(Mark One)
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/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 28, 2014
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OR
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _______ to _______
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Delaware
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36-2495346
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification Number)
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251 O'Connor Ridge Blvd., Suite 300
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Irving, Texas
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75038
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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X
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Page No.
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June 28,
2014 |
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December 28,
2013 |
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ASSETS
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(unaudited)
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Current assets:
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Cash and cash equivalents
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$
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143,785
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$
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870,857
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Restricted cash
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350
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354
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Accounts receivable, net
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467,392
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112,844
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Inventories
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431,529
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65,133
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Prepaid expenses
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26,296
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14,223
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Income taxes refundable
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26,448
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14,512
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Other current assets
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33,022
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32,290
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Deferred income taxes
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18,955
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17,289
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Total current assets
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1,147,777
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1,127,502
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Property, plant and equipment, less accumulated depreciation of
$467,749 at June 28, 2014 and $381,314 at December 28, 2013
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1,697,058
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666,573
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Intangible assets, less accumulated amortization of
$146,900 at June 28, 2014 and $105,070 at December 28, 2013
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1,037,479
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588,664
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Goodwill
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1,442,299
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701,637
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Investment in unconsolidated subsidiaries
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147,662
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115,114
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Other assets
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76,077
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44,643
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Deferred income taxes
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6,443
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—
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$
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5,554,795
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$
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3,244,133
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Current portion of long-term debt
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$
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68,616
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$
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19,888
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Accounts payable, principally trade
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313,171
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43,742
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Income taxes payable
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7,830
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—
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Accrued expenses
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167,552
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113,174
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Total current liabilities
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557,169
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176,804
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Long-term debt, net of current portion
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2,302,655
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866,947
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Other non-current liabilities
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98,241
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40,671
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Deferred income taxes
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472,863
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138,759
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Total liabilities
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3,430,928
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1,223,181
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Commitments and contingencies
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Stockholders’ equity:
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Common stock, $0.01 par value; 250,000,000 shares authorized;
165,917,726 and 165,261,003 shares issued at June 28, 2014
and at December 28, 2013, respectively
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1,659
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1,653
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Additional paid-in capital
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1,470,908
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1,454,250
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Treasury stock, at cost; 1,259,664 and 993,578 shares at
June 28, 2014 and at December 28, 2013, respectively
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(18,685
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)
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(13,271
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)
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Accumulated other comprehensive loss
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(16,199
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)
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(29,423
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)
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Retained earnings
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587,697
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607,743
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Total Darling's stockholders’ equity
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2,025,380
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2,020,952
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Noncontrolling interests
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98,487
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—
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Total stockholders' equity
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$
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2,123,867
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$
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2,020,952
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$
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5,554,795
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$
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3,244,133
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Three Months Ended
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Six Months Ended
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June 28,
2014 |
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June 29,
2013 |
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June 28,
2014 |
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June 29,
2013 |
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Net sales
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$
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1,006,959
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$
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423,593
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$
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1,938,394
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$
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869,015
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Costs and expenses:
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Cost of sales and operating expenses
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747,966
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309,922
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1,492,945
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632,608
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Selling, general and administrative expenses
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111,845
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40,793
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217,248
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83,086
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Acquisition and integration costs
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4,165
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—
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20,113
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—
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Depreciation and amortization
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67,498
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22,076
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133,167
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43,943
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Total costs and expenses
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931,474
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372,791
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1,863,473
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759,637
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Operating income
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75,485
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50,802
