Welcome to the B&G Foods Incorporated fourth quarter 2007 financial results conference call. Today's call is being recorded. At this time all participants are in a listen-only-mode. Following the presentation we'll conduct a question-and-answer session. Instructions will be provided at that time for you to queue for your questions. I like to remind everyone this conference is being recorded. I would now like to turn the conference over to David Wenner, Chief Executive Officer of B&G Foods. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to the B&G Foods fourth quarter and full year fiscal 2007 conference call. Everyone on the call today can access detailed financial information on the quarter and full year in our earnings press release issued today and available on our website at bgfoods.com and in our annual report on Form 10-K that we have filed with the SEC today. Before we begin our formal remarks, I need to remind everyone that part of the discussion today includes forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial conditions. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. We also will be making reference on today's call to the non-GAAP financial measure, EBITDA. A reconciliation of EBITDA to the most directly comparable GAAP financial measure is provided in today's press release and is included in our 10-K. We will start the call by having our CFO, Bob Cantwell, discuss financial results for the quarter and the year. After Bob's remarks, I'll discuss factors that affected our quarterly and annual results, some of our business highlights and our current thoughts concerning the business going forward into 2008. Bob?

Thank you, Dave. First I’ll review the full year briefly, then talk about the fourth quarter. Net sales increased $60 million, or 14.6%, to $471.3 million for 2007, compared to $411.3 million for 2006. Net sales of Cream of Wheat products for 2007, which includes two months of net sales under the brand's prior owner, increased $3.8 million, or 6.1%, as compared to net sales during 2006 under the brand's prior owner. Our 10-K has additional disclosure on the performance of our brands for the full year. Operating income increased 33% to $81.2 million during 2007 from $61.0 million in 2006. Operating income expressed as a percentage of net sales increased to 17.2% in 2007, from 14.8% in 2006. I’d like to take a moment to discuss EBITDA or non-GAAP financial measures that we have reconciled to net cash provided by operating activities in today’s press release. Our EBITDA increased to $94.5 million in 2007, compared to $69 million in 2006. Net income increased 54% to $17.8 million for 2007, compared to $11.6 million for fiscal 2006. For 2007, earnings per share of Class A common stock was $0.62. Earnings per share of Class A common stock was negatively impacted by $0.04 due to a $1.9 million accrual, $1.2 million net of tax for special bonus awards to be paid in March 2008 to certain executive officers and members of our senior management in recognition of their contributions to the successful completion of the Cream of Wheat acquisition and the Class A common stock offering. Prior to the third quarter of 2007, B&G Foods had posted two classes of common stock outstanding, and computed earnings per share under the two class method. As a result, it is not meaningful to compare earnings per share for 2007 against 2006. The capital…

Thanks Bob. From my perspective this was a remarkable year and its numbers certainly bear that out. We acquired the Cream of Wheat brand from Kraft Foods two months in to the year. The brand is the eighth major acquisition our company has done in the past ten years, and our expertise in acquiring and integrating brands showed in this acquisition. The brand was integrated into our G&A, sales and distribution systems by April 1st, meeting our standard of 30 days for integration. The brand responded better than the expected on the sales line, leveling off even as we were acquiring it, and growing for the 10 months we owned it. We fully expected Cream of Wheat sales to continue to decline for six months before we could turn it around. Obviously we exceeded that expectation. The benefit of this performance shows in our results for the full year. 2007 net sales were up $60 million, almost 15%, with Cream of Wheat contributing $54 million of that increase. We saw nearly $10 million of pricing gains for the year, either from price increases or lower promotional spending. This helped to offset a $3 million loss in net sales from a temporary co-pack arrangement we had in 2006. Adding these two factors, you can see that our base business unit sales were essentially flat for the year, even though 13 of our 18 brands did see increased dollar sales. Fourth quarter performance mirrored the year to a great degree. Net sales were up 19%, Cream of Wheat accounting for $20 million of the increase, and pricing accounting for the remainder. 12 brands were up and six down for the year, while unit volume on the base business was up 6%. As Bob mentioned, Cream of Wheat net sales for the full…

Very good. (Operator Instructions) Our first question will come from Jim Essert with ING.

Hi. Looks like a great year and a great quarter. Thank you.

Thank you.

Thank you.

On the Cream of Wheat production, will that be all done in-house?

Actually, the instant products are being done in-house and right now that represents about a third of the volume. The other two thirds, which are the more traditional Stove Top products have been co-packed for a good long time.

Right.

The co-packer is very good at it, and we're going to leave it with him.

So in terms of total percentage, how much will be co-packed versus produced?

Right now, it's about two thirds co-packed, one third in-house.

And that will remain the same?

Unless sales shift, yes.

Okay. And I did hear you say that towards the end of the year of '08 we should see inventory as a year-over-year to go down correct?

We're very hopeful for that, yes.

Okay. Thank you.

Our next question will come from Reza Vahabzadeh with Lehman Brothers.

Good afternoon.

Afternoon, Reza.

Afternoon, Reza.

Let me just start with some housekeeping questions. How much pricing did you get in the quarter, roughly a $1 million - $1.5 million?

