48" (FIN 48-1). FIN 48-1 amends FIN 48 to provide guidance on how an
enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The guidance in FIN 48-1 is to be applied upon the
initial adoption of FIN 48. Accordingly, we have applied the provisions of FIN 48-1 effective December 31, 2006. As a result of the adoption of FIN 48, as amended by
FIN 48-1, we reclassified $169 to other non-current liabilities.

We
operate in multiple taxing jurisdictions within the United States and Canada and from time to time face audits from various tax authorities regarding the deductibility of certain
expenses, state income tax nexus, intercompany transactions, transfer pricing and other matters. At the beginning of the first quarter of fiscal 2007, the total amount of liability for unrecognized
tax benefits related to state income taxes was approximately $157 (of which the entire amount would impact our effective tax rate if recognized) plus approximately $61 of accrued interest and
penalties.

We
are currently under examination in one Canadian tax jurisdiction and remain subject to examination in other jurisdictions until the applicable statute of limitations expires. As of
the beginning

6

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(2)    Summary of Significant Accounting Policies (Continued)

of
the first quarter of fiscal 2007, a summary of the tax years that remain subject to examination in our major tax jurisdictions are:

United StatesFederal

2003 and forwardUnited StatesStates

2002 and forwardCanada

1999 and forward


Based
upon the expiration of statutes of limitations and the conclusion of tax examinations in several jurisdictions, we believe it is reasonably possible that the total
amount of previously unrecognized tax benefits may decrease by $49 within twelve months of the reporting date.

Our
policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.



In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS No. 157),
which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective as of the
beginning of our 2008 fiscal year. We are currently evaluating the impact, if any, of adopting SFAS No. 157 on our consolidated financial statements.

(3)    Inventories

Inventories consist of the following, as of the dates indicated:

March 31, 2007

December 30, 2006Raw materials and packaging

$
14,439

$
11,461Work in process


1,821


2,587Finished goods


71,346


64,221Total

$
87,606

$
78,269


7

---



B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(4)    Goodwill, Trademarks and Customer Relationship Intangibles

The following table reconciles the changes in the carrying amount of goodwill for the period from December 30, 2006 to March 31, 2007:

Balance at December 30, 2006

$
198,076Cream of Wheat business


55,638Balance at March 31, 2007

$
253,714


The
following table reconciles the changes in the carrying amount of trademarks for the period from December 30, 2006 to March 31, 2007:

Balance at December 30, 2006

$
200,220Cream of Wheatbusiness


27,000Balance at March 31, 2007

$
227,220


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.

Customer
Relationship
Intangibles

Less:
Accumulated
Amortization

TotalBalance at December 30, 2006

$
15,100

$
(731
)
$
14,369Cream of Wheatbusiness


113,900





113,900Amortization expense





(663
)

(663
)Balance at March 31, 2007

$
129,000

$
(1,394
)
$
127,606


No
amortization expense of customer relationship intangibles was recorded for the first quarter of fiscal 2006.

(5)    Long-term Debt

Long-term debt consists of the following, as of the dates indicated:

March 31, 2007

December 30, 2006Revolving credit facility

$


$
Term loan


230,000


25,000Total senior secured credit facility


230,000


25,00012.0% Senior Subordinated Notes due October 30, 2016


165,800


165,8008.0% Senior Notes due October 1, 2011


240,000


240,000Total long-term debt

$
635,800

$
430,800


8

---



B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(5)    Long-term Debt (Continued)

As
of March 31, 2007, the aggregate maturities of long-term debt are as follows:

Years ending December:2007

$
2008


2009


2010


2011


240,000Thereafter


395,800Total

$
635,800


Senior Secured Credit Facility.In October 2004, we entered into a $30,000 senior secured revolving credit facility.
In order to finance our acquisition of theGrandma'smolasses brand, we amended the credit facility in January 2006 to provide for, among other
things, a new $25,000 term loan and a reduction in the revolving credit facility commitments from $30,000 to $25,000. In order to finance the Cream of Wheat acquisition, our credit facility was
amended and restated in February 2007 to provide for, among other things, an additional $205,000 of term loans. As amended, our $25,000 revolving credit facility matures on January 10,
2011 and our $230,000 term loan facility matures on February 26, 2013.

Interest
under the $25,000 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%.

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 $130,000 of our
$230,000 of term loan borrowings. As of March 31, 2007, the interest rate for the remaining $100,000 of our term loan borrowings is 7.36% (based upon a three-month LIBOR rate contract expiring
May 25, 2007). The swap is designated as a cash flow hedge under the guidelines of SFAS No. 133. The swap is in place through the life of the term loan, ending on February 26,
2013. Changes in fair value of the swap are recorded in accumulated other comprehensive income (loss), net of tax on our consolidated balance sheet.

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 subsidiaries' assets except our and our subsidiaries' real property. The credit facility provides for mandatory
prepayment based on asset dispositions and certain issuances of securities, as defined. The credit facility contains covenants that restrict, among other things, our ability to incur additional
indebtedness, pay dividends and create certain liens. The credit facility also contains certain financial maintenance covenants, which, among other things, specify maximum capital expenditure limits,
a minimum interest coverage ratio and a maximum senior and

9

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(5)    Long-term Debt (Continued)

total
leverage ratio, each ratio as defined. Proceeds of the revolving credit facility are restricted to funding our working capital requirements, capital expenditures and acquisitions of companies in
the same line of business as our company, subject to specified criteria. The revolving credit facility remained undrawn through March 31, 2007. The available borrowing capacity under our
revolving credit facility, net of outstanding letters of credit of $2,358 was $22,642 at March 31, 2007. The maximum letter of credit capacity under the revolving credit facility is $10,000,
with a fronting fee of 3.0% per annum for all outstanding letters of credit.

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 subsidiaries that
are not guarantors of our senior subordinated notes and senior notes are, individually and in the aggregate, "minor subsidiaries" as that term is used in Rule 3-10 of
Regulation S-X promulgated by the Securities and Exchange Commission. There are no significant restrictions on our ability and the ability of our subsidiaries to obtain funds from
our respective subsidiaries by dividend or loan. Consequently, separate financial statements have not been presented for our subsidiaries because management has determined that they would not be
material to investors.

Deferred Financing Costs.In connection with the issuance of our 12.0% senior subordinated notes due 2016 and our 8.0% senior
notes due 2011, we capitalized approximately $23,123 of financing costs, which will be amortized over their respective terms. In connection with the issuance of our term loan in January 2006,
we capitalized approximately $419 of additional financing costs, which will be amortized over the term of the loan. In connection with the issuance of additional term loan borrowings of $205,000 in
February 2007 we capitalized approximately $3,991 of additional financing costs. As of March 31, 2007 we had net deferred financing costs of $20,532.

At
March 31, 2007 and December 30, 2006 accrued interest of $14,484 and $8,546, respectively, is included in accrued expenses in the accompanying consolidated balance
sheets.

(6)    Fair Value of Financial Instruments

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.

We
have outstanding $240,000 principal amount of 8.0% senior notes due 2011. The fair value of the senior notes at March 31, 2007 and December 30, 2006, based on quoted
market prices, was $243,000 and $244,800, respectively.