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74,921
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109,378
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Other expense:
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Interest expense
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(26,571
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)
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(5,669
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)
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(85,428
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)
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(11,294
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)
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Foreign currency gain/ (loss)
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11
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—
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(13,803
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)
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—
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Other income/ (expense), net
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(887
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)
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(418
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)
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(2,025
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)
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649
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Total other expense
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(27,447
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)
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(6,087
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)
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(101,256
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)
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(10,645
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)
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Equity in net income/ (loss) of unconsolidated subsidiaries
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2,040
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(1,962
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)
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7,117
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(3,157
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)
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Income/ (loss) before income taxes
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50,078
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42,753
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(19,218
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)
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95,576
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Income tax expense/ (benefit)
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15,503
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16,335
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(2,787
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)
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36,753
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Net income/ (Loss)
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34,575
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26,418
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(16,431
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)
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58,823
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||||
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Net (income)/ loss attributable to noncontrolling interests
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(1,818
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)
|
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—
|
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(3,615
|
)
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—
|
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||||
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Net income/ (loss) attributable to Darling
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$
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32,757
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$
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26,418
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$
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(20,046
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)
|
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$
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58,823
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||||||||
Basic income/ (loss) per share
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$
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0.20
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$
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0.22
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$
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(0.12
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)
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$
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0.50
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Diluted income/ (loss) per share
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$
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0.20
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$
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0.22
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$
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(0.12
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)
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$
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0.50
|
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 28, 2014
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June 29, 2013
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|
June 28, 2014
|
|
June 29, 2013
|
||||||||
Net income/ (loss)
|
$
|
34,575
|
|
|
$
|
26,418
|
|
|
$
|
(16,431
|
)
|
|
$
|
58,823
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(6,931
|
)
|
|
—
|
|
|
13,684
|
|
|
—
|
|
||||
Pension adjustments
|
321
|
|
|
805
|
|
|
641
|
|
|
1,610
|
|
||||
Natural gas swap derivative adjustments
|
(11
|
)
|
|
(209
|
)
|
|
(124
|
)
|
|
(61
|
)
|
||||
Corn option derivative adjustments
|
621
|
|
|
358
|
|
|
(977
|
)
|
|
1,307
|
|
||||
Total other comprehensive income/ (loss), net of tax
|
(6,000
|
)
|
|
954
|
|
|
13,224
|
|
|
2,856
|
|
||||
Total comprehensive income/ (loss)
|
$
|
28,575
|
|
|
$
|
27,372
|
|
|
$
|
(3,207
|
)
|
|
$
|
61,679
|
|
|
June 28,
2014 |
|
June 29,
2013 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income/ (loss)
|
$
|
(16,431
|
)
|
|
$
|
58,823
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
133,167
|
|
|
43,943
|
|
||
Gain on disposal of property, plant, equipment and other assets
|
(839
|
)
|
|
(627
|
)
|
||
Gain on insurance proceeds from insurance settlements
|
—
|
|
|
(1,981
|
)
|
||
Deferred taxes
|
(12,882
|
)
|
|
23,539
|
|
||
Increase/ (decrease) in long-term pension liability
|
(6,519
|
)
|
|
600
|
|
||
Stock-based compensation expense
|
14,583
|
|
|
4,875
|
|
||
Write-off deferred loan costs
|
4,330
|
|
|
—
|
|
||
Deferred loan cost amortization
|
4,911
|
|
|
1,537
|
|
||
Equity in net (income)/ loss of unconsolidated subsidiaries
|
(7,117
|
)
|
|
3,157
|
|
||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
||||
Accounts receivable
|
(36,920
|
)
|
|
6,259
|
|
||
Income taxes refundable/payable
|
(3,181
|
)
|
|
(273
|
)
|
||
Inventories and prepaid expenses
|
(2,806
|
)
|
|
(3,880
|
)
|
||
Accounts payable and accrued expenses
|
(25,218
|
)
|
|
(333
|
)
|
||
Other
|
(4,054
|
)
|
|
(6,459
|
)
|
||
Net cash provided by operating activities
|
41,024
|
|
|
129,180
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(103,531
|
)
|
|
(54,689
|
)
|
||
Acquisitions, net of cash acquired
|
(2,075,651
|
)
|
|
—
|
|
||
Investment in unconsolidated subsidiary
|
—
|
|
|
(44,959
|
)
|
||
Gross proceeds from disposal of property, plant and equipment and other assets
|
2,308
|
|
|
1,292
|
|
||
Proceeds from insurance settlement
|
—
|
|
|
1,981
|
|
||
Payments related to routes and other intangibles
|
(7,312
|
)
|
|
(649
|
)
|
||
Net cash used by investing activities
|
(2,184,186
|
)
|
|
(97,024
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt
|
1,821,196
|
|
|
—
|
|
||
Payments on long-term debt
|
(287,066
|
)
|
|
(40
|
)
|
||
Borrowings from revolving credit facility
|
170,143
|
|
|
—
|
|
||
Payments on revolving credit facility
|
(257,254
|
)
|
|
—
|
|
||
Net cash overdraft financing
|
9,529
|
|
|
—
|
|
||
Deferred loan costs
|
(44,865
|
)
|
|
—
|
|
||
Issuance of common stock
|
417
|
|
|
32
|
|
||
Minimum withholding taxes paid on stock awards
|
(5,495
|
)
|
|
(2,529
|
)
|
||
Excess tax benefits from stock-based compensation
|
1,329
|
|
|
703
|
|
||
Net cash provided/ (used) by financing activities
|
1,407,934
|
|
|
(1,834
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
8,156
|
|
|
—
|
|
||
Net increase/ (decrease) in cash and cash equivalents
|
(727,072
|
)
|
|
30,322
|
|
||
Cash and cash equivalents at beginning of period
|
870,857
|
|
|
103,249
|
|
||
Cash and cash equivalents at end of period
|
$
|
143,785
|
|
|
$
|
133,571
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Accrued capital expenditures
|
$
|
(2,300
|
)
|
|
$
|
(1,074
|
)
|
Cash paid during the period for:
|
|
|
|
||||
Interest, net of capitalized interest
|
$
|
47,851
|
|
|
$
|
9,756
|
|
Income taxes, net of refunds
|
$
|
11,301
|
|
|
$
|
17,713
|
|
(1)
|
General
|
(2)
|
Summary of Significant Accounting Policies
|
(a)
|
Basis of Presentation
|
(b)
|
Fiscal Periods
|
(c)
|
Revenue Recognition
|
(d)
|
Foreign Currency Translation and Remeasurement
|
(e)
|
Reclassifications
|
(f)
|
Earnings Per Share
|
|
Net Income per Common Share (in thousands, except per share data)
|
||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
|
|
June 28, 2014
|
|
|
|
|
|
June 29, 2013
|
|
|
||||||||||
|
Income
|
|
Shares
|
|
Per Share
|
|
Income
|
|
Shares
|
|
Per Share
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income allocable to Darling
|
$
|
32,757
|
|
|
164,600
|
|
|
$
|
0.20
|
|
|
$
|
26,418
|
|
|
118,196
|
|
|
$
|
0.22
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add: Option shares in the money and dilutive effect of non-vested stock awards
|
|
|
|
1,071
|
|
|
|
|
|
|
|
|
690
|
|
|
|
|
||||
Less: Pro forma treasury shares
|
|
|
|
(574
|
)
|
|
|
|
|
|
|
|
(298
|
)
|
|
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income allocable to Darling
|
$
|
32,757
|
|
|
165,097
|
|
|
$
|
0.20
|
|
|
$
|
26,418
|
|
|
118,588
|
|
|
$
|
0.22
|
|
|
Net Income/ (loss) per Common Share (in thousands, except per share data)
|
||||||||||||||||||||
|
Six Months Ended
|
||||||||||||||||||||
|
|
|
June 28, 2014
|
|
|
|
|
|
June 29, 2013
|
|
|
||||||||||
|
Loss
|
|
Shares
|
|
Per Share
|
|
Income
|
|
Shares
|
|
Per Share
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income/ (loss) allocable to Darling
|
$
|
(20,046
|
)
|
|
164,469
|
|
|
$
|
(0.12
|
)
|
|
$
|
58,823
|
|
|
118,056
|
|
|
$
|
0.50
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add: Option shares in the money and dilutive effect of non-vested stock
|
|
|
|
—
|
|
|
|
|
|
|
|
|
688
|
|
|
|
|
||||
Less: Pro forma treasury shares
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(304
|
)
|
|
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income/ (loss) allocable to Darling
|
$
|
(20,046
|
)
|
|
164,469
|
|
|
$
|
(0.12
|
)
|
|
$
|
58,823
|
|
|
118,440
|
|
|
$
|
0.50
|
|
(3)
|