Better part of $2 million in the fourth quarter.

And that's just on the base business or does that include…?

No, it's just on the base business.

Okay. And Cream of Wheat has done reasonably well in the last couple of quarters, and I know you have touched on it. But to what do you attribute the resurgence of this brand?

Well, the early part of the year we were going up against distribution losses Kraft had experienced in 2006. So as we regained distribution obviously, we were witling away at the comparisons year-over-year. And then we believe that as we dropped coupons and ran promotional events and things like that, we saw increases in the consumer takeaway on the brand. We know that in conjunction with one coupon drop for instance and this is probably the clearest information you’ll get. Wal-Mart same store movement went up 20% based off the coupon drops. So we know that those were effective in bringing consumers to the shelf and buying the brand.

And then in Emeril, the turnaround, is it because of better merchandising, better products, just easier comparisons, and should we expect this thing to continue?

It, first off, is an easier comparison obviously for rolling over against results where we had lost that distribution in the mass merchants, but the brand is performing stronger in a number of categories that it’s in. And we had some very successful new products, the cooking stocks for instance, sales were up about 50%, this year on cooking stocks. And we still have about 50% more distribution to gain than we have today in that particular category. So we are very hopeful that that will continue too. And we had very good reception on some of the new products like mustards; we added it to that line obviously as I said. The cooking sprays have had a very good reception as well, and we see general strength in a number of areas in the line.

Got it, and Polaner is that still hanging in there despite the rapid price increases?

It is, it’s hanging in there pretty well. We have actually taken some very modest price increases on Polaner this March. The March 1st price increase is a more substantial one, but Polaner grew more modestly for us last year.

Got it. So you talk about the cost inflation and the acceleration in cost inflation. Do you have enough pricing and revenue growth, productivity improvement to offset the cost inflation in ‘08.

We don’t have enough that if the trend continues as it has in the first part of this year as I have said we have seen accelerating costs and that's why we're laying in another price increase in anticipation of that trend continuing. Otherwise, it's close to even, but we feel that we're probably going to have to increase price to stay even.

Right. So you're saying you are close to even now, but might have to do more because you are expecting more cost inflation?

I mean we are looking at -- right now, we are forecasting 15 and we know -- I am not forecasting, we know we have had $15 million to $16 million of cost increases this year. We know that we have just done a price increase that we think will yield us about $10 million of revenue. We believe we have $2 million to $4 million of cost savings outright. And as I said, we think we can save more on trade promotions and things like that. So within a couple of million dollars, $0 million to $2 million of a shortfall perhaps, and we need to lay in another price increase to make sure that's not a shortfall and to have an insurance policy for any further cost increases.

Fair enough. And then on CapEx, Bob, you said the [60 million bucks] extra in the first half, what's the CapEx for the whole year?

Approximately $11 million is what we'll spend in 2008.

And then after '08, you're going to back to 7 to 8?

Probably, closer to 9.

Okay.

9, 10 would be more of a realistic number on a go forward basis.

Thank you.

That really is going to be dictated by a cost savings opportunity. So we've done a lot of integration of product lines in the facilities here in the last couple of years. We know we have some opportunities. We want to take advantage of that, have very quick payback going into 2009. So that may affect the capital spending. But the $10 million give or take is probably good number.

Thanks very much.

Our next question is from Pi Aquino with Credit Suisse.

Good afternoon.

Good afternoon.

You went through your brands for the full year, could you just tell -- really quickly, I am assuming Maple Grove was roughly at the top of that list again. Could you quickly run through that for the fourth quarter in the terms of what the key brand drivers were?

Well, I mean, certainly, the sales were up because $20 million Cream of Wheat, that's our new business. Maple Grove was up a little over $2 million, little over 12%. I mean Maple Grove for the year was up $9.3 million almost 16%. Las Palmas was about $0.5 million or 8%. Everything else, plus or minus. Our Trappey business was up 200,000 or 6%, and everything else plus or minus kind of offset each other. There are no other big swings expected for the co-pack business, which was down $600,000, which is no longer in existence.

Right. And then, in terms of a guidance for '08, are you thinking 2% to 3% topline growth? What kind of operating margin expansion are you looking for? I mean it sounds like its going to be a tough commodity here, so a lot of that unknown. But do you have some targets that you're looking for internally?

Well, the pricing alone, if we manage to keep unit volumes steady, pricing alone the $10 million implies somewhere north of 2% growth on the topline. And so that's realistic. Margin expansion is harder to forecast and it gets into the whole price versus cost dynamic and also sales mix. As I said, we have seen some margin contraction because a lot of the growth in the business in 2007 was lower gross profit business like Maple Grove. We would certainly hope that that would shift to more growth in Cream of Wheat, which would obviously pull the margins up. So topline we will hopefully grow at least to 2% to 3% and that depends on how successful we are growing unit volume beyond price increases and margins because of this whole cost issue.

Great, thank you.

(Operator Instructions) And we do have a question from Andrew Lazar with Lehman Brothers.

Good afternoon.

Afternoon.

Afternoon.