We
also have outstanding $165,800 principal amount of 12.0% senior subordinated notes due 2016. Of such outstanding principal amount, $143,000 principal amount is represented by
20.0 million EISs. Each EIS represents one share of our Class A common stock and $7.15 principal amount of our senior subordinated notes. As of March 31, 2007 and
December 30, 2006, the fair value of the EISs, based on the per EIS closing price on the American Stock Exchange on March 30, 2007 and December 29, 2006, was $467,400 and
$400,400, respectively. It is not practicable to estimate the fair value of the $143,000 principal amount of senior subordinated notes represented by the EISs. Of the $165,800 aggregate principal
amount of senior subordinated notes outstanding, $22,800 principal amount is not represented

10

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(6)    Fair Value of Financial Instruments (Continued)

by
EISs and trades separately. The fair value of the separate senior subordinated notes at March 31, 2007 and December 30, 2006, based on quoted market prices, was $25,153 and $25,510.

The
carrying value of our other borrowings approximates their fair value based on the information currently available to us with respect to similar instruments.

We
use an interest rate swap to manage variable interest rate exposure on $130,000 of our term loan borrowings. Our objective for holding this derivative is to decrease the volatility of
future cash flows associated with interest payments on our variable rate debt. Derivative instruments are recognized in other liabilities on our consolidated balance sheet at fair value. We record
gains and losses on derivatives qualifying as a cash flow hedge in comprehensive income (loss), to the extent that the hedge is effective and until we recognize the underlying transactions in net
income, at which time these gains
and losses are reflected in the consolidated statement of operations. Other comprehensive income (loss) for the first quarter of fiscal 2007 includes a net unrealized after tax losses of $697 ($1,122
pre-tax). The unrealized amounts in comprehensive income (loss) will fluctuate based on changes in the fair value of open contracts during each reporting period. Our interest rate swap
agreement, which is described in note 5, was an effective hedge for the first quarter of fiscal 2007, meaning that it qualified for hedge accounting treatment. We did not have any derivatives
during the first quarter of fiscal 2006.

(7)    Comprehensive Income Recognition

Comprehensive income includes net income, foreign currency translation adjustments relating to assets and liabilities located in our foreign subsidiaries,
amortization of unrecognized prior service cost and pension deferrals and cash flow hedges, net of tax. The components of comprehensive income (loss) are as follows:

Thirteen Weeks EndedMarch 31, 2007

April 1, 2006Net income

$
4,074

$
2,952Other comprehensive income (loss):Foreign currency translation adjustments


4


(43
)Amortization of unrecognized prior service cost and pension deferrals, net of tax


11


Mark to market adjustment of cash flow hedge transaction, net of tax


(697
)

Comprehensive income

$
3,392

$
2,909


11

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(8)    Pension Benefits

Net periodic costs for the first quarter of fiscal 2007 and the first quarter of fiscal 2006 include the following components:

Thirteen Weeks EndedMarch 31,
2007

April 1,
2006Service costbenefits earned during the period

$
385

$
426Interest cost on projected benefit obligation


336


313Expected return on plan assets


(372
)

(297
)Amortization of unrecognized prior service cost


6


1Net amortization and deferral


11


64Net pension cost

$
366

$
507


12

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(8)    Pension Benefits (Continued)

We expect to contribute $1,335 to our defined benefit pension plans in fiscal 2007. As of March 31, 2007, we have not made any contributions to our defined
benefit pension plans during fiscal 2007.

(9)    Related-Party Transactions

We are party to a transaction services agreement pursuant to which Bruckmann, Rosser, Sherrill & Co., Inc. (BRS & Co.), the manager of
Bruckmann, Rosser, Sherrill & Co., L.P. (BRS), will be paid a transaction fee for management, financial and other corporate advisory services rendered by BRS & Co. in connection with
acquisitions, divestitures, financings and other transactions by our company, which fee will not exceed 1.0% of the total transaction value. BRS was our majority owner prior to our EIS offering in
October 2004 and remains a majority owner of our Class B common stock. Stephen C. Sherrill, the chairman of our board of directors, is a managing director of BRS & Co. In
connection with our 2004 EIS offering, the transaction services agreement was amended to provide that transaction fees will be payable as described above unless a majority of our disinterested
directors determines otherwise. BRS & Co. did not receive any transaction fees in connection with theGrandma'smolasses acquisition or Cream of Wheatacquisition.

We
lease a manufacturing and warehouse facility from a former chairman of our board of directors under an operating lease, which expires in April 2009. Total rent expense
associated with this lease was $192 for the first quarter of fiscal 2007 and the first quarter of fiscal 2006.

On
January 10, 2006, through a wholly-owned subsidiary, we acquired theGrandma'smolasses business from Mott's LLP, a Cadbury
Schweppes Americas Beverages company, for $30,000 in cash. James R. Chambers, a member of our board of directors has been the President, Cadbury Schweppes Americas Confectionary since
July 2005. Mr. Chambers did not participate in the negotiation of the transaction nor did he participate in the board's deliberations or decisions regarding the transaction.
Mr. Chambers did not personally have any direct or indirect pecuniary or other interest in the transaction as a result of his position at Cadbury.

(10)    Commitments and Contingencies

We are subject to environmental laws and regulations in the normal course of business. We did not make any material expenditures during the first quarter of
fiscal 2007 and the first quarter of fiscal 2006 in order to comply with environmental laws or regulations. Based on our experience to date, management believes that the future cost of compliance with
existing environmental laws and regulations (and liability for known environmental conditions) will not have a material adverse effect on our consolidated financial 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.

We
are 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, for which we carry insurance, as well as trademark,

13

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(10)    Commitments and Contingencies (Continued)

copyright,
patent infringement and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our
consolidated financial position, results of operations or liquidity.

We
have employment agreements with our executive officers. The agreements generally continue until terminated by the executive or by us, and provide for severance payments under certain
circumstances. As of March 31, 2007, if all of our executive officers were to be terminated by us without cause (as defined) or as a result of the employees' disability, our severance
liability, including salary continuation, continuation of health care and insurance benefits, present value of additional pension credits, and accelerated vesting under compensation plans, would have
been approximately $3,059. As of March 31, 2007, if all of our executives were to be terminated or deemed terminated by us upon a change of control (as defined), our severance liability,
including salary continuation, continuation of health care and insurance benefits, present value of additional pension credits, accelerated vesting under compensation plans, and potential excise tax
liability and gross up payments, would have been approximately $4,886.

(11)    Earnings per Share

We have two classes of common stock, designated as Class A common stock and Class B common stock, and we present earnings per share using the
two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and
participation rights in undistributed earnings or losses.