Acquisitions
|
Accounts receivable
|
$
|
318,272
|
|
Inventory
|
375,306
|
|
|
Deferred tax asset
|
18,852
|
|
|
Property and equipment
|
1,017,112
|
|
|
Identifiable intangibles
|
481,278
|
|
|
Goodwill
|
740,573
|
|
|
Investment in unconsolidated subsidiaries
|
27,069
|
|
|
Other long term assets
|
1,101
|
|
|
Accounts payable
|
(337,437
|
)
|
|
Current portion of long-term debt
|
(22,399
|
)
|
|
Accrued expenses
|
(17,310
|
)
|
|
Deferred tax liability
|
(361,861
|
)
|
|
Long debt obligations
|
(6,906
|
)
|
|
Other non-current liabilities
|
(58,996
|
)
|
|
Noncontrolling interests
|
(99,648
|
)
|
|
Purchase price, net of cash acquired
|
$
|
2,075,006
|
|
|
Three Months Ended
|
Six Months Ended
|
||||
|
June 29, 2013
|
June 29, 2013
|
||||
Net sales
|
$
|
1,036,230
|
|
$
|
2,073,834
|
|
Income from continuing operations
|
64,305
|
|
141,146
|
|
||
Net income
|
38,684
|
|
84,713
|
|
||
Earnings per share
|
|
|
||||
Basic
|
$
|
0.23
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.23
|
|
$
|
0.51
|
|
(4)
|
Inventories
|
|
June 28, 2014
|
|
December 28, 2013
|
||||
Finished product
|
$
|
295,987
|
|
|
$
|
57,681
|
|
Work in process
|
85,718
|
|
|
—
|
|
||
Supplies and other
|
49,824
|
|
|
7,452
|
|
||
|
$
|
431,529
|
|
|
$
|
65,133
|
|
(5)
|
Investment in Unconsolidated Subsidiaries
|
(7)
|
Debt
|
|
June 28, 2014
|
|
December 28, 2013
|
||||
Amended Credit Agreement and Former Credit Agreement:
|
|
|
|
||||
Revolving Credit Facility
|
$
|
200,018
|
|
|
$
|
286,676
|
|
Term Loan A
|
336,421
|
|
|
340,030
|
|
||
Term Loan B
|
1,294,442
|
|
|
—
|
|
||
5.375% Senior Notes due 2022
|
500,000
|
|
|
—
|
|
||
8.5% Senior Notes due 2018
|
—
|
|
|
250,000
|
|
||
Other Notes and Obligations
|
40,390
|
|
|
10,129
|
|
||
|
2,371,271
|
|
|
886,835
|
|
||
Less Current Maturities
|
68,616
|
|
|
19,888
|
|
||
|
$
|
2,302,655
|
|
|
$
|
866,947
|
|
Year
|
Percentage
|
2017
|
104.031%
|
2018
|
102.688%
|
2019
|
101.344%
|
2020 and thereafter
|
100.000%
|
|
June 28,
2014 |
December 28,
2013 |
||||
Senior Notes:
|
|
|
||||
5.375% Senior Notes due 2022
|
$
|
500,000
|
|
$
|
—
|
|
8.5% Senior Notes due 2018
|
$
|
—
|
|
$
|
250,000
|
|
Senior Secured Credit Facilities:
|
|
|
||||
Term Loan A
|
$
|
336,421
|
|
$
|
340,030
|
|
Term Loan B
|
$
|
1,294,442
|
|
$
|
—
|
|
Revolving Credit Facility:
|
|
|
|
|
||
Maximum availability
|
$
|
1,000,000
|
|
$
|
1,000,000
|
|
Borrowings outstanding
|
200,018
|
|
286,676
|
|
||
Letters of credit issued
|
32,663
|
|
32,662
|
|
||
Availability
|
$
|
767,319
|
|
$
|
680,662
|
|
(8)
|
Income Taxes
|
(9)
|
Other Comprehensive Income
|
|
Three Months Ended
|
|||||||||||||||||
|
Before-Tax
|
Tax (Expense)
|
Net-of-Tax
|
|||||||||||||||
|
Amount
|
or Benefit
|
Amount
|
|||||||||||||||
|
June 28, 2014
|
June 29, 2013
|
June 28, 2014
|
June 29, 2013
|
June 28, 2014
|
June 29, 2013
|
||||||||||||
Defined benefit pension plans
|
|
|
|
|
|
|
||||||||||||
Amortization of prior service cost
|
$
|
4
|
|
$
|
15
|
|
$
|
(2
|
)
|
$
|
(6
|
)
|
$
|
2
|
|
$
|
9
|
|
Amortization of actuarial loss
|
520
|
|
1,300
|
|
(201
|
)
|
(504
|
)
|
319
|
|
796
|
|
||||||
Total defined benefit pension plans
|
524
|
|
1,315
|
|
(203
|
)
|
(510
|
)
|
321
|
|
805
|
|
||||||
Natural gas swap derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
—
|
|
(244
|
)
|
—
|
|
94
|
|
—
|
|
(150
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
(17
|
)
|
(97
|
)
|
6
|
|
38
|
|
(11
|
)
|
(59
|
)
|
||||||
Total natural gas swap derivatives
|
(17
|
)
|
(341
|
)
|
6
|
|
132
|
|
(11
|
)
|
(209
|
)
|
||||||
Corn option derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
(32
|
)
|
(866
|
)
|
12
|
|
336
|
|
(20
|
)
|
(530
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
1,046
|
|
1,450
|
|
(405
|
)
|
(562
|
)
|
641
|
|
888
|
|
||||||
Total corn option derivatives
|
1,014
|
|
584
|
|
(393
|
)
|
(226
|
)
|
621
|
|
358
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
(6,931
|
)
|
—
|
|
—
|
|
—
|
|
(6,931
|
)
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss)
|
$
|
(5,410
|
)
|
$
|
1,558
|
|
$
|
(590
|
)
|
$
|
(604
|
)
|
$
|
(6,000
|
)
|
$
|
954
|
|
|
Six Months Ended
|
|||||||||||||||||
|
Before-Tax
|
Tax (Expense)
|
Net-of-Tax
|
|||||||||||||||
|
Amount
|
or Benefit
|
Amount
|
|||||||||||||||
|
June 28, 2014
|
June 29, 2013
|
June 28, 2014
|
June 29, 2013
|
June 28, 2014
|
June 29, 2013
|
||||||||||||
Defined benefit pension plans
|
|
|
|
|
|
|
||||||||||||
Amortization of prior service cost
|
$
|
8
|
|
$
|
30
|
|
$
|
(4
|
)
|
$
|
(12
|
)
|
$
|
4
|
|
$
|
18
|
|
Amortization of actuarial loss
|
1,039
|
|
2,600
|
|
(402
|
)
|
(1,008
|
)
|
637
|
|
1,592
|
|
||||||
Total defined benefit pension plans
|
1,047
|
|
2,630
|
|
(406
|
)
|
(1,020
|
)
|
641
|
|
1,610
|
|
||||||
Natural gas swap derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
(357
|
)
|
(187
|
)
|
139
|
|
72
|
|
(218
|
)
|
(115
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
155
|
|
87
|
|
(61
|
)
|
(33
|
)
|
94
|
|
54
|
|
||||||
Total natural gas swap derivatives
|
(202
|
)
|
(100
|
)
|
78
|
|
39
|
|
(124
|
)
|
(61
|
)
|
||||||
Corn option derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
(1,324
|
)
|
(908
|
)
|
513
|
|
352
|
|
(811
|
)
|
(556
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
(273
|
)
|
3,041
|
|
107
|
|
(1,178
|
)
|
(166
|
)
|
1,863
|
|
||||||
Total corn option derivatives
|
(1,597
|
)
|
2,133
|
|
620
|
|
(826
|
)
|
(977
|
)
|
1,307
|
|
||||||
Interest rate swap derivatives
|
|
|
|
|
|
|
||||||||||||
Loss reclassified to net income
|
13,684
|
|
—
|
|
—
|
|
—
|
|
13,684
|
|
—
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Other Comprehensive income (loss)
|
$
|
12,932
|
|
$
|
4,663
|
|
$
|
292
|
|
$
|
(1,807
|
)
|
$
|
13,224
|
|
$
|
2,856
|
|
|
Three Months Ended
|
Six Months Ended
|
|
||||||||||
|
June 28, 2014
|
June 29, 2013
|
June 28, 2014
|
June 29, 2013
|
Statement of Operations Classification
|
||||||||
Derivative instruments
|
|
|
|
|
|
||||||||
Natural gas swap derivatives
|
$
|
—
|
|
$
|
244
|
|
$
|
357
|
|
$
|
187
|
|
Cost of sales and operating expenses
|
Corn option derivatives
|
32
|
|
866
|
|
1,324
|
|
908
|
|
Cost of sales and operating expenses
|
||||
|
32
|
|
1,110
|
|
1,681
|
|
1,095
|
|
Total before tax
|
||||
|
(12
|
)
|
(430
|
)
|
(652
|
)
|
(424
|
)
|
Income taxes
|
||||
|
20
|
|
680
|
|
1,029
|
|
671
|
|
Net of tax
|
||||
Defined benefit pension plans
|
|
|
|
|
|
||||||||
Amortization of prior service cost
|
$
|
(4
|
)
|
$
|
(15
|
)
|
$
|
(8
|
)
|
$
|
(30
|
)
|
(a)
|
Amortization of actuarial loss
|
(520
|
)
|
(1,300
|
)
|
(1,039
|
)
|
(2,600
|
)
|
(a)
|
||||
|
(524
|
)
|
(1,315
|
)
|
(1,047
|
)
|
(2,630
|
)
|
Total before tax
|
||||
|
203
|
|
510
|
|
406
|
|
1,020
|
|
Income taxes
|
||||
|
(321
|
)
|
(805
|
)
|
(641
|
)
|
(1,610
|
)
|
Net of tax
|
||||
Total reclassifications
|
$
|
(301
|
)
|
$
|
(125
|
)
|
$
|
388
|
|
$
|
(939
|
)
|
Net of tax
|
(a)
|
These items are included in the computation of net periodic pension cost. See Note 10 Employee Benefit Plans for additional information.
|
|
|
Six Months Ended June 28, 2014
|
|||||||||||
|
|
Foreign Currency
|
Derivative
|
Defined Benefit
|
|
||||||||
|
|
Translation
|
Instruments
|
Pension Plans
|
Total
|
||||||||
Accumulated Other Comprehensive Income (loss) December 28, 2013, net of tax
|
|
$
|
(14,502
|
)
|
$
|
1,448
|
|
$
|
(16,369
|
)
|
$
|
(29,423
|
)
|
Other comprehensive gain before reclassifications
|
|
13,684
|
|
(72
|
)
|
—
|
|
13,612
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
—
|
|
(1,029
|
)
|
641
|
|
(388
|
)
|
||||
Net current-period other comprehensive income
|
|
13,684
|
|
(1,101
|
)
|
641
|
|
13,224
|
|
||||
Accumulated Other Comprehensive Income (loss) June 28, 2014, net of tax
|
|
(818
|
)
|
$
|
347
|
|
$
|
(15,728
|
)
|
$
|
(16,199
|
)
|
|
Pension Benefits
|
|
Pension Benefits
|
||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||
|
June 28,
2014 |
June 29,
2013 |
|
June 28,
2014 |
June 29,
2013 |
||||||||
Service cost
|
$
|
1,452
|
|
$
|
76
|
|
|
$
|
2,898
|
|
$
|
153
|
|
Interest cost
|
3,332
|
|
1,318
|
|
|
6,658
|
|
2,636
|
|
||||
Expected return on plan assets
|
(379
|
)
|
(1,819
|
)
|
|
(762
|
)
|
(3,638
|
)
|
||||
Amortization of prior service cost
|
4
|
|
15
|
|
|
8
|
|
30
|
|
||||
Amortization of net loss
|
520
|
|
1,300
|
|
|
1,040
|
|
2,600
|
|
||||
Net pension cost
|
$
|
4,929
|
|
$
|
890
|
|
|
$
|
9,842
|
|
$
|
1,781
|
|
|
Other Post Retirement Benefits
|
|
Other Post Retirement Benefits
|
||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||
|
June 28, 2014
|
|
June 29, 2013
|
|
|
June 28, 2014
|
|
June 29, 2013
|
|
||||
Service cost
|
$
|
44
|
|
$
|
—
|
|
|
$
|
88
|
|
$
|
—
|
|
Interest cost
|
21
|
|
—
|
|
|
42
|
|
—
|
|
||||
Net pension cost
|
$
|
65
|
|
$
|
—
|
|
|
$
|
130
|
|
$
|
—
|
|
(11)
|
Derivatives
|
Functional Currency
|
|
Contract Currency
|
||||
Type
|
Amount
|
|
Type
|
Amount
|
||
Brazilian real
|
12,600
|
|
|
Euro
|
4,000
|
|
Brazilian real
|
23,354
|
|
|
U.S. dollar
|
10,250
|
|
Euro
|
250,999
|
|
|
U.S. dollar
|
343,858
|
|
Euro
|
16,516
|
|
|
Polish zloty
|
69,698
|
|
Euro
|
4,556
|
|
|
Japanese yen
|
637,802
|
|
Euro
|
28,249
|
|
|
Chinese renminbi
|
242,054
|
|
Euro
|
6,829
|
|
|
Australian dollar
|
9,950
|
|
Euro
|
2,800
|
|
|
British pound
|
2,248
|
|
Derivatives
Designated as
Cash Flow Hedges
|
Gain or (Loss)
Recognized in Other Comprehensive Income ("OCI")
on Derivatives
(Effective Portion) (a)
|
Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion) (b)
|
Gain or (Loss)
Recognized in Income
on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (c)
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Corn options
|
$
|
1,046
|
|
$
|
1,450
|
|
$
|
32
|
|
$
|
866
|
|
$
|
355
|
|
$
|
(288
|
)
|
Natural gas swaps
|
(17
|
)
|
(97
|
)
|
—
|
|
244
|
|
(4
|
)
|
(7
|
)
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
1,029
|
|
$
|
1,353
|
|
$
|
32
|
|
$
|
1,110
|
|
$
|
351
|
|
$
|
(295
|
)
|
(a)
|
Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/ (loss) of approximately $
1.0 million
and approximately $
1.4 million
recorded net of taxes of approximately $
0.4 million
and less than $
0.5 million
as of
June 28, 2014
and
June 29, 2013
, respectively.
|
(b)
|
Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options and natural gas swaps are included in cost of sales, respectively, in the Company’s consolidated statements of operations.
|
(c)
|
Gains and (losses) recognized in income on derivatives (ineffective portion) for corn options and natural gas swaps is included in other income/ (expense), net in the Company’s consolidated statements of operations.
|
Derivatives
Designated as
Cash Flow Hedges
|
Gain or (Loss)
Recognized in OCI
on Derivatives
(Effective Portion) (a)
|
Gain or (Loss)
Reclassified From
Accumulated OCI
into Income
(Effective Portion) (b)
|
Gain or (Loss)
Recognized in Income
on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (c)
|
|||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Corn options
|
$
|
(273
|
)
|
$
|
3,041
|
|
$
|
1,324
|
|
$
|
908
|
|
$
|
731
|
|
$
|
(34
|
)
|
Natural gas swaps
|
155
|
|
87
|
|
357
|
|
187
|
|
(5
|
)
|
(8
|
)
|
||||||
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
(118
|
)
|
$
|
3,128
|
|
$
|
1,681
|
|
$
|
1,095
|
|
$
|
726
|
|
$
|
(42
|
)
|
(a)
|
Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/ (loss) of approximately $
(0.1) million
and approximately $
3.1 million
recorded net of taxes of approximately less than $
(0.1) million
and $
1.2 million
as of
June 28, 2014
and
June 29, 2013
, respectively.
|
(b)
|
Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options and natural gas swaps are included in cost of sales, respectively, in the Company’s consolidated statements of operations.
|
(c)
|
Gains and (losses) recognized in income on derivatives (ineffective portion) for corn options and natural gas swaps is included in other income/ (expense), net in the Company’s consolidated statements of operations.