So just one just clarification, I think I heard but I could be wrong that you'd said base business volume in the quarter was up 6%, did I hear about right?

No, we didn't talk about the quarter base business. Total base business was up about $1.8 million for the quarter. I don't have that handy, exactly how much that was.

Okay. I had written something about base business volume up 6% and I wasn't sure what that was relating to, the volume for the base business up 6.

No, the pure business dollar volume…

That was me saying unit volume Andrew.

Okay, right. So unit volume and that was unit volume for the base business.

Yes it was.

So the base sales were up $1.8 million.

Okay.

And the difference is a mix issue, lower price -- unit volume was on lower priced items.

Okay. So that is what I was trying to get at around the base business. I was trying to get a sense of what that meant and what that implied for pricing in the fourth quarter on the base business?

As we said pricing was not quite $2 million in gains, but we did see, I guess, I was trying to point out that we did see some unit volume gains in the quarter as well.

Got it. Okay. And then is there anyway to clarify what the share, sort of dilution or increased share count might be in ‘08 from the compensation accrual that you’ve talked about.

Well, there would be no additional shares issued in ’08. If we do this we would be accruing that initially, actually issuing shares in ‘09.

Okay.

But what you are looking at is about [$100] -- assuming a $10 share prices, if we take about a 150,000 shares.

Got it. Okay. And that will be a known non event.

Right.

Okay, and then terms of thinking about how you budget kind of internally, I know you guys look at this in a granular way, kind of thinking about how all that potentates go in if you build in sort of a worst case scenario -- which I would given your sort of debt levels, and obviously dividend payment, probably look at kind of what you need and then to have a comfortable cushion, right, in terms of EBITDA. You kind of know you can deliver or you clearly hope you can do more than that, maybe even keep EBITDA flat at the end of the day like you have done in the last couple of years. But what is the reasonable thought process in trying to keep expectations again in a prudent place given the cost environment. Where you just kind of say, worst case, we can get there, hopefully it is better. But that worst case would be hey, well in excess of enough to get -- what we need to do on the debt side and the dividend side. Is there a way to sort of communicate a comfort level, perhaps?

When I look at ‘08, the EBITDA we produced in ’07 is certainly comfortable in terms of servicing our debt and our dividends.

Okay.

And I guess our worst case scenario would be not doing better than the '07 EBITDA.

Okay.

So we're aspiring at minimum. And this is -- I think you have to have some more unknown costs or costs we don't foresee today, have been coming in -- getting down to the same EBITDA as 2007. We believe that we can do better than 2007 in '08. And as I said that would certainly continue to make us very comfortable in terms of servicing debt and dividend.

Got it. And last thing, I know this is -- it gets a little bit tougher but from an M&A environment perspective, perhaps you can just comment on -- on the one hand you think that some of these cost pressures maybe mix some assets that might be more available now at more reasonable price points. But on the other hand not as easy to get sort of deals done from a financing perspective. Trying to see how those two things way out for you and what are you seeing, perhaps, a fuller pipeline or a pipeline that is less robust, just directionally.

Well, there was a sort of a low in 2007 for 6 to 8 months where there wasn't a whole lot out there. We are actually seeing more properties for sale now. Some of which are interesting to us. I don't know that we can tell you what the financial situation is going to be in terms of being able to do those deals until we actually get to the point that we go to our bankers and say, okay, we have a potential deal, now we want to go to market for financing. I think the market is so uncertain that that the banks can't today speculate on what it will be. And so you actually go out there.

Right.

But as far as pipeline goes, yes, there are a number of things out there.

Great. Thanks very much.

Yeah.

And we do have a follow-up from Reza Vahabzadeh with Lehman Brothers.

In terms of the different channels that you guys are operating in, are you seeing any relative weakness in the food service channel away from your maple syrup business, which I know has been strong.

We're expecting to see that Reza. Yes. We're seeing it getting softer and it's fairly broad.

Got it. And then on the typical food at home channel, whether it's mass, clubs or grocery. Is that channel relatively stable or strengthening or any trends that you would note?

Yeah. That's harder to see. We believe it's going to strengthen. Certainly everything you read says that people are eating at home more and we've been trying over the last year Orion, Ortega in the dinner kit type of thing where -- buy this -- you have a meal when you add some ground beef or something like to it kind of products, because we believe that those are the products people want to buy from a convenience and cost point of view. Those are right down the runway in terms of the kind of products people should be buying in this environment.

Got it. Thank you.

Yeah.

And with that there are no further questions. I would like to turn the conference back to you, David Wenner for any additional or closing comments.

Thank you all for joining us on the call. As we said, we believe we had a great year. We had a lot of challenges that we met in terms of cost, but we also integrated a major acquisition into this company and made major strides in terms of taking this company to the next level. The EBITDA increase we saw, the sales increase we saw and our ability to continue to service our debt and our dividends reliably, that's very important to us. And we believe that we had another year proving that we can continue to do that. So thank you. And we will be speaking to you about the first quarter in not too longer time. Bye.

Again, this does conclude today's conference call. I would like to thank everyone for your participation