Net
income available to our common stockholders is allocated between our two classes of common stock based upon the two-class method. Earnings per share for our
Class A common stock and Class B

14

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B&G Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)

(Dollars in thousands, except per share data)
(Unaudited)

(11)    Earnings per Share (Continued)

common
stock is calculated by dividing allocated net income by the weighted average number of shares of Class A common stock and Class B common stock outstanding.

|                                                                                   |                      | Thirteen Weeks Ended |           
|---------------------------------------------------------------------------------- | -------------------- | -------------------- | ----------
|
|Net income                                                                         |                      | $                    | 4,074     
|Less: Class A common stock dividends declared                                      |                      |                      | 4,240     
|                                                                                   |                      |                      |           
|Undistributed (loss) earnings available to Class A and Class B common stockholders |                      | $                    | (166      
|                                                                                   |                      |                      |           
|Basic and Diluted weighted average common shares outstanding:                      |                      |                      |           
|Class A common stock                                                               |                      |                      | 20,000,000
|Class B common stock                                                               |                      |                      | 7,556,443 
|Basic and diluted allocation of undistributed (loss) earnings:                     |                      |                      |           
|Class A common stock                                                               |                      | $                    | (120      
|Class B common stock                                                               |                      |                      | (46       
|                                                                                   |                      |                      |           
|Total                                                                              |                      | $                    | (166      
|                                                                                   |                      |                      |           
|Basic and diluted earnings per share:                                              |                      |                      |           
|Undistributed (loss) earnings per share:                                           |                      |                      |           
|                                                                                   | Class A common stock |                      | $         
|                                                                                   | Class B common stock |                      | $         
|Distributed earnings:                                                              |                      |                      |           
|                                                                                   | Class A common stock |                      | $         
|Earnings (loss) per share:                                                         |                      |                      |           
|                                                                                   | Class A common stock |                      | $         
|                                                                                   | Class B common stock |                      | $         

No
dividends were declared on our Class B common stock during the first quarter of fiscal 2007 or the first quarter of fiscal 2006; therefore, for purposes of the earnings per
share calculation, all distributed earnings are included in Class A common stock earnings per share.

(12)    Business and Credit Concentrations

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. As of March 31, 2007, we do not believe we have any significant concentration of credit risk with respect
to our trade accounts receivable. Our top ten customers accounted for approximately 45.2% and 42.7% of consolidated net sales for the first quarter of fiscal 2007 and the first quarter of fiscal 2006,
respectively. Other than Wal-Mart, which accounted for 12.2% of our consolidated net sales for the first quarter of fiscal 2007, no single customer accounted for 10.0% or more of our
consolidated net sales for the first quarter of fiscal 2007 or the first quarter of fiscal 2006.

15

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

The following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading
"Forward-Looking Statements" below and elsewhere in this report. The following discussion should be read in conjunction with the unaudited consolidated interim financial statements and related notes
for the thirteen weeks ended March 31, 2007 (first quarter of fiscal 2007) included elsewhere in this report and the audited consolidated financial statements and related notes for the fiscal
year ended December 30, 2006 (fiscal 2006) included in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (SEC) on March 9, 2007.

General

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

Our
business strategy is to continue to increase sales, profitability and cash available to pay dividends by enhancing our existing portfolio of branded shelf-stable products and by
capitalizing on our competitive strengths. We intend to implement our strategy through the following initiatives: profitably growing our established brands, leveraging our unique multiple-channel
sales and distribution system, introducing new products, capitalizing on the higher growth Mexican segment of the food industry, designing new products and modifying existing products to address
consumer health and wellness concerns such as diabetes and natural/organic foods, and expanding our brand portfolio through acquisitions.

Since
1996, we have successfully acquired and integrated 18 separate brands into our operations. We believe that successful future acquisitions, if any, will enhance our portfolio of
existing businesses, further leveraging our existing infrastructure.

We
completed the acquisition of theGrandma'smolasses business from Motts LLP, a Cadbury Schweppes Americas Beverages Company, on
January 10, 2006. We completed the acquisition of theCream of WheatandCream of Ricebusiness
from Kraft Foods Global, Inc. effective February 25, 2007. We refer to theCream of WheatandCream of
Riceacquisition as theCream of Wheatacquisition and theCream of Wheatand Cream of Ricebusinesses collectively as the "Cream of Wheatbusiness." Both the Grandma'smolasses acquisition andCream of
Wheatacquisition have been accounted for using the purchase
method of accounting and, accordingly, the assets acquired and results of operations of the acquired businesses are included in our consolidated financial statements from the respective dates of
acquisition. These acquisitions and the application of the purchase method of accounting for these acquisitions affect comparability between periods.

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 and packaging materials from growers, commodity processors, other food companies and packaging manufacturers. Raw 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.
In the first quarter of fiscal 2007, our commodity prices for maple syrup and corn sweeteners were higher than those incurred during the thirteen weeks ended April 1,

16

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2006
(first quarter of fiscal 2006). In addition, the cost of labor, manufacturing, energy, fuel, packaging materials and other costs related to the production and distribution of our food products
have risen in recent years, and we believe that certain of these costs may continue to rise in the foreseeable future. We manage these risks by entering into short-term supply contracts
and advance commodities purchase agreements from time to time, and if necessary, by raising prices. We cannot assure you that any sales price increases by us will offset the increased cost of raw
material commodities.

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, including the health implications of genetically modified organisms and obesity.

Changing Valuations of the Canadian Dollar in Relation to the U.S. Dollar.We purchase the majority of our maple syrup
requirements from manufacturers located in Quebec, Canada. Over the past year the U.S. dollar has weakened against the Canadian dollar, which has in turn increased our costs relating to the production
of our maple syrup products.

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.

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, and the accounting for our EISs, including their treatment in computing our income tax expense and the accounting for earnings per share. Actual results could differ from
these estimates and assumptions.

Summaries
of our significant accounting policies are described more fully in note 2 to our consolidated financial statements included in our 2006 Annual Report on
Form 10-K/A. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our consolidated financial
statements.



We offer various sales incentive programs to customers and consumers, such as price discounts, in-store display incentives, slotting fees and coupons.
The recognition of expense for these programs involves the use of judgment related to performance and redemption estimates.
Estimates are made based on historical experience and other factors. Actual expenses may differ if the level of redemption rates and performance vary from estimates.

17

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Inventories are stated at the lower of cost or market. 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 our management's review of inventories on hand compared to
estimated future usage and sales.



Long-lived assets, such as property, plant and equipment, and intangibles with estimated useful lives are depreciated or amortized over their
respective estimated useful lives to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of
the asset. Recoverability of assets held for sale is measured by a comparison of the carrying amount of an asset or asset group to their fair value less estimated cost to sell. Calculating fair value
of assets requires significant estimates and assumptions by management.



Goodwill and intangible assets with indefinite useful lives (trademarks) are tested for impairment at least annually and whenever events or circumstances occur
indicating that goodwill or indefinite life intangibles might be impaired.

We
perform the annual impairment tests as of the last day of each fiscal year. The annual goodwill impairment test involves a two-step process. The first step of the
impairment test involves comparing the fair value of our company with our company's carrying value, including goodwill. If the carrying value of our company exceeds our fair value, we perform the
second step of the impairment test to determine the amount of the impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of goodwill with the
carrying value of that goodwill and recognizing a loss for the difference. Calculating our fair value requires significant estimates and assumptions by management. We estimate our fair value by
applying third party market value indicators to our earnings before interest, taxes, depreciation and amortization (EBITDA). We test indefinite life intangible assets for impairment by comparing their
carrying value to their fair value that is determined using a cash flow method and recognize a loss to the extent the carrying value is greater.

We
completed our annual impairment tests for fiscal 2006 with no adjustments to the carrying values of goodwill and indefinite life intangibles. We did not note any events or
circumstances during the first quarter of fiscal 2007 that would indicate that goodwill or indefinite life intangibles might be impaired.



We use an interest rate swap to manage variable interest rate exposure on $130.0 million of our term loan borrowings. Our objective for holding this
derivative is to decrease the volatility of future cash flows associated with interest payments on our variable rate debt. This derivative is recognized in other liabilities on our consolidated
balance sheet at fair value. We record gains and losses on derivatives qualifying as a cash flow hedge in comprehensive income (loss), to the extent that the hedge is effective and until we recognize
the underlying transactions in net income, at which time we recognize these gains and losses in our consolidated statement of operations.