|
|
|
Fair Value Measurements at June 28, 2014 Using
|
||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||
(In thousands of dollars)
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
2,879
|
|
$
|
—
|
|
$
|
2,879
|
|
$
|
—
|
|
Total Assets
|
$
|
2,879
|
|
$
|
—
|
|
$
|
2,879
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
1,042
|
|
$
|
—
|
|
$
|
1,042
|
|
$
|
—
|
|
Senior notes
|
521,250
|
|
—
|
|
521,250
|
|
—
|
|
||||
Term loan A
|
338,945
|
|
—
|
|
338,945
|
|
—
|
|
||||
Term loan B
|
1,296,538
|
|
—
|
|
1,296,538
|
|
—
|
|
||||
Revolver debt
|
197,017
|
|
—
|
|
197,017
|
|
—
|
|
||||
Total Liabilities
|
$
|
2,354,792
|
|
$
|
—
|
|
$
|
2,354,792
|
|
$
|
—
|
|
(13)
|
Contingencies
|
(14)
|
Business Segments
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended June 28, 2014
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
599,884
|
|
$
|
329,541
|
|
$
|
77,534
|
|
$
|
—
|
|
$
|
1,006,959
|
|
Cost of sales and operating expenses
|
431,549
|
|
256,153
|
|
60,278
|
|
(14
|
)
|
747,966
|
|
|||||
Gross Margin
|
168,335
|
|
73,388
|
|
17,256
|
|
14
|
|
258,993
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
53,963
|
|
42,447
|
|
5,998
|
|
9,437
|
|
111,845
|
|
|||||
Acquisition costs
|
—
|
|
—
|
|
—
|
|
4,165
|
|
4,165
|
|
|||||
Depreciation and amortization
|
39,866
|
|
19,628
|
|
5,819
|
|
2,185
|
|
67,498
|
|
|||||
Segment operating income/ (loss)
|
74,506
|
|
11,313
|
|
5,439
|
|
(15,773
|
)
|
75,485
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
561
|
|
—
|
|
1,479
|
|
—
|
|
2,040
|
|
|||||
Segment income
|
75,067
|
|
11,313
|
|
6,918
|
|
(15,773
|
)
|
77,525
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(27,447
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
50,078
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended June 29, 2013
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
421,366
|
|
$
|
—
|
|
$
|
2,227
|
|
$
|
—
|
|
$
|
423,593
|
|
Cost of sales and operating expenses
|
308,326
|
|
—
|
|
1,679
|
|
(83
|
)
|
309,922
|
|
|||||
Gross Margin
|
113,040
|
|
—
|
|
548
|
|
83
|
|
113,671
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
33,108
|
|
—
|
|
95
|
|
7,590
|
|
40,793
|
|
|||||
Acquisition costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Depreciation and amortization
|
21,535
|
|
—
|
|
31
|
|
510
|
|
22,076
|
|
|||||
Segment operating income/ (loss)
|
58,397
|
|
—
|
|
422
|
|
(8,017
|
)
|
50,802
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
—
|
|
—
|
|
(1,962
|
)
|
—
|
|
(1,962
|
)
|
|||||
Segment income
|
58,397
|
|
—
|
|
(1,540
|
)
|
(8,017
|
)
|
48,840
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(6,087
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
42,753
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended June 28, 2014
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,169,687
|
|
$
|
624,824
|
|
$
|
143,883
|
|
$
|
—
|
|
$
|
1,938,394
|
|
Cost of sales and operating expenses
|
869,197
|
|
512,148
|
|
111,630
|
|
(30
|
)
|
1,492,945
|
|
|||||
Gross Margin
|
300,490
|
|
112,676
|
|
32,253
|
|
30
|
|
445,449
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
110,167
|
|
76,437
|
|
11,133
|
|
19,511
|
|
217,248
|
|
|||||
Acquisition costs
|
—
|
|
—
|
|
—
|
|
20,113
|
|
20,113
|
|
|||||
Depreciation and amortization
|
78,425
|
|
37,069
|
|
13,196
|
|
4,477
|
|
133,167
|
|
|||||
Segment operating income/ (loss)
|
111,898
|
|
(830
|
)
|
7,924
|
|
(44,071
|
)
|
74,921
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
964
|
|
—
|
|
6,153
|
|
—
|
|
7,117
|
|
|||||
Segment income
|
112,862
|
|
(830
|
)
|
14,077
|
|
(44,071
|
)
|
82,038
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(101,256
|
)
|
|||||||||
Income/ (loss) before income taxes
|
|
|
|
|
$
|
(19,218
|
)
|
||||||||
|
|
|
|
|
|
||||||||||
Segment assets at June 28, 2014
|
$
|
2,786,197
|
|
$
|
1,881,335
|
|
$
|
743,597
|
|
$
|
143,666
|
|
$
|
5,554,795
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended June 29, 2013
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
865,148
|
|
$
|
—
|
|
$
|
3,867
|
|
$
|
—
|
|
$
|
869,015
|
|
Cost of sales and operating expenses
|
629,659
|
|
—
|
|
3,040
|
|
(91
|
)
|
632,608
|
|
|||||
Gross Margin
|
235,489
|
|
—
|
|
827
|
|
91
|
|
236,407
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
67,194
|
|
—
|
|
191
|
|
15,701
|
|
83,086
|
|
|||||
Acquisition costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Depreciation and amortization
|
42,173
|
|
—
|
|
62
|
|
1,708
|
|
43,943
|
|
|||||
Segment operating income/ (loss)
|
126,122
|
|
—
|
|
574
|
|
(17,318
|
)
|
109,378
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
—
|
|
—
|
|
(3,157
|
)
|
—
|
|
(3,157
|
)
|
|||||
Segment income
|
126,122
|
|
—
|
|
(2,583
|
)
|
(17,318
|
)
|
106,221
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(10,645
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
95,576
|
|
||||||||
|
|
|
|
|
|
||||||||||
Segment assets at December 28, 2013
|
$
|
1,986,564
|
|
$
|
—
|
|
$
|
179,722
|
|
$
|
1,077,847
|
|
$
|
3,244,133
|
|
(15)
|
Immaterial Correction of Prior Period Financial Statements
|
As previously reported:
|
|
|
|
|
|
||||||||||
Three Months Ended March 29, 2014
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
$
|
446,039
|
|
$
|
235,358
|
|
$
|
74,177
|
|
$
|
(121
|
)
|
$
|
755,453
|
|
Selling, general and administrative expense
|
$
|
52,376
|
|
$
|
27,795
|
|
$
|
4,815
|
|
$
|
9,943
|
|
$
|
94,929
|
|
|
|
|
|
|
|
||||||||||
Adjustments:
|
|
|
|
|
|
||||||||||
Three Months Ended March 29, 2014
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
$
|
(3,373
|
)
|
$
|
(5,520
|
)
|
$
|
(1,581
|
)
|
$
|
—
|
|
$
|
(10,474
|
)
|
Selling, general and administrative expense
|
$
|
3,373
|
|
$
|
5,520
|
|
$
|
1,581
|
|
$
|
—
|
|
$
|
10,474
|
|
|
|
|
|
|
|
||||||||||
As adjusted:
|
|
|
|
|
|
||||||||||
Three Months Ended March 29, 2014
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
$
|
442,666
|
|
$
|
229,838
|
|
$
|
72,596
|
|
$
|
(121
|
)
|
$
|
744,979
|
|
Selling, general and administrative expense
|
$
|
55,749
|
|
$
|
33,315
|
|
$
|
6,396
|
|
$
|
9,943
|
|
$
|
105,403
|
|
(16)
|
Related Party Transactions
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
59,167
|
|
$
|
16,240
|
|
$
|
68,378
|
|
$
|
—
|
|
$
|
143,785
|
|
Restricted cash
|
103
|
|
—
|
|
247
|
|
—
|
|
350
|
|
|||||
Accounts receivable
|
42,899
|
|
589,740
|
|
315,487
|
|
(480,734
|
)
|
467,392
|
|
|||||
Inventories
|
20,913
|
|
99,072
|
|
311,544
|
|
—
|
|
431,529
|
|
|||||
Income taxes refundable
|
23,596
|
|
—
|
|
2,852
|
|
—
|
|
26,448
|
|
|||||
Prepaid expenses
|
14,551
|
|
1,052
|
|
10,693
|
|
—
|
|
26,296
|
|
|||||
Other current assets
|
2,052
|
|
14
|
|
240,168
|
|
(209,212
|
)
|
33,022
|
|
|||||
Deferred income taxes
|
15,300
|
|
—
|
|
3,655
|
|
—
|
|
18,955
|
|
|||||
Total current assets
|