18

---



The
unrealized amounts in comprehensive income (loss) will fluctuate based on changes in the fair value of open contracts during each reporting period. Our interest rate swap, which is
described below under "Liquidity and Capital ResourcesDebt" and in note 5 to our consolidated financial statements was an effective
hedge for the first quarter of fiscal 2007, meaning that it qualified for hedge accounting treatment.



Our EISs include Class A common stock and senior subordinated notes. Upon completion of our 2004 EIS offering (including the exercise of the
over-allotment option), we allocated the proceeds from the issuance of the EISs, based upon relative fair value at the issuance date, to the Class A common stock and the senior
subordinated notes. We have assumed that the price paid in the 2004 EIS offering was equivalent to the combined fair value of the Class A common stock and the senior subordinated notes, and the
price paid in the offering for the senior subordinated notes sold separately (not in the form of EISs) was equivalent to their initial stated principal amount. Therefore, we have allocated the entire
proceeds of the 2004 EIS offering to the Class A common stock and the senior subordinated notes, and the allocation of the EIS proceeds to the senior subordinated notes did not result in a
premium or discount.

The
Class A common stock portion of each EIS is included in stockholders' equity, net of the related portion of the EIS transaction costs allocated to Class A common stock.
Dividends paid on the Class A common stock are recorded as a decrease to additional paid-in capital when declared by us. The senior subordinated note portion of each EIS is included
in long-term debt, and the related portion of the EIS transaction costs allocated to the senior subordinated notes was capitalized as deferred financing costs and is being amortized to
interest expense using the effective interest method. Interest on the senior subordinated notes is charged to expense as accrued by us and deducted for income tax purposes.



As part of the income tax provision process of preparing our consolidated financial statements, we are required to estimate our income taxes. This process
involves estimating our current tax expenses together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in
deferred tax assets and liabilities. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe the recovery is not likely, we
establish a valuation allowance. Further, to the extent that we establish a valuation allowance or increase this allowance in a financial accounting period, we include such charge in our tax
provision, or reduce our tax benefits in our consolidated statement of operations. We use our judgment to determine our provision or benefit for income taxes, deferred tax assets and liabilities and
any valuation allowance recorded against our net deferred tax assets.

There
are various factors that may cause these tax assumptions to change in the near term, and we may have to record a valuation allowance against our deferred tax assets. We cannot
predict whether future U.S. federal and state income tax laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant
changes to the U.S. federal and state income tax laws and regulations on a regular basis and update the assumptions and estimates used
to prepare our consolidated financial statements when new regulations and legislation are enacted. We recognize the benefit of an uncertain tax position that we have taken or expect to take on the
income tax returns we file if it is "more likely than not" that such tax position will be sustained based on its technical merits.

19

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We have two classes of common stock, designated as Class A common stock and Class B common stock, and we present earnings per share using the
two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and
participation rights in undistributed earnings.

Net
income available to our common stockholders is allocated between our two classes of common stock based upon the two-class method. Basic and diluted earnings per share for
our Class A common stock and Class B common stock is calculated by dividing allocated net income by the weighted average number of shares of Class A common stock and
Class B common stock outstanding.



We have defined benefit pension plans covering substantially all of our employees. Our funding policy is to contribute annually the amount recommended by our
actuaries. The funded status of our pension plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. We review pension assumptions
regularly and we may from time to time make voluntary contributions to our pension plans, which exceed the amounts required by statute. During the first quarter of fiscal 2007 and the first quarter of
fiscal 2006, we made no contributions to our pension plans. Changes in interest rates and the market value of the securities held by the plans could materially change, positively or negatively, the
underfunded status of the plans and affect the level of pension expense and required contributions in fiscal 2007 and beyond.

Our
discount rate assumption increased from 5.65% at December 31, 2005 to 5.90% at December 30, 2006 for our pension plans. We presently anticipate that assumption changes,
coupled with the
amortization of deferred gains and losses will result in a decrease in fiscal 2007 pre-tax pension expense of approximately $0.3 million. While we do not presently anticipate a
change in our fiscal 2007 assumptions, as a sensitivity measure, a 0.25% decline or increase in our discount rate would increase or decrease our pension expense by approximately $0.1 million.
Similarly, a 0.25% decrease or increase in the expected return on pension plan assets would increase or decrease our pension expense by approximately $0.1 million.

In
August 2006, the Pension Protection Act of 2006 was signed into law. The major provisions of the statute will take effect January 1, 2008. Among other things, the
statute is designed to ensure timely and adequate funding of qualified pension plans by shortening the time period within which employers must fully fund pension benefits. We are currently evaluating
the effect, if any, that the Pension Protection Act of 2006 will have on future pension funding requirements.

The
adoption of SFAS No. 158 as of December 30, 2006 required us to record an incremental after-tax charge of $1.6 million in accumulated other
comprehensive loss related to the unrecognized net actuarial losses and unrecognized prior service costs.



We account for acquired businesses using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the
date of acquisition at their respective fair values. Our consolidated financial statements and results of operations reflect an acquired business after the completion of the acquisition. The cost to
acquire a business, including transaction costs, is allocated to the underlying net assets of the acquired business in proportion to their respective fair values. Any excess of the purchase price over
the estimated fair values of the net assets acquired is recorded as goodwill.

20

---



The
judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of
operations. Accordingly, for significant items, we typically obtain assistance from third party valuation specialists.

Determining
the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be
considered to have indefinite useful lives.

All
of these judgments and estimates can materially impact our results of operations.

Results of Operations

The following table sets forth the percentages of net sales represented by selected items for the first quarter of fiscal 2007 and the first quarter of fiscal
2006 reflected in our consolidated statements of operations. The comparisons of financial results are not necessarily indicative of future results:

|                                            |                                  | Thirteen Weeks Ended |     
|------------------------------------------- | -------------------------------- | -------------------- | ----
|
|Statement of Operations:                    |                                  |                      |     
|Net sales                                   |                                  | 100.0                | %   
|Cost of goods sold                          |                                  | 68.5                 | %   
|                                            |                                  |                      |     
|                                            | Gross profit                     |                      | 31.5
|Sales, marketing and distribution expenses  |                                  | 11.1                 | %   
|General and administrative expenses         |                                  | 1.8                  | %   
|Amortization expensecustomer relationships |                                  | 0.6                  | %   
|                                            |                                  |                      |     
|                                            | Operating income                 |                      | 18.0
|Interest expense, net                       |                                  | 11.7                 | %   
|                                            |                                  |                      |     
|                                            | Income before income tax expense |                      | 6.3 
|Income tax expense                          |                                  | 2.4                  | %   
|                                            |                                  |                      |     
|                                            | Net income                       |                      | 3.9 
|                                            |                                  |                      |     

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 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.

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Gain on Sale of Property, Plant and Equipment.Gain on sale of property, plant and equipment includes
any gain or loss on the
sale of property, plant and equipment.

Amortization ExpensesCustomer Relationships.Amortization expensecustomer relationships includes
the amortization expense associated with customer relationship intangibles and 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.



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.

We
define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. We believe that the most directly comparable GAAP financial measure to EBITDA is
net cash provided by operating activities. We believe that EBITDA is useful to management and investors as a measure of comparative operating performance because we view our results, after eliminating
depreciation, amortization and other non-cash charges from net income, as 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 and the indentures governing the senior notes and the senior subordinated notes contain ratios based on these measures. EBITDA is not a substitute for operating income or net
income, as determined in accordance with generally accepted accounting principles. 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, if any. Rather, EBITDA is a potential indicator of an entity's ability to fund these cash requirements.
EBITDA also 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.
EBITDA, as we define it, may differ from similarly named measures used by other entities.

A
reconciliation of EBITDA with the most directly comparable GAAP measure is included below for the first quarter of fiscal 2007 and the first quarter of fiscal 2006 along with the
components of EBITDA.

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Reconciliation of EBITDA to Net Income and to Net Cash Provided by Operating Activities (dollars in thousands).

Thirteen Weeks EndedMarch 31, 2007

April 1, 2006Net income

$
4,074

$
2,952Income tax expense


2,487


1,887Interest expense, net


12,125


10,858Depreciation and amortization


2,458


1,771EBITDA


21,144


17,468Income tax expense


(2,487
)

(1,887
)Interest expense, net


(12,125
)

(10,858
)Deferred income taxes


2,076


1,616Amortization of deferred financing costs


773


708Changes in assets and liabilities, net of effects of business combination


(4,564
)

1,601Net cash provided by operating activities

$
4,817

$
8,648


First quarter of fiscal 2007 compared to the first quarter of fiscal 2006

Net Sales.Net sales increased $10.7 million or 11.6% to $103.7 million for the first quarter of fiscal 2007
from $93.0 million for the first quarter of fiscal 2006. TheCream of Wheatacquisition accounted for $6.5 million of the net sales
increase. The remaining $4.2 million increase in net sales related to increases in sales price and unit volume. Net sales of our lines ofMaple Grove Farms, Las Palmas,
Grandma'smolasses,Joan of Arc and Ortegaproducts increased in the amounts of $3.6 million, $0.8 million,
$0.5 million, $0.5 million and $0.5 million or 30.2%, 14.6%, 58.2%, 26.9% and 2.2%, respectively. These increases were offset by a reduction in net sales of Emeril'sandPolanerproducts of $1.3 million and $0.4 million or 23.0% and 4.1%,
respectively. In the aggregate, net sales for all other brands remained constant.

Gross Profit.Gross profit increased $4.8 million or 17.3% to $32.7 million for the first quarter of fiscal
2007 from $27.9 million for the first quarter of fiscal 2006. Gross profit expressed as a percentage of net sales increased 1.5% to 31.5% in the first quarter of fiscal 2007 from 30.0% in the
first quarter of fiscal 2006. The increase in gross profit expressed as a percentage of net sales was primarily due toCream of Wheat'sgross profit for
the month of March, which improved our overall gross profit expressed as a percentage of net sales for March by 1.8%. This increase was partially offset by higher costs for packaging, transportation
costs and corn sweeteners.

Sales, Marketing and Distribution Expenses.Sales, marketing and distribution expenses increased $1.0 million or 9.8%
to $11.5 million for the first quarter of fiscal 2007 from $10.5 million for the first quarter of fiscal 2006. These expenses as a percentage of net sales decreased to 11.1% for the
first quarter of fiscal 2007 from 11.3% for the first quarter of fiscal 2006. This increase is primarily due to
an increase in consumer marketing of $0.9 million and an increase in brokerage commissions of $0.1 million.

General and Administrative Expenses.General and administrative expenses increased $0.1 million or 8.4% to
$1.8 million for the first quarter of fiscal 2007 from $1.7 million in the first quarter of fiscal 2006. The increase was primarily due to an increase in incentive compensation.

Amortization ExpenseCustomer Relationships.Amortization
expensecustomer relationships, all of which relates to the amortization of customer relationship intangibles acquired in theGrandma's

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molasses
andCream of Wheatacquisitions, was $0.7 for the first quarter of fiscal 2007. We had no customer relationship intangibles for the first
quarter of fiscal 2006.

Operating Income.As a result of the foregoing, operating income increased $3.0 million or 19.0% to
$18.7 million for the first quarter of fiscal 2007 from $15.7 million for the first quarter of fiscal 2006. Operating income expressed as a percentage of net sales increased to 18.0% in
the first quarter of fiscal 2007 from 16.9% in the first quarter of fiscal 2006.

Interest Expense.Net interest expense increased $1.3 million or 11.7% to $12.1 million for the first quarter
of fiscal 2007 from $10.8 million in the first quarter of fiscal 2006. Our outstanding long-term debt increased $205.0 million on February 26, 2007 as a result of
additional term loan borrowings used to finance our acquisition of theCream of Wheatbusiness.See
"Liquidity and Capital ResourcesDebt" below.

Income Tax Expense.Income tax expense increased $0.6 million to $2.5 for the first quarter of fiscal 2007 from
$1.9 million for the first quarter of fiscal 2006. Our effective tax rate was 37.9% for the first quarter of fiscal 2007 and 39.0% for the first quarter of fiscal 2006.

Liquidity and Capital Resources

Our primary liquidity requirements include debt service, capital expenditures and working capital needs. See also, "Dividend Policy" and "Commitments and
Contractual Obligations" below. We fund our liquidity requirements, as well as financing for acquisitions and dividend payments, if any, primarily through cash generated from operations and to the
extent necessary, through borrowings under our credit facility.

Cash Flows.Cash provided by operating activities decreased $3.8 million to $4.8 million for the first quarter
of fiscal 2007 from $8.6 million in the first quarter of fiscal 2006. The decrease was due to changes relating to an increase in accounts receivable relating to the Cream of Wheatacquisition of
$6.3 million partially offset by an increase in net income of $1.1 million and increases in trade accounts
payable. Working capital at March 31, 2007 was $108.4 million, an increase of $5.4 million over working capital at December 30, 2006 of $103.0 million.

Net
cash used in investing activities for the first quarter of fiscal 2007 was $203.2 million as compared to $31.7 million for the first quarter of fiscal 2006. Capital
expenditures during the first quarter of fiscal 2007 were $2.3 million and included purchases of manufacturing and computer equipment, and were $0.7 million greater than our
$1.6 million in capital expenditures for the first quarter of fiscal 2006. Investment expenditures for the first quarter of fiscal 2007 included $200.9 million for the Cream of Wheatacquisition. Investment expenditures for the first quarter of fiscal 2006 included $30.1 million for the Grandma'smolasses acquisition.

Net
cash provided by financing activities for the first quarter of fiscal 2007 was $196.8 million as compared to $20.4 million for the first quarter of fiscal 2006. Net
cash provided by financing activities for the first quarter of fiscal 2007 consists of $205.0 million in additional term loan borrowings, offset by $4.2 million in dividends paid on our
Class A common stock, and $4.0 million in debt issuance costs. Net cash used in financing activities for the first quarter of fiscal 2006 consists of $25.0 million in term loan
borrowings, offset by dividends paid to holders of our Class A common stock of $4.2 million, and $0.4 million in debt issuance costs.