178,581
|
|
706,118
|
|
953,024
|
|
(689,946
|
)
|
1,147,777
|
|
|||||
Investment in subsidiaries
|
3,718,984
|
|
1,871,439
|
|
2,704,580
|
|
(8,295,003
|
)
|
—
|
|
|||||
Property, plant and equipment, net
|
204,130
|
|
402,030
|
|
1,090,898
|
|
—
|
|
1,697,058
|
|
|||||
Intangible assets, net
|
22,057
|
|
326,100
|
|
689,322
|
|
—
|
|
1,037,479
|
|
|||||
Goodwill
|
21,860
|
|
595,243
|
|
825,196
|
|
—
|
|
1,442,299
|
|
|||||
Investment in unconsolidated subsidiaries
|
—
|
|
—
|
|
147,662
|
|
—
|
|
147,662
|
|
|||||
Other assets
|
58,632
|
|
575,436
|
|
609,475
|
|
(1,167,466
|
)
|
76,077
|
|
|||||
Deferred taxes
|
—
|
|
—
|
|
6,443
|
|
—
|
|
6,443
|
|
|||||
|
$
|
4,204,244
|
|
$
|
4,476,366
|
|
$
|
7,026,600
|
|
$
|
(10,152,415
|
)
|
$
|
5,554,795
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|||||||
Current portion of long-term debt
|
$
|
20,000
|
|
$
|
85
|
|
$
|
257,743
|
|
$
|
(209,212
|
)
|
$
|
68,616
|
|
Accounts payable
|
475,910
|
|
30,772
|
|
261,199
|
|
(454,710
|
)
|
313,171
|
|
|||||
Income taxes payable
|
—
|
|
—
|
|
7,830
|
|
—
|
|
7,830
|
|
|||||
Accrued expenses
|
81,719
|
|
20,231
|
|
91,626
|
|
(26,024
|
)
|
167,552
|
|
|||||
Total current liabilities
|
$
|
577,629
|
|
$
|
51,088
|
|
$
|
618,398
|
|
$
|
(689,946
|
)
|
$
|
557,169
|
|
Long-term debt, net of current portion
|
1,432,500
|
|
14
|
|
2,037,607
|
|
(1,167,466
|
)
|
2,302,655
|
|
|||||
Other noncurrent liabilities
|
35,219
|
|
4,676
|
|
58,346
|
|
—
|
|
98,241
|
|
|||||
Deferred income taxes
|
133,516
|
|
—
|
|
339,347
|
|
—
|
|
472,863
|
|
|||||
Total liabilities
|
2,178,864
|
|
55,778
|
|
3,053,698
|
|
(1,857,412
|
)
|
3,430,928
|
|
|||||
Total stockholders’ equity
|
2,025,380
|
|
4,420,588
|
|
3,972,902
|
|
(8,295,003
|
)
|
2,123,867
|
|
|||||
|
$
|
4,204,244
|
|
$
|
4,476,366
|
|
$
|
7,026,600
|
|
$
|
(10,152,415
|
)
|
$
|
5,554,795
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
857,267
|
|
$
|
6,117
|
|
$
|
7,473
|
|
$
|
—
|
|
$
|
870,857
|
|
Restricted cash
|
102
|
|
—
|
|
252
|
|
—
|
|
354
|
|
|||||
Accounts receivable
|
41,464
|
|
484,091
|
|
16,092
|
|
(428,803
|
)
|
112,844
|
|
|||||
Inventories
|
20,799
|
|
36,314
|
|
8,020
|
|
—
|
|
65,133
|
|
|||||
Income taxes refundable
|
14,397
|
|
—
|
|
115
|
|
—
|
|
14,512
|
|
|||||
Prepaid expenses
|
9,347
|
|
3,794
|
|
1,082
|
|
—
|
|
14,223
|
|
|||||
Other current assets
|
31,248
|
|
15
|
|
1,027
|
|
—
|
|
32,290
|
|
|||||
Deferred income taxes
|
15,107
|
|
—
|
|
2,182
|
|
—
|
|
17,289
|
|
|||||
Total current assets
|
989,731
|
|
530,331
|
|
36,243
|
|
(428,803
|
)
|
1,127,502
|
|
|||||
Investment in subsidiaries
|
2,140,869
|
|
63,116
|
|
—
|
|
(2,203,985
|
)
|
—
|
|
|||||
Property, plant and equipment, net
|
172,533
|
|
356,772
|
|
137,268
|
|
—
|
|
666,573
|
|
|||||
Intangible assets, net
|
15,896
|
|
340,611
|
|
232,157
|
|
—
|
|
588,664
|
|
|||||
Goodwill
|
21,860
|
|
424,244
|
|
255,533
|
|
—
|
|
701,637
|
|
|||||
Investment in unconsolidated subsidiary
|
—
|
|
—
|
|
115,114
|
|
—
|
|
115,114
|
|
|||||
Other assets
|
40,588
|
|
373,699
|
|
1,352
|
|
(370,996
|
)
|
44,643
|
|
|||||
|
$
|
3,381,477
|
|
$
|
2,088,773
|
|
$
|
777,667
|
|
$
|
(3,003,784
|
)
|
$
|
3,244,133
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|||||||
Current portion of long-term debt
|
$
|
10,000
|
|
$
|
87
|
|
$
|
9,801
|
|
$
|
—
|
|
$
|
19,888
|
|
Accounts payable
|
425,117
|
|
21,236
|
|
22,939
|
|
(425,550
|
)
|
43,742
|
|
|||||
Accrued expenses
|
85,165
|
|
20,178
|
|
11,084
|
|
(3,253
|
)
|
113,174
|
|
|||||
Total current liabilities
|
520,282
|
|
41,501
|
|
43,824
|
|
(428,803
|
)
|
176,804
|
|
|||||
Long-term debt, net of current portion
|
680,000
|
|
55
|
|
557,888
|
|
(370,996
|
)
|
866,947
|
|
|||||
Other noncurrent liabilities
|
36,381
|
|
—
|
|
4,290
|
|
—
|
|
40,671
|
|
|||||
Deferred income taxes
|
123,862
|
|
—
|
|
14,897
|
|
—
|
|
138,759
|
|
|||||
Total liabilities
|
1,360,525
|
|
41,556
|
|
620,899
|
|
(799,799
|
)
|
1,223,181
|
|
|||||
Total stockholders’ equity
|
2,020,952
|
|
2,047,217
|
|
156,768
|
|
(2,203,985
|
)
|
2,020,952
|
|
|||||
|
$
|
3,381,477
|
|
$
|
2,088,773
|
|
$
|
777,667
|
|
$
|
(3,003,784
|
)
|
$
|
3,244,133
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
144,032
|
|
$
|
396,323
|
|
$
|
534,191
|
|
$
|
(67,587
|
)
|
$
|
1,006,959
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
99,203
|
|
315,584
|
|
400,766
|
|
(67,587
|
)
|
747,966
|
|
|||||
Selling, general and administrative expenses
|
34,908
|
|
14,892
|
|
62,045
|
|
—
|
|
111,845
|
|
|||||
Acquisition and integration costs
|
2,626
|
|
—
|
|
1,539
|
|
—
|
|
4,165
|
|
|||||
Depreciation and amortization
|
7,630
|
|
19,012
|
|
40,856
|
|
—
|
|
67,498
|
|
|||||
Total costs and expenses
|
144,367
|
|
349,488
|
|
505,206
|
|
(67,587
|
)
|
931,474
|
|
|||||
Operating income
|
(335
|
)
|
46,835
|
|
28,985
|
|
—
|
|
75,485
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(15,434
|
)
|
5,330
|
|
(16,467
|
)
|
—
|
|
(26,571
|
)
|
|||||
Foreign currency gains/ (losses)
|
—
|
|
328
|
|
(317
|
)
|
—
|
|
11
|
|
|||||
Other, net
|
(1,266
|
)
|
227
|
|
152
|
|
—
|
|
(887
|
)
|
|||||
Equity in net income of unconsolidated subsidiaries
|
—
|
|
—
|
|
2,040
|
|
—
|
|
2,040
|
|
|||||
Earnings in investments in subsidiaries
|
57,688
|
|
—
|
|
—
|
|
(57,688
|
)
|
—
|
|
|||||
Income/ (loss) before taxes
|
40,653
|
|
52,720
|
|
14,393
|
|
(57,688
|
)
|
50,078
|
|
|||||
Income taxes (benefit)
|
7,896
|
|
2,050
|
|
5,557
|
|
—
|
|
15,503
|
|
|||||
Net income/ (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
(1,818
|
)
|
—
|
|
(1,818
|
)
|
|||||
Net income/ (loss) attributable to Darling
|
$
|
32,757
|
|
$
|
50,670
|
|
$
|
7,018
|
|
$
|
(57,688
|
)
|
$
|
32,757
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
291,087
|
|
$
|
785,430
|
|
$
|
1,018,237
|
|
$
|
(156,360
|
)
|
$
|
1,938,394
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
209,997
|
|
628,592
|
|
810,716
|
|
(156,360
|
)
|
1,492,945
|
|
|||||
Selling, general and administrative expenses
|
72,460
|
|
28,768
|
|
116,020
|
|
—
|
|
217,248
|
|
|||||
Acquisition and integration costs
|
17,007
|
|
—
|
|
3,106
|
|
—
|
|
20,113
|
|
|||||
Depreciation and amortization
|
15,148
|
|
38,523
|
|
79,496
|
|
—
|
|
133,167
|
|
|||||
Total costs and expenses
|
314,612
|
|
695,883
|
|
1,009,338
|
|
(156,360
|
)
|
1,863,473
|
|
|||||
Operating income
|
(23,525
|
)
|
89,547
|
|
8,899
|
|
—
|
|
74,921
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(65,735
|
)
|
10,555
|
|
(30,248
|
)
|
—
|
|
(85,428
|
)
|
|||||
Foreign currency gains/ (losses)
|
(12,228
|
)
|
236
|
|
(1,811
|
)
|
—
|
|
(13,803
|
)
|
|||||
Other, net
|
(2,719
|
)
|
(570
|
)
|
1,264
|
|
—
|
|
(2,025
|
)
|
|||||
Equity in net income of unconsolidated subsidiaries
|
—
|
|
—
|
|
7,117
|
|
—
|
|
7,117
|
|
|||||
Earnings in investments in subsidiaries
|
69,049
|
|
—
|
|
—
|
|
(69,049
|
)
|
—
|
|
|||||
Income/ (loss) before taxes
|
(35,158
|
)
|
99,768
|
|
(14,779
|
)
|
(69,049
|
)
|
(19,218
|
)
|
|||||
Income taxes (benefit)
|
(15,112
|
)
|
14,468
|
|
(2,143
|
)
|
—
|
|
(2,787
|
)
|
|||||
Net income/ (loss) attributable to noncontrolling interests
|
—
|
|
—
|
|
(3,615
|
)
|
—
|
|
(3,615
|
)
|
|||||
Net income/ (loss) attributable to Darling
|
$
|
(20,046
|
)
|
$
|
85,300
|
|
$
|
(16,251
|
)
|
$
|
(69,049
|
)
|
$
|
(20,046
|
)
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
159,392
|
|
$
|
309,689
|
|
$
|
1,761
|
|
$
|
(47,249
|
)
|
$
|
423,593
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
124,146
|
|
231,381
|
|
1,644
|
|
(47,249
|
)
|
309,922
|
|
|||||
Selling, general and administrative expenses
|
22,106
|
|
18,674
|
|
13
|
|
—
|
|
40,793
|
|
|||||
Depreciation and amortization
|
5,817
|
|
16,253
|
|
6
|
|
—
|
|
22,076
|
|
|||||
Total costs and expenses
|
152,069
|
|
266,308
|
|
1,663
|
|
(47,249
|
)
|
372,791
|
|
|||||
Operating income
|
7,323
|
|
43,381
|
|
98
|
|
—
|
|
50,802
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(5,666
|
)
|
(3
|
)
|
—
|
|
—
|
|
(5,669
|
)
|
|||||
Other, net
|
(612
|
)
|
212
|
|
(18
|
)
|
—
|
|
(418
|
)
|
|||||
Equity in net loss of unconsolidated subsidiaries
|
—
|
|
—
|
|
(1,962
|
)
|
—
|
|
(1,962
|
)
|
|||||
Earnings in investments in subsidiaries
|
25,767
|
|
—
|
|
—
|
|
(25,767
|
)
|
—
|
|
|||||
Income/ (loss) before taxes
|
26,812
|
|
43,590
|
|
(1,882
|
)
|
(25,767
|
)
|
42,753
|
|
|||||
Income taxes
|
394
|
|
16,663
|
|
(722
|
)
|
—
|
|
16,335
|
|
|||||
Net income/ (loss)
|
$
|
26,418
|
|
$
|
26,927
|
|
$
|
(1,160
|
)
|
$
|
(25,767
|
)
|
$
|
26,418
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
321,264
|
|
$
|
629,100
|
|
$
|
5,895
|
|
$
|
(87,244
|
)
|
$
|
869,015
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
248,250
|
|
465,902
|
|
5,700
|
|
(87,244
|
)
|
632,608
|
|
|||||
Selling, general and administrative expenses
|
44,673
|
|
38,360
|
|
53
|
|
—
|
|
83,086
|
|
|||||
Depreciation and amortization
|
11,955
|
|
31,976
|
|
12
|
|
—
|
|
43,943
|
|
|||||
Total costs and expenses
|
304,878
|
|
536,238
|
|
5,765
|
|
(87,244
|
)
|
759,637
|
|
|||||
Operating income
|
16,386
|
|
92,862
|
|
130
|
|
—
|
|
109,378
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(11,287
|
)
|
(7
|
)
|
—
|
|
—
|
|
(11,294
|
)
|
|||||
Other, net
|
326
|
|
347
|
|
(24
|
)
|
—
|
|
649
|
|
|||||
Equity in net loss of unconsolidated subsidiaries
|
—
|
|
—
|
|
(3,157
|
)
|
—
|
|
(3,157
|
)
|
|||||
Earnings in investments in subsidiaries
|
55,485
|
|
—
|
|
—
|
|
(55,485
|
)
|
—
|
|
|||||
Income/ (loss) before taxes
|
60,910
|
|
93,202
|
|
(3,051
|
)
|
(55,485
|
)
|
95,576
|
|
|||||
Income taxes
|
2,087
|
|
35,840
|
|
(1,174
|
)
|
—
|
|
36,753
|
|
|||||
Net income/ (loss)
|
$
|
58,823
|
|
$
|
57,362
|
|
$
|
(1,877
|
)
|
$
|
(55,485
|
)
|
$
|
58,823
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income
|
$
|
34,575
|
|
$
|
50,670
|
|
$
|
7,018
|
|
$
|
(57,688
|
)
|
$
|
34,575
|
|
Other comprehensive income/ (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
(6,931
|
)
|
—
|
|
(6,931
|
)
|
|||||
Pension adjustments
|
321
|
|
—
|
|
—
|
|
—
|
|
321
|
|
|||||
Natural gas swap derivative adjustments
|
(11
|
)
|
—
|
|
—
|
|
—
|
|
(11
|
)
|
|||||
Corn option derivative adjustments
|
621
|
|
—
|
|
—
|
|
—
|
|
621
|
|
|||||
Total other comprehensive income, net of tax
|
931
|
|
—
|
|
(6,931
|
)
|
—
|
|
(6,000
|
)
|
|||||
Total comprehensive income/ (loss)
|
$
|
35,506
|
|
$
|
50,670
|
|
$
|
87
|
|
$
|
(57,688
|
)
|
$
|
28,575
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income
|
$
|
(16,431
|
)
|
$
|
85,300
|
|
$
|
(16,251
|
)
|
$
|
(69,049
|
)
|
$
|
(16,431
|
)
|
Other comprehensive income/ (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
13,684
|
|
—
|
|
13,684
|
|
|||||
Pension adjustments
|
641
|
|
—
|
|
—
|
|
—
|
|
641
|
|
|||||
Natural gas swap derivative adjustments
|
(124
|
)
|
—
|
|
—
|
|
—
|
|
(124
|
)
|
|||||
Corn option derivative adjustments
|
(977
|
)
|
—
|
|
—
|
|
—
|
|
(977
|
)
|
|||||
Total other comprehensive income, net of tax
|
(460
|
)
|
—
|
|
13,684
|
|
—
|
|
13,224
|
|
|||||
Total comprehensive income/ (loss)
|
$
|
(16,891
|
)
|
$
|
85,300
|
|
$
|
(2,567
|
)
|
$
|
(69,049
|
)
|
$
|
(3,207
|
)
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income
|
$
|
26,418
|
|
$
|
26,927
|
|
$
|
(1,160
|
)
|
$
|
(25,767
|
)
|
$
|
26,418
|
|
Other comprehensive income/ (loss), net of tax:
|
|
|
|
|
|
||||||||||
Pension adjustments
|
805
|
|
—
|
|
—
|
|
—
|
|
805
|
|
|||||
Natural gas swap derivative adjustments
|
(209
|
)
|
—
|
|
—
|
|
—
|
|
(209
|
)
|
|||||
Corn option derivative adjustments
|
358
|
|
—
|
|
—
|
|
—
|
|
358
|
|
|||||
Total other comprehensive income, net of tax
|
954
|
|
—
|
|
—
|
|
—
|
|
954
|
|
|||||
Total comprehensive income/ (loss)
|
$
|
27,372
|
|
$
|
26,927
|
|
$
|
(1,160
|
)
|
$
|
(25,767
|
)
|
$
|
27,372
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income
|
$
|
58,823
|
|
$
|
57,362
|
|
$
|
(1,877
|
)
|
$
|
(55,485
|
)
|
$
|
58,823
|
|
Other comprehensive income/ (loss), net of tax:
|
|
|
|
|
|
||||||||||
Pension adjustments
|
1,610
|
|
—
|
|
—
|
|
—
|
|
1,610
|
|
|||||
Natural gas swap derivative adjustments
|
(61
|
)
|
—
|
|
—
|
|
—
|
|
(61
|
)
|
|||||
Corn option derivative adjustments
|
1,307
|
|
—
|
|
—
|
|
—
|
|
1,307
|
|
|||||
Total other comprehensive income, net of tax
|
2,856
|
|
—
|
|
—
|
|
—
|
|
2,856
|
|
|||||
Total comprehensive income/ (loss)
|
$
|
61,679
|
|
$
|
57,362
|
|
$
|
(1,877
|
)
|
$
|
(55,485
|
)
|
$
|
61,679
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Net income/ (loss)
|
$
|
(16,431
|
)
|
$
|
85,300
|
|
$
|
(16,251
|
)
|
$
|
(69,049
|
)
|
$
|
(16,431
|
)
|
Earnings in investments in subsidiaries
|
(69,049
|
)
|
—
|
|
—
|
|
69,049
|
|
—
|
|
|||||
Other operating cash flows
|
81,867
|
|
(36,376
|
)
|
11,964
|
|
—
|
|
57,455
|
|
|||||
Net cash provided by operating activities
|
(3,613
|
)
|
48,924
|
|
(4,287
|
)
|
—
|
|
41,024
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(22,570
|
)
|
(38,730
|
)
|
(42,231
|
)
|
—
|
|
(103,531
|
)
|
|||||
Acquisitions
|
—
|
|
(645
|
)
|
(2,075,006
|
)
|
—
|
|
(2,075,651
|
)
|
|||||
Investment in subsidiaries and affiliates
|
(1,483,007
|
)
|
(2,217,686
|
)
|
(2,307,591
|
)
|
6,008,284
|
|
—
|
|
|||||
Note receivable from affiliates
|
—
|
|
(204,074
|
)
|
204,074
|
|
—
|
|
—
|
|
|||||
Gross proceeds from sale of property, plant and equipment and other assets
|
1,041
|
|
615
|
|
652
|
|
—
|
|
2,308
|
|
|||||
Proceeds from insurance settlements
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Payments related to routes and other intangibles
|
(7,312
|
)
|
—
|
|
—
|
|
—
|
|
(7,312
|
)
|
|||||
Net cash used in investing activities
|
(1,511,848
|
)
|
(2,460,520
|
)
|
(4,220,102
|
)
|
6,008,284
|
|