We
believe that based on a number of factors, including our trademark and goodwill amortization for tax purposes from our prior acquisitions, we realized a significant reduction in cash
taxes in 2006 and 2005 as compared to our tax expense for financial reporting purposes. While we expect cash taxes to increase beginning in 2007 as compared to the prior two years, we will realize a
benefit to our cash taxes payable from amortization of our trademarks, goodwill and customer relationship intangibles for

24

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the
taxable years 2007 through 2022 that will not be reflected in our income tax expense for financial statement purposes.



Our board of directors adopted a dividend policy that reflects a basic judgment that our stockholders would be better served if we distributed a substantial
portion of our cash available to pay dividends to
them instead of retaining it in our business. Under this policy, cash generated by our company in excess of operating needs, interest and principal payments on indebtedness, capital expenditures
sufficient to maintain our properties and other assets and $6.0 million of dividend restricted cash (that can be used for the payment of dividends on Class A common stock or for any
other purpose other than the payment of dividends on the Class B common stock) is in general distributed as regular quarterly cash dividends (up to the intended dividend rate as determined by
our board of directors) to the holders of our Class A common stock and as regular annual cash dividends (up to the dividend rate permitted under our debt agreements and our organizational
documents) to the holders of our Class B common stock and not retained by us. The current intended dividend rate for our Class A common stock is $0.848 per share per annum.

Dividend
payments, however, are not mandatory or guaranteed and holders of our common stock do not have any legal right to receive, or require us to pay, dividends. Furthermore, our
board of directors may, in its sole discretion, amend or repeal this dividend policy with respect to the Class A common stock and Class B common stock at any time. Our board of directors
may decrease the level of dividends for the Class A common stock and Class B common stock below the intended dividend rates or discontinue entirely the payment of dividends. Future
dividends with respect to shares of our capital stock, if any, depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, business
opportunities, provisions of applicable law and other factors that our board of directors may deem relevant. The indenture governing our senior subordinated notes, the terms of our revolving credit
facility and the indenture governing the senior notes contain significant restrictions on our ability to make dividend payments. In addition, certain provisions of the Delaware General Corporation Law
may limit our ability to pay dividends.

As
a result of our dividend policy, we may not retain a sufficient amount of cash to finance growth opportunities or unanticipated capital expenditure needs or to fund our operations in
the event of a significant business downturn. We may have to forego growth opportunities or capital expenditures that would otherwise be necessary or desirable if we do not find alternative sources of
financing. If we do not have sufficient cash for these purposes, our financial condition and our business will suffer.

For
the first quarter of fiscal 2007, we had cash flows provided by operating activities of $4.8 million. If our cash flows from operating activities for future periods were to
fall below our minimum expectations (or if our assumptions as to capital expenditures or interest expense were too low or our assumptions as to the sufficiency of our revolving credit facility to
finance our working capital needs were to prove incorrect), we would need either to reduce or eliminate dividends or, to the extent permitted under the indenture governing our senior notes, the
indenture governing our senior subordinated notes and the terms of our credit facility, fund a portion of our dividends with borrowings or from other sources. If we were to use working capital or
permanent borrowings to fund dividends, we would have less cash and/or borrowing capacity available for future dividends and other purposes, which could negatively impact our financial position, our
results of operations, our liquidity and our ability to maintain or expand our business.

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The
table below illustrates for fiscal 2006 and the latest twelve months ended March 31, 2007, respectively, the amount of cash that we had available for distribution to our
stockholders.

|Cash Available to Pay Dividends                         |                                        | Fiscal Year
Ended
December 30,
2006 |         | Less:
Thirteen
Weeks Ended
April 1,
2006 |   | Plus:
Thirteen
Weeks Ended
March 31,
2007 |       | Latest Twelve
Months
Ended
March 31,
2007(a) |        
|------------------------------------------------------- | -------------------------------------- | ----------------------------------- | ------- | ---------------------------------------- | - | ----------------------------------------- | ----- | -------------------------------------------- | -------
|
|
|Net cash provided by operating activities               |                                        | $                                   | 32,771  |                                          | $ | 8,648                                     |       | $                                            | 4,817  
|Interest expense, net                                   |                                        |                                     | 43,481  |                                          |   | 10,858                                    |       |                                              | 12,125 
|Income taxes                                            |                                        |                                     | 5,962   |                                          |   | 1,887                                     |       |                                              | 2,487  
|Amortization of deferred debt issuance costs            |                                        |                                     | (2,830  | )                                        |   | (708                                      | )     |                                              | (773   
|Deferred income taxes                                   |                                        |                                     | (6,165  | )                                        |   | (1,616                                    | )     |                                              | (2,076 
|Gain on sale of property, plant and equipment           |                                        |                                     | 525     |                                          |   |                                          |       |                                              |       
|Changes in assets and liabilities                       |                                        |                                     | (4,744  | )                                        |   | (1,601                                    | )     |                                              | 4,564  
|                                                        |                                        |                                     |         |                                          |   |                                           |       |                                              |        
|EBITDA                                                  |                                        |                                     | 69,000  |                                          |   | 17,468                                    |       |                                              | 21,144 
|Reduction for cash income tax expense (b)               |                                        |                                     |        |                                          |   |                                          |       |                                              |       
|Cash interest expense (c)                               |                                        |                                     | (40,651 | )                                        |   | (10,150                                   | )     |                                              | (11,352
|Capital expenditures                                    |                                        |                                     | (7,306  | )                                        |   | (1,592                                    | )     |                                              | (2,283 
|                                                        |                                        |                                     |         |                                          |   |                                           |       |                                              |        
|Cash available to pay dividends on Class A common stock |                                        |                                     | 21,043  |                                          |   | 5,726                                     |       |                                              | 7,509  
|Less:                                                   |                                        |                                     |         |                                          |   |                                           |       |                                              |        
|                                                        | Dividends paid on Class A common stock |                                     |         | 16,960                                   |   |                                           | 4,240 |                                              |        
|                                                        | Dividend restricted cash (d)           |                                     |         | 6,000                                    |   |                                           |       |                                              |        
|                                                        |                                        |                                     |         |                                          |   |                                           |       |                                              |        
|Cash available to pay dividends on Class B common stock |                                        | $                                   | (1,917  | )                                        |   |                                           |       |                                              |        
|                                                        |                                        |                                     |         |                                          |   |                                           |       |                                              |        

---

There can be no assurance that we will continue to pay dividends at historical levels, or at all. Dividend payments are not mandatory or
guaranteed, are within the absolute discretion of our board of directors and will be dependent upon many factors and future developments that could differ materially from our current expectations.
Over time, our EBITDA, capital expenditure, working capital and other cash needs will be subject to uncertainties, which could impact the level of dividends, if any, we pay in the future.



Our liquidity and capital resources have been significantly impacted by acquisitions and may be impacted in the foreseeable future by additional acquisitions. We
have historically financed acquisitions with borrowings and cash flows from operating activities. Our interest expense has increased significantly as a result of additional indebtedness we have
incurred as a result of theGrandma'smolasses acquisition in January 2006 and theCream of Wheatacquisition in February 2007, and will increase with any additional indebtedness we may incur to finance potential future acquisitions, if any.

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To
the extent future acquisitions, if any, are financed by additional indebtedness, the resulting increase in debt and interest expense could have a negative impact on liquidity.