(2,184,186
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||||||
Proceeds for long-term debt
|
1,100,000
|
|
—
|
|
721,196
|
|
—
|
|
1,821,196
|
|
|||||
Payments on long-term debt
|
(252,500
|
)
|
(43
|
)
|
(34,523
|
)
|
—
|
|
(287,066
|
)
|
|||||
Borrowings from revolving facilities
|
122,445
|
|
—
|
|
47,698
|
|
—
|
|
170,143
|
|
|||||
Payments on revolving facilities
|
(207,445
|
)
|
—
|
|
(49,809
|
)
|
—
|
|
(257,254
|
)
|
|||||
Net cash overdraft financing
|
—
|
|
—
|
|
9,529
|
|
—
|
|
9,529
|
|
|||||
Deferred loan costs
|
(41,390
|
)
|
—
|
|
(3,475
|
)
|
—
|
|
(44,865
|
)
|
|||||
Issuances of common stock
|
417
|
|
—
|
|
—
|
|
—
|
|
417
|
|
|||||
Contributions from parent
|
—
|
|
2,421,762
|
|
3,586,522
|
|
(6,008,284
|
)
|
—
|
|
|||||
Minimum withholding taxes paid on stock awards
|
(5,495
|
)
|
—
|
|
—
|
|
—
|
|
(5,495
|
)
|
|||||
Excess tax benefits from stock-based compensation
|
1,329
|
|
—
|
|
—
|
|
—
|
|
1,329
|
|
|||||
Net cash used in financing activities
|
717,361
|
|
2,421,719
|
|
4,277,138
|
|
(6,008,284
|
)
|
1,407,934
|
|
|||||
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
—
|
|
8,156
|
|
—
|
|
8,156
|
|
|||||
|
|
|
|
|
|
||||||||||
Net increase/ (decrease) in cash and cash equivalents
|
(798,100
|
)
|
10,123
|
|
60,905
|
|
—
|
|
(727,072
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
857,267
|
|
6,117
|
|
7,473
|
|
—
|
|
870,857
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
59,167
|
|
$
|
16,240
|
|
$
|
68,378
|
|
$
|
—
|
|
$
|
143,785
|
|
|
Issuer
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||||||
Net income
|
$
|
58,823
|
|
$
|
57,362
|
|
$
|
(1,877
|
)
|
$
|
(55,485
|
)
|
$
|
58,823
|
|
Earnings in investments in subsidiaries
|
(55,485
|
)
|
—
|
|
—
|
|
55,485
|
|
—
|
|
|||||
Other operating cash flows
|
98,273
|
|
(29,858
|
)
|
1,942
|
|
—
|
|
70,357
|
|
|||||
Net cash provided by operating activities
|
101,611
|
|
27,504
|
|
65
|
|
—
|
|
129,180
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(24,344
|
)
|
(30,345
|
)
|
—
|
|
—
|
|
(54,689
|
)
|
|||||
Acquisitions
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Investment in subsidiaries and affiliates
|
(44,985
|
)
|
—
|
|
(44,959
|
)
|
44,985
|
|
(44,959
|
)
|
|||||
Gross proceeds from sale of property, plant and equipment and other assets
|
744
|
|
548
|
|
—
|
|
—
|
|
1,292
|
|
|||||
Proceeds from insurance settlements
|
1,531
|
|
450
|
|
—
|
|
—
|
|
1,981
|
|
|||||
Payments related to routes and other intangibles
|
(649
|
)
|
—
|
|
—
|
|
—
|
|
(649
|
)
|
|||||
Net cash used in investing activities
|
(67,703
|
)
|
(29,347
|
)
|
(44,959
|
)
|
44,985
|
|
(97,024
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||||||
Payments on long-term debt
|
—
|
|
(40
|
)
|
—
|
|
—
|
|
(40
|
)
|
|||||
Issuances of common stock
|
32
|
|
—
|
|
—
|
|
—
|
|
32
|
|
|||||
Contributions from parent
|
—
|
|
—
|
|
44,985
|
|
(44,985
|
)
|
—
|
|
|||||
Minimum withholding taxes paid on stock awards
|
(2,529
|
)
|
—
|
|
—
|
|
—
|
|
(2,529
|
)
|
|||||
Excess tax benefits from stock-based compensation
|
703
|
|
—
|
|
—
|
|
—
|
|
703
|
|
|||||
Net cash used in financing activities
|
(1,794
|
)
|
(40
|
)
|
44,985
|
|
(44,985
|
)
|
(1,834
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Net increase/ (decrease) in cash and cash equivalents
|
32,114
|
|
(1,883
|
)
|
91
|
|
—
|
|
30,322
|
|
|||||
Cash and cash equivalents at beginning of year
|
96,945
|
|
5,577
|
|
727
|
|
—
|
|
103,249
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
129,059
|
|
$
|
3,694
|
|
$
|
818
|
|
$
|
—
|
|
$
|
133,571
|
|
•
|
$3.5 million ($0.02 per diluted share) related to a non-cash inventory step-up associated with the required purchase accounting for the VION Acquisition related to the portion of acquired inventory sold during the period; and
|
•
|
$2.6 million ($0.02 per diluted share) associated with the acquisition and integration of Rothsay and VION Ingredients during the quarter;
|
|
Three Months Ended
|
|||||
(dollars in thousands)
|
June 28,
2014 |
June 29,
2013 |
||||
Net income allocable to Darling
|
$
|
32,757
|
|
$
|
26,418
|
|
Depreciation and amortization
|
67,498
|
|
22,076
|
|
||
Interest expense
|
26,571
|
|
5,669
|
|
||
Income tax expense
|
15,503
|
|
16,335
|
|
||
Foreign currency gain
|
(11
|
)
|
—
|
|
||
Other expense/ (income), net
|
887
|
|
418
|
|
||
Equity in net (income)/ loss of unconsolidated subsidiaries
|
(2,040
|
)
|
1,962
|
|
||
Net income attributable to noncontrolling interests
|
1,818
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
142,983
|
|
$
|
72,878
|
|
|
|
|
||||
Non-cash inventory step-up associated with VION Acquisition
|
4,971
|
|
—
|
|
||
Acquisition and integration-related expenses
|
4,165
|
|
—
|
|
||
DGD Joint Venture Adjusted EBITDA (Darling's share) (1)
|
5,902
|
|
(1,962
|
)
|
||
|
|
|
||||
Pro forma Adjusted EBITDA
|
$
|
158,021
|
|
$
|
70,916
|
|
•
|
Segment operating income
|
•
|
Raw material processed
|
•
|
Gross margin percentage
|
•
|
Foreign currency
|
(in thousands except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended June 28, 2014
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
599,884
|
|
$
|
329,541
|
|
$
|
77,534
|
|
$
|
—
|
|
$
|
1,006,959
|
|
Cost of sales and operating expenses
|
431,549
|
|
256,153
|
|
60,278
|
|
(14
|
)
|
747,966
|
|
|||||
Gross Margin
|
168,335
|
|
73,388
|
|
17,256
|
|
14
|
|
258,993
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
28.1
|
%
|
22.3
|
%
|
22.3
|
%
|
—
|
|
25.7
|
%
|
(in thousands except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended June 29, 2013
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
421,366
|
|
$
|
—
|
|
$
|
2,227
|
|
$
|
—
|
|
$
|
423,593
|
|
Cost of sales and operating expenses
|
308,326
|
|
—
|
|
1,679
|
|
(83
|
)
|
309,922
|
|
|||||
Gross Margin
|
113,040
|
|
—
|
|
548
|
|
83
|
|
113,671
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
26.8
|
%
|
—
|
%
|
24.6
|
%
|
—
|
%
|
26.8
|
%
|
•
|
$34.8 million ($0.21 per diluted share) related to a non-cash inventory step-up associated with the required purchase accounting for the VION Acquisition related to the portion of acquired inventory sold during the period;
|
•
|
$20.2 million ($0.12 per diluted share) related to the redemption premium and write-off of deferred loan costs associated with the retirement of the Company’s 8.5% Senior Notes on January 7, 2014;
|
•
|
$15.4 million ($0.09 per diluted share) associated with the acquisition and integration of Rothsay and VION Ingredients during the period;
|
•
|
$8.0 million ($0.05 per diluted share) related to certain euro forward contracts entered into to hedge against foreign exchange risks related to the closing of the VION Acquisition; and
|
•
|
$5.2 million ($0.03 per diluted share) associated with discrete tax items principally associated with the VION Acquisition.