We have not made any material expenditures during the first quarter of fiscal 2007 in order to comply with environmental laws or regulations. Based on our
experience to date, we believe that the future cost of compliance with existing environmental laws and regulations (and liability for known environmental conditions) will not have a material adverse
effect on our consolidated financial condition, results of operations or liquidity. However, we cannot predict what environmental or health and safety legislation or regulations will be enacted in the
future or how existing or future laws or regulations will be enforced, administered or interpreted, nor can we predict the amount of future expenditures that may be required in order to comply with
such environmental or health and safety laws or regulations or to respond to such environmental claims.



Senior Secured Credit Facility.Concurrent with our 2004 EIS offering and concurrent offerings, we entered into a
$30.0 million senior secured revolving credit facility on October 14, 2004. In order to finance theGrandma'smolasses acquisition, we
amended the credit facility in January 2006 to provide for, among other things, a new $25.0 million term loan and a reduction in the revolving credit facility commitments from
$30.0 million to $25.0 million. In order to finance theCream of Wheatacquisition, our credit facility was amended and restated to
provide for, among other things, an additional $205.0 million of term loan borrowings. As amended, our $25.0 million revolving credit facility matures on January 10, 2011 and our
$230.0 million term loan facility matures on February 26, 2013.

Interest
under the $25.0 million revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance
with the revolving credit facility, including the base lending rate per annum plus an applicable margin, and LIBOR plus an applicable margin. 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%.

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 our $230.0 million of term loan borrowings. As of March 31, 2007, the interest rate for the remaining $100.0 million of our term loan borrowings is 7.36%
(based upon a three-month LIBOR rate contract expiring May 25, 2007). The swap is designated as a cash flow hedge under the guidelines of SFAS No. 133. The swap is in place through
the life of the term loan, ending on February 26, 2013. Changes in fair value of the swap are recorded in accumulated other comprehensive loss on our consolidated balance sheet.

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 future domestic subsidiaries.
The credit facility is secured by substantially all of our and our subsidiaries' assets except our and our subsidiaries' real property. The credit facility provides for mandatory prepayment based on
asset dispositions and certain issuances of securities, as defined. The credit facility contains covenants that restrict, among other things, our ability to incur additional indebtedness, pay
dividends and create certain liens. The credit facility also contains certain financial maintenance covenants, which, among other things, specify maximum capital expenditure limits, a minimum interest
coverage ratio and a maximum senior and total leverage ratio, each ratio as defined. Proceeds of the credit facility are restricted to funding our working capital requirements, capital expenditures
and acquisitions of companies in the same line of business as our company, subject to specified criteria. The revolving credit facility was undrawn on the

27

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date
of consummation of our 2004 EIS offering and concurrent offerings and remained undrawn through March 31, 2007. The available borrowing capacity under our revolving credit facility, net of
outstanding letters of credit of $2.4 million, was $22.6 million at March 31, 2007. 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.

12.0% Senior Subordinated Notes due 2016.In connection with our 2004 EIS offering, we issued on October 14, 2004,
$124.3 million aggregate principal amount of 12.0% senior subordinated notes due 2016 in the form of EISs and an additional $22.8 million aggregate principal amount of 12.0% senior
subordinated notes due 2016 (not in the form of EISs). In connection with the exercise of the underwriters' over-allotment option, on October 22, 2004 we issued an additional
$18.7 million aggregate principal amount of 12.0% senior subordinated notes in the form of EISs. Each EIS represents one share of our Class A common stock and $7.15 principal amount of
our 12.0% senior subordinated notes. As of March 31, 2007, $165.8 million aggregate principal amount of senior subordinated notes were outstanding.

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

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

We
may not redeem the notes prior to October 30, 2009. However, we may, from time to time, seek to retire the senior subordinated notes through cash repurchases of EISs or
separate senior subordinated notes and/or exchanges of EISs or separate senior subordinated notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such
repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We expect that any repurchase of EISs or senior
subordinated notes would be funded with our existing cash balances and cash from operations. The amounts involved may be material.

In
addition, on and after October 30, 2009, we may redeem for cash all or part of the senior subordinated notes at a redemption price of 106.0% beginning October 30, 2009
and thereafter at prices declining annually to 100% on or after October 30, 2012. If we redeem any senior subordinated notes, the senior subordinated notes and Class A common stock
represented by each EIS will be automatically separated.

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

The
senior subordinated notes are jointly and severally and fully and unconditionally guaranteed by all of our existing domestic subsidiaries and certain future domestic subsidiaries on
an unsecured and subordinated basis on the terms set forth in the indenture governing the senior subordinated notes. The senior subordinated note guarantees are subordinated in right of payment to all
existing and future senior indebtedness of the guarantors, including the indebtedness under our credit facility and the

28

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senior
notes. Our present foreign subsidiaries are not guarantors, and any future foreign or partially owned domestic subsidiaries will not be guarantors, of our senior subordinated notes.

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

8.0% Senior Notes due 2011.Concurrent with our 2004 EIS offering and offering of separate senior subordinated notes, we
issued $240.0 million aggregate principal amount of 8.0% senior notes due 2011. Interest on the senior notes is payable on April 1 and October 1 of each year, commencing on
April 1,
2005. The senior notes will mature on October 1, 2011, unless earlier retired or redeemed at our option as described below.

We
may not redeem the notes prior to October 1, 2008. However, we may, from time to time, seek to retire the senior notes through cash repurchases of senior subordinated notes
and/or exchanges of senior notes for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing
market conditions, our liquidity requirements, contractual restrictions and other factors.

On
or after October 1, 2008, we may redeem some or all of the senior notes at a redemption price of 104.0% beginning October 1, 2008 and thereafter at prices declining
annually to 100% on or after October 1, 2010. Prior to October 1, 2007, we may redeem up to 35% of the aggregate principal amount of the senior notes issued in the senior note offering
with the net proceeds of one or more equity offerings at the redemption price as described in the indenture governing the senior notes. If we or any of the guarantors sell certain assets or experience
specific kinds of changes in control, we must offer to purchase the senior notes at the prices as described in the indenture governing the senior notes plus accrued and unpaid interest to the date of
redemption.

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

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



We are highly leveraged. On March 31, 2007, our total long-term debt and stockholders' equity was $635.8 million and
$74.6 million, respectively.

29

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Our
ability to generate sufficient cash to fund our operations depends generally on our results of operations and the availability of financing. Our management believes that our cash on
hand, cash flow from operating activities and available borrowing capacity under our revolving credit facility, will be sufficient for the foreseeable future to fund operations, meet debt service
requirements, fund capital expenditures, make future acquisitions within our line of business, if any, and pay our anticipated dividends on our Class A common stock. We expect to make capital
expenditures of approximately $7.0 million in fiscal 2007 in respect of our existing manufacturing operations. In addition, in connection with theCream of
Wheatacquisition, we anticipate making additional capital expenditures of approximately $8.0 million in the aggregate over the course of fiscal 2007 and fiscal 2008.



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

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



During fiscal 2006 and the first quarter of fiscal 2007, we were faced with increasing prices in certain commodities and packaging materials and we expect this
trend may continue. We manage this risk by entering into short-term supply contracts and advance commodities purchase agreements from time to time, and if necessary, by raising prices. Our
cost increases in fiscal 2006 were partially attributable to the spike in oil and natural gas prices, which have had a substantial impact on our raw material, packaging and transportation costs. We
believe that through sales price increases and our cost saving efforts we have to some degree been able to offset the impact of recent raw material, packaging and transportation cost increases. There
can be no assurance, however, that any future sales price
increases or cost saving efforts by us will offset the increased cost of raw material, packaging and transportation costs, or that we will be able to raise prices or reduce costs at all.