|
|
Six Months Ended
|
|||||
(dollars in thousands)
|
June 28,
2014 |
June 29,
2013 |
||||
Net income/ (loss) allocable to Darling
|
$
|
(20,046
|
)
|
$
|
58,823
|
|
Depreciation and amortization
|
133,167
|
|
43,943
|
|
||
Interest expense
|
85,428
|
|
11,294
|
|
||
Income tax expense/ (benefit)
|
(2,787
|
)
|
36,753
|
|
||
Foreign currency loss
|
13,803
|
|
—
|
|
||
Other expense/ (income), net
|
2,025
|
|
(649
|
)
|
||
Equity in net (income)/ loss of unconsolidated subsidiaries
|
(7,117
|
)
|
3,157
|
|
||
Net loss/ (income) attributable to noncontrolling interests
|
3,615
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
208,088
|
|
$
|
153,321
|
|
|
|
|
||||
Non-cash inventory step-up associated with VION Acquisition
|
49,803
|
|
—
|
|
||
Acquisition and integration-related expenses
|
20,113
|
|
—
|
|
||
DGD Joint Venture Adjusted EBITDA (Darling's share) (1)
|
14,975
|
|
(3,157
|
)
|
||
Darling Ingredients International - 13th week (2)
|
4,100
|
|
—
|
|
||
|
|
|
||||
Pro forma Adjusted EBITDA
|
$
|
297,079
|
|
$
|
150,164
|
|
•
|
Segment operating income
|
•
|
Raw material processed
|
•
|
Gross margin percentage
|
•
|
Foreign currency
|
(in thousands except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended June 28, 2014
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,169,687
|
|
$
|
624,824
|
|
$
|
143,883
|
|
$
|
—
|
|
$
|
1,938,394
|
|
Cost of sales and operating expenses
|
869,197
|
|
512,148
|
|
111,630
|
|
(30
|
)
|
1,492,945
|
|
|||||
Gross Margin
|
300,490
|
|
112,676
|
|
32,253
|
|
30
|
|
445,449
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
25.7
|
%
|
18.0
|
%
|
22.4
|
%
|
—
|
|
23.0
|
%
|
(in thousands except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended June 29, 2013
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
865,148
|
|
$
|
—
|
|
$
|
3,867
|
|
$
|
—
|
|
$
|
869,015
|
|
Cost of sales and operating expenses
|
629,659
|
|
—
|
|
3,040
|
|
(91
|
)
|
632,608
|
|
|||||
Gross Margin
|
235,489
|
|
—
|
|
827
|
|
91
|
|
236,407
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
27.2
|
%
|
—
|
%
|
21.4
|
%
|
—
|
%
|
27.2
|
%
|
5.375% Notes:
|
|
||
5.375 % Notes due 2022
|
$
|
500,000
|
|
|
|
||
Amended Credit Agreement:
|
|
||
Term Loan A
|
$
|
336,421
|
|
Term Loan B
|
$
|
1,294,442
|
|
Revolving Credit Facility:
|
|
||
Maximum availability
|
$
|
1,000,000
|
|
Borrowings outstanding
|
200,018
|
|
|
Letters of credit issued
|
32,663
|
|
|
Availability
|
$
|
767,319
|
|
•
|
As of
June 28, 2014
, the Company had availability of $
767.3 million
under the revolving loan facility, taking into account an aggregate of $
200.0 million
outstanding borrowings and letters of credit issued of $
32.7 million
.
|
•
|
As of
June 28, 2014
, the Company has borrowed all $
350.0 million
under the term loan A facility under the terms of the term loan facility and repaid approximately CAD$
1.9 million
, which when repaid, cannot be reborrowed. The term loan A facility is repayable in quarterly installments as follows: for the first eight quarters,
1.25%
of the original principal amount of the term loan A facility, for the ninth through sixteenth quarters,
1.875%
of the original principal amount of the term loan A facility, and for each quarterly installment after such sixteenth installment until September 27, 2018,
3.75%
of the original principal amount of the term loan A facility. The term loan A facility will mature on September 27, 2018.
|
•
|
As of
June 28, 2014
, the Company has borrowed all $
1.3 billion
under the terms of the term loan B facility, which when repaid, cannot be reborrowed. The term loan B facility is repayable in quarterly installments of
0.25%
of the aggregate principal amount of the relevant term loan B facility on the last day of each March, June, September and December of each year commencing on the last day of each month falling on or after the last day of the first full quarter of the closing date of the VION Acquisition and continuing until the last day of each quarter period ending immediately prior to the term loan B maturity date; and one final installment in the amount of the relevant term loan B facility then outstanding, due on the term loan B maturity date. The term loan B facility will mature on January 7, 2021.
|
•
|
The interest rate applicable to any borrowings under the term loan A facility and the revolving loan facility will equal either LIBOR/euro interbank offered rate/CDOR plus
2.50%
per annum or base rate/Canadian prime rate plus
1.50%
per annum, subject to certain step-downs based on the Company's total leverage ratio. The interest rate applicable to any borrowings under the term loan B facility will equal (a) for U.S. dollar term loans, either the base rate plus
1.50%
or LIBOR plus
2.50%
, and (b) for euro term loans, the euro interbank offered rate plus
2.75%
, in each case subject to a step-down based on Darling’s total leverage ratio. For term loan B loans, the LIBOR rate shall not be less than
0.75%
.
|
Functional Currency
|
|
Contract Currency
|
|
Range of
|
U.S.
|
||||||
Type
|
Amount
|
|
Type
|
Amount
|
|
Hedge rates
|
Equivalent
|
||||
Brazilian real
|
12,600
|
|
|
Euro
|
4,000
|
|
|
3.08 - 3.44
|
$
|
5,737
|
|
Brazilian real
|
23,354
|
|
|
U.S. dollar
|
10,250
|
|
|
2.23 - 2.48
|
10,250
|
|
|
Euro
|
250,999
|
|
|
U.S. dollar
|
343,858
|
|
|
1.35 - 1.39
|
343,858
|
|
|
Euro
|
16,516
|
|
|
Polish zloty
|
69,698
|
|
|
4.16 - 4.26
|
22,488
|
|
|
Euro
|
4,556
|
|
|
Japanese yen
|
637,802
|
|
|
138.50 - 142.44
|
6,203
|
|
|
Euro
|
28,249
|
|
|
Chinese renminbi
|
242,054
|
|
|
8.42 - 8.60
|
38,466
|
|
|
Euro
|
6,829
|
|
|
Australian dollar
|
9,950
|
|
|
1.46
|
9,299
|
|
|
Euro
|
2,800
|
|
|
British pound
|
2,248
|
|
|
0.80
|
3,813
|
|
|
|
|
|
|
|
|
|
$
|
440,114
|
|
|
10.1
|
Form of Notice of Grant of Restricted Stock Unit Award (Non-Employee Directors) under the Darling International Inc. 2012 Omnibus Incentive Plan.
|
||
|
31.1
|
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.
|
||
|
31.2
|
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Colin Stevenson, the Chief Financial Officer of the Company.
|
||
|
32
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Colin Stevenson, the Chief Financial Officer of the Company.
|
||
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of June 28, 2014 and December 28, 2013; (ii) Consolidated Statements of Operations for the three and six months ended June 28, 2014 and June 29, 2013; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 28, 2014 and June 29, 2013; (iv) Consolidated Statements of Cash Flows for the six months ended June 28, 2014 and June 29, 2013; (v) Notes to the Consolidated Financial Statements.
|
|
|
DARLING INGREDIENTS INC.
|
|
|
|
|
|
|
|
|
|
Date:
|
August 7, 2014
|
By:
|
/s/ Randall C. Stuewe
|
|
|
|
Randall C. Stuewe
|
|
|
|
Chairman and
|
|
|
|
Chief Executive Officer
|
Date:
|
August 7, 2014
|
By:
|
/s/ Colin Stevenson
|
|
|
|
Colin Stevenson
|
|
|
|
Executive Vice President
|
|
|
|
Global Finance and Administration
|
|
|
|
(Principal Financial Officer)
|
(a)
|
Except as provided by Section 3(b), vested Restricted Stock Units shall be payable to the Grantee in a single lump sum payment as soon as administratively practicable following the Grantee’s Separation from Service.
|
(b)
|
Notwithstanding the provisions of Section 3(a) to the contrary, if the Grantee has met the stock ownership guidelines established in the Stock Ownership and Retention Policy on or before the Grant Date, the Grantee may elect to have vested Restricted Stock Units payable as soon as administratively practicable after either (i) the Grantee’s Separation from Service or (ii) the earlier of (x) a specified
|
(c)
|
Each date upon which vested Restricted Stock Units are payable is referred to herein as a “
Settlement Date
.” Any payment election hereunder must be completed no later than the Grant Date by completing an election form which has been approved by the Committee. If a payment election is not duly made, payment of vested Restricted Stock Units shall be made as a lump sum payment as soon as administratively practicable following Separation from Service. In case of installment payments, the number of Restricted Stock Units payable as of a given Settlement Date shall be the total number of vested Restricted Stock Units that are subject to the installment payment divided by the number of installment payments remaining (including the payment then being made), rounded to the nearest whole Restricted Stock Unit. The payment election applicable to the Restricted Stock Units shall also apply to any Dividend Restricted Stock Units credited in accordance with Section 1(c) of the Terms and Conditions.
|
(a)
|
“
Disability
” shall mean that the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment as determined by the Board of Directors in its sole discretion; provided, however, that the Grantee shall recuse himself or herself from the determination as to his or her own Disability.
|
(b)
|
“
Separation from Service
” shall mean the Grantee’s “separation from service” with the Company within the meaning of Section 409A and any related administrative policies of the Company.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Darling Ingredients Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstance under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 7, 2014
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Darling Ingredients Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstance under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 7, 2014
|
|
/s/ Randall C. Stuewe
|
|
/s/ Colin Stevenson
|
|
Randall C. Stuewe
|
|
Colin Stevenson
|
|
Chief Executive Officer
|
|
Chief Financial Officer
|
|
Date: August 7, 2014
|
|
Date: August 7, 2014
|