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes" (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions
that the company has taken or expects to take on a tax return. FIN 48 states that a tax benefit from an uncertain tax position may be recognized only if it is "more likely than not" that the position
is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a
taxing authority having full knowledge of all relevant information. A tax benefit from an uncertain position was previously recognized if it was probable of being sustained. Under FIN 48, the
liability for unrecognized tax benefits is classified as non-current unless the liability is expected to be settled in cash within 12 months of the reporting date. FIN 48 is
effective as of the beginning of the first fiscal year beginning after December 15, 2006. We adopted the provisions of FIN 48 on December 31, 2006. On May 2, 2007, the FASB
issued FASB Staff Position No. 48-1, "Definition of Settlement in FASB Interpretation 48" (FIN 48-1). FIN
48-1 amends FIN 48 to provide guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax
benefits. The guidance in FIN 48-1 is to be applied upon the initial adoption of FIN 48. Accordingly, we have applied the provisions of FIN

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48-1
effective December 31, 2006. As a result of the adoption of FIN 48, as amended by FIN 48-1, we reclassified $0.2 million to other non-current
liabilities.

We
operate in multiple taxing jurisdictions within the United States and Canada and from time to time face audits from various tax authorities regarding the deductibility of certain
expenses, state income tax nexus, intercompany transactions, transfer pricing and other matters. At the beginning of the first quarter of fiscal 2007, the total amount of liability for unrecognized
tax benefits related to state income taxes was approximately $0.2 million (of which the entire amount would impact our effective tax rate if recognized) plus approximately $0.1 million
of accrued interest and penalties.

We
are currently under examination in one Canadian tax jurisdiction and remain subject to examination in other jurisdictions until the applicable statute of limitations expires. As of
the beginning of the first quarter of fiscal 2007, a summary of the tax years that remain subject to examination in our major tax jurisdictions are:

United StatesFederal

2003 and forwardUnited StatesStates

2002 and forwardCanada

1999 and forward


Based
upon the expiration of statutes of limitations and the conclusion of tax examinations in several jurisdictions, we believe it is reasonably possible that the total amount of
previously unrecognized tax benefits may decrease by $0.1 million within twelve months of the reporting date.

Our
policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.

In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS No. 157), which defines fair value,
establishes a framework for measuring fair value and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of our 2008 fiscal year.
We are currently evaluating the impact, if any, of adopting SFAS No. 157 on our consolidated financial statements.

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Off-balance Sheet Arrangements

As of March 31, 2007, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K.

Commitments and Contractual Obligations

Our contractual obligations and commitments principally include obligations associated with our outstanding indebtedness and future minimum operating lease
obligations as set forth in the following table as of December 30, 2006.

|                               |  | Payments Due by Period
|------------------------------ |  | ----------------------
|
|
|Long-term debt(1)              |  | $                     
|Operating leases               |  |                       
|Other long-term obligations(2) |  |                       
|                               |  |                       
|Total                          |  | $                     
|                               |  |                       

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During
the first quarter of fiscal 2007, there were no material changes outside the ordinary course of business in the specified contractual obligations set forth in the table above,
except that in February 2007, we incurred additional long-term debt of $205.0 million in the form of additional term loan borrowings under our amended senior secured credit
facility, which is not reflected in the table. As amended, our $25.0 million revolving credit facility matures on January 10, 2011 and our $230.0 term loan facility matures on
February 26, 2013. See "DebtSenior Secured Credit Facility" above.

Forward-Looking Statements

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



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

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

We
caution that the foregoing list of important factors is not exclusive. We urge investors not to unduly rely on forward-looking statements contained in this report.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

In the normal course of operations, we are exposed to market risks arising from adverse changes in interest rates. Market risk is defined for these purposes as
the potential change in the fair value of a financial asset or liability resulting from an adverse movement in interest rates. As of March 31, 2007, our revolving credit facility was amended
and restated to provide for an additional $205.0 million of term loan borrowings to finance theCream of Wheatacquisition and pay related
transaction fees and expenses.

Interest
under the $25.0 million revolving credit facility, including any outstanding letters of credit, is determined based on alternative rates that we may choose in accordance
with the revolving credit facility, including the base lending rate per annum plus an applicable margin, and LIBOR plus an

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applicable
margin. 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%. 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 our $230.0 million of term loan borrowings. As of March 31, 2007, the interest rate for the remaining
$100.0 million of our term loan borrowings is 7.36% (based upon a three-month LIBOR rate contract expiring May 25, 2007). A 1.0% increase in interest rates, applied to our variable rate
borrowings at March 31, 2007, would result in an annual increase in interest expense and a corresponding reduction in cash flow of $1.0 million.

We
also have outstanding $240.0 million principal amount of 8.0% senior notes due October 1, 2011, with interest payable semiannually on April 1 and October 1
of each year. The fair value of the senior notes at March 31, 2007 and December 30, 2006, based on quoted market prices, was $243.0 million and $244.8 million,
respectively.

We
also have outstanding $165.8 million principal amount of 12.0% senior subordinated notes due October 30, 2016, with interest payable quarterly on January 30,
April 30, July 30 and October 30 of each year. Of such outstanding principal amount, $143.0 million principal amount is represented by 20.0 million EISs. Each EIS
represents one share of our Class A common stock and $7.15 principal amount of our senior subordinated notes. As of March 31, 2007 and December 30, 2006, the fair value of the
EISs, based on the per EIS closing price on the AMEX on March 30, 2007 and December 29, 2006, was $467.4 million and $400.4 million. It is not practicable to estimate the
fair value of the $143.0 million principal amount of senior subordinated notes represented by the EISs. Of the $165.8 million aggregate principal amount of senior subordinated notes
outstanding, $22.8 million principal amount is not represented by EISs and trades separately. The fair value of the separate senior subordinated notes at March 31, 2007 and
December 30, 2006, based on quoted market prices, was $25.2 million and $25.5 million, respectively.

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

Item 4.    Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting.As required by Rule 13a-15(d) under the Exchange
Act, our management, including our chief executive officer and our chief financial officer, also conducted an evaluation of our internal control over financial reporting to determine whether any
change occurred during the quarter covered by this report that has materially affected, or is reasonably

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likely
to materially affect, our internal control over financial reporting. Based on that evaluation, our chief executive officer and our chief financial officer concluded that there has been no
change during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

PART II  OTHER INFORMATION

Item 1.    Legal Proceedings

We are 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, for which we carry insurance, as well as trademark, copyright, patent infringement and related claims and legal
actions. In the opinion of our management, the
ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Item 1A.    Risk Factors

We do not believe there have been any material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K/A for the
year ended December 30, 2006 filed with the Securities and Exchange Commission on March 9, 2007.

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

Not applicable.

Item 3.    Defaults Upon Senior Securities

Not applicable.

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

Not applicable.

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Item 5.    Other Information

Not applicable.

Item 6.    Exhibits

|Exhibit No. |  | Description                                                                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1        |  | Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer.                                                  
|31.2        |  | Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer.                                                  
|32.1        |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer and Chief Financial Officer.

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SIGNATURE

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

|Dated: May 7, 2007 |  | B&G FOODS, INC.
|------------------ |  | ---------------
|                   |  | By:            